Exhibit 10.1
ACQUISITION SERVICES AGREEMENT
     THIS ACQUISITION SERVICES AGREEMENT, dated as of June 28, 2000 is between
Corporate Property Associates 12 Incorporated, a corporation organized under the
laws of the State of Maryland (the “Company”) and CAREY ASSET MANAGEMENT CORP.,
a Delaware limited liability company, (the “Advisor”).
W I T N E S S E T H
     WHEREAS, the Company desires to avail itself of the experience, sources of
information, advice and assistance available to the Advisor and to have the
Advisor undertake the duties and responsibilities herein after set forth, on
behalf of, and subject to the supervision, of the Board of Directors of the
Company all as provided herein; and
     WHEREAS, the Advisor is willing to undertake to render such services,
subject to the supervision of the Board of Directors, on the terms and
conditions herein after set forth;
     NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
     1. Definitions. As used in this Agreement, the following terms have the
definitions hereinafter indicated:
     a. Acquisition Expenses. Those expenses, including but not limited to legal
fees and expenses, travel and communications expenses, costs of appraisals,
nonrefundable option payments on Property not acquired, accounting fees and
expenses, title insurance and miscellaneous expenses, related to selection and
acquisition of Properties, whether or not acquired. Acquisition Expenses shall
not include Acquisition Fees.
     b. Acquisition Fees. The total of all fees and commissions paid by any
party in connection with the making or investing in mortgage loans or the
purchase or development of Properties by the Company. A development fee paid to
a Person not affiliated with the Sponsor in connection with the actual
development of a project after acquisition of the Property by the Company shall
not be deemed an Acquisition Fee. Included in the computation of such fees or
commissions shall be any real estate commission, selection fee, development fee
(other than as described above), non-recurring management fee, mortgage
placement fee, lease-up fee, transaction structuring fee or any fee of a similar
nature, however designated. Acquisition Fees shall not include Acquisition
Expenses.

 

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     c. Adjusted Investor Capital. As of any date, the Initial Investor Capital
for such date reduced by any distribution on or prior to such date deemed by the
Board to be from Cash from Sales and Financings.
     d. Advisor. Carey Asset Management Corp., a limited liability company
organized under the laws of the State of Delaware.
     e. Affiliate. With respect to any Person (i) any Person directly or
indirectly controlling or controlled by, or under common control with such
Person, (ii) any officer, director, partner or trustee of such Person or any
Person of which the specified Person is an officer, director, general partner or
trustee, and (iii) any Person owning or controlling 10% or more of the
outstanding voting securities or beneficial interests of the specified Person.
     f. Appraised Value. Value according to an appraisal made by an Independent
Appraiser.
     g. Articles or Articles of Incorporation. Articles of Incorporation of the
Company under the General Corporation Law of Maryland, as amended from time to
time.
     h. Board of Directors, Board or Directors. The persons holding such office,
as of any particular time, under the Articles of Incorporation of the Company,
whether they be the Directors named therein or additional or successor
Directors.
     i. Bylaws. The Bylaws of the Company.
     j. Cause. With respect to the termination of this Agreement, fraud,
criminal conduct, willful misconduct or willful or negligent breach of fiduciary
duty by the Advisor, breach of this Agreement, a default by the Sponsor under
the guarantee by the Sponsor to the Company or the bankruptcy of the Sponsor.
     k. Code. Internal Revenue Code of 1986, as amended.
     l. Company. Corporate Property Associates 12 Incorporated, a corporation
organized under the laws of the State of Maryland.
     m. Contract Purchase Price. The amount actually paid or allocated (as of
the date of purchase) to the purchase, development, construction or improvement
of property, exclusive of Acquisition Fees and Acquisition Expenses.
     n. Cumulative Return. For the period for which the calculation is being
made, the percentage resulting from dividing (A) the total Dividends paid on
each Dividend payment date during such period (without regard to Dividends paid
out of Cash from Sales and Financings), by (B) the product of (i) the average
Adjusted Investor Capital for such period

