CONTENTS       Page      1. Definitions  1 2. Appointment  8 3. Duties of the Advisor  8 4. Authority of Advisor  10 5. Bank Accounts  11 6. Records; Access  11 7. Limitations on Activities  12 8. Relationship with Directors  13 9. Fees  13 10. Expenses  16 11. Other Services  17 12. Fidelity Bond  17 13. Limitation on Expenses  18 14. Other Activities of the Advisor  18 15. Relationship of Advisor and CWI  19 16. Term; Termination of Agreement  19 17. Termination by CWI  20 18. Termination by Either Party  20 19. Assignment Prohibition  20 20. Payments to and Duties of Advisor Upon Termination  20 21. Non-Solicitation and Non-Hire Following Termination  22 22. Indemnification by CWI and the Operating Partnership  22 23. Indemnification by Advisor  22 
 
- i -

 
       Page      24. Joint and Several Obligations  22 25. Notices  22 26. Modification  23 27. Severability  23 28. Construction  23 29. Entire Agreement  23 30. Indulgences, Not Waivers  23 31. Gender  23 32. Titles Not to Affect Interpretation  24 33. Execution in Counterparts  24 34. Initial Investment  24 
 
- ii -

 
**ADVISORY AGREEMENT**THIS ADVISORY AGREEMENT, dated as of September 15, 2010, is among CAREY WATERMARK INVESTORSINCORPORATED, a Maryland corporation (“CWI”), CWI OP, LP, a Delaware limited partnership ofwhich CWI is a general partner (the “Operating Partnership”), and CAREY LODGING ADVISORS,LLC, a Delaware limited liability company (the “Advisor”).**W I T N E S S E T H**:WHEREAS, CWI through its interest in the Operating Partnership intends to acquire, own,dispose of, and, through its Advisor, manage a portfolio consisting primarily of lodging and otherlodging related properties; andWHEREAS, CWI intends to qualify as a REIT (as defined below), and the Operating Partnershipintends to qualify as a partnership, in each case for U.S. federal income tax purposes; andWHEREAS, CWI and its subsidiaries, including the Operating Partnership, desire to availthemselves of the experience, sources of information, advice and assistance of, and certainfacilities available to, the Advisor and to have the Advisor undertake the duties andresponsibilities hereinafter set forth, on behalf of, and subject to the supervision of the Boardof Directors of CWI, all as provided herein; andWHEREAS, the Advisor is willing to render such services, subject to the supervision of theBoard of Directors of CWI, on the terms and conditions hereinafter set forth;NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreementscontained herein, the parties hereto agree as follows:1. Definitions. As used in this Agreement, the following terms have the definitionshereinafter indicated:“2%/25% Guidelines.” The requirement, as provided for in Section 13 hereof, that, inthe 12-month period ending on the last day of any fiscal quarter, Operating Expenses not exceed thegreater of two percent of Average Invested Assets during such 12-month period or 25% of CWI’sAdjusted Net Income over the same 12-month period.“Acquisition Expenses.” To the extent not paid or to be paid by the seller, lessee,borrower or any other party involved in the transaction, those expenses, including, but not limitedto, travel and communications expenses, the cost of appraisals, title insurance, nonrefundableoption payments on Investments not acquired, legal fees and expenses, accounting fees and expenses,and miscellaneous expenses related to selection, acquisition and origination of Investments,whether or not a particular Investment ultimately is made. Acquisition Expenses shall not includeAcquisition Fees.“Acquisition Fees.” Any fee or commission paid by CWI or its subsidiaries to theAdvisor, or, with respect to Section 9(b)(ii), by CWI or its subsidiaries to any party, inconnection with the making of Investments, including, without limitation, the purchase, developmentor construction of Properties. A Development Fee or Construction Fee paid to a Person notaffiliated with the Sponsor in connection with the actual development or construction of a projectafter acquisition of the Property by CWI shall not be deemed an Acquisition Fee. Included in thecomputation of such fees or commissions shall be any real estate commission, selection fee,Development Fee or Construction Fee (other than as described above),non-recurring management fees, loan fees, points or any fee of a similar nature, howeverdesignated. Acquisition Fees shall not include Acquisition Expenses.
 
- 1 -

 
“Adjusted Net Income.” For any period, the total consolidated revenues recognized insuch period by CWI, less the total consolidated expenses of CWI recognized in such period,excluding additions to reserves for depreciation and amortization, bad debts or other similarnon-cash reserves; *provided, however*, that Adjusted Net Income for purposes of calculating totalallowable Operating Expenses under the 2%/25% Guidelines shall exclude any gains, losses orwritedowns from the sale of CWI’s assets.“Affiliate.” An Affiliate of another Person shall include any of the following:(i) any Person directly or indirectly owning, controlling, or holding, with power to vote tenpercent or more of the outstanding voting securities of such other Person; (ii) any Person tenpercent 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 orindirectly controlling, controlled by, or under common control with such other Person; (iv) anyexecutive officer, director, trustee or general partner of such other Person; or (v) any legalentity for which such Person acts as an executive officer, director, trustee or general partner.“Agreement.” This Advisory Agreement.“Appraised Value.” Value according to an appraisal made by an Independent Appraiser,which may take into consideration any factor deemed appropriate by such Independent Appraiser,including, but not limited to, current market and property conditions, any unique attributes of theproperty or its operations, current and anticipated income and expense trends, forecasts ofstabilized operations, repositioning opportunities and conditions in the credit and investmentmarkets. The Appraised Value of a Property may be greater than the construction cost or thereplacement cost of the Property.“Articles of Incorporation.” Articles of Incorporation of CWI under the MarylandGeneral Corporation Law, as amended from time to time, pursuant to which CWI is organized.“Asset Management Fee.” The Asset Management Fee as defined in Section 9(a) hereof.“Average Invested Assets.” The average during any period of the aggregate book valueof CWI’s Investments, before deducting reserves for depreciation, bad debts, impairments,amortization and all other non-cash reserves, computed by taking the average of such values at theend of each month during such period.“Average Market Value.” The Total Investment Cost paid by CWI for an Investment, lessAcquisition Fees, *provided*that, if a later Appraised Value is obtained for the Investment, thatlater Appraised Value, adjusted for other net assets and liabilities that have economic value andare associated with that Investment, shall become the Average Market Value for the Investment.“Board or Board of Directors.” The Board of Directors of CWI.“Bylaws.” The bylaws of CWI, as amended from time to time.“Cause.” With respect to the termination of this Agreement means the occurrence ofany of the following: (a) the transfer of W. P. Carey & Co. LLC’s interests in the Advisor to oneor more entities other than to one or more controlled subsidiaries of W. P. Carey & Co. LLC, (b)fraud, criminal conduct, willful misconduct or willful or negligent breach of fiduciary duty by theAdvisor that, in each case, isdetermined by a majority of the Independent Directors to be materially adverse to CWI, or (c)a breach of a material term or condition of this Agreement by the Advisor and the Advisor has notcured such breach within 30 days of written notice thereof or, in the case of any breach thatcannot be cured within 30 days by reasonable effort, has not taken all necessary action within areasonable time period to cure such breach.
 
