Document:

exv10w4wc

Exhibit 10.4(c)

EXECUTION VERSION

CYAN PARTNERS, LP

399 PARK AVENUE, 39TH FLOOR

NEW YORK, NY 10022

October 21, 2010

Endeavour International Corporation

1001 Fannin, Suite 1600

Houston, Texas 77002

			
	Attention:	 	Mr. J. Michael Kirksey

Executive Vice President and

Chief Financial Officer

Endeavour Energy UK Limited

c/o Endeavour International Corporation

1001 Fannin, Suite 1600

Houston, Texas 77002

			
	Attention:	 	Mr. J. Michael Kirksey

Executive Vice President and

Chief Financial Officer

CONFIDENTIAL

			
	Re:	 	Incremental Fee Letter

Ladies and Gentlemen:

          Reference is made to:

          (i) that certain Credit Agreement, dated as of August 16, 2010 (as amended, restated,
supplemented and/or modified from time to time, the “Credit Agreement”), among Endeavour
International Corporation (“Holdings”), Endeavour Energy UK Limited (the
“Borrower”), the lenders party thereto and Cyan Partners, LP (“Cyan”), as
administrative agent (in such capacity, the “Administrative Agent”); and

          (ii) that certain Incremental Term Loan Commitment and Amendment Agreement, dated on or about
the date hereof (the “Incremental Amendment Agreement”), among Holdings, the Borrower, the
incremental lenders party thereto and the Administrative Agent pursuant to which certain affiliates
of Cyan have agreed to provide Incremental Term Loans as set forth therein.

          This fee letter (the “Incremental Fee Letter”) will supplement the Incremental
Amendment Agreement by setting forth arrangements for services rendered by Cyan in connection with
the Incremental Amendment Agreement.

 

 

          Capitalized terms used in this Incremental Fee Letter but not defined herein shall have the
respective meanings set forth in the Credit Agreement.

          You agree to pay to Cyan a fee in the amount of $500,000, which fee shall be earned by, and
payable to, Cyan on the Agreement Effective Date (as defined in the Incremental Amendment
Agreement).

          Payment of the foregoing fee (i) will not be subject to counterclaim or set-off for, or be
otherwise affected by, any claim or dispute relating to any other matter, (ii) will not be
refundable (such fees being in addition to and not creditable against any other fees, including,
without limitation, fees payable to Cyan and/or any of its affiliates pursuant to any other
agreements or for acting in any other capacities) and (iii) will be made to Cyan in immediately
available funds in accordance with the following wiring instructions: ABA# 221172610, account
number 1255234583, for the account of Cyan Partners, LP. In addition, the foregoing fees shall be
retained and/or distributed by Cyan, in such manner as it determines in its sole discretion.

          You agree that (without Cyan’s prior written consent) no lender or any other agent (other than
Cyan) under the Credit Agreement or the Incremental Amendment Agreement will receive any
compensation of any kind for its participation in the Incremental Amendment Agreement except as
expressly provided herein.

          You fully understand that (i) this Incremental Fee Letter does not constitute a commitment on
the part of, or engagement of, Cyan to provide, arrange, place, underwrite and/or participate in
any Incremental Term Loans and that Cyan is not under any obligation, as a result of this
Incremental Fee Letter, to provide or offer to provide any such commitment or engagement and (ii)
Cyan cannot make any commitments on behalf of any of its affiliates.

          In addition, you hereby agree that all reasonable and documented out-of-pocket costs and
expenses (including the reasonable fees and expenses of counsel and consultants) of Cyan (including
in its capacity as Administrative Agent under the Credit Agreement) arising in connection with
underwriting, negotiating documentation and closing of the transactions contemplated by the
Incremental Amendment Agreement shall be for your account (and that you shall upon request from
Cyan reimburse it for all such fees and expenses or pay same directly all in accordance with
Section 11.01 of the Credit Agreement). You further agree that Section 11.01(a)(iii) of the Credit
Agreement shall apply to any liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, suits, costs, expenses and disbursements (including reasonable attorneys’ and
consultants’ fees and disbursements arising in connection with this Incremental Fee Letter, the
Incremental Amendment Agreement or any Incremental Term Loans made pursuant thereto) and that the
provisions of such section are hereby incorporated into this Incremental Fee Letter by reference.

          This Incremental Fee Letter may not be amended or modified, or any provision hereof waived,
except by an instrument in writing signed by you and Cyan. This Incremental Fee Letter may be
executed in any number of counterparts, each of which shall be an original and all of which, when
taken together, shall constitute one agreement. Delivery of an executed signature page of this
Incremental Fee Letter by facsimile transmission or other electronic transmission shall be
effective as delivery of a manually executed counterpart hereof. This Incremental Fee Letter shall
be governed by, and construed in accordance with, the laws of the State of New York. This
Incremental Fee Letter is intended to be solely for the benefit of the parties hereto and

-2-

 

Cyan’s permitted assigns and is not intended to confer any benefits upon, or create any rights
in favor of, any person or entity other than the parties hereto and may not be relied upon by any
person or entity other than you and Cyan and its permitted assigns. This Incremental Fee Letter is
not intended to create a fiduciary relationship among the parties hereto. This Incremental Fee
Letter sets forth the entire agreement between the parties hereto in respect of the matters set
forth herein, and supersedes all prior communications, written or oral, with respect to matters
herein.

          EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM,
ACTION, SUIT OR PROCEEDING ARISING OUT OF OR CONTEMPLATED BY THIS INCREMENTAL FEE LETTER. EACH OF
THE PARTIES HERETO HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK
STATE COURTS LOCATED IN THE COUNTY OF NEW YORK IN CONNECTION WITH ANY DISPUTE RELATED TO THIS
INCREMENTAL FEE LETTER OR ANY MATTERS CONTEMPLATED HEREBY.

-3-

 

          You and Cyan agree that this Incremental Fee Letter is for confidential use only and that
neither its existence nor the terms hereof will be disclosed to any person other than your and
Cyan’s officers, directors, employees, accountants, attorneys and other advisors in connection with
the transactions contemplated by the Incremental Amendment Agreement, the Credit Agreement, and
this Incremental Fee Letter and on a confidential basis (except that, notwithstanding the
foregoing, (a) you may make such public disclosures as, and to the extent, you are required by law
to make or in order to comply with any order, regulation or ruling applicable to you and (b) Cyan
may make such disclosures as are contemplated in Section 11.16 of the Credit Agreement). Each
party’s obligations hereunder with respect to confidentiality shall survive the termination of this
Incremental Fee Letter.

