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THE STANLEY WORKS

2009 LONG-TERM INCENTIVE PLAN

Section 1. Purpose

     The purposes of this Long-Term Incentive Plan (the “Plan”) are to encourage selected salaried
employees of The Stanley Works (together with any successor thereto, the “Company”) and selected
salaried employees and non-employee directors of its Affiliates (as defined below) to acquire a
proprietary interest in the growth and performance of the Company, to generate an increased
incentive to contribute to the Company’s future success and prosperity, thus enhancing the value of
the Company for the benefit of its shareholders, and to enhance the ability of the Company and its
Affiliates to attract and retain exceptionally qualified individuals upon whom, in large measure,
the sustained progress, growth and profitability of the Company depend.

Section 2. Definitions

     As used in the Plan, the following terms shall have the meanings set forth below:

	 	(a)	 	“Affiliate” shall mean (i) any entity that, directly or through one or more
intermediaries, is controlled by the Company and (ii) any entity in which the Company
has a significant equity interest, as determined by the Committee.
	 
	 	(b)	 	“Award” shall mean any Option, Stock Appreciation Right, Restricted Stock,
Restricted Stock Unit, Performance Award, Dividend Equivalent, or Other Stock-Based
Award granted under the Plan.
	 
	 	(c)	 	“Award Agreement” shall mean any written agreement, contract, or other
instrument or document evidencing any Award granted under the Plan. An Award Agreement
may be in an electronic medium.
	 
	 	(d)	 	“Board of Directors” or “Board” shall mean the Board of Directors of the
Company.
	 
	 	(e)	 	“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.
	 
	 	(f)	 	“Committee” shall mean the Compensation and Organization Committee of the
Board.
	 
	 	(g)	 	“Dividend Equivalent” shall mean any right granted under Section 6(e) of the
Plan.
	 
	 	(h)	 	“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from
time to time.
	 
	 	(i)	 	“Fair Market Value” shall mean, with respect to any property other than Shares,
the fair market value of such property determined by such methods or procedures as
shall be established from time to time by the Committee, and with respect to

 

 

	 	 	 	Shares, shall mean the mean average of the high and the low price of a Share as
quoted on the New York Stock Exchange Composite Tape on the date as of which fair
market value is to be determined or, if there is no trading of Shares on such date,
such mean average of the high and the low price on the next preceding date on which
there was such trading.

	 	(j)	 	“Full Value Award” shall mean an Award that is settled by the issuance of
Shares, other than a Stock Option or Stock Appreciation Right.
	 
	 	(k)	 	“Immediate family members” of a Participant shall mean the Participant’s child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person sharing
the employee’s household (other than a tenant or employee), a trust in which these
persons have more than fifty percent of the beneficial interest, a foundation in which
these persons (or the employee) control the management of assets, and any other entity
in which these persons (or the employee) own more than fifty percent of the voting
interests.
	 
	 	(l)	 	“Incentive Stock Option” shall mean an option granted under Section 6(a) of the
Plan that is intended to meet the requirements of Section 422 of the Code, or any
successor provision thereto.
	 
	 	(m)	 	“1997 Plan” shall mean the Company’s 1997 Long-Term Incentive Plan.
	 
	 	(n)	 	“Non-Employee Director” shall mean any non-employee director of an Affiliate.
	 
	 	(o)	 	“Non-Qualified Stock Option” shall mean an option granted under Section 6(a) of
the Plan that is not intended to be an Incentive Stock Option.
	 
	 	(p)	 	“Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option.
	 
	 	(q)	 	“Other Stock-Based Award” shall mean any right granted under Section 6(f) of
the Plan.
	 
	 	(r)	 	“Participant” shall mean a Salaried Employee or Non-Employee Director
designated to be granted an Award under the Plan.
	 
	 	(s)	 	“Performance Award” shall mean any Award granted under Section 6(d) of the
Plan.
	 
	 	(t)	 	“Person” shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, or government or political
subdivision thereof.
	 
	 	(u)	 	“Released Securities” shall mean securities that were Restricted Securities
with respect to which all applicable restrictions have expired, lapsed, or been waived.

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	 	(v)	 	“Restricted Securities” shall mean securities covered by Awards of Restricted
Stock or other Awards under which issued and outstanding Shares are held subject to
certain restrictions.
	 
	 	(w)	 	“Restricted Stock” shall mean any Share granted under Section 6(c) of the Plan.
	 
	 	(x)	 	“Restricted Stock Unit” shall mean any right granted under Section 6(c) of the
Plan that is denominated in Shares.
	 
	 	(y)	 	“Salaried Employee” shall mean any salaried employee of the Company or of any
Affiliate.
	 
	 	(z)	 	“Shares” shall mean shares of the common stock of the Company, par value $2.50
per share, and such other securities or property as may become the subject of Awards,
or become subject to Awards, pursuant to an adjustment made under Section 4(b) of the
Plan.
	 
	 	(aa)	 	“Stock Appreciation Right” shall mean any right granted under Section 6(b) of
the Plan.
	 
	 	(bb)	 	“2001 Plan” shall mean the Company’s 2001 Long-Term Incentive Plan.