- 2 -

 
“Code.” Internal Revenue Code of 1986, as amended.“Competitive Real Estate Commission.” The real estate or brokerage commission paidfor the purchase or sale of an Investment that is reasonable, customary and competitive in light ofthe size, type and location or other relevant characteristics of the Investment.“Construction Fee.” A fee or other remuneration for acting as general contractorand/or construction manager to construct improvements, supervise and coordinate projects or toprovide major repairs or rehabilitations on a Property.“Contract Purchase Price.” The amount actually paid for, or allocated (as of the dateof purchase) to, the purchase, development, construction or improvement of an Investment or, in thecase of an originated Loan, the principal amount of such Loan, in each case exclusive ofAcquisition Fees and Acquisition Expenses.“Contract Sales Price.” The total consideration received by CWI for the sale of anInvestment.“Control.” The possession, directly or indirectly, of the power to direct or cause thedirection of the management or policies of a Person, whether through the ability to exercise votingpower, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.“CWI.” Carey Watermark Investors Incorporated together with its consolidatedsubsidiaries, including the Operating Partnership, unless in the context of a particular reference,it is clear that such reference refers to Carey Watermark Investors Incorporated excluding itsconsolidated subsidiaries. Unless the context otherwise requires, any reference to financialmeasures of CWI shall be calculated by reference to the consolidated financial statements of CWIand its subsidiaries, including, without limitation, the Operating Partnership, prepared inaccordance with GAAP.“Dealer Manager.” Carey Financial, LLC.“Development Fee.” A fee for the packaging of a Property including negotiating andapproving plans, and undertaking to assist in obtaining zoning and necessary variances andnecessary financing for the specific Property, either initially or at a later date.“Directors.” The persons holding such office, as of any particular time, under theArticles of Incorporation, whether they be the directors named therein or additional or successordirectors.“Disposition Fee.” The Disposition Fee as defined in Section 9(d) hereof.“Distributions.” Distributions declared by the Board.“First Offer Period.” The period commencing on the date of this Agreement and endingon the earliest of:(i) the dissolution of CWI,(ii) the termination of the Subadvisory Agreement;
 
- 3 -

 
(iii) the third anniversary of the date of this Agreement, if CWI has not then acceptedaggregate net offering proceeds from investors of at least Five Hundred Million Dollars($500,000,000);(iv) the date on which CWI has Fully Invested the net proceeds of its initial publicoffering, unless on or before such date there has been an initial filing by CWI with theSecurities and Exchange Commission of a Registration Statement on Form S-11, or any otherform which CWI is eligible to use to register securities, with respect to a Follow-OnOffering;(v) the third anniversary of the date of effectiveness of the Registration Statementfor the Follow-On Offering as described in (iv) above, if CWI has not then accepted netoffering proceeds from investors of at least 75% of the maximum aggregate offering proceedsnamed in such registration statement at the time of its effectiveness; or(vi) the date on which CWI has Fully Invested the net proceeds of the Follow-OnOffering.“Follow-On Offering.” means a public offering of common stock of CWI with maximumaggregate offering proceeds named in the registration statement related thereto of not less than$500,000,000 and for which CWI begins receiving proceeds within six months after the termination ofCWI’s initial public offering.“Fully Invested.” With respect to the First Offer Period as defined in this Agreement,at least ninety percent (90%) of the net offering proceeds of CWI’s initial public offering or aFollow-On Offering, as applicable, are invested or committed for investment.“GAAP.” Generally accepted accounting principles, as applied in the United States.“Good Reason.” With respect to the termination of this Agreement, (i) any failure toobtain a satisfactory agreement from any successor to CWI or the Operating Partnership to assumeand agree to perform CWI’s or the Operating Partnership’s, as applicable, obligations under thisAgreement; or (ii) any material breach of this Agreement of any nature whatsoever by CWI or theOperating Partnership; *provided*that (a) such breach is of a material term or condition of thisAgreement and (b) CWI or the Operating Partnership, as applicable, has not cured such breach within30 days of written notice thereof or, in the case of any breach that cannot be cured within 30 daysby reasonable effort, has not taken all necessary action within a reasonable time period to curesuch breach.“Gross Offering Proceeds.” The aggregate purchase price of Shares sold in anyOffering.“Incentive Plans.” CWI’s 2010 Equity Incentive Plan and CWI’s Directors’ IncentivePlan.“Independent Appraiser.” A qualified appraiser of real estate as determined by theBoard, who has no material current or prior business or personal relationship with the Advisor orthe Directors and who is engaged to a substantial extent in the business of rendering opinionsregarding the value of assets of the type held by CWI. Membership in a nationally recognizedappraisal society such as the American Institute of Real Estate Appraisers or the Society of RealEstate Appraisers shall be conclusive evidence of such qualification (but not of independence).
 
- 4 -

 
“Independent Director.” A Director of CWI who meets the criteria for an IndependentDirector specified in the Articles of Incorporation.“Individual.” Any natural person and those organizations treated as individuals inSection 542(a) of the Code.“Investment.” An investment made by CWI, directly or indirectly, in a Property, Loanor Other Permitted Investment Asset.“Investment Committee.” The committee of individuals responsible for reviewingInvestments on behalf of CWI.“Investment Opportunity.” With respect to the limitations set forth in Section 14hereof, the opportunity to lease, sublease, purchase or to offer to purchase any asset orinvestment originated by, presented to or otherwise identified by the Subadvisor, the Advisor, orany of their respective Affiliates, as applicable, relating to (i) Lodging Facilities or(ii) Lodging Loans. “Investment Opportunity” shall not include any opportunity to purchase or tooffer to purchase any asset or investment if the purchase price of such asset or investment doesnot exceed $4,000,000.00.“Loans.” The notes and other evidences of indebtedness or obligations acquired,originated or entered into, directly or indirectly, by CWI as lender, noteholder, participant, notepurchaser or other capacity, including but not limited to first or subordinate mortgage loans,construction loans, development loans, loan participations, B notes, loans secured by capital stockor any other assets or form of equity interest and any other type of loan or financial arrangement,such as providing or arranging for letters of credit, providing guarantees of obligations to thirdparties, or providing commitments for loans. The term “Loans” shall not include leases which arenot recognized as leases for federal income tax reporting purposes.“Loan Refinancing Fee.” A fee payable to the Advisor in respect of the refinancing ofa loan secured by an Investment.“Lodging Facility or Lodging Facilities.” With respect to an Investment Opportunity(1) a hotel, motel or other mixed-use establishment of which more than one-half (1/2) of itsdwelling units are used on a transient basis or (2) equity interests in an entity that derives atleast 30% of its earnings before interest, taxes, depreciation and amortization, or “EBITDA”, fromowning, operating or managing facilities of the type described in clause (1) of this definition.“Lodging Loans.” With respect to an Investment Opportunity (1) Loans fully orpartially secured by Lodging Facilities or equity interests in entities that own, directly orindirectly, Lodging Facilities; (2) unsecured Loans to entities that derive at least 30% of theirEBITDA from interests in Lodging Facilities, or (3) participations in any of the Loans described inclauses (1) or (2) of this definition.“NASDAQ.” The NASDAQ Stock Market.
 
- 5 -

 
“Offering.” The offering of Shares pursuant to a Prospectus.“Operating Expenses.” All consolidated operating, general and administrative expensespaid or incurred by CWI, as determined under GAAP, except the following (insofar as they wouldotherwise be considered operating, general and administrative expenses under GAAP): (i) interestand discounts and other cost of borrowed money; (ii) taxes (including state, Federal and foreignincome tax, property taxes and assessments, franchise taxes and taxes of any other nature);(iii) expenses of raising capital, includingOrganization and Offering Expenses, printing, engraving, and other expenses, and taxesincurred in connection with the issuance and distribution of CWI’s Shares and Securities;(iv) Acquisition Expenses, real estate commissions on resale of property and other expensesconnected with the acquisition, disposition, origination, ownership and operation of Investments,including the costs of foreclosure, insurance premiums, legal services, brokerage and salescommissions, and the maintenance, repair and improvement of property; (v) Acquisition Fees orDisposition Fees payable to the Advisor or any other party; (vi) distributions paid by theOperating Partnership to the Special General Partner under the agreement of limited partnership ofthe Operating Partnership in respect of gains realized on dispositions of Investments and othercapital transactions; (vii) amounts paid to effect a redemption or repurchase of the specialgeneral partner interest held by the Special General Partner pursuant to the agreement of limitedpartnership of the Operating Partnership; and (viii) non-cash items, such as depreciation,amortization, depletion, and additions to reserves for depreciation, amortization, depletion,losses and bad debts. Notwithstanding anything herein to the contrary, Operating Expenses shallinclude the Asset Management Fee and any Loan Refinancing Fee and, solely for the purposes ofdetermining compliance with the 2%/25% Guidelines, (1) distributions of available cash generated byoperations and investments made by the Operating Partnership to the Special General Partnerpursuant to the agreement of limited partnership of the Operating Partnership, which, for theavoidance of doubt, does not include distributions described in clauses (vi) and (vii) of thisdefinition and (2) Disposition Fees paid in respect of non-real property Investments.“Operating Partnership.” CWI OP, LP, a Delaware limited partnership, through whichCWI owns Investments.“Organization and Offering Expenses.” Those expenses payable by CWI and the OperatingPartnership in connection with the formation, qualification and registration of CWI and inmarketing and distributing Shares, including, but not limited to: (i) the preparation, printing,filing and delivery of any registration statement or Prospectus (including any amendments thereofor supplements thereto) and the preparing and printing of contractual agreements among CWI, theOperating Partnership, the Dealer Manager and the Selected Dealers (including copies thereof);(ii) the preparing and printing of the Articles of Incorporation and Bylaws, other solicitationmaterial and related documents and the filing and/or recording of such documents necessary tocomply with the laws of the State of Maryland for the formation of a corporation and thereafter forthe continued good standing of a corporation; (iii) the qualification or registration of the Sharesunder state securities or “Blue Sky” laws; (iv) any escrow arrangements, including any compensationto an escrow agent; (v) the filing fees payable to the SEC and to the Financial Industry RegulatoryAuthority; (vi) reimbursement for the reasonable and identifiable out-of-pocket expenses of theDealer Manager and the Selected Dealers, including the cost of their counsel; (vii) the fees ofCWI’s counsel and accountants; (viii) all advertising expenses incurred in connection with anOffering, including the cost of all sales literature and the costs related to investor andbroker-dealer sales and information meetings and marketing incentive programs; and (ix) sellingcommissions, dealer manager fees, selected dealer fees, marketing fees, incentive fees and duediligence fees incurred in connection with the sale of the Shares.“Other Permitted Investment Asset.” An asset, other than cash, cash equivalents,short term bonds, auction rate securities and similar short term investments, acquired by CWI forinvestment purposes that is not a Loan or a Property and is consistent with the investmentobjectives and policies of CWI.“Person.” An Individual, corporation, partnership, joint venture, association,company, trust, bank, or other entity, or government or any agency or political subdivision of agovernment.
 
