Exhibit 10.1





Exhibit 10.1




EXECUTION COPY




AMENDED AND RESTATED ADVISORY AGREEMENT




THIS AMENDED AND RESTATED ADVISORY AGREEMENT, dated as of October 1, 2009, is between
CORPORATE PROPERTY ASSOCIATES 16 — GLOBAL INCORPORATED, a Maryland corporation (the
“Company”), and CAREY ASSET MANAGEMENT CORP., a Delaware corporation and wholly-owned
subsidiary of W. P. Carey & Co. LLC (the “Advisor”).



W I T N E S S E T H:




WHEREAS, the Company intends to qualify as a REIT (as defined below), and to invest its funds
in investments permitted by the terms of any prospectus pursuant to which it raised equity capital
and Sections 856 through 860 of the Code (as defined below);



WHEREAS, the Company and the Advisor entered into an initial advisory agreement, dated
December 19, 2003, which has been subsequently amended and restated;



WHEREAS, the Company desires to continue to avail itself of the experience, sources of
information, advice and assistance of, and certain facilities available to, the Advisor and to have
the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf of, and
subject to the supervision of the Board of Directors of the Company, all as provided herein;



WHEREAS, the Advisor is willing to continue to render such services, subject to the
supervision of the Board of Directors, on the terms and conditions hereinafter set forth; and



WHEREAS, the parties desire to further amend and restate their mutual agreements as set forth
herein;



NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:



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



“2%/25% Guidelines.” The requirement, as provided for in Section 13 hereof, that, in
the 12-month period ending on the last day of any fiscal quarter, Operating Expenses not exceed the
greater of two percent of Average Invested Assets during such 12-month period or 25% of the
Company’s Adjusted Net Income over the same 12-month period.



“Acquisition Expense.” To the extent not paid or to be paid by the seller or lessee
in the case of a Property or the borrower in the case of a Loan, those expenses, including but not
limited to travel and communications expenses, the cost of appraisals, title insurance,
nonrefundable option payments on Property not acquired, legal fees and expenses, accounting fees
and expenses and miscellaneous expenses, related to selection, acquisition and origination of
Properties and Loans, whether or not a particular Property or Loan ultimately is acquired or
originated. Acquisition Expenses shall not include Acquisition Fees.



“Acquisition Expense Allowance.” An amount equal to one half percent of the Contract
Purchase Price of a Property or Loan, to be paid to the Advisor in connection with Properties and
Loans acquired



 


 









 






using proceeds of the Part I Offering, to provide for the payment by the Advisor of
Acquisition Expenses and such other expenses as provided in Section 10(b) hereof.



“Acquisition Fee.” Any fee or commission (including any interest thereon) paid by the
Company to the Advisor or, with respect to Section 9(d), by the Company to any party, in connection
with the making or investing in Loans and the purchase, development or construction of Properties
by the Company. A Development Fee or a Construction Fee paid to a Person not affiliated with the
Sponsor in connection with the actual development or construction of a project after acquisition of
the Property by the Company shall not be deemed an Acquisition Fee. Acquisition Fees include, but
are not limited to, any real estate commission, selection fee, development fee (other than as
described above) or any fee of a similar nature, however designated. Acquisition Fees include
Subordinated Acquisition Fees unless the context otherwise requires. Acquisition Fees shall not
include Acquisition Expenses or the Acquisition Expense Allowance.



“Adjusted Invested Assets.” The average during any period of the aggregate historical
cost, or to the extent available for a particular asset, the most recent Appraised Value, of the
Investment Assets of the Company, before accumulated reserves for depreciation or bad debt
allowances or other similar non-cash reserves, computed (unless otherwise specified) by taking the
average of such values at the end of each month during such period.



“Adjusted Investor Capital.” As of any date, the Initial Investor Capital reduced by
any Redemptions, other than Redemptions intended to qualify as a liquidity event for purposes of
this Agreement, and by any other Distributions on or prior to such date determined by the Board to
be from Cash from Sales and Financings.



“Adjusted Net Income.” For any period, the total revenues recognized in such period,
less the total expenses recognized in such period, excluding additions to reserves for depreciation
and amortization, bad debts or other similar non-cash reserves; provided, however, if the Advisor
receives a Subordinated Incentive Fee, Adjusted Net Income for purposes of calculating total
allowable Operating Expenses shall exclude any gain, losses or writedowns from the sale of the
Company’s assets that gave rise to such Subordinated Incentive Fee.



“Advisor.” Carey Asset Management Corp, a corporation organized under the laws of the
State of Delaware and wholly-owned by W. P. Carey & Co. LLC.



“Affiliate.” An Affiliate of another Person shall include any of the following:
(i) any Person directly or indirectly owning, controlling, or holding, with power to vote ten
percent or more of the outstanding voting securities of such other Person; (ii) any Person ten
percent or more of whose outstanding voting securities are directly or indirectly owned,
controlled, or held, with power to vote, by such other Person; (iii) any Person directly or
indirectly controlling, controlled by, or under common control with such other Person; (iv) any
executive officer, director, trustee or general partner of such other Person; or (v) any legal
entity for which such Person acts as an executive officer, director, trustee or general partner.



“Agreement.” This Advisory Agreement.



“Appraised Value.” Value according to an appraisal made by an Independent Appraiser,
which may take into consideration any factor deemed appropriate by such Independent Appraiser,
including, but not limited to, the terms and conditions of any lease of the relevant property, the
quality of any lessee’s credit and the conditions of the credit markets. The Appraised Value may
be greater than the construction cost or the replacement cost of the property. For purposes of
the definition of Adjusted Invested Assets,



 


2









 






Appraised Value shall not include the initial appraisal of any property in connection with the
acquisition of that property.



“Articles of Incorporation.” Articles of Incorporation of the Company under the
General Corporation Law of Maryland, as amended from time to time, pursuant to which the Company is
organized.



“Asset Management Fee.” The Asset Management Fee as defined in Section 9(a) hereof.



“Average Invested Assets.” The average during any period of the aggregate book value
of the assets of the Company invested, directly or indirectly, in Properties and in Loans, before
deducting reserves for depreciation, bad debts, impairments, amortization and all other similar
non-cash reserves, computed by taking the average of such values at the end of each month during
such period.



“Board or Board of Directors.” The Board of Directors of the Company.



“Bylaws.” The bylaws of the Company.



“Cash from Financings.” Net cash proceeds realized by the Company from the financing
of Investment Assets or the refinancing of any Company indebtedness.



“Cash from Sales.” Net cash proceeds realized by the Company from the sale, exchange
or other disposition of any of its assets after deduction of all expenses incurred in connection
therewith. Cash from Sales shall not include Cash from Financings.



“Cash from Sales and Financings.” The total sum of Cash from Sales and Cash from
Financings.



“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 that, in each
case, is determined by a majority of the Independent Directors to be materially adverse to the
Company, or a breach of a material term or condition of this Agreement by the Advisor and the
Advisor has not cured such breach within 30 days of written notice thereof or, in the case of any
breach that cannot be cured within 30 days by reasonable effort, has not taken all necessary action
within a reasonable time period to cure such breach.