Section 3. Administration

     Except as otherwise provided herein, the Plan shall be administered by the Committee. Subject
to the terms of the Plan and applicable law, the Committee shall have full power and authority to:
(i) designate Participants; (ii) determine the type or types of Awards to be granted to each
Participant under the Plan; (iii) determine the number of Shares to be covered by or with respect
to which payments, rights, or other matters are to be calculated in connection with Awards; (iv)
determine the terms and conditions of any Award; (v) determine whether, to what extent, and under
what circumstances Awards may be settled or exercised in cash, Shares, other securities, other
Awards, or other property, or canceled, forfeited, or suspended, and the method or methods by which
Awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine in accordance
with the requirements of Section 409A of the Code whether, to what extent, and under what
circumstances cash, Shares, other securities, other Awards, other property and other amounts
payable with respect to an Award under the Plan shall be deferred either automatically or at the
election of the holder thereof or of the Committee; (vii) interpret and administer the Plan and any
instrument or agreement relating to, or Award made under, the Plan; (viii) establish, amend,
suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate
for the proper administration of the Plan; and (ix) make any other determination and take any other
action that the Committee deems necessary or desirable for the administration of the Plan. Unless
otherwise expressly provided in the Plan, all designations, determinations, interpretations, and
other decisions under or with respect to the Plan or any Award shall be within the sole discretion
of the Committee, may be made at any time, and shall be final, conclusive, and binding upon all
Persons, including the Company, any Affiliate, any Participant, any holder or beneficiary of any
Award, any shareholder, and any employee of the Company or of any Affiliate. All elective
deferrals permitted pursuant to this Section 3 shall be accomplished by the delivery of a written,
irrevocable election by the

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Participant on a form
provided by the Company. All deferrals shall be made in accordance with administrative
guidelines established by the Committee to ensure that such deferrals comply with all applicable
requirements of Section 409A of the Code. The Committee may credit interest, at such rates to be
determined by the Committee, on cash payments that are deferred and credit dividends or dividend
equivalents on deferred payments denominated in the form of Shares. The Committee may, in its
discretion, require deferral of payment of any Award (other than an Option or Stock Appreciation
Right) or portion thereof if the deduction with respect to such payment would, or could in the
reasonable anticipation of the Committee, not be permitted due to the application of Section 162(m)
of the Code.

Section 4. Shares Available for Awards

	 	(a)	 	Shares Available. Subject to adjustment as provided in Section 4(b):

	 	(i)	 	Calculation of Number of Shares Available. The number of
Shares authorized to be issued in connection with the granting of Awards under
the Plan is five million one hundred thousand (5,100,000). If any Shares
covered by an Award granted under the Plan or by an award granted under the
2001 Plan or the 1997 Plan, or to which such an Award or award relates, are
forfeited, or if an Award or award otherwise terminates without the delivery of
Shares or of other consideration, then the Shares covered by such Awards or
award, or to which such Award or award relates, or the number of Shares
otherwise counted against the aggregate number of Shares available under the
Plan with respect to such Award or award, to the extent of any such forfeiture
or termination, shall again be, or shall become available for granting Awards
under the Plan. Notwithstanding the foregoing but subject to adjustment as
provided in Section 4(b), (A) no more than one million (1,000,000) Shares shall
be cumulatively available for delivery pursuant to the exercise of Incentive
Stock Options and (B) no more than two million five hundred thousand
(2,500,000) Shares shall be cumulatively available for issuance in connection
with the payment or settlement of Full Value Awards.
	 
	 	(ii)	 	Accounting for Awards. For purposes of this Section 4,

	 	(A)	 	if an Award (other than a Dividend Equivalent)
is denominated in Shares, the number of Shares covered by such Award,
or to which such Award relates, shall be counted on the date of grant
of such Award against the aggregate number of Shares available for
granting Awards under the Plan; and
	 
	 	(B)	 	Dividend Equivalents shall be counted against
the aggregate number of Shares available for granting Awards under the
Plan, if at all, only in such amount and at such time as the Committee
shall determine under procedures adopted by the Committee consistent
with the purposes of the Plan; provided, however, that Awards that
operate in tandem with (whether granted simultaneously with or at

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	 	 	 	a different time from), or that are substituted for, other Awards or
awards granted under the 2001 Plan or the 1997 Plan may be counted or
not counted under procedures adopted by the Committee in order to
avoid double counting. Any Shares that are delivered by the Company,
and any Awards that are granted by, or become obligations of, the
Company through the assumption by the Company or an Affiliate of, or
in substitution for, outstanding awards previously granted by an
acquired company, shall not be counted against the Shares available
for granting Awards under the Plan.

	 	(iii)	 	Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist, in whole or in part, of authorized
and unissued Shares or of treasury Shares.

	 	(b)	 	Adjustments. In the event that the Committee shall determine that any dividend
or other distribution (whether in the form of cash, Shares, other securities, or other
property), recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation split-up, spin-off, combination repurchase, or exchange of Shares or
other securities of the Company, issuance of warrants or other rights to purchase
Shares or other securities of the Company, or other similar corporate transaction or
event affects the Shares such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan, then the Committee shall, in
such manner as it may deem equitable, adjust any or all of (i) the number and type of
Shares (or other securities or property) which thereafter may be made the subject of
Awards, (ii) the number and type of Shares (or other securities or property) subject to
outstanding Awards, (iii) the number and type of Shares (or other securities or
property) specified as the annual per-participant limitation under Sections 6(g)(vi)
and 6(g)(viii), and (iv) the grant, purchase, or exercise price with respect to any
Award, or, if deemed appropriate, make provision for a cash payment to the holder of an
outstanding Award; provided, however, in each case, that with respect to Awards of
Incentive Stock Options no such adjustment shall be authorized to the extent that such
authority would cause the Plan to violate Section 422(b)(1) of the Code or any
successor provision thereto; and provided further, however, that the number of Shares
subject to any Award denominated in Shares shall always be a whole number.

Section 5. Eligibility

     Any Salaried Employee, including any officer or employee-director of the Company or of any
Affiliate, and any Non-Employee Director, who is not a member of the Committee shall be eligible to
be designated a Participant.

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Section 6. Awards

	 	(a)	 	Options. The Committee is hereby authorized to grant Options to Participants
with the following terms and conditions and with such additional terms and conditions,
in either case not inconsistent with the provisions of the Plan, as the Committee shall
determine:

	 	(i)	 	Exercise Price. The purchase price per Share purchasable under
an Option shall be determined by the Committee; provided, however, that such
purchase price shall not be less than the Fair Market Value of a Share on the
date of grant of such Option (or, if the Committee so determines, in the case
of any Option retroactively granted in tandem with or in substitution for
another Award or any outstanding award granted under any other plan of the
Company, on the date of grant of such other Award or award).
	 
