Document:

Exhibit 10.7

Exhibit 10.7

[Form of CWI Indemnification Agreement]

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT is made and entered into this
 _____ 

day of                     , 2010
(“Agreement”), by and between Carey Watermark Investors Incorporated, a Maryland corporation (the
“Company”), and [Name of Director or Officer] (“Indemnitee”).

WHEREAS, at the request of the Company, Indemnitee currently serves as a director and/or
officer of the Company and may, therefore, be subjected to claims, suits or proceedings arising as
a result of his or her service; and

WHEREAS, as an inducement to Indemnitee to continue to serve as such director and/or officer,
the Company has agreed to indemnify and to advance expenses and costs incurred by Indemnitee in
connection with any such claims, suits or proceedings, subject to certain limitations set forth
herein; and

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

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

Section 1. Definitions. For purposes of this Agreement:

(a) “Affiliates” means, with respect to a specified person or entity, another person or entity
that directly, or indirectly through one or more persons or entities, Controls or is Controlled by
or is under common Control with the person or entity specified.

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

(c) “Change of Control” means a change in control of the Company occurring after the Effective
Date of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated
under the Securities Exchange Act of 1934, as amended (the “Act”), whether or not the Company is
then subject to such reporting requirement; provided, however, that, without limitation, such a
Change in Control shall be deemed to have occurred if after the Effective Date (i) any “person” (as
such term is used in Sections 13(d) and 14(d) of the Act) is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company
representing 15% or more of the combined voting power of the Company’s then outstanding securities
without the prior approval of at least two-thirds of the members of the Board of Directors in
office immediately prior to such person attaining such percentage interest; (ii) there occurs a
proxy contest, or the Company is a party to a merger,
consolidation, sale of assets, plan of liquidation or other reorganization not approved by at
least two-thirds of the members of the Board of Directors then in office, as a consequence of which
members of the Board of Directors in office immediately prior to such transaction or event
constitute less than a majority of the Board of Directors thereafter; or (iii) during any period of
two consecutive years, other than as a result of an event described in clause (a)(ii) of this
Section 1, individuals who at the beginning of such period constituted the Board of Directors
(including for this purpose any new director whose election or nomination for election by the
Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of such period) cease for any reason to constitute at
least a majority of the Board of Directors.

 

 

 

(d) “Corporate Status” means the status of a person who is or was a director, officer,
employee or agent of the Company or of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise for which such person is or was serving at the request of
the Company.

(e) “Disinterested Director” means a director of the Company who is not and was not a party to
the Proceeding in respect of which indemnification is sought by Indemnitee.

(f) “Effective Date” means the date set forth in the first paragraph of this Agreement.

(g) “Expenses” shall include all reasonable and out-of-pocket attorneys’ fees, retainers,
court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, delivery service fees, and all other
disbursements or expenses of the types customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness
in a Proceeding.

(h) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in
matters of corporation law and neither is, nor in the past five years has been, retained to
represent: (i) the Company, Affiliates of the Company, any entity for which the Company’s external
advisor or its Affiliates acts as investment advisor, or Indemnitee in any matter material to
either such party, or (ii) any other party to or witness in the Proceeding giving rise to a claim
for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall
not include any person who, under the applicable standards of professional conduct then prevailing,
would have a conflict of interest in representing either the Company or Indemnitee in an action to
determine Indemnitee’s rights under this Agreement. If a Change of Control has not occurred,
Independent Counsel shall be selected by the Board of Directors, with the approval of Indemnitee,
which approval will not be unreasonably withheld. If a Change of Control has occurred, Independent
Counsel shall be selected by Indemnitee, with the approval of the Board of Directors, which
approval will not be unreasonably withheld.

(i) “Proceeding” includes any threatened, pending or completed action, suit, arbitration,
alternate dispute resolution mechanism, investigation, administrative hearing or any other
proceeding, whether civil, criminal, administrative or investigative (including on appeal).

Section 2. Services by Indemnitee. Indemnitee will serve as a director and/or officer
of the Company. However, this Agreement shall not impose any obligation on Indemnitee or the
Company to continue Indemnitee’s service to the Company beyond any period otherwise required by law
or by other agreements or commitments of the parties, if any.

 

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Section 3. Indemnification — General. Subject to the limitations in Section 7, the
Company shall indemnify, and advance Expenses to, Indemnitee (a) as provided in this Agreement and
(b) as otherwise permitted by Maryland law in effect on the date hereof and as amended from time to
time; provided, however, that no change in Maryland law shall have the effect of reducing the
benefits available to Indemnitee hereunder based on Maryland law as in effect on the Effective
Date. Subject to the limitations in Section 7, the rights of Indemnitee provided in this Section 3
shall include the rights set forth in the other sections of this Agreement, including any
additional indemnification permitted by Section 2-418(g) of the Maryland General Corporation Law
(“MGCL”).

Section 4. Rights to Indemnification. Subject to the limitations in Section 7, if, by
reason of his or her Corporate Status, Indemnitee is, or is threatened to be, made a party to or a
witness in any Proceeding, Indemnitee shall be indemnified against all judgments, penalties, fines
and amounts paid in settlement and all Expenses actually and reasonably incurred by him or her or
on his or her behalf unless it is established by clear and convincing evidence that (i) the act or
omission of Indemnitee was material to the matter giving rise to the Proceeding and (a) was
committed in bad faith or (b) was the result of active and deliberate dishonesty, (ii) Indemnitee
actually received an improper personal benefit in money, property or services, or (iii) in the case
of any criminal Proceeding, Indemnitee had reasonable cause to believe that his or her conduct was
unlawful.