“Change of Control.” A change of control of the Company of a nature that would be
required to be reported in response to the disclosure requirements of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), as enacted and in force on the date hereof, whether or not the Company is then subject
to such reporting requirements; provided, however, that, without limitation, a Change of Control
shall be deemed to have occurred if: (i) any “person” (within the meaning of Section 13(d) of the
Exchange Act, as enacted and in force on the date hereof) is or becomes the “beneficial owner” (as
that term is defined in Rule 13d-3, as enacted and in force on the date hereof, under the Exchange
Act) of securities of the Company representing 8.5% or more of the combined voting power of the
Company’s securities then outstanding; (ii) there occurs a merger, consolidation or other
reorganization of the Company which is not approved by the Board; (iii) there occurs a sale,
exchange, transfer or other disposition of substantially all of the assets of the Company to
another entity, which disposition is not approved by the Board; or (iv) there occurs a contested
proxy solicitation of the Shareholders of the Company that results in the contesting party electing
candidates to a majority of the Board’s positions next up for election.



“Code.” Internal Revenue Code of 1986, as amended.


 


3









 





“Company.” Corporate Property Associates 16 — Global Incorporated, a corporation
organized under the laws of the State of Maryland.



“Competitive Real Estate Commission.” The real estate or brokerage commission paid
for the purchase or sale of a property that is reasonable, customary and competitive in light of
the size, type and location of the property.



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



“Contract Purchase Price.” The amount actually paid for, or allocated to, the
purchase, development, construction or improvement of a Property or acquired Loan or, in the case
of an originated Loan, the principal amount of such Loan, exclusive, in each case, of Acquisition
Fees, Acquisition Expenses and the Acquisition Expense Allowance.



“Contract Sales Price.” The total consideration received by the Company for the sale
of Properties and Loans.



“Cumulative Return.” For the period for which the calculation is being made, the
percentage resulting from dividing (A) the total Distributions for such period (not including
Distributions out of Cash from Sales and Financings), by (B) the product of (i) the average
Adjusted Investor Capital for such period (calculated on a daily basis), and (ii) the number of
years (including fractions thereof) elapsed during such period. Notwithstanding the foregoing,
neither the Shares received by the Advisor or its Affiliates for any consideration other than cash,
nor the Distributions in respect of such Shares, shall be included in the foregoing calculation.



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



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



“Distributions.” Distributions declared by the Board.



“GAAP.” Generally accepted accounting principles in the United States.



“Good Reason.” With respect to the termination of this Agreement, (i) any failure to
obtain a satisfactory agreement from any successor to the Company to assume and agree to perform
the Company’s obligations under this Agreement; or (ii) any material breach of this Agreement of
any nature whatsoever by the Company; provided that such breach (a) is of a material term or
condition of this Agreement and (b) the Company has not cured such breach within 30 days of written
notice thereof or, in the case of any breach that cannot be cured within 30 days by reasonable
effort, has not taken all necessary action within a reasonable time period to cure such breach.



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



“Independent Appraiser.” A qualified appraiser of real estate as determined by the
Board, who is not affiliated, directly or indirectly, with the Company, the Advisor or their
respective Affiliates.


 


4









 





Membership in a nationally recognized appraisal society such as the American Institute of Real
Estate Appraisers or the Society of Real Estate Appraisers shall be conclusive evidence of such
qualification.



“Independent Director.” A Director of the Company who meets the criteria for an
Independent Director specified in the Bylaws.



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



“Initial Closing Date.” The first date on which Shares were issued pursuant to an
Offering.



“Initial Investor Capital.” The total amount of capital invested from time to time by
Shareholders (computed at the Original Issue Price per Share), excluding any Shares received by the
Advisor or its Affiliates for any consideration other than cash.



“Investment Asset.” Any Property, Loan or Other Permitted Investment Asset.



“Loan Refinancing Fee.” The Loan Refinancing Fee as defined in Section 9(e) hereof.



“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.



“Market Value.” The value calculated by multiplying the total number of outstanding
Shares by the average closing price of the Shares over the 30 trading days beginning 180 calendar
days after the Shares are first listed on a national security exchange or included for quotation on
Nasdaq, as the case may be.



“Nasdaq.” The national automated quotation system operated by the National
Association of Securities Dealers, Inc.



“Offering.” The offering of Shares pursuant to a Prospectus.



“Operating Expenses.” All operating, general and administrative expenses paid or
incurred by the Company, as determined under GAAP, except the following (insofar as they would
otherwise be considered operating, general and administrative expenses under GAAP): (i) interest
and discounts and other cost of borrowed money; (ii) taxes (including state and Federal income tax,
property taxes and assessments, franchise taxes and taxes of any other nature); (iii) expenses of
raising capital, including Organization and Offering Expenses, printing, engraving, and other
expenses, and taxes incurred in connection with the issuance and distribution of the Company’s
Shares and Securities; (iv) Acquisition Expenses, real estate commissions on resale of property and
other expenses connected with the acquisition, disposition, origination, ownership and operation of
real estate interests, mortgage loans, or other property, including the costs of foreclosure,
insurance premiums, legal services, brokerage and sales commissions, maintenance, repair and
improvement of property; (v) Acquisition Fees or Subordinated Disposition Fees payable to the
Advisor or any other party; (vi) non-cash items, such as depreciation, amortization, depletion, and
additions to reserves for depreciation, amortization, depletion, losses and bad



 


5









 






debts; (vii) Termination Fees; and (viii) Subordinated Incentive Fees paid in compliance with
Section 9(i). Notwithstanding anything herein to the contrary, Operating Expenses shall include
the Asset Management Fee and the Loan Refinancing Fee.



“Organization and Offering Expenses.” Those expenses payable by the Company in
connection with the formation, qualification and registration of the Company and in marketing and
distributing Shares, including, but not limited to: (i) the preparation, printing, filing and
delivery of any registration statement or Prospectus and the preparing and printing of contractual
agreements between the Company and the Sales Agent and the Selected Dealers (including copies
thereof); (ii) the preparing and printing of the Articles of Incorporation and Bylaws, solicitation
material and related documents and the filing and/or recording of such documents necessary to
comply with the laws of the State of Maryland for the formation of a corporation and thereafter for
the continued good standing of a corporation; (iii) the qualification or registration of the Shares
under state securities or “Blue Sky” laws; (iv) any escrow arrangements, including any compensation
to an escrow agent; (v) the filing fees payable to the SEC and to the National Association of
Securities Dealers, Inc.; (vi) reimbursement for the reasonable and identifiable out-of-pocket
expenses of the Sales Agent and the Selected Dealers, including the cost of their counsel;
(vii) the fees of the Company’s counsel; (viii) all advertising expenses incurred in connection
with the Offering, including the cost of all sales literature and the costs related to investor and
broker-dealer sales and information meetings and marketing incentive programs; and (ix) selling
commissions, marketing fees, incentive fees, due diligence fees and wholesaling fees and expenses
incurred in connection with the sale of the Shares.



“Original Issue Price.” For any share issued in an Offering, the price at which such
Share was initially offered to the public by the Company, regardless of whether selling commissions
were paid in connection with the purchase of such Shares from the Company.



“Other Permitted Investment Asset.” An asset, other than cash, cash equivalents,
short term bonds, auction rate securities and similar short term investments, acquired by the
Company for investment purposes that is not a Loan or a Property and is consistent with the
investment objectives and policies of the Company.



“Other Permitted Investment Assets Fee.” The Other Permitted Investment Assets Fee as
defined in Section 9(h).



“Part I Offering.” The Offering of 110,000,000 Shares of the Company, declared
effective by the Securities and Exchange Commission pursuant to the Company’s Registration
Statement on Form S-11 (File No. 333-106838).



“Part II Offering.” The Offering of 55,000,000 Shares of the Company, declared
effective by the Securities and Exchange Commission pursuant to the Company’s Registration
Statement on Form S-11 (File No. 333-119265).



“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.



“Preferred Return.” A Cumulative Return of six percent computed from the Initial
Closing Date through the date as of which such amount is being calculated.