	 	(ii)	 	Option Term. The term of each Option shall be fixed by the
Committee; provided, however, that in no event shall the term of any Option
exceed a period of ten years from the date of its grant.
	 
	 	(iii)	 	Time and Method of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole or in part, and
the method or methods by which, and the form or forms, including, without
limitation, cash, Shares, other Awards, or other property, or any combination
thereof, having a Fair Market Value on the exercise date equal to the relevant
exercise price, in which, payment of the exercise price with respect thereto
may be made or deemed to have been made.
	 
	 	(iv)	 	Incentive Stock Options. The terms of any Incentive Stock
Option granted under the plan shall comply in all respects with the provisions
of Section 422 of the Code, or any successor provision thereto, and any
regulations promulgated thereunder. No Incentive Stock Option shall be granted
to any Non-Employee Director who is not otherwise an employee of the Company or
any of its Affiliates.
	 
	 	(v)	 	Transferability. An Option shall not be transferable other
than by will or the laws of descent and distribution or pursuant to a domestic
relations order, as defined in the Code, and, during the Participant’s
lifetime, shall be exercisable only by the Participant, except that the
Committee may:

	 	(A)	 	permit exercise, during the Participant’s
lifetime, by the Participant’s guardian or legal representative; and
	 
	 	(B)	 	permit transfer, upon the Participant’s death,
to beneficiaries designated by the Participant in a manner authorized
by the Committee, provided that the Committee determines that such
exercise and such transfer are consonant with requirements for
exemption from Section 16(b) of the Exchange Act and, with

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	 	 	 	respect to an Incentive Stock Option, the requirements of Section
422(b)(5) of the Code; and
	 
	 	(C)	 	grant Non-Qualified Stock Options that are
transferable, or amend outstanding Non-Qualified Stock Options to make
them so transferable, without payment of consideration, to Immediate
Family of the Participant.

	 	(b)	 	Stock Appreciation Rights. The Committee is hereby authorized to grant Stock
Appreciation Rights to Participants. Subject to the terms of the Plan and any
applicable Award Agreement, a Stock Appreciation Right granted under the Plan shall
confer on the holder thereof a right to receive in cash or Shares, at the Company’s
sole discretion, upon exercise thereof, the excess of (i) the Fair Market Value of one
Share on the date of exercise over (ii) the grant price of the right as specified by
the Committee, which shall not be less than the Fair Market Value of one Share on the
date of grant of the Stock Appreciation Right (or, if the Committee so determines, in
the case of any Stock Appreciation Right retroactively granted in tandem with or in
substitution for another Award or any outstanding award granted under any other plan of
the Company, on the date of grant of such other Award or award). Subject to the terms
of the Plan and any applicable Award Agreement, the grant price, term, methods of
exercise, methods of settlement, and any other terms and conditions of any Stock
Appreciation Right shall be as determined by the Committee; provided that no Stock
Appreciation Right shall be exercisable more than ten (10) years from the date of
grant. The Committee may impose such conditions or restrictions on the exercise of any
Stock Appreciation Right as it may deem appropriate.
	 
	 	(c)	 	Restricted Stock and Restricted Stock Units.

	 	(i)	 	Issuance. The Committee is hereby authorized to grant Awards
of Restricted Stock and Restricted Stock Units to Participants.
	 
	 	(ii)	 	Restrictions. Shares of Restricted Stock and Restricted Stock
Units shall be subject to such restrictions as the Committee may impose
(including, without limitation, any limitation on the right to vote a Share of
Restricted Stock or the right to receive any dividend or other right or
property), which restrictions, subject to Section 6(e), may lapse separately or
in combination at such time or times, in such installments or otherwise, as the
Committee may deem appropriate.
	 
	 	(iii)	 	Registration. Any Restricted Stock granted under the Plan may
be evidenced in such manner as the Committee may deem appropriate, including,
without limitation, book-entry registration or issuance of a stock certificate
or certificates. In the event any stock certificate is issued in respect of
Shares of Restricted Stock granted under the Plan, such certificate shall be
registered in the name of the Participant and shall bear

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	 	 	 	an appropriate legend referring to the terms, conditions, and restrictions
applicable to such Restricted Stock.
	 
	 	(iv)	 	Forfeiture. Except as otherwise determined by the Committee,
upon termination of employment (as determined under criteria established by the
Committee) for any reason during the applicable restriction period, all Shares
of Restricted Stock and all Restricted Stock Units still, in either case,
subject to restriction shall be forfeited and reacquired by the Company;
provided, however, that the Committee may, when it finds that a waiver would be
in the best interests of the Company, waive in whole or in part any or all
remaining restrictions with respect to Shares of Restricted Stock or Restricted
Stock Units. Unrestricted Shares, evidenced in such manner as the Committee
shall deem appropriate, shall be delivered to the holder of Restricted Stock
promptly after such Restricted Stock shall become Released Securities.
	 
	 	(v)	 	Restricted Stock Units. Notwithstanding anything to the
contrary in the Plan or in any Award Agreement, Restricted Stock Units shall be
subject to the following requirements. Unless previously forfeited, and
subject to Section 10(b), Restricted Stock Units shall be settled on the
30th day following the earliest of (I) the applicable vesting date
set forth in the Award Agreement, (II) the Participant’s death, (III) the
Participant’s separation from service within the meaning of Section 409A of the
Code after attaining the age of 55 and completing 10 years of service or as a
result of a disability within the meaning of Section 22(e)(3) of the Code. If
the Committee reasonably anticipates that making a payment in respect of
Restricted Stock Units may violate Federal securities laws or other applicable
law, such payment may be delayed and made in accordance with Section 409A of
the Code and Section 1.409A-2(b)(7)(ii) of the Treasury Regulations thereunder.