Section 5. Court-Ordered Indemnification. Subject to the limitations in Section 7, a
court of appropriate jurisdiction, upon application of Indemnitee and such notice as the court
shall require, may order indemnification in the following circumstances:

(a) if it determines Indemnitee is entitled to reimbursement under Section 2-418(d)(1) of the
MGCL, the court shall order indemnification, in which case Indemnitee shall be entitled to recover
the expenses of securing such reimbursement; or

(b) if it determines that Indemnitee is fairly and reasonably entitled to indemnification in
view of all the relevant circumstances, whether or not Indemnitee (i) has met the standards of
conduct set forth in Section 2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of
an improper personal benefit under Section 2-418(c) of the MGCL, in which case the court may order
such indemnification as the court shall deem proper.

Section 6. Indemnification for Expenses of a Party Who is Wholly or Partly Successful.
Subject to the limitations in Section 7, to the extent that Indemnitee is, by reason of his or her
Corporate Status, made a party to and is successful, on the merits or otherwise, in the defense of
any Proceeding, he or she shall be indemnified for all Expenses actually and reasonably incurred by
him or her or on his or her behalf in connection therewith. If Indemnitee is not wholly successful
in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than
all claims, issues or matters in such Proceeding, the Company shall
indemnify Indemnitee under this Section 6 for all Expenses actually and reasonably incurred by
him or her or on his or her behalf in connection with each successfully resolved claim, issue or
matter, allocated on a reasonable and proportionate basis. For purposes of this Section and
without limitation, the termination of any claim, issue or matter in such a Proceeding by
dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim,
issue or matter.

 

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Section 7. Limitations on Indemnification. Notwithstanding any other provision of
this Agreement, the Company shall not be obligated under this Agreement to make any payment to
Indemnitee for indemnification with respect to any Proceeding:

(a) for any loss or liability unless all of the following conditions are met: (i) Indemnitee
has determined, in good faith, that the course of conduct that caused the loss or liability was in
the best interests of the Company, (ii) Indemnitee was acting on behalf of or performing services
for the Company, (iii) if Indemnitee is an inside director of the Company, such loss or liability
was not the result of negligence or misconduct, or, if Indemnitee is an independent director, gross
negligence or willful misconduct, and (iv) such indemnification is recoverable only out of the
Company’s net assets and not from the Company’s stockholders; or

(b) for any loss or liability arising from an 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
Indemnitee, (ii) such claims have been dismissed with prejudice on the merits by a court of
competent jurisdiction as to Indemnitee; or (iii) a court of competent jurisdiction approves a
settlement of the claims against 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 the Company were
offered or sold as to indemnification for violations of securities laws.

Section 8. Advance of Expenses. The Company shall advance all reasonable Expenses
actually and reasonably incurred by or on behalf of Indemnitee in connection with any Proceeding
(other than a Proceeding brought to enforce indemnification under this Agreement, applicable law,
the charter or Bylaws of the Company, any agreement or a resolution of the stockholders entitled to
vote generally in the election of directors or of the Board of Directors) to which Indemnitee is,
or is threatened to be, made a party or a witness, which is initiated by a third party who is not a
stockholder of the Company, or which is initiated by a stockholder of the Company acting in his or
her capacity as such and a court of competent jurisdiction specifically approves such advancement,
and which relates to acts or omissions with respect to the performance of duties or services on
behalf of the Company, within ten days after the receipt by the Company of a statement or
statements from Indemnitee requesting such advance or advances from time to time, whether prior to
or after final disposition of such Proceeding. Such statement or statements shall reasonably
evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a
written affirmation by Indemnitee of Indemnitee’s good faith belief that the standard of conduct
necessary for indemnification by the Company as authorized by law and by this Agreement has been
met and a written undertaking by or on behalf of Indemnitee, in substantially the form attached
hereto as

 

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Exhibit A
or in such form as may be required under applicable law as in effect at the time of the execution thereof, to reimburse
the portion of any Expenses advanced to Indemnitee, together with the applicable legal rate of
interest thereon, relating to claims, issues or matters in the Proceeding as to which it shall
ultimately be established, by clear and convincing evidence, that the standard of conduct for
indemnification, as set forth in Section 4, has not been met and which have not been successfully
resolved as described in Section 6. To the extent that Expenses advanced to Indemnitee do not
relate to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on
a reasonable and proportionate basis. The undertaking required by this Section 8 shall be an
unlimited general obligation by or on behalf of Indemnitee and shall be accepted without reference
to Indemnitee’s financial ability to repay such advanced Expenses and without any requirement to
post security therefor. In any Proceeding initiated by a stockholder of the Company acting in his
or her capacity as such, the Company shall promptly petition a court of competent jurisdiction for
approval of the advancement of all reasonable Expenses actually and reasonably incurred by or on
behalf of Indemnitee upon the receipt by the Company of a statement or statements from Indemnitee
requesting such advance or advances.

Section 9. Procedure for Determination of Entitlement to Indemnification.

(a) To obtain indemnification under Section 4 of this Agreement, Indemnitee shall submit to
the Company a written request, including such documentation and information as is reasonably
available to Indemnitee and is reasonably necessary to determine whether and to what extent
Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board of Directors in writing that
Indemnitee has requested indemnification.

