using proceeds of the Part I Offering, to provide for the payment by the Advisor ofAcquisition Expenses and such other expenses as provided in Section 10(b) hereof.“Acquisition Fee.” Any fee or commission (including any interest thereon) paid by theCompany to the Advisor or, with respect to Section 9(d), by the Company to any party, in connectionwith the making or investing in Loans and the purchase, development or construction of Propertiesby the Company. A Development Fee or a Construction Fee paid to a Person not affiliated with theSponsor in connection with the actual development or construction of a project after acquisition ofthe Property by the Company shall not be deemed an Acquisition Fee. Acquisition Fees include, butare not limited to, any real estate commission, selection fee, development fee (other than asdescribed above) or any fee of a similar nature, however designated. Acquisition Fees includeSubordinated Acquisition Fees unless the context otherwise requires. Acquisition Fees shall notinclude Acquisition Expenses or the Acquisition Expense Allowance.“Adjusted Invested Assets.” The average during any period of the aggregate historicalcost, or to the extent available for a particular asset, the most recent Appraised Value, of theInvestment Assets of the Company, before accumulated reserves for depreciation or bad debtallowances or other similar non-cash reserves, computed (unless otherwise specified) by taking theaverage of such values at the end of each month during such period.“Adjusted Investor Capital.” As of any date, the Initial Investor Capital reduced byany Redemptions, other than Redemptions intended to qualify as a liquidity event for purposes ofthis Agreement, and by any other Distributions on or prior to such date determined by the Board tobe 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 depreciationand amortization, bad debts or other similar non-cash reserves; *provided*, *however*, if the Advisorreceives a Subordinated Incentive Fee, Adjusted Net Income for purposes of calculating totalallowable Operating Expenses shall exclude any gain, losses or writedowns from the sale of theCompany’s assets that gave rise to such Subordinated Incentive Fee.“Advisor.” Carey Asset Management Corp, a corporation organized under the laws of theState 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 tenpercent or more of the outstanding voting securities of such other Person; (ii) any Person tenpercent 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 orindirectly controlling, controlled by, or under common control with such other Person; (iv) anyexecutive officer, director, trustee or general partner of such other Person; or (v) any legalentity 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, thequality of any lessee’s credit and the conditions of the credit markets. The Appraised Value maybe greater than the construction cost or the replacement cost of the property. For purposes ofthe definition of Adjusted Invested Assets,
 
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Appraised Value shall not include the initial appraisal of any property in connection with theacquisition of that property.“Articles of Incorporation.” Articles of Incorporation of the Company under theGeneral Corporation Law of Maryland, as amended from time to time, pursuant to which the Company isorganized.“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 valueof the assets of the Company invested, directly or indirectly, in Properties and in Loans, beforededucting reserves for depreciation, bad debts, impairments, amortization and all other similarnon-cash reserves, computed by taking the average of such values at the end of each month duringsuch 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 financingof Investment Assets or the refinancing of any Company indebtedness.“Cash from Sales.” Net cash proceeds realized by the Company from the sale, exchangeor other disposition of any of its assets after deduction of all expenses incurred in connectiontherewith. Cash from Sales shall not include Cash from Financings.“Cash from Sales and Financings.” The total sum of Cash from Sales and Cash fromFinancings.“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 eachcase, is determined by a majority of the Independent Directors to be materially adverse to theCompany, or a breach of a material term or condition of this Agreement by the Advisor and theAdvisor has not cured such breach within 30 days of written notice thereof or, in the case of anybreach that cannot be cured within 30 days by reasonable effort, has not taken all necessary actionwithin a reasonable time period to cure such breach.“Change of Control.” A change of control of the Company of a nature that would berequired to be reported in response to the disclosure requirements of Schedule 14A ofRegulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “ExchangeAct”), as enacted and in force on the date hereof, whether or not the Company is then subjectto such reporting requirements; *provided*, *however*, that, without limitation, a Change of Controlshall be deemed to have occurred if: (i) any “person” (within the meaning of Section 13(d) of theExchange Act, as enacted and in force on the date hereof) is or becomes the “beneficial owner” (asthat term is defined in Rule 13d-3, as enacted and in force on the date hereof, under the ExchangeAct) of securities of the Company representing 8.5% or more of the combined voting power of theCompany’s securities then outstanding; (ii) there occurs a merger, consolidation or otherreorganization 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 toanother entity, which disposition is not approved by the Board; or (iv) there occurs a contestedproxy solicitation of the Shareholders of the Company that results in the contesting party electingcandidates to a majority of the Board’s positions next up for election.“Code.” Internal Revenue Code of 1986, as amended.
 
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“Company.” Corporate Property Associates 16 — Global Incorporated, a corporationorganized under the laws of the State of Maryland.“Competitive Real Estate Commission.” The real estate or brokerage commission paidfor the purchase or sale of a property that is reasonable, customary and competitive in light ofthe size, type and location of the property.“Construction Fee.” A fee or other remuneration for acting as general contractorand/or construction manager to construct improvements, supervise and coordinate projects or toprovide major repairs or rehabilitation on a Property.“Contract Purchase Price.” The amount actually paid for, or allocated to, thepurchase, development, construction or improvement of a Property or acquired Loan or, in the caseof an originated Loan, the principal amount of such Loan, exclusive, in each case, of AcquisitionFees, Acquisition Expenses and the Acquisition Expense Allowance.“Contract Sales Price.” The total consideration received by the Company for the saleof Properties and Loans.“Cumulative Return.” For the period for which the calculation is being made, thepercentage resulting from dividing (A) the total Distributions for such period (not includingDistributions out of Cash from Sales and Financings), by (B) the product of (i) the averageAdjusted Investor Capital for such period (calculated on a daily basis), and (ii) the number ofyears (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 andapproving plans, and undertaking to assist in obtaining zoning and necessary variances andnecessary financing for the specific Property, either initially or at a later date.“Directors.” The persons holding such office, as of any particular time, under theArticles of Incorporation, whether they be the directors named therein or additional or successordirectors.“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 toobtain a satisfactory agreement from any successor to the Company to assume and agree to performthe Company’s obligations under this Agreement; or (ii) any material breach of this Agreement ofany nature whatsoever by the Company; *provided*that such breach (a) is of a material term orcondition of this Agreement and (b) the Company has not cured such breach within 30 days of writtennotice thereof or, in the case of any breach that cannot be cured within 30 days by reasonableeffort, 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 anyOffering.“Independent Appraiser.” A qualified appraiser of real estate as determined by theBoard, who is not affiliated, directly or indirectly, with the Company, the Advisor or theirrespective Affiliates.
 