	 	 	 	 	 
	 	Very truly yours,

CYAN PARTNERS, LP

 	 
	 	By:  	/s/ Jonathan Tunis
 	 
	 	 	Name:  	Jonathan Tunis 	 
	 	 	Title:  	Authorized Signatory 	 
	 

-4-

 

	 	 	 	 	 
	Accepted and Agreed to this

21st day of October, 2010:

ENDEAVOUR INTERNATIONAL CORPORATION

 	 	 
	By:  	/s/ J. Michael Kirksey
 	 	 
	 	Name:  	J. Michael Kirksey 	 	 
	 	Title:  	Executive Vice President and
 Chief Financial Officer 	 	 
	 
	ENDEAVOUR ENERGY UK LIMITED

 	 	 
	By:  	/s/ J. Michael Kirksey
 	 	 
	 	Name:  	J. Michael Kirksey 	 	 
	 	Title:  	Executive Vice President and
 Chief Financial Officer 	 	 
	 

-5-Exhibit 10.1

Exhibit 10.1

 

ADVISORY AGREEMENT

 

 

 

 

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 INVESTORS
INCORPORATED, a Maryland corporation (“CWI”), CWI OP, LP, a Delaware limited partnership of
which 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 other
lodging related properties; and

WHEREAS, CWI intends to qualify as a REIT (as defined below), and the Operating Partnership
intends to qualify as a partnership, in each case for U.S. federal income tax purposes; and

WHEREAS, CWI and its subsidiaries, including the Operating Partnership, desire to avail
themselves of the experience, sources of information, advice and assistance of, and certain
facilities available to, the Advisor and to have the Advisor undertake the duties and
responsibilities hereinafter set forth, on behalf of, and subject to the supervision of the Board
of Directors of CWI, all as provided herein; and

WHEREAS, the Advisor is willing to render such services, subject to the supervision of the
Board 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 agreements
contained herein, the parties hereto agree as follows:

1. Definitions. As used in this Agreement, the following terms have the definitions
hereinafter indicated:

“2%/25% Guidelines.” The requirement, as provided for in Section 13 hereof, that, in
the 12-month period ending on the last day of any fiscal quarter, Operating Expenses not exceed the
greater of two percent of Average Invested Assets during such 12-month period or 25% of CWI’s
Adjusted 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 limited
to, travel and communications expenses, the cost of appraisals, title insurance, nonrefundable
option 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 include
Acquisition Fees.

“Acquisition Fees.” Any fee or commission paid by CWI or its subsidiaries to the
Advisor, or, with respect to Section 9(b)(ii), by CWI or its subsidiaries to any party, in
connection with the making of Investments, including, without limitation, the purchase, development
or construction of Properties. A Development Fee or Construction Fee paid to a Person not
affiliated with the Sponsor in connection with the actual development or construction of a project
after acquisition of the Property by CWI shall not be deemed an Acquisition Fee. Included in the
computation 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, however
designated. Acquisition Fees shall not include Acquisition Expenses.

 

- 1 -

 

“Adjusted Net Income.” For any period, the total consolidated revenues recognized in
such 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 similar
non-cash reserves; provided, however, that Adjusted Net Income for purposes of calculating total
allowable Operating Expenses under the 2%/25% Guidelines shall exclude any gains, losses or
writedowns 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 ten
percent or more of the outstanding voting securities of such other Person; (ii) any Person ten
percent or more of whose outstanding voting securities are directly or indirectly owned,
controlled, or held, with power to vote, by such other Person; (iii) any Person directly or
indirectly controlling, controlled by, or under common control with such other Person; (iv) any
executive officer, director, trustee or general partner of such other Person; or (v) any legal
entity for which such Person acts as an executive officer, director, trustee or general partner.

“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 the
property or its operations, current and anticipated income and expense trends, forecasts of
stabilized operations, repositioning opportunities and conditions in the credit and investment
markets. The Appraised Value of a Property may be greater than the construction cost or the
replacement cost of the Property.

“Articles of Incorporation.” Articles of Incorporation of CWI under the Maryland
General 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 value
of 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 the
end of each month during such period.

“Average Market Value.” The Total Investment Cost paid by CWI for an Investment, less
Acquisition Fees, provided that, if a later Appraised Value is obtained for the Investment, that
later Appraised Value, adjusted for other net assets and liabilities that have economic value and
are 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 of
any of the following: (a) the transfer of W. P. Carey & Co. LLC’s interests in the Advisor to one
or 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 the
Advisor that, in each case, is
determined 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 not
cured such breach within 30 days of written notice thereof or, in the case of any breach that
cannot be cured within 30 days by reasonable effort, has not taken all necessary action within a
reasonable 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 paid
for the purchase or sale of an Investment that is reasonable, customary and competitive in light of
the size, type and location or other relevant characteristics of the Investment.

“Construction Fee.” A fee or other remuneration for acting as general contractor
and/or construction manager to construct improvements, supervise and coordinate projects or to
provide major repairs or rehabilitations on a Property.

“Contract Purchase Price.” The amount actually paid for, or allocated (as of the date
of purchase) to, the purchase, development, construction or improvement of an Investment or, in the
case of an originated Loan, the principal amount of such Loan, in each case exclusive of
Acquisition Fees and Acquisition Expenses.

“Contract Sales Price.” The total consideration received by CWI for the sale of an
Investment.

“Control.” The possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability to exercise voting
power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

“CWI.” Carey Watermark Investors Incorporated together with its consolidated
subsidiaries, 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 its
consolidated subsidiaries. Unless the context otherwise requires, any reference to financial
measures of CWI shall be calculated by reference to the consolidated financial statements of CWI
and its subsidiaries, including, without limitation, the Operating Partnership, prepared in
accordance with GAAP.

“Dealer Manager.” Carey Financial, LLC.

“Development Fee.” A fee for the packaging of a Property including negotiating and
approving plans, and undertaking to assist in obtaining zoning and necessary variances and
necessary financing for the specific Property, either initially or at a later date.

“Directors.” The persons holding such office, as of any particular time, under the
Articles of Incorporation, whether they be the directors named therein or additional or successor
directors.

“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 ending
on 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 accepted
aggregate 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 public
offering, unless on or before such date there has been an initial filing by CWI with the
Securities and Exchange Commission of a Registration Statement on Form S-11, or any other
form which CWI is eligible to use to register securities, with respect to a Follow-On
Offering;

(v) the third anniversary of the date of effectiveness of the Registration Statement
for the Follow-On Offering as described in (iv) above, if CWI has not then accepted net
offering proceeds from investors of at least 75% of the maximum aggregate offering proceeds
named 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-On
Offering.

“Follow-On Offering.” means a public offering of common stock of CWI with maximum
aggregate 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 of
CWI’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 a
Follow-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 to
obtain a satisfactory agreement from any successor to CWI or the Operating Partnership to assume
and agree to perform CWI’s or the Operating Partnership’s, as applicable, obligations under this
Agreement; or (ii) any material breach of this Agreement of any nature whatsoever by CWI or the
Operating Partnership; provided that (a) such breach is of a material term or condition of this
Agreement and (b) CWI or the Operating Partnership, as applicable, has not cured such breach within
30 days of written notice thereof or, in the case of any breach that cannot be cured within 30 days
by reasonable effort, has not taken all necessary action within a reasonable time period to cure
such breach.

“Gross Offering Proceeds.” The aggregate purchase price of Shares sold in any
Offering.

“Incentive Plans.” CWI’s 2010 Equity Incentive Plan and CWI’s Directors’ Incentive
Plan.

“Independent Appraiser.” A qualified appraiser of real estate as determined by the
Board, who has no material current or prior business or personal relationship with the Advisor or
the Directors and who is engaged to a substantial extent in the business of rendering opinions
regarding the value of assets of the type held by CWI. Membership in a nationally recognized
appraisal society such as the American Institute of Real Estate Appraisers or the Society of Real
Estate 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 Independent
Director specified in the Articles of Incorporation.

“Individual.” Any natural person and those organizations treated as individuals in
Section 542(a) of the Code.

“Investment.” An investment made by CWI, directly or indirectly, in a Property, Loan
or Other Permitted Investment Asset.

“Investment Committee.” The committee of individuals responsible for reviewing
Investments on behalf of CWI.

“Investment Opportunity.” With respect to the limitations set forth in Section 14
hereof, the opportunity to lease, sublease, purchase or to offer to purchase any asset or
investment originated by, presented to or otherwise identified by the Subadvisor, the Advisor, or
any 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 to
offer to purchase any asset or investment if the purchase price of such asset or investment does
not 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, note
purchaser 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 stock
or 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 third
parties, or providing commitments for loans. The term “Loans” shall not include leases which are
not recognized as leases for federal income tax reporting purposes.