(b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of
Section 9(a) hereof, a determination, if required by applicable law, with respect to Indemnitee’s
entitlement thereto shall promptly be made in the specific case: (i) if a Change of Control shall
have occurred, by Independent Counsel in a written opinion to the Board of Directors, a copy of
which shall be delivered to Indemnitee; or (ii) if a Change of Control shall not have occurred, (A)
by the Board of Directors (or a duly authorized committee thereof) by a majority vote of a quorum
consisting of Disinterested Directors (as herein defined), or (B) if a quorum of the Board of
Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, such
quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the
Board of Directors, a copy of which shall be delivered to Indemnitee, or (C) if so directed by a
majority of the members of the Board of Directors, by the stockholders of the Company. If it is so
determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made
within ten days after such determination. Indemnitee shall cooperate with the person, persons or
entity making such determination with respect to Indemnitee’s entitlement to indemnification,
including providing to such person, persons or entity upon reasonable advance request any
documentation or information which is not privileged or otherwise protected from disclosure and
which is reasonably available to Indemnitee and reasonably necessary to such determination in the
discretion of the Board of Directors or Independent Counsel if retained pursuant to clause (ii)(B)
of this Section 9. Any Expenses actually and reasonably incurred by Indemnitee in so cooperating
with the person, persons or entity making such determination shall be borne by the Company
(irrespective of the
determination as to Indemnitee’s entitlement to indemnification) and the Company shall
indemnify and hold Indemnitee harmless therefrom.

 

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(c) In making a determination with respect to entitlement to indemnification hereunder, the
person or persons or entity making such determination shall presume that Indemnitee is entitled to
indemnification under this Agreement if Indemnitee has submitted a request for indemnification in
accordance with Section 9(a) of this Agreement, and the Company shall have the burden of proof to
overcome that presumption in connection with the making of any determination contrary to that
presumption.

(d) The termination of any Proceeding by judgment, order, settlement, conviction, a plea of
nolo contendere or its equivalent, or an entry of an order of probation prior to
judgment, does not create a presumption that Indemnitee did not meet the requisite standard of
conduct described herein for indemnification.

Section 10. Remedies of Indemnitee.

(a) If (i) a determination is made pursuant to Section 9 of this Agreement that Indemnitee is
not entitled to indemnification under this Agreement, (ii) advance of Expenses is not timely made
pursuant to Section 8 of this Agreement, (iii) no determination of entitlement to indemnification
shall have been made pursuant to Section 9(b) of this Agreement within 30 days after receipt by the
Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to
Section 6 of this Agreement within ten days after receipt by the Company of a written request
therefor, or (v) payment of indemnification is not made within ten days after a determination has
been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an
adjudication in an appropriate court located in the State of Maryland, or in any other court of
competent jurisdiction, of his or her entitlement to such indemnification or advance of Expenses.
Alternatively, Indemnitee, at his or her option, may seek an award in arbitration to be conducted
by a single arbitrator pursuant to the commercial Arbitration Rules of the American Arbitration
Association. Indemnitee shall commence such proceeding seeking an adjudication or an award in
arbitration within 180 days following the date on which Indemnitee first has the right to commence
such proceeding pursuant to this Section 10(a); provided, however, that the foregoing clause shall
not apply to a proceeding brought by Indemnitee to enforce his or her rights under Section 6 of
this Agreement.

(b) In any judicial proceeding or arbitration commenced pursuant to this Section 10, the
Company shall have the burden of proving that Indemnitee is not entitled to indemnification or
advance of Expenses, as the case may be.

(c) If a determination shall have been made pursuant to Section 9(b) of this Agreement that
Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration commenced pursuant to this Section 10, absent a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for indemnification.

(d) In the event that Indemnitee, pursuant to this Section 10, seeks a judicial adjudication
of or an award in arbitration to enforce his or her rights under, or to recover damages for breach
of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be
indemnified by the Company for, any and all Expenses actually and reasonably incurred by him or her
in such judicial adjudication or arbitration. If it shall be determined in such judicial
adjudication or arbitration that Indemnitee is entitled to receive part but not all of the
indemnification or advance of Expenses sought, the Expenses incurred by Indemnitee in connection
with such judicial adjudication or arbitration shall be appropriately prorated.

 

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Section 11. Defense of the Underlying Proceeding.

(a) Indemnitee shall notify the Company promptly upon being served with or receiving any
summons, citation, subpoena, complaint, indictment, information, notice, request or other document
relating to any Proceeding which may result in the right to indemnification or the advance of
Expenses hereunder; provided, however, that the failure to give any such notice shall not
disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to
indemnification or the advance of Expenses under this Agreement unless the Company’s ability to
defend in such Proceeding or to obtain proceeds under any insurance policy is materially and
adversely prejudiced thereby, and then only to the extent the Company is thereby actually so
prejudiced.

(b) Subject to the provisions of the last sentence of this Section 11(b) and of Section 11(c)
below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise
to indemnification hereunder; provided, however, that the Company shall notify Indemnitee of any
such decision to defend within 15 calendar days following receipt of notice of any such Proceeding
under Section 11(a) above. The Company shall not, without the prior written consent of Indemnitee,
which shall not be unreasonably withheld or delayed, consent to the entry of any judgment against
Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of
Indemnitee or (ii) does not include, as an unconditional term thereof, the full release of
Indemnitee from all liability in respect of such Proceeding, which release shall be in form and
substance reasonably satisfactory to Indemnitee. This Section 11(b) shall not apply to a
Proceeding brought by Indemnitee under Section 10 above or Section 17 below.

