Form of Sales Agency Agreement

EXHIBIT 10.3CAREY WATERMARK INVESTORS INCORPORATED
207 E. WESTMINSTER
SUITE 200
LAKE FOREST, IL 60045FORM OF SALES AGENCY AGREEMENT[ullet ], 2008Carey Financial, LLC
50 Rockefeller Plaza
New York, NY 10020Ladies and Gentlemen: Carey Watermark Investors Incorporated, a Maryland corporation (the " Company" ), hereby confirms its agreement with you as follows: 1. Introduction . This Sales Agency Agreement (the " Agreement" ) sets forth the understandings and agreements between the Company and you whereby you will offer and sell on a best efforts basis for the account and risk of the Company, along with a group of Selected Dealers (as defined in Section 3(c) below) to be formed with your assistance, up to 125,000,000 shares of common stock, par value $0.001 per share (each a " Share ," and collectively, the " Shares" ) of the Company, of which 25,000,000 Shares are being offered pursuant to the Company' s Distribution Reinvestment and Stock Purchase Plan (the " DRIP" ), registered on Form S-11. Shares sold to the public other than through the DRIP shall be sold at $10 per share (subject to certain volume discounts) and shares sold through the DRIP shall be sold at $9.50 per share (the " Offering" ). The Shares are more fully described in the Registration Statement referred to below. 2. Representations and Warranties of the Company . The Company represents, warrants and agrees that: (a) Registration Statement and Prospectus . The Company has filed with the Securities and Exchange Commission (the " Commission" ) a registration statement on Form S-11 (File No. 333-149899), for the registration of the Shares under the Securities Act of 1933, as amended (the " Securities Act" ) and the regulations thereunder (the " Regulations" ). The registration statement, as amended, (including financial statements, exhibits and all other documents related thereto filed as a part thereof or incorporated therein), and any registration statement filed under Rule 462(b) of the Securities Act, are herein called the " Registration Statement" and the prospectus contained therein is called the " Prospectus," respectively, except that if the Registration Statement is amended by a post-effective amendment, the term " Registration Statement" shall, from and after the declaration of effectiveness of such post-effective amendment, refer to the Registration Statement as so amended and the term " Prospectus" shall refer to the Prospectus as so amended, and if the Prospectus filed by the Company pursuant to Rule 424(b) or 424(c) of the Regulations shall differ from the Prospectus on file at the time the Registration Statement or any post-effective amendment shall become effective, the term " Prospectus" shall refer to the Prospectus filed pursuant to either of such Rules from and after the date on which it shall have been filed with the Commission. Further, if a separate prospectus is filed and becomes effective with respect solely to the DRIP (a " DRIP Prospectus" ), the term " Prospectus" shall refer to such DRIP Prospectus from and after the declaration of effectiveness of such DRIP Prospectus.


(b) Compliance with the Securities Act . The Registration Statement has been prepared and filed by the Company and has been declared effective by the Commission. Neither the Commission nor any state securities authority has issued any order preventing or suspending the use of any Prospectus filed with the Registration Statement or any amendments or supplements thereto and no proceeding for that purpose has been instituted, or to the Company' s knowledge, is threatened or contemplated by the Commission or by the states securities authorities. At the time the Registration Statement became effective (the " Effective Date" ) and at the time that any post-effective amendments thereto or any additional registration statement filed under Rule 462(b) of the Securities Act becomes effective, the Registration Statement or any amendment thereto (1) complied, or will comply, as to form in all material respects with the requirements of the Securities Act and the Regulations and (2) did not or will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading. When the Prospectus or any amendment or supplement thereto is filed with the Commission pursuant to Rule 424(b) or 424(c) of the Regulations and at all times subsequent thereto through the date on which the Offering is terminated (" Termination Date" ), the Prospectus (as amended or as supplemented) will comply in all material respects with the requirements of the Securities Act and the Regulations, and will not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) The Company . The Company has been duly incorporated and validly exists as a corporation in good standing under the laws of the State of Maryland with full power and authority to conduct the business in which it is engaged in as described in the Prospectus. The Company is duly qualified to do business as a foreign corporation and is in good standing in each other jurisdiction in which it owns or leases property of a nature, or transacts business of a type that would make such qualification necessary except where the failure to be so qualified or in good standing could not have, individually or in the aggregate, a material adverse effect on the financial condition, stockholders' equity, results of operation or business of the Company, taken as a whole (a " Material Adverse Effect" ). (d) The Shares . The Shares, when issued, will be duly and validly issued, fully paid and non-assessable and will conform in all material respects to the description thereof contained in the Prospectus; no holder thereof will be subject to personal liability for the obligations of the Company solely by reason of being such a holder; such Shares are not subject to the preemptive rights of any shareholder of the Company; and all corporate action required to be taken for the authorization, issue and sale of such Shares has been validly and sufficiently taken. (e) Violations . The Company is not in violation of its Articles of Incorporation (" Articles" ) or Bylaws or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which it is a party or by which it or any of its properties is bound. (f) Taxes . The Company has filed all federal, state and foreign income tax returns which have been required to be filed on or before the due date (taking into account all extensions of time to file). The Company has paid or provided for the payment of all taxes indicated by said returns and all assessments received by the Company to the extent that such taxes or assessment have become due, except where the Company is contesting such assessments in good faith and except for such taxes and assessments of immaterial amounts, the failure of which to pay, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. (g) Pending Action . Except as disclosed in the Registration Statement and the Prospectus, there is no action, suit or proceeding pending or, to the best of the knowledge, information and belief of the Company, threatened to which the Company is a party, before or by