- 6 -

 
“Pre-Existing Holdings.” The (i) the interests in the Lodging Facilities and Loanslisted on Schedule 14.1; and (ii) interests in Lodging Facilities and Loans acquired between thedate hereof and the expiration of the period commencing on the date of the initial filing ofPre-Effective Amendment No. 2 to CWI’s Registration Statement on Form S-11 (No. 333-149899) withrespect to CWI and ending on the date on which CWI has first accepted net offering proceeds frominvestors.“Property or Properties.” CWI’s partial or entire interest in real property(including leasehold interests) and personal or mixed property connected therewith. An Investmentwhich obligates CWI to acquire a Property will be treated as a Property for purposes of thisAgreement.“Property Management Fee.” Subject to CWI’s intention to qualify as a REIT for U.S.federal income tax purposes, a fee for property management services rendered by the Advisor or itsAffiliates in connection with Properties acquired directly or through foreclosure.“Prospectus.” Any prospectus or offering document pursuant to which CWI offers Sharesin a public or private offering, as the same may at any time and from time to time be amended orsupplemented, after the effective date of the registration statement in which it is included.“REIT.” A real estate investment trust, as defined in Sections 856-860 of the Code.“Securities.” Any stock, shares (other than currently outstanding Shares andsubsequently issued Shares), or other evidences of equity or beneficial or other interests, votingtrust certificates, bonds, debentures, notes or other evidences of indebtedness, secured orunsecured, convertible, subordinated or otherwise or in general any instruments commonly known as“securities” or any certificate of interest, shares or participation in temporary or interimcertificates for, receipts for, guarantees of, or warrants, options or rights to subscribe to,purchase or acquire any of the foregoing.“Selected Dealers.” Broker-dealers who are members of the Financial IndustryRegulatory Authority and who have executed an agreement with the Dealer Manager in which theSelected Dealers agree to participate with the Dealer Manager in the Offering.“Shareholders.” Those Persons who, at the time any calculation hereunder is to bemade, are shown as holders of record of Shares on the books and records of CWI or its transferagent.“Shares.” All of the shares of common stock of CWI, $0.001 par value, and any othershares of common stock of CWI.“Special General Partner.” Carey Watermark Holdings, LLC and any permitted transfereeof the special general partnership interest under the agreement of limited partnership of theOperating Partnership.“Sponsor.” W. P. Carey & Co. LLC and any other Person directly or indirectlyinstrumental in organizing, wholly or in part, CWI or any person who will control, manage orparticipate in the management of CWI, and any Affiliate of any such person. Sponsor does notinclude a person whose only relationship to CWI is that of an independent property manager andwhose only compensation is as such. Sponsor also does not include wholly independent third partiessuch as attorneys, accountants and underwriters whose only compensation is for professionalservices.“Subadvisor.” CWA, LLC, an Illinois limited liability company.
 
- 7 -

 
“Subadvisory Agreement.” The Subadvisory Agreement, dated as of the date hereof (asamended from time to time), between the Advisor and the Subadvisor.“Termination Date.” The effective date of any termination of this Agreement.“Total Investment Cost.” With regard to any Investment, an amount equal to the sum ofthe Contract Purchase Price of such Investment plus the Acquisition Fees and Acquisition Expensespaid in connection with such Investment and other fees and costs approved by the IndependentDirectors relating to the initial capitalization of the Investment.2. Appointment. CWI hereby appoints the Advisor to serve as its advisor on the termsand conditions set forth in this Agreement, and the Advisor hereby accepts such appointment.3. Duties of the Advisor. Subject to Section 14, the Advisor undertakes to use itsbest efforts to present to CWI potential investment opportunities and to provide a continuing andsuitable investment program consistent with the investment objectives and policies of CWI asdetermined and adopted from time to time by the Board. In performance of this undertaking, subjectto the supervision of the Board and consistent with the provisions of the Articles of Incorporationand Bylaws of CWI and any Prospectus pursuant to which Shares are offered, the Advisor shall,either directly or by engaging an Affiliate or the Subadvisor:(a) serve as CWI’s investment and financial advisor and provide research and economicand statistical data in connection with CWI’s assets and investment policies;(b) provide the daily management of CWI and perform and supervise the variousadministrative functions reasonably necessary for the management of CWI, the OperatingPartnership and the Investments;(c) investigate, select, and, on behalf of CWI, engage, oversee and conduct businesswith such Persons as the Advisor deems necessary to the proper performance of itsobligations hereunder, including but not limited to consultants, accountants,correspondents, lenders, technical advisors, attorneys, brokers, underwriters, corporatefiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers,insurance agents, banks, builders, developers, property owners, mortgagors, franchisors,independent property operators and any and all agents for any of the foregoing, includingAffiliates of the Advisor, and Persons acting in any other capacity deemed by the Advisornecessary or desirable for the performance of any of the foregoing services, including butnot limited to entering into contracts in the name of CWI with any of the foregoing;(d) consult with Directors of CWI and assist the Board in the formulation andimplementation of CWI’s policies, and furnish the Board with such information, advice andrecommendations as they may request or as otherwise may be necessary to enable them todischarge their fiduciary duties with respect to matters coming before the Board;(e) subject to the provisions of Sections 3(g) and 4 hereof: (i) locate, analyze andselect potential Investments and deliver to the Investment Committee, as applicable, suchinformation as it may request or as otherwise may be necessary to enable the InvestmentCommittee to evaluate potential Investments; (ii) structure and negotiate the terms andconditions of transactions pursuant to which Investments will be made, purchased or acquiredby CWI;(iii) make Investments on behalf of CWI; (iv) arrange for financing and refinancing of,make other changes in the asset or capital structure of, dispose of, reinvest the proceedsfrom the sale of, or otherwise deal with the Investments; (v) enter into service contractsfor Properties and, to the extent necessary, perform all other operational functions for themaintenance and administration of such; (vi) oversee such non-affiliated property managersand other non-affiliated Persons who perform services for CWI; and (vii) undertakeaccounting and other record-keeping functions at the Investment level;
 
