Document:

EX-4.2

EXHIBIT 4.2

CAREY WATERMARK INVESTORS INCORPORATED

a Maryland corporation

FORM
OF NOTICE TO STOCKHOLDER OF ISSUANCE

OF UNCERTIFICATED SHARES OF COMMON STOCK

Containing the Information Required by Section 2-211 of the

Maryland General Corporation Law

	 	 	 
	To:

	 	Stockholder
	 
	 	 
	From:

	 	[Name], President

Shares of Common Stock, $.001 par value per share

     Carey Watermark Investors Incorporated, a Maryland corporation (the “Corporation”), is issuing to
you, subject to acceptance by the Corporation, the number of shares of its common stock (the
“Securities”) set forth in your subscription agreement with the Corporation. The Securities do not
have physical certificates. Instead, the Securities are recorded on the books and records of the
Corporation, and this notice is given to you of certain information relating to the Securities.
All capitalized terms not defined herein have the meanings defined in the Corporation’s charter, as
the same may be amended from time to time (the “Charter”), a copy of which, including the
restrictions on transfer and ownership, will be furnished to each holder of Securities on request
and without charge. Requests for such a copy may be directed to the Secretary of the Corporation
at its principal office.

     The Corporation has the authority to issue shares of stock of more than one class. Upon the
request of any stockholder, and without charge, the Corporation will furnish a full statement of
the information required by Section 2-211 of the Maryland General Corporation Law with respect to
certain restrictions on ownership and transferability, the designations and any preferences,
conversion and other rights, voting powers, restrictions, limitations as to dividends and other
distributions, qualifications, and terms and conditions of redemption of the shares of each class
of stock which the Corporation has authority to issue, the differences in the relative rights and
preferences between the shares of each series to the extent set, and the authority of the Board of
Directors to set such rights and preferences of subsequent series. Such requests must be made to
the Secretary of the Corporation at its principal office.

     The Securities are subject to restrictions on Beneficial and Constructive Ownership and
Transfer for the purpose, among others, of the Corporation’s maintenance of its status as a real
estate investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended (the
“Code”). Subject to certain further restrictions and except as expressly provided in the Charter,
(i) no Person may Beneficially or Constructively Own Common Shares in excess of 9.8% (in value or
number of Shares) of the outstanding Common Shares unless such Person is an Excepted Holder (in
which case the Excepted Holder Limit shall be applicable); (ii) no Person may Beneficially or
Constructively Own Shares in excess of 9.8% of the value of the total outstanding Shares, unless
such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable);
(iii) no Person may Beneficially or Constructively Own Shares that would result in the Corporation
being “closely held” under Section 856(h) of the Code or otherwise cause the Corporation to fail to
qualify as a REIT; and (iv) no Person may Transfer Shares if such Transfer would result in Shares
being owned by fewer than 100 Persons. Any Person who Beneficially or Constructively Owns or
attempts to Beneficially or Constructively Own Shares which cause or will cause a Person to
Beneficially or Constructively Own Shares in excess or in violation of the above limitations must
immediately notify the Corporation. If any of the restrictions on transfer or ownership are
violated, the Securities will be automatically transferred to a Charitable Trust for the benefit of
one or more Charitable Beneficiaries. In addition, the Corporation may redeem Shares upon the
terms and conditions specified by the Board of Directors in its sole discretion if the Board of
Directors determines that ownership or a Transfer or other event may violate the restrictions
described above. Furthermore, upon the occurrence of certain events, attempted Transfers in
violation of the restrictions described above may be void ab initio.EX-10.1

EXHIBIT 10.1

Carey Financial, LLC

50 Rockefeller Plaza

New York, NY 10020

CAREY WATERMARK INVESTORS INCORPORATED

FORM OF SELECTED DEALER AGREEMENT

Ladies/Gentlemen:

     We have agreed to use our best efforts to sell, along with a group of selected dealers
(collectively, the “Selected Dealers”) to be formed with our assistance, up to 125,000,000 shares
of common stock, par value $0.001 per share (each a “Share,” and collectively, the “Shares”) of
Carey Watermark Investors Incorporated (the “Company”), of which 25,000,000 Shares are being
offered pursuant to the Company’s Distribution Reinvestment and Stock Purchase Plan (the “DRIP”).
The Shares are being offered by us, as Sales Agent for the Company, and by the Selected Dealers.
The terms of the offering of the Shares (the “Offering”) are more fully described in the enclosed
prospectus (the “Prospectus”), receipt of which you hereby acknowledge.