“Loan Refinancing Fee.” A fee payable to the Advisor in respect of the refinancing of
a 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 its
dwelling units are used on a transient basis or (2) equity interests in an entity that derives at
least 30% of its earnings before interest, taxes, depreciation and amortization, or “EBITDA”, from
owning, 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 or
partially secured by Lodging Facilities or equity interests in entities that own, directly or
indirectly, Lodging Facilities; (2) unsecured Loans to entities that derive at least 30% of their
EBITDA from interests in Lodging Facilities, or (3) participations in any of the Loans described in
clauses (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 expenses
paid or incurred by CWI, as determined under GAAP, except the following (insofar as they would
otherwise be considered operating, general and administrative expenses under GAAP): (i) interest
and discounts and other cost of borrowed money; (ii) taxes (including state, Federal and foreign
income tax, property taxes and assessments, franchise taxes and taxes of any other nature);
(iii) expenses of raising capital, including
Organization and Offering Expenses, printing, engraving, and other expenses, and taxes
incurred 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 expenses
connected with the acquisition, disposition, origination, ownership and operation of Investments,
including the costs of foreclosure, insurance premiums, legal services, brokerage and sales
commissions, and the maintenance, repair and improvement of property; (v) Acquisition Fees or
Disposition Fees payable to the Advisor or any other party; (vi) distributions paid by the
Operating Partnership to the Special General Partner under the agreement of limited partnership of
the Operating Partnership in respect of gains realized on dispositions of Investments and other
capital transactions; (vii) amounts paid to effect a redemption or repurchase of the special
general partner interest held by the Special General Partner pursuant to the agreement of limited
partnership 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 shall
include the Asset Management Fee and any Loan Refinancing Fee and, solely for the purposes of
determining compliance with the 2%/25% Guidelines, (1) distributions of available cash generated by
operations and investments made by the Operating Partnership to the Special General Partner
pursuant to the agreement of limited partnership of the Operating Partnership, which, for the
avoidance of doubt, does not include distributions described in clauses (vi) and (vii) of this
definition and (2) Disposition Fees paid in respect of non-real property Investments.

“Operating Partnership.” CWI OP, LP, a Delaware limited partnership, through which
CWI owns Investments.

“Organization and Offering Expenses.” Those expenses payable by CWI and the Operating
Partnership in connection with the formation, qualification and registration of CWI and in
marketing and distributing Shares, including, but not limited to: (i) the preparation, printing,
filing and delivery of any registration statement or Prospectus (including any amendments thereof
or supplements thereto) and the preparing and printing of contractual agreements among CWI, the
Operating Partnership, the Dealer Manager and the Selected Dealers (including copies thereof);
(ii) the preparing and printing of the Articles of Incorporation and Bylaws, other solicitation
material and related documents and the filing and/or recording of such documents necessary to
comply with the laws of the State of Maryland for the formation of a corporation and thereafter for
the continued good standing of a corporation; (iii) the qualification or registration of the Shares
under state securities or “Blue Sky” laws; (iv) any escrow arrangements, including any compensation
to an escrow agent; (v) the filing fees payable to the SEC and to the Financial Industry Regulatory
Authority; (vi) reimbursement for the reasonable and identifiable out-of-pocket expenses of the
Dealer Manager and the Selected Dealers, including the cost of their counsel; (vii) the fees of
CWI’s counsel and accountants; (viii) all advertising expenses incurred in connection with an
Offering, including the cost of all sales literature and the costs related to investor and
broker-dealer sales and information meetings and marketing incentive programs; and (ix) selling
commissions, dealer manager fees, selected dealer fees, marketing fees, incentive fees and due
diligence 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 for
investment purposes that is not a Loan or a Property and is consistent with the investment
objectives 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 a
government.

 

- 6 -

 

“Pre-Existing Holdings.” The (i) the interests in the Lodging Facilities and Loans
listed on Schedule 14.1; and (ii) interests in Lodging Facilities and Loans acquired between the
date hereof and the expiration of the period commencing on the date of the initial filing of
Pre-Effective Amendment No. 2 to CWI’s Registration Statement on Form S-11 (No. 333-149899) with
respect to CWI and ending on the date on which CWI has first accepted net offering proceeds from
investors.

“Property or Properties.” CWI’s partial or entire interest in real property
(including leasehold interests) and personal or mixed property connected therewith. An Investment
which obligates CWI to acquire a Property will be treated as a Property for purposes of this
Agreement.

“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 its
Affiliates in connection with Properties acquired directly or through foreclosure.

“Prospectus.” Any prospectus or offering document pursuant to which CWI offers Shares
in a public or private offering, as the same may at any time and from time to time be amended or
supplemented, 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 and
subsequently issued Shares), or other evidences of equity or beneficial or other interests, voting
trust certificates, bonds, debentures, notes or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise or in general any instruments commonly known as
“securities” or any certificate of interest, shares or participation in temporary or interim
certificates 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 Industry
Regulatory Authority and who have executed an agreement with the Dealer Manager in which the
Selected Dealers agree to participate with the Dealer Manager in the Offering.

“Shareholders.” Those Persons who, at the time any calculation hereunder is to be
made, are shown as holders of record of Shares on the books and records of CWI or its transfer
agent.

“Shares.” All of the shares of common stock of CWI, $0.001 par value, and any other
shares of common stock of CWI.

“Special General Partner.” Carey Watermark Holdings, LLC and any permitted transferee
of the special general partnership interest under the agreement of limited partnership of the
Operating Partnership.

“Sponsor.” W. P. Carey & Co. LLC and any other Person directly or indirectly
instrumental in organizing, wholly or in part, CWI or any person who will control, manage or
participate in the management of CWI, and any Affiliate of any such person. Sponsor does not
include a person whose only relationship to CWI is that of an independent property manager and
whose only compensation is as such. Sponsor also does not include wholly independent third parties
such as attorneys, accountants and underwriters whose only compensation is for professional
services.

“Subadvisor.” CWA, LLC, an Illinois limited liability company.

 

- 7 -

 

“Subadvisory Agreement.” The Subadvisory Agreement, dated as of the date hereof (as
amended 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 of
the Contract Purchase Price of such Investment plus the Acquisition Fees and Acquisition Expenses
paid in connection with such Investment and other fees and costs approved by the Independent
Directors relating to the initial capitalization of the Investment.

