Document:

exv10w2

EXHIBIT 10.2

AGREEMENT FOR SALE AND PURCHASE

          THIS AGREEMENT FOR SALE AND PURCHASE (“Agreement”) made and entered into by and among
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED, a Maryland corporation (“CPA:14”), whose
address is 50 Rockefeller Plaza, New York City, NY 10020, and W.P. CAREY & CO. LLC, a Delaware
limited liability company, (the “Buyer”) whose address is 50 Rockefeller Plaza, New York
City, NY 10020.

WITNESSETH:

     1.     Subject to the terms and conditions hereinafter set forth, and for good and valuable
consideration, receipt of which is hereby acknowledged, the parties hereto agree that CPA:14 shall
sell, and Buyer shall buy, assume and accept, or cause to be bought, assumed and accepted by CAREY
REIT II, INC., a Maryland corporation (“REIT II”), an affiliate of Buyer, the applicable respective
interest of the CPA:14, directly or indirectly, in and to the respective entities (“Owning
Entities”) which directly or indirectly own the properties, as such properties are described on
Exhibits “A-1” through “A-3” and on Schedule 1 attached hereto and incorporated herein (singularly,
a “Land”, and collectively, the “Lands”), together with CPA:14’s direct and indirect interest in
(i) all buildings and other improvements situated on the Lands (singularly, a “Building”, and
collectively, the “Buildings”), (ii) all right, title and interest of the Owning Entities in and to
all easements, rights of way, reservations, privileges, appurtenances, and other estates pertaining
to the Lands and the Buildings, (iii) all right, title and interest of the Owning Entities, if any,
in and to the fixtures, machinery, equipment, supplies and other articles of personal property
attached or appurtenant to the Lands or the Buildings owned by the Owning Entities and not by
Tenants (collectively, the “Personal Property”), (iv) all right, title and interest of the Owning
Entities, if any, in and to the trade name(s) of the Buildings and all other names, designations,
logos, service marks and the appurtenant goodwill used in connection with the Properties (except
for names and logos registered as CPA and CPA:14), (v) all right, title and interest of the Owning
Entities, if any, in and to all strips and gores, all adjacent streets and alleys adjoining the
Lands to the center line thereof, and all right, title and interest of the Owning Entities, if any,
in and to any award made or to be made in lieu thereof and in and to any unpaid award for any
taking by condemnation or any damages to the Lands or the Buildings by reason of a change of grade
of any street, road or avenue, (vi) all right, title and interest of the Owning Entities, if any,
in and to the leases licenses and other occupancy agreements, together with all amendments,
renewals and modifications thereof for the respective Lands and Buildings, or any portions thereof
(collectively, the “Leases”), together with all rents and other sums due under the Leases and any
security deposits, letters of credit, guaranties, and/or together with any warrants delivered in
connection with any of the Leases, (vii) all right, title and interest of Owning Entities, if any,
in, to and under those purchase orders, equipment leases, and managements, service, advertising,
franchise and license agreements and other contracts and agreements relating to the ownership, use,
operation and maintenance of the applicable Land and Building and Personal Property (collectively,
the “Service Agreements”), (viii) all right, title and interest of the Owning Entities, if any, in,
to and under all guaranties, warranties and agreements (express or implied) from contractors,
subcontractors, vendors and suppliers, if any, regarding their performance, quality of workmanship
and quality of materials supplied in connection with the construction, manufacture, development,
installation and operation of any and all Buildings and Personal Property (collectively, the
“Warranties”), (ix) to the extent transferable, certificates, licenses, permits, authorizations,
consents, authorizations, approvals and variances, if any, by any governmental or
quasi-governmental authority, including, without limitation, a letter or certificate regarding the zoning of each of the
Lands from the applicable local office(s) (collectively, the “Permits”), (x) all right, title and
interest of the Owning Entities in and to any insurance, casualty and/or condemnation proceeds and
awards and any rights or claims thereto relating to any of the Properties and payable or to be
assigned pursuant to Section 19 hereof; (xi) all

 

 

right, title and interest of the Owning Entities
in and to all accounts, accounts receivable and reserve funds held by or for the benefit of CPA:14
or a Subsidiary with respect to the operation of the Properties; and (xii) all of the Owning
Entities’ liabilities and obligations relating to the Land and
items described in clauses (i) – (xi) (the Lands, the Buildings and all of the foregoing items listed
in clauses (i) – (xii) above
being hereinafter sometimes singularly referred to as a “Property”, and collectively referred to as
the “Properties”). The respective interests of CPA:14 in and to the Owning Entities which own the
Properties are collectively referred to as the “Interests”. The transaction contemplated by this
Agreement contemplates the sale and purchase of all, but not less than all, of the Interests.

     2.     PURCHASE PRICE

          (a)     The aggregate purchase price (“Purchase Price”) for the Interests is (i) Thirty Two
Million Eighty Thousand Eight Hundred Ninety-Four and 00/100 Dollars ($32,080,894.00) payable in
cash, which shall be allocated among the Interests and Properties in accordance with the allocation
schedule set forth on Exhibit “B” attached hereto and incorporated herein (“Cash Purchase
Price”) and (ii) by Closing, the acknowledgement and agreement by Buyer that loans encumbering the
applicable Property identified on Exhibit “C” attached hereto and incorporated herein
(“Assumable Loans”) remain outstanding and an obligation of the respective Owning Entities.

          (b)     Buyer acknowledges that following the Closing, the Properties will remain encumbered by the
Assumable Loans and that Buyer shall be obligated to obtain any required approvals from the lenders
of the Assumable Loans to the transfer of the Interests and to pay, in addition to the Purchase
Price, any assumption fees, transfer fees and/or other costs and expenses incurred in connection
with the transfer of the Interests. Buyer and CPA:14 shall exercise good faith reasonable efforts
to obtain lenders’ approvals. Buyer further acknowledges and agrees that the Assumable Loan
encumbering the Federal Express Property identified on Exhibit “C” may be refinanced prior
to the Closing and upon such refinancing, the replacement loan will be substituted for the replaced
loan and for all purposes hereunder shall thereafter be the Assumable Loan with respect to the
Federal Express Property.

          (c)     The Cash Purchase Price, as increased or decreased by prorations and adjustments pursuant to
Section 13 hereof, shall be payable by wire transfer of immediately available funds at the Closing
(as hereinafter defined).

     3.     PURCHASE PRICE PAYMENT. CPA:14 may direct that the Cash Purchase Price, as increased or
decreased by prorations and adjustments pursuant to Section 13 hereof, be paid by confirmed federal
wire transfer of immediately available funds to CPA:14, and Buyer agrees to make such payment as
directed.

     4.     PROPERTY CONVEYED “AS-IS, WHERE-IS”. Buyer hereby acknowledges that it currently indirectly
holds an interest in the Owning Entities and that through a wholly-owned subsidiary it has been
managing the Properties for the Owning Entities and is intimately familiar with the Properties and
all portions thereof, and the titles thereto, encumbrances thereon, physical condition thereof and
of all improvements thereon, leases affecting portions thereof, tenants and occupants thereof,
Service Agreements and operations (including all costs, expenses and revenues from the ownership of
each Property). As a result thereof, Buyer agrees as follows:

     EXCEPT AS SPECIFICALLY SET FORTH IN SECTION 8 HEREOF OR IN THE TRANSFER DOCUMENTS, CPA:14 IS
NOT MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER,
EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE PROPERTIES, INCLUDING, BUT NOT LIMITED TO, ANY
WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR