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Membership in a nationally recognized appraisal society such as the American Institute of RealEstate Appraisers or the Society of Real Estate Appraisers shall be conclusive evidence of suchqualification.“Independent Director.” A Director of the Company who meets the criteria for anIndependent Director specified in the Bylaws.“Individual.” Any natural person and those organizations treated as natural personsin Section 542(a) of the Code.“Initial Closing Date.” The first date on which Shares were issued pursuant to anOffering.“Initial Investor Capital.” The total amount of capital invested from time to time byShareholders (computed at the Original Issue Price per Share), excluding any Shares received by theAdvisor 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 orentered into by the Company as lender which are secured or collateralized by personal property, orfee or leasehold interests in real estate or other assets, including but not limited to first orsubordinate mortgage loans, construction loans, development loans, loans secured by capital stockor 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 thirdparties, or providing commitments for loans. The term “Loans” shall not include leases which arenot recognized as leases for Federal income tax reporting purposes.“Market Value.” The value calculated by multiplying the total number of outstandingShares by the average closing price of the Shares over the 30 trading days beginning 180 calendardays after the Shares are first listed on a national security exchange or included for quotation onNasdaq, as the case may be.“Nasdaq.” The national automated quotation system operated by the NationalAssociation of Securities Dealers, Inc.“Offering.” The offering of Shares pursuant to a Prospectus.“Operating Expenses.” All operating, general and administrative expenses paid orincurred by the Company, as determined under GAAP, except the following (insofar as they wouldotherwise be considered operating, general and administrative expenses under GAAP): (i) interestand 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 ofraising capital, including Organization and Offering Expenses, printing, engraving, and otherexpenses, and taxes incurred in connection with the issuance and distribution of the Company’sShares and Securities; (iv) Acquisition Expenses, real estate commissions on resale of property andother expenses connected with the acquisition, disposition, origination, ownership and operation ofreal estate interests, mortgage loans, or other property, including the costs of foreclosure,insurance premiums, legal services, brokerage and sales commissions, maintenance, repair andimprovement of property; (v) Acquisition Fees or Subordinated Disposition Fees payable to theAdvisor or any other party; (vi) non-cash items, such as depreciation, amortization, depletion, andadditions to reserves for depreciation, amortization, depletion, losses and bad
 
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debts; (vii) Termination Fees; and (viii) Subordinated Incentive Fees paid in compliance withSection 9(i). Notwithstanding anything herein to the contrary, Operating Expenses shall includethe Asset Management Fee and the Loan Refinancing Fee.“Organization and Offering Expenses.” Those expenses payable by the Company inconnection with the formation, qualification and registration of the Company and in marketing anddistributing Shares, including, but not limited to: (i) the preparation, printing, filing anddelivery of any registration statement or Prospectus and the preparing and printing of contractualagreements between the Company and the Sales Agent and the Selected Dealers (including copiesthereof); (ii) the preparing and printing of the Articles of Incorporation and Bylaws, solicitationmaterial and related documents and the filing and/or recording of such documents necessary tocomply with the laws of the State of Maryland for the formation of a corporation and thereafter forthe continued good standing of a corporation; (iii) the qualification or registration of the Sharesunder state securities or “Blue Sky” laws; (iv) any escrow arrangements, including any compensationto an escrow agent; (v) the filing fees payable to the SEC and to the National Association ofSecurities Dealers, Inc.; (vi) reimbursement for the reasonable and identifiable out-of-pocketexpenses 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 connectionwith the Offering, including the cost of all sales literature and the costs related to investor andbroker-dealer sales and information meetings and marketing incentive programs; and (ix) sellingcommissions, marketing fees, incentive fees, due diligence fees and wholesaling fees and expensesincurred in connection with the sale of the Shares.“Original Issue Price.” For any share issued in an Offering, the price at which suchShare was initially offered to the public by the Company, regardless of whether selling commissionswere 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 theCompany for investment purposes that is not a Loan or a Property and is consistent with theinvestment objectives and policies of the Company.“Other Permitted Investment Assets Fee.” The Other Permitted Investment Assets Fee asdefined in Section 9(h).“Part I Offering.” The Offering of 110,000,000 Shares of the Company, declaredeffective by the Securities and Exchange Commission pursuant to the Company’s RegistrationStatement on Form S-11 (File No. 333-106838).“Part II Offering.” The Offering of 55,000,000 Shares of the Company, declaredeffective by the Securities and Exchange Commission pursuant to the Company’s RegistrationStatement 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 agovernment.“Preferred Return.” A Cumulative Return of six percent computed from the InitialClosing 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 investmentwhich obligates the Company to acquire a Property will be treated as a Property for purposes ofthis Agreement
 
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“Property Management Fee.” A fee for property management services rendered by theAdvisor or its Affiliates in connection with Properties acquired directly or through foreclosure.“Prospectus.” Any prospectus pursuant to which the Company offers Shares in a publicoffering, as the same may at any time and from time to time be amended or supplemented after theeffective date of the registration statement in which it is included.“Redemptions.” An amount determined by multiplying the number of Shares redeemed bythe 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 andsubsequently issued Shares), voting trust certificates, bonds, debentures, notes or other evidencesof indebtedness, secured or unsecured, convertible, subordinated or otherwise or in general anyinstruments commonly known as “securities” or any certificate of interest, shares or participationin temporary or interim certificates for receipts (or, guarantees of, or warrants, options orrights to subscribe to, purchase or acquire any of the foregoing), which subsequently may be issuedby the Company.“Selected Dealers.” Broker-dealers who are members of the National Association ofSecurities Dealers, Inc. and who have executed an agreement with the Sales Agent in which theSelected Dealers agree to participate with the Sales Agent in the Offering.“Shareholders.” Those Persons who, at the time any calculation hereunder is to bemade, 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 anyother shares of common stock of the Company.“Sponsor.” W.P. Carey & Co. LLC and any other Person directly or indirectlyinstrumental in organizing, wholly or in part, the Company or any person who will control, manageor participate in the management of the Company, and any Affiliate of any such person. Sponsordoes not include a person whose only relationship to the Company is that of an independent propertymanager and whose only compensation is as such. Sponsor also does not include wholly independentthird parties such as attorneys, accountants and underwriters whose only compensation is forprofessional services.“Subordinated Acquisition Fee.” The Subordinated Acquisition Fee as defined inSection 9(c).“Subordinated Disposition Fee.” The Subordinated Disposition Fee as defined inSection 9(g) hereof.“Subordinated Incentive Fee.” The Subordinated Incentive Fee as defined inSection 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) thefair value of the Investment Assets, less the amount of all indebtedness secured by such InvestmentAssets and less any fees (other than the Termination Fee) payable to the Advisor, in each case asof the Termination Date, exceeds (2) the total of the Adjusted Investor Capital plus an amountequal to the Preferred Return
 