- 8 -

 
(f) provide the Board with periodic reports regarding prospective Investments and withperiodic reports, no less than quarterly, of new Investments made during the prior fiscalquarter;(g) obtain the prior approval of the Board (including a majority of the IndependentDirectors) for any and all investments in Properties which do not meet all of therequirements set forth in Section 4(b) hereof;(h) negotiate on behalf of CWI with banks or lenders for loans to be made to CWI, andnegotiate on behalf of CWI with investment banking firms and broker-dealers or negotiateprivate sales of Shares and Securities or obtain loans for CWI, but in no event in such away so that the Advisor shall be acting as broker-dealer or underwriter; and *provided*,*further*, that any fees and costs payable to third parties incurred by the Advisor inconnection with the foregoing shall be the responsibility of CWI;(i) obtain reports (which may be prepared by the Advisor or its Affiliates), whereappropriate, concerning the value of Investments or contemplated Investments;(j) obtain for, or provide to, CWI such services as may be required in acquiring,managing and disposing of Investments, including, but not limited to: (i) the negotiation,making and servicing of Investments; (ii) the disbursement and collection of Company monies;(iii) the payment of debts of and fulfillment of the obligations of CWI; and (iv) thehandling, prosecuting and settling of any claims of or against CWI, including, but notlimited to, foreclosing and otherwise enforcing mortgages and other liens securing Loans;(k) from time to time, or at any time reasonably requested by the Board, make reportsto the Board of its performance of services to CWI under this Agreement;(l) communicate on behalf of CWI with Shareholders as required to satisfy the reportingand other requirements of any governmental bodies or agencies to Shareholders and thirdparties and otherwise as requested by CWI;(m) provide or arrange for administrative services and items, legal and other services,office space, office furnishings, personnel and other overhead items necessary andincidental to CWI’s business and operations;(n) provide CWI with such accounting data and any other information requested by CWIconcerning the investment activities of CWI as shall be required to prepare and to file allperiodic financial reports and returns required to be filed with the Securities and ExchangeCommission and any other regulatory agency, including annual financial statements;(o) maintain the books and records of CWI;(p) supervise the performance of such ministerial and administrative functions as maybe necessary in connection with the daily operations of the Investments;
 
- 9 -

 
(q) provide CWI with all necessary cash management services;(r) provide asset management services including, without limitation, oversight andstrategic guidance to independent property operators that handle day-to-day operations ofCWI’s Properties;(s) do all things necessary to assure its ability to render the services described inthis Agreement;(t) perform such other services as may be required from time to time for management andother activities relating to the assets of CWI as the Advisor shall deem advisable under theparticular circumstances;(u) arrange to obtain on behalf of CWI as requested by the Board, and deliver to ormaintain on behalf of CWI copies of, all appraisals obtained in connection with Investments;(v) if a transaction, proposed transaction or other matter requires approval by theBoard or by the Independent Directors, deliver to the Board or the Independent Directors, asthe case may be, all documentation reasonably requested by them to properly evaluate suchtransaction, proposed transaction or other matter; and(w) on an annual basis, no later than 90 days prior to the end of each term of thisAgreement, provide the Independent Directors with a report on (1) the Advisor’s performanceduring the past year, (2) the compensation paid to the Advisor during such year and (3) anyproposed changes to the compensation to be paid to the Advisor during the upcoming year ifthe Agreement is renewed. The Advisor’s report shall address, among other things, (a) thosematters identified in CWI’s organizational documents as matters which the IndependentDirectors must review each year with respect to the Advisor’s performance and compensation;(b) whether any Triggering Event occurred with respect to an Investment made during the pastyear; and (c) the “dead deal” costs incurred by CWI during the past year. In addition, theIndependent Directors may request that the Advisor refund certain of the “dead deal” costsincurred by CWI if, in light of the circumstances under which such costs were incurred, theIndependent Directors determine that CWI should not bear such costs.4. Authority of Advisor.(a) Pursuant to the terms of this Agreement (and subject to the restrictions includedin Paragraphs (b), (c) and (d) of this Section 4 and in Section 7 hereof), and subject tothe continuing and exclusive authority of the Board over the management of CWI, the Boardhereby delegates to the Advisor the authority to: (1) locate, analyze and select Investmentopportunities; (2) structure and negotiate the terms and conditions of transactions pursuantto which Investments will be made, purchased or acquired for CWI; (3) make Investments onbehalf of CWI in compliance with the investment objectives and policies of CWI; (4) arrangefor financing or refinancing, or make changes in the asset or capital structure of, anddispose of, reinvest the proceeds from the sale of, or otherwise deal with, Investments;(5) enter into the Subadvisory Agreement; (6) enter into service contracts, contracts withindependent property operators and franchisors and perform other property level operations;(7) oversee such non-affiliated property managers and other non-affiliated Persons who perform services for CWI; and (8) undertake accounting and otherrecord-keeping functions at the Investment level.
 
- 10 -

 
(b) The consideration paid for an Investment acquired by CWI shall ordinarily be basedon the fair market value thereof. Consistent with the foregoing provision, the Advisor may,without further approval by the Board (except with respect to transactions subject toparagraphs (c) and (d) of this Section 4) invest on behalf of CWI in an Investment so longas, in the Advisor’s good faith judgment, (i) the Total Investment Cost of such Investmentdoes not exceed the fair market value thereof, and in the case of an Investment that is aProperty, shall in no event exceed the Appraised Value of such Property and (ii) theInvestment, in conjunction with CWI’s other Investments and proposed Investments, at thetime CWI is committed to purchase or originate the Investment, is reasonably expected tofulfill CWI’s investment objectives and policies as established by the Board and then ineffect. For purposes of the foregoing, the Total Investment Cost shall be measured at thedate the Investment is made and shall exclude future commitments to fund improvements.Investments not meeting the foregoing criteria must be approved in advance by the Board.(c) Notwithstanding anything to the contrary contained in this Agreement, the Advisorshall not cause CWI to make Investments that do not comply with Article IX (InvestmentObjectives and Limitations) of the Articles of Incorporation and related sections of theBylaws.(d) The prior approval of the Board, including a majority of the Independent Directorsand a majority of the Directors not interested in the transaction, will be required for:(i) Investments made through co-investment or joint venture arrangements with the Sponsor,the Advisor, one or more Directors or any of their Affiliates; (ii) Investments which arenot contemplated by the terms of a Prospectus; (iii) transactions that present issues whichinvolve conflicts of interest for the Advisor, its members or Affiliates (other thanconflicts involving the payment of fees or the reimbursement of expenses); (iv) the purchaseor lease of assets from or to any Director, any Sponsor, the Advisor, the member of theAdvisor or any of their Affiliates; (v) any purchase or sale of an Investment from or to theAdvisor, its members, one or more Directors or their Affiliates; and (vi) the retention ofany Affiliate of the Advisor to provide services to CWI not expressly contemplated by thisAgreement and the terms of such services by such Affiliate. In addition, the Advisor shallcomply with any further approval requirements set forth in the Bylaws.(e) The Board may, at any time upon the giving of notice to the Advisor, modify orrevoke the authority set forth in this Section 4. If and to the extent the Board somodifies or revokes the authority contained herein, the Advisor shall henceforth comply withsuch modification or revocation, *provided however*, that such modification or revocationshall be effective upon receipt by the Advisor and shall not be applicable to investmenttransactions to which the Advisor has committed CWI prior to the date of receipt by theAdvisor of such notification.5. Bank Accounts. The Advisor may establish and maintain one or more bank accounts inits own name for the account of CWI or in the name of CWI and may collect and deposit into any suchaccount or accounts, and disburse from any such account or accounts, any money on behalf of CWI,*provided*that no funds shall be commingled with the funds of the Advisor; and the Advisor shallfrom time to time render appropriate accountings of such collections and payments to the Board andto the auditors of CWI.6. Records; Access. The Advisor shall maintain appropriate records of all itsactivities hereunder and make such records available for inspection by the Board and by counsel,auditors and authorized agents of CWI, at any time or from time to time during normal businesshours. The Advisor shall at all reasonable times have access to the books and records of CWI.
 