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PURPOSE, TITLE (OTHER THAN THE OWNING ENTITIES’ WARRANTY OF TITLE), ZONING, TAX CONSEQUENCES,
PHYSICAL OR ENVIRONMENTAL CONDITION, OPERATING HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL
APPROVALS, GOVERNMENTAL REGULATIONS, THE TRUTH, ACCURACY OR COMPLETENESS OF THE ITEMS OR ANY OTHER
INFORMATION PROVIDED BY OR ON BEHALF OF CPA:14 OR SUCH OWNING ENTITIES TO BUYER OR ANY OTHER MATTER
OR THING REGARDING ANY OF THE PROPERTIES. UPON CLOSING, THE RESPECTIVE PROPERTIES SHALL BE
DELIVERED, AND BUYER (OR REIT II) SHALL ACCEPT DELIVERY OF THE RESPECTIVE PROPERTIES, “AS IS, WHERE
IS, WITH ALL FAULTS.” BUYER HAS NOT RELIED UPON AND WILL NOT RELY UPON EITHER DIRECTLY OR
INDIRECTLY, ANY REPRESENTATION OR WARRANTY OF CPA:14 OR THE OWNING ENTITIES WITH RESPECT TO ANY OF
THE PROPERTIES EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN OR IN ANY TRANSFER DOCUMENTS. BUYER
HAS PREVIOUSLY CONDUCTED SUCH INVESTIGATIONS OF THE PROPERTIES, INCLUDING BUT NOT LIMITED TO, THE
PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS BUYER DEEMS NECESSARY TO SATISFY ITSELF AS TO THE
CONDITION OF THE PROPERTIES AND WILL RELY SOLELY UPON SAME AND THE REPRESENTATIONS AND WARRANTIES
EXPRESSLY PROVIDED HEREIN OR IN ANY OF THE TRANSFER DOCUMENTS. UPON CLOSING, BUYER SHALL ASSUME
THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE
PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY BUYER’S INVESTIGATIONS.
BUYER, UPON CLOSING, HEREBY WAIVES, RELINQUISHES AND RELEASES CPA:14, FROM AND AGAINST ANY AND ALL
CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT [I.E., NEGLIGENCE AND STRICT
LIABILITY]), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND COURT
COSTS) (COLLECTIVELY, “CLAIMS”) OF ANY KIND AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN,
WHICH BUYER MIGHT HAVE ASSERTED OR ALLEGED AGAINST CPA:14, AT ANY TIME BY REASON OF OR ARISING OUT
OF ANY CONSTRUCTION DEFECTS, PHYSICAL AND ENVIRONMENTAL CONDITIONS, THE VIOLATION OF ANY APPLICABLE
LAWS AND ANY AND ALL OTHER MATTERS REGARDING THE PROPERTIES, OR ANY OF THEM.

     5.     BUYER AND CPA:14 CONTINGENCY.

          (a)     The obligation of Buyer hereunder to close is subject to satisfaction, (i) as evidenced by a
written confirmation thereof from Corporate Property Associates 16
– Global Incorporated
(“CPA:16”), which written confirmation shall not be unreasonably withheld, delayed or
conditioned, of all conditions precedent to the merger (the “Merger”) of CPA:14 with and
into CPA:16, as set forth and defined in that certain Agreement and Plan of Merger dated as of
December 13, 2010 (“Merger Agreement”) by and among CPA:14, CPA:14 Sub Inc., CPA:16, CPA 16
Acquisition Inc., CPA 16 Merger Sub Inc., CPA 16 Holdings Inc. and W.P. Carey & Co. LLC, other than
the closing of the transactions contemplated by this Agreement and other than those which by their
nature, are satisfied at closing of the Merger and (ii) of CPA:14’s delivery of all the Transfer
Documents that it is required to deliver pursuant to Section 11 hereof. It is understood, however,
that the delivery of certain documents to effectuate the actual Merger of CPA:14 with and into CPA:16 shall not occur until subsequent to the closing of the transactions
contemplated hereby and is not a contingency to this transaction.

          (b)     The obligation of CPA:14 to close is subject to satisfaction, (i) as evidenced by a written
confirmation thereof from CPA:16, which written confirmation shall not be unreasonably withheld,
delayed or conditioned, of all conditions precedent to the Merger of

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CPA:14 with and into CPA:16,
other than the closing of the transactions contemplated by this Agreement and other than those
which by their nature, are satisfied at closing of the Merger and (ii) of Buyer’s delivery of the
Transfer Documents that it is required to deliver pursuant to Section 11 hereof. It is understood,
however, that the delivery of certain documents to effectuate the actual Merger of CPA:14 with and
into CPA:16 shall not occur until subsequent to the closing of the transactions contemplated hereby
and is not a contingency to this transaction.

     6.     TITLE COMMITMENTS AND POLICIES. Buyer may order an update of title in order for First
American Title Insurance Company (“Title Company”) to issue title commitments
(collectively, “Commitments”) for the Properties, together with copies of all documents
shown as title exceptions in the Commitments (“Title Documents”). Buyer acknowledges that
it is familiar with the title to the Properties and except for any (i) mortgage, deed of trust,
deed to secure debt, assignment of leases and rents, negative pledge, financing statement and
similar instruments encumbering all or any portion of the Properties (other than first priority
mortgages, deeds of trusts, deeds to secure debt, assignments of leases and rents, negative
pledges, financing statements and similar instruments encumbering all or any portion of the
Properties securing the Assumable Loans), (ii) mechanic’s, materialmen’s, broker’s or similar lien
created or caused by the Owning Entities (unless resulting from any act or omission of Buyer) and
(iii) judgment or other monetary lien filed against the Owning Entities (collectively,
“Liens”), which the Owning Entities shall satisfy at Closing, CPA:14 and the Owning
Entities shall have no obligation to eliminate or cure any other title exceptions, and Buyer will
proceed to Closing subject to all other matters affecting the title to the Properties.

     7.     TIME OF CLOSING. The Closing (“Closing”) shall occur immediately following
satisfaction of the respective Buyer’s and CPA:14’s Contingency set forth in Section 5 above and
prior to closings of the merger of CPA:14 with and into CPA:16 at a time and location mutually
agreed to by CPA:14 and Buyer (“Closing Date”).

     8.     REPRESENTATIONS AND COVENANTS OF CPA:14. CPA:14 expressly covenants, represents and warrants
to Buyer as to itself and as to each Property in which such CPA:14 has a direct or indirect
interest in an Owning Entity owning such Property, as follows:

          A.     CPA:14 is the owner of a direct or indirect equity interest in the Owning Entity which is the
owner (or one of the owners) of a fee interest in such Property.

          B.     CPA:14 and each entity wholly owned (directly or indirectly ) by CPA:14 which has an ownership
interest in the Owing Entity owning a Property (a “Subsidiary”) is a duly formed and validly
existing entity in good standing under the laws of its state of organization and is qualified to do
business in the state(s) in which it is legally required to be so qualified.

          C.     CPA:14 has full right, power and authority to execute, deliver and perform its obligations
under this Agreement and has taken or will take all necessary action and obtained all necessary
consents to authorize the execution, delivery and performance of this Agreement and all
documentation required to effectuate the full intent and purposes of this Agreement, and this
Agreement is enforceable against CPA:14 and such Subsidiary.

          D.     The execution and delivery of this Agreement and the Transfer Documents by CPA:14, and the
consummation by CPA:14 of the transaction contemplated hereby and thereby does not and will not,
(i) violate any judgment, order, injunction, decree, regulation or ruling of any court or
governmental authority by which CPA:14 is bound, (ii) subject to receipt of applicable consents, if
any, discussed in the Merger Agreement and Schedule of Disclosures thereunder, conflict with,
result in a breach of, or constitute a default under the organizational documents of CPA:14 or any
note or other evidence of indebtedness, any mortgage, deed of trust or indenture, or any material
agreement or instrument to which CPA:14 is a party or by which it is bound, or (iii) violate any
law, statute, rule or regulation by which CPA:14 is bound.

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          E.     There is no legal action pending, or to the knowledge of such CPA:14, threatened in writing
against CPA:14 or a Subsidiary or an Owning Entity which relates and materially and adversely
affects the use and operation or value of a Property or otherwise materially adversely affects the
ability of CPA:14 to perform its obligations hereunder.

          F.     No petition in bankruptcy (voluntary or otherwise), assignment for the benefit of creditors,
or petition seeking reorganization or arrangement or other action under federal or state bankruptcy
laws is pending against or contemplated by CPA:14 or any Subsidiary or Owning Entity.

          G.     Neither CPA:14 nor any Subsidiary is a foreign person within the meaning of Section 1445(f) of
the Internal Revenue Code of 1986, as amended.

          H.     CPA:14 and each Subsidiary and each Owning Entity has at all times been in material compliance
with and will continue to be in material compliance through the Closing Date with (a) the Patriot
Act, Pub. L. No. 107-56, the Bank Secrecy Act, 31 U.S.C. § 5311 et seq., the Money Laundering
Control Act of 1986, and laws relating to the prevention and detection of money laundering in 18
U.S.C. §§ 1956 and 1957; (b) the Export Administration Act (50 U.S.C. §§ 2401-2420), the
International Emergency Economic Powers Act (50 U.S.C. § 1701, et seq.), the Arms Export Control
Act (22 U.S.C. §§ 2778-2994), the Trading With The Enemy Act (50 U.S.C. app. §§ 1-44), and 13
U.S.C. Chapter 9 and (c) the Foreign Asset Control Regulations contained in 31 C.F.R., Subtitle B,
Chapter V.