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through the Termination Date reduced by the total Distributions paid by the Company from itsinception through the Termination Date (other than Distributions made from Cash from Sales andFinancings that are counted in determining Adjusted Investor Capital). For purposes of calculatingthis Fee (i) the fair value of any Property shall be its Appraised Value, and (ii) any payments inrespect of redeemed Shares (other than in respect of Redemptions intended to qualify as a liquidityevent for purposes of this Agreement), Shares received by the Advisor or its Affiliates for anyconsideration 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 thesum of the Contract Purchase Price of such Property or Loan plus the Acquisition Fees paid inconnection with such Property or Loan.“Triggering Event.” With regard to any Investment Asset, the occurrence of any of thefollowing 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 othermaterial 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 orproceeding under applicable bankruptcy or reorganization law, (2) consents to the entry of a decreeor order for relief in an involuntary proceeding under applicable bankruptcy law, (3) consents tothe filing of a petition or the appointment of a custodian, receiver or liquidator, (4) makes anassignment for the benefit of creditors, (5) admits in writing its inability to pay its debts asthey come due; (6) is the subject of a decree or order for relief entered by a court of competentjurisdiction in respect of such obligor in an involuntary bankruptcy case or proceeding, or adecree or order adjudging such obligor bankrupt or insolvent or appointing a custodian, receiver orliquidator for the obligor.2. Appointment. The Company hereby appoints the Advisor to serve as its advisor onthe terms and conditions set forth in this Agreement, and the Advisor hereby accepts suchappointment.3. Duties of the Advisor. The Advisor undertakes to use its best efforts to presentto the Company potential investment opportunities and to provide a continuing and suitableinvestment program consistent with the investment objectives and policies of the Company asdetermined and adopted from time to time by the Board. In performance of this undertaking, subjectto the supervision of the Board and consistent with the provisions of the Articles of Incorporationand Bylaws of the Company and any Prospectus pursuant to which Shares are offered, the Advisorshall, either directly or by engaging an Affiliate:(a) serve as the Company’s investment and financial advisor and provide research andeconomic and statistical data in connection with the Company’s assets and investmentpolicies;(b) provide the daily management of the Company and perform and supervise the variousadministrative functions reasonably necessary for the management of the Company;(c) investigate, select, and, on behalf of the Company, engage and conduct businesswith such Persons as the Advisor deems necessary to the proper performance of itsobligations hereunder, including but not limited to consultants, accountants,correspondents, lenders, technical advisors, attorneys, brokers, underwriters, corporatefiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers,insurance agents, banks, builders, developers, property owners, mortgagors, and any and allagents for any of the foregoing, including Affiliates of the Advisor, and Persons acting inany other capacity deemed by the
 
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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 ofthe foregoing;(d) consult with Directors of the Company and assist the Board in the formulation andimplementation 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 enablethem 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 andselect potential investments in Investment Assets; (ii) structure and negotiate the termsand conditions of transactions pursuant to which investments in Investment Assets will bemade, purchased or acquired by the Company; (iii) make investments in Investment Assets onbehalf of the Company in compliance with the investment objectives and policies of theCompany; (iv) arrange for financing and refinancing of, make other changes in the asset orcapital structure of, dispose of, reinvest the proceeds from the sale of, or otherwise dealwith the investments in, Investment Assets; and (v) enter into leases and service contractsfor Properties and, to the extent necessary, perform all other operational functions for themaintenance and administration of such Properties;(f) provide the Board with periodic reports regarding prospective investments inInvestment 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 fiscalquarter;(g) obtain the prior approval of the Board (including a majority of the IndependentDirectors) for any and all investments in Property which do not meet all of the requirementsset forth in Section 4(b) hereof;(h) negotiate on behalf of the Company with banks or lenders for loans to be made tothe Company, and negotiate on behalf of the Company with investment banking firms andbroker-dealers or negotiate private sales of Shares and Securities or obtain loans for theCompany, but in no event in such a way so that the Advisor shall be acting as broker-dealeror underwriter; and *provided*, *further*, that any fees and costs payable to third partiesincurred by the Advisor in connection with the foregoing shall be the responsibility of theCompany;(i) obtain reports (which may be prepared by the Advisor or its Affiliates), whereappropriate, concerning the value of investments or contemplated investments of the Companyin Investment Assets;(j) obtain for, or provide to, the Company such services as may be required inacquiring, managing and disposing of Investment Assets, including, but not limited to:(i) the negotiation, making and servicing of Loans; (ii) the disbursement and collection ofCompany monies; (iii) the payment of debts of and fulfillment of the obligations of theCompany; and (iv) the handling, prosecuting and settling of any claims of or against theCompany, including, but not limited to, foreclosing and otherwise enforcing mortgages andother liens securing the Loans;(k) from time to time, or at any time reasonably requested by the Board, make reportsto 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 thereporting and other requirements of any governmental bodies or agencies to Shareholders andthird parties and otherwise as requested by the Company;
 
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(m) provide or arrange for administrative services and items, legal and other services,office space, office furnishings, personnel and other overhead items necessary andincidental to the Company’s business and operations;(n) provide the Company with such accounting data and any other information requestedby the Company concerning the investment activities of the Company as shall be required toprepare and to file all periodic financial reports and returns required to be filed with theSecurities and Exchange Commission and any other regulatory agency, including annualfinancial statements;(o) maintain the books and records of the Company;(p) supervise the performance of such ministerial and administrative functions as maybe 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 inthis Agreement;(s) perform such other services as may be required from time to time for management andother activities relating to the assets of the Company as the Advisor shall deem advisableunder the particular circumstances;(t) arrange to obtain on behalf of the Company as requested by the Board, and deliverto or maintain on behalf of the Company copies of, all appraisals obtained in connectionwith investments in Properties and Loans; and(u) if a transaction, proposed transaction or other matter requires approval by theBoard or by the Independent Directors, deliver to the Board or the Independent Directors, asthe case may be, all documentation reasonably requested by them to properly evaluate suchtransaction, proposed transaction or other matter.(v) on an annual basis, no later than 90 days prior to the end of each term of thisAgreement, provide the Independent Directors with a report on (1) the Advisor’s performanceduring the past year, (2) the compensation paid to the Advisor during such year and (3) anyproposed changes to the compensation to be paid to the Advisor during the upcoming year ifthe Agreement is renewed. The Advisor’s report shall address, among other things, (a) thosematters identified in the Company’s organizational documents as matters which theIndependent Directors must review each year with respect to the Advisor’s performance andcompensation; (b) whether any Triggering Event occurred with respect to an Investment madeduring the past year; and (c) the “dead deal” costs incurred by the Company during the pastyear. 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, theywish to request that the Advisor refund all or a portion of the Initial Acquisition Fee paidby the Company in respect of such Investment Asset, and if the Independent Directors makethat request, the Advisor shall refund such amount to the Company within 60 days afterreceipt of such request. In addition, the Independent Directors may request that theAdvisor refund certain of the dead deal costs incurred by the Company if, in light of thecircumstances under which such costs were incurred, the Independent Directors determine thatthe Company should not bear such costs.
 