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any court or governmental agency or body which would reasonably be expected to have a Material Adverse Effect. (h) Financial Statements . The financial statements of the Company, including the notes thereto, filed as part of the Registration Statement and those included in the Prospectus present fairly in all material respects the financial position of the Company as of the date indicated and the results of its operations for the periods specified; said financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis and comply with the requirements of Regulation S-X promulgated by the Commission; and PricewaterhouseCoopers LLP, whose report is filed with the Commission as a part of the Registration Statement, are independent accountants as required by the Securities Act and the Regulations. (i) No Subsequent Material Events . Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as may otherwise be stated in or contemplated by the Registration Statement and the Prospectus, (a) there has not been any material adverse change in the condition (financial or otherwise) of the Company or in the earnings, affairs or business prospects of the Company, whether or not arising in the ordinary course of business, and (b) there have not been any material transactions entered into by the Company except in the ordinary course of business. (j) Investment Company Act . The Company does not intend to conduct its business so as to be an " investment company" as that term is defined in the Investment Company Act of 1940, as amended and the rules and regulations thereunder, and it will exercise reasonable diligence to ensure that it does not become an " investment company" within the meaning of the Investment Company Act of 1940. (k) Authorization of Agreement . This Agreement and the Advisory Agreement (the " Advisory Agreement" ) among the Company, Carey Watermark Advisors, LLC (the " Advisor" ) and CWI Limited Partnership have been duly and validly authorized, executed and delivered by the Company and CWI Limited Partnership and constitute the valid agreements of the Company and CWI Limited Partnership enforceable in accordance with their terms. The execution and delivery of this Agreement and the Advisory Agreement, the consummation of the transactions herein and therein contemplated and the compliance with the terms of this Agreement and the Advisory Agreement by the Company and CWI Limited Partnership will not conflict with or constitute a default under (1) the Articles or bylaws of the Company or the Operating Partnership Agreement of CWI Limited Partnership or (2) any indenture, mortgage, deed of trust, lease or other agreement or instrument to which the Company is a party, or (3) any law, order, rule or regulation, writ, injunction or decree of any government, governmental instrumentality or court, domestic or foreign, having jurisdiction over the Company, or any of its property, except in the case of clauses (2) and (3), where such conflict, breach, violation or default would not reasonably be expected to have individually or in the aggregate, a Material Adverse Effect and except to the extent that the enforceability of the indemnity and/or contribution provisions contained in Section 8 of this Agreement may be limited under applicable securities law; and no consent, approval, authorization or order of any court or other governmental agency or body has been or is required for the performance of this Agreement or the Advisory Agreement by the Company, or CWI Limited Partnership, or for the consummation of the transactions contemplated hereby and thereby (except such as have been obtained under the Securities Act or as may be required under state securities or " blue sky" laws in connection with the distribution of the Shares). (l) Description of Agreements . The Company is not a party to or bound by any contract or other instrument of a character required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement that is not described and filed as required.

