AGREEMENTNOW, THEREFORE, in consideration of the premises and other good and valuable consideration,the receipt and sufficiency of which are hereby acknowledged by the parties, the parties covenantand agree as follows:1. Establishment of Escrow Account; Escrow Period. On or prior to the commencement of theoffering of Shares pursuant to the Prospectus, the Company shall establish the Escrow Account withthe Escrow Agent, which shall be entitled “UMB Bank, N.A., as Escrow Agent for Carey WatermarkInvestors Incorporated”. This Agreement shall be effective on the date on which the RegistrationStatement becomes effective. Except as otherwise set forth herein for the PennsylvaniaSubscribers, the escrow period shall commence upon the effectiveness of this Agreement and shallcontinue until the earlier of (i) the date upon which the Escrow Agent receives confirmation fromthe Company and the Dealer Manager that the Company has raised the Minimum Offering, (ii) theClosing Date, or (iii) the termination of the Offering by the Company prior to the receipt of theMinimum Offering (the “Escrow Period”).2. Operation of the Escrow.(a) Deposits in the Escrow Account. During the Escrow Period, persons subscribing topurchase Shares will be instructed by the Company, the Dealer Manager and the Selected Dealersto make checks for subscriptions payable to the order of “UMB Bank, N.A., as Escrow Agent forCarey Watermark Investors Incorporated.” When a Selected Dealer’s internal supervisoryprocedures are conducted at the site at which the subscription agreement and check wereinitially received by Selected Dealer from the subscriber, Selected Dealer shall transmit thesubscription agreement and check to the Escrow Agent by the end of the next business dayfollowing receipt of the check and subscription agreement. When, pursuant to SelectedDealer’s internal supervisory procedures, Selected Dealer’s final internal supervisoryprocedures are conducted at a different location (the “Final Review Office”), theSelected Dealer shall transmit the check and subscription agreement to the Final Review Officeby the end of the next business day following the Selected Dealer’s receipt of thesubscription agreement and check. The Final Review Office will, by the end of the nextbusiness day following its receipt of the subscription agreement and check, forward both thesubscription agreement and check to the Escrow Agent. If any subscription agreement solicitedby the Selected Dealer is rejected by the Dealer Manager or the Company, then the subscriptionagreement and check will be returned to the rejected subscriber within 10 business days fromthe date of rejection. The Escrow Agent shall have no liability or responsibility regarding aSelected Dealer’s internal supervisory procedures. Completed subscription agreements andchecks in payment for the purchase price shall be remitted to the P.O. Box designated for thereceipt of such agreements and funds, and wires or Automated ClearingHouse (ACH) paymentsshall be transmitted directly to the Escrow Account. subscription agreements received by theEscrow Agent shall be scanned and emailed by the Escrow Agent to Phoenix American FinancialServices, Inc. (the “Transfer Agent”) within 24 hours of receipt by the Escrow Agent.The Escrow Agent shall also deliver the original subscription agreements to the
 