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


 


6









 





“Property Management Fee.” A fee for property management services rendered by the
Advisor or its Affiliates in connection with Properties acquired directly or through foreclosure.



“Prospectus.” Any prospectus pursuant to which the Company offers Shares in a public
offering, as the same may at any time and from time to time be amended or supplemented after the
effective date of the registration statement in which it is included.



“Redemptions.” An amount determined by multiplying the number of Shares redeemed by
the Original Issue Price.



“REIT.” A real estate investment trust, as defined in Sections 856-860 of the Code.



“Sales Agent.” Carey Financial Corporation.



“Securities.” Any stock, shares (other than currently outstanding Shares and
subsequently issued Shares), 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.



“Selected Dealers.” Broker-dealers who are members of the National Association of
Securities Dealers, Inc. and who have executed an agreement with the Sales Agent in which the
Selected Dealers agree to participate with the Sales Agent in the Offering.



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



“Shares.” All of the shares of common stock of the Company, $.001 par value, and any
other shares of common stock of the Company.



“Sponsor.” W.P. Carey & Co. LLC and any other Person directly or indirectly
instrumental in organizing, wholly or in part, the Company or any person who will control, manage
or participate in the management of the Company, and any Affiliate of any such person. Sponsor
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.



“Subordinated Acquisition Fee.” The Subordinated Acquisition Fee as defined in
Section 9(c).



“Subordinated Disposition Fee.” The Subordinated Disposition Fee as defined in
Section 9(g) hereof.



“Subordinated Incentive Fee.” The Subordinated Incentive Fee as defined in
Section 9(i) hereof.



“Termination Date.” The effective date of any termination of this Agreement.



“Termination Fee.” An amount equal to 15% of the amount, if any, by which (1) the
fair value of the Investment Assets, less the amount of all indebtedness secured by such Investment
Assets and less any fees (other than the Termination Fee) payable to the Advisor, in each case as
of the Termination Date, exceeds (2) the total of the Adjusted Investor Capital plus an amount
equal to the Preferred Return



 


7









 






through the Termination Date reduced by the total Distributions paid by the Company from its
inception through the Termination Date (other than Distributions made from Cash from Sales and
Financings that are counted in determining Adjusted Investor Capital). For purposes of calculating
this Fee (i) the fair value of any Property shall be its Appraised Value, and (ii) any payments in
respect of redeemed Shares (other than in respect of Redemptions intended to qualify as a liquidity
event for purposes of this Agreement), Shares received by the Advisor or its Affiliates for any
consideration other than cash and the Distributions in respect of such Shares shall be excluded.



“Total Property Cost.” With regard to any Property or Loan, an amount equal to the
sum of the Contract Purchase Price of such Property or Loan plus the Acquisition Fees paid in
connection with such Property or Loan.



“Triggering Event.” With regard to any Investment Asset, the occurrence of any of the
following during the six months after the closing date of the acquisition of the Investment Asset:
(a) the failure by an obligor on an Investment to pay rent, interest or principal, or other
material payment, to the Company when due (after giving effect to all applicable grace periods) or
(b) the obligor on an Investment Asset (including a guarantor) (1) commences a voluntary case or
proceeding under applicable bankruptcy or reorganization law, (2) consents to the entry of a decree
or order for relief in an involuntary proceeding under applicable bankruptcy law, (3) consents to
the filing of a petition or the appointment of a custodian, receiver or liquidator, (4) makes an
assignment for the benefit of creditors, (5) admits in writing its inability to pay its debts as
they come due; (6) is the subject of a decree or order for relief entered by a court of competent
jurisdiction in respect of such obligor in an involuntary bankruptcy case or proceeding, or a
decree or order adjudging such obligor bankrupt or insolvent or appointing a custodian, receiver or
liquidator for the obligor.



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 Board. In performance of this undertaking, subject
to the supervision of the Board and consistent with the provisions of the Articles of Incorporation
and Bylaws of the Company and any Prospectus pursuant to which Shares are offered, the Advisor
shall, either directly or by engaging an Affiliate:




(a) serve as the Company’s investment and financial advisor and provide research and
economic and statistical data in connection with the Company’s assets and investment
policies;




(b) provide the daily management of the Company and perform and supervise the various
administrative functions reasonably necessary for the management of the Company;




(c) investigate, select, and, on behalf of the Company, engage and conduct business
with such Persons as the Advisor deems necessary to the proper performance of its
obligations hereunder, including but not limited to consultants, accountants,
correspondents, lenders, technical advisors, attorneys, brokers, underwriters, corporate
fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers,
insurance agents, banks, builders, developers, property owners, mortgagors, and any and all
agents for any of the foregoing, including Affiliates of the Advisor, and Persons acting in
any other capacity deemed by the


 


8









 






Advisor necessary or desirable for the performance of any of the foregoing services,
including but not limited to entering into contracts in the name of the Company with any of
the foregoing;




(d) consult with Directors of the Company and assist the Board in the formulation and
implementation of the Company’s policies, and furnish the Board with such information,
advice and recommendations as they may request or as otherwise may be necessary to enable
them to discharge their fiduciary duties with respect to matters coming before the Board;




(e) subject to the provisions of Sections 3(g) and 4 hereof: (i) locate, analyze and
select potential investments in Investment Assets; (ii) structure and negotiate the terms
and conditions of transactions pursuant to which investments in Investment Assets will be
made, purchased or acquired by the Company; (iii) make investments in Investment Assets on
behalf of the Company in compliance with the investment objectives and policies of the
Company; (iv) arrange for financing and refinancing of, make other changes in the asset or
capital structure of, dispose of, reinvest the proceeds from the sale of, or otherwise deal
with the investments in, Investment Assets; and (v) enter into leases and service contracts
for Properties and, to the extent necessary, perform all other operational functions for the
maintenance and administration of such Properties;




(f) provide the Board with periodic reports regarding prospective investments in
Investment Assets; the occurrence of any Triggering Event during the prior fiscal quarter;
and the amounts of “dead deal” costs incurred by the Company during the prior fiscal
quarter;




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




(h) 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;




(i) obtain reports (which may be prepared by the Advisor or its Affiliates), where
appropriate, concerning the value of investments or contemplated investments of the Company
in Investment Assets;




(j) obtain for, or provide to, the Company such services as may be required in
acquiring, managing and disposing of Investment Assets, 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;




(k) from time to time, or at any time reasonably requested by the Board, make reports
to the Board of its performance of services to the Company under this Agreement;




(l) communicate on behalf of the Company with Shareholders as required to satisfy the
reporting and other requirements of any governmental bodies or agencies to Shareholders and
third parties and otherwise as requested by the Company;


 


9









 






(m) provide or arrange for administrative services and items, legal and other services,
office space, office furnishings, personnel and other overhead items necessary and
incidental to the Company’s business and operations;




(n) provide the Company with such accounting data and any other information requested
by the Company concerning the investment activities of the Company as shall be required to
prepare and to file all periodic financial reports and returns required to be filed with the
Securities and Exchange Commission and any other regulatory agency, including annual
financial statements;




(o) maintain the books and records of the Company;




(p) supervise the performance of such ministerial and administrative functions as may
be necessary in connection with the daily operations of the Properties and Loans;




(q) provide the Company with all necessary cash management services;




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




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




(t) arrange to obtain on behalf of the Company as requested by the Board, and deliver
to or maintain on behalf of the Company copies of, all appraisals obtained in connection
with investments in Properties and Loans; and




(u) if a transaction, proposed transaction or other matter requires approval by the
Board or by the Independent Directors, deliver to the Board or the Independent Directors, as
the case may be, all documentation reasonably requested by them to properly evaluate such
transaction, proposed transaction or other matter.