     We are hereby inviting you to act as a Selected Dealer for the Offering, subject to the other
terms and conditions set forth below. You hereby confirm that you are a member in good standing of
the Financial Industry Regulatory Authority (the “FINRA”), that you have complied with all
applicable federal and state broker-dealer registration requirements and that you are not a
“discount broker” as that term is commonly understood in the brokerage industry. Upon execution of
this Selected Dealer Agreement (the “Selected Dealer Agreement”), you agree to be bound by the
terms and conditions of the Sales Agency Agreement between us, as Sales Agent and the Company (the
“Sales Agency Agreement”) (to the extent such terms apply to the Selected Dealers), a copy of which
is attached hereto as Exhibit A and of which this Selected Dealer Agreement is a part.

     Capitalized terms used herein and not otherwise defined herein shall have the same meaning as
in the Sales Agency Agreement.

     Upon notification by us, you may offer the Shares at the public offering price stated in the
Prospectus, subject to the terms and conditions hereof. The public offering price of the Shares
and the amount of your Selling Commission that is re-allowed by us to you with respect to volume
sales of Shares to single purchasers (as defined in the Prospectus) on Orders (as defined below) of
$250,000 or more shall be reduced by the amount of the Share purchase price discount. In the case
of such volume sales to single purchasers, your Selling Commission will be reduced for each
incremental Share purchase in the total volume ranges set forth in the table below. Such reduced
Share price purchase price will not affect the amount received by the Company for investment. The
following table sets forth the reduced Share purchase price and Selling Commission payable to you:

 

 

	 	 	 	 	 	 	 	 	 
	Volume Discount	 	Purchase Price Per Share For	 	Selling Commission Per Share
	Range for a	 	Incremental Share In Volume	 	For Incremental Share In
	“Single Purchaser”	 	Discount Range	 	Volume Discount Range
	$       2,000  —  $   250,000
	 	$	10.00	 	 	$	0.65	 
	$   250,001  —  $   500,000
	 	$	9.85	 	 	$	0.50	 
	$   500,001  —  $   750,000
	 	$	9.70	 	 	$	0.35	 
	$   750,001  —  $1,000,000
	 	$	9.60	 	 	$	0.25	 
	$1,000,001  —  $5,000,000
	 	$	9.50	 	 	$	0.15	 

     As an example, a single purchaser would receive 50,380.7107 Shares (rather than 50,000 Shares)
for his investment of $500,000 and the Selling Commission would be $28,940. On the first $250,000
of the investment there would be no discount and the purchaser would receive 25,000 Shares at $10
per share. On the remaining $250,000, the per share price would be $9.85 and the purchaser would
receive 25,380.7107 Shares. Selling Commissions for purchases of more than $5,000,000 are
negotiable but in no event will net purchase price be less than $9.35 per Share. We may also
re-allow to you a selected dealer fee of up to two $.20 per Share for each Share sold by you (the
“Selected Dealer Fee”), if you have executed an Addendum to this Selected Dealer Agreement related
to the Selected Dealer Fee; provided however, we will not pay you a Selected Dealer Fee if the
aggregate compensation to be paid to us, you and the other Selected Dealers exceeds the limitations
prescribed by the FINRA.

     We will not pay Selling Commissions related to Shares purchased under the DRIP. During the
Offering and until the first annual valuation of the Company’s assets, Shares sold under the DRIP
shall be sold at $9.50 per Share. Subsequent to the first annual valuation of the Company’s
assets, Shares sold under the DRIP will be sold at 95% of the then-current net asset value per
Share, as estimated by the Company’s Advisor or another firm chosen for that purpose. All shares
sold under the DRIP shall be sold at the same price.

     To the extent a Selected Dealer is entitled to all or a portion of the $.20 per Share Selected
Dealer Fee, the Selected Dealer may elect to defer over time its receipt of the Selected Dealer Fee
to which it is entitled. In such event, the Selected Dealer Fee to be reallowed will be paid to
the Selected Dealer over a period of up to ten years (which period will be agreed upon by Carey
Financial, LLC (“Sales Agent”) and the Selected Dealer) until the Selected Dealer Fee payable to
the Selected Dealer has been paid in full. Further, if listing of the Company’s shares occurs on a
national exchange or the Company’s shares are included for quotation on Nasdaq, any remaining
deferred portion of the Selected Dealer Fee payable to the Selected Dealer will become immediately
due and payable.