2. Appointment. CWI hereby appoints the Advisor to serve as its advisor on the terms
and 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 its
best efforts to present to CWI potential investment opportunities and to provide a continuing and
suitable investment program consistent with the investment objectives and policies of CWI as
determined and adopted from time to time by the Board. In performance of this undertaking, subject
to the supervision of the Board and consistent with the provisions of the Articles of Incorporation
and 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 economic
and statistical data in connection with CWI’s assets and investment policies;

(b) provide the daily management of CWI and perform and supervise the various
administrative functions reasonably necessary for the management of CWI, the Operating
Partnership and the Investments;

(c) investigate, select, and, on behalf of CWI, engage, oversee and conduct business
with such Persons as the Advisor deems necessary to the proper performance of its
obligations hereunder, including but not limited to consultants, accountants,
correspondents, lenders, technical advisors, attorneys, brokers, underwriters, corporate
fiduciaries, 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, including
Affiliates of the Advisor, and Persons acting in any other capacity deemed by the Advisor
necessary or desirable for the performance of any of the foregoing services, including but
not 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 and
implementation of CWI’s policies, and furnish the Board with such information, advice and
recommendations as they may request or as otherwise may be necessary to enable them to
discharge 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 and
select potential Investments and deliver to the Investment Committee, as applicable, such
information as it may request or as otherwise may be necessary to enable the Investment
Committee to evaluate potential Investments; (ii) structure and negotiate the terms and
conditions of transactions pursuant to which Investments will be made, purchased or acquired
by 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 proceeds
from the sale of, or otherwise deal with the Investments; (v) enter into service contracts
for Properties and, to the extent necessary, perform all other operational functions for the
maintenance and administration of such; (vi) oversee such non-affiliated property managers
and other non-affiliated Persons who perform services for CWI; and (vii) undertake
accounting and other record-keeping functions at the Investment level;

 

- 8 -

 

(f) provide the Board with periodic reports regarding prospective Investments and with
periodic reports, no less than quarterly, of new Investments made during the prior fiscal
quarter;

(g) obtain the prior approval of the Board (including a majority of the Independent
Directors) for any and all investments in Properties which do not meet all of the
requirements set forth in Section 4(b) hereof;

(h) negotiate on behalf of CWI with banks or lenders for loans to be made to CWI, and
negotiate on behalf of CWI with investment banking firms and broker-dealers or negotiate
private sales of Shares and Securities or obtain loans for CWI, but in no event in such a
way 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 in
connection with the foregoing shall be the responsibility of CWI;

(i) obtain reports (which may be prepared by the Advisor or its Affiliates), where
appropriate, 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) the
handling, prosecuting and settling of any claims of or against CWI, including, but not
limited 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 reports
to 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 reporting
and other requirements of any governmental bodies or agencies to Shareholders and third
parties 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 and
incidental to CWI’s business and operations;

(n) provide CWI with such accounting data and any other information requested by CWI
concerning the investment activities of CWI as shall be required to prepare and to file all
periodic financial reports and returns required to be filed with the Securities and Exchange
Commission 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 may
be 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 and
strategic guidance to independent property operators that handle day-to-day operations of
CWI’s Properties;

(s) do all things necessary to assure its ability to render the services described in
this Agreement;

(t) perform such other services as may be required from time to time for management and
other activities relating to the assets of CWI as the Advisor shall deem advisable under the
particular circumstances;

(u) arrange to obtain on behalf of CWI as requested by the Board, and deliver to or
maintain 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 the
Board or by the Independent Directors, deliver to the Board or the Independent Directors, as
the case may be, all documentation reasonably requested by them to properly evaluate such
transaction, proposed transaction or other matter; and

(w) on an annual basis, no later than 90 days prior to the end of each term of this
Agreement, provide the Independent Directors with a report on (1) the Advisor’s performance
during the past year, (2) the compensation paid to the Advisor during such year and (3) any
proposed changes to the compensation to be paid to the Advisor during the upcoming year if
the Agreement is renewed. The Advisor’s report shall address, among other things, (a) those
matters identified in CWI’s organizational documents as matters which the Independent
Directors 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 past
year; and (c) the “dead deal” costs incurred by CWI during the past year. In addition, the
Independent Directors may request that the Advisor refund certain of the “dead deal” costs
incurred by CWI if, in light of the circumstances under which such costs were incurred, the
Independent 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 included
in Paragraphs (b), (c) and (d) of this Section 4 and in Section 7 hereof), and subject to
the continuing and exclusive authority of the Board over the management of CWI, the Board
hereby delegates to the Advisor the authority to: (1) locate, analyze and select Investment
opportunities; (2) structure and negotiate the terms and conditions of transactions pursuant
to which Investments will be made, purchased or acquired for CWI; (3) make Investments on
behalf of CWI in compliance with the investment objectives and policies of CWI; (4) arrange
for financing or refinancing, or make changes in the asset or capital structure of, and
dispose 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 with
independent 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 other
record-keeping functions at the Investment level.

 

- 10 -

 

(b) The consideration paid for an Investment acquired by CWI shall ordinarily be based
on 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 to
paragraphs (c) and (d) of this Section 4) invest on behalf of CWI in an Investment so long
as, in the Advisor’s good faith judgment, (i) the Total Investment Cost of such Investment
does not exceed the fair market value thereof, and in the case of an Investment that is a
Property, shall in no event exceed the Appraised Value of such Property and (ii) the
Investment, in conjunction with CWI’s other Investments and proposed Investments, at the
time CWI is committed to purchase or originate the Investment, is reasonably expected to
fulfill CWI’s investment objectives and policies as established by the Board and then in
effect. For purposes of the foregoing, the Total Investment Cost shall be measured at the
date 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 Advisor
shall not cause CWI to make Investments that do not comply with Article IX (Investment
Objectives and Limitations) of the Articles of Incorporation and related sections of the
Bylaws.

(d) The prior approval of the Board, including a majority of the Independent Directors
and 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 are
not contemplated by the terms of a Prospectus; (iii) transactions that present issues which
involve conflicts of interest for the Advisor, its members or Affiliates (other than
conflicts involving the payment of fees or the reimbursement of expenses); (iv) the purchase
or lease of assets from or to any Director, any Sponsor, the Advisor, the member of the
Advisor or any of their Affiliates; (v) any purchase or sale of an Investment from or to the
Advisor, its members, one or more Directors or their Affiliates; and (vi) the retention of
any Affiliate of the Advisor to provide services to CWI not expressly contemplated by this
Agreement and the terms of such services by such Affiliate. In addition, the Advisor shall
comply 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 or
revoke the authority set forth in this Section 4. If and to the extent the Board so
modifies or revokes the authority contained herein, the Advisor shall henceforth comply with
such modification or revocation, provided however, that such modification or revocation
shall be effective upon receipt by the Advisor and shall not be applicable to investment
transactions to which the Advisor has committed CWI prior to the date of receipt by the
Advisor of such notification.

5. Bank Accounts. The Advisor may establish and maintain one or more bank accounts in
its own name for the account of CWI or in the name of CWI and may collect and deposit into any such
account 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 shall
from time to time render appropriate accountings of such collections and payments to the Board and
to the auditors of CWI.

6. Records; Access. The Advisor shall maintain appropriate records of all its
activities 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 business
hours. 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 contrary
notwithstanding, the Advisor shall refrain from taking any action which, in its sole judgment made
in good faith, would (i) adversely affect the status of CWI as a REIT or of the Operating
Partnership as a partnership for Federal income tax purposes, (ii) subject CWI or the Operating
Partnership to regulation under the Investment Company Act of 1940, as amended, or (iii) would
violate any law, rule, regulation or statement of policy of any governmental body or agency having
jurisdiction over CWI, its Shares or its Securities, or otherwise not be permitted by the Articles
of Incorporation or Bylaws or agreement of limited partnership of the Operating Partnership, except
if such action shall be ordered by the Board, in which case the Advisor shall notify promptly the
Board of the Advisor’s judgment of the potential impact of such action and shall refrain from
taking such action until it receives further clarification or instructions from the Board. In such
event the Advisor shall have no liability for acting in accordance with the specific instructions
of the Board so given.