(c) Notwithstanding the provisions of Section 11(b) above, if in a Proceeding to which
Indemnitee is a party by reason of Indemnitee’s Corporate Status, (i) Indemnitee reasonably
concludes, based upon an opinion of counsel approved by the Company, which approval shall not be
unreasonably withheld, that he or she may have separate defenses or counterclaims to assert with
respect to any issue which may not be consistent with other defendants in such Proceeding, (ii)
Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which
approval shall not be unreasonably withheld, that an actual or apparent conflict of interest or
potential conflict of interest exists between Indemnitee and the Company, or (iii) if the Company
fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to
be represented by separate legal counsel of Indemnitee’s choice, subject to the prior approval of
the Company, which shall not be unreasonably withheld, at the expense of the Company. In addition,
if the Company fails to
comply with any of its obligations under this Agreement or in the event that the Company or
any other person takes any action to declare this Agreement void or unenforceable, or institutes
any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to
Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee’s choice,
subject to the prior approval of the Company, which shall not be unreasonably withheld, at the
expense of the Company (subject to Section 10(d)), to represent Indemnitee in connection with any
such matter.

 

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Section 12. Non-Exclusivity; Survival of Rights; Subrogation; Insurance.

(a) The rights of indemnification and advance of Expenses as provided by this Agreement shall
not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under
applicable law, the charter or Bylaws of the Company, any agreement or a resolution of the
stockholders entitled to vote generally in the election of directors or of the Board of Directors,
or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof
shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken
or omitted by such Indemnitee in his or her Corporate Status prior to such amendment, alteration or
repeal.

(b) In the event of any payment under this Agreement, the Company shall be subrogated to the
extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers
required and take all action necessary to secure such rights, including execution of such documents
as are necessary to enable the Company to bring suit to enforce such rights.

(c) The Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable or payable or reimbursable as Expenses hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance policy, contract,
agreement or otherwise.

Section 13. Insurance. The Company will use its reasonable best efforts to acquire
and maintain directors and officers liability insurance, on terms and conditions deemed appropriate
by the Board of Directors of the Company, with the advice of counsel, covering Indemnitee or any
claim made against Indemnitee for service as a director or officer of the Company and covering the
Company for any indemnification or advance of Expenses made by the Company to Indemnitee for any
claims made against Indemnitee for service as a director or officer of the Company. Without in any
way limiting any other obligation under this Agreement, the Company shall indemnify Indemnitee for
any payment by Indemnitee arising out of the amount of any deductible or retention and the amount
of any excess of the aggregate of all judgments, penalties, fines, settlements and reasonable
Expenses actually and reasonably incurred by Indemnitee in connection with a Proceeding over the
coverage of any insurance referred to in the previous sentence.

Section 14. Indemnification for Expenses of a Witness. Subject to the limitations in
Section 7, to the extent that Indemnitee is or may be, by reason of his or her Corporate Status, a
witness in any Proceeding, whether instituted by the Company or any other party, and to which
Indemnitee is not a party but in which the Indemnitee receives a subpoena to testify or to
produce documents, he or she shall be advanced all reasonable Expenses and indemnified against
all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection
therewith.

 

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Section 15. Duration of Agreement; Binding Effect.

(a) This Agreement shall continue until and terminate ten years after the date that
Indemnitee’s Corporate Status shall have ceased; provided, that the rights of Indemnitee hereunder
shall continue until the final termination of any Proceeding then pending in respect of which
Indemnitee is granted rights of indemnification or advance of Expenses hereunder and of any
proceeding commenced by Indemnitee pursuant to Section 10 of this Agreement relating thereto.

(b) The indemnification and advance of Expenses provided by, or granted pursuant to, this
Agreement shall be binding upon and be enforceable by the parties hereto and their respective
successors and assigns (including any direct or indirect successor by purchase, merger,
consolidation or otherwise to all or substantially all of the business or assets of the Company),
shall continue as to an Indemnitee who has ceased to be a director, trustee, officer, employee or
agent of the Company or of any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise which such person is or was serving in any capacity at the written
request of the Company, and shall inure to the benefit of Indemnitee and his or her spouse,
assigns, heirs, devisees, executors and administrators and other legal representatives.

(c) The Company shall require and cause any successor (whether direct or indirect by purchase,
merger, consolidation or otherwise) to all, substantially all or a substantial part of the business
and/or assets of the Company, by written agreement in form and substance satisfactory to
Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform if no such succession had taken place.

Section 16. Severability. If any provision or provisions of this Agreement shall be
held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality
and enforceability of the remaining provisions of this Agreement (including, without limitation,
each portion of any section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way
be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this
Agreement (including, without limitation, each portion of any section of this Agreement containing
any such provision held to be invalid, illegal or unenforceable, that is not itself invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

Section 17. Exception to Right of Indemnification or Advance of Expenses.
Notwithstanding any other provision of this Agreement, Indemnitee shall not be entitled to
indemnification or advance of Expenses under this Agreement with respect to any Proceeding brought
by Indemnitee, unless (a) the Proceeding is brought to enforce indemnification under this
Agreement, and then only to the extent in accordance with and as authorized by Sections 8 and 10 of
this Agreement, or (b) the Company’s Bylaws, as amended, the Company’s charter, a
resolution of the stockholders entitled to vote generally in the election of directors or of
the Board of Directors or an agreement approved by the Board of Directors to which the Company is a
party expressly provide otherwise.

 

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Section 18. Identical Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original but all of which
together shall constitute one and the same Agreement. One such counterpart signed by the party
against whom enforceability is sought shall be sufficient to evidence the existence of this
Agreement.