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Transfer Agent. The Escrow Agent hereby agrees to maintain the funds contributed by thePennsylvania Subscribers in a manner in which they may be separately accounted for so that therequirements of Section 3 of this Agreement can be met. Deposits shall be held in the EscrowAccount until such funds are disbursed in accordance with this Agreement. Prior todisbursement of the funds deposited in the Escrow Account (the “Escrowed Funds”), suchfunds shall not be subject to claims by creditors of the Company or any of its affiliates. Ifany of the instruments of payment are returned to the Escrow Agent for nonpayment prior toreceipt of the Break Escrow Affidavit (as described below), the Escrow Agent shall promptlynotify the Company in writing via mail, email or facsimile of such nonpayment, and the EscrowAgent is authorized to debit the Escrow Account in the amount of such returned payment and theEscrow Agent shall delete the appropriate account from the records maintained by the EscrowAgent. The Escrow Agent will maintain a written account of each sale, which account shall setforth, among other things, the following information: (i) the subscriber’s name and address,(ii) the subscriber’s social security number, (iii) the number of Shares purchased by suchsubscriber, and (iv) the amount paid by such subscriber for such Shares. During the EscrowPeriod neither the Company nor the Dealer Manager will be entitled to any principal fundsreceived into the Escrow Account.(b) Distribution of the Funds in the Escrow Account to Subscribers other than thePennsylvania Subscribers. If at any time on or prior to the Closing Date, the MinimumOffering has been raised, then upon the happening of such event, the funds in the EscrowAccount shall remain in the Escrow Account until the Escrow Agent receives written directionprovided by the Company and the Dealer Manager instructing the Escrow Agent to deliver suchfunds as the Company shall direct (other than any funds received from Pennsylvania Subscriberswhich cannot be released until the conditions of Section 3 hereof, respectively, has beenmet) (“Initial Closing”). An affidavit or certification from an officer of the Company and anofficer of the Dealer Manager to the Escrow Agent stating that at least the Minimum Offeringhas been timely raised, shall constitute sufficient evidence for the purpose of this Agreementthat such event has occurred (the “Break Escrow Affidavit”). The Affidavit shallindicate (i) the date on which the Minimum Offering was raised and (ii) the actual totalnumber of Shares sold as of such date. Thereafter, the Escrow Agent shall release funds andany interest or other income earned, based on the conditions of Section 4 hereof, thereon fromthe Escrow Account as directed by the Company pursuant to written instruction that the Companyshall provide to the Escrow Agent from time to time. Accrued and unpaid interest on suchEscrowed Funds shall be paid pursuant to Section 4 below.(c) If the Escrow Agent has not received a Break Escrow Affidavit on or prior to the ClosingDate, the Escrow Agent shall promptly return the funds in the Escrow Account, together withany remaining interest thereon, to each respective subscriber, and the Escrow Agent shallpromptly create and dispatch checks and wires drawn on the Escrow Account to return the fullamount of the funds deposited in the Escrow Account, together with their pro-rata share of anyremaining interest thereon, to the respective subscribers, and the Escrow Agent shall notifythe Company and the Dealer Manager of its distribution of the funds. For the purposes ofthis Agreement “remaining interest” shall mean any interest that remains in the Escrow Accountafter deducting the full amount of the escrow fees and expenses which have been or are dueunder this Agreement or have been paid hereunder. Any amounts previously paid hereunder willbe reimbursed by the Escrow Agent to such party after applying the interest to any escrow feesand expenses that are or will be due under this Agreement as of the Closing Date. The subscription payments returned to eachsubscriber shall be free and clear of any and all claims of the Company or any of itscreditors.
 
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(d) After the Initial Closing, upon receipt by the Escrow Agent of instructions signed by theDealer Manager and the Company, the Escrow Agent shall release to the Company the EscrowedFunds (other than any funds received from Pennsylvania Subscribers which cannot be releaseduntil the conditions of Section 3 hereof, have been met) in accordance with such instructions.The Company shall give the Escrow Agent one business day oral notification of the contents ofsuch instructions. Accrued and unpaid interest on such Escrowed Funds shall be paid pursuantto Section 4 below.3. Distribution of the Funds from Pennsylvania Subscribers.(a) Notwithstanding anything to the contrary herein, disbursements of funds contributedby Pennsylvania Subscribers may only be distributed in compliance with the provisions of thisSection 3. Irrespective of any disbursement of funds from the Escrow Account pursuant toSection 2 hereof, the Escrow Agent will continue to place deposits from the PennsylvaniaSubscribers into the Escrow Account, until such time as the Company notifies the Escrow Agentin writing that total subscriptions (including amounts previously disbursed as directed by theCompany and the amounts then held in the Escrow Account) equal or exceed $33,333,334,whereupon the Escrow Agent shall disburse to the Company, at the Company’s request, any fundsfrom the Pennsylvania Subscribers received by the Escrow Agent for accepted subscriptions, butnot those funds of a subscriber whose subscription has been rejected or rescinded of which theEscrow Agent has been notified by the Company, or otherwise in accordance with the Company’swritten request.(b) If the Company has not received total subscriptions of at least $33,333,334 within120 days of the date the Company first receives a subscription from a Pennsylvania Subscriber(the “Initial Escrow Period”), the Company shall notify each Pennsylvania Subscriber of theright of Pennsylvania Subscribers to have their investment returned to them. If, pursuant tosuch notice, a Pennsylvania Subscriber requests the return of his or her subscription fundswithin ten (10) days after receipt of the notification (the “Request Period”), the EscrowAgent shall promptly refund, including the pro-rata share of any interest earned thereon,directly to each Pennsylvania Subscriber the funds deposited in the Escrow Account on behalfof the Pennsylvania Subscriber.(c) The funds of Pennsylvania Subscribers who do not request the return of their fundswithin the Request Period shall remain in the Escrow Account for successive 120-dayescrow periods (each a “Successive Escrow Period”), each commencing automatically uponthe termination of the prior Successive Escrow Period, and the Company and Escrow Agentshall follow the notification and payment procedure set forth in Section 3(b) above withrespect to the Initial Escrow Period for each Successive Escrow Period, provided that anyrefunds made to a Pennsylvania Subscriber after a Successive Escrow Period shall includea pro-rata share of any interest earned thereon after the Initial Escrow Period, untilthe occurrence of the earliest of (i) the termination of the Offering, (ii) the receiptand acceptance by the Company of total subscriptions that equal or exceed $33,333,334 andthe disbursement of the Escrow Account on the terms specified in this Section 3, or (iii)all funds held in the Escrow Account that were contributed by Pennsylvania Subscribers having beenreturned to the Pennsylvania Subscribers in accordance with the provisions hereof.
 