          I.     CPA:14 has not received, nor to the best of CPA:14’s knowledge has any Subsidiary or Owning
Entity received, any written notice of any pending or threatened eminent domain or condemnation
proceeding from any governmental authority with respect to all or any part of the Properties which
would materially and adversely affect the use and operation or value of a Property, and, to the
best of CPA:14’s knowledge, no such proceeding exists or is threatened.

          J.     CPA:14 has not received, nor to the best of CPA:14’s knowledge has any Subsidiary or Owning
Entity received, any written notice of a material violation of any laws enacted by any federal,
state, local or other governmental agency or regulatory body which remains uncured, outstanding or
in effect which would materially adversely affect the use and operation or value of such Property
or otherwise materially adversely affect the ability of CPA:14 to perform its obligations
hereunder.

          K.     CPA:14 has not received, nor to the best of CPA:14’s knowledge has any Subsidiary or Owning
Entity received, written notice of any currently existing violations of Environmental Laws (and to
the best of CPA:14’s knowledge, no such violations currently exist) with respect to any Property or
pending or threatened administrative or other legal proceedings, including, without limitation, any enforcement proceeding under any Environmental
Laws concerning Hazardous Substances, relating to any Property, or of any settlement thereof which
would materially and adversely affect the use and operation or value of a Property.

“Environmental Laws” shall mean any law, statute, rule or regulation now or hereafter in
effect pertaining to Hazardous Substances, protection of the environment, or human health and
safety with respect to exposure to any Hazardous Substances, including, but not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et
seq.), the Hazardous Substances Transportation Act (49 U.S.C. § 1802 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), as
amended by the 

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Hazardous and Solid
Wastes Amendments of 1984, the Water Pollution Control Act (33 U.S.C. § 1251 et seq.), the Safe
Drinking Water Act (42 U.S.C. § 300f et seq.), the Clean Water Act (33 U.S.C. § 1321 et seq.), the
Clean Air Act (42 U.S.C. § 7401 et seq.), the Solid Waste Disposal Act (42 U.S.C. § 6901 et seq.),
the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Emergency Planning and Community
Right-to-Know Act of 1986 (42 U.S.C. § 11001 et seq.), the Radon Gas and Indoor Air Quality
Research Act of 1986 (42 U.S.C. § 7401 et seq.), the National Environmental Policy Act (42 U.S.C. §
4321 et seq.), the Superfund Amendment Reauthorization Act of 1986 (42 U.S.C. § 9601 et seq.), and
the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.) and any similar state or local any
law, statute, rule or regulation.

“Hazardous Substances” shall mean (a) asbestos, radon gas and urea formaldehyde foam
insulation, (b) any solid, liquid, gaseous or thermal contaminant, including, without limitation,
smoke, vapor, soot, molds, fumes, acids, alkalis, chemicals, solvents, petroleum products or
byproducts, natural gas, natural gas liquids and liquefied natural gas and synthetic gas,
polychlorinated biphenyls, phosphates, lead or other heavy metals and chlorine, (c) any solid or
liquid waste (including, without limitation, hazardous waste), hazardous air pollutant, hazardous
substance, hazardous chemical, hazardous mixture, toxic substance, pollutant, pollution and
regulated substance, and (d) any other chemical, material or substance, in each case to the extent
regulated by any Environmental Laws, whether on or after the date hereof.

     All representations and warranties of CPA:14 set forth in this Agreement and the conditions
and circumstances contained herein shall be effective, valid, true and correct on the Closing Date
and the representations and warranties of CPA:14 shall survive the Closing for a period of six (6)
months.

     9.     REPRESENTATIONS AND COVENANTS OF BUYER. Buyer expressly covenants, represents and
warrants to CPA:14, as follows:

          A.     Buyer is a duly formed and validly existing limited liability company in good standing under
the laws of the State of Delaware.

          B.     Buyer has full right, power and authority to execute, deliver and perform its obligations
under this Agreement and has taken all necessary action and obtained all necessary consents to
authorize the execution, delivery and performance of this Agreement and all documentation required
to effectuate the full intent and purposes of this Agreement, and this Agreement is enforceable
against Buyer.

          C.     There is no legal action pending or to Buyer’s knowledge threatened in writing against Buyer
which would materially and adversely affect the ability of Buyer to carry out the transactions
contemplated by this Agreement.

          D.     The execution and delivery of this Agreement and the Transfer Documents by Buyer, and the
consummation by Buyer of the transaction contemplated hereby and thereby does not and will not, (i)
violate any judgment, order, injunction, decree, regulation or ruling of any court or governmental
authority by which Buyer or REIT II is bound, (ii) conflict with, result in a breach of, or
constitute a default under the organizational documents of Buyer or REIT II or any note or other
evidence of indebtedness, any mortgage, deed of trust or indenture, or any material agreement or
instrument to which Buyer or REIT II is a party or by which it is bound, or (iii) violate any law,
statute, rule or regulation by which Buyer or REIT II is bound.

          E.     No petition in bankruptcy (voluntary or otherwise), assignment for the benefit of creditors,
or petition seeking reorganization or arrangement or other action under federal or state bankruptcy
laws is pending against or contemplated by Buyer.

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          F.     Buyer has at all times been in material compliance with and will continue to be in material
compliance through the Closing Date with (a) the Patriot Act, Pub. L. No. 107-56, the Bank Secrecy
Act, 31 U.S.C. § 5311 et seq., the Money Laundering Control Act of 1986, and laws relating to the
prevention and detection of money laundering in 18 U.S.C. §§ 1956 and 1957; (b) the Export
Administration Act (50 U.S.C. §§ 2401-2420), the International Emergency Economic Powers Act (50
U.S.C. § 1701, et seq.), the Arms Export Control Act (22 U.S.C. §§ 2778-2994), the Trading With The
Enemy Act (50 U.S.C. app. §§ 1-44), and 13 U.S.C. Chapter 9; (c) the Foreign Asset Control
Regulations contained in 31 C.F.R., Subtitle B, Chapter V; and (d) any other civil or criminal
federal or state laws, regulations, or orders of similar import.

          G.     At the Closing, Buyer has, and shall have, sufficient resources available to consummate all
the transactions contemplated hereby, including paying the Purchase Price to CPA:14 in cash.

          H.     Buyer has not received, nor to the best of Buyer’s knowledge has REIT II received, any written
notice of a material violation of any laws enacted by any federal, state, local or other
governmental agency or regulatory body which remains uncured, outstanding or in effect which could
materially adversely affect the ability of Buyer or REIT II to perform its obligations hereunder.

          I.     Buyer does not intend to (a) enter into a definitive agreement within six (6) months after the
Closing Date hereunder to sell any of the Interests or their respective interests in any of the
Interests purchased under this Agreement or (b) otherwise sell and close on the conveyance of a
Property or otherwise transfer the Interests purchased under this Agreement within six (6) months
after the Closing Date.

     All representations and warranties of Buyer set forth in this Agreement and the conditions and
circumstances contained herein shall be effective, valid, true and correct on the Closing Date and
the representations and warranties of Buyer shall survive the Closing for a period of six (6)
months.

     10.     PERMITTED ENCUMBRANCES. Upon Closing hereunder and transfer of the Interests to Buyer or REIT
II, the respective title of the applicable Owning Entity in and to the applicable Property shall be
subject only to: (i) zoning and/or restrictions and prohibitions imposed by governmental
authorities to which Buyer has not objected; (ii) covenants,
conditions, restrictions, easements and other matters of record or apparent from an inspection of the
Properties or a survey of the Properties, (iii) the Assumable Loans and the documents evidencing or
securing the Assumable Loans; and (iv) taxes and assessments which are a lien, but not yet due and
payable (collectively, the “Permitted Encumbrances”).

     11.     DOCUMENTS FOR CLOSING. At Closing, CPA:14 shall deposit in escrow with First American Title
Insurance Company (the “Escrow Agent”), the following executed documents (the “Transfer
Documents”):

          (1)     Instruments transferring and conveying to Buyer (or REIT II) the memberships, shareholders
and/or partnership interest of CPA:14 in the applicable Subsidiary wholly owned directly by CPA:14,
which subsidiary owns directly or indirectly an interest in the Owning Entity which own the
respective Properties (“Transfer Documents”).

          (2)     A resolution from the Board of directors of CPA:14 authorizing the sale of the Interests; and

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          (3)     A certificate from CPA:14 and each applicable Subsidiary and Owning Entity certifying that it
is not a “foreign person” or “foreign corporation” within the meaning of Section 1445(f) of the
Internal Revenue Code of 1986, as amended; and

          (4)     Such other documents as Buyer or the Title Company shall reasonably request to evidence or
facilitate the sale and transfer of the Interests.