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4. Authority of Advisor.(a) Pursuant to the terms of this Agreement (and subject to the restrictions includedin Paragraphs (b), (c) and (d) of this Section 4 and in Section 7 hereof), and subject tothe continuing and exclusive authority of the Board over the management of the Company, theBoard hereby delegates to the Advisor the authority to: (1) locate, analyze and selectinvestment opportunities; (2) structure the terms and conditions of transactions pursuant towhich investments will be made or acquired for the Company; (3) acquire Property, make oracquire Loans and make or acquire Other Permitted Investment Assets in compliance with theinvestment 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 performother property level operations; (6) oversee non-affiliated property managers and othernon-affiliated Persons who perform services for the Company; and (7) undertake accountingand other record-keeping functions at the Investment Asset level.(b) The consideration paid for an Investment acquired by the Company shall ordinarilybe based on the fair market value thereof. Consistent with the foregoing provision, theAdvisor may, without further approval by the Board (except with respect to transactionssubject to paragraphs (c) and (d)) invest on behalf of the Company in an Investment Asset solong as, in the Advisor’s good faith judgment, (i) the Total Property Cost of suchInvestment Asset does not exceed the fair market value thereof, and in the case of anInvestment Asset that is a Property, shall in no event exceed the Appraised Value of suchProperty and (ii) the Investment Asset, in conjunction with the Company’s other investmentsand proposed investments, at the time the Company is committed to purchase or originate theInvestment Asset, is reasonably expected to fulfill the Company’s investment objectives andpolicies 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 shallexclude future commitments to fund improvements. Investments not meeting the foregoingcriteria must be approved in advance by the Board.(c) Notwithstanding anything to the contrary contained in this Agreement, the Advisorshall 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 Directorsand 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 withthe Sponsor, the Advisor or any of their Affiliates; (ii) investments in Investment Assetswhich are not contemplated by the terms of a Prospectus; (iii) transactions that presentissues which involve conflicts of interest for the Advisor or an Affiliate (other thanconflicts involving the payment of fees or the reimbursement of expenses); (iv) the lease ofassets to the Sponsor, any Director, the Advisor or any Affiliate of the Advisor; (v) anypurchase or sale of an Investment Asset from or to the Advisor or an Affiliate; and (vi) theretention of any Affiliate of the Advisor to provide services to the Company not expresslycontemplated by this Agreement and the terms of such services by such Affiliate. Inaddition, the Advisor shall comply with any further approval requirements set forth in theBylaws.(e) The Board may, at any time upon the giving of notice to the Advisor, modify orrevoke the authority set forth in this Section 4. If and to the extent the Board somodifies or revokes the authority contained herein, the Advisor shall henceforth comply withsuch modification or revocation, *provided however*, that such modification or revocationshall be
 
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effective upon receipt by the Advisor and shall not be applicable to investmenttransactions to which the Advisor has committed the Company prior to the date of receipt bythe Advisor of such notification.5. Bank Accounts. The Advisor may establish and maintain one or more bank accounts inits own name for the account of the Company or in the name of the Company and may collect anddeposit into any such account or accounts, and disburse from any such account or accounts, anymoney on behalf of the Company, *provided*that no funds shall be commingled with the funds of theAdvisor; and the Advisor shall from time to time render appropriate accountings of such collectionsand payments to the Board and to the auditors of the Company.6. Records; Access. The Advisor shall maintain appropriate records of all itsactivities 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 normalbusiness hours. The Advisor shall at all reasonable times have access to the books and records ofthe Company.7. Limitations on Activities. Anything else in this Agreement to the contrarynotwithstanding, the Advisor shall refrain from taking any action which, in its sole judgment madein good faith, would adversely affect the status of the Company as a REIT, subject the Company toregulation under the Investment Company Act of 1940, would violate any law, rule, regulation orstatement of policy of any governmental body or agency having jurisdiction over the Company, itsShares 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 notifypromptly the Board of the Advisor’s judgment of the potential impact of such action and shallrefrain from taking such action until it receives further clarification or instructions from theBoard. In such event the Advisor shall have no liability for acting in accordance with thespecific instructions of the Board so given. Notwithstanding the foregoing, the Advisor, itsshareholders, directors, officers and employees, and partners, shareholders, directors and officersof the Advisor’s shareholders and Affiliates of any of them, shall not be liable to the Company, orto 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 theAdvisor’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 theCompany, except that no employee of the Advisor or its Affiliates who also is a Director or officerof the Company shall receive any compensation from the Company for serving as a Director or officerother than for reasonable reimbursement for travel and related expenses incurred in attendingmeetings of the Board; for the avoidance of doubt, the limitations of this Section 8 shall notapply to any compensation paid by the Advisor or any Affiliate for which the Company reimbursed theAdvisor or Affiliate in accordance with Section 10 hereof.9. Fees.(a) Asset Management Fee. The Company shall pay to the Advisor as compensationfor the advisory services rendered to the Company hereunder an amount equal to one percentper annum of the Adjusted Invested Assets of the Company (the “Asset ManagementFee”) calculated as set forth below. The Asset Management Fee will be calculatedmonthly, beginning with the month in which the Company first makes an investment inInvestment Assets, on the basis of one-twelfth of one percent of the Adjusted InvestedAssets for that month, computed as a daily average. The Asset Management Fee shall beprorated for the number of days during the month that the Company owns an Investment Asset.One-half of the Asset Management Fee with
 