- 11 -

 
7. Limitations on Activities. Anything else in this Agreement to the contrarynotwithstanding, the Advisor shall refrain from taking any action which, in its sole judgment madein good faith, would (i) adversely affect the status of CWI as a REIT or of the OperatingPartnership as a partnership for Federal income tax purposes, (ii) subject CWI or the OperatingPartnership to regulation under the Investment Company Act of 1940, as amended, or (iii) wouldviolate any law, rule, regulation or statement of policy of any governmental body or agency havingjurisdiction over CWI, its Shares or its Securities, or otherwise not be permitted by the Articlesof Incorporation or Bylaws or agreement of limited partnership of the Operating Partnership, exceptif such action shall be ordered by the Board, in which case the Advisor shall notify promptly theBoard of the Advisor’s judgment of the potential impact of such action and shall refrain fromtaking such action until it receives further clarification or instructions from the Board. In suchevent the Advisor shall have no liability for acting in accordance with the specific instructionsof the Board so given.(a) Notwithstanding the foregoing, the Company shall indemnify and hold harmless thethe Advisor, its shareholders, members, directors, officers and employees, and partners,shareholders, directors and officers of the Advisor’s shareholders and Affiliates of any ofthem for any loss or liability suffered by them, and the Advisor, its shareholders, members,directors, officers and employees, and partners, shareholders, directors and officers of theAdvisor’s shareholders and Affiliates of any of them, shall not be liable to CWI, theOperating Partnership or to the Directors or Shareholders for any act or omission by theAdvisor, its shareholders, members, directors, officers and employees, or partners,shareholders, directors or officers of the Advisor’s shareholders and Affiliates of any ofthem, if in each case the following conditions are met:(i) The Advisor, its shareholders, members, directors, officers and employees,and partners, shareholders, directors and officers of the Advisor’s shareholders andAffiliates of any of them have determined, in good faith, that the course of conductwhich caused the loss or liability was in the best interests of CWI;(ii) The Advisor, its shareholders, members, directors, officers and employees,and partners, shareholders, directors and officers of the Advisor’s shareholders andAffiliates of any of them were acting on behalf of or performing services for CWI;and(iii) Such liability or loss was not the result of negligence or misconduct bythe Advisor, its shareholders, members, directors, officers and employees, andpartners, shareholders, directors and officers of the Advisor’s shareholders orAffiliates of any of them.(b) Notwithstanding the foregoing, the Advisor and its Affiliates shall not beindemnified by CWI or the Operating Partnership for any losses, liabilities or expensesarising from or out of the alleged violation of federal or state securities laws unless oneor more of the following conditions are met:(i) There has been a successful adjudication on the merits of each countinvolving alleged securities law violations as to the particular indemnitee;(ii) Such claims have been dismissed with prejudice on the merits by a court ofcompetent jurisdiction as to the particular indemnitee; or
 
- 12 -

 
(iii) A court of competent jurisdiction approves a settlement of the claimsagainst a particular indemnitee and finds that indemnification of the settlement andthe related costs should be made, and the court considering the request forindemnification has been advised of the position of the Securities and ExchangeCommission and of the published position of any state securities regulatoryauthority in which securities of CWI were offered or sold as to indemnification forviolation of securities laws.(c) CWI and the Operating Partnership shall advance funds to the Advisor or itsAffiliates for legal expenses and other costs incurred as a result of any legal action forwhich indemnification is being sought only if all of the following conditions are satisfied:(i) The legal action relates to acts or omissions with respect to theperformance of duties or services on behalf of CWI;(ii) The Advisor or the Affiliate has provided CWI or the Operating Partnershipwith a written affirmation of his, her or its good faith belief that the standard ofconduct necessary for indemnification has been met;(iii) The legal action is initiated by a third party who is not a Shareholderor the legal action is initiated by a Shareholder acting in his or her capacity assuch and a court of competent jurisdiction specifically approves such advancement;and(iv) The Advisor or the Affiliate undertakes to repay the advanced funds toCWI, together with the applicable legal rate of interest thereon, in cases in whichsuch Advisor or Affiliate is found not to be entitled to indemnification.(d) Notwithstanding the foregoing, the Advisor shall not be entitled to indemnificationor be held harmless pursuant to this Section 7 for any activity which the Advisor shall berequired to indemnify or hold harmless CWI pursuant to Section 23 hereof.(e) Any amounts paid pursuant to this Section 7 shall be recoverable or paid only outthe net assets of CWI and not from Shareholders.8. Relationship with Directors. There shall be no limitation on any shareholder,member, director, officer, or employee of the Advisor or its Affiliates serving as a Director or anofficer of CWI, except that no employee of the Advisor or its Affiliates who is also a Director orofficer of CWI shall receive any compensation from CWI for serving as a Director or officer otherthan for (a) reasonable reimbursement for travel and related expenses incurred in attendingmeetings of the Board and (b) awards made pursuant to the Incentive Plans; for the avoidance ofdoubt, the limitations of this Section 8 shall not apply to any compensation paid by the Advisor orany Affiliate for which CWI reimbursed the Advisor or Affiliate in accordance with Section 10hereof. However, an employee of the Advisor who is also an officer of CWI is eligible to receiverestricted stock units as provided under the Incentive Plans.9. Fees.(a) Asset Management Fee.(i) The Operating Partnership shall pay to the Advisor as compensation for theadvisory services rendered hereunder an asset management fee (the “AssetManagement Fee”) in an amount equal to 0.50% of the aggregate Average MarketValue of Investments. The Asset Management Fee with respect to an Investment willbe calculated monthly, beginning with the month in which CWI first makes theInvestment, and shall be pro rated for the number of days during a month that CWIowns the Investment. The aggregate Asset Management Fees calculated with respect toeach month shall be payable on the first business day following such month.
 
- 13 -

 
(b) Acquisition Fee.(i) The Advisor may receive as compensation for services rendered in connectionwith the investigation, selection, acquisition or origination (by purchase,investment or exchange) of any Investment, an acquisition fee (an “AcquisitionFee”) payable by the Operating Partnership. The Acquisition Fee payable to theAdvisor in respect of an Investment shall be payable at the time such Investment isacquired in an amount equal to 2.50% of the Total Investment Cost.(ii) The total amount of all Acquisition Fees, whether payable to the Advisoror a third party, and Acquisition Expenses payable by the Operating Partnership maynot exceed 6% of the aggregate Contract Purchase Price of all Investments, measuredfor the period beginning with the initial acquisition of an Investment and ending(A) on December 31 of the year in which CWI has invested 90% of the net proceeds ofits initial Offering (excluding the net proceeds from the sale of Shares pursuant toCWI’s dividend reinvestment program), and (B) on each December 31 thereafter, unlessa majority of the Directors (including a majority of the Independent Directors) nototherwise interested in any transaction approves the excess as being commerciallycompetitive, fair and reasonable to CWI.(c) Property Management Fee; Loan Refinancing Fee.(i) No Property Management Fee shall be paid unless approved by a majority ofthe Independent Directors.(ii) The Advisor shall receive as compensation for services rendered inconnection with a qualifying refinancing of a Loan secured by a Property (the“Refinanced Loan”), a loan refinancing fee (a “Loan RefinancingFee”) payable by the Operating Partnership. A refinancing will qualify for aLoan Refinancing Fee only if (A) the maturity date of the Refinanced Loan is lessthan one year from the date of the refinancing and the new loan has a term of atleast five years, (B) in the judgment of the Independent Directors, the terms of thenew loan represent an improvement over the Refinanced Loan, or (C) the new loan isapproved by the Independent Directors as being in the best interest of CWI. TheLoan Refinancing Fee payable to the Advisor in respect of a Refinanced Loan shall bepayable at upon the funding of the related mortgage loan or as soon thereafter as isreasonably practicable in an amount up to 1.00% of the principal amount of theRefinanced Loan.(d) Disposition Fee.(i) If the Advisor or an Affiliate provides a substantial amount of services inthe sale of an Investment, the Advisor or such Affiliate shall be entitled toreceive a disposition fee (the “Disposition Fee”) at the time of suchdisposition, in an amount equal to the lesser of (1) 50% of the Competitive RealEstate Commission (if applicable) and (2) 1.5% of the Contract Sales Price of theInvestment.
 