(a) Notwithstanding the foregoing, the Company shall indemnify and hold harmless the
the Advisor, its shareholders, members, directors, officers and employees, and partners,
shareholders, directors and officers of the Advisor’s shareholders and Affiliates of any of
them 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 the
Advisor’s shareholders and Affiliates of any of them, shall not be liable to CWI, the
Operating Partnership or to the Directors or Shareholders for any act or omission by the
Advisor, its shareholders, members, directors, officers and employees, or partners,
shareholders, directors or officers of the Advisor’s shareholders and Affiliates of any of
them, 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 and
Affiliates of any of them have determined, in good faith, that the course of conduct
which 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 and
Affiliates 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 by
the Advisor, its shareholders, members, directors, officers and employees, and
partners, shareholders, directors and officers of the Advisor’s shareholders or
Affiliates of any of them.

(b) Notwithstanding the foregoing, the Advisor and its Affiliates shall not be
indemnified by CWI or the Operating Partnership for any losses, liabilities or expenses
arising from or out of the alleged violation of federal or state securities laws unless one
or more of the following conditions are met:

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

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

 

- 12 -

 

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

(c) CWI and the Operating Partnership shall advance funds to the Advisor or its
Affiliates for legal expenses and other costs incurred as a result of any legal action for
which indemnification is being sought only if all of the following conditions are satisfied:

(i) The legal action relates to acts or omissions with respect to the
performance of duties or services on behalf of CWI;

(ii) The Advisor or the Affiliate has provided CWI or the Operating Partnership
with a written affirmation of his, her or its good faith belief that the standard of
conduct necessary for indemnification has been met;

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

(iv) The Advisor or the Affiliate undertakes to repay the advanced funds to
CWI, together with the applicable legal rate of interest thereon, in cases in which
such Advisor or Affiliate is found not to be entitled to indemnification.

(d) Notwithstanding the foregoing, the Advisor shall not be entitled to indemnification
or be held harmless pursuant to this Section 7 for any activity which the Advisor shall be
required 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 out
the 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 an
officer of CWI, except that no employee of the Advisor or its Affiliates who is also a Director or
officer of CWI shall receive any compensation from CWI for serving as a Director or officer other
than for (a) reasonable reimbursement for travel and related expenses incurred in attending
meetings of the Board and (b) awards made pursuant to the Incentive Plans; for the avoidance of
doubt, the limitations of this Section 8 shall not apply to any compensation paid by the Advisor or
any Affiliate for which CWI reimbursed the Advisor or Affiliate in accordance with Section 10
hereof. However, an employee of the Advisor who is also an officer of CWI is eligible to receive
restricted 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 the
advisory services rendered hereunder an asset management fee (the “Asset
Management Fee”) in an amount equal to 0.50% of the aggregate Average Market
Value of Investments. The Asset Management Fee with respect to an Investment will
be calculated monthly, beginning with the month in which CWI first makes the
Investment, and shall be pro rated for the number of days during a month that CWI
owns the Investment. The aggregate Asset Management Fees calculated with respect to
each 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 connection
with the investigation, selection, acquisition or origination (by purchase,
investment or exchange) of any Investment, an acquisition fee (an “Acquisition
Fee”) payable by the Operating Partnership. The Acquisition Fee payable to the
Advisor in respect of an Investment shall be payable at the time such Investment is
acquired in an amount equal to 2.50% of the Total Investment Cost.

(ii) The total amount of all Acquisition Fees, whether payable to the Advisor
or a third party, and Acquisition Expenses payable by the Operating Partnership may
not exceed 6% of the aggregate Contract Purchase Price of all Investments, measured
for 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 of
its initial Offering (excluding the net proceeds from the sale of Shares pursuant to
CWI’s dividend reinvestment program), and (B) on each December 31 thereafter, unless
a majority of the Directors (including a majority of the Independent Directors) not
otherwise interested in any transaction approves the excess as being commercially
competitive, 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 of
the Independent Directors.

(ii) The Advisor shall receive as compensation for services rendered in
connection with a qualifying refinancing of a Loan secured by a Property (the
“Refinanced Loan”), a loan refinancing fee (a “Loan Refinancing
Fee”) payable by the Operating Partnership. A refinancing will qualify for a
Loan Refinancing Fee only if (A) the maturity date of the Refinanced Loan is less
than one year from the date of the refinancing and the new loan has a term of at
least five years, (B) in the judgment of the Independent Directors, the terms of the
new loan represent an improvement over the Refinanced Loan, or (C) the new loan is
approved by the Independent Directors as being in the best interest of CWI. The
Loan Refinancing Fee payable to the Advisor in respect of a Refinanced Loan shall be
payable at upon the funding of the related mortgage loan or as soon thereafter as is
reasonably practicable in an amount up to 1.00% of the principal amount of the
Refinanced Loan.

(d) Disposition Fee.

(i) If the Advisor or an Affiliate provides a substantial amount of services in
the sale of an Investment, the Advisor or such Affiliate shall be entitled to
receive a disposition fee (the “Disposition Fee”) at the time of such
disposition, in an amount equal to the lesser of (1) 50% of the Competitive Real
Estate Commission (if applicable) and (2) 1.5% of the Contract Sales Price of the
Investment.

 

- 14 -

 

(ii) The total real estate commissions and Disposition Fees CWI pays to all
Persons shall not exceed an amount equal to the lesser of: (1) 6% of the Contract
Sales Price of the Investment and (2) the Competitive Real Estate Commission. The
Advisor shall present to the Independent Directors such information as they may
reasonably request to review the level of services provided by the Advisor in
connection with a disposition and the basis for the calculation of the amount of the
Disposition Fees on a quarterly basis. No payment of Disposition Fees shall be made
prior to review and approval of such information by the Independent Directors.

(e) Loans From Affiliates. CWI shall not borrow funds from the Advisor or its
Affiliates unless (A) the transaction is approved by a majority of the Independent Directors
and 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 or
fees received by the Advisor or its Affiliates do not exceed the amount which would be
charged by non-affiliated lending institutions and (C) the terms are not less favorable than
those prevailing for comparable arm’s-length loans for the same purpose. CWI will not
borrow on a long-term basis from the Advisor or its Affiliates unless it is to provide the
debt portion of a particular investment and CWI is unable to obtain a permanent loan at that
time or in the judgment of the Board, it is not in CWI’s best interest to obtain a permanent
loan at the interest rates then prevailing and the Board has reason to believe that CWI will
be able to obtain a permanent loan on or prior to the end of the loan term provided by the
Advisor or its Affiliates.

(f) Changes To Fee Structure. In the event the Shares are listed on a national
securities exchange or are included for quotation on the NASDAQ, CWI and the Advisor shall
negotiate in good faith to establish a fee structure appropriate for an entity with a
perpetual life. A majority of the Independent Directors must approve the new fee structure
negotiated with the Advisor. In negotiating a new fee structure, the Independent Directors
may consider any of the factors they deem relevant, including but not limited to: (a) the
size of the advisory fee in relation to the size, composition and profitability of CWI’s
portfolio; (b) the success of the Advisor in generating opportunities that meet the
investment objectives of CWI; (c) the rates charged to other REITs and to investors other
than REITs by advisors performing similar services; (d) additional revenues realized by the
Advisor and its Affiliates through their relationship with CWI, including loan
administration, underwriting or broker commissions, servicing, engineering, inspection and
other fees, whether paid by CWI or by others with whom CWI does business; (e) the quality
and extent of service and advice furnished by the Advisor; (f) the performance of the
investment 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 the
Advisor for the account of other clients. The Independent Directors shall not approve any
new fee structure that is in their judgment more favorable (taken as a whole) to the Advisor
than the current fee structure.