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If, upon termination of the Offering, the Company has not received and accepted totalsubscriptions that equal or exceed $33,333,334, all funds in the Escrow Account that werecontributed by Pennsylvania Subscribers will be promptly returned in full to such PennsylvaniaSubscribers, together with their pro-rata share of any interest earned thereon pursuant toinstructions made by the Company, upon which the Escrow Agent may conclusively rely.4. Distribution of Escrow InterestAs soon as practical but no more than 45 days after the release of the funds to the Companypursuant to the conditions in Sections 2 and 3 hereof, the Escrow Agent shall calculate anddistribute to each susbscriber whose subscription funds were held in the Escrow Account for atleast 20 days its pro-rata share of interest based on the length of time its subscription fundshave been held in the Escrow Account. Escrow interest earned, but not payable to subscriberspursuant to this Section 4, shall be paid to the Company, as instructed by the Company inwriting.5. Funds in the Escrow Account. Upon receipt of funds from subscribers, the Escrow Agentshall hold such funds in escrow pursuant to the terms of this Agreement. All funds in the EscrowAccount shall at all times be placed in “Short-term Investments” (as defined below) as directed bythe Company and the Escrow Agent agrees to reinvest all earnings and interest derived therefrom inany of the Short-term Investments specified below.“Short-term Investments” include short-term obligations of, or short-term obligationsguaranteed by, the United States government or bank money-market funds comprised of theseobligations or certificates of deposit of national or state banks that have deposits insured by theFederal Deposit Insurance Corporation, including certificates of deposit of any bank acting as adepository or custodian for any such funds, including, without limitation, such certificates orinstruments of the Escrow Agent, all of which instruments must be capable of being readily sold orotherwise disposed of for cash on or before the earlier of (i) the date that the Minimum Amount isachieved, or (ii) the Expiration Date, without any dissipation of the offering proceeds invested.The following securities are not permissible investments:(a) corporate equity or debt securities;(b) repurchase agreements;(c) bankers’ acceptances;(d) commercial paper;(e) municipal securities; and(f) money market funds other than bank money market accounts.
 