     No payment of Selling Commissions or the Selected Dealer Fee will be made in respect of orders
for Shares (each an “Order”) (or portions thereof) which are rejected by the Company. Selling
Commissions and the Selected Dealer Fee will be paid within five business days following any
Closing Date with respect to Shares sold to purchasers whose Shares are issued on such Closing
Date. Selling Commissions and the Selected Dealer Fee will be payable only with respect to
transactions lawful in the jurisdictions where they occur.

     For purposes of determining investors eligible for volume discounts, investments made by
accounts with the same primary account holder, as determined by tax identification number, may be
combined. This includes individual accounts and joint accounts that have the same primary holder
as an individual account. Investments made through individual retirement accounts may also be
combined with accounts that have the same tax identification number as beneficiary of the
individual retirement account. In the event Orders are combined, the Selling Commission payable
with respect to the subsequent

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purchase of Shares will equal the commission per share which would have been payable in
accordance with the table set forth above if all purchases had been made simultaneously. Any
reduction of the $0.65 per share Selling Commission otherwise payable to the Sales Agent or a
Selected Dealer will be credited to the purchaser as additional Shares. Unless purchasers indicate
that Orders are to be combined and provide all other requested information, the Company will not be
held responsible for failing to combine Orders properly.

     In no event shall the aggregate underwriting compensation to be paid to us, you and the other
Selected Dealers in connection with the Offering and sale of the Shares exceed the limitations
prescribed by the FINRA.

     An Order must be made during the offering period described in the Prospectus (except for
Orders made pursuant to the DRIP, which may be made on an ongoing basis, pursuant to the terms of
the DRIP). An enrollment form, in the form attached to the Prospectus, (each an “Enrollment Form”)
must be used in placing an Order for investors residing in certain states and, for all other
investors. Orders may be placed through such procedures as are normally used by you for the sale
of REIT shares and agreed to by the Company. Persons desiring to purchase Shares are required to
comply with such procedures and, in certain states, to execute or have executed on their behalf one
copy of the Enrollment Form. Subscribers purchasing shares by check must make such checks payable
to Wells Fargo Bank, National Association, or Wells Fargo (the
“Escrow Agent”), until subscription proceeds reach $20 million and thereafter to Bank of the West
(each of such Bank of the West and Wells Fargo being an “Agent Bank”). By noon of the business day
following receipt of funds by you, either by check or by a sweep of customer accounts, you will
deliver via overnight delivery service a check payable to, Agent Bank, or other acceptable form of
payment, for the full amount of each Order along with an Enrollment Form for each such Order and a
list showing the name, address and telephone number of, the social security number or taxpayer
identification number of, the brokerage account number of (if applicable), the number of Shares
purchased by, any election to participate in the DRIP by, and the total dollar amount of the
investment by, each investor on whose behalf a check or other payment is delivered. You will
advise the Agent Bank whether the funds you are submitting are attributable to individual
retirement accounts, Keogh plans, or any other employee benefit plan subject to Title I of the
Employee Retirement Income Security Act of 1974 or from some other type of investor.

     All Orders solicited by you will be strictly subject to review and acceptance by the Company,
and the Company reserves the right in its absolute discretion to reject any such Order or to accept
or reject Orders in the order of their receipt by the Company or otherwise. You agree to maintain,
for at least six years, records of the information used by you to determine whether an investment
in Shares is suitable and appropriate for a potential investor in Shares.

     If the Company elects to reject an Order (such rejection to occur within 30 days after receipt
by the Company of such Order), the Company shall, within 10 business days after such rejection,
inform you of such rejection and return the funds (and any interest earned thereon) and other
documents submitted by the rejected purchaser to you for transmission to such purchaser. If no
notice of rejection is received by you with the foregoing time limits or if funds submitted by the
purchaser are released from escrow to the Company within the foregoing time limits, the Order shall
be deemed accepted.

     You agree that you will use your best efforts in offering the Shares and will offer the Shares
only in jurisdictions in which you are currently registered as a securities dealer and only in
accordance with the securities laws of such jurisdictions.