(g) Payment. Compensation payable to the Advisor pursuant to this Section 9
shall be paid in cash; provided, however, that any fee payable pursuant to this Section 9
may be paid, at the option of the Advisor, in the form of: (i) cash, (ii) restricted stock
of CWI, or (iii) a combination of cash and restricted stock. The Advisor shall notify CWI
in writing annually of
the form in which the fee shall be paid. Such notice shall be provided no later than
January 15 of each year. If no such notice is provided, the fee shall be paid in cash. For
purposes of the payment of compensation to the Advisor in the form of stock, the value of
each share of restricted stock shall be: (i) the Net Asset Value per Share as determined
based 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 being
offered to the public at the time a fee is paid with stock, the value shall be the price of
the stock without commissions. The Net Asset Value determined on the basis of such
appraisal may be adjusted on a quarterly or other basis by the Board to account for
significant capital transactions. Stock issued by CWI to the Advisor in payment of fees
hereunder shall be governed by the terms set forth in Schedule A hereto, or such other terms
as 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, in
addition to the compensation paid to the Advisor pursuant to Section 9 hereof, the Operating
Partnership shall pay directly or reimburse the Advisor for the following expenses:

(i) Organization and Offering Expenses; provided however, that within 60 days
after the end of the quarter in which any Offering terminates, the Advisor shall
reimburse the Operating Partnership for any Organization and Offering Expense
reimbursements received by the Advisor pursuant to this Section 10 to the extent
that such reimbursements, when added to the balance of the Organization and Offering
Expenses (excluding selling commissions and dealer manager fees) paid directly by
the Operating Partnership, exceed two percent of the Gross Offering Proceeds;
provided further, that the Advisor shall be responsible for the payment of all
Organization and Offering Expenses (excluding such commissions and such fees and
expense 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 of
whatever nature reasonably incurred and directly connected with the proposed
acquisition of any Investment that does not result in the actual acquisition of the
Investment, including, without limitation, personnel costs;

(iv) expenses other than Acquisition Expenses incurred in connection with the
investment of the funds of CWI, including, without limitation, business development
expenses, costs of retaining industry or economic consultants and finder’s fees and
similar payments, to the extent not paid by the seller of the Investment or another
third party, regardless of whether such expenses were incurred in transactions where
a fee is not payable to the Advisor;

(v) interest and other costs for borrowed money, including discounts, points
and other similar fees;

(vi) taxes and assessments on income of CWI, to the extent paid or advanced by
the Advisor, or on Investments and taxes as an expense of doing business;

(vii) costs associated with insurance required in connection with the business
of CWI or by the Directors;

(viii) expenses of managing and operating Investments owned by CWI, whether
payable 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 of
the Directors and Shareholders;

(xii) all expenses in connection with payments to the non-director members of
the Investment Committee for CWI’s Investments and meetings of the Investment
Committee;

(xiii) expenses associated with listing the Shares and Securities on a
securities exchange or the NASDAQ if requested by the Board;

(xiv) expenses connected with payments of Distributions in cash or otherwise
made or caused to be made by the Board to the Shareholders;

(xv) expenses of organizing, revising, amending, converting, modifying, or
terminating CWI, the Operating Partnership or their respective governing
instruments;

(xvi) expenses of maintaining communications with Shareholders, including the
cost of preparation, printing and mailing annual reports and other Shareholder
reports, proxy statements and other reports required by governmental entities; and

(xvii) all other Operating Expenses and other expenses the Advisor incurs in
connection with providing services to CWI, including reimbursement to the Advisor or
its Affiliates for the costs of rent, goods, materials and personnel incurred by
them based upon the compensation of the Persons involved and an appropriate share of
overhead allocable to those Persons as reasonably determined by the Advisor on a
basis approved annually by the Board (including a majority of the Independent
Directors). No reimbursement shall be made for the cost of time spent by personnel
on activities for which the Advisor receives a separate fee.

(b) Expenses incurred by the Advisor on behalf of CWI and payable pursuant to this
Section 10 shall be reimbursed quarterly to the Advisor within 60 days after the end of each
quarter, subject to the provisions of Section 13 hereof. The Advisor shall prepare a
statement documenting the Operating Expenses of CWI within 45 days after the end of each
quarter.

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 3
hereof, such services shall be separately compensated and shall not be deemed to be services
pursuant to the terms of this Agreement.

12. Fidelity Bond. The Advisor shall maintain a fidelity bond for the benefit of CWI
which bond shall insure CWI from losses of up to $5,000,000 and shall be of the type customarily
purchased 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 any
fiscal quarter of CWI exceed the greater of (i) two percent of the Average Invested Assets
during the same 12-month period or (ii) 25% of the Adjusted Net Income of CWI over the same
12-month period (the “2%/25% Guidelines”), then subject to paragraph (b) of this
Section 13, such excess amount shall be the sole responsibility of the Advisor and neither
the Operating Partnership nor CWI shall be liable for payment therefor. CWI may defer the
payment or distribution to the Advisor and the Special General Partner of fees, expenses and
distributions that would, if paid or distributed, cause Operating Expenses during such
12-month period to exceed the foregoing limitations; provided, however, that in determining
which items shall be paid and which may be deferred, priority will be given to the payment
of distributions to the Special General Partner over the payment to the Advisor of amounts
due under this Agreement.

(b) Notwithstanding the foregoing, to the extent that the Advisor becomes responsible
for any excess amount as provided in paragraph (a), if a majority of the Independent
Directors finds such excess amount or a portion thereof justified based on such unusual and
non-recurring factors as they deem sufficient, the Operating Partnership shall reimburse the
Advisor in future quarters for the full amount of such excess, or any portion thereof, but
only to the extent such reimbursement would not cause the Operating Expenses to exceed the
2%/25% Guidelines in the 12-month period ending on the last day of such quarter. In no
event shall the Operating Expenses payable by the Operating Partnership in any 12-month
period 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 that
exceeds the limitations provided in paragraph (a) unless the Independent Directors determine
that such excess expenses are justified, as provided in paragraph (b), and provided the
Operating 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 be
determined in accordance with generally accepted accounting principles applied on a
consistent basis.

(e) If the Special General Partner receives distributions pursuant to the agreement of
limited partnership of the Operating Partnership in respect of realized gains on the
disposition of an Investment, Adjusted Net Income, for purposes of calculating the Operating
Expenses, 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, directly
or 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 Permitted
Investment Assets; (ii) Pre-Existing Holdings; and (iii) Investment Opportunities presented
by 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 the
Subadvisory 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, nothing
herein contained shall prevent the Advisor from engaging in other activities, including the
rendering of advice to other investors (including other REITs) and the management of other
programs advised, sponsored or organized by the Advisor or its Affiliates; nor shall this
Agreement limit or restrict the right of the Advisor or any of its Affiliates or of any
director, member, officer, employee or shareholder of the Advisor or its Affiliates to
engage 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 any
investment in which CWI is a participant, also render advice and service to each other
participant therein. Without limiting the generality of the foregoing, CWI acknowledges
that (i) affiliates of W. P. Carey & Co. LLC provide or will provide services to the
CPA® REIT funds, (ii) W. P. Carey & Co. LLC owns investments in lodging
properties which are not being contributed to CWI which it will continue to own and manage
and (iii) the Advisor and its Affiliates may provide services to other programs sponsored or
managed by W. P. Carey & Co. LLC whether now in existence or formed hereafter, and (iv) the
Advisor and its Affiliates may make future investments for their own account. The Advisor
shall be responsible for promptly reporting to the Board the existence of any actual or
potential conflict of interest that arises that may affect its performance of its duties
under this Agreement. If the Sponsor, Advisor, Director or Affiliates thereof has or have
sponsored other investment programs with similar investment objectives which have investment
funds available at the same time as CWI, it shall be the duty of the Advisor to adopt a
reasonable method by which properties are to be allocated to the competing investment
entities 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 and
suitable 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 present
any 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 which
might be made by CWI and by another investment entity which the Advisor or its Affiliates
advises or manages, the Advisor shall consider, among other things, the investment portfolio
of each entity, cash flow of each entity and from the asset, the effect of the acquisition
on the diversification of each entity’s portfolio, the estimated income tax effects of the
purchase on each entity, the policies of each entity relating to leverage, the funds of each
entity available for investment, the amount of equity required to make the investment, the
length of time such funds have been available for investment and the manner in which the
potential investment can be structured by each entity, and whether a particular entity has
been formed specifically for the purpose of making particular types of investments (in which
case 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 not
created and do not intend to create by this Agreement a joint venture or partnership relationship
between them and nothing in this Agreement shall be construed to make them partners or joint
venturers or impose any liability as partners or joint venturers on either of them.