     At Closing, Buyer shall deposit in escrow with the Escrow Agent, the following executed
documents:

          (1)     Counterparts of the Transfer Documents, including the acceptance of the Interests and
assumptions of all terms, liabilities and obligations thereunder arising and accruing after the
Closing;

          (2)     A resolution from the Board of Directors of Buyer [and REIT II, to the extent REIT II acquires
any Interest] authorizing the purchase of the Interests; and

          (3)     Such other documents as CPA:14 or the Title Company shall reasonably request to evidence or
facilitate the purchase of the Interests.

     12.     EXPENSES.

          A.     Buyer shall pay the following costs:

               (1)     The escrow fee;

               (2)     The cost to effectuate the transfers of Interest contemplated hereunder;

               (3)     Loan assumption fees; and

               (4)     Any transfer or conveyance tax and any other tax charged in connection with the transfer of
Interests.

          B.     CPA:14 shall pay any costs to be borne by CPA:14 and specifically provided for in this
Agreement.

     13.     PRORATION
OF RENTS AND INTEREST ON ASSUMABLE LOANS. CPA:14 shall pay or cause to be paid to
Buyer, in cash at Closing, the proportionate share (based on the percentage of ownership interest
in the applicable Owning Entity represented by the Interests; said percentages being hereinafter
collectively called the “Interest Percentages” or individually for each Property, the
“Interest Percentage”) of the amount of any prepaid rents and rents paid for the month in
which Closing occurs paid to each applicable Owning Entity by tenants as of the Proration Date.
The prorations of prepaid rents and rents shall be computed on a monthly basis based upon the
actual number of days in the calendar month. No proration shall be made for rents delinquent as of
the Closing Date (“Delinquent Rents”). Any Rents collected after Closing shall first be
applied to current rent and then to Delinquent Rents. In addition, the applicable Interest
Percentage of interest occurring under the Assumable Loans shall be prorated as of the Proration
Date. Further, at Closing, a credit in the amount of the Interest Percentage of the tenant
improvement allowance outstanding, if any, under the Lease to the tenant at the San Diego,
California Property owned by AMLN Landlord LLC shall be taken by the Buyer against the Cash
Purchase Price.

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     14.     PRORATION DATE. Interest and rents of the Properties and allocable to the Interests shall be
prorated through 11:59 P.M. on the day prior to Closing (“Proration Date”).

     15.     COMMUNICATIONS. All notices, demands, requests, consents, approvals, waivers
or other communications shall be in writing and shall be deemed to be delivered
(i) when mailed, upon receipt or refusal thereof, (ii) when delivered by a
nationally recognized overnight courier service, upon confirmation of delivery
by the courier service or refusal thereof or (iii) when sent by confirmed
telecopy, upon receipt, and addressed to the parties as follows:

If to CPA:14 address as follows:

Corporate Property Associates 14 Incorporated

50 Rockefeller Plaza

New York City, NY 10020

Attn: Director, Asset Management

Fax Number: 212-492-8922

with a copy to:

Reed Smith, LLP

599 Lexington, Avenue

New York, NY 10022-7650

Attn: Ruth S. Perfido, Esq.

Fax Number: 212 521-5450

And to:

Greenberg Traurig, LLP

200 Park Avenue

New York, NY 10166

Attn: Judith D. Fryer, Esq.

Fax Number: 212-805-9330

If to Buyer, to the address as follows:

W.P. Carey & Co. LLC

50 Rockefeller Plaza

New York City, NY 10020

Attn: Director, Asset Management

Fax Number: 212-492-8922

with a copy to:

Reed Smith, LLP

599 Lexington, Avenue

New York, NY 10022-7650

Attn: Ruth S. Perfido, Esq.

Fax Number: 212 521-5450

And to:

Clifford Chance US, LLP

31 West 52nd Street

New York, NY 10019-6131

Attn: Kathleen L. Werner, Esq.

Fax Number: 212-878 8375

9

 

     16.     EFFECTIVE
DATE OF AGREEMENT. The effective date (“Effective Date”) of this
Agreement shall be the last date that this Agreement is executed either by CPA:14 or by Buyer.

     17.     ATTORNEY’S
FEES AND COSTS. In connection with any litigation arising out of this
Agreement, each party shall pay its own legal fees and costs incurred in connection with such
litigation, appellate proceedings and post-judgment proceedings.

     18.     BROKERAGE. Buyer and CPA:14 each represent and warrant to the other that neither has
had any dealings with any person, firm, broker or finder in connection with the negotiations of
this Agreement and/or the consummation of the purchase and sale contemplated hereby, and no broker
or person, firm or entity is entitled to any commission or finder’s fee in connection with this
Agreement or this transaction. Buyer and CPA:14 do each hereby indemnify, defend, protect and hold
the other harmless from and against any costs, expenses or liability for compensation, commission
or charges which may be claimed by any broker, finder or other similar party by reason of any
actions of the indemnifying party.

     19.     CONDEMNATION
AND CASUALTY.

          A.     CONDEMNATION. Buyer hereby agrees to assume the risk during the term of this Agreement for
any threatened or commenced condemnation or eminent domain. CPA:14 shall promptly notify Buyer of
any threatened or commenced condemnation or eminent domain proceedings affecting any Property to
the extent that Buyer, as owner directly or indirectly of an interest in the Owning Entities, has
not otherwise been advised of the same. In the event that all or any portion of a Property shall
be taken in condemnation or by conveyance in lieu thereof or under the right of eminent domain or
formal proceedings have been initiated therefor after the Effective Date and before the Closing
Date, Buyer, nonetheless, shall be obligated to proceed to close the transaction contemplated
herein pursuant to the terms hereof, in which event CPA:14 shall deliver to Buyer or REIT II, as
applicable, at the Closing any proceeds actually received by such CPA:14 attributable to such
Property from such condemnation or eminent domain proceeding or conveyance in lieu thereof and
assign to Buyer or REIT II, as applicable, the rights of CPA:14 to any such proceeds not yet
received by it, and there shall be no reduction in the allocated portion of the Purchase Price for
such Property.

          B.     CASUALTY. Buyer hereby agrees to assume the risk during the term of this Agreement for any
casualty or damage affecting any Property. CPA:14 shall promptly notify Buyer of any casualty
affecting any Property to the extent that Buyer, as owner directly or indirectly of an interest in
the Owning Entities, has not otherwise been advised of the same. In the event that all or any
portion of a Property shall be damaged or destroyed by fire or other casualty after the Effective
Date and before the Closing Date, Buyer, nonetheless, shall be obligated to close the transaction
contemplated herein according to the terms hereof, notwithstanding such casualty loss, and CPA:14
shall either (i) deliver to Buyer or REIT II, as applicable, at the Closing any insurance proceeds
actually received by CPA:14 attributable to the

10

 

Property from such casualty, or (ii) assign to
Buyer or all of the right, title, and interest of CPA:14 in any claim under any applicable
insurance policies in respect of such casualty, together with payment to Buyer of an amount equal
to the Interest Percentage of the deductible(s), if any, applicable to such loss under the
insurance policy(ies), and there shall be no reduction in the allocated portion of the Purchase
Price for such Property.

     20.     DEFAULT.

          A.     CPA:14 DEFAULT; BUYER’S SOLE REMEDIES. If, after written demand, CPA:14 fails to
consummate this Agreement in accordance with its terms (other than by reason of (i) Buyer’s breach
of any of its representations or warranties contained in this Agreement; (ii) Buyer’s continuing
default of any of its material covenants hereunder after ten (10) days’ prior written notice of
such default; (iii) a termination of this Agreement by Sellers or Buyer pursuant to a right to do
so expressly provided for in this Agreement; or (iv) the failure of the satisfaction of any
condition or contingency herein that is within the control of Buyer to satisfy), Buyer may either
(1) terminate this Agreement by written notice to CPA:14, in which event all further rights and
obligations of the parties hereunder will terminate or (2) pursue specific performance of this
Agreement, provided, however, that such action in equity for specific performance is commenced by
Buyer duly and properly filing and serving a complaint within sixty (60) days after the Outside
Closing Date (as hereinafter defined). Notwithstanding anything to the contrary in this Agreement,
the Buyer may not terminate this Agreement or refuse to close the transactions contemplated hereby
unless the breach of a representation, warranty or covenant by CPA:14 has a material adverse effect
on the Properties, taken as a whole. In the event of any continuing default by CPA:14 after
Closing in any of its representations, warranties or covenants in this Agreement which survive
Closing or any documents delivered by CPA:14 at Closing, and such default continues for more than
thirty (30) days after written notice of such default from Buyer, Buyer shall be entitled to pursue
its remedies available at law or in equity.