(v) on an annual basis, no later than 90 days prior to the end of each term of this
Agreement, provide the Independent Directors with a report on (1) the Advisor’s performance
during the past year, (2) the compensation paid to the Advisor during such year and (3) any
proposed changes to the compensation to be paid to the Advisor during the upcoming year if
the Agreement is renewed. The Advisor’s report shall address, among other things, (a) those
matters identified in the Company’s organizational documents as matters which the
Independent Directors must review each year with respect to the Advisor’s performance and
compensation; (b) whether any Triggering Event occurred with respect to an Investment made
during the past year; and (c) the “dead deal” costs incurred by the Company during the past
year. If a Triggering Event has occurred, the Independent Directors may consider whether,
after taking account of the overall performance of the Advisor during the past year, they
wish to request that the Advisor refund all or a portion of the Initial Acquisition Fee paid
by the Company in respect of such Investment Asset, and if the Independent Directors make
that request, the Advisor shall refund such amount to the Company within 60 days after
receipt of such request. In addition, the Independent Directors may request that the
Advisor refund certain of the dead deal costs incurred by the Company if, in light of the
circumstances under which such costs were incurred, the Independent Directors determine that
the Company should not bear such costs.


 


10









 





4. Authority of Advisor.




(a) Pursuant to the terms of this Agreement (and subject to the restrictions included
in Paragraphs (b), (c) and (d) of this Section 4 and in Section 7 hereof), and subject to
the continuing and exclusive authority of the Board over the management of the Company, the
Board hereby delegates 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, make or
acquire Loans and make or acquire Other Permitted Investment Assets in compliance with the
investment objectives and policies of the Company; (4) arrange for financing or refinancing,
or make changes in the asset or capital structure of, and dispose of or otherwise deal with,
Investment Assets; (5) enter into leases and service contracts for Properties, and perform
other property level operations; (6) oversee non-affiliated property managers and other
non-affiliated Persons who perform services for the Company; and (7) undertake accounting
and other record-keeping functions at the Investment Asset level.




(b) The consideration paid for an Investment acquired by the Company shall ordinarily
be based on the fair market value thereof. Consistent with the foregoing provision, the
Advisor may, without further approval by the Board (except with respect to transactions
subject to paragraphs (c) and (d)) invest on behalf of the Company in an Investment Asset so
long as, in the Advisor’s good faith judgment, (i) the Total Property Cost of such
Investment Asset does not exceed the fair market value thereof, and in the case of an
Investment Asset that is a Property, shall in no event exceed the Appraised Value of such
Property and (ii) the Investment Asset, in conjunction with the Company’s other investments
and proposed investments, at the time the Company is committed to purchase or originate the
Investment Asset, is reasonably expected to fulfill the Company’s investment objectives and
policies as established by the Board and then in effect. For purposes of the foregoing,
Total Property Cost shall be measured at the date the Investment Asset is acquired and shall
exclude future commitments to fund improvements. Investments not meeting the foregoing
criteria must be approved in advance by the Board.




(c) Notwithstanding anything to the contrary contained in this Agreement, the Advisor
shall not cause the Company to make investments that do not comply with Article VIII
(Restrictions on Investments and Activities) and related sections of the Bylaws.




(d) The prior approval of the Board, including a majority of the Independent Directors
and a majority of the Directors not interested in the transaction, will be required for:
(i) investments in Properties made through co-investment or joint venture arrangements with
the Sponsor, the Advisor or any of their Affiliates; (ii) investments in Investment Assets
which are not contemplated by the terms of a Prospectus; (iii) transactions that present
issues which involve conflicts of interest for the Advisor or an Affiliate (other than
conflicts involving the payment of fees or the reimbursement of expenses); (iv) the lease of
assets to the Sponsor, any Director, the Advisor or any Affiliate of the Advisor; (v) any
purchase or sale of an Investment Asset from or to the Advisor or an Affiliate; and (vi) the
retention of any Affiliate of the Advisor to provide services to the Company not expressly
contemplated by this Agreement and the terms of such services by such Affiliate. In
addition, the Advisor shall comply with any further approval requirements set forth in the
Bylaws.




(e) The Board may, at any time upon the giving of notice to the Advisor, modify or
revoke the authority set forth in this Section 4. If and to the extent the Board so
modifies or revokes the authority contained herein, the Advisor shall henceforth comply with
such modification or revocation, provided however, that such modification or revocation
shall be


 


11









 






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. Bank Accounts. The Advisor may establish and maintain one or more bank accounts in
its own name for the account of the Company or in the name of the Company and may collect and
deposit into any such account or accounts, and disburse from any such account or accounts, any
money on behalf of the Company, provided that no funds shall be commingled with the funds of the
Advisor; and the Advisor shall from time to time render appropriate accountings of such collections
and payments to the Board and to the auditors of the Company.



6. Records; Access. The Advisor shall maintain appropriate records of all its
activities hereunder and make such records available for inspection by the Board and by counsel,
auditors and authorized agents of 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.



7. Limitations on Activities. Anything else in this Agreement to the contrary
notwithstanding, the Advisor shall refrain from taking any action which, in its sole judgment made
in good faith, would 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,
except if such action shall be ordered by the Board, in which case the Advisor shall notify
promptly the Board of the Advisor’s judgment of the potential impact of such action and shall
refrain from taking such action until it receives further clarification or instructions from the
Board. In such event the Advisor shall have no liability for acting in accordance with the
specific instructions of the Board so given. Notwithstanding the foregoing, the Advisor, its
shareholders, directors, officers and employees, and partners, shareholders, directors and officers
of the Advisor’s shareholders and Affiliates of any of them, shall not be liable to the Company, or
to the Directors or Shareholders for any act or omission by the Advisor, its shareholders,
directors, officers and employees, or partners, shareholders, directors or officers of the
Advisor’s shareholders except as provided in Sections 20 and 22 hereof.



8. Relationship with Directors. There shall be no limitation on any shareholder,
director, officer, employee or Affiliate of the Advisor serving as a Director or an officer of the
Company, except that no 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 Board; for the avoidance of doubt, the limitations of this Section 8 shall not
apply to any compensation paid by the Advisor or any Affiliate for which the Company reimbursed the
Advisor or Affiliate in accordance with Section 10 hereof.



9. Fees.




(a) Asset Management Fee. The Company shall pay to the Advisor as compensation
for the advisory services rendered to the Company hereunder an amount equal to one percent
per annum of the Adjusted Invested Assets of the Company (the “Asset Management
Fee”) calculated as set forth below. The Asset Management Fee will be calculated
monthly, beginning with the month in which the Company first makes an investment in
Investment Assets, on the basis of one-twelfth of one percent of the Adjusted Invested
Assets for that month, computed as a daily average. The Asset Management Fee shall be
prorated for the number of days during the month that the Company owns an Investment Asset.
One-half of the Asset Management Fee with


 


12









 






respect to a Property or Loan will be paid on the first business day of each month,
beginning on the first business day after the month in which the Investment Asset was
acquired or originated. The remaining one-half of the Asset Management Fee shall be
subordinated to the extent described below and shall be payable quarterly. The subordinated
Asset Management Fee for any quarter shall be payable only if the Preferred Return has been
met through the end of the applicable quarter. Any portion of the subordinated Asset
Management Fee not paid due to the Company’s failure to meet the Preferred Return shall be
paid by the Company, to the extent it is not restricted by the 2%/25% Guidelines as
described below, at the end of the next fiscal quarter through which the Company has met the
Preferred Return. If at the end of any fiscal quarter, the Company’s Operating Expenses
exceed the 2%/25% Guidelines over the immediately preceding 12 months, payment of the
subordinated Asset Management Fee will be withheld consistent with Section 13. For purposes
of calculating the value per share of restricted stock given for payment of the Asset
Management Fee, the price per share shall be: (i) the net asset value per share as
determined by the most recent appraisal performed by an independent third party at the time
such Asset Management Fee was earned or, if an appraisal has not yet been made and accepted
by the Company, (ii) $10 per share. Any part of the Asset Management Fee that has been
subordinated pursuant to this subsection (a) shall not be deemed earned until such time as
payable hereunder.