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(calculated on a daily basis), and (ii) the number of years (including fractions
thereof) elapsed during such period.
     o. Dividends. Dividends declared by the Board.
     p. Equity Interest. The stock of or other interests in, or warrants or
other rights to purchase the stock of or other interests in, any entity that has
borrowed money from the Company or that is a tenant of the Company or that is a
parent or controlling Person of any such borrower or tenant.
     q. Gross Offering Proceeds. The aggregate purchase price of Shares sold
pursuant to the Offering.
     r. Independent Appraiser. A qualified appraiser of real estate as
determined by the Board. Membership in a nationally recognized appraisal society
such as the American Institute of Real Estate Appraisers (“M.A.I.”) or the
Society of Real Estate Appraisers (“S.R.E.A.”) shall be conclusive evidence of
such qualification.
     s. Independent Director. A Director of the Company who (i) is not
affiliated, directly or indirectly with the Advisor, whether by ownership of,
ownership interest in, employment by, any business, or professional relationship
with, or service as an officer or director of, the Advisor or its Affiliates
other than as a director or trustee or officer of not more than two other REITs
organized by the Sponsor or its Affiliates; and (ii) performs no other services
for the Company except as a Director. An indirect relationship shall include
circumstances in which a member of the immediate family of the Director has one
of the foregoing relationships with the Company or the Advisor.
     t. Initial Closing Date. The date on which the first closing for the sale
of Shares sold pursuant to the Prospectus occurs.
     u. Initial Investor Capital. The total amount of capital invested from time
to time by Shareholders (computed at a rate of $10 per Share for every Share
including those Shares for which reduced selling commissions were paid in
connection with their purchase from the Company). Upon completion of the
Offering, the Initial Investor Capital shall be equal to the Gross Offering
Proceeds.
     v. Loans. The notes and other evidences of indebtedness or obligations
acquired or entered into by the Company as lender which are secured or
collateralized by personal property or fee or leasehold interests in real estate
or other assets, including, but not limited to, first or subordinate mortgage
loans, construction loans, development loans, loans secured by capital stock or
any other assets or form of equity interest and any other type of loan or
financial arrangement, such as providing or arranging for letters of credit,
providing guarantees of obligations to third parties, or providing commitments
for loans. The term “Loans” shall not include leases which are not recognized as
leases for Federal income tax reporting purposes.

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     w. NASDAQ. The national automated quotation system operated by the National
Association of Securities Dealers, Inc.
     x. Offering. The offering of Shares pursuant to the Prospectus.
     y. Person. An individual, corporation, partnership, joint venture,
association, company, trust, bank, or other entity, or government or any agency
or political subdivision of a government.
     z. Preferred Return. A Cumulative Return of 7% computed from the Initial
Closing Date through the date as of which the Preferred Return is being
calculated.
     aa. Property or Properties. Partial or entire interest in real property
(including leasehold interests) and personal or mixed property connected
therewith.
     bb. Prospectus. The final prospectus of the Company pursuant to which the
Company will offer up to 20,000,000 Shares, as the same may at any time and from
time to time be amended or supplemented after the effective date of the
Registration Statement.
     cc. Registration Statement. The Registration Statement on Form S-11 of
which the Prospectus is a part.
     dd. REIT or Real Estate Investment Trust A real estate investment trust, as
defined in Sections 856-860 of the Code.
     ee. Securities. Any stock, shares (other than currently outstanding Shares
and subsequently issued shares of common stock of the Company), voting trust
certificates, bonds, debentures, notes or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or otherwise or in general any
instruments commonly known as “securities” or any certificate of interest,
shares or participation in temporary or interim certificates for receipts (or,
guarantees of, or warrants, options or rights to subscribe to, purchase or
acquire any of the foregoing), which subsequently may be issued by the Company.
     ff. Shareholders. Those Persons who at any particular time are shown as
holders of record of Shares on the books and records of the Company.
     gg. Shares. All of the shares of common stock of the Company, $.001 par
value, and all other shares of common stock of the Company issued in the
Offering or any subsequent offering.
     hh. Sponsor. W.P. Carey & Co. LLC and any other person directly or
indirectly instrumental in organizing, wholly or in par, the Company or any
person who will manage or participate in the management of the Company, and any
Affiliate of any such person. Sponsor

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does not include a person whose only relationship to the Company is that of an
independent property manager and whose only compensation is as such. Sponsor
also does not include wholly independent third parties such as attorneys,
accountants and underwriters whose only compensation is for professional
services.
     ii. Subordinated Disposition Fee. The Subordinated Disposition Fee as
defined in Paragraph 8(c).
     jj. Subordinated Incentive Fee. The Subordinated Incentive Fee as defined
in Paragraph 8( d).
     kk. Termination Date. The effective date of any termination of this
Agreement.
     ll. Termination Fee. An amount equal to 15% of the amount, if any, by which
(1) the Appraised Value of the Properties on the Termination Date, less the
amount of all indebtedness secured by such Properties, exceeds (2) the total of
the Initial Investor Capital on the Final Closing Date plus an amount equal to
the Preferred Return through the Termination Date reduced by the total Dividends
paid by the Company from its inception though the Termination Date.
     mm. Total Property Cost. With regard to any Company Property, an amount
equal to the sum of the Contract Purchase Price of such Property plus the
Acquisition Fees paid in connection with such Property.
     2. Appointment. The Company hereby appoints the Advisor to serve as its
advisor on the terms and conditions set forth in this Agreement, and the Advisor
hereby accepts such appointment.
     3. Duties of the Advisor. The Advisor undertakes to use its best efforts to
present to the Company potential investment opportunities and to provide a
continuing and suitable investment program consistent with the investment
objectives and policies of the Company as determined and adopted from time to
time by the Directors. In performance of this undertaking, subject to the
supervision of the Directors and consistent with the provisions of the
Registration Statement, Articles of Incorporation and Bylaws of the Company, the
Advisor shall, either directly or by engaging an Affiliate:
     (a) subject to the provisions of Paragraph 4 hereof, (i) locate, analyze
and select potential investments in Property and Loans; (ii) structure and
negotiate the terms and conditions of transactions pursuant to which investments
in Properties and Loans will be made, purchased or acquired by the Company;
(ii) make investments in Property on behalf of the Company in compliance with
the investment objectives and policies of the Company; (iv) arrange for
financing, and refinancing and make other changes in