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The Escrow Agent shall be entitled to sell or redeem any such investment as necessary to makeany distributions required under this Agreement and shall not be liable or responsible for any lossresulting from any such sale or redemption.Income, if any, resulting from the investment of the funds in the Escrow Account shall bedistributed according to this Agreement.The Escrow Agent shall provide to the Company monthly statements (or more frequently asreasonably requested by the Company) on the account balance in the Escrow Account and the activityin such accounts since the last report.6. Tax Reporting. The Escrow Agent shall provide subscribers with applicable Form 1099 foramounts paid pursuant to Section 4 above in a timely manner.7. Duties of the Escrow Agent. The Escrow Agent shall have no duties or responsibilitiesother than those expressly set forth in this Agreement, and no implied duties or obligations shallbe read into this Agreement against the Escrow Agent. The Escrow Agent is not a party to, or boundby, any other agreement among the other parties hereto with respect to the subject matter hereof,and the Escrow Agent’s duties shall be determined solely by reference to this Agreement. The EscrowAgent shall have no duty to enforce any obligation of any person, other than as provided herein.The Escrow Agent shall be under no liability to anyone by reason of any failure on the part of anyparty hereto or any maker, endorser or other signatory of any document or any other person toperform such person’s obligations under any such document.8. Liability of the Escrow Agent; Indemnification. The Escrow Agent acts hereunder as adepository only. The Escrow Agent is not responsible or liable in any manner for the sufficiency,correctness, genuineness or validity of this Agreement or with respect to the form of execution ofthe same. The Escrow Agent shall not be liable for any action taken or omitted by it, or any actionsuffered by it to be taken or omitted, in good faith, and in the exercise of its own best judgment,and may rely conclusively and shall be protected in acting upon any order, notice, demand,certificate, opinion or advice of counsel (including counsel chosen by the Escrow Agent),statement, instrument, report or other paper or document (not only as to its due execution and thevalidity and effectiveness of its provisions, but also as to the truth and acceptability of anyinformation therein contained) which is believed by the Escrow Agent to be genuine and to be signedor presented by the proper person(s). The Escrow Agent shall not be held liable for any error injudgment made in good faith by an officer or employee of the Escrow Agent or the Company unless itshall be proved that the Escrow Agent, as appropriate, was grossly negligent or reckless inascertaining the pertinent facts or acted intentionally in bad faith. The Escrow Agent shall not bebound by any notice of demand, or any waiver, modification, termination or rescission of thisAgreement or any of the terms hereof, unless evidenced by a writing delivered to the Escrow Agentsigned by the proper party or parties and, if the duties or rights of the Escrow Agent areaffected, unless it shall give its prior written consent thereto.The Escrow Agent may consult legal counsel and shall exercise reasonable care in the selection ofsuch counsel, in the event of any dispute or question as to the construction of any provisionshereof or its duties hereunder, and it shall incur no liability and shall be fully protected inacting in accordance with the reasonable opinion or instructions of such counsel.
 
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The Escrow Agent shall not be responsible, may conclusively rely upon and shall be protected,indemnified and held harmless by the Company, for the sufficiency or accuracy of the form of, or the execution, validity, value or genuineness of any document or property received, held ordelivered by it hereunder, or of the signature or endorsement thereon, or for any descriptiontherein; nor shall the Escrow Agent be responsible or liable in any respect on account of theidentity, authority or rights of the persons executing or delivering or purporting to execute ordeliver any document, property or this Agreement.In the event that the Escrow Agent shall become involved in any arbitration or litigation relatingto the funds in the Escrow Account, the Escrow Agent is authorized to comply with any decisionreached through such arbitration or litigation.The Company hereby agrees to indemnify the Escrow Agent for, and to hold it harmless against, anyloss, liability or expense incurred in connection herewith without gross negligence, recklessnessor willful misconduct on the part of the Escrow Agent, including without limitation legal or otherfees arising out of or in connection with its entering into this Agreement and carrying out itsduties hereunder, including without limitation the costs and expenses of defending itself againstany claim of liability in the premises or any action for interpleader. The Escrow Agent will not beunder any obligation to institute or defend any action, suit, or legal proceeding in connectionherewith, unless first indemnified and held harmless to its satisfaction in accordance with theforegoing, except that the Escrow Agent shall not be indemnified against any loss, liability orexpense arising out of its own gross negligence, recklessness or willful misconduct. Such indemnityshall survive the termination or discharge of this Agreement or resignation of the Escrow Agent.9. The Escrow Agent’s Fee. Escrow Agent shall be entitled to fees and expenses for itsregular services as Escrow Agent as set forth in Exhibit A. Additionally, Escrow Agent isentitled to reasonable fees for extraordinary services and reimbursement of any reasonable out ofpocket and extraordinary costs and expenses related to its obligations as Escrow Agent under thisAgreement, including, but not limited to, reasonable attorneys’ fees. All of the Escrow Agent’scompensation, costs and expenses shall be paid by the Company.10. Security Interests. No party to this Agreement shall grant a security interest in anymonies or other property deposited with the Escrow Agent under this Agreement, or otherwise createa lien, encumbrance or other claim against such monies or borrow against the same.11. Dispute. In the event of any disagreement between the undersigned or the person orpersons named in the instructions contained in this Agreement, or any other person, resulting inadverse claims and demands being made in connection with or for any papers, money or propertyinvolved herein, or affected hereby, the Escrow Agent shall be entitled to refuse to comply withany demand or claim, as long as such disagreement shall continue, and in so refusing to make anydelivery or other disposition of any money, papers or property involved or affected hereby, theEscrow Agent shall not be or become liable to the undersigned or to any person named in suchinstructions for its refusal to comply with such conflicting or adverse demands, and the EscrowAgent shall be entitled to refuse and refrain to act until: (a) The rights of the adverse claimantsshall have been fully and finally adjudicated in a Court assuming and having jurisdiction of theparties and money, papers and property involved herein or affected hereby, or (b) All differencesshall have been adjusted by agreement and the Escrow Agent shall have been notified thereof inwriting, signed by all the interested parties.
 