16. Term; Termination of Agreement. This Agreement, as amended and restated, shall
continue in force until September 30, 2011 or until 60 days after the date on which the Independent
Directors shall have notified the Advisor of their determination either to renew this
Agreement for an additional one-year period or terminate this Agreement, as required by the
Articles of Incorporation.

 

- 19 -

 

17. Termination by CWI. At the sole option of the Board (including a majority of the
Independent Directors), this Agreement may be terminated immediately by written notice of
termination from CWI to the Advisor upon the occurrence of events which would constitute Cause or
if any of the following events occur:

(a) If the Advisor shall be adjudged bankrupt or insolvent by a court of competent
jurisdiction, or an order shall be made by a court of competent jurisdiction for the
appointment of a receiver, liquidator, or trustee of the Advisor, for all or substantially
all of its property by reason of the foregoing, or if a court of competent jurisdiction
approves any petition filed against the Advisor for reorganization, and such adjudication or
order 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 a
petition seeking reorganization under the federal bankruptcy laws, or for relief under any
law for relief of debtors, or shall consent to the appointment of a receiver for itself or
for all or substantially all of its property, or shall make a general assignment for the
benefit 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 date
specified in such notice, which may be the day on which such notice is given or any date
thereafter. 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 occurrence
of such event.

18. Termination by Either Party. This Agreement may be terminated immediately without
penalty (but subject to the requirements of Section 20 hereof) by the Advisor by written notice of
termination to CWI upon the occurrence of events which would constitute Good Reason or by CWI
without cause or penalty (but subject to the requirements of Section 20 hereof) by action of the
Directors, 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 Advisor
without 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 the
affairs of the Advisor, provided: (i) that at the time of such assignment, such successor
organization shall be owned substantially by an entity directly or indirectly controlled by the
Advisor and only if such entity has a net worth of at least $5,000,000, and (ii) that the board of
directors of the Advisor shall deliver to the Board a statement in writing indicating the ownership
structure and net worth of the successor organization and a certification from the new Advisor as
to its net worth. Such an assignment shall bind the assignees hereunder in the same manner as the
Advisor is bound by this Agreement. The Advisor may assign any rights to receive fees or other
payments under this Agreement without obtaining the approval of the Board. This Agreement may not
be assigned by CWI or the Operating Partnership without the prior written consent of the Advisor
except in case of an assignment to a corporation or other organization which is a successor to CWI
or the Operating Partnership, in which case such successor organization shall be bound hereunder
and by the terms of said assignment in the same manner as CWI or the Operating Partnership is bound
by this Agreement.

20. Payments to and Duties of Advisor Upon Termination.

(a) After the Termination Date, the Advisor shall not be entitled to compensation for
further services hereunder but shall be entitled to receive from CWI the following:

(i) all unpaid reimbursements of Organization and Offering Expenses and of
Operating Expenses payable to the Advisor;

(ii) all earned but unpaid Asset Management Fees payable to the Advisor prior
to the Termination Date;

 

- 20 -

 

(iii) all earned but unpaid Acquisition Fees payable to the Advisor relating to
the acquisition of any Property prior to the Termination Date;

(iv) all earned but unpaid Disposition Fees payable to the Advisor relating to
the 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 any
property prior to the termination of this Agreement.

(b) Notwithstanding the foregoing, if this Agreement is terminated by CWI for Cause, or
by the Advisor for other than Good Reason, the Advisor will not be entitled to receive the
sums 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 Termination
Date either because they were not subordinated or all conditions to their payment had been
satisfied, shall be paid within 90 days after the Termination Date. All other amounts shall
be paid in a manner determined by the Board, but in no event on terms less favorable to the
Advisor than those represented by a note (i) maturing upon the liquidation of CWI or the
Operating 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, if
any, may be prepaid by the Operating Partnership at any time prior to maturity with accrued
interest to the date of payment but without premium or penalty. Notwithstanding the
foregoing, any amounts that relate to Investments (A) shall be an amount which provides
compensation to the Advisor only for that portion of the holding period for the respective
Investments during which the Advisor provided services to CWI, (B) shall not be due and
payable until the Property, Loan or Other Permitted Investment Asset to which such amount
relates is sold or refinanced, and (C) shall not bear interest until the Property, Loan or
Other Permitted Investment Asset to which such amount relates is sold or refinanced. A
portion of the amount shall be paid as each Investment owned by CWI on the Termination Date
is sold. The portion of such amount payable upon each such sale shall be equal to (X) such
amount multiplied by (Y) the percentage calculated by dividing the fair value (at the
Termination Date) of the Investment sold by CWI divided by the total fair value (at the
Termination 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 the
account of CWI pursuant to this Agreement, after deducting any accrued compensation
and reimbursement for its expenses to which it is then entitled;

(ii) deliver to the Board a full accounting, including a statement showing all
payments collected by it and a statement of all money held by it, covering the
period following the date of the last accounting furnished to the Board;

(iii) deliver to the Board all assets, including the Properties, Loans, and
Other Permitted Investment Assets, and documents of CWI then in the custody of the
Advisor; 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 its
Affiliates 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 the
services to be provided under this Agreement and the Subadvisory Agreement, in each case of the
Advisor or the Subadvisor or any of their respective Affiliates (each a “Restricted
Person”) or (ii) any Affiliate of a Restricted Person.

22. Indemnification by CWI and the Operating Partnership. Neither CWI nor the
Operating Partnership shall indemnify the Advisor or any of its Affiliates for any loss or
liability suffered by the Advisor or the Affiliate, or hold the Advisor or the Affiliate harmless
for 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 and
the Operating Partnership from liability, claims, damages, taxes or losses and related expenses
including attorneys’ fees, to the extent that such liability, claims, damages, taxes or losses and
related expenses are not fully reimbursed by insurance and are incurred by reason of the Advisor’s
bad 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 the
joint and several obligations of CWI and the Operating Partnership, unless otherwise specifically
provided in this Agreement.

25. Notices. Any notice, report or other communication required or permitted to be
given hereunder shall be in writing unless some other method of giving such notice, report or other
communication is accepted by the party to whom it is given, and shall be given by being delivered
by hand or by overnight mail or other overnight delivery service to the addresses set forth herein:

	 	 	 
	To the Board
and to CWI:

	 	Carey Watermark Investors Incorporated

50 Rockefeller Plaza

New York, NY 10020
	 
	 	 
	To the Operating Partnership:

	 	c/o Carey Watermark Investors Incorporated

50 Rockefeller Plaza

New York, NY 10020

 

- 22 -

 

	 	 	 
	To the Advisor:

	 	Carey Lodging Advisors, LLC

50 Rockefeller Plaza

New York, NY 10020
	 
	 	 
	 

	 	With a copy to:

Carey Asset Management Corp.