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the asset or capital structure of, and dispose of, reinvest the proceeds from
the sale of or otherwise deal with the investments in Property and Loans; and
(v) enter into leases and service contracts for Company Property and, to the
extent necessary, perform all other operational functions for the maintenance
and administration of such Property;
     (b) provide the Directors with periodic reports regarding prospective
investments in Properties and Loans;
     (c) obtain the prior approval of the Directors (including a majority of the
Independent Directors) for any and all investments in Property which do not meet
all of the requirements set forth in Paragraphs 4(b) below and obtain the prior
approval of the Independent Directors for all investments in Loans;
     (d) negotiate on behalf of the Company with banks or lenders for loans to
be made to the Company, and negotiate on behalf of the Company with investment
banking firms and broker-dealers or negotiate private sales of Shares and
Securities or obtain loans for the Company, but in no event in such a way so
that the Advisor shall be acting as broker-dealer or underwriter; and provided,
further, that any fees and costs payable to third parties incurred by the
Advisor in connection with the foregoing shall be the responsibility of the
Company;
     (e) obtain for, or provide to, the Company such services as may be required
in acquiring, managing and disposing of Company Property and/or Loans,
including, but not limited to; (i) the negotiation, making and servicing of
Loans; (ii) the disbursement and collection of Company monies; (iii) the payment
of debts of and fulfillment of the obligations of the Company; and (iv) the
handling, prosecuting and settling of any claims of or against the Company,
including, but not limited to, foreclosing and otherwise enforcing mortgages and
other liens securing the Loans;
     (f) do all things necessary to assure its ability to render the services
described in this Agreement;
     (g) deliver to or maintain on behalf of the Company copies of all
appraisals obtained in connection with investments in Property and Loans; and

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     (h) notify the Board of all proposed acquisitions before they are
completed.
     4. Authority of Advisor.
     (a) Pursuant to the terms of this Agreement (including the restrictions
included in this Paragraph 4 and in Paragraph 6), and subject to the continuing
and exclusive authority of the Directors over the management of the Company, the
Directors hereby delegate to the Advisor the authority to (1) locate, analyze
and select investment opportunities, (2) structure the terms and conditions of
transactions pursuant to which investments will be made or acquired for the
Company, (3) acquire Property and make Loans in compliance with the investment
objectives and policies of the Company, and (4) enter into leases for the
Company’s Property;
     (b) Notwithstanding the foregoing, any investment in Property, including
any acquisition of Property by the Company (as well as any financing acquired by
the Company in connection with such acquisition), will require the prior
approval of the Directors unless, prior to completion of any such transaction,
the Advisor provides the Company with:
     (i) an appraisal for the investment in Property indicating that the Total
Property Cost does not exceed the Appraised Value of the Property; and
     (ii) a representation from the Advisor that the Property, in conjunction
with the Company’s other investments and proposed investments, at the time the
Company is committed to purchase the Property, is reasonably expected to fulfill
the Company’s investment objectives and policies as established by the Directors
and then in effect.
     (c) If a transaction requires approval by the Independent Directors, the
Advisor will deliver to the Independent Directors all documents required by them
to properly evaluate the proposed investment in the Property or the Loan.
     Notwithstanding the foregoing, the prior approval of the Directors,
including a majority of the Independent Directors, will be required for
transactions involving (a) investments in Property in respect of which all of
the requirements specified in Paragraph 4(b) above have not be satisfied,
(b) investments in Property made though joint venture arrangements with
Affiliates, (c) investments in Property which are not contemplated by the terms
of the Prospectus, (d) transactions that present issues which involve conflicts
of interest for the Advisor (other than conflicts involving the payment of fees
or the reimbursement of expenses), and ( e) the making or purchasing of any
Loans on behalf of the Company.