- 14 -

 
(ii) The total real estate commissions and Disposition Fees CWI pays to allPersons shall not exceed an amount equal to the lesser of: (1) 6% of the ContractSales Price of the Investment and (2) the Competitive Real Estate Commission. TheAdvisor shall present to the Independent Directors such information as they mayreasonably request to review the level of services provided by the Advisor inconnection with a disposition and the basis for the calculation of the amount of theDisposition Fees on a quarterly basis. No payment of Disposition Fees shall be madeprior to review and approval of such information by the Independent Directors.(e) Loans From Affiliates. CWI shall not borrow funds from the Advisor or itsAffiliates unless (A) the transaction is approved by a majority of the Independent Directorsand a majority of the Directors who are not interested in the transaction as being fair,competitive and commercially reasonable, (B) the interest and other financing charges orfees received by the Advisor or its Affiliates do not exceed the amount which would becharged by non-affiliated lending institutions and (C) the terms are not less favorable thanthose prevailing for comparable arm’s-length loans for the same purpose. CWI will notborrow on a long-term basis from the Advisor or its Affiliates unless it is to provide thedebt portion of a particular investment and CWI is unable to obtain a permanent loan at thattime or in the judgment of the Board, it is not in CWI’s best interest to obtain a permanentloan at the interest rates then prevailing and the Board has reason to believe that CWI willbe able to obtain a permanent loan on or prior to the end of the loan term provided by theAdvisor or its Affiliates.(f) Changes To Fee Structure. In the event the Shares are listed on a nationalsecurities exchange or are included for quotation on the NASDAQ, CWI and the Advisor shallnegotiate in good faith to establish a fee structure appropriate for an entity with aperpetual life. A majority of the Independent Directors must approve the new fee structurenegotiated with the Advisor. In negotiating a new fee structure, the Independent Directorsmay consider any of the factors they deem relevant, including but not limited to: (a) thesize of the advisory fee in relation to the size, composition and profitability of CWI’sportfolio; (b) the success of the Advisor in generating opportunities that meet theinvestment objectives of CWI; (c) the rates charged to other REITs and to investors otherthan REITs by advisors performing similar services; (d) additional revenues realized by theAdvisor and its Affiliates through their relationship with CWI, including loanadministration, underwriting or broker commissions, servicing, engineering, inspection andother fees, whether paid by CWI or by others with whom CWI does business; (e) the qualityand extent of service and advice furnished by the Advisor; (f) the performance of theinvestment portfolio of CWI, including income, conservation or appreciation of capital,frequency of problem investments and competence in dealing with distress situations; and(g) the quality of the portfolio of CWI in relationship to the investments generated by theAdvisor for the account of other clients. The Independent Directors shall not approve anynew fee structure that is in their judgment more favorable (taken as a whole) to the Advisorthan the current fee structure.(g) Payment. Compensation payable to the Advisor pursuant to this Section 9shall be paid in cash; *provided*, *however*, that any fee payable pursuant to this Section 9may be paid, at the option of the Advisor, in the form of: (i) cash, (ii) restricted stockof CWI, or (iii) a combination of cash and restricted stock. The Advisor shall notify CWIin writing annually ofthe form in which the fee shall be paid. Such notice shall be provided no later thanJanuary 15 of each year. If no such notice is provided, the fee shall be paid in cash. Forpurposes of the payment of compensation to the Advisor in the form of stock, the value ofeach share of restricted stock shall be: (i) the Net Asset Value per Share as determinedbased on the most recent appraisal of CWI’s assets performed by an Independent Appraiser, or(ii) if an appraisal has not yet been performed, $10.00 per share. If shares are beingoffered to the public at the time a fee is paid with stock, the value shall be the price ofthe stock without commissions. The Net Asset Value determined on the basis of suchappraisal may be adjusted on a quarterly or other basis by the Board to account forsignificant capital transactions. Stock issued by CWI to the Advisor in payment of feeshereunder shall be governed by the terms set forth in Schedule A hereto, or such other termsas the Advisor and CWI may from time to time agree.
 
- 15 -

 
10. Expenses.(a) Subject to the limitations set forth in Section 9(b), to the extent applicable, inaddition to the compensation paid to the Advisor pursuant to Section 9 hereof, the OperatingPartnership shall pay directly or reimburse the Advisor for the following expenses:(i) Organization and Offering Expenses; *provided however*, that within 60 daysafter the end of the quarter in which any Offering terminates, the Advisor shallreimburse the Operating Partnership for any Organization and Offering Expensereimbursements received by the Advisor pursuant to this Section 10 to the extentthat such reimbursements, when added to the balance of the Organization and OfferingExpenses (excluding selling commissions and dealer manager fees) paid directly bythe Operating Partnership, exceed two percent of the Gross Offering Proceeds;*provided further*, that the Advisor shall be responsible for the payment of allOrganization and Offering Expenses (excluding such commissions and such fees andexpense reimbursements) in excess of two percent of the Gross Offering Proceeds;(ii) all Acquisition Expenses;(iii) to the extent not included in Acquisition Expenses, all expenses ofwhatever nature reasonably incurred and directly connected with the proposedacquisition of any Investment that does not result in the actual acquisition of theInvestment, including, without limitation, personnel costs;(iv) expenses other than Acquisition Expenses incurred in connection with theinvestment of the funds of CWI, including, without limitation, business developmentexpenses, costs of retaining industry or economic consultants and finder’s fees andsimilar payments, to the extent not paid by the seller of the Investment or anotherthird party, regardless of whether such expenses were incurred in transactions wherea fee is not payable to the Advisor;(v) interest and other costs for borrowed money, including discounts, pointsand other similar fees;(vi) taxes and assessments on income of CWI, to the extent paid or advanced bythe Advisor, or on Investments and taxes as an expense of doing business;(vii) costs associated with insurance required in connection with the businessof CWI or by the Directors;(viii) expenses of managing and operating Investments owned by CWI, whetherpayable to an Affiliate of the Advisor or a non-affiliated Person;(ix) fees and expenses of legal counsel for CWI;
 
- 16 -

 
(x) fees and expenses of auditors and accountants for CWI;(xi) all expenses in connection with payments to the Directors and meetings ofthe Directors and Shareholders;(xii) all expenses in connection with payments to the non-director members ofthe Investment Committee for CWI’s Investments and meetings of the InvestmentCommittee;(xiii) expenses associated with listing the Shares and Securities on asecurities exchange or the NASDAQ if requested by the Board;(xiv) expenses connected with payments of Distributions in cash or otherwisemade or caused to be made by the Board to the Shareholders;(xv) expenses of organizing, revising, amending, converting, modifying, orterminating CWI, the Operating Partnership or their respective governinginstruments;(xvi) expenses of maintaining communications with Shareholders, including thecost of preparation, printing and mailing annual reports and other Shareholderreports, proxy statements and other reports required by governmental entities; and(xvii) all other Operating Expenses and other expenses the Advisor incurs inconnection with providing services to CWI, including reimbursement to the Advisor orits Affiliates for the costs of rent, goods, materials and personnel incurred bythem based upon the compensation of the Persons involved and an appropriate share ofoverhead allocable to those Persons as reasonably determined by the Advisor on abasis approved annually by the Board (including a majority of the IndependentDirectors). No reimbursement shall be made for the cost of time spent by personnelon activities for which the Advisor receives a separate fee.(b) Expenses incurred by the Advisor on behalf of CWI and payable pursuant to thisSection 10 shall be reimbursed quarterly to the Advisor within 60 days after the end of eachquarter, subject to the provisions of Section 13 hereof. The Advisor shall prepare astatement documenting the Operating Expenses of CWI within 45 days after the end of eachquarter.11. Other Services. Should the Board request that the Advisor or any Affiliate,shareholder or employee thereof render services for CWI other than as set forth in Section 3hereof, such services shall be separately compensated and shall not be deemed to be servicespursuant to the terms of this Agreement.12. Fidelity Bond. The Advisor shall maintain a fidelity bond for the benefit of CWIwhich bond shall insure CWI from losses of up to $5,000,000 and shall be of the type customarilypurchased by entities performing services similar to those provided to CWI by the Advisor.
 