Section 19. Headings. The headings of the paragraphs of this Agreement are inserted
for convenience only and shall not be deemed to constitute part of this Agreement or to affect the
construction thereof.

Section 20. Modification and Waiver. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

Section 21. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand
and receipted for by the party to whom said notice or other communication shall have been directed,
or (ii) mailed by certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:

(a) If to Indemnitee, to: The address set forth on the signature page hereto.

(b) If to the Company to:

Carey Watermark Investors Incorporated

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

50 Rockefeller Plaza

New York, New York 10020

Attn: General Counsel

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

Section 22. Governing Law. The parties agree that this Agreement shall be governed
by, and construed and enforced in accordance with, the laws of the State of Maryland, without
regard to its conflicts of laws rules.

[SIGNATURE PAGE FOLLOWS]

 

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

	 	 	 	 	 	 	 	 	 
	ATTEST:	 	 	 	CAREY WATERMARK INVESTORS INCORPORATED	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	 	(SEAL)
	 

	 	 	 	 	 	 

Name:
	 	 
	 

	 	 	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 	 	 
	WITNESS:	 	 	 	INDEMNITEE	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name:	 	 
	 	 	 	 	Address:	 	 

 

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[Form of CWI Indemnification Agreement]

EXHIBIT A

FORM OF AFFIRMATION AND UNDERTAKING TO REPAY EXPENSES ADVANCED

The Board of Directors of Carey Watermark Investors Incorporated

Re: Undertaking to Repay Expenses Advanced

Ladies and Gentlemen:

This undertaking is being provided pursuant to that certain Indemnification Agreement dated
the
 _____ 

day of                     , 20_____, by and between Carey Watermark Investors Incorporated, a
Maryland corporation (the “Company”), and the undersigned Indemnitee (the “Indemnification
Agreement”), pursuant to which I am entitled to advance of expenses in connection with [Description
of Proceeding] (the “Proceeding”).

Terms used herein and not otherwise defined shall have the meanings specified in the
Indemnification Agreement.

I am subject to the Proceeding by reason of my Corporate Status or by reason of alleged
actions or omissions by me in such capacity. I hereby affirm that at all times, insofar as I was
involved as a director or officer of the Company, in any of the facts or events giving rise to the
Proceeding, I (1) acted in good faith and honestly, (2) did not receive any improper personal
benefit in money, property or services and (3) in the case of any criminal proceeding, had no
reasonable cause to believe that any act or omission by me was unlawful.

In consideration of the advance of Expenses by the Company for reasonable attorneys’ fees and
related expenses incurred by me in connection with the Proceeding (the “Advanced Expenses”), I
hereby agree that if, in connection with the Proceeding, it is established that (1) an act or
omission by me was material to the matter giving rise to the Proceeding and (a) was committed in
bad faith or (b) was the result of active and deliberate dishonesty or (2) I actually received an
improper personal benefit in money, property or services or (3) in the case of any criminal
proceeding, I had reasonable cause to believe that the act or omission was unlawful, then I shall
promptly reimburse the portion of the Advanced Expenses, together with the applicable legal rate of
interest thereon, relating to the claims, issues or matters in the Proceeding as to which the
foregoing findings have been established and which have not been successfully resolved as described
in Section 6 of the Indemnification Agreement. To the extent that Advanced Expenses do not relate
to a specific claim, issue or matter in the Proceeding, I agree that such Expenses shall be
allocated on a reasonable and proportionate basis.

IN WITNESS WHEREOF, I have executed this Affirmation and Undertaking on this
 _____ 
day of
                    , 20_____.

	 	 	 	 	 
	WITNESS:
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	(SEAL)
	 

	 	 

	 	 

 

- 1 -Exhibit No. 10.4

EXHIBIT NO. 10.4

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is entered into as of the
 _____ 

day of June 2010,
by and between UFood Restaurant Group, Inc., a Nevada corporation, with a business address of 255
Washington St., Suite 100 Newton, MA 02458 (the “Company”), and George Naddaff, an
individual with a residence address of 93 Bellevue Street, Newton, MA 02458 (the
“Executive”).

INTRODUCTION

1. The Company is in the better-for-you restaurant and nutritional product retail business
(the “Business”).

2. The Company wishes to employ the Executive as its Chairman and Chief Executive Officer
pursuant to the terms and conditions set forth herein.

3. The Executive desires to be employed by the Company, pursuant to the terms and conditions
set forth herein.

AGREEMENT

In consideration of the premises and mutual promises herein below set forth, the parties
hereby agree as follows:

1. Employment Period. The term of the Executive’s employment by the Company pursuant
to this Agreement (the “Employment Period”) shall commence on the date hereof and shall
continue until October 15, 2013. Thereafter, the Employment Period shall automatically renew for
successive periods of one (1) year, unless either party shall have given to the other at least
ninety (90) days’ prior written notice of their intention not to renew the Executive’s employment
prior to the end of the Employment Period or the then applicable renewal term, as the case may be.
In any event, the Employment Period may be terminated as provided herein.

2. Employment; Duties. Subject to the terms and conditions set forth herein, the
Company hereby employs the Executive to act as Chairman and Chief Executive Officer of the Company
during the Employment Period, and the Executive hereby accepts such employment. The duties
assigned and authority granted to the Executive shall be as determined by the Board of Directors
(the “Board”) from time to time. The Executive agrees to perform his duties for the
Company diligently, competently, and in a good faith manner.