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     The Directors may, at any time upon the giving of notice to the Advisor,
modify or revoke the authority set forth in this Paragraph 4. If and to the
extent the Directors so modify or revoke the authority contained herein, the
Advisor shall henceforth submit to the Directors for prior approval such
proposed transactions involving investments in Property as thereafter require
prior approval, provided however, that such modification or revocation shall be
effective upon receipt by the Advisor and shall not be applicable to investment
transactions to which the Advisor has committed the Company prior to the date of
receipt by the Advisor of such notification.
     5. Records; Access. The Advisor shall maintain appropriate records of all
its activities hereunder and make such records available for inspection by the
Directors and by counsel, auditors and authorized agents of the Company, at any
time or from time to time during normal business hours. The Advisor shall at all
reasonable times have access to the books and records of the Company.
     6. Limitations on Activities. Anything else in this Agreement to the
contrary notwithstanding, the Advisor shall refrain from taking any action
which, in its sole judgment made in good faith, would adversely affect the
status of the Company as a REIT, subject the Company to regulation under the
Investment Company Act of 1940, would violate any law, rule, regulation or
statement of policy of any governmental body or agency having jurisdiction over
the Company, its Shares or its Securities, or otherwise not be permitted by the
Articles of Incorporation or Bylaws of the Company, except if such action shall
be ordered by the Directors, in which case the Advisor shall notify promptly the
Directors of the Advisor’s judgment of the potential impact of such action and
shall refrain from taking such action until it receives further clarification or
instructions from the Directors. In such event the Advisor shall have no
liability for acting in accordance with the specific instructions of the
Directors so given. Notwithstanding the foregoing, the Advisor, its partners and
employees, and partners, stockholders, directors and officers of the Advisor’s
partners shall not be liable to the Company, or to the Directors or Shareholders
for any act or omission by the Advisor, its partners or employees, or partners,
stockholders, directors or officers of the Advisor’s partners except as provided
in Paragraphs 17 and 19 of this Agreement.
     7. Relationship with Directors. Partners and employees of the Advisor or
partners in the Advisor or any corporate parents of a partner, or directors,
officers or stockholders of any partner or corporate parent of a partner may
serve as a Director and as officers of the Company, except that no partner in or
employee of the Advisor or its Affiliates who also is a Director or officer of
the Company shall receive any compensation from the Company for serving as a
Director or officer other than for reasonable reimbursement for travel and
related expenses incurred in attending meetings of the Directors.
     8. Fees.
     (a) Acquisition Fee. The Advisor may receive as compensation for services
rendered in connection with the investigation, selection and acquisition (by
purchase, investment

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or exchange) of Property an Acquisition Fee payable by the seller of such
Property or the Company. The total Acquisition Fees (not including Subordinated
Acquisition Fees) payable to the Advisor and its Affiliates plus Acquisition
Fees (not including Subordinated Acquisition Fees) payable by the Company to any
other party may not exceed 2.5% of the aggregate Total Property Cost of all
Properties purchased by the Company with proceeds from the Offering (calculated
after all such proceeds are invested) unless a majority of the Directors
(including a majority of the Independent Directors) not otherwise interested in
any transaction approve the excess as being commercially competitive, fair and
reasonable to the Company. The total amount of Acquisition Fees (including
Subordinated Acquisition Fees and any interest thereon) and Acquisition Expenses
paid by the Company may not exceed six percent (6%) of the aggregate Contract
Purchase Price of all Properties purchased by the Company unless a majority of
the Board (including a majority of the Independent Directors) not otherwise
interested in any transaction approves fees in excess of this limit as being
commercially competitive, fair and reasonable to the Company. No Acquisition
Fees will be payable on the reinvestment of proceeds from the sale or
refinancing of Properties.
     (b) Subordinated Acquisition Fee. In addition to the Acquisition Fee
described in Section 9(c) above, the Advisor may receive as additional
compensation for services rendered in connection with the investigation,
selection and acquisition (by purchase, investment or exchange) of a Property a
Subordinated Acquisition Fee payable by the seller of such Property or the
Company. The total Subordinated Acquisition Fees payable to the Advisor and its
Affiliates plus Subordinated Acquisition Fees payable by the Company to any
other party may not exceed 2.0% of the aggregate Total Property Cost of all
Properties purchased by the Company with proceeds from the Offering (calculated
after all such proceeds are invested) unless a majority of the Directors
(including a majority of the Independent Directors) not otherwise interested in
any transaction approve the excess as being commercially competitive, fair and
reasonable to the Company. The unpaid portion of the Subordinated Acquisition
Fee with respect to any Property shall bear interest at the rate of 7% per annum
from the date of acquisition of such Property until such portion is paid.
Subject to the following sentence, the Subordinated Acquisition Fee with respect
to any Property shall be payable in equal annual installments on January 1 of
each of the eight calendar years following the first anniversary of the date
such Property was purchased. Accrued interest shall also be payable on such
dates. The portion of the Subordinated Acquisitions Fees, and accrued interest
thereon, otherwise payable for any year on January 1 of the following year shall
be payable only if the Company has paid Dividends to Shareholders in an amount
sufficient to pay the Preferred Return for the period beginning with the Initial
Closing Date and ending on the last day of such year. Any portion of the
Subordinated Acquisitions Fees, and accrued interest thereon, not paid due to
the Company’s failure to pay the Preferred Return for the most recently
completed fiscal year shall be paid by the Company on January 1 following the
fiscal year through which the Company has paid the Preferred Return. In the
event that the Shares are listed for trading on a national securities exchange
or are included for quotation on NASDAQ, all Subordinated Acquisition Fees, and
accrued interest thereon, shall be due and payable on the date of such listing
or inclusion. No Subordinated Acquisition Fees will be payable on the
reinvestment of proceeds from the sale or refinancing of Properties.