- 17 -

 
13. Limitation on Expenses.(a) If Operating Expenses during the 12-month period ending on the last day of anyfiscal quarter of CWI exceed the greater of (i) two percent of the Average Invested Assetsduring the same 12-month period or (ii) 25% of the Adjusted Net Income of CWI over the same12-month period (the “2%/25% Guidelines”), then subject to paragraph (b) of thisSection 13, such excess amount shall be the sole responsibility of the Advisor and neitherthe Operating Partnership nor CWI shall be liable for payment therefor. CWI may defer thepayment or distribution to the Advisor and the Special General Partner of fees, expenses anddistributions that would, if paid or distributed, cause Operating Expenses during such12-month period to exceed the foregoing limitations; *provided, however*, that in determiningwhich items shall be paid and which may be deferred, priority will be given to the paymentof distributions to the Special General Partner over the payment to the Advisor of amountsdue under this Agreement.(b) Notwithstanding the foregoing, to the extent that the Advisor becomes responsiblefor any excess amount as provided in paragraph (a), if a majority of the IndependentDirectors finds such excess amount or a portion thereof justified based on such unusual andnon-recurring factors as they deem sufficient, the Operating Partnership shall reimburse theAdvisor in future quarters for the full amount of such excess, or any portion thereof, butonly to the extent such reimbursement would not cause the Operating Expenses to exceed the2%/25% Guidelines in the 12-month period ending on the last day of such quarter. In noevent shall the Operating Expenses payable by the Operating Partnership in any 12-monthperiod ending at the end of a fiscal quarter exceed the 2%/25% Guidelines.(c) Within 60 days after the end of any 12-month period referred to in paragraph (a),the Advisor shall reimburse CWI for any amounts expended by CWI in such 12-month period thatexceeds the limitations provided in paragraph (a) unless the Independent Directors determinethat such excess expenses are justified, as provided in paragraph (b), and provided theOperating Expenses for such later quarter would not thereby exceed the 2%/25% Guidelines.(d) All computations made under paragraphs (a) and (b) of this Section 13 shall bedetermined in accordance with generally accepted accounting principles applied on aconsistent basis.(e) If the Special General Partner receives distributions pursuant to the agreement oflimited partnership of the Operating Partnership in respect of realized gains on thedisposition of an Investment, Adjusted Net Income, for purposes of calculating the OperatingExpenses, shall exclude the gain from the disposition of such Investment.14. Other Activities of the Advisor.(a) During the First Offer Period, the Advisor and its Affiliates shall not, directlyor indirectly, acquire, lease, own or manage any Lodging Facility or Lodging Loan other than(i) non-Controlling interests in Persons that own one or more Properties or Other PermittedInvestment Assets; (ii) Pre-Existing Holdings; and (iii) Investment Opportunities presentedby the Advisor or its Affiliates which are rejected by the Investment Committee.(b) The Advisor shall not consent to any material amendment of Section 4(a) of theSubadvisory Agreement without the prior approval of a majority of the Independent Directors.
 
- 18 -

 
(c) Subject to the limitations set forth in paragraph (a) of this Section 14, nothingherein contained shall prevent the Advisor from engaging in other activities, including therendering of advice to other investors (including other REITs) and the management of otherprograms advised, sponsored or organized by the Advisor or its Affiliates; nor shall thisAgreement limit or restrict the right of the Advisor or any of its Affiliates or of anydirector, member, officer, employee or shareholder of the Advisor or its Affiliates toengage in any other business or to render services of any kind to any other partnership,corporation, firm, individual, trust or association. The Advisor may, with respect to anyinvestment in which CWI is a participant, also render advice and service to each otherparticipant therein. Without limiting the generality of the foregoing, CWI acknowledgesthat (i) affiliates of W. P. Carey & Co. LLC provide or will provide services to theCPA® REIT funds, (ii) W. P. Carey & Co. LLC owns investments in lodgingproperties which are not being contributed to CWI which it will continue to own and manageand (iii) the Advisor and its Affiliates may provide services to other programs sponsored ormanaged by W. P. Carey & Co. LLC whether now in existence or formed hereafter, and (iv) theAdvisor and its Affiliates may make future investments for their own account. The Advisorshall be responsible for promptly reporting to the Board the existence of any actual orpotential conflict of interest that arises that may affect its performance of its dutiesunder this Agreement. If the Sponsor, Advisor, Director or Affiliates thereof has or havesponsored other investment programs with similar investment objectives which have investmentfunds available at the same time as CWI, it shall be the duty of the Advisor to adopt areasonable method by which properties are to be allocated to the competing investmententities and to use its best efforts to apply such method fairly to CWI.(d) The Advisor shall be required to use its best efforts to present a continuing andsuitable investment program to CWI that is consistent with the investment procedures,objectives and policies of CWI, but subject to the last sentence of the preceding paragraph,neither the Advisor nor any Affiliate of the Advisor shall be obligated generally to presentany particular investment opportunity to CWI even if the opportunity is of character which,if presented to CWI, could be taken by CWI.(e) If the Advisor or its Affiliates is presented with a potential investment whichmight be made by CWI and by another investment entity which the Advisor or its Affiliatesadvises or manages, the Advisor shall consider, among other things, the investment portfolioof each entity, cash flow of each entity and from the asset, the effect of the acquisitionon the diversification of each entity’s portfolio, the estimated income tax effects of thepurchase on each entity, the policies of each entity relating to leverage, the funds of eachentity available for investment, the amount of equity required to make the investment, thelength of time such funds have been available for investment and the manner in which thepotential investment can be structured by each entity, and whether a particular entity hasbeen formed specifically for the purpose of making particular types of investments (in whichcase it will generally receive preference in the allocation of those types of investments).15. Relationship of Advisor and CWI. CWI and the Advisor agree that they have notcreated and do not intend to create by this Agreement a joint venture or partnership relationshipbetween them and nothing in this Agreement shall be construed to make them partners or jointventurers or impose any liability as partners or joint venturers on either of them.16. Term; Termination of Agreement. This Agreement, as amended and restated, shallcontinue in force until September 30, 2011 or until 60 days after the date on which the IndependentDirectors shall have notified the Advisor of their determination either to renew thisAgreement for an additional one-year period or terminate this Agreement, as required by theArticles of Incorporation.
 
- 19 -

 
17. Termination by CWI. At the sole option of the Board (including a majority of theIndependent Directors), this Agreement may be terminated immediately by written notice oftermination from CWI to the Advisor upon the occurrence of events which would constitute Cause orif any of the following events occur:(a) If the Advisor shall be adjudged bankrupt or insolvent by a court of competentjurisdiction, or an order shall be made by a court of competent jurisdiction for theappointment of a receiver, liquidator, or trustee of the Advisor, for all or substantiallyall of its property by reason of the foregoing, or if a court of competent jurisdictionapproves any petition filed against the Advisor for reorganization, and such adjudication ororder shall remain in force or unstayed for a period of 30 days; or(b) If the Advisor shall institute proceedings for voluntary bankruptcy or shall file apetition seeking reorganization under the federal bankruptcy laws, or for relief under anylaw for relief of debtors, or shall consent to the appointment of a receiver for itself orfor all or substantially all of its property, or shall make a general assignment for thebenefit of its creditors, or shall admit in writing its inability to pay its debts,generally, as they become due.Any notice of termination under Section 16 or 17 hereof shall be effective on the datespecified in such notice, which may be the day on which such notice is given or any datethereafter. The Advisor agrees that if any of the events specified in this Section 17(a) or (b)shall occur, it shall give written notice thereof to the Board within 15 days after the occurrenceof such event.18. Termination by Either Party. This Agreement may be terminated immediately withoutpenalty (but subject to the requirements of Section 20 hereof) by the Advisor by written notice oftermination to CWI upon the occurrence of events which would constitute Good Reason or by CWIwithout cause or penalty (but subject to the requirements of Section 20 hereof) by action of theDirectors, a majority of the Independent Directors or by action of a majority of the Shareholders,in each case upon 60 days’ written notice.19. Assignment Prohibition. This Agreement may not be assigned by the Advisorwithout the prior written consent of CWI except in case of an assignment to a corporation,partnership, association, trust or organization which takes over the assets and carries on theaffairs of the Advisor, *provided*: (i) that at the time of such assignment, such successororganization shall be owned substantially by an entity directly or indirectly controlled by theAdvisor and only if such entity has a net worth of at least $5,000,000, and (ii) that the board ofdirectors of the Advisor shall deliver to the Board a statement in writing indicating the ownershipstructure and net worth of the successor organization and a certification from the new Advisor asto its net worth. Such an assignment shall bind the assignees hereunder in the same manner as theAdvisor is bound by this Agreement. The Advisor may assign any rights to receive fees or otherpayments under this Agreement without obtaining the approval of the Board. This Agreement may notbe assigned by CWI or the Operating Partnership without the prior written consent of the Advisorexcept in case of an assignment to a corporation or other organization which is a successor to CWIor the Operating Partnership, in which case such successor organization shall be bound hereunderand by the terms of said assignment in the same manner as CWI or the Operating Partnership is boundby this Agreement.20. Payments to and Duties of Advisor Upon Termination.(a) After the Termination Date, the Advisor shall not be entitled to compensation forfurther services hereunder but shall be entitled to receive from CWI the following:(i) all unpaid reimbursements of Organization and Offering Expenses and ofOperating Expenses payable to the Advisor;(ii) all earned but unpaid Asset Management Fees payable to the Advisor priorto the Termination Date;
 