(b) Acquisition Fee. The Advisor may receive as compensation in connection
with the investigation, selection, acquisition or origination (by purchase, investment or
exchange) of any Property or Loan, an Acquisition Fee payable by the Company at the time
such Property or Loan is acquired. The total such Acquisition Fees (not including
Subordinated Acquisition Fees and any interest thereon) payable to the Advisor may not
exceed two-and-one-half percent of the aggregate Total Property Cost of all Properties and
Loans acquired or originated by the Company, subject to the limitations set forth in
paragraph 9(d).




(c) Subordinated Acquisition Fee. In addition to the Acquisition Fee described
in Section 9(b) above, the Advisor may receive as compensation in connection with the
investigation, selection, acquisition or origination (by purchase, investment or exchange)
of Properties and Loans a Subordinated Acquisition Fee payable by the Company to the Advisor
or its Affiliates (the “Subordinated Acquisition Fee”). The total Subordinated
Acquisition Fees paid may not exceed two percent of the aggregate Total Property Cost of all
Properties and Loans purchased and originated by the Company, measured at such time as the
Company shall have completed all Offerings (other than pursuant to its dividend reinvestment
plan) and invested substantially all of the net proceeds of such Offerings, unless a
majority of the Directors (including a majority of the Independent Directors) not otherwise
interested in any transaction approves the excess as being commercially competitive, fair
and reasonable to the Company. The unpaid portion of the Subordinated Acquisition Fee
payable to the Advisor and its Affiliates with respect to any Property or Loan shall bear
interest at the rate of five percent per annum from the date of acquisition of such Property
or Loan until such portion is paid. Subject to the following sentence, the Subordinated
Acquisition Fee with respect to any Investment Asset shall be payable in equal annual
installments on January 1 of each of the three calendar years following the date such Asset
was purchased; accrued interest on all unpaid Subordinated Acquisition Fees shall also be
payable on such dates. The portion of the Subordinated Acquisition Fees, and accrued
interest thereon, otherwise payable on any January 1 shall be payable only if the Preferred
Return through the end of the fiscal year preceding such January 1 has been met. Any
portion of the Subordinated Acquisition Fees, and accrued interest thereon, not paid due to
the Company’s failure to meet the Preferred Return through any fiscal year end shall be paid
by the Company on the January 1 following the first fiscal year thereafter through which the
Preferred Return has been met.


 


13









 






(d) Six Percent Limitation. The total amount of Acquisition Fees plus
Subordinated Acquisition Fees and any interest thereon, whether payable to the Advisor or a
third party, and Acquisition Expenses may not exceed six percent of the sum of the aggregate
Contract Purchase Price of all Properties and Loans, measured for the period beginning on
the date of the initial acquisition of a Property or Loan by the Company and ending on each
December 31 after the date hereof, unless a majority of the Directors (including a majority
of the Independent Directors) not otherwise interested in any transaction approves the
excess as being commercially competitive, fair and reasonable to the Company.




(e) Loan Refinancing Fee. The Company shall pay to the Advisor for all
qualifying loan refinancings of Properties a Loan Refinancing Fee in the amount up to one
percent of the principal amount of the refinanced loan. Any Loan Refinancing Fee shall be
due and payable upon the funding of the related loan or as soon thereafter as is reasonably
practicable. A refinancing will qualify for a Loan Refinancing Fee only if the refinanced
loan is secured by Property and (i) the maturity date of the refinanced loan (which must
have a term of five years or more) is less than one year from the date of the refinancing;
or (ii) the terms of the new loan represent, in the judgment of a majority of the
Independent Directors, an improvement over the terms of the refinanced loan; or (iii) the
new loan is approved by the Board, including a majority of the Independent Directors and, in
each case, the Loan Refinancing Fee is found, in the judgment of a majority of the
Independent Directors, to be in the best interest of the Company.




(f) Property Management Fee. No Property Management Fee shall be paid unless
approved by a majority of the Independent Directors.




(g) Subordinated Disposition Fee. If the Advisor or an Affiliate provides a
substantial amount of services in the sale of a Property or Loan, the Advisor or such
Affiliate shall receive a fee equal to the lesser of: (i) 50% of the Competitive Real
Estate Commission and (ii) three percent of the Contract Sales Price of such Property (the
“Subordinated Disposition Fee”). The Subordinated Disposition Fee will be paid only
if Shareholders have received in the aggregate a return of 100% of Initial Investor Capital
(through liquidity or Distributions) plus a Preferred Return through the end of the fiscal
quarter immediately preceding the date the Subordination Disposition Fee is paid. The
return requirement will be deemed satisfied if the total Distributions paid by the Company
have satisfied the Preferred Return requirement and the Market Value of the Company equals
or exceeds Adjusted Investor Capital. 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 due 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 of all real estate commissions in respect of a Property paid to all
Persons by the Company and the Subordinated Disposition Fee shall not exceed an amount equal
to the lesser of: (i) six percent of the Contract Sales Price of such Property or (ii) the
Competitive Real Estate Commission. The Advisor shall present to the Independent Directors
such information as they may reasonably request to review the level of services provided by
the Advisor in connection with a disposition and the basis for the calculation of the amount
of the accrued Subordinated Disposition Fees on an annual basis. The amount of any accrued
Subordinated Disposition Fee shall be deemed conclusively established once it has been
approved by the Independent Directors, absent a subsequent finding of error. No payment of
Subordinated Disposition Fees shall be made prior to review and approval of such information
by the Independent Directors. If this Agreement is terminated prior to such time as the
Shareholders have received (through liquidity or Distributions) a return of 100% of Initial
Investor Capital plus a Preferred Return through the date of termination of this Agreement,
an appraisal of the Properties then owned by the Company shall be made and any unpaid
Subordinated Disposition


 


14









 






Fee on Properties sold prior to the date of termination will be payable if the
Appraised Value of the Properties then owned by the Company plus Distributions to
Shareholders prior to the date of termination of this Agreement (through liquidity or
Distributions) is equal to or greater than 100% of Initial Investor Capital plus an amount
sufficient to pay a Preferred Return through the date of termination of this Agreement. If
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 or an Affiliate has provided a
substantial amount of services in the sale of Property, for purposes of determining whether
the subordination conditions for the payment of the Subordinated Disposition Fee have been
satisfied, Shareholders will be deemed to have received a Distribution in an amount equal to
the Market Value of the Company.




(h) Other Permitted Investment Assets Fee. The Advisor may receive as
compensation for services rendered in connection with the investigation, selection,
acquisition or origination of Other Permitted Investments a fee (the “Other Permitted
Investment Assets Fee”) that shall be negotiated in good faith by the Advisor and the
Company and approved by the Board (including a majority of the Independent Directors) on a
case by case basis; provided that such compensation shall be on terms not more favorable,
taken as a whole, than what the Advisor receives in respect of investments in Properties and
Loans.