	 	(d)	 	Performance Awards. The Committee is hereby authorized to grant Performance
Awards to Participants. Subject to the terms of the Plan and any applicable Award
Agreement, a Performance Award granted under the Plan (i) may be denominated or payable
in cash, Shares (including without limitation, Restricted Stock), other securities,
other Awards, or other property and (ii) shall confer on the holder thereof rights
valued as determined by the Committee and payable to, or exercisable by, the holder of
the Performance Award, in whole or in part, upon the achievement of such performance
goals during such performance periods as the Committee shall establish.
	 
	 	 	 	Performance goals shall be based on one or more of the following criteria,
determined in accordance with generally accepted accounting principles, where
applicable: (i) pre-tax income or after-tax income; (ii) earnings including
operating income, earnings before or after taxes, earnings before or after interest,
depreciation, amortization, or extraordinary or special items; (iii) net income
excluding amortization of intangible assets, depreciation and impairment of

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	 	 	 	goodwill and intangible assets; (iv) operating income; (v) earnings or book value
per share (basic or diluted); (vi) return on assets (gross or net), return on
investment, return on capital, or return on equity; (vii) return on revenues; (viii)
net tangible assets (working capital plus property, plants and equipment) or return
on net tangible assets (operating income divided by average net tangible assets) or
working capital; (ix) operating cash flow (operating income plus or minus changes in
working capital less capital expenditures); (x) cash flow, free cash flow, cash flow
return on investment (discounted or otherwise), net cash provided by operations, or
cash flow in excess of cost of capital; (xi) sales or sales growth; (xii) operating
margin or profit margin; (xiii) share price or total shareholder return; (xiv)
earnings from continuing operations; (xv) cost targets, reductions or savings,
productivity or efficiencies; (xvi) economic value added; and (xvii) strategic
business criteria, consisting of one or more objectives based on meeting specified
market penetration or market share, geographic business expansion, customer
satisfaction, employee satisfaction, human resources management, financial
management, project management, supervision of litigation, information technology,
or goals relating to divestitures, joint ventures or similar transactions.
	 	 
	 	 	 	Where applicable, the performance goals may be expressed in terms of attaining a
specified level of the particular criterion or the attainment of a percentage
increase or decrease in the particular criterion, and may be applied to one or more
of the Company or a parent or subsidiary of the Company, or a division or strategic
business unit of the Company, all as determined by the Committee. The performance
goals may include a threshold level of performance below which no payment will be
made (or no vesting will occur), levels of performance at which specified payments
will be paid (or specified vesting will occur) and a maximum level of performance
above which no additional payment will be made (or at which full vesting will
occur).
	 
	 	 	 	Subject to the terms of the Plan and any applicable Awards Agreement, the
performance goals to be achieved during any performance period, the length of any
performance period, the amount of any Performance Award granted, and the amount of
any payment or transfer to be made pursuant to any Performance Award shall be
determined by the Committee.
	 
	 	(e)	 	Dividend Equivalents. The Committee is hereby authorized to grant to
Participants Awards (other than Awards in respect of Options and Stock Appreciation
Rights) under which the holders thereof shall be entitled to receive payments
equivalent to dividends or interest with respect to a number of Shares determined by
the Committee, and the Committee may provide that such amounts (if any) shall be deemed
to have been reinvested in additional Shares or otherwise reinvested. Dividend
equivalents credited in respect of an Award will vest (or be forfeited) and will settle
at the same time as the underlying Award to which they relate. Subject to the terms of
the Plan and any applicable Awards Agreement, such Awards may have such additional
terms and conditions as the Committee shall determine.

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	 	(f)	 	Other Stock-Based Awards. The Committee is hereby authorized to grant to
Participants such other Awards that are denominated or payable in, valued in whole or
in part by reference to, or otherwise based on or related to, Shares (including,
without limitation, securities convertible into Shares), as are deemed by the Committee
to be consistent with the purposes of the Plan, provided, however, that such grants
must comply with applicable law. Subject to the terms of the Plan and any applicable
Award Agreement, the Committee shall determine the terms and conditions of such Awards.
Shares or other securities delivered pursuant to a purchase right granted under this
Section 6(f) shall be purchased for such consideration, which may be paid by such
method or methods and in such form or forms, including, without limitation, cash,
Shares, other securities, other Awards, or other property, or any combination thereof,
as the Committee shall determine, the value of which consideration, as established by
the Committee, shall not be less than the Fair Market Value of such Shares or other
securities as of the date such purchase right is granted (or, if the Committee so
determines, in the case of any such purchase right retroactively granted in tandem with
or in substitution for another Award or any outstanding award granted under any other
plan of the Company, on the date of grant of such other Award or award).
	 
	 	(g)	 	General.

	 	(i)	 	No Cash Consideration for Awards. Awards may be granted for no
cash consideration or for such minimal cash consideration as may be required by
applicable law.
	 
	 	(ii)	 	Awards May Be Granted Separately or Together. Awards may, in
the discretion of the Committee, be granted either alone or in addition to, in
tandem with, or in substitution for any other Award or any awards granted under
any other plan of the Company or any Affiliate. Awards granted in addition to
or in tandem with other Awards, or in addition to or in tandem with awards
granted under any other plan of the Company or any Affiliate, may be granted
either at the same time as or at a different time from the grant of such other
Awards or awards.
	 
	 	(iii)	 	Forms of Payment Under Awards. Subject to the terms of the
Plan and of any applicable Award Agreement, payments or transfers to be made by
the Company or an Affiliate upon the grant, exercise, or payment of an Award
may be made in such form or forms as the Committee shall determine, including,
without limitation, cash, Shares, other securities, other Awards, or other
property, or any combination thereof, and may be made in a single payment or
transfer, in installments, or on a deferred basis, in each case in accordance
with rules and procedures established by the Committee. Such rules and
procedures may include, without limitation, provisions for the payment or
crediting of reasonable interest on installment or deferred payments or the
grant or crediting of Dividend Equivalents in respect of installment or
deferred payments.