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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 wasacquired or originated. The remaining one-half of the Asset Management Fee shall besubordinated to the extent described below and shall be payable quarterly. The subordinatedAsset Management Fee for any quarter shall be payable only if the Preferred Return has beenmet through the end of the applicable quarter. Any portion of the subordinated AssetManagement Fee not paid due to the Company’s failure to meet the Preferred Return shall bepaid by the Company, to the extent it is not restricted by the 2%/25% Guidelines asdescribed below, at the end of the next fiscal quarter through which the Company has met thePreferred Return. If at the end of any fiscal quarter, the Company’s Operating Expensesexceed the 2%/25% Guidelines over the immediately preceding 12 months, payment of thesubordinated Asset Management Fee will be withheld consistent with Section 13. For purposesof calculating the value per share of restricted stock given for payment of the AssetManagement Fee, the price per share shall be: (i) the net asset value per share asdetermined by the most recent appraisal performed by an independent third party at the timesuch Asset Management Fee was earned or, if an appraisal has not yet been made and acceptedby the Company, (ii) $10 per share. Any part of the Asset Management Fee that has beensubordinated pursuant to this subsection (a) shall not be deemed earned until such time aspayable hereunder.(b) Acquisition Fee. The Advisor may receive as compensation in connectionwith the investigation, selection, acquisition or origination (by purchase, investment orexchange) of any Property or Loan, an Acquisition Fee payable by the Company at the timesuch Property or Loan is acquired. The total such Acquisition Fees (not includingSubordinated Acquisition Fees and any interest thereon) payable to the Advisor may notexceed two-and-one-half percent of the aggregate Total Property Cost of all Properties andLoans acquired or originated by the Company, subject to the limitations set forth inparagraph 9(d).(c) Subordinated Acquisition Fee. In addition to the Acquisition Fee describedin Section 9(b) above, the Advisor may receive as compensation in connection with theinvestigation, selection, acquisition or origination (by purchase, investment or exchange)of Properties and Loans a Subordinated Acquisition Fee payable by the Company to the Advisoror its Affiliates (the “Subordinated Acquisition Fee”). The total SubordinatedAcquisition Fees paid may not exceed two percent of the aggregate Total Property Cost of allProperties and Loans purchased and originated by the Company, measured at such time as theCompany shall have completed all Offerings (other than pursuant to its dividend reinvestmentplan) and invested substantially all of the net proceeds of such Offerings, unless amajority of the Directors (including a majority of the Independent Directors) not otherwiseinterested in any transaction approves the excess as being commercially competitive, fairand reasonable to the Company. The unpaid portion of the Subordinated Acquisition Feepayable to the Advisor and its Affiliates with respect to any Property or Loan shall bearinterest at the rate of five percent per annum from the date of acquisition of such Propertyor Loan until such portion is paid. Subject to the following sentence, the SubordinatedAcquisition Fee with respect to any Investment Asset shall be payable in equal annualinstallments on January 1 of each of the three calendar years following the date such Assetwas purchased; accrued interest on all unpaid Subordinated Acquisition Fees shall also bepayable on such dates. The portion of the Subordinated Acquisition Fees, and accruedinterest thereon, otherwise payable on any January 1 shall be payable only if the PreferredReturn through the end of the fiscal year preceding such January 1 has been met. Anyportion of the Subordinated Acquisition Fees, and accrued interest thereon, not paid due tothe Company’s failure to meet the Preferred Return through any fiscal year end shall be paidby the Company on the January 1 following the first fiscal year thereafter through which thePreferred Return has been met.
 
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(d) Six Percent Limitation. The total amount of Acquisition Fees plusSubordinated Acquisition Fees and any interest thereon, whether payable to the Advisor or athird party, and Acquisition Expenses may not exceed six percent of the sum of the aggregateContract Purchase Price of all Properties and Loans, measured for the period beginning onthe date of the initial acquisition of a Property or Loan by the Company and ending on eachDecember 31 after the date hereof, unless a majority of the Directors (including a majorityof the Independent Directors) not otherwise interested in any transaction approves theexcess as being commercially competitive, fair and reasonable to the Company.(e) Loan Refinancing Fee. The Company shall pay to the Advisor for allqualifying loan refinancings of Properties a Loan Refinancing Fee in the amount up to onepercent of the principal amount of the refinanced loan. Any Loan Refinancing Fee shall bedue and payable upon the funding of the related loan or as soon thereafter as is reasonablypracticable. A refinancing will qualify for a Loan Refinancing Fee only if the refinancedloan is secured by Property and (i) the maturity date of the refinanced loan (which musthave 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 theIndependent Directors, an improvement over the terms of the refinanced loan; or (iii) thenew loan is approved by the Board, including a majority of the Independent Directors and, ineach case, the Loan Refinancing Fee is found, in the judgment of a majority of theIndependent Directors, to be in the best interest of the Company.(f) Property Management Fee. No Property Management Fee shall be paid unlessapproved by a majority of the Independent Directors.(g) Subordinated Disposition Fee. If the Advisor or an Affiliate provides asubstantial amount of services in the sale of a Property or Loan, the Advisor or suchAffiliate shall receive a fee equal to the lesser of: (i) 50% of the Competitive RealEstate Commission and (ii) three percent of the Contract Sales Price of such Property (the“Subordinated Disposition Fee”). The Subordinated Disposition Fee will be paid onlyif 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 fiscalquarter immediately preceding the date the Subordination Disposition Fee is paid. Thereturn requirement will be deemed satisfied if the total Distributions paid by the Companyhave satisfied the Preferred Return requirement and the Market Value of the Company equalsor exceeds Adjusted Investor Capital. To the extent that Subordinated Disposition Fees arenot paid by the Company on a current basis due to the foregoing limitation, the unpaid feeswill be due and paid at such time as the limitation has been satisfied. The SubordinatedDisposition 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 allPersons by the Company and the Subordinated Disposition Fee shall not exceed an amount equalto the lesser of: (i) six percent of the Contract Sales Price of such Property or (ii) theCompetitive Real Estate Commission. The Advisor shall present to the Independent Directorssuch information as they may reasonably request to review the level of services provided bythe Advisor in connection with a disposition and the basis for the calculation of the amountof the accrued Subordinated Disposition Fees on an annual basis. The amount of any accruedSubordinated Disposition Fee shall be deemed conclusively established once it has beenapproved by the Independent Directors, absent a subsequent finding of error. No payment ofSubordinated Disposition Fees shall be made prior to review and approval of such informationby the Independent Directors. If this Agreement is terminated prior to such time as theShareholders have received (through liquidity or Distributions) a return of 100% of InitialInvestor 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 unpaidSubordinated Disposition
 
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Fee on Properties sold prior to the date of termination will be payable if theAppraised Value of the Properties then owned by the Company plus Distributions toShareholders prior to the date of termination of this Agreement (through liquidity orDistributions) is equal to or greater than 100% of Initial Investor Capital plus an amountsufficient to pay a Preferred Return through the date of termination of this Agreement. Ifthe Company’s Shares are listed on a national securities exchange or included for quotationon Nasdaq and, at the time of such listing, the Advisor or an Affiliate has provided asubstantial amount of services in the sale of Property, for purposes of determining whetherthe subordination conditions for the payment of the Subordinated Disposition Fee have beensatisfied, Shareholders will be deemed to have received a Distribution in an amount equal tothe Market Value of the Company.(h) Other Permitted Investment Assets Fee. The Advisor may receive ascompensation for services rendered in connection with the investigation, selection,acquisition or origination of Other Permitted Investments a fee (the “Other PermittedInvestment Assets Fee”) that shall be negotiated in good faith by the Advisor and theCompany and approved by the Board (including a majority of the Independent Directors) on acase 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 andLoans.(i) Subordinated Incentive Fee. A fee shall be payable to the Advisor in anamount equal to 15% of Cash from Sales distributable to Shareholders after Shareholders havereceived a return of 100% of Initial Investor Capital (through liquidity or Distributions)plus a Preferred Return through the date payment is made (the “Subordinated IncentiveFee”). For these purposes the Shareholders will be deemed to have been providedliquidity if the Shares are listed on a national security exchange or included for quotationon Nasdaq. The return requirement will be deemed satisfied if the total Distributions paidby the Company has satisfied the Preferred Return requirement and the Market Value of theCompany equals or exceeds Adjusted Investor Capital. The Company shall have the option topay such fee in the form of a promissory note or as set forth in Section 9(l). Thepromissory note shall be fully amortizing over five years, provide for quarterly paymentsand 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 Advisoror its Affiliates unless (A) the transaction is approved by a majority of the IndependentDirectors and a majority of the Directors who are not interested in the transaction as beingfair, competitive and commercially reasonable, (B) the interest and other financing chargesor fees received by the Advisor or its Affiliates do not exceed the amount which would becharged by non-affiliated lending institutions and (C) the terms are not less favorable thanthose prevailing for comparable arm’s-length loans for the same purpose. The Company willnot borrow on a long-term basis from the Advisor or its Affiliates unless it is to providethe debt portion of a particular investment and the Company is unable to obtain a permanentloan at that time or in the judgment of the Board, it is not in the Company’s best interestto obtain a permanent loan at the interest rates then prevailing and the Board has reason tobelieve that the Company will be able to obtain a permanent loan on or prior to the end ofthe loan term provided by the Advisor or its Affiliates.(k) Changes To Fee Structure. In the event the Shares are listed on a nationalsecurities exchange or are included for quotation on Nasdaq, the Company and the Advisorshall negotiate in good faith to establish a fee structure appropriate for an entity with aperpetual life. A majority of the Independent Directors must approve the new fee structurenegotiated with the Advisor. In negotiating a new fee structure, the Independent Directorsmay consider any of the factors they deem relevant, including but not limited to: (a) thesize of the Advisory Fee in
 