          B.     BUYER’S DEFAULT; CPA:14’S SOLE REMEDIES. If after written demand, Buyer fails to
consummate this Agreement in accordance with its terms (other than by

reason of (i) breach by CPA:14 of any of its representations or warranties contained in this
Agreement; (ii) the continuing default by CPA:14 of any of its material covenants after ten (10)
days’ prior written notice of such default; (iii) a termination of this Agreement by CPA:14 or
Buyer pursuant to a right to do so expressly provided for in this Agreement; or (iv) the failure of
the satisfaction of any condition or contingency herein that is within the control of CPA:14 to
satisfy), CPA:14 may either terminate this Agreement, in which event all further rights and
obligations of the parties hereunder will terminate, or CPA:14 may also pursue specific performance
of this Agreement; provided, however, that such action in equity for specific performance is
commenced by CPA:14 duly and properly filing a complaint within sixty (60) days after the Outside
Closing Date (as hereinafter defined). Notwithstanding anything to the contrary in this Agreement,
CPA:14 may not terminate this Agreement or refuse to close the transactions contemplated hereby
unless the breach of a representation, warranty or covenant by the Buyer has a material adverse
effect on the Properties, taken as a whole. Buyer acknowledges that monetary damages are not
sufficient to adequately compensate CPA:14 for a default by Buyer hereunder. In the event of
Buyer’s continuing default after Closing in any of its representations, warranties or covenants in
this Agreement which survive Closing or any documents delivered by Buyer at Closing, and such
default continues for more than thirty (30) days after written notice of such default from CPA:14,
CPA:14 shall be entitled to pursue any remedies available at law or in equity.

          C.     NO DEFAULT; MUTUAL TERMINATION. This Agreement may be terminated at any time prior to the
Closing Date:

11

 

               (a)     by mutual written consent of Buyer and CPA:14, but conditioned upon the consent of CPA: 16 to
such termination, which consent of CPA:16 is not to be unreasonably withheld, delayed or
conditioned;

               (b)     by CPA:14, upon a breach of any representation, warranty, covenant or agreement on the part of
Buyer set forth in this Agreement that has a material adverse effect on the Properties, taken as a
whole;

               (c)     by Buyer, upon a breach of any representation, warranty, covenant or agreement on the part of
CPA:14 set forth in this Agreement that has a material adverse effect on the Properties, taken as a
whole;

               (d)     by either Buyer or CPA:14, if any judgment, injunction, order, decree or action by any
governmental entity of competent authority preventing the consummation of the transactions
contemplated hereby shall have become final and non-appealable after the parties have used
reasonable best efforts to have such judgment, injunction, order, decree or action removed,
repealed or overturned;

               (e)     by either Buyer or CPA:14, if the agreement and plan of merger referred to in Section 5 hereof
is terminated prior to the Closing hereunder pursuant to its terms; and

               (f)     by either Buyer or CPA:14, if the Closing shall not have occurred before September 30, 2011
(the “Outside Closing Date”) (subject to automatic extension until December 31, 2011, if a
condition to Closing hereunder which is not satisfied as of September 30, 2011 is reasonably likely
to be satisfied by December 31, 2011). Provided, if the Merger Agreement has been extended, the
Outside Closing Date will be similarly extended until December 31, 2011. Either party may
terminate this Agreement after December 31, 2011.

     21     TIME. Any time period provided for herein which shall end on Saturday, Sunday or state or
national legal holiday shall extend to 5:00 P.M. Eastern Time of the next business day.

     22.     PERSONS
BOUND. The benefits and obligations of the covenants herein shall inure to and bind
the respective successors and assigns of the parties hereto. Whenever used, the singular number
shall include the plural, the plural the singular and the use of any gender shall include all
genders.

     23.     FINAL
AGREEMENT. This Agreement represents the final agreement of the parties and no
agreements or representations, unless incorporated into this Agreement, shall be binding on any of
the parties.

     24.     GOVERNING
LAW. This Agreement shall be governed and construed in all respects with the laws
of the State of New York.

     25.     EXECUTION
AND COUNTERPARTS; FACSIMILES. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
agreement. This Agreement shall not bind CPA:14 or Buyer as an offer or an agreement unless signed
by the person or party sought to be bound. Facsimile transmissions and other copies of executed
documents shall serve the same purpose as originals in connection with the terms of this Agreement
and any notices required to be or given hereunder may be delivered by facsimile transmission in the
manner provided in Section 15. The transmittal of an unexecuted draft of this document for
purposes of review shall not be considered an offer to enter into an agreement.

12

 

     26.     AMENDMENT. This Agreement may not be modified or amended, except by an agreement in writing
signed by CPA:14 and Buyer. The parties may waive any of the conditions contained herein or any of
the obligations of the other party hereunder, but any such waiver shall be effective only if in
writing and signed by the party waiving such conditions or obligations.

     27.     REASONABLE
BEST EFFORTS. Upon the terms and subject to the conditions set forth in this
Agreement and compliance with applicable law and the other terms of this agreement, each of CPA:14
and the Buyer agrees to use its reasonable best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, and to assist and cooperate with the other in doing, all things
necessary, proper or advisable to fulfill all conditions applicable to such party pursuant to this
Agreement and to consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement, including (i) the obtaining of all necessary actions
or nonactions, waivers, consents and approvals from governmental entities and the making of all
necessary registrations and filings and the taking of all reasonable steps as maybe necessary to
obtain an approval, waiver or exemption from any governmental entity, (ii) the obtaining of all
necessary consents, approvals, waivers or exemption from non-governmental third parties; and (iii)
the execution and delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. Nothing herein however,
shall require either CPA:14 or the Buyer to increase any of its respective liabilities or
obligations hereunder.

     28.     EQUITABLE ASSIGNMENT. To the extent the deliverables contemplated by Section 11 are third
party consents or waivers which are required to be obtained under applicable law or the terms of a
governing agreement in order to effect the transactions hereunder with respect to an applicable
Property or Interest, but such consents or waivers have not been obtained at Closing, if the
parties are otherwise required to close under the terms of Section 5, then the parties shall close
the transactions hereunder but with respect to such outstanding deliverables, the parties shall
continue to seek to obtain such consent or waiver, and until such time as it is obtained, the
parties shall not transfer the Interest in breach of the applicable restrictions and
instead shall enter into an equitable arrangement providing the Buyer or REIT II, as
applicable, the benefits and risks of ownership with respect to the Interest for which the consent
or waiver has not been obtained.

     29.     THIRD PARTY BENEFICIARIES. Except for the provisions of Section 9.I, of which the parties
intend for the stockholders of CPA:14 to be third party beneficiaries, this Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their respective successors
and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon
any other person, any legal or equitable right, benefit or remedy of any nature whatsoever, under
or by reason of this Agreement.

     30.     SATISFACTION OF OBLIGATIONS. Except for those representations and warranties and obligations
which by their terms expressly survive the Closing and delivery of the Transfer Documents, all
other obligations of CPA:14 and the Buyer hereunder will be deemed satisfied upon delivery of the
Transfer Documents and payment of the Purchase Price.

(signature blocks on the following pages)

13

 

	 	 	 	 	 
	 	BUYER: 

W.P. CAREY & CO. LLC,

a Delaware limited liability company

 	 

	 	 	 	 	 
	 	 	
 	 
	 	 	 	 

	 	 	 	 	 
	 	 	 
	 	By:  	/s/
Thomas E. Zacharias 	 
	 	 	 	 
	 	Its:  	Managing
Director and Chief Operating Officer 	 

	 	 	 	 	 
	 	

CPA:14:

CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED,

a Maryland corporation

 	 
	 	By:  	/s/
Susan C. Hyde 	 
	 	 	 	 
	 	Its:  	Managing
Director and Secretary 	 
	 

15Exhibit 10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into to be effective as of July 12,
2010 (the “Effective Date”), between PEERLESS MFG. CO. (“Employer”), and John H. Conroy
(“Employee”).

Section 1. Employment.

1.1 Employment and Term. Subject to the terms and conditions of this Agreement,
Employer agrees to employ Employee as the Director of Business & Product Development — CEFCO
Systems of the Employer pursuant to this Agreement for a term beginning on the Effective Date and
ending on the second anniversary of this agreement, (the “Term”) unless Employee’s employment is
terminated earlier as provided in Section 4 below. Sections 2, 3, and
5 of this Agreement shall survive any termination of Employee’s employment with Employer.