3. Salary.

(a) Base Salary. The Executive shall be entitled to receive a salary from the Company
during the Employment Period at the rate of no less than Three Hundred Thousand ($300,000) per year
(the “Base Salary”), payable in accordance with the Company’s customary
payroll practices. The Executive’s Base Salary may be increased, but not decreased, on each
anniversary date of this Agreement, at the Board’s sole discretion.

 

 

 

(b) Equity Payments. In addition to the Base Salary, it is intended that the Executive
shall receive non-qualified options to purchase three million two hundred fifty thousand
(3,250,000) shares of the common stock of the Company (the “Options”). The Options shall
terminate ten (10) years from the date hereof, be exercisable at
$___ per share, and vest and be
exercisable as follows: (a) one million six hundred twenty-five thousand (1,625,000) Options shall
vest upon the date hereof; and (b) one million six hundred twenty-five thousand (1,625,000) Options
shall vest in equal amounts on the first day of each month for thirty-six months. Notwithstanding
the termination of this Agreement for any cause, the Executive shall receive the Options pursuant
to the terms set forth herein.

(c) Franchise and Development Fees. In addition to the foregoing, upon the
consummation by the Company of the sale of any franchise restaurant, the Company shall pay the
Executive a franchise fee of $10,000 (the “Franchise Fee”). To the extent any franchise
transaction is a part of an Area Development Agreement, the Franchise Fee shall be payable by the
Company to the Executive upon consummation of the franchise sale as follows : (i) $5,000 in cash,
and (ii) the remaining portion of such Franchise Fee shall be paid in such number of shares of the
Company’s common stock having an aggregate value of $5,000 on the date such Franchise Fee is due.

4. Bonus. The Executive’s annual bonus (if any) shall be in such amount as the Board
may determine in its sole discretion. The Executive shall be eligible to participate in any bonus
or other incentive program established by the Company for executives of the Company.

5. Other Benefits

(a) Insurance and Other Benefits. During the Employment Period, the Executive shall
be entitled to participate in the Company’s insurance programs and any ERISA benefit plans, as the
same may be adopted and/or amended from time to time (the “Benefits”). The Executive shall
be entitled to paid personal days on a basis consistent with the Company’s other senior executives.
The Executive shall be bound by all of the policies and procedures established by the Company from
time to time.

(b) Vacation. During the Employment Period, the Executive shall be entitled to an
annual vacation of such duration consistent with the Company’s policies from time to time.

(c) Expense Reimbursement. The Company shall reimburse the Executive for all
reasonable business, promotional, travel and entertainment expenses (“Reimbursable
Expenses”) incurred or paid by him during the Employment Period in the performance of his
services under this Agreement, provided that the Executive furnishes to the Company appropriate
documentation required by the Internal Revenue Code in a timely fashion in connection with such
expenses and shall furnish such other documentation and accounting as the Company may from time to
time reasonably request.

 

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6. Termination; Compensation Due Upon Termination of Employment. The Executive’s
employment hereunder may terminate as provided in paragraphs (a) through (e)
below, and subject to those payments to Executive that expressly survive the termination of
this Agreement as set forth in Section 3 hereof, the Executive’s right to compensation for periods
after the date his employment with the Company terminates shall be determined in accordance with
the provisions of paragraphs (a) through (e) below:

(a) Voluntary Resignation. The Executive may terminate his employment at any time
upon sixty (60) days prior written notice to the Company. In the event of the Executive’s
voluntary termination of employment, the Company shall have no obligation to make payments to the
Executive in accordance with the provisions of Sections 3 or 4, or, except as otherwise required by
law, to provide the benefits described in Section 5, for periods after the date on which the
Executive’s employment with the Company terminates due to the
Executive ’s voluntary resignation,
except for the payment of the Executive’s Base Salary accrued through the date of such resignation.

(b) Discharge for Cause. Upon (i) written notice to the Executive, and (ii)
Executive’s failure to cure such default within 30 days of receipt of notice, the Company may
terminate the Executive’s employment for Cause if any of the following events shall occur:

(i) the Executive’s continued and willful refusal or neglect to satisfactorily perform and
discharge his material duties and responsibilities;

(ii) the Executive’s gross misconduct that is injurious to the Company or the Executive’s
ability to perform his duties and responsibilities hereunder;

(iii) the Executive’s fraud, embezzlement or other acts of dishonesty;

(iv) the Executive’s conviction of, or entry of a plea of guilty or nolo contendere to, a
felony or a crime;

(v) the Executive’s willful or prolonged absence from work (other than by reason of disability
due to physical or mental illness); or

(vi) the Executive’s breach of his obligations under Section 7 or Section 8.

In the event Executive is terminated for “Cause,” the Company shall have no obligation to make
payments to Executive in accordance with the provisions of Sections 3 or 4, or, except as otherwise
required by law, to provide the benefits described in Section 5, for periods after the Executive’s
employment with the Company is terminated on account of the Executive’s discharge for cause except
for the Executive’s base salary accrued through the date of such termination.

 

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(c) Disability. The Company shall have the right, but shall not be obligated to
terminate the Executive’s employment hereunder in the event the Executive becomes disabled such
that he is unable to discharge his duties to the Company for a period of ninety (90) consecutive
days or one hundred twenty (120) days in any one hundred eighty (180) consecutive day period (a
“Permanent Disability”). In the event of a termination of employment due to a Permanent
Disability, then the Company shall be obligated to continue to make payments to the Executive in an
amount equal to Executive’s then-current Base Salary and Benefits for the
Severance Period (as defined below), payable in the form of salary continuation for the
applicable Severance Period after the Executive’s employment with the Company is terminated due to
a Permanent Disability. A determination of a Permanent Disability shall be made by a physician
satisfactory to both the Executive and the Company; provided, however, that if the
Executive and the Company do not agree on a physician, the Executive and the Company shall each
select a physician and those two physicians together shall select a third physician, whose
determination as to a Permanent Disability shall be binding on all parties.