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12. Resignation of Escrow Agent. Escrow Agent may resign or be removed, at any time, forany reason, by written notice of its resignation or removal to the proper parties at theirrespective addresses as set forth herein, at least 60 days before the date specified for such resignation orremoval to take effect; upon the effective date of such resignation or removal:(a) All cash and other payments and all other property then held by the Escrow Agenthereunder shall be delivered by it to such successor escrow agent as may be designated inwriting by the Company, whereupon the Escrow Agent’s obligations hereunder shall cease andterminate;(b) If no such successor escrow agent has been designated by such date, all obligationsof the Escrow Agent hereunder shall, nevertheless, cease and terminate, and the Escrow Agent’ssole responsibility thereafter shall be to keep all property then held by it and to deliverthe same to a person designated in writing by the Company or in accordance with the directionsof a final order or judgment of a court of competent jurisdiction; or(c) Further, if no such successor escrow agent has been designated by such date, theEscrow Agent may petition any court of competent jurisdiction for the appointment of asuccessor agent; further the Escrow Agent may pay to such court-appointed successor agent allmonies and property deposited with Escrow Agent under this Agreement.13. Notices. All notices, demands and requests required or permitted to be given under theprovisions hereof must be in writing and shall be deemed to have been sufficiently given, uponreceipt, if (i) personally delivered, (ii) sent by telecopy and confirmed by phone or (iii) mailedby registered or certified mail, with return receipt requested, or by overnight courier withsignature required, delivered to the addresses set forth below, or to such other address as a partyshall have designated by notice in writing to the other parties in the manner provided by thisparagraph:   (1) If to Company: Carey Watermark Investments Incorporated  50 Rockefeller Plaza  New York, New York 10020   (2) If to the Escrow Agent: UMB Bank, N.A.  1010 Grand Blvd., 4th Floor  Mail Stop: 1020409  Kansas City, Missouri 64106  Attention: Lara Stevens,  Corporate Trust  Telephone: (816) 860-3017  Facsimile: (816) 860-3029   (3) If to Dealer Manager: Carey Financial, LLC  50 Rockefeller Plaza  New York, New York 1002013. Governing Law. This Agreement shall be construed and enforced in accordance with thelaws of the State of New York without regard to the principles of conflicts of law.
 