1.2 Duties. At all times during the course of Employee’s employment with Employer,
Employee agrees to perform the duties associated with his position diligently and to devote all of
his business time, attention and efforts to the business of Employer. Employee agrees to comply
with the policies, procedures and guidelines established by Employer from time to time. Employee
agrees to perform his duties faithfully and loyally and to the best of his abilities, and shall use
his best efforts to promote the business of Employer. Employee understands and agrees that both
the business and personal standards and ethics of Employer’s employees must at all times be above
reproach. Employee agrees to act at all times so as to reflect this high standard. Employee
further agrees to abide by all rules, policies, or procedures established by Employer from time to
time.

1.3 Supervision. Employee shall perform the duties of employment under the direction
and supervision of Employer’s Chief Executive Officer.

1.4 Compensation. During Employee’s employment, Employer will pay Employee a base
annualized salary of $190,000 (“Base Salary”), less all applicable withholding as required by law
and/or voluntarily elected by Employee, to be paid in installments in accordance with Employer’s
standard payroll practice and schedule. The Employer may adjust the Employee’s annualized salary
from time to time at its sole discretion, but Employee’s Base Salary shall never be reduced below
$190,000 without his consent. Employer will provide Employee with Employee benefits generally made
available by Employer to other similarly situated employees, as per company policy. During
Employee’s employment, Employer shall reimburse Employee for all reasonable and necessary expenses
incurred by Employee in furtherance of Employer’s business interests upon appropriate documentation
of such expenditures in accordance with Employer’s general policy.

1.5 Bonus. Employee shall be eligible to participate in and receive bonuses according
to such bonus structure and plan as may be established or modified from time to time by the
Employer on the same basis as other similarly situated officers of the Employer.

Employment Agreement

 

 

 

1.6 Long Term Incentive. Subject to the discretion and approval of the Board,
Employee may be awarded stock awards in the form of options and/or restricted stock on an annual
basis subject to the terms of the applicable incentive plan as such may be established or modified
by the Board from time to time.

Section 2. Non-Competition.

2.1 Non Competition.

(a) In consideration of his employment under this Agreement and Employer’s agreement to
provide Employee with Confidential Information under Section 3 below, Employee agrees that
during the term of his employment and for a period of two (2) years following termination of
his employment (regardless of whether Employee is terminated without Cause, for Cause (as
defined in Section 4.1(c) below), voluntarily resigns or otherwise), neither
Employee nor any person or entity directly or indirectly controlling, controlled by or under
common control with Employee, shall directly or indirectly, on his own behalf or as an
employee or other agent of or an investor in another person:

(i) engage in any business conducted by Employer during Employee’s term of
employment with Employer (collectively, the “Business”);

(ii) influence or attempt to influence any customer or supplier of Employer or
any affiliate of Employer to purchase goods or services related to the Business from
any person other than Employer or such affiliate; or

(iii) employ or attempt to employ any individuals who are then or have been
employees of Employer or any affiliate of Employer during the preceding 12 months,
or influence or seek to influence any such employees to leave Employer’s or such
affiliate’s employment.

(b) Employee specifically acknowledges that Employer’s products are sold in a
world market and that Employee has been engaged with regard to Employer’s products and
Employer’s customers throughout the world without geographic limitation, and accordingly
that the restrictive covenant regarding competition contained in this Section 2.1
shall apply without geographic limitation.

(c) Employee acknowledges that his obligations under this Section 2.1 are a
material inducement and condition to Employer’s entering into this Agreement and a material
inducement and condition to Employee receiving or having access to Confidential Information
(as defined in Section 3.1). Employee acknowledges and agrees that the terms and
provisions of this Agreement (including the severance provisions of Section 4.1) and
Employee’s receipt and access to Confidential Information are sufficient consideration for
the restrictions set forth in this Section 2.1. Employee acknowledges and agrees
further that such restrictions are reasonable as to time, geographic area and scope of
activity and do not impose a greater restraint than is
necessary to protect the goodwill and other business interests of Employer, and
Employee agrees that Employer is justified in believing the foregoing.

Employment Agreement

 

Page 2 of 12

 

(d) If any provision of this Section 2.1 should be found by any court of
competent jurisdiction to be unenforceable by reason of its being too broad as to the period
of time, territory, and/or scope, then, and in that event, such provision shall nevertheless
remain valid and fully effective, but shall be considered to be amended so that the period
of time, territory, and/or scope set forth shall be changed to be the maximum period of
time, the largest territory, and/or the broadest scope, as the case may be, which would be
found enforceable by such court

(e) Employee acknowledges that Employee’s violation or attempted violation of this
Section 2.1 will cause irreparable damage to Employer or its affiliates, and
Employee therefore agrees that Employer shall be entitled as a matter of right to an
injunction, out of any court of competent jurisdiction, restraining any violation or further
violation of such agreements by Employee or others acting on his behalf. Employer’s right
to injunctive relief will be cumulative and in addition to any other remedies provided by
law or equity.

(f) Employee shall not be subject to the provisions of this Section 2 if Employer fails
to pay any uncontested amounts due to Employee under Section 4 and such failure is not cured
within thirty (30) days after written notice to Employer.

Section 3. Confidentiality; Nondisparagement; Conflict of Interest.

3.1 Confidentiality.

(a) In the course of his employment with Employer, Employer shall provide Employee with
access to commercially valuable, confidential or proprietary information of the Employer
(“Confidential Information”). Confidential Information means all information, whether oral
or written, previously or hereafter developed, acquired or used by Employer and relating to
the business of Employer that is not generally known to the public or others in Employer’s
area of business, including without limitation (i) any trade secrets, work product,
processes, analyses or know-how of Employer; (ii) Employer’s advertising, product
development, strategic and business plans and information, including customer and prospect
lists; (iii) the prices at which Employer has sold or offered to sell its products or
services; and (iv) Employer’s internal financial statements, budgets, cost information,
pricing information and other financial information.

(b) Employee acknowledges and agrees that the Confidential Information is and shall be
the sole and exclusive property of Employer. Employee shall not use any Confidential
Information for his own benefit or disclose any Confidential Information to any third party
(except in the course of performing his authorized duties for Employer under this
Agreement), either during or subsequent to his employment with Employer.

(c) Specifically, Employee agrees that, except as expressly authorized in writing by
Employer, or as may be required by law or court order, Employee shall (i) not
disclose Confidential Information to any third party, (ii) not copy Confidential
Information for any reason, and (iii) not remove Confidential Information from Employer’s
premises. Upon termination of his employment with Employer, Employee shall promptly deliver
to the Employer all Confidential Information, including documents, computer disks and other
computer storage devices and other papers and materials (including all copies thereof in
whatever form) containing or incorporating any Confidential Information or otherwise
relating in any way to the Employer’s business that are in his possession or under his
control.

Employment Agreement

 

Page 3 of 12

 

(d) Employee acknowledges that Employee’s violation or attempted violation of this
Section 3.1 will cause irreparable damage to Employer or its affiliates, and
Employee therefore agrees that Employer shall be entitled as a matter of right to an
injunction, out of any court of competent jurisdiction, restraining any violation or further
violation of such agreements by Employee or others acting on his behalf. Employer’s right
to injunctive relief will be cumulative and in addition to any other remedies provided by
law or equity.

3.2. Covenant of Nondisparagement. In consideration of this Agreement, Employee
agrees and promises that, during the Term and at all times after the termination of this Agreement
(regardless of whether Employee is terminated without Cause, for Cause, voluntarily resigns or
otherwise), not to make any libelous, disparaging or otherwise injurious statements about or
concerning Employer or any of its affiliates, their officers, employees or representatives. Such
prohibited statements include any statement that is injurious to the business or business
reputation of any of Employer, its affiliates or their employees or representatives, but does not
include reasonable statements of disagreement that Employee makes for the purpose of protecting or
enforcing any of his rights or interests hereunder or defending against any claim or claims of
Employer, so long as such statements are not slanderous or libelous and are delivered in terms as
would ordinarily be considered customary and appropriate.

3.3. Conflict of Interest. Employee agrees that during the Term, without the prior
approval of the Board, Employee shall not engage, either directly or indirectly, in any activity
which may involve a conflict of interest with Employer or its affiliates (a “Conflict of
Interest”), including ownership in any supplier, contractor, subcontractor, customer or other
entity with which Employer does business (other than as a shareholder of less than one percent of a
publicly traded class of securities) or accept any material payment, service, loan, gift, trip,
entertainment or other favor from a supplier, contractor, subcontractor, customer or other entity
with which Employer does business and that Employee shall promptly inform the Board as to each
offer received by Employee to engage in any such activity. Employee further agrees to disclose to
Employer any other facts of which Employee becomes aware which might involve or give rise to a
Conflict of Interest or potential Conflict of Interest.

Section 4. Termination.