(d) Death. The Executive’s employment hereunder shall terminate upon the death of the
Executive. The Company shall be obligated to continue to make payments in an amount equal to
Executive’s then-current Base Salary and Benefits for the Severance Period following his death,
payable to the Executive’s beneficiary, as the Executive shall have indicated in writing to the
Company (or if no such beneficiary has been designated, to Executive’s estate).

(e) Termination for Good Reason or Without Cause. The Executive may terminate this
Agreement at any time for Good Reason. In the event that this Agreement is terminated by the
Executive for Good Reason or this Agreement is terminated by the Company without Cause, the Company
shall pay to the Executive severance in an amount equal to the Executive’s then-current Base Salary
and Benefits for a period (the “Severance Period”) equal to the lesser of (i) 12 months or
(ii) the remainder of the then-current Employment Period, payable in the form of salary
continuation for the applicable Severance Period following the Executive’s termination, subject to
the Company’s regular payroll practices and required withholdings. For the purposes of this
Agreement, “Good Reason” shall mean any of the following (without Executive’s express written
consent): (i) removal of Executive from his position as Chairman and Chief Executive Officer; (ii)
a reduction by Company in Executive’s then current annual base salary or other compensation, unless
said reduction is pari passu with other senior executives of the Company; (iii) the taking of any
action by the Company that would, directly or indirectly, materially reduce Executive’s benefits,
unless said reductions are pari passu with other senior executives of the Company; or (iv) breach
by Company of any material term of this Agreement that is not cured by Company within 30 days
following receipt by Company of written notice thereof.

7. Non-Competition; Non-Solicitation. Unless Executive terminates this Agreement
pursuant to Section 6(e), for the duration of the Employment Period and three (3) years following
the Employment Period (the “Non-compete Period”), the Executive shall not, directly or
indirectly, engage or invest in, own, manage, operate, finance, control or participate in the
ownership, management, operation, financing, or control of, be employed by, associated with, or in
any manner connected with, lend any credit to, or render services or advice to, any business, firm,
corporation, partnership, association, joint venture or other entity that engages or conducts any
business the same as or substantially similar to the Business or currently proposed to be engaged
in or conducted by the Company or included in the future strategic plan of the Business, anywhere
within the United States of America; provided, however, that the Executive may own
less than 5% of the outstanding shares of any class of securities of any enterprise (but without
otherwise participating in the activities of such enterprise) if such securities are listed on any
national or regional securities exchange or have been registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended.

 

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During the Employment Period and the Non-compete Period, Executive will not and will not cause
another person, business or commercial enterprise, without the express prior written approval of
the Company, to hire, recruit, solicit or otherwise induce or influence any proprietor, partner,
stockholder, lender, director, officer, employee, sales agent, joint venturer, investor, lessor,
customer, consultant, agent, representative or any other person which has a business relationship
with the Company or had a business relationship with the Company to discontinue or reduce such
employment, agency or business relationship.

The Executive recognizes and agrees that because a violation by him of his obligations under
this Section 7 will cause irreparable harm to the Company that would be difficult to quantify and
for which money damages would be inadequate, the Company shall have the right to injunctive relief
to prevent or restrain any such violation, without the necessity of posting a bond. The Non-compete
Period will be extended by the duration of any violation by the Executive of any of his obligations
under this Section 7.

The Executive expressly agrees that the character, duration and scope of the covenant not to
compete are reasonable in light of the circumstances as they exist at the date upon which this
Agreement has been executed. However, should a determination nonetheless be made by a court of
competent jurisdiction at a later date that the character, duration or geographical scope of the
covenant not to compete is unreasonable in light of the circumstances as they then exist, then it
is the intention of both the Executive and the Company that the covenant not to compete shall be
construed by the court in such a manner as to impose only those restrictions on the conduct of the
Executive which are reasonable in light of the circumstances as they then exist and necessary to
assure the Company of the intended benefit of the covenant to compete.

8. Confidentiality Covenants.

(a) The Executive understands that the Company, from time to time, may impart to him
confidential business information, whether such information is written, oral or graphic, including,
but not limited to, financial plans and records, marketing plans, business strategies and
relationships with third parties, present and proposed products, trade secrets, information
regarding customers and suppliers, strategic planning and systems and contractual terms
(collectively “Confidential Information”). The Executive hereby acknowledges Company’s
exclusive ownership of such Confidential Information.

(b) The Executive agrees as follows: (1) only to use the Confidential Information to provide
services to Company; (2) only to communicate the Confidential Information to fellow employees,
agents and representatives on a need-to-know basis; and (3) not to otherwise disclose or use any
Confidential Information. Upon demand by Company or upon termination of the Executive’s employment,
the Executive will deliver to Company all manuals, photographs, recordings and any other instrument
or device by which, through which or on which Confidential Information has been recorded and/or
preserved, which are in the Executive’s possession, custody or control.

9. Executive’s Representation. The Executive hereby represents that his entry into
this Employment Agreement will not violate the terms or conditions of any other agreement to which
the Executive is a party.