50 Rockefeller Plaza

New York, NY 10020 and
	 
	 	 
	 

	 	During the term of the Subadvisory
Agreement, with a copy to:
	 
	 	 
	 

	 	CWA, LLC

c/o Watermark Capital Partners, LLC

207 East Westminster, Ste. 200

Lake Forest, IL 60045

Either party may at any time give notice in writing to the other party of a change in its
address for the purposes of this Section 25.

26. Modification. This Agreement shall not be changed, modified, terminated, or
discharged, 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 severable
from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue
of the fact that for any reason any other or others of them may be invalid or unenforceable in
whole or in part.

28. Construction. This Agreement shall be governed by, construed and enforced in
accordance with the laws of the State of New York.

29. Entire Agreement. This Agreement contains the entire agreement and understanding
among the parties hereto with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or
written, of any nature whatsoever with respect to the subject matter hereof. The express terms
hereof control and supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof. This Agreement may not be modified or amended other than by an agreement
in writing.

30. Indulgences, Not Waivers. Neither the failure nor any delay on the part of a
party to exercise any right, remedy, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege
preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver
of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of
such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be
effective 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 other
gender, masculine, feminine or neuter, as the context requires.

 

- 23 -

 

32. Titles Not to Affect Interpretation. The titles of Sections and subsections
contained in this Agreement are for convenience only, and they neither form a part of this
Agreement nor are they to be used in the construction or interpretation hereof.

33. Execution in Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall together constitute one and the same instrument. This
Agreement shall become binding when one or more counterparts hereof, individually or taken
together, 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 for
22,222 Shares (the “Initial Investment”). The Advisor or its Affiliates may not sell any
of the Shares purchased with the Initial Investment during the term of this Agreement. The
restrictions included above shall not continue to apply to any Shares other than the Shares
acquired through the Initial Investment acquired by the Advisor or its Affiliates. The Advisor
shall not vote any Shares it now owns or hereafter acquires in any vote for the election of
Directors or any vote regarding the approval or termination of any contract with the Advisor or any
of its Affiliates.

 

- 24 -

 

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

	 	 	 	 	 
	 	CAREY WATERMARK INVESTORS INCORPORATED

 	 
	 	By:  	/s/ Thomas E. Zacharias
 	 
	 	 	Name:  	Thomas E. Zacharias 	 
	 	 	Title:  	Authorized Officer 	 
	 	 	 	 	 
	 	CWI OP, LP

 	 
	 	By:  	/s/ Thomas E. Zacharias
 	 
	 	 	Name:  	Thomas E. Zacharias 	 
	 	 	Title:  	Authorized Officer 	 
	 	 	 	 	 
	 	CAREY LODGING ADVISORS, LLC

 	 
	 	By:  	CAREY ASSET MANAGEMENT CORP., as sole member
 	 
	 	 	 	 	 
	 	By:  	/s/ Thomas E. Zacharias
 	 
	 	 	Name:  	Thomas E. Zacharias 	 
	 	 	Title:  	Managing Director and Chief Operating Officer 	 

 

- 25 -

 

SCHEDULE 14.1

Pre-Existing Holdings

The Lodging Facilities and Lodging Loans described in the Registration Statement on Form S-11
(File No. 333-149899) as being owned by the Advisor and its Affiliates.

 

- 26 -

 

SCHEDULE A

This Schedule A sets forth the terms governing any Shares issued by CWI to the Advisor in
payment of advisory fees set forth in the Agreement. Capitalized terms used herein and not defined
herein shall have the meanings ascribed to them in the Agreement.

1. Restrictions. The Shares are subject to vesting over a five-year period. The
Shares shall vest ratably over a five-year period with 20% of the Shares paid in each payment
vesting on each of the first through fifth anniversary of the date hereof. Prior to the vesting of
the ownership of the Shares in the Advisor, the Shares may not be transferred by the Advisor.

2. Immediate Vesting. Upon the expiration or termination of the Agreement for any
reason other than a termination for Cause under Section 17 of the Agreement or upon a “Change of
Control” of CWI (as defined below), all Shares granted to the Advisor pursuant to Section 9(g) of
the Agreement shall vest immediately and all restrictions shall lapse. For purposes of this
Schedule A, a “Change of Control” of CWI shall be deemed to have occurred if there has been a
change in the ownership of CWI of a nature that would be required to be reported in response to the
disclosure requirements of Schedule 14A of Regulation 14A promulgated under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), as enacted and in force on the date hereof,
whether or not CWI is then subject to such reporting requirements; provided, however, that, without
limitation, a “Change of Control” shall be deemed to have occurred if:

(i) any “person,” as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than CWI, any of its subsidiaries, any trustee, fiduciary or
other person or entity holding securities under any employee benefit plan of CWI or
any of its subsidiaries), together with all “affiliates” and “associates” (as such
terms are defined in Rule 14b-2 under the Exchange Act) of such person, shall become
the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of CWI representing 25 % or more of
either (A) the combined voting power of CWI’s then outstanding securities having the
right to vote in an election of the Board (“Voting Securities”) or (B) the
Shares then outstanding (in either such case other than as a result of acquisition
of securities directly from CWI);

(ii) persons who, as of the date hereof, constitute the Board (the
“Incumbent Directors”) cease for any reason, including without limitation,
as a result of a tender offer, proxy contest, merger or similar transaction, to
constitute at least a majority of the Board, provided that any person becoming a
director of CWI subsequent to the date hereof whose election or nomination for
election was approved by a vote of at least a majority of the Incumbent Directors
shall be considered an Incumbent Director; or

(iii) the stockholders of CWI shall approve (A) any consolidation or merger of
CWI or any subsidiary where the stockholders of CWI, immediately prior to the
consolidation or merger, would not, immediately after the consolidation or merger,
beneficially own (as such term is defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, shares representing in the aggregate 50 % or more of the
voting equity of the entity issuing cash or securities in the consolidation or
merger (or of its ultimate parent entity, if any), (B) any sale, lease, exchange or
other transfer (in one transaction or a series of transactions contemplated or
arranged by any party as a single plan) of all or substantially all of the assets of
CWI or (C) any plan or proposal for the liquidation or dissolution of CWI.

 

- 27 -

 

Notwithstanding the foregoing, a Change of Control shall not be deemed to have occurred for
purposes of the foregoing clause (i) solely as the result of an acquisition of securities by CWI
which, by reducing the number of Shares outstanding, increases (A) the proportionate number of
Shares beneficially owned by any person to 25% or more of the Shares then outstanding, or (B) the
proportionate voting power represented by the Shares beneficially owned by any person to 25% or
more of the combined voting power of all then outstanding Voting Securities; provided, however,
that if any person referred to in clause (A) or (B) of this sentence shall thereafter become the
beneficial owner of any additional Shares or other Voting Securities (other than pursuant to a
Share split, Share dividend, or similar transaction), then a Change of Control shall be deemed to
have occurred for purposes of the foregoing clause (i).

3. Exception. Notwithstanding anything else in the Agreement to the contrary, the
Shares shall continue to vest according to the vesting schedule in this Section A regardless of:
(a) the expiration of the Agreement for any reason other than a termination by CWI for Cause or a
resignation by the Advisor for other than Good Reason, (b) the merger of CWI and an Affiliate of
CWI, or (c) any Change of Control of CWI in connection with a merger of CWI with an Affiliate of
CWI.

 

- 28 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00180-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00180-of-00352.parquet"}]]