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relation to the size, composition and profitability of the Company’s portfolio; (b) thesuccess of the Advisor in generating opportunities that meet the investment objectives ofthe Company; (c) the rates charged to other REITs and to investors other than REITs byAdvisors performing similar services; (d) additional revenues realized by the Advisor andits 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) thequality and extent of service and advice furnished by the Advisor; (f) the performance ofthe investment portfolio of the Company, including income, conversion or appreciation ofcapital, frequency of problem investments and competence in dealing with distresssituations; and (g) the quality of the portfolio of the Company in relationship to theinvestments generated by the Advisor for its own account. The new fee structure can be nomore favorable to the Advisor than the current fee structure. The Independent Directorsshall not approve any new fee structure that is in their judgment more favorable (taken as awhole) to the Advisor than the current fee structure.(l) Payment. Compensation payable to the Advisor pursuant to this Section 9shall be paid in cash; *provided*, *however*, that any fee payable pursuant to Section 9 may bepaid, at the option of the Advisor, in the form of: (i) cash, (ii) common stock of theCompany, or (iii) a combination of cash and common stock. The Advisor shall notify theCompany in writing annually of the form in which the fee shall be paid. Such notice shallbe provided no later than January 15 of each year. If no such notice is provided, the feeshall be paid in cash. For purposes of the payment of compensation to the Advisor in theform of stock, the value of each share of common stock shall be: (i) the Net Asset Valueper Share as determined by the most recent appraisal of the Company’s assets performed by anIndependent 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 valueshall be the price of the stock without commissions. The Net Asset Value determined on thebasis of such appraisal may be adjusted on a quarterly basis by the Board to account forsignificant capital transactions. Stock issued by the Company to the Advisor in payment offees hereunder shall be governed by the terms set forth in Schedule A hereto, or such otherterms 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, inaddition to the compensation paid to the Advisor pursuant to Section 9 hereof, the Companyshall pay directly or reimburse the Advisor for the following expenses:(i) the Company’s Organization and Offering Expenses; *provided however*, thatwithin 60 days after the end of the month in which any Offering terminates, theAdvisor shall reimburse the Company for any Organization and Offering Expensereimbursements received by the Advisor pursuant to this Section 10 to the extentthat such reimbursements, when added to the balance of the Organization and OfferingExpenses (excluding selling commissions, and fees paid and expenses reimbursed tothe Selected Dealers) paid directly by the Company, exceed four percent of the GrossOffering Proceeds; *provided further*, *however*, that the Advisor shall be responsiblefor the payment of all Organization and Offering Expenses (excluding suchcommissions and such fees and expense reimbursements) in excess of four percent ofthe Gross Offering Proceeds;(ii) all Acquisition Expenses;
 
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(iii) to the extent not otherwise included in Acquisition Expenses, allexpenses of whatever nature reasonably incurred and directly connected with theproposed acquisition of any Investment that does not result in the actualacquisition of the Investment, including, without limitation, personnel costs;(iv) expenses other than Acquisition Expenses incurred in connection with theinvestment of the funds of the Company, including, without limitation, costs ofretaining 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 notpayable to the Advisor;(v) interest and other costs for borrowed money, including discounts, pointsand other similar fees;(vi) taxes and assessments on income of the Company, to the extent paid oradvanced by the Advisor, or on Property and taxes as an expense of doing business;(vii) costs associated with insurance required in connection with the businessof 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 ofthe Directors and Shareholders;(xii) expenses associated with listing the Shares and Securities on asecurities exchange or Nasdaq if requested by the Board;(xiii) expenses connected with payments of Distributions in cash or otherwisemade or caused to be made by the Board to the Shareholders;(xiv) expenses of organizing, revising, amending, converting, modifying, orterminating the Company or the Articles of Incorporation;(xv) expenses of maintaining communications with Shareholders, including thecost of preparation, printing and mailing annual reports and other Shareholderreports, proxy statements and other reports required by governmental entities;(xvi) expenses related to the Properties and Loans and other fees relating tomaking investments including personnel and other costs incurred in Property or Loantransactions where a fee is not payable to the Advisor other than as provided inSection 10(b) hereof; and(xvii) all other expenses the Advisor incurs in connection with providingservices to the Company, including reimbursement to the Advisor or its Affiliatesfor the
 