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     (c) Subordinated Disposition Fee. If the Advisor or an Affiliate provides a
substantial amount of the services (as determined by a majority of the
Independent Directors) in the sale of a Property, the Advisor or an Affiliate
shall receive a Subordinated Disposition Fee equal to the lesser of (i) 50% of
the Competitive Real Estate Commission and (ii) 3 % of the Contract Sales Price
of such Property. The Subordinated Disposition Fee will be paid only if
Shareholders have received total Dividends in an amount equal to 100% of Initial
Investor Capital plus an amount sufficient to pay a Cumulative Return of 6% from
the Initial Closing Date through the date payment is made. To the extent that
Subordinated Disposition Fees are not paid by the Company on a current basis due
to the foregoing limitation, the unpaid fees will be accrued and paid at such
time as the limitation has been satisfied. The Subordinated Disposition Fee may
be paid in addition to real estate commissions paid to non-Affiliates, provided
that the total real estate commissions paid to all Persons by the Company shall
not exceed an amount equal to the lesser of (i) 6% of the Contract Sales Price
of a Property or (ii) the Competitive Real Estate Commission. In the event this
Agreement is terminated prior to such time as the Shareholders have received
total Dividends in an amount equal to 100% of Initial Investor Capital plus an
amount sufficient to pay a Cumulative Return of 6% from the Initial Closing Date
through the date of termination of this Agreement, an appraisal of the
Properties then owned by the Company shall be made and the Subordinated
Disposition Fee on Properties previously sold will be deemed earned if the
Appraised Value of the Properties then owned by the Company plus total Dividends
received prior to the date of termination of this Agreement is equal to 100% of
Initial Investor Capital plus an amount sufficient to pay a Cumulative Return of
6% from the Initial Closing Date through the date of termination of this
Agreement. In the event the Company’s Shares are listed on a national securities
exchange or included for quotation on NASDAQ and, at the time of such listing,
the Advisor has accrued a Subordinated Disposition Fee which has not been paid,
for purposes of determining whether the subordination conditions have been
satisfied, Shareholders will be deemed to have received a Dividend in an amount
equal to the product of the total number of outstanding Shares and the average
of the closing prices (or average bid and asked quotes) of the Shares over a
period, beginning 180 days after listing of the Shares, of 30 days during which
the Shares are traded.
     (d) Subordinated Incentive Fee. The Subordinated Incentive Fee shall be
payable to the Advisor in an amount equal to 15% of Cash from Sales and
Financings distributed to the Shareholders after the Shareholders have received
total Dividends in an amount equal to 100% of Initial Investor Capital plus an
amount sufficient to pay the Preferred Return from the Initial Closing Date
through the date on which each distribution out of Cash From Sales and
Financings is made. In the event the Company’s Shares are listed on a national
securities exchange or included for quotation on NASDAQ, the Advisor shall be
paid the Subordinated Incentive Fee in an amount equal to 12% of the excess (the
“Excess Return”) of (A) the sum (defined hereinafter as the “Hypothetical
Return”) of (i) the market value of the Company, measured by taking the average
closing price or bid and asked price, as the case may be, over a period,
beginning 180 days after listing of the Shares, of 30 days during which the
Shares are traded (the “Market Value”) plus (ii) the total of the Dividends paid
to Shareholders from the Initial Closing Date until the date the Shares are
listed or included for quotation over (B) the sum of (i) 100% of Initial
Investor Capital and (ii) the total amount of the Dividends required to be

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paid to Shareholders in order to pay the Preferred Return through the date the
Market Value is determined. The Subordinated Incentive Fee shall be increased to
13% of the Excess Return if the Hypothetical Return is an amount sufficient to
return to investors 100% of Initial Investor Capital plus a cumulative return of
9% or more but less than 10%; 14% if the Hypothetical Return is an amount
sufficient to return 100% of Initial Investor Capital plus a cumulative return
of 10% or more but less than 11%; and 15% if the Hypothetical Return is an
amount sufficient to return 100% of Initial Investor Capital plus a cumulative
return of 11% or more. Cumulative return shall be measured from the Initial
Closing Date through the last day on which the Market Value is determined. The
fee may only be paid if the average closing price of the stock over any
consecutive three-month period ending within 24 months of the date of listing,
is sufficient, when added to Dividends previously paid from the Initial Closing
Date through the end of such three-month period, to return 100% of Initial
Invested, Capital plus a 6% cumulative return from the Initial Closing date
through the last day of such three-month period. The Company shall have the
option to pay such fee in the form of cash, a promissory note or any combination
thereof. The promissory note shall be fully amortizing over five years, provide
for quarterly payments and bear interest at the prime rate announced from time
to time by The Bank of New York.
     (e) Payment. Compensation payable to the Advisor pursuant to this
Paragraph 8 shall be paid in cash.
     9. Expenses. In addition to the compensation paid to the Advisor pursuant
to Paragraph 8 hereof, the Company shall pay directly or reimburse the Advisor
for the following expenses:
     (i) Acquisition Expenses incurred in connection with the investment of the
funds of the Company;
     (ii) expenses other than Acquisition Expenses incurred in connection with
the investment of the funds of the Company;
     (iii) interest and other costs for borrowed money, including discounts,
points and other similar fees;
     (iv) fees and expenses of legal counsel for the Company;
     (v) all other expenses the Advisor incurs in connection with providing
services to the Company.
     Expenses incurred by the Advisor on behalf of the Company and payable
pursuant to this Paragraph 9 shall be reimbursed quarterly to the Advisor within
60 days after the end of each quarter. The Advisor shall prepare a statement
documenting the expenses of the Company during each quarter, and shall deliver
such statement to the Company within 45 days after the end of each quarter.