     You covenant and agree with respect to your participation in the Offering to comply with any
applicable requirements of the Securities Act of 1933 (the “33 Act”) and of the Securities Exchange
Act of 1934 (the “34 Act”), and the published rules and regulations of the Securities and Exchange

3

 

Commission thereunder, and the Conduct Rules of the FINRA including but not limited to Rule
2730, Rule 2740 and IM 2740, Rule 2420 and IM 2420 and Rule 2750 and IM 2750.

     We shall have full authority to take such action as we may deem advisable in respect of all
matters pertaining to the Offering. Neither you nor any other person is authorized to give any
information or make any representations other than those contained in the Prospectus and sales
literature furnished by the Company in connection with the Offering, and you agree not to give any
such information or make any such representations. You acknowledge that we will rely upon your
agreements in this paragraph and in the preceding paragraph in connection with the Sales Agency
Agreement. No Selected Dealer is authorized to act as agent for us when offering any of the Shares
to the public or otherwise, it being understood that you and each other Selected Dealer are
independent contractors with us. Nothing herein contained shall constitute you or the Selected
Dealers an association, unincorporated business, partnership or separate entity with each other or
an association or partner with us. Nothing contained in this paragraph is intended to operate as,
and the provisions of this paragraph shall not constitute, a waiver by you of compliance with any
provision of the ‘33 Act or of the rules and regulations thereunder.

     The Company will provide you with such number of copies of the enclosed Prospectus and such
number of copies of amendments and supplements thereto, and certain supplemental sales material
prepared by the Company, as you may reasonably request for use by you in connection with the offer
and sales of the Shares. In the event you elect to use any such supplemental sales material, you
agree that such material shall not be used in connection with the offer and sale of the Shares
unless accompanied or preceded by the Prospectus as then currently in effect and as it may be
amended or supplemented in the future, and you expressly agree not to prepare or use any sales
material other than the approved sales material. To the extent that information is provided to you
marked “For Broker/Dealer Use Only,” “Internal Use Only” or with other similar language, you
covenant and agree not to provide such information to existing or prospective investors. You agree
that you will not use any other offering materials without the prior written consent of the Company
and us.

     This Selected Dealer Agreement shall terminate at the close of business on the 45th day after
the completion of the sale of all of the Shares by the Company, unless earlier terminated or unless
the Sales Agency Agreement is terminated, in which event this Selected Dealer Agreement will
automatically terminate. Either party may terminate this Selected Dealer Agreement at any time by
written notice, and we shall notify you promptly in the event of any early termination of this
Selected Dealer Agreement.

     We will furnish to you a Blue Sky Memorandum naming the jurisdictions in which we believe the
Shares have been qualified for sale under, or are exempt from the requirements of, the respective
securities laws of such jurisdictions, but we assume no responsibility or obligation as to your
right to sell Shares in any jurisdiction.

     Your obligations under this Selected Dealer Agreement shall be subject to the continued
accuracy throughout the Effective Term of the representations, warranties and agreements of the
Company under the Sales Agency Agreement and the Selected Dealer Agreement and to the performance
by the Company of its obligations under such agreements and to the terms and conditions set forth
in Section 7 of the Sales Agency Agreement.

     You confirm that you are familiar with ‘33 Act Release No. 4968 and Rule 15c2-8 under the ‘34
Act, relating to the distribution of preliminary and final prospectuses, and confirm that you have
complied, and will comply, therewith. You shall not directly or indirectly pay or award any
finder’s fees, commissions or other compensation to any persons engaged by an investor for
investment advice as an inducement to such adviser to advise a potential investor to purchase
Shares. In addition, you agree not to receive any rebates or give-ups or to participate in any
reciprocal business arrangements (other than for

4

 

the underwriting arrangements described herein) which would violate any restrictions on the
Company contained in the Prospectus.

     All representations, warranties and agreements contained in this Selected Dealer Agreement
(including any Addendum), the Sales Agency Agreement or in certificates submitted to you pursuant
to this Selected Dealer Agreement or Sales Agency Agreement shall remain operative and in full
force and effect, regardless of any investigation made by, or on behalf of, you or any person who
controls you, and shall survive the closing and termination of the Offering.