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	 	(iv)	 	Limits on Transfer of Awards. Except as provided in Section
6(a) above regarding Options, no Award (other than Released Securities), and no
right under any such Award, shall be assignable, alienable, saleable, or
transferable by a Participant otherwise than by will or by the laws of descent
and distribution or pursuant to a qualified domestic relations order, as
defined in the Code (or, in the case of an Award of Restricted Securities, to
the Company); provided, however, that, if so determined by the Committee, a
Participant may, in the manner established by the Committee, designate a
beneficiary or beneficiaries to exercise the rights of the Participant, and to
receive any property distributable, with respect to any Award upon the death of
the Participant. Each Award, and each right under any Award, shall be
exercisable, during the Participant’s lifetime, only by the Participant or, if
permissible under applicable law, by the Participant’s guardian or legal
representative. No Award (other than Released Securities), and no right under
any such Award, may be pledged, alienated, attached, or otherwise encumbered,
and any purported pledge, alienation, attachment, or encumbrance thereof shall
be void and unenforceable against the Company or any Affiliate. Except as
permitted under Section 409A of the Code, any deferred compensation (within the
meaning of Section 409A of the Code) payable to Participant or for a
Participant’s benefit under this Plan and Awards hereunder may not be reduced
by, or offset against, any amount owing by a Participant to the Company or any
Affiliate.
	 
	 	(v)	 	Terms of Awards. The Term of each Award shall be for such
period as may be determined by the Committee; provided, however, that in no
event shall the term of any Incentive Stock Option exceed a period of ten years
from the date of its grant.
	 
	 	(vi)	 	Per-Person Limitation on Options and SARs. The number of
Shares with respect to which Options and SARs may be granted under the Plan to
an individual Participant in any three-year period from January 4, 2009 through
the end of the term shall not exceed 4,000,000 Shares, subject to adjustment as
provided in Section 4(b).
	 
	 	(vii)	 	Share Certificates. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the Plan or the rules, regulations, and
other requirements of the Securities and Exchange Commission, any stock
exchange upon which such Shares or other securities are then listed, and any
applicable Federal or state securities laws, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
	 
	 	(viii)	 	Maximum Payment Amount. The maximum fair market value of payments to any
executive officer made in connection with any long-term

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	 	 	 	performance awards (except for payments made in connection with Options or
Stock Appreciation Rights) granted under the Plan shall not, during any
three-year period, exceed two percent of the Company’s shareholders’ equity
as of the end of the year immediately preceding the commencement of such
three-year period.

Section 7. Amendment and Termination

     Except to the extent prohibited by applicable law and unless otherwise expressly provided in
an Award Agreement or in the Plan:

	 	(a)	 	Amendments to the Plan. The Board of Directors of the Company may amend,
alter, suspend, discontinue, or terminate the Plan, including, without limitation, any
amendment, alteration, suspension, discontinuation, or termination that would impair
the rights of any Participant, or any other holder or beneficiary of any Award
theretofore granted, without the consent of any shareholder, Participant, other holder
or beneficiary of an Award, or other Person; provided, however, that, notwithstanding
any other provision of the Plan or any Award Agreement, without the approval of the
shareholders of the Company no such amendment, alteration, suspension, discontinuation,
or termination shall be made that would:

	 	(i)	 	increase the total number of Shares available for Awards under
the Plan, except as provided in Section 4 hereof; or
	 
	 	(ii)	 	permit Options, Stock Appreciation Rights, or other Stock-Based
Awards encompassing rights to purchase Shares to be granted with per Share
grant, purchase, or exercise prices of less than the Fair Market Value of a
Share on the date of grant thereof, except to the extent permitted under
Sections 6(a), 6(b), or 6(f) hereof.

	 	(b)	 	Adjustments of Awards Upon Certain Acquisitions. In the event the Company or
any Affiliate shall assume outstanding employee awards or the right or obligation to
make future such awards in connection with the acquisition of another business or
another corporation or business entity, the Committee may make such adjustments, not
inconsistent with the terms of the Plan, in the terms of Awards as it shall deem
appropriate in order to achieve reasonable comparability or other equitable
relationship between the assumed awards and the Awards granted under the Plan as so
adjusted.
	 
	 	(c)	 	Adjustments of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
Events. The Committee shall be authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in Section
4(b) hereof) affecting the Company, any Affiliate, or the financial statements of the
Company or any Affiliate, or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are appropriate in
order to prevent dilution or enlargement

- 12 -

 

	 	 	 	of the benefits or potential benefits to be made available under the Plan; provided
that such adjustments shall be consistent with the requirements of Section 162(m) of
the Code with regard to Awards subject to Section 162(m) of the Code.

	 	(d)	 	Certain Adjustments of Awards Not Permitted. Except in connection with an
event or transaction described in subsections (b) or (c) or Section 4(b), the terms of
outstanding Awards may not be amended to reduce the purchase price per share
purchasable under an Option or the grant price of Stock Appreciation Rights, or cancel
outstanding Options or Stock Appreciation Rights in exchange for cash, other Awards or
Options or Stock Appreciation Rights with a purchase price per share or grant price, as
applicable, that is less than the purchase price per share or grant price of the
original Options or Stock Appreciation Rights, as applicable, without shareholder
approval.
	 
	 	(e)	 	Correction of Defects, Omissions and Inconsistencies. The Committee may
correct any defect, supply any omission, or reconcile any inconsistency in the Plan or
any Award in the manner and to the extent it shall deem desirable to carry the Plan
into effect.

Section 8. General Provisions

	 	(a)	 	No Rights to Awards. No Salaried Employee, Participant or other Person shall
have any claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Salaried Employees, Participants, or holders or
beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be
the same with respect to each recipient.
	 
	 	(b)	 	Delegation. The Committee may delegate to one or more officers or managers of
the Company or any Affiliate, or a committee of such officers or managers, the
authority, subject to such terms and limitations as the Committee shall determine, to
grant Awards to, or to cancel, modify, waive rights with respect to, alter,
discontinue, suspend or terminate Awards held by, Salaried Employees who are not
officers of the Company for purposes of Section 16 of the Exchange Act.
	 