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14. Binding Effect; Benefit. This Agreement shall be binding upon and inure to the benefitof the permitted successors and assigns of the parties hereto.15. Modification. This Agreement may be amended, modified or terminated at any time by awriting executed by the Dealer Manager, the Company and the Escrow Agent.16. Assignability. This Agreement shall not be assigned by the Escrow Agent without theCompany’s prior written consent.17. Counterparts. This Agreement may be executed in one or more counterparts, each of whichwill be deemed an original, but all of which together will constitute one and the same instrument.Copies, telecopies, facsimiles, electronic files and other reproductions of original executeddocuments shall be deemed to be authentic and valid counterparts of such original documents for allpurposes, including the filing of any claim, action or suit in the appropriate court of law.18. Headings. The section headings contained in this Agreement are inserted for convenienceonly, and shall not affect in any way, the meaning or interpretation of this Agreement.19. Severability. This Agreement constitutes the entire agreement among the parties andsupersedes all prior and contemporaneous agreements and undertakings of the parties in connectionherewith. No failure or delay of the Escrow Agent in exercising any right, power or remedy may be,or may be deemed to be, a waiver thereof; nor may any single or partial exercise of any right,power or remedy preclude any other or further exercise of any right, power or remedy. In the eventthat any one or more of the provisions contained in this Agreement, shall, for any reason, be heldto be invalid, illegal or unenforceable in any respect, then to the maximum extent permitted bylaw, such invalidity, illegality or unenforceability shall not affect any other provision of thisAgreement.20. Earnings Allocation; Tax Matters; Patriot Act Compliance; OFAC Search Duties. TheCompany or its agent shall be responsible for all tax reporting under this Agreement. The Companyshall provide to Escrow Agent upon the execution of this Agreement any documentation requested andany information reasonably requested by the Escrow Agent to comply with the USA Patriot Act of2001, as amended from time to time.21. Miscellaneous. This Agreement shall not be construed against the party preparing it,and shall be construed without regard to the identity of the person who drafted it or the party whocaused it to be drafted and shall be construed as if all parties had jointly prepared thisAgreement and it shall be deemed their joint work product, and each and every provision of thisAgreement shall be construed as though all of the parties hereto participated equally in thedrafting hereof; and any uncertainty or ambiguity shall not be interpreted against any one party.As a result of the foregoing, any rule of construction that a document is to be construed againstthe drafting party shall not be applicable.22. Termination of the Escrow Agreement. This Agreement, except for Sections 8 and 11hereof, which shall continue in effect, shall terminate upon written notice from the Company to theEscrow Agent. Unless otherwise provided, final termination of this Agreement shall occur on thedate that all funds held in the Escrow Account are distributed either (a) to the Company or tosubscribers and the Company has informed the Escrow Agent in writing to close the Escrow Account or(b) to a successor escrow agent upon written instructions from the Company.
 
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23. Relationship of Parties. The Escrow Agent is not affiliated with either the DealerManager or the Company and this Agreement does not create any partnership or joint venture amongthem.**IN WITNESS WHEREOF,**the undersigned have caused this Agreement to be executed by their dulyauthorized representatives as of the date first written hereinabove:       **DEALER MANAGER:**       **CAREY FINANCIAL, LLC**            By: /s/ Mark Goldberg       Name:  Mark Goldberg  Title:  President       **COMPANY:**       **CAREY WATERMARK INVESTORS INCORPORATED**            By: /s/ Susan C. Hyde       Name:  Susan C. Hyde  Title:  Managing Director       **ESCROW AGENT:**       **UMB BANK, N.A**.            By:  /s/ Lara L. Stevens       Name:  Lara Stevens  Title: Vice President
 
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**EXHIBIT A****ESCROW FEES AND EXPENSES**     **One Time Fee**    Review escrow agreement, establish account andmaintain account $6,000      **Monthly Fee**    To be charged each month if Escrow Accountremains open after the one-year anniversary dateof the Escrow Agreement $250.00 Fees specified are for the regular, routine services contemplated by the Escrow Agreement, and anyadditional or extraordinary services, including, but not limited to disbursements involving adispute or arbitration, or administration while a dispute, controversy or adverse claim is inexistence, will be charged based upon time required at the then standard hourly rate. In additionto the specified fees, all expenses related to the administration of the Escrow Agreement (otherthan normal overhead expenses of the regular staff) such as, but not limited to, legal fees andaccounting fees, etc., will be reimbursable. One time fees will be payable at the initiation of theescrow and monthly fees will be payable in advance thereafter. Other fees and expenses will bebilled as incurred.
 
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**EXHIBIT B**Payment Instructions
 
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