 

5

 

10. Technology Ownership. The Executive hereby assigns to the Company all inventions,
discoveries, designs, trade secrets, formulae, processes, methods, techniques, mask works,
improvements, developments, concepts, computer programs, databases and works which the Executive
may make or acquire during the term of his employment hereunder, whether or not during working
hours and whether made solely or jointly with others, that (1) are related to the Business of the
Company at the time they are made or acquired, or (2) are made using the equipment, supplies,
facilities, or proprietary information of the Company, as well as all patents, patent applications,
copyrights, copyright registrations and all other intellectual property rights which cover, protect
or are embodied in any of the foregoing.

11. Arbitration. In the event of any breach arising from the performance of this
Agreement, either party may request arbitration. In such event, the parties will submit to
arbitration by a qualified arbitrator with the definition and laws of the Commonwealth of
Massachusetts. Such arbitration shall be final and binding on both parties.

12. Governing Law/Jurisdiction. This Agreement and any disputes or controversies
arising hereunder shall be construed and enforced in accordance with and governed by the internal
laws of the Commonwealth of Massachusetts other than principles of law that would apply the law of
another jurisdiction. The parties agree that this Agreement was made and entered into in the
Commonwealth of Massachusetts and, subject to Section 11, each party hereby consents to the
jurisdiction of any competent federal or state court within the Commonwealth of Massachusetts to
hear any dispute arising out of this Agreement.

13. Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and thereof and supersedes and cancels any
and all previous agreements, written and oral, regarding the subject matter hereof between the
parties hereto. This Agreement shall not be changed, altered, modified or amended, except by a
written agreement signed by both parties hereto.

14. Notices. All notices, requests, demands and other communications called for or
contemplated hereunder shall be in writing and shall be deemed to have been given when delivered to
the party to whom addressed or when sent by telecopy (if promptly confirmed by registered or
certified mail, return receipt requested, prepaid and addressed) to the parties, their successors
in interest, or their assignees at the following addresses, or at such other addresses as the
parties may designate by written notice in the manner aforesaid:

	 	(a)	 	to the Company at:

UFood Restaurant Group, Inc.

255 Washington St. Suite 100

Newton, MA 02458

Attn: Charles Cocotas

Fax: 617-787-6010

with
a copy to:

Robinson & Cole LLP

695 East Main Street

Stamford, Connecticut 06904

Attn: Richard A. Krantz

Fax: (203) 462-7599

	 	(b)	 	to the Executive at:

93 Bellevue St.

Newton, MA 02458

Fax:                                         

 

6

 

All such notices, requests and other communications will (i) if delivered personally to the
address as provided in this Section 14, be deemed given upon delivery, (ii) if delivered by
facsimile transmission to the facsimile number as provided for in this Section 14, be deemed given
upon facsimile confirmation, (iii) if delivered by mail in the manner described above to the
address as provided for in this Section 14, be deemed given on the earlier of the third business
day following mailing or upon receipt and (iv) if delivered by overnight courier to the address as
provided in this Section 14, be deemed given on the earlier of the first business day following the
date sent by such overnight courier or upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other person to whom a copy of such
notice is to be delivered pursuant to this Section 14). Either party may, by notice given to the
other party in accordance with this Section 14, designate another address or person for receipt of
notices hereunder.

15. Severability. If any term or provision of this Agreement, or the application
thereof to any person or under any circumstance, shall to any extent be invalid or unenforceable,
the remainder of this Agreement, or the application of such terms to the persons or under
circumstances other than those as to which it is invalid or unenforceable, shall be considered
severable and shall not be affected thereby, and each term of this Agreement shall be valid and
enforceable to the fullest extent permitted by law. The invalid or unenforceable provisions shall,
to the extent permitted by law, be deemed amended and given such interpretation as to achieve the
economic intent of this Agreement.

16. Waiver. The failure of any party to insist in any one instance or more upon
strict performance of any of the terms and conditions hereof, or to exercise any right or privilege
herein conferred, shall not be construed as a waiver of such terms, conditions, rights or
privileges, but same shall continue to remain in full force and effect. Any waiver by any party of
any violation of, breach of or default under any provision of this Agreement by the other party
shall not be construed as, or constitute, a continuing waiver of such provision, or waiver of any
other violation of, breach of or default under any other provision of this Agreement.

17. Successors and Assigns. This Agreement shall be binding upon the Company and any
successors and assigns of the Company. Neither this Agreement nor any right or obligation
hereunder may be assigned by the Executive. The Company may assign this Agreement and its right
and obligations hereunder, in whole or in part.

 

7

 

18. Counterparts. This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original, and all of which together shall constitute one and the same
instrument.

19. Headings. Headings in this Agreement are for reference purposes only and shall
not be deemed to have any substantive effect.

20. Opportunity to Seek Advice. The Executive acknowledges and confirms that he has
had the opportunity to seek such legal, financial and other advice and representation as he has
deemed appropriate in connection with this Agreement.

21. Withholding and Payroll Practices. All salary, severance payments, bonuses or
benefits provided by the Company under this Agreement shall be net of any tax or other amounts
required to be withheld by the Company under applicable law and shall be paid in the ordinary
course pursuant to the Company’s then existing payroll practices.

[the next page is the signature page]

 

8

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
above.

	 	 	 	 	 	 	 
	 	 	UFood Restaurant Group, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:  	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Charles Cocotas	 	 
	 

	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 
	Witness:

	 	EXECUTIVE:
	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	Name:	 	Name: George Naddaff	 	 

 

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