(i) Subordinated Incentive Fee. A fee shall be payable to the Advisor in an
amount equal to 15% of Cash from Sales distributable to Shareholders after Shareholders have
received a return of 100% of Initial Investor Capital (through liquidity or Distributions)
plus a Preferred Return through the date payment is made (the “Subordinated Incentive
Fee”). For these purposes the Shareholders will be deemed to have been provided
liquidity if the Shares are listed on a national security exchange or included for quotation
on Nasdaq. The return requirement will be deemed satisfied if the total Distributions paid
by the Company has satisfied the Preferred Return requirement and the Market Value of the
Company equals or exceeds Adjusted Investor Capital. The Company shall have the option to
pay such fee in the form of a promissory note or as set forth in Section 9(l). 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 in The Wall Street Journal.




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




(k) Changes To Fee Structure. In the event the Shares are listed on a national
securities exchange or are included for quotation on Nasdaq, the Company and the Advisor
shall negotiate in good faith to establish a fee structure appropriate for an entity with a
perpetual life. A majority of the Independent Directors must approve the new fee structure
negotiated with the Advisor. In negotiating a new fee structure, the Independent Directors
may consider any of the factors they deem relevant, including but not limited to: (a) the
size of the Advisory Fee in


 


15









 






relation to the size, composition and profitability of the Company’s portfolio; (b) the
success of the Advisor in generating opportunities that meet the investment objectives of
the Company; (c) the rates charged to other REITs and to investors other than REITs by
Advisors performing similar services; (d) additional revenues realized by the Advisor and
its Affiliates through their relationship with the Company, including loan administration,
underwriting or broker commissions, servicing, engineering, inspection and other fees,
whether paid by the Company or by others with whom the Company does business; (e) the
quality and extent of service and advice furnished by the Advisor; (f) the performance of
the investment portfolio of the Company, including income, conversion or appreciation of
capital, frequency of problem investments and competence in dealing with distress
situations; and (g) the quality of the portfolio of the Company in relationship to the
investments generated by the Advisor for its own account. The new fee structure can be no
more favorable to the Advisor than the current fee structure. The Independent Directors
shall not approve any new fee structure that is in their judgment more favorable (taken as a
whole) to the Advisor than the current fee structure.




(l) Payment. Compensation payable to the Advisor pursuant to this Section 9
shall be paid in cash; provided, however, that any fee payable pursuant to Section 9 may be
paid, at the option of the Advisor, in the form of: (i) cash, (ii) common stock of the
Company, or (iii) a combination of cash and common stock. The Advisor shall notify the
Company in writing annually of the form in which the fee shall be paid. Such notice shall
be provided no later than January 15 of each year. If no such notice is provided, the fee
shall be paid in cash. For purposes of the payment of compensation to the Advisor in the
form of stock, the value of each share of common stock shall be: (i) the Net Asset Value
per Share as determined by the most recent appraisal of the Company’s assets performed by an
Independent Appraiser, or (ii) if an appraisal has not yet been performed, $10 per share.
If shares are being offered to the public at the time a fee is paid with stock, the value
shall be the price of the stock without commissions. The Net Asset Value determined on the
basis of such appraisal may be adjusted on a quarterly basis by the Board to account for
significant capital transactions. Stock issued by the Company to the Advisor in payment of
fees hereunder shall be governed by the terms set forth in Schedule A hereto, or such other
terms as the Advisor and the Company may from time to time agree.



10. Expenses.




(a) Subject to the limitations set forth in Section 9(d), to the extent applicable, in
addition to the compensation paid to the Advisor pursuant to Section 9 hereof, the Company
shall pay directly or reimburse the Advisor for the following expenses:




(i) the Company’s Organization and Offering Expenses; provided however, that
within 60 days after the end of the month in which any Offering terminates, the
Advisor shall reimburse the Company for any Organization and Offering Expense
reimbursements received by the Advisor pursuant to this Section 10 to the extent
that such reimbursements, when added to the balance of the Organization and Offering
Expenses (excluding selling commissions, and fees paid and expenses reimbursed to
the Selected Dealers) paid directly by the Company, exceed four percent of the Gross
Offering Proceeds; provided further, however, that the Advisor shall be responsible
for the payment of all Organization and Offering Expenses (excluding such
commissions and such fees and expense reimbursements) in excess of four percent of
the Gross Offering Proceeds;




(ii) all Acquisition Expenses;


 


16









 






(iii) to the extent not otherwise included in Acquisition Expenses, all
expenses of whatever nature reasonably incurred and directly connected with the
proposed acquisition of any Investment that does not result in the actual
acquisition of the Investment, including, without limitation, personnel costs;




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




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




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




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




(viii) expenses of managing and operating Properties owned by the Company,
whether payable to an Affiliate of the Advisor or a non-affiliated Person;




(ix) fees and expenses of legal counsel for the Company;




(x) fees and expense of auditors and accountants for the Company;




(xi) all expenses in connection with payments to the Directors and meetings of
the Directors and Shareholders;




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




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




(xiv) expenses of organizing, revising, amending, converting, modifying, or
terminating the Company or the Articles of Incorporation;




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




(xvi) expenses related to the Properties and Loans and other fees relating to
making investments including personnel and other costs incurred in Property or Loan
transactions where a fee is not payable to the Advisor other than as provided in
Section 10(b) hereof; and




(xvii) all other expenses the Advisor incurs in connection with providing
services to the Company, including reimbursement to the Advisor or its Affiliates
for the


 


17









 






cost of rent, goods, materials and personnel incurred by them based upon the
compensation of the Persons involved and an appropriate share of overhead allocable
to those Persons as reasonably determined by the Advisor on a basis approved
annually by the Board (including a majority of the Independent Directors). No
reimbursement shall be made for the cost of personnel to the extent that such
personnel are used in transactions for which the Advisor receives a separate fee.




(b) Notwithstanding anything to the contrary in Section 10(a), with respect to
Properties and Loans acquired using proceeds of the Part I Offering, the Advisor shall be
responsible for payment of (i) all Acquisition Expenses, (ii) all expenses of whatever
nature directly connected with the proposed acquisition of any property or loan that does
not result in the actual acquisition of Properties or Loans; (iii) finder’s fees and similar
payments to the extent not paid by the seller of Property or other third party; and
(iv) costs of retaining industry or economic consultants. The Company shall pay to the
Advisor the Acquisition Expense Allowance, which shall be used by Advisor to pay the
expenses described in this Section 10(b). To the extent the expenses paid by the Advisor
pursuant to this Section 10(b) exceed the Acquisition Expense Allowance, the Company shall
have no duty to reimburse the Advisor for the amount of such excess. To the extent the
Acquisition Expense Allowance exceeds the expenses paid by the Advisor pursuant to this
Section 10(b), the Advisor shall have no duty to repay or account to the Company for any
such excess.




(c) With respect to Properties and Loans acquired using proceeds of the Part II
Offering, no Acquisition Expense Allowance shall be payable to the Advisor and the Company
shall be solely responsible for payment of (i) all Acquisition Expenses; (ii) all expenses
of whatever nature directly connected with the proposed acquisition of any property or loan
that does not result in the actual acquisition of Properties or Loans; (iii) finder’s fees
and similar payments to the extent not paid by the seller of Property or other third party;
and (iv) costs of retaining industry or economic consultants.




(d) With respect to Properties and Loans acquired using a mixture of proceeds from the
Part I and Part II Offerings, the Acquisition Expense Allowance shall be calculated and
payable to the Advisor on a pro rata basis, and the Advisor and the Company shall be
responsible for its respective pro rata share of the expenses described in Section 10(b) and
10(c).




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



11. Other Services. Should the Board request that the Advisor or any shareholder or
employee thereof render services for the Company other than as set forth in Section 3 hereof, such
services shall be separately compensated and shall not be deemed to be services pursuant to the
terms of this Agreement.