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     10. Other Services. Should the Directors request that the Advisor or any
partner or employee thereof render services for the Company other than set fort
in Paragraph 3, such services shall be separately compensated and shall not be
deemed to be services pursuant to the terms of this Agreement.
     11. Other Activities of the Advisor. Nothing herein contained shall prevent
the Advisor from engaging in other activities, including, without limitation,
the rendering of advice to other investors (including other REITs) and the
management of other programs advised, sponsored or organized by the Advisor or
its Affiliates; nor shall this Agreement limit or restrict the right of any
director, officer, employee, partner or shareholder of the Advisor or its
Affiliates to engage in any other business or to render services of any kind to
any other partnership, corporation, firm, individual, trust or association. The
Advisor may, with respect to any investment in which the Company is a
participant, also render advice and service to each and every other participant
therein. The Advisor shall report to the Directors the existence of any
condition or circumstance, existing or anticipated, of which it has knowledge,
which creates or could create a conflict of interest between the Advisor’s
obligations to the Company and its obligations to or its interest in any other
partnership, corporation, firm, individual, trust or association. The Advisor or
its Affiliates shall promptly disclose to the Directors knowledge of such
condition or circumstance. If the Sponsor, Advisor, Director or Affiliates
thereof have sponsored other investment programs with similar investment
objectives which have investment funds available at the same time as the
Company, it shall be the duty of the Directors (including the Independent
Directors) to adopt the method set forth in the Registration Statement or
another reasonable method by which properties are to be allocated to the
competing investment entities and to use their best efforts to apply such method
fairly to the Company.
     The Advisor shall be required to use its best efforts to present a
continuing and suitable investment program to the Company which is consistent
with the investment policies and objectives of the Company, but neither the
Advisor nor any Affiliate of the Advisor shall be obligated generally to present
any particular investment opportunity to the Company even if the opportunity is
of character which, if presented to the Company, could be taken by the Company.
     In the event that the Advisor or its Affiliates is presented with a
potential investment which might be made by the Company, the Advisor or by
another investment entity which the Advisor or its Affiliates advises or
manages, the Advisor shall consider the investment portfolio of each entity,
cash flow of each entity, the effect of the acquisition on the diversification
of each entity’s portfolio, rental payments during any renewal period, the
estimated income tax effects of the purchase on each entity, the policies of
each entity relating to leverage, the funds of each entity available for
investment and the length of time such funds have been available for investment.
To the extent that a Property might be suitable for the Company, the Advisor or
for another investment entity which is advised or managed by the Advisor, the
Advisor shall give priority to the investment entity, including the Company,
which has uninvested funds for the longest period of time. The Advisor may
consider the Property for

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private placement only if such Property is deemed inappropriate for any
investment entity which is advised or managed by the Advisor, including the
Company.
     12. Relationship of Advisor and Company. The Company and the Advisor are
not partners or joint ventures with each other, and nothing in this Agreement
shall be construed to make them such partner or joint ventures or impose any
liability as such on either of them.
     13. Term; Termination of Agreement. This Agreement shall continue in force
until December 31, 2000.
     14. Termination by Company. At the sole option of a majority of the
Independent Directors, this Agreement may be terminated immediately by written
notice of termination from the Company to the Advisor if, in addition to the
occurrence of events which would constitute Cause, any of the following events
occur:
     (a) If the Advisor shall violate any material provision of this Agreement,
and after written notice of such violation, shall not cure such default within
30 days or have begun action within 30 days to cure the default which shall be
completed with reasonable diligence; or
     (b) If the Advisor shall be adjudged bankrupt or insolvent by a court of
competent jurisdiction, or an order shall be made by a court of competent
jurisdiction for the appointment of a receiver, liquidator, or trustee of the
Advisor, for all or substantially all of its property by reason of the
foregoing, or if a court of competent jurisdiction approves any petition filed
against the Advisor for reorganization, and such adjudication or order shall
remain in force or unstayed for a period of 30 days; or
     (c) If the Advisor shall institute proceedings for voluntary bankruptcy or
shall file a petition seeking reorganization under the federal bankruptcy laws,
or for relief under any law for relief of debtors, or shall consent to the
appointment of a receiver for itself or for all or substantially all of its
property, or shall make a general assignment for the benefit of its creditors,
or shall admit in writing its inability to pay its debts, generally, as they
become due; or
     (d) If the Sponsor shall default on its obligations under the guarantee
agreement between it and the Company relating to certain obligations of the
Advisor to the Company;