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(m) Qualification as a Real Estate Investment Trust . The Company intends to satisfy the requirements of the Internal Revenue Code of 1986 as amended (the " Code" ) for qualification of the Company as a real estate investment trust. Commencing with the taxable year ending December 31, 2008, the Company has been organized and has operated in conformity with the requirements for qualification as a real estate investment trust under the Code and its actual method of operation has enabled it and its proposed method of operation as described in the Prospectus will enable it to continue to meet the requirements for taxation as a real estate investment trust under the Code. 3. Sales of Shares . On the basis of the representations, warranties and covenants herein contained, but subject to the terms and conditions herein set forth, the Company hereby appoints you as its sales agent (" Sales Agent" ) to solicit purchasers, along with the Selected Dealers, for the Shares during the period (the " Effective Term" ) from the Effective Date to the Termination Date, including the Shares pursuant to the DRIP, each in the manner described in the Registration Statement. Subject to the performance by the Company of all obligations to be performed by it hereunder and the completeness and accuracy of all of its representations and warranties, you agree to use your best efforts as Sales Agent, promptly following written or telegraphic receipt of notice of the Effective Date from the Company, to offer and sell such number of Shares as contemplated by this Agreement at the price stated in the Prospectus. (a) Purchase of Shares . The purchase of Shares must be made during the offering period described in the Prospectus, or after such offering period in the case of purchases made pursuant to the DRIP (each such purchase hereinafter defined as an " Order" ). Persons desiring to purchase Shares are required to (i) deliver to you or the appropriate Selected Dealer a check in the amount of $10 per Share purchased (subject to certain volume discounts or other discounts as described in the Prospectus) payable to Wells Fargo Bank, National Association, or Wells Fargo, 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" ) or (ii) authorize a debit of such amount to the account such purchaser maintains with you, the appropriate Selected Dealer. During the Offering and until the first annual valuation of the Company' s assets is completed, Shares issued pursuant to the DRIP shall be purchased at $9.50 per share. Subsequent to the first annual valuation of the Company' s assets, the price of shares purchased pursuant to the DRIP will be 95% of the then-current net asset value per share. For investors residing in certain states, an enrollment form in the form attached to the Prospectus (each an " Enrollment Form" ) must be completed and submitted to the Company. On a daily basis, you will submit all checks received from investors and transfer, via Federal Reserve bank wire, the total amount debited from investor accounts for the purchase of Shares along with a list including 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 investment by, each investor on whose behalf checks are submitted or the wire transfer is made. You also will forward all Enrollment Forms to the Company. You shall use your best efforts to wire such funds or transmit checks to the applicable Agent Bank not later than noon of the next business day after receipt by you from your customer of each Order. You will advise the applicable 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 Order or to accept or reject Orders in the order of their receipt by the Company or otherwise. Within 30 days of receipt of an Order, the Company must accept or reject such Order. If the Company elects to reject such Order, within 10 business days after such rejection, it will notify the purchaser of such fact and cause the return of such purchaser' s funds submitted with such application and any interest earned thereon. If you receive no notice of rejection within 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 to make every reasonable effort to determine that the purchase of

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Shares is a suitable and appropriate investment for each potential purchaser of Shares based on information provided by such purchaser regarding such purchaser' s financial situation and investment objectives. You agree to maintain copies of the Orders received from investors. (b) Closing Dates and Delivery of Shares . In no event shall a sale of Shares to an investor be completed until at least five business days after the date the investor receives a copy of the Prospectus. On the date Shares are first issued to shareholders (such date being herein referred to as the " Initial Closing Date" ), the applicable Agent Bank will at such time and place as instructed by you and the Company (which instruction shall be subject to the satisfaction on such date of the conditions contained herein), deliver to the Company or its designee immediately available funds in an amount equal to the escrow funds maintained by the Company and on deposit in the escrow account of the applicable Agent Bank prior to the date designated by the Company. If, after the Initial Closing Date, additional sales of Shares are made, on each such date (each such date being referred to as an " Additional Closing Date" ) and at each such time and place as instructed by you and the Company (which instruction shall be subject to the satisfaction on each such date of the conditions contained herein), the applicable Agent Bank shall be required to deliver to the Company or its designee immediately available funds in an amount equal to the escrow funds on deposit in the escrow account of the applicable Agent Bank prior to the date specified by the Company. The Initial Closing Date and each Additional Closing Date are each herein referred to as a " Closing Date ." Closing dates for purchases made pursuant to the DRIP will be as set forth in the DRIP. (c) Selected Dealers . The Shares offered and sold under this Agreement, other than sales made by the Company directly to its officers and directors, shall be offered and sold only by you as Sales Agent and by a selling group of brokers or dealers (the " Selected Dealers" ), all of whom must be members in good standing of the Financial Industry Regulatory Authority (the " FINRA" ), who execute Selected Dealer Agreements with you substantially in the form attached hereto as Exhibit A, all of whom are acceptable to the Company and you (which acceptance shall not be unreasonably withheld by you). You will assist the Company in forming the selling group of Selected Dealers. No firm shall be invited to join the selling group of Selected Dealers if it is (i) currently subject to any suspension or expulsion pursuant to the rules and regulations of the Commission, the state securities commissions of any of the fifty states, the New York Stock Exchange, Inc. or the American Stock Exchange, Inc. as those rules and regulations relate to broker-dealers, or the rules and regulations of the FINRA or (ii) a " discount broker" as that term is commonly understood in the brokerage industry. The Company and the Advisor or an affiliate thereof agree to participate in your marketing efforts to the extent that you may reasonably request and, without limiting the generality of the foregoing, agree to visit the offices of Selected Dealers as you may reasonably designate. (d) Compensation . In consideration for your execution of this Agreement, and for the performance of your obligations hereunder, the Company agrees to pay or cause to be paid to you a selling commission (the " Selling Commission" ) of six and one-half percent ( ...