12. Fidelity Bond. The Advisor shall maintain a fidelity bond for the benefit of the
Company which bond shall insure the Company from losses of up to $5,000,000 and shall be of the
type customarily purchased by entities performing services similar to those provided to the Company
by the Advisor.


 


18









 





13. Limitation on Expenses.




(a) If Operating Expenses of the Company during the 12-month period ending on the last
day of any fiscal quarter of the Company exceed the greater of (i) two percent of the
Average Invested Assets during the same 12-month period or (ii) 25% of the Adjusted Net
Income of the Company during the same 12-month period, then subject to paragraph (b) of this
Section 13, such excess amount shall be the sole responsibility of the Advisor and the
Company shall not be liable for payment therefor.




(b) Notwithstanding the foregoing, to the extent that the Advisor becomes responsible
for any such excess amount as provided in paragraph (a), if a majority of the Independent
Directors finds such excess amount or a portion thereof justified based on such unusual and
non-recurring factors as they deem sufficient, the Company shall reimburse the Advisor in
future quarters for the full amount of such excess, or any portion thereof, but only to the
extent such reimbursement would not cause the Company’s Operating Expenses to exceed the
2%/25% Guidelines in the 12-month period ending on any such quarter. In no event shall the
Operating Expenses paid by the Company in any 12-month period ending at the end of a fiscal
quarter exceed the 2%/25% Guidelines.




(c) Within 60 days after the end of any twelve-month period referred to in
paragraph (a), the Advisor shall reimburse the Company for any amounts expended by the
Company in such twelve-month period that exceeds the limitations provided in paragraph
(a) unless the Independent Directors determine that such excess expenses are justified, as
provided in paragraph (b), and provided the Operating Expenses for such later quarter would
not thereby exceed the 2%/25% Guidelines.




(d) To the extent Organization and Offering Expenses payable by the Company exceed 15%
of the Gross Offering Proceeds, the excess will be paid by the Advisor.




(e) All computations made under paragraphs (a) and (b) of this Section 13 shall be
determined in accordance with generally accepted accounting principles applied on a
consistent basis.




(f) If the Advisor receives a Subordinated Incentive Fee for the sale of Property,
Adjusted Net Income, for purposes of calculating the Operating Expenses, shall exclude the
gain from the sale of such Property.



14. Other Activities of the Advisor. Nothing herein contained shall prevent the
Advisor from engaging in other activities, including without limitation direct investment by the
Advisor and its Affiliates in assets that would be suitable for the Company, the rendering of
advice to other investors (including other REITs) and the management of other programs advised,
sponsored or organized by the Advisor or its Affiliates; nor shall this Agreement limit or restrict
the right of the Advisor or any of its Affiliates or of any director, officer, employee or
shareholder of the Advisor or its Affiliates to engage in any other business or to render services
of any kind to any other partnership, corporation, firm, individual, trust or association. The
Advisor may, with respect to any investment in which the Company is a participant, also render
advice and service to each other participant therein. Without limiting the generality of the
foregoing, the Company acknowledges that the Advisor provides or will provide services to other CPA
REIT funds, whether now in existence or formed hereafter, and that the Advisor and its Affiliates
may invest for their own account. The Advisor shall be responsible for promptly reporting to the
Board the existence of any actual or potential conflict of interest that arises that may affect its
performance of its duties under this Agreement. If the Sponsor, Advisor, Director or Affiliates
thereof



 


19









 






has or 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 Advisor to
adopt a reasonable method by which properties are to be allocated to the competing investment
entities and to use its best efforts to apply such method fairly to the Company.



The Advisor shall be required to use its best efforts to present a continuing and suitable
investment program to the Company that is consistent with the investment policies and objectives of
the Company, but subject to the last sentence of the preceding paragraph, neither the Advisor nor
any Affiliate of the Advisor shall be obligated generally to present any particular investment
opportunity to the Company even if the opportunity is of character which, if presented to the
Company, could be taken by the Company.



If the Advisor or its Affiliates is presented with a potential investment which might be made
by the Company and by another investment entity which the Advisor or its Affiliates advises or
manages, the Advisor shall consider, among other things, the investment portfolio of each entity,
cash flow of each entity, 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, the amount of equity required to make the investment and the length of
time such funds have been available for investment.



15. Relationship of Advisor and Company. The Company and the Advisor agree that they
have not created and do not intend to create by this Agreement a joint venture or partnership
relationship between them and nothing in this Agreement shall be construed to make them partners or
joint venturers or impose any liability as partners or joint venturers on either of them.



16. Term; Termination of Agreement. This Agreement, as amended and restated, shall
continue in force until September 30, 2010 and thereafter shall be automatically renewed for
successive one-year periods, unless either party shall give notice in writing of non-renewal to the
other party not less than 60 days before the end of any such year.



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




(a) If the Advisor shall breach this Agreement; provided that such breach (i) is of a
material term or condition of this Agreement and (ii) the Advisor has not cured such breach
within 30 days of written notice thereof or, in the case of any breach that cannot be cured
within 30 days by reasonable effort, has not taken all necessary action within a reasonable
time period to cure such breach;




(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


 


20









 






substantially all of its property, or shall make a general assignment for the benefit
of its creditors, or shall admit in writing its inability to pay its debts, generally, as
they become due.



Any notice of termination under Section 16 or 17 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 Section 17(b) or (c) shall occur, it shall
give written notice thereof to the Board within 15 days after the occurrence of such event.



18. Termination by Either Party. This Agreement may be terminated immediately without
penalty (but subject to the requirements of Section 20 hereof) by the Advisor by written notice of
termination to the Company upon the occurrence of events which would constitute Good Reason or by
the Company without cause or penalty (but subject to the requirements of Section 20 hereof) by
action of a majority of the Independent Directors or by action of a majority of the Shareholders,
in either case upon 60 days’ written notice.



19. Assignment Prohibition. This Agreement may not be assigned by the Advisor without
the approval of the Board (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 an entity directly or indirectly controlled by the
Sponsor and only if such entity has a net worth of at least $5,000,000, and (ii) that the board of
directors of the Advisor shall deliver to the Board a statement in writing indicating the ownership
structure and net worth of the successor organization and a certification from the new Advisor as
to its net worth. Such an assignment shall bind the assignees hereunder in the same manner as the
Advisor is bound by this Agreement. The Advisor may assign any rights to receive fees or other
payments under this Agreement without obtaining the approval of the Board. This Agreement 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.



20. Payments to and Duties of Advisor Upon Termination.




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




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




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




(iii) all earned but unpaid Subordinated Acquisition Fees and interest thereon,
in each case payable to the Advisor relating to the acquisition of any Property
prior to the Termination Date;




(iv) all earned but unpaid Subordinated Disposition Fees payable to the Advisor
relating to the sale of any Property prior to the Termination Date;




(v) all earned but unpaid Loan Refinancing Fees payable to the Advisor relating
to the financing or refinancing of any Property prior to the Termination Date; and


 


21









 






(vi) 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.




(b) Notwithstanding the foregoing, if 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 Section 20(a) above.




(c) If this Agreement is terminated by the Company for any reason other than Cause, by
either party 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. Notwithstanding the foregoing,
the Advisor shall not be entitled to payment of the Termination Fee if:




(i) this Agreement is terminated because of failure of the Company and the
Advisor to establish, following good-faith negotiations pursuant to Section 9(k)
hereof, a fee structure appropriate for an entity with a perpetual life in the event
the Shares are listed on a national securities exchange or are included for
quotation on Nasdaq, or




(ii) the Subordinated Incentive Fee is paid to the Advisor as a result of the
listing of the Shares on a national securities exchange or their inclusion for
quotation on Nasdaq and this Agreement is terminated after such listing or
inclusion.