- 20 -

 
(iii) all earned but unpaid Acquisition Fees payable to the Advisor relating tothe acquisition of any Property prior to the Termination Date;(iv) all earned but unpaid Disposition Fees payable to the Advisor relating tothe sale of any Investment prior to the Termination Date; and(v) all earned but unpaid Property Management Fees and Loan Refinancing Fees,if any, payable to the Advisor or its Affiliates relating to the management of anyproperty prior to the termination of this Agreement.(b) Notwithstanding the foregoing, if this Agreement is terminated by CWI for Cause, orby the Advisor for other than Good Reason, the Advisor will not be entitled to receive thesums in this Section 20(a) (ii) through (v).(c) Any and all amounts payable to the Advisor pursuant to Section 20(a) hereof that,irrespective of the termination, were payable on a current basis prior to the TerminationDate either because they were not subordinated or all conditions to their payment had beensatisfied, shall be paid within 90 days after the Termination Date. All other amounts shallbe paid in a manner determined by the Board, but in no event on terms less favorable to theAdvisor than those represented by a note (i) maturing upon the liquidation of CWI or theOperating Partnership or three years from the Termination Date, whichever is earlier,(ii) with no less than twelve equal quarterly installments and (iii) bearing a fair,competitive and commercially reasonable interest rate (the “Note”). The Note, ifany, may be prepaid by the Operating Partnership at any time prior to maturity with accruedinterest to the date of payment but without premium or penalty. Notwithstanding theforegoing, any amounts that relate to Investments (A) shall be an amount which providescompensation to the Advisor only for that portion of the holding period for the respectiveInvestments during which the Advisor provided services to CWI, (B) shall not be due andpayable until the Property, Loan or Other Permitted Investment Asset to which such amountrelates is sold or refinanced, and (C) shall not bear interest until the Property, Loan orOther Permitted Investment Asset to which such amount relates is sold or refinanced. Aportion of the amount shall be paid as each Investment owned by CWI on the Termination Dateis sold. The portion of such amount payable upon each such sale shall be equal to (X) suchamount multiplied by (Y) the percentage calculated by dividing the fair value (at theTermination Date) of the Investment sold by CWI divided by the total fair value (at theTermination Date) of all Investments owned by CWI on the Termination Date.(d) The Advisor shall promptly upon termination:(i) pay over to the Operating Partnership all money collected and held for theaccount of CWI pursuant to this Agreement, after deducting any accrued compensationand reimbursement for its expenses to which it is then entitled;(ii) deliver to the Board a full accounting, including a statement showing allpayments collected by it and a statement of all money held by it, covering theperiod following the date of the last accounting furnished to the Board;(iii) deliver to the Board all assets, including the Properties, Loans, andOther Permitted Investment Assets, and documents of CWI then in the custody of theAdvisor; and(iv) cooperate with CWI to provide an orderly management transition.
 
- 21 -

 
21. Non-Solicitation and Non-Hire Following Termination. None of CWI or any of itsAffiliates will, for a period of 24 months after the termination of this Agreement for any reason,solicit for employment or employ, solicit for engagement or engage, including as an advisor,subadvisor, consultant or independent contractor, (i) any officer, director or management employee,or any other employee with whom CWI or its Affiliates came into contact in connection with theservices to be provided under this Agreement and the Subadvisory Agreement, in each case of theAdvisor or the Subadvisor or any of their respective Affiliates (each a “RestrictedPerson”) or (ii) any Affiliate of a Restricted Person.22. Indemnification by CWI and the Operating Partnership. Neither CWI nor theOperating Partnership shall indemnify the Advisor or any of its Affiliates for any loss orliability suffered by the Advisor or the Affiliate, or hold the Advisor or the Affiliate harmlessfor any loss or liability suffered by CWI, except as permitted under Section 7 hereof.23. Indemnification by Advisor. The Advisor shall indemnify and hold harmless CWI andthe Operating Partnership from liability, claims, damages, taxes or losses and related expensesincluding attorneys’ fees, to the extent that such liability, claims, damages, taxes or losses andrelated expenses are not fully reimbursed by insurance and are incurred by reason of the Advisor’sbad faith, fraud, willful misfeasance, misconduct, negligence or reckless disregard of its duties.24. Joint and Several Obligations. Any obligations of CWI shall be construed as thejoint and several obligations of CWI and the Operating Partnership, unless otherwise specificallyprovided in this Agreement.25. Notices. Any notice, report or other communication required or permitted to begiven hereunder shall be in writing unless some other method of giving such notice, report or othercommunication is accepted by the party to whom it is given, and shall be given by being deliveredby hand or by overnight mail or other overnight delivery service to the addresses set forth herein:   To the Boardand to CWI: Carey Watermark Investors Incorporated50 Rockefeller PlazaNew York, NY 10020   To the Operating Partnership: c/o Carey Watermark Investors Incorporated50 Rockefeller PlazaNew York, NY 10020
 
- 22 -

 
   To the Advisor: Carey Lodging Advisors, LLC50 Rockefeller PlazaNew York, NY 10020     With a copy to:Carey Asset Management Corp.50 Rockefeller PlazaNew York, NY 10020 and     During the term of the SubadvisoryAgreement, with a copy to:     CWA, LLCc/o Watermark Capital Partners, LLC207 East Westminster, Ste. 200Lake Forest, IL 60045Either party may at any time give notice in writing to the other party of a change in itsaddress for the purposes of this Section 25.26. Modification. This Agreement shall not be changed, modified, terminated, ordischarged, in whole or in part, except by an instrument in writing signed by both parties hereto,or their respective successors or assignees.27. Severability. The provisions of this Agreement are independent of and severablefrom each other, and no provision shall be affected or rendered invalid or unenforceable by virtueof the fact that for any reason any other or others of them may be invalid or unenforceable inwhole or in part.28. Construction. This Agreement shall be governed by, construed and enforced inaccordance with the laws of the State of New York.29. Entire Agreement. This Agreement contains the entire agreement and understandingamong the parties hereto with respect to the subject matter hereof, and supersedes all prior andcontemporaneous agreements, understandings, inducements and conditions, express or implied, oral orwritten, of any nature whatsoever with respect to the subject matter hereof. The express termshereof control and supersede any course of performance and/or usage of the trade inconsistent withany of the terms hereof. This Agreement may not be modified or amended other than by an agreementin writing.30. Indulgences, Not Waivers. Neither the failure nor any delay on the part of aparty to exercise any right, remedy, power or privilege under this Agreement shall operate as awaiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilegepreclude any other or furtherexercise of the same or of any other right, remedy, power or privilege, nor shall any waiverof any right, remedy, power or privilege with respect to any occurrence be construed as a waiver ofsuch right, remedy, power or privilege with respect to any other occurrence. No waiver shall beeffective unless it is in writing and is signed by the party asserted to have granted such waiver.31. Gender. Words used herein regardless of the number and gender specifically used,shall be deemed and construed to include any other number, singular or plural, and any othergender, masculine, feminine or neuter, as the context requires.
 
- 23 -

 
32. Titles Not to Affect Interpretation. The titles of Sections and subsectionscontained in this Agreement are for convenience only, and they neither form a part of thisAgreement nor are they to be used in the construction or interpretation hereof.33. Execution in Counterparts. This Agreement may be executed in any number ofcounterparts, each of which shall be deemed to be an original as against any party whose signatureappears thereon, and all of which shall together constitute one and the same instrument. ThisAgreement shall become binding when one or more counterparts hereof, individually or takentogether, shall bear the signatures of all of the parties reflected hereon as the signatories.34. Initial Investment. The Advisor has contributed to CWI $200,000 in exchange for22,222 Shares (the “Initial Investment”). The Advisor or its Affiliates may not sell anyof the Shares purchased with the Initial Investment during the term of this Agreement. Therestrictions included above shall not continue to apply to any Shares other than the Sharesacquired through the Initial Investment acquired by the Advisor or its Affiliates. The Advisorshall not vote any Shares it now owns or hereafter acquires in any vote for the election ofDirectors or any vote regarding the approval or termination of any contract with the Advisor or anyof its Affiliates.
 
- 24 -

 
IN WITNESS WHEREOF, the parties hereto have executed this Advisory Agreement as of the day andyear first above written.      CAREY WATERMARK INVESTORS INCORPORATED