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     (e) If the Sponsor shall be adjudged bankrupt or insolvent by a court of
competent jurisdiction, or an order shall be made by a court of competent
jurisdiction for the appointment of a receiver, liquidator, or trustee of the
Sponsor, for all or substantially all of its property by reason of the
foregoing, or if a court of competent jurisdiction approves any petition filed
against the Sponsor for reorganization, and such adjudication or order shall
remain in force or unstayed for a period of 30 days.; or
     (f) If the Sponsor shall institute proceedings for voluntary bankruptcy or
shall file a petition seeking reorganization under the federal bankruptcy laws,
or for relief under any law for relief of debtors, or shall consent to the
appointment of a receiver for itself or for all or substantially all of its
property, or shall make a general assignment for the benefit of its creditors,
or shall admit in writing its inability to pay its debts, generally, as they
become due.
     Any notice of termination under Paragraph 13 or 14 shall be effective on
the date specified in such notice, which may be the day on which such notice is
given or any date thereafter. The Advisor agrees that if any of the events
specified in Paragraph 14 (b) or (c) shall occur, it shall give written notice
thereof to the Directors within 15 days after the occurrence of such event.
     15. Termination by Either Party. This Agreement may be terminated
immediately without penalty by the Advisor by written notice of termination to
the Company upon the occurrence of events which would constitute Cause or by the
Company without cause or penalty by action of the Directors, the Independent
Directors or by action of a majority of the Shareholders upon 60 days’ written
notice.
     16. Assignment Prohibition. This Agreement may not be assigned by the
Advisor without the approval of a majority of the Directors (including a
majority of the Independent Directors); provided, however, that such approval
shall not be required in the case of an assignment to a corporation,
partnership, association, trust or organization which may take over the assets
and carry on the affairs of the Advisor, provided (i) that at the time of such
assignment, such successor organization shall be owned substantially by the then
partners of the Advisor or their Affiliates and only if such entity has either a
net worth of at least $5,000,000 or the guarantee from the Sponsor to the
Company relating to the obligations of the Advisor remain in effect with respect
to the new entity serving as the Advisor (the “Guarantee”) and (ii) that a
general partner of the Advisor shall deliver to the Directors a statement in
writing indicating the ownership structure and net worth of the successor
organization and either a certification from the new Advisor as to its net worth
or a confirmation from the Sponsor that the Guarantee will remain in effect.
Such an assignment shall bind the assignees hereunder in the same manner as the
Advisor is bound by this Agreement. The Advisor may assign any rights to receive
fees or

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other payments under this Agreement without obtaining the approval of the
Directors. This Agreement shall not be assigned by the Company without the
consent of the Advisor, except in the case of an assignment by the Company to a
corporation or other organization which is a successor to the Company, in which
case such successor organization shall be bound hereunder and by the terms of
said assignment in the same manner as the Company is bound by this Agreement.
     17. Payments to and Duties of Advisor Upon Termination.
     (a) After the Termination Date, the Advisor shall not be entitled to
compensation for further services hereunder except it shall be entitled to
receive from the Company within 30 days after the effective date of such
termination the following:
     (i) all earned but unpaid Subordinated Disposition Fees payable to the
Advisor relating to the sale of any Property prior to the termination of this
Agreement;
     (ii) all earned but unpaid Loan Refinancing Fees payable to the Advisor
relating to the financing or refinancing of any Property prior to the
termination of this Agreement; and
     (iii) all earned but unpaid Property Management Fees payable to the Advisor
or its Affiliates relating to the management of any property prior to the
termination of this Agreement.
     Notwithstanding the foregoing, in the event this Agreement is terminated by
the Company for Cause or by the Advisor for other than Good Reason, the Advisor
will not be entitled to receive the sums in subparagraphs 17(a)(i)-(v), above.
All amounts payable to the Advisor in the event of a termination shall be
evidenced by a non-interest bearing promissory note (the “Note”) having a
principal amount of the unpaid amount payable to the Advisor.
     (b) If this Agreement is terminated by the Company for any reason other
than Cause, by either par in connection with a Change of Control, or by the
Advisor for Good Reason, the Advisor shall be entitled to payment of the
Termination Fee.
     (c) The Termination Fee shall be paid in a manner determined by the
Directors, but in no event shall any portion of the Termination Fee remain
unpaid three years after the termination, non-renewal or substantial
modification of this Agreement, nor shall the Termination Fee be paid in less
than 12 equal quarterly installments, with interest, on the unpaid balance at
the prime rate of interest then in effect as announced by The Bank of New York.
Notwithstanding the preceding sentence, any amounts which may be deemed payable
at the date the obligation to pay the Termination Fee is incurred (i) shall be
an amount which provides compensation to the Advisor only for that portion of
the holding period for the respective Properties during which the Advisor
provided services to the Company, (ii) shall not be due and