(d) Any and all amounts payable to the Advisor pursuant to Section 20(a) and Section
20(c) that, irrespective of the termination, were payable on a current basis prior to the
Termination Date either because they were not subordinated or all conditions to their
payment had been satisfied, shall be paid within 90 days after the Termination Date. All
other amounts payable to the Advisor pursuant to Section 20(a) and Section 20(c) shall be
paid in a manner determined by the Board, but in no event on terms less favorable to the
Advisor than those represented by a note (i) maturing upon the liquidation of the Company or
three years from the Termination Date, whichever is earlier, (ii) with no less than twelve
equal quarterly installments and (iii) bearing a fair, competitive and commercially
reasonable interest rate (the “Note”). The Note, if any, may be prepaid by the
Company at any time prior to maturity with accrued interest to the date of payment but
without premium or penalty. Notwithstanding the foregoing, any amounts that relate to
Investment Assets (i) shall be an amount which provides compensation to the Advisor only for
that portion of the holding period for the respective Investment Assets during which the
Advisor provided services to the Company, (ii) shall not be due and payable until the
Investment Asset to which such amount relates is sold or refinanced, and (iii) shall not
bear interest until the Investment Asset to which such amount relates is sold or refinanced.
A portion of the amount shall be paid as each Investment Asset owned by the Company on the
Termination Date is sold. The portion of such amount payable upon each such sale shall be
equal to (i) such amount multiplied by (ii) the percentage calculated by dividing the fair
value (at the Termination Date) of the Investment Asset sold by the Company divided by the
total fair value (at the Termination Date) of all Investment Assets owned by the Company on
the Termination Date.




(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;


 


22









 






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




(iii) deliver to the Board all assets, including 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.



21. Indemnification by the Company.




(a) The Company shall not indemnify the Advisor or any of its Affiliates for any loss
or liability suffered by the Advisor or the Affiliate, or hold the Advisor or the Affiliate
harmless for any loss or liability suffered by the Company, unless all of the following
conditions are met:




(i) The Advisor or Affiliate has determined, in good faith, that the course of
conduct which caused the loss or liability was in the best interests of the Company;




(ii) The Advisor or the Affiliate was acting on behalf of or performing
services for the Company; and




(iii) Such liability or loss was not the result of negligence or misconduct by
the Advisor or the Affiliate.




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




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




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




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




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




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


 


23









 






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




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




(d) Notwithstanding the foregoing, the Advisor shall not be entitled to indemnification
or be held harmless pursuant to this Section 21 for any activity which the Advisor shall be
required to indemnify or hold harmless the Company pursuant to Section 22.




(e) Any amounts paid pursuant to this Section 21 shall be recoverable or paid only out
the net assets of the Company and not from Shareholders.



22. Indemnification by Advisor. The Advisor shall indemnify and hold harmless the
Company from liability, claims, damages, taxes or losses and related expenses including attorneys’
fees, to the extent that such liability, claims, damages, taxes or losses and related expenses are
not fully reimbursed by insurance and are incurred by reason of the Advisor’s bad faith, fraud,
willful misfeasance, misconduct, negligence or reckless disregard of its duties.



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



	 	 	 	 	 
	 

	 	To the Board

and to the Company:
	 	Corporate Property Associates 16 — Global Incorporated

50 Rockefeller Plaza

New York, NY 10020
	 
	 	 	 	 
	 

	 	To the Advisor:
	 	Carey Asset Management Corp.

50 Rockefeller Plaza

New York, NY 10020






Either party may at any time give notice in writing to the other party of a change in its
address for the purposes of this Section 23.



24. Modification. This Agreement shall not be changed, modified, terminated, or
discharged, in whole or in part, except by an instrument in writing signed by both parties hereto,
or their respective successors or assignees.



25. 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.



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


 


24









 





27. 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.



28. 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.



29. 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.



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



31. 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.



32. Name. W.P. Carey & Co. LLC has a proprietary interest in the name “Corporate
Property Associates” and “CPA(R).” Accordingly, and in recognition of this right, if at any time
the Company ceases to retain Carey Asset Management Corp., or an Affiliate thereof to perform the
services of Advisor, the Company will, promptly after receipt of written request from Carey Asset
Management Corp., cease to conduct business under or use the name “Corporate Property Associates”
or “CPA(R)” or any diminutive thereof and the Company shall use its best efforts to change the name
of the Company to a name that does not contain the name “Corporate Property Associates” or “CPA(R)”
or any other word or words that might, in the sole discretion of the Advisor, be susceptible of
indication of some form of relationship between the Company and the Advisor or any Affiliate
thereof. Consistent with the foregoing, it is specifically recognized that the Advisor or one or
more of its Affiliates has in the past and may in the future organize, sponsor or otherwise permit
to exist other investment vehicles (including vehicles for investment in real estate) and financial
and service organizations having “Corporate Property Associates” or “CPA(R)” as a part of their
name, all without the need for any consent (and without the right to object thereto) by the Company
or its Directors.



33. INITIAL INVESTMENT. The Advisor has contributed to the Company $200,000 in
exchange for 20,000 Shares (the “Initial Investment”). The Advisor or its Affiliates may
not sell any of the Shares purchased with the Initial Investment during the term of this Agreement.
The restrictions included above shall not continue to apply to any Shares other than the Share
acquired through the Initial Investment acquired by the Advisor or its Affiliates. The Advisor
shall not vote any Shares it now owns or hereafter acquires in any vote for the election of
Directors or any vote regarding the approval or termination of any contract with the Advisor or any
of its Affiliates.


 


25









 





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



	 	 	 	 	 
	 	CORPORATE PROPERTY ASSOCIATES 

16 — GLOBAL INCORPORATED

 	 
	 	By:  	/s/ Mark J. DeCesaris
 	 
	 	 	Name:  	Mark J. DeCesaris 	 
	 	 	Title:  	Managing Director and
Acting 

Chief Financial Officer 	 
	 
	 	CAREY ASSET MANAGEMENT CORP.

 	 
	 	By:  	/s/ Gordon F. DuGan
 	 
	 	 	Name:  	Gordon F. DuGan 	 
	 	 	Title:  	President and Chief
Executive Officer 	 




 


 









 







SCHEDULE A





This Schedule sets forth the terms governing any Shares issued by the Company to the Advisor
in payment of advisory fees set forth in the Agreement.



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



2. Immediate Vesting. Upon the expiration of the Agreement for any reason other than
a termination for Cause under paragraph 17 or upon a “Change of Control” of CPA(R):16 (as defined
below), all Shares granted to the Advisor hereunder shall vest immediately and all restrictions
shall lapse. For purposes of this Schedule A, a “Change of Control” of the Company shall be deemed
to have occurred if there has been a change in the ownership of the Company of a nature that would
be required to be reported in response to the disclosure requirements of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), as enacted and in force on the date hereof, whether or not the Company is then subject
to such reporting requirements; provided, however, that, without limitation, a Change of Control
shall be deemed to have occurred if:




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




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




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


 


Schedule A-1









 





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



3. Exception. Notwithstanding anything else in this Agreement to the contrary, the Shares
shall continue to vest according to the vesting schedule in Section 1 regardless of: (a) the
expiration of the Advisory Agreement for any reason other than a termination by the Company for
Cause or a resignation by the Advisor for other than Good Reason, (b) the merger of the Company and
an Affiliate of the Company or (c) any “Change of Control” of the Company in connection with a
merger with an Affiliate of the Company.




 


Schedule A-2