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cost of rent, goods, materials and personnel incurred by them based upon thecompensation of the Persons involved and an appropriate share of overhead allocableto those Persons as reasonably determined by the Advisor on a basis approvedannually by the Board (including a majority of the Independent Directors). Noreimbursement shall be made for the cost of personnel to the extent that suchpersonnel are used in transactions for which the Advisor receives a separate fee.(b) Notwithstanding anything to the contrary in Section 10(a), with respect toProperties and Loans acquired using proceeds of the Part I Offering, the Advisor shall beresponsible for payment of (i) all Acquisition Expenses, (ii) all expenses of whatevernature directly connected with the proposed acquisition of any property or loan that doesnot result in the actual acquisition of Properties or Loans; (iii) finder’s fees and similarpayments 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 theAdvisor the Acquisition Expense Allowance, which shall be used by Advisor to pay theexpenses described in this Section 10(b). To the extent the expenses paid by the Advisorpursuant to this Section 10(b) exceed the Acquisition Expense Allowance, the Company shallhave no duty to reimburse the Advisor for the amount of such excess. To the extent theAcquisition Expense Allowance exceeds the expenses paid by the Advisor pursuant to thisSection 10(b), the Advisor shall have no duty to repay or account to the Company for anysuch excess.(c) With respect to Properties and Loans acquired using proceeds of the Part IIOffering, no Acquisition Expense Allowance shall be payable to the Advisor and the Companyshall be solely responsible for payment of (i) all Acquisition Expenses; (ii) all expensesof whatever nature directly connected with the proposed acquisition of any property or loanthat does not result in the actual acquisition of Properties or Loans; (iii) finder’s feesand 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 thePart I and Part II Offerings, the Acquisition Expense Allowance shall be calculated andpayable to the Advisor on a *pro rata*basis, and the Advisor and the Company shall beresponsible for its respective *pro rata*share of the expenses described in Section 10(b) and10(c).(e) Expenses incurred by the Advisor on behalf of the Company and payable pursuant tothis Section 10 shall be reimbursed quarterly to the Advisor within 60 days after the end ofeach quarter, subject to the provisions of Section 13 hereof. The Advisor shall prepare astatement documenting the Operating Expenses of the Company within 45 days after the end ofeach quarter.11. Other Services. Should the Board request that the Advisor or any shareholder oremployee thereof render services for the Company other than as set forth in Section 3 hereof, suchservices shall be separately compensated and shall not be deemed to be services pursuant to theterms of this Agreement.12. Fidelity Bond. The Advisor shall maintain a fidelity bond for the benefit of theCompany which bond shall insure the Company from losses of up to $5,000,000 and shall be of thetype customarily purchased by entities performing services similar to those provided to the Companyby the Advisor.
 
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13. Limitation on Expenses.(a) If Operating Expenses of the Company during the 12-month period ending on the lastday of any fiscal quarter of the Company exceed the greater of (i) two percent of theAverage Invested Assets during the same 12-month period or (ii) 25% of the Adjusted NetIncome of the Company during the same 12-month period, then subject to paragraph (b) of thisSection 13, such excess amount shall be the sole responsibility of the Advisor and theCompany shall not be liable for payment therefor.(b) Notwithstanding the foregoing, to the extent that the Advisor becomes responsiblefor any such excess amount as provided in paragraph (a), if a majority of the IndependentDirectors finds such excess amount or a portion thereof justified based on such unusual andnon-recurring factors as they deem sufficient, the Company shall reimburse the Advisor infuture quarters for the full amount of such excess, or any portion thereof, but only to theextent such reimbursement would not cause the Company’s Operating Expenses to exceed the2%/25% Guidelines in the 12-month period ending on any such quarter. In no event shall theOperating Expenses paid by the Company in any 12-month period ending at the end of a fiscalquarter exceed the 2%/25% Guidelines.(c) Within 60 days after the end of any twelve-month period referred to inparagraph (a), the Advisor shall reimburse the Company for any amounts expended by theCompany in such twelve-month period that exceeds the limitations provided in paragraph(a) unless the Independent Directors determine that such excess expenses are justified, asprovided in paragraph (b), and provided the Operating Expenses for such later quarter wouldnot 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 bedetermined in accordance with generally accepted accounting principles applied on aconsistent 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 thegain from the sale of such Property.14. Other Activities of the Advisor. Nothing herein contained shall prevent theAdvisor from engaging in other activities, including without limitation direct investment by theAdvisor and its Affiliates in assets that would be suitable for the Company, the rendering ofadvice 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 restrictthe right of the Advisor or any of its Affiliates or of any director, officer, employee orshareholder of the Advisor or its Affiliates to engage in any other business or to render servicesof any kind to any other partnership, corporation, firm, individual, trust or association. TheAdvisor may, with respect to any investment in which the Company is a participant, also renderadvice and service to each other participant therein. Without limiting the generality of theforegoing, the Company acknowledges that the Advisor provides or will provide services to other CPAREIT funds, whether now in existence or formed hereafter, and that the Advisor and its Affiliatesmay invest for their own account. The Advisor shall be responsible for promptly reporting to theBoard the existence of any actual or potential conflict of interest that arises that may affect itsperformance of its duties under this Agreement. If the Sponsor, Advisor, Director or Affiliatesthereof
 
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has or have sponsored other investment programs with similar investment objectives which haveinvestment funds available at the same time as the Company, it shall be the duty of the Advisor toadopt a reasonable method by which properties are to be allocated to the competing investmententities 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 suitableinvestment program to the Company that is consistent with the investment policies and objectives ofthe Company, but subject to the last sentence of the preceding paragraph, neither the Advisor norany Affiliate of the Advisor shall be obligated generally to present any particular investmentopportunity to the Company even if the opportunity is of character which, if presented to theCompany, could be taken by the Company.If the Advisor or its Affiliates is presented with a potential investment which might be madeby the Company and by another investment entity which the Advisor or its Affiliates advises ormanages, 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’sportfolio, rental payments during any renewal period, the estimated income tax effects of thepurchase on each entity, the policies of each entity relating to leverage, the funds of each entityavailable for investment, the amount of equity required to make the investment and the length oftime such funds have been available for investment.15. Relationship of Advisor and Company. The Company and the Advisor agree that theyhave not created and do not intend to create by this Agreement a joint venture or partnershiprelationship between them and nothing in this Agreement shall be construed to make them partners orjoint 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, shallcontinue in force until September 30, 2010 and thereafter shall be automatically renewed forsuccessive one-year periods, unless either party shall give notice in writing of non-renewal to theother 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 theIndependent Directors), this Agreement may be terminated immediately by written notice oftermination from the Company to the Advisor upon the occurrence of events which would constituteCause or if any of the following events occur:(a) If the Advisor shall breach this Agreement; *provided*that such breach (i) is of amaterial term or condition of this Agreement and (ii) the Advisor has not cured such breachwithin 30 days of written notice thereof or, in the case of any breach that cannot be curedwithin 30 days by reasonable effort, has not taken all necessary action within a reasonabletime period to cure such breach;(b) If the Advisor shall be adjudged bankrupt or insolvent by a court of competentjurisdiction, or an order shall be made by a court of competent jurisdiction for theappointment of a receiver, liquidator, or trustee of the Advisor, for all or substantiallyall of its property by reason of the foregoing, or if a court of competent jurisdictionapproves any petition filed against the Advisor for reorganization, and such adjudication ororder 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 apetition seeking reorganization under the federal bankruptcy laws, or for relief under anylaw for relief of debtors, or shall consent to the appointment of a receiver for itself orfor all or
 