4.1 Termination by Employer.

(a) Employer may terminate Employee’s employment without Cause upon no less than 30
days prior notice of termination to Employee. Employer shall pay the
Severance Compensation (as defined in Section 5.1(h)) to Employee after the effective
date of such termination, except as otherwise provided by the terms of any stock option or
restricted stock agreement entered into with Employee during the Term.

Employment Agreement

 

Page 4 of 12

 

(b) Employer may discharge Employee for Cause at any time without prior notice. In the
event of any such termination for Cause, Employer’s obligations to pay any base salary,
incentive compensation or bonus or provide for any benefits to Employee shall terminate
immediately upon the effective date of such termination, except as otherwise provided by the
terms of any stock option or restricted stock agreement entered into with Employee during
the Term.

(c) As used herein, “Cause” shall mean any of the following:

(i) the conviction of Employee by a court of competent jurisdiction of any
felony or crime involving moral turpitude;

(ii) commission by Employee of an act of fraud, dishonesty, slander, or other
act reflecting unfavorably upon the public image of Employer as reasonably
determined by Chief Executive Officer;

(iii) the failure by Employee to substantially perform his duties hereunder, or
any wrongdoing by Employee resulting in injury to Employer, in each case as
reasonably determined by Chief Executive Officer;

(iv) the failure by Employee to follow a directive of the Chief Executive
Officer or Board; or

(v) violation of any policies or procedures of Employer, including without
limitation, any human relations policy.

4.2 Termination by Employee. Employee may resign from Employee’s employment
hereunder (whether for voluntary retirement or otherwise) upon no less than 30 days prior notice of
resignation to Employer, unless such prior notice is otherwise waived by Employer in its absolute
and sole discretion. The effective date of Employee’s resignation shall be as stated in Employee’s
notice of resignation or at the sole option of Employer, such earlier date as determined by
Employer in its sole discretion. If Employee voluntarily resigns from his employment with Employer
during the term hereof (whether for voluntary retirement or otherwise), Employer’s obligations to
pay any base salary, incentive compensation or bonus or provide for any benefits shall terminate
immediately upon the effective date of such resignation. Upon retirement, Employee shall be
entitled to all benefits (if any) provided by Employer in the ordinary course to other executive
officers of Employer at comparable retirement age.

4.3 Termination on Death of Employee. This Agreement shall terminate automatically
upon the death of Employee and all rights of Employee, his heirs, executors and administrators to
salary, bonus, incentive compensation or benefits shall terminate immediately, except as otherwise
provided in Employer’s benefit plans in effect at such time.

Employment Agreement

 

Page 5 of 12

 

4.4 Termination by Disability. Employer may terminate Employee’s employment hereunder
upon Employee becoming Disabled (as defined below). Upon such termination, Employer shall pay
Employee an amount equal to his then current monthly base salary for a period of six months, which
payment amounts will be reduced by any disability payments Employee receives during such period
from the disability insurance provided through Employer, if any. Employee shall be entitled to all
other disability benefits then in effect (if any) provided by Employer to other similarly situated
executive officers of Employer. In the event of termination due to Employee being Disabled, except
as aforesaid or as otherwise agreed to in writing by Employee and Employer, Employer shall have no
other obligation to pay any base salary, incentive compensation or bonus or provide for any
benefits to Employee after the effective date of termination. For purposes of this Section,
“Disabled” means any mental or physical impairment lasting (or that will last) more than 180
consecutive or non-consecutive calendar days that prevents Employee from performing the essential
functions of his position with or without reasonable accommodation as determined by a competent
physician chosen by Employer and consented to by Employee or his legal representatives, which
consent will not be unreasonably withheld or delayed. Employee agrees to submit to appropriate
medical examinations and authorize his physicians to release medical information necessary to
determine whether Employee is Disabled for purposes of this Agreement.

Section 5. Termination Following a Change in Control

5.1 Definitions. For Purposes of this Section 5, the following definitions apply.

	 	(a)	 	Acquiring Person. An “Acquiring Person” shall mean any person that,
together with all Affiliates and Associates of such person, is the beneficial owner of
50.1% or more of the outstanding Common Stock of the Employer or its parent. The term
“Acquiring Person” shall not include the Employer, its parent, any subsidiary of the
Employer, any employee benefit plan of the Employer (or trust with respect thereto) or
subsidiary of the Employer, or any person holding Common Stock of the Employer for or
pursuant to the terms of any such plan.

	 
	 	(b)	 	Affiliate and Associate. “Affiliate” and “Associate” shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
in effect on the date of this Agreement.

	 
	 	(c)	 	Cause. For “Cause” shall have the meaning set forth in Section 4.1(c) above.

	 
	 	(d)	 	Change in Control. A “Change in Control” of the Employer or PMFG,
Inc., shall have occurred if at any time during the Term any of the following events
shall occur:

	 	(i)	 	The Employer or PMFG, Inc., is merged, consolidated or
reorganized into or with another corporation or other legal person and as a
result of such merger, consolidation or reorganization less than 50.1% of the
combined voting power to elect Directors of the then outstanding securities of
the remaining
corporation or legal person or its ultimate parent immediately after such
transaction is available to be received by all stockholders on a pro rata
basis and is actually received in respect of or exchange for voting
securities of the Employer or PMFG, Inc. pursuant to such transaction;

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	 	(ii)	 	The Employer or PMFG, Inc. sells all or substantially all of
its assets to any other corporation or other legal person not controlled by or
under common control with the Employer or PMFG, Inc.;

	 
	 	(iii)	 	Any person or group (including any “person” as such term is
used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act has become the
beneficial owner (as the term “beneficial owner” is defined under Rule 13d-3 or
any successor rule or regulation promulgated under the Exchange Act) of
securities which when added to any securities already owned by such person
would represent in the aggregate 50% or more of the then outstanding securities
of the Employer or PMFG, Inc., which are entitled to vote to elect Directors;

	 
	 	(iv)	 	If at any time, the Continuing Directors then serving on the
Board, cease for any reason to constitute at least a majority thereof;

	 
	 	(v)	 	Any occurrence that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A or any successor rule
or regulation promulgated under the Exchange Act; or

	 
	 	(vi)	 	Such other events that cause a change in control of the
Employer, as determined by the Board in its sole discretion;

	 	 	 	provided, however, a Change in Control of the Employer or PMFG, Inc.
shall not be deemed to have occurred as the result of any transaction having one or
more of the foregoing effects if such transaction is both (1) proposed by, and (2)
includes a significant equity participation of, executive officers of the Employer
or PMFG, Inc. as constituted immediately prior to the occurrence of such transaction
or any Employer employee stock ownership plan or pension plan.

	 
	 	(e)	 	Code. The “Code” shall mean the Internal Revenue Code of 1986, as
amended.

	 
	 	(f)	 	Continuing Director. A “Continuing Director” shall mean a member of
the Board who (i) is not an Acquiring Person, an Affiliate or Associate, a
representative of an Acquiring Person or nominated for election by an Acquiring Person,
and (ii) was a member of the Board, on the date of this Agreement or subsequently
became a member of the Board of PMFG, Inc., and whose initial election or initial
nomination for election by the PMFG, Inc.’s stockholders was approved by a majority of
the Continuing Directors then on the Board.

	 
	 	(g)	 	Disabled. “Disabled” shall have the meaning defined in Section 4.4 above.

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	 	(h)	 	Severance Compensation. The “Severance Compensation” shall be:

	 	(i)	 	A lump sum amount equal to 75% of the Employee’s then current
annualized base salary in effect as of the date of the Termination;

	 
	 	(ii)	 	in any year in which Employee has been provided a bonus target
under a bonus plan adopted by the Board of PMFG, Inc., a pro rated bonus amount
based upon the portion of the year served by Employee, provided, however, such
bonus amount shall be calculated and paid at the time such bonuses are usually
calculated by the Employer at year end; and

	 
	 	(iii)	 	For a period of three (3) months, provide Employee with
benefits substantially similar to those which Employee was entitled to receive
immediately prior to the date of termination under all of the Employer’s
“employee welfare benefit plans” within the meaning of Section 3(1) of The
Employee Retirement Income Security Act of 1974, as amended.

	 	(i)	 	Termination Date. The “Termination Date” shall be the effective date
upon which the Employer terminates the employment of Employee with the Employer within
one year following a Change in Control.