	 	(c)	 	Withholding. The Company or any Affiliate shall be authorized to withhold from
any Award granted or any payment due or transfer made under any Award or under the Plan
the minimum amount (in cash, Shares, other securities, other Awards, or other property)
of withholding taxes due in respect of an Award, its exercise, or any payment or
transfer under such Awards or under the Plan and to take such other action as may be
necessary in the opinion of the Company or Affiliate to satisfy all obligations for the
payment of such taxes.
	 
	 	(d)	 	No Limit on Other Compensation Arrangements. Nothing contained in the Plan
shall prevent the Company or any Affiliate from adopting or continuing in effect other
or additional compensation arrangements, and such arrangements may be either generally
applicable or applicable only in specific cases.

- 13 -

 

	 	(e)	 	No Right to Employment. The grant of an Award shall not be construed as giving
a Participant the right to be retained in the employ of the Company or any Affiliate.
Further, the Company or an Affiliate may at any time dismiss a Participant from
employment, free from any liability, or any claim under the Plan, unless otherwise
expressly provided in the Plan or in any Award Agreement.
	 
	 	(f)	 	Governing Law. The validity, construction, and effect of the Plan and any
rules and regulations relating to the Plan shall be determined in accordance with the
laws of the State of Connecticut and applicable Federal law.
	 
	 	(g)	 	Severability. If any provision of the Plan or any Award is or becomes or is
deemed to be invalid, illegal, or unenforceable in any jurisdiction, or as to any
Person or Award, or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed amended to
conform to applicable laws, or if it cannot be so construed or deemed amended without,
in the determination of the Committee, materially altering the intent of the Plan or
the Award, such provision shall be stricken as to such jurisdiction, Person, or Award,
and the remainder of the Plan and any such Award shall remain in full force and effect.
	 
	 	(h)	 	No Trust or Fund Created. Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary relationship
between the Company or any Affiliate and a Participant or any other Person. To the
extent that any Person acquires a right to receive payments from the Company or any
Affiliate pursuant to an Award, such right shall be no greater than the right of any
unsecured general creditor of the Company or any Affiliate.
	 
	 	(i)	 	No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether cash,
other securities, or other property shall be paid or transferred in lieu of any
fractional Shares, or whether such fractional Shares or any rights thereto shall be
canceled, terminated, or otherwise eliminated.
	 
	 	(j)	 	Headings. Headings are given to the Sections and subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall not be deemed in
any way material or relevant to the construction or interpretation of the Plan or any
provision thereof.

Section 9. Change in Control

	 	(a)	 	Upon the occurrence of a Change in Control (as hereinafter defined), unless
otherwise determined by the Committee and set forth in an Award Agreement:

	 	(i)	 	all Options and Stock Appreciation Rights, whether granted as
performance awards or otherwise, shall become immediately exercisable in full
for the remainder of their terms, and Grantees shall have the right to have the
Company purchase all or any number of such Options or Stock Appreciation Rights
for cash for a period of thirty (30) days following a

- 14 -

 

	 	 	 	Change in Control at the Option Acceleration Price (as hereinafter defined);
and

	 	(ii)	 	all restrictions applicable to all Restricted Stock and
Restricted Stock Units, whether such Restricted Stock and Restricted Stock
Units were granted as performance awards or otherwise, shall immediately lapse
and have no effect, and Grantees shall have the right to have the Company
purchase all or any number of such Restricted Stock Units and shares of
Restricted Stock for cash for a period of thirty (30) days following a Change
in Control at the Restricted Stock Acceleration Price (as hereinafter defined).
	 
	 	(iii)	 	In addition, for each Option or Stock Appreciation Right with
a purchase price per share or grant price, as applicable, that is greater than
the consideration offered in connection with any Change in Control, the
Committee may in its sole discretion elect to cancel such Option or Stock
Appreciation Right without any payment to the person holding such Option or
Stock Appreciation Right.

	 	(b)	 	(i) The “Restricted Stock Acceleration Price” is the highest of the following
on the date of a Change in Control:

	 	(A)	 	the highest reported sales price of a share of
the Common Stock within the sixty (60) days preceding the date of a
Change in Control, as reported on any securities exchange upon which
the Common Stock is listed,
	 
	 	(B)	 	the highest price of a share of the Common
Stock reported in a Schedule 13D or an amendment thereto as paid within
the sixty (60) days preceding the date of the Change in Control,
	 
	 	(C)	 	the highest tender offer price paid for a share
of the Common Stock, and
	 
	 	(D)	 	any cash merger or similar price paid for a
share of the Common Stock.

	 	(ii)	 	The “Option Acceleration Price” is the excess of the price
received by shareholders of the Company for one Share pursuant to the Change in
Control over the exercise price or the grant price of the award; provided,
however, that the Option Acceleration Price is limited to the spread between
the Fair Market Value (which shall be based on the per Share price received by
the shareholders of the Company pursuant to such Change in Control) and the
exercise price or grant price. In the event the Change in Control is effected
pursuant to a stock-for-stock transaction, the price received by shareholders
of the Company for one Share pursuant to the Change in Control shall be
calculated using the exchange ratio applied in the transaction.