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substantially all of its property, or shall make a general assignment for the benefitof its creditors, or shall admit in writing its inability to pay its debts, generally, asthey become due.Any notice of termination under Section 16 or 17 shall be effective on the date specified insuch notice, which may be the day on which such notice is given or any date thereafter. TheAdvisor agrees that if any of the events specified in Section 17(b) or (c) shall occur, it shallgive 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 withoutpenalty (but subject to the requirements of Section 20 hereof) by the Advisor by written notice oftermination to the Company upon the occurrence of events which would constitute Good Reason or bythe Company without cause or penalty (but subject to the requirements of Section 20 hereof) byaction 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 withoutthe 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 theaffairs of the Advisor, *provided*: (i) that at the time of such assignment, such successororganization shall be owned substantially by an entity directly or indirectly controlled by theSponsor and only if such entity has a net worth of at least $5,000,000, and (ii) that the board ofdirectors of the Advisor shall deliver to the Board a statement in writing indicating the ownershipstructure and net worth of the successor organization and a certification from the new Advisor asto its net worth. Such an assignment shall bind the assignees hereunder in the same manner as theAdvisor is bound by this Agreement. The Advisor may assign any rights to receive fees or otherpayments under this Agreement without obtaining the approval of the Board. This Agreement shallnot be assigned by the Company without the consent of the Advisor, except in the case of anassignment by the Company to a corporation or other organization which is a successor to theCompany, in which case such successor organization shall be bound hereunder and by the terms ofsaid 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 forfurther services hereunder but shall be entitled to receive from the Company the following:(i) all unpaid reimbursements of Organization and Offering Expenses and ofOperating Expenses payable to the Advisor;(ii) all earned but unpaid Asset Management Fees payable to the Advisor priorto 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 Propertyprior to the Termination Date;(iv) all earned but unpaid Subordinated Disposition Fees payable to the Advisorrelating to the sale of any Property prior to the Termination Date;(v) all earned but unpaid Loan Refinancing Fees payable to the Advisor relatingto the financing or refinancing of any Property prior to the Termination Date; and
 
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(vi) all earned but unpaid Property Management Fees payable to the Advisor orits Affiliates relating to the management of any property prior to the terminationof this Agreement.(b) Notwithstanding the foregoing, if this Agreement is terminated by the Company forCause, or by the Advisor for other than Good Reason, the Advisor will not be entitled toreceive the sums in Section 20(a) above.(c) If this Agreement is terminated by the Company for any reason other than Cause, byeither party in connection with a Change of Control, or by the Advisor for Good Reason, theAdvisor 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 theAdvisor 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 eventthe Shares are listed on a national securities exchange or are included forquotation on Nasdaq, or(ii) the Subordinated Incentive Fee is paid to the Advisor as a result of thelisting of the Shares on a national securities exchange or their inclusion forquotation on Nasdaq and this Agreement is terminated after such listing orinclusion.(d) Any and all amounts payable to the Advisor pursuant to Section 20(a) and Section20(c) that, irrespective of the termination, were payable on a current basis prior to theTermination Date either because they were not subordinated or all conditions to theirpayment had been satisfied, shall be paid within 90 days after the Termination Date. Allother amounts payable to the Advisor pursuant to Section 20(a) and Section 20(c) shall bepaid in a manner determined by the Board, but in no event on terms less favorable to theAdvisor than those represented by a note (i) maturing upon the liquidation of the Company orthree years from the Termination Date, whichever is earlier, (ii) with no less than twelveequal quarterly installments and (iii) bearing a fair, competitive and commerciallyreasonable interest rate (the “Note”). The Note, if any, may be prepaid by theCompany at any time prior to maturity with accrued interest to the date of payment butwithout premium or penalty. Notwithstanding the foregoing, any amounts that relate toInvestment Assets (i) shall be an amount which provides compensation to the Advisor only forthat portion of the holding period for the respective Investment Assets during which theAdvisor provided services to the Company, (ii) shall not be due and payable until theInvestment Asset to which such amount relates is sold or refinanced, and (iii) shall notbear 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 theTermination Date is sold. The portion of such amount payable upon each such sale shall beequal to (i) such amount multiplied by (ii) the percentage calculated by dividing the fairvalue (at the Termination Date) of the Investment Asset sold by the Company divided by thetotal fair value (at the Termination Date) of all Investment Assets owned by the Company onthe Termination Date.(e) The Advisor shall promptly upon termination:(i) pay over to the Company all money collected and held for the account of theCompany pursuant to this Agreement, after deducting any accrued compensation andreimbursement for its expenses to which it is then entitled;
 
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(ii) deliver to the Board a full accounting, including a statement showing allpayments collected by it and a statement of all money held by it, covering theperiod following the date of the last accounting furnished to the Board;(iii) deliver to the Board all assets, including Properties and Loans, anddocuments 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 lossor liability suffered by the Advisor or the Affiliate, or hold the Advisor or the Affiliateharmless for any loss or liability suffered by the Company, unless all of the followingconditions are met:(i) The Advisor or Affiliate has determined, in good faith, that the course ofconduct 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 performingservices for the Company; and(iii) Such liability or loss was not the result of negligence or misconduct bythe Advisor or the Affiliate.(b) Notwithstanding the foregoing, the Advisor and its Affiliates shall not beindemnified by the Company for any losses, liabilities or expenses arising from or out ofthe alleged violation of federal or state securities laws unless one or more of thefollowing conditions are met:(i) There has been a successful adjudication on the merits of each countinvolving alleged securities law violations as to the particular indemnitee;(ii) Such claims have been dismissed with prejudice on the merits by a court ofcompetent jurisdiction as to the particular indemnitee; or(iii) A court of competent jurisdiction approves a settlement of the claimsagainst a particular indemnitee and finds that indemnification of the settlement andthe related costs should be made, and the court considering the request forindemnification has been advised of the position of the Securities and ExchangeCommission and of the published position of any state securities regulatoryauthority in which securities of the Company were offered or sold as toindemnification for violation of securities laws.(c) The Company shall advance funds to the Advisor or its Affiliates for legal expensesand other costs incurred as a result of any legal action for which indemnification is beingsought only if all of the following conditions are satisfied:(i) The legal action relates to acts or omissions with respect to theperformance of duties or services on behalf of the Company;
 
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(ii) The legal action is initiated by a third party who is not a Shareholder orthe legal action is initiated by a Shareholder acting in his or her capacity as suchand a court of competent jurisdiction specifically approves such advancement; and(iii) The Advisor or the Affiliate undertakes to repay the advanced funds tothe Company, together with the applicable legal rate of interest thereon, in casesin which such Advisor or Affiliate is found not to be entitled to indemnification.(d) Notwithstanding the foregoing, the Advisor shall not be entitled to indemnificationor be held harmless pursuant to this Section 21 for any activity which the Advisor shall berequired 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 outthe net assets of the Company and not from Shareholders.22. Indemnification by Advisor. The Advisor shall indemnify and hold harmless theCompany 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 arenot 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 begiven hereunder shall be in writing unless some other method of giving such notice, report or othercommunication is accepted by the party to whom it is given, and shall be given by being deliveredby hand or by overnight mail or other overnight delivery service to the addresses set forth herein:       To the Board