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payable until the Property to which such fees relate is sold or refinanced, and
(iii) shall not bear interest until the Property to which such fees relate is
sold or refinanced. A portion of the Termination Fee shall be paid as each
Property owned by the Company on the Termination Date is sold. The portion of
the Termination Fee payable upon each such sale shall be equal to (y) the
Termination Fee multiplied by (z) the percentage calculated by dividing the
Appraised Value (at the Termination Date) of the Property sold by the Company
divided by the total Appraised Value (at the Termination Date) of all Properties
owned by the Company on the Termination Date.
     The Note for amounts payable as described above shall mature upon the
liquidation of the Company (or ten years from date of issuance whichever is
earlier) and shall be payable at any time prior to maturity. The compensation
payable under this paragraph shall be paid or delivered to the Advisor within
30 days after funds shall become available to the Company for the making of such
payments.
     (d) Notwithstanding the foregoing, the Advisor shall not be entitled to
payment of the Termination Fee in the event this Agreement is terminated because
of failure of the Company and the Advisor to establish, pursuant to Paragraph
9(h) hereof, a fee structure appropriate for a perpetual-life entity in the
event the Shares are listed on a national securities exchange or are included
for quotation on NASDAQ.
     (e) The Advisor shall promptly upon termination:
     (i) pay over to the Company all money collected and held for the account of
the Company pursuant to this Agreement, after deducting any accrued compensation
and reimbursement for its expenses to which it is then entitled;
     (ii) deliver to the Directors a full accounting, including a statement
showing all payments collected by it and a statement of all money held by it,
covering the period following the date of the last accounting furnished to the
Directors;
     (iii) deliver to the Directors all assets, including Properties and Loans,
and documents of the Company then in the custody of the Advisor; and
     (iv) cooperate with the Company to provide an orderly management
transition.
     18. Indemnification by the Company. The Company shall indemnify and hold
harmless the Advisor and its Affiliates, including their respective officers,
directors, partners and employees, from all liability, claims, damages or losses
arising in the performance of their duties hereunder, and related expenses,
including reasonable attorneys’ fees, to the extent such liability, claims,
damages or losses and related expenses are not fully reimbursed by

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insurance, subject to any limitations imposed by the laws of the State of
Maryland, the Articles of Incorporation or the Bylaws of the Company.
Notwithstanding the foregoing, the Advisor shall not be entitled to
indemnification or be held harmless pursuant to this Paragraph 18 for any
activity which the Advisor shall be required to indemnify or hold harmless the
Company pursuant to Paragraph 19.
     19. Indemnification by Advisor. The Advisor shall indemnify and hold
harmless the Company from contract or other liability, claims, damages, taxes or
losses and related expenses including attorneys’ fees, to the extent that such
liability, claims, damages, taxes or losses and related expenses are not fully
reimbursed by insurance and are incurred by reason of the Advisor’s bad faith,
fraud, willful misfeasance, misconduct, negligence or reckless disregard of its
duties.
     20. Notices. Any notice, report or other communication required or
permitted to be given hereunder shall be in writing unless some other method of
giving such notice, report or other communication is accepted by the party to
whom it is given, and shall be given by being delivered by hand or by overnight
mail or other overnight delivery service to the addresses set forth herein:

         
 
  To the Directors   Corporate Property Associates 14 Incorporated
 
  and to the Company:   50 Rockefeller Plaza
 
      New York, NY 10020
 
      Attn: President
 
       
 
  To the Advisor:   Carey Asset Management Corp.
 
      50 Rockefeller Plaza
 
      New York, NY 10020
 
      Attn: President

     Either party may at any time give notice in writing to the other party of a
change in its address for the purposes of this Paragraph 20.
     21. Modification. This Agreement shall not be changed, modified,
terminated, or discharged, in whole or in part, except by an instrument in
writing signed by both parries hereto, or their respective successors or
assignees.
     22. Severability. The provisions of this Agreement are independent of and
severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.
     23. Construction. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York.

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     24. Entire Agreement. This Agreement contains the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof. This Agreement may not be modified or
amended other than by an agreement in writing.
     25. Indulgences, Not Waivers. Neither the failure nor any delay on the part
of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.
     26. Gender. Words used herein regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context requires.
     27. Titles Not to Affect Interpretation. The titles of paragraphs and
subparagraphs contained in this Agreement are for convenience only, and they
neither form a part of this Agreement nor are they to be used in the
construction or interpretation hereof.
     28. Execution in Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.

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

                  CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED    
 
           
 
  BY:   /s/ Claude Fernandez    
 
  Name: Claude Fernandez    
 
  Title: Executive Vice President    
 
                CAREY ASSET MANAGEMENT CORP.    
 
           
 
  By:   /s/ John J. Park    
 
  Name:    
 
  Title:    

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