     Any communication from you should be in writing addressed to Carey Financial, LLC,
50 Rockefeller Plaza, New York, NY 10020. Any notice from us to you shall be deemed to have been
duly given if mailed or telegraphed to you at the address to which this Selected Dealer Agreement
is mailed.

     The terms of this Agreement may be extended to cover additional offerings of shares of the
Company by the execution by the parties hereto of an addendum identifying the shares and
registration statement relating to such additional offering. Upon execution of such addendum, the
terms “Shares,” “Offering,” “Registration Statement” and “Prospectus” set forth herein (and in any
Addendum hereto) shall be deemed to be amended as set forth in such addendum.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

5

 

     Please confirm your agreement hereto by signing and returning at once to us both of the
enclosed duplicate of this Selected Dealer Agreement, including the information requested in
Schedule A attached thereto. This Selected Dealer Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made and to be performed
entirely within such state.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Very truly yours,
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	CAREY FINANCIAL, LLC

Sales Agent
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	CAREY WATERMARK INVESTORS

INCORPORATED, the Company
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ACCEPTED, as of	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	SELECTED DEALER:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

6

 

SCHEDULE A TO SELECTED DEALER AGREEMENT

SELECTED DEALER INFORMATION

[PLEASE PRINT OR TYPE ALL REQUESTED INFORMATION]

	 	 	 
	SELECTED/DEALER NAME:
	 	 
	 

	 	 

	 	 	 
	FIRM CRD NUMBER:
	 	 
	 

	 	 

	 	 	 
	SELECTED/DEALER ADDRESS:
	 	 
	 

	 	 
	 
	 	 
	 

	 	 	 
	PHONE NUMBER:
	 	 
	 

	 	 

	 	 	 
	NAME OF PERSON SIGNING SELECTED DEALER AGREEMENT:
	 	 
	 

	 	 
	 
	 	 
	 

	 	 	 
	TITLE OF PERSON SIGNING SELECTED DEALER AGREEMENT:
	 	 
	 

	 	 
	 
	 	 
	 
	 
	 	 
	 

Sch. A-1

 

 

CAREY WATERMARK INVESTORS INCORPORATED

ADDENDUM TO SELECTED DEALER AGREEMENT

     The following reflects the Selected Dealer fee as agreed upon between Carey Financial, LLC
(the “Sales Agent”) and the Selected Dealer, effective [                    ], 2008.

     Each calendar year, the Selected Dealer may qualify to receive a fee (the “Selected Dealer
Fee”), of up to $0.20 per share in connection with sales of Carey Watermark Investors
Incorporated’s (the Company) common stock by the Selected Dealer in such calendar year.

     Eligibility to receive the Selected Dealer Fee is conditioned upon the Selected Dealer
reaching a prescribed minimum annual sales volume of shares of the Company’s common stock and the
Selected Dealer’s compliance with one or more of the following conditions. Any determination
regarding the Selected Dealer’s compliance with the listed conditions will be made by the Sales
Agent, in its sole discretion.

	 	1.	 	The Selected Dealer has internal marketing and support personnel
(telemarketers, marketing director, etc.) who assist the Sales Agent’s marketing team;
	 
	 	2.	 	The Selected Dealer has and uses internal marketing communications vehicle(s)
to promote the Company. Vehicles may include, but are not restricted to, newsletters,
conference calls, cassette tapes, internal mail, etc.;
	 
	 	3.	 	The Selected Dealer will respond to investors’ inquiries concerning monthly
statements, valuations, distribution rates, tax information, annual reports,
reinvestment and redemption rights and procedures, the financial status of the Company
and the real estate markets in which the Company has invested;
	 
	 	4.	 	The Selected Dealer will assist investors with reinvestments and redemptions;
and/or
	 
	 	5.	 	The Selected Dealer will provide other services requested by investors from
time to time and will maintain the technology necessary to adequately service
investors.

Sch. A-2

 

 

     IN WITNESS WHEREOF, the parties have executed this Addendum on the date and year shown above.

	 	 	 	 	 	 	 	 	 	 	 
	SELECTED DEALER:	 	 	 	SALES AGENT:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	CAREY FINANCIAL, LLC	 	 
	 	 	 	 	 	 	 	 	 
	(Name of Selected Dealer)	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 
	Name:

	 	 	 	 	 	Name:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 

Sch. A-3

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