5.2. Rights of Employee Upon Change in Control and Subsequent Termination.

	 	(a)	 	The Employer shall provide Employee, within ten days following the Termination
Date, Severance Compensation, but without affecting the rights of Employee or the
Employer at law or in equity, if, within one year following the occurrence of a Change
in Control, either of the following two events shall occur:

	 	(1)	 	the Employer terminates Employee’s employment except for any of
the following reasons:

	 	(i)	 	Employee dies;

	 
	 	(ii)	 	Employee becomes Disabled; or

	 
	 	(iii)	 	The Employer terminates the Employee for
Cause; or

	 	(2)	 	Employee terminates his employment after such Change in Control
and the occurrence of at least one of the following events:

	 	(i)	 	an material adverse change in the positions
held by Employee or a material diminution in the nature or scope of the
authorities, functions
or duties attached to the positions with the Employer that Employee
had immediately prior to the Change in Control (provided however, a
material adverse change or material diminution shall not be deemed to
have occurred simply because the parent of the Employer has sold all
or a substantial part of its interest in Employer, that Employer
becomes a subsidiary of another entity, or that Employee ceases to be
a Vice President of the Employer (PMFG, Inc.,), any reduction in
Employee’s base salary (excluding bonus and incentive compensation)
during the Term or a material diminution in scope or value of the
aggregate other base benefits to which Employee was entitled from the
Employer immediately prior to the Change in Control, any of which is
not remedied within ten calendar days after receipt by the Employer
of written notice from Employee of such change, reduction, alteration
or termination, as the case may be;

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	 	(ii)	 	the relocation of the Employer’s principal
executive offices, or the requirement by the Employer that Employee
have as his principal location of work any location not within the
greater Dallas, Texas metropolitan area or that he/she travel away from
his office in the course of discharging his duties hereunder
significantly more (in terms of either consecutive days or aggregate
days in any calendar year) than required of his prior to the Change in
Control; or

	 
	 	(iii)	 	the Employer commits any material breach of
this Agreement, which is not cured within ten calendar days after
receipt by the Employer of written notice from Employee of such breach.

	 	(b)	 	Upon written notice given by Employee to the Employer prior to the receipt of
Severance Compensation, Employee, at his sole option, may elect to have all or any part
of any such amount paid to them, without interest, on an installment basis selected by
them.

	 
	 	(c)	 	The payment of Severance Compensation by the Employer to Employee shall not
affect any rights and benefits which Employee may have pursuant to any other agreement,
policy, plan, program or arrangement with the Employer prior to the Termination Date,
which rights shall be governed by the terms thereof, except that payments hereunder
after termination under this Section 5 shall reduce by an equal amount any sums payable
after termination of employment under Section 4.1(a) above, as may be amended, restated
or modified.

5.3 No Mitigation Required. In the event that this Agreement or the employment
of Employee hereunder is terminated, Employee shall not be obligated to mitigate his damages nor
the amount of any payment provided for in this Agreement by seeking other employment or
otherwise, and the acceptance of employment elsewhere after termination shall in no way reduce
the amount of Severance Compensation payable under this Section 5.

Section 6. Miscellaneous.

6.1 Section 409A. For purposes of Section 4 or 5, whether a “termination of
employment” has occurred shall be determined as set forth in Proposed Regulation §1.409A-3(h)(1) or
any successor regulations. Notwithstanding the foregoing provisions of this Section 4 or 5, in the
event as of the date of termination of employment, Employee is a “specified employee” as such term
is defined under Section 409A of the Internal Revenue Code of 1986 (the “Code”)(or any regulations
or proposed regulations promulgated thereunder) each payment that would have been due to be made to
employee during the first six (6) months after such termination shall be delayed to the extent
required and all such delayed payments shall be made in a single lump sum on the first business day
after the six—month anniversary of such termination unless an exception to such delay is otherwise
applicable under the Code or regulations thereunder.

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6.2 Notice. Except as set forth below in this Section 6.2, any notice under
this Agreement must be in writing and shall be deemed to have been given when delivered personally
or by overnight courier service or three days after being sent by mail, postage prepaid, at the
address indicated below or to such changed address as such person may subsequently give such notice
of:

	 	 	 
	if to Employer:
	 	 
	 

	 	Peerless Mfg. Co.
	 

	 	14651 North Dallas Pkwy
	 

	 	Dallas, Texas 75254
	 

	 	Attn: Chairman, Board of Directors
	 
	 	 
	if to Employee:

	 	John H. Conroy
	 

	 	7009 Redstone Lane
	 

	 	Plano, TX 75024

Notwithstanding the foregoing, the party receiving notice may waive any provisions of this
Section 6.2 in its or his sole and absolute discretion.

6.3 Assignment. This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, personal representatives, successors, and assigns.
Except as otherwise provided herein, this Agreement may not be assigned by Employee without
the prior written consent of the Employer and PMFG, Inc. Employer shall require any successor, and
any corporation or other person which is in control of such successor, to all or substantially all
of the business and/or assets of Employer (by purchase, merger, consolidation or otherwise), by
agreement in form and substance reasonably satisfactory to Employee, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that Employer would be required
to perform it if no such succession had taken place. Failure of Employer to obtain such agreement
prior to the effectiveness of any such succession shall be a material breach of this Agreement by
Employer. As used in this Agreement, “Employer” shall mean Employer as herein before defined and
any successor to its business and/or all or part of its assets as aforesaid which executes and
delivers the assumption agreement provided for in this Section 6.3 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of law.

6.4 Headings. The section headings used herein are for reference and convenience only
and shall not enter into the interpretation hereof.

6.5 Counterparts. This Agreement may be executed in one or more counterparts for the
convenience of the parties hereto, all of which together shall constitute one and the same
instrument.

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6.6 Amendment and Waiver. The provisions of this Agreement may be amended or waived
only by written agreement of Employer and Employee, and no course of conduct, failure or delay in
enforcing the provisions of this Agreement shall effect the validity, binding effect or
enforceability of this Agreement.

6.7 Severability. Any provision or portion of a provision of this Agreement that is
held to be invalid or unenforceable will be severable, and this Agreement will be construed and
enforced as if such provision, or portion thereof, did not comprise a part hereof, and the
remaining provisions or portions of provisions will remain in full force and effect. In lieu of
each invalid or unenforceable provision there will be added automatically as part of this Agreement
a provision as similar in terms to such invalid or unenforceable provision as may be possible and
be legal, valid, and enforceable.

6.8 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, without giving effect to any conflicts of law rule or
principle that might require the application of the laws of another jurisdiction.

6.9 Indemnification. Employee shall be subject to, and entitled to the benefit of,
the indemnification provisions contained in the Employer’s Articles of Incorporation and Bylaws, as
amended, to the same extent and degree as other similarly situated officers and/or directors of
Employer.

6.10 Disputes. The parties to this Agreement agree that in the event there is a
dispute or controversy between them that cannot be settled through direct discussions, it is in the
best interests of all for such dispute or controversy to be resolved in the shortest time and with
the lowest cost of resolution as practicable. Consequently, any such dispute, controversy or claim
between the parties to this Agreement will not be litigated, but instead will be resolved by
arbitration in accordance with Title 9 of the U.S. Code (United States Arbitration Act) and the
Commercial Arbitration Rules of the American Arbitration Association (the “Rules”), and judgment
upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.
The arbitration will be before one neutral arbitrator and will proceed under the Expedited
Procedures of said Rules. The arbitration will be held in Dallas, Texas, or such other place as
may be selected by mutual agreement. The arbitrator will have the discretion to order a prehearing
exchange of information by the parties, and to set limits for both the scope and time period of
such exchange. All issues regarding exchange requests will be decided by the arbitrator. Neither
party nor the arbitrator may disclose the existence, content or results of any arbitration
hereunder, unless required to do so by court or regulatory order, without the prior written consent
of both parties. Administrative fees and expenses of the arbitration itself will be borne by the
parties equally unless otherwise required by law, a court of competent jurisdiction or the Rules;
provided, that, in no event will Employee be required to pay in excess of $1,000 of such fees and
expenses. The arbitrator will also be authorized to award to the prevailing party all or that
fraction of its reasonable costs and fees as is deemed equitable. Costs of a party’s
representation by counsel or preparation costs for hearing are not considered administrative fees
and expenses for purposes hereof. This provision will not apply to any claim for injunctive relief
sought by the Employer or any of its affiliates under Section 2 or 3 of this Agreement.

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6.11 Entire Agreement. This Agreement embodies the complete agreement between
Employer and Employee regarding the subject matter hereof and supersedes all prior agreements or
understandings, whether oral, written or otherwise, between the parties hereto that may have
related in any way to the subject matter hereof.

	 	 	 	 	 
	 	EMPLOYER:

PEERLESS MFG. CO.

 	 
	 	 	 
	 	Peter J. Burlage, 	 
	 	Chief Executive Officer 	 
	 
	 	EMPLOYEE:

 	 
	 	 	 
	 	John Conroy 	 
	 	 	 

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