- 15 -

 

	 	(c)	 	A “Change in Control” shall be deemed to have occurred if the event set forth
in any one of the following paragraphs shall have occurred:

	 	(I)	 	any Person, as hereinafter defined, is or becomes the
Beneficial Owner, as hereinafter defined, directly or indirectly, of securities
of the Company, as hereinafter defined, (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its Affiliates) representing 25% or more of the combined voting
power of the Company’s then outstanding securities, excluding any Person who
becomes such a Beneficial Owner in connection with a transaction described in
clause (i) of paragraph (III) below; or
	 
	 	(II)	 	the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the date
hereof, constitute the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of the Company) whose appointment or election by
the Board or nomination for election by the Company’s shareholders was approved
or recommended by a vote of at least two thirds (2/3) of the directors then
still in office who either were directors on December 17, 2003 or whose
appointment, election or nomination for election was previously so approved or
recommended; or
	 
	 	(III)	 	there is consummated a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other corporation
or other entity, other than (i) a merger or consolidation which results in the
voting securities of the Company outstanding immediately prior to such merger
or consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof) at least 50% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, or (ii) a merger or consolidation effected
to implement a recapitalization of the Company (or similar transaction) in
which no Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities Beneficially Owned
by such Person any securities acquired directly from the Company or its
Affiliates) representing 25% or more of the combined voting power of the
Company’s then outstanding securities; or
	 
	 	(IV)	 	the shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an agreement
for the sale or disposition by the Company of all or substantially all of the
Company’s assets, other than a sale or disposition by the Company of all or
substantially all of the Company’s assets to an entity, at least 50% of the
combined voting power of the voting securities of which are owned by

- 16 -

 

	 	 	 	shareholders of the Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale.
	 
	 	(V)	 	Notwithstanding any provision of this Plan to the contrary, to
the extent an award shall be deemed to be vested or restrictions lapse, expire
or terminate upon the occurrence of a Change in Control and such Change in
Control is not described by Section 409A(a)(2)(A)(v) of the Code, then any
resulting payment permitted by Section 9 that would be considered deferred
compensation under Section 409A of the Code will instead be made to the
Participant on the 30th day following the earliest of (A) the
Participant’s “separation from service” with the Company (determined in
accordance with Section 409A of the Code); (B) the date payment otherwise would
have been made in the absence of any provisions in this Plan to the contrary
(provided such date is permissible under Section 409A of the Code), or (C) the
Participant’s death.

	 	(d)	 	Solely for purposes of Section 9(c) and (d), and notwithstanding anything to
the contrary in any other provision of this Plan, the following terms shall have the
meanings indicated below:

	 	1.	 	“Beneficial Owner” shall have the meaning set
forth in Rule 13d-3 under the Exchange Act.
	 
	 	2.	 	“Company” shall mean The Stanley Works.
	 
	 	3.	 	“Person” shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof, except that such term shall not include (i)
the Company or any of its subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv)
a corporation owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership of
stock of the Company.

Section 10. Compliance with Section 409A of the Code.

	 	(a)	 	To the extent applicable, it is intended that this Plan and any grants made
hereunder comply with the provisions of Section 409A of the Code, so that the income
inclusion provisions of Section 409A(a)(1) of the Code do not apply to Participants.
This Plan and any Awards granted hereunder shall be administered in a manner consistent
with this intent. Any reference in this Plan to Section 409A of the Code will also
include any regulations or any other formal guidance promulgated with respect to such
Section by the U.S. Department of the Treasury or the Internal Revenue Service.

- 17 -

 

	 	(b)	 	If at the time of a Participant’s separation from service (within the meaning
of Section 409A of the Code), (i) the Participant shall be a specified employee (within
the meaning of Section 409A of the Code and using the identification methodology
selected by the Company from time to time) and (ii) the Company shall make a good faith
determination that an amount payable hereunder constitutes deferred compensation
(within the meaning of Section 409A of the Code) the payment of which is required to be
delayed pursuant to the six-month delay rule set forth in Section 409A of the Code in
order to avoid taxes or penalties under Section 409A of the Code, then the Company
shall not pay such amount on the otherwise scheduled payment date but shall instead pay
it, without interest, on the first business day of the seventh month after such
six-month period or, if earlier, on the Participant’s death.
	 
	 	(c)	 	Notwithstanding any provision of this Plan or of any Award Agreement to the
contrary, in light of the uncertainty with respect to the proper application of Section
409A of the Code, the Company reserves the right to make amendments to this Plan and
any Award Agreements as the Company deems necessary or desirable to avoid the
imposition of taxes or penalties under Section 409A of the Code. In any case, a
Participant shall be solely responsible and liable for the satisfaction of all taxes
and penalties that may be imposed on a Participant or for a Participant’s account in
connection with this Plan and any Award Agreements (including any taxes and penalties
under Section 409A of the Code), and neither the Company nor any of its affiliates
shall have any obligation to indemnify or otherwise hold a Participant harmless from
any or all of such taxes or penalties.

Section 11. Effective Date of the Plan

     The Plan shall be effective as of January 4, 2009.

Section 12. Term of the Plan

     No Award shall be granted under the Plan after January 3, 2019. However, unless otherwise
expressly provided in the plan or in an applicable Award Agreement, any Award theretofore granted
may extend beyond such date, and the authority of the Committee to amend, alter, or adjust any such
Award, or to waive any conditions or rights under any such Award, and the authority of the Board of
Directors of the Company to amend the Plan, shall extend beyond such date.

- 18 -Exhibit 10.1

Exhibit 10.1

EXECUTION COPY

AMENDED AND RESTATED ADVISORY AGREEMENT

THIS AMENDED AND RESTATED ADVISORY AGREEMENT, dated as of October 1, 2009, is between
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED, a Maryland corporation (the “Company”), and CAREY
ASSET MANAGEMENT CORP., a Delaware corporation and wholly-owned subsidiary of W. P. Carey & Co. LLC
(the “Advisor”).

W I T N E S S E T H:

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

WHEREAS, the Company and the Advisor entered into an initial advisory agreement, dated
November 10, 1997, which has been subsequently amended and restated;

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

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

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

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

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

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

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

Acquisition Fee. Any fee or commission (including any interest thereon) paid by the Company
to the Advisor or, with respect to Section 9(d), by the Company to any party, in connection with
the making or investing in Loans and the purchase, development or construction of Properties by the
Company. A

 

 

 

Development Fee or a Construction Fee paid to a Person not affiliated with the Sponsor in
connection with the actual development or construction of a project after acquisition of the
Property by the Company shall not be deemed an Acquisition Fee. Acquisition Fees include, but are
not limited to, any real estate commission, selection fee, development fee (other than as described
above) or any fee of a similar nature, however designated. Acquisition Fees include Subordinated
Acquisition Fees unless the context otherwise requires. Acquisition Fees shall not include
Acquisition Expenses.

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

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

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

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

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

Agreement. This Advisory Agreement.

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

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

 

2

 

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

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

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

Bylaws. The bylaws of the Company.

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

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

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

Cause. With respect to the termination of this Agreement, fraud, criminal conduct, willful
misconduct or willful or negligent breach of fiduciary duty by the Advisor that, in each case, is
determined by a majority of the Independent Directors to be materially adverse to the Company, or a
breach of a material term or condition of this Agreement by the Advisor and the Advisor has not
cured such breach within 30 days of written notice thereof or, in the case of any breach that
cannot be cured within 30 days by reasonable effort, has not taken all necessary action within a
reasonable time period to cure such breach.

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

Code. Internal Revenue Code of 1986, as amended.

Company. Corporate Property Associates 14 Incorporated, a corporation organized under the
laws of the State of Maryland.

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

 

3

 

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

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

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

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

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

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

Distributions. Distributions declared by the Board.

GAAP. Generally accepted accounting principles in the United States.

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

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

Independent Appraiser. A qualified appraiser of real estate as determined by the Board, who
is not affiliated, directly or indirectly, with the Company, the Advisor or their respective
Affiliates. Membership in a nationally recognized appraisal society such as the American Institute
of Real Estate Appraisers or the Society of Real Estate Appraisers shall be conclusive evidence of
such qualification.

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

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

 

4

 

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

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

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

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

Loans. The notes and other evidences of indebtedness or obligations acquired or entered into
by the Company as lender which are secured or collateralized by personal property, or fee or
leasehold interests in real estate or other assets, including but not limited to first or
subordinate mortgage loans, construction loans, development loans, loans secured by capital stock
or any other assets or form of equity interest and any other type of loan or financial arrangement,
such as providing or arranging for letters of credit, providing guarantees of obligations to third
parties, or providing commitments for loans. The term “Loans” shall not include leases which are
not recognized as leases for Federal income tax reporting purposes.

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

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

Offering. The offering of Shares pursuant to a Prospectus.

Operating Expenses. All operating, general and administrative expenses paid or incurred by
the Company, as determined under GAAP, except the following (insofar as they would otherwise be
considered operating, general and administrative expenses under GAAP): (i) interest and discounts
and other cost of borrowed money; (ii) taxes (including state and Federal income tax, property
taxes and assessments, franchise taxes and taxes of any other nature); (iii) expenses of raising
capital, including Organization and Offering Expenses, printing, engraving, and other expenses, and
taxes incurred in connection with the issuance and distribution of the Company’s Shares and
Securities; (iv) Acquisition Expenses, real estate commissions on resale of property and other
expenses connected with the acquisition, disposition, origination, ownership and operation of real
estate interests, mortgage loans, or other property, including the costs of foreclosure, insurance
premiums, legal services, brokerage and sales commissions, maintenance, repair and improvement of
property; (v) Acquisition Fees or Subordinated Disposition Fees payable to the Advisor or any other
party; (vi) non-cash items, such as depreciation, amortization, depletion, and additions to
reserves for depreciation, amortization, depletion, losses and bad debts; (vii) Termination Fees;
and (viii) Subordinated Incentive Fees paid in compliance with Section 9(i). Notwithstanding
anything herein to the contrary, Operating Expenses shall include the Asset Management Fee and the
Loan Refinancing Fee.

Organization and Offering Expenses. Those expenses payable by the Company in connection with
the formation, qualification and registration of the Company and in marketing and distributing
Shares, including, but not limited to: (i) the preparation, printing, filing and delivery of any
registration statement or Prospectus and the preparing and printing of contractual agreements
between the Company and the Sales Agent and the Selected Dealers (including copies thereof); (ii)
the preparing and printing of the Articles of Incorporation and Bylaws, solicitation material and
related documents and the filing and/or

 

5

 

recording of such documents necessary to comply with the laws of the State of Maryland for the
formation of a corporation and thereafter for the continued good standing of a corporation; (iii)
the qualification or registration of the Shares under state securities or “Blue Sky” laws; (iv) any
escrow arrangements, including any compensation to an escrow agent; (v) the filing fees payable to
the SEC and to the National Association of Securities Dealers, Inc.; (vi) reimbursement for the
reasonable and identifiable out-of-pocket expenses of the Sales Agent and the Selected Dealers,
including the cost of their counsel; (vii) the fees of the Company’s counsel; (viii) all
advertising expenses incurred in connection with the Offering, including the cost of all sales
literature and the costs related to investor and broker-dealer sales and information meetings and
marketing incentive programs; and (ix) selling commissions, marketing fees, incentive fees, due
diligence fees and wholesaling fees and expenses incurred in connection with the sale of the
Shares.

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

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

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

Person. An Individual, corporation, partnership, joint venture, association, company, trust,
bank, or other entity, or government or any agency or political subdivision of a government.

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

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

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

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

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

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

Sales Agent. Carey Financial Corporation.

Securities. Any stock, shares (other than currently outstanding Shares and subsequently
issued Shares), voting trust certificates, bonds, debentures, notes or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or otherwise or in general any
instruments commonly known as

 

6

 

“securities” or any certificate of interest, shares or participation in temporary or interim
certificates for receipts (or, guarantees of, or warrants, options or rights to subscribe to,
purchase or acquire any of the foregoing), which subsequently may be issued by the Company.

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

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

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

Sponsor. W.P. Carey & Co. LLC and any other Person directly or indirectly instrumental in
organizing, wholly or in part, the Company or any person who will control, manage or participate in
the management of the Company, and any Affiliate of any such person. Sponsor does not include a
person whose only relationship to the Company is that of an independent property manager and whose
only compensation is as such. Sponsor also does not include wholly independent third parties such
as attorneys, accountants and underwriters whose only compensation is for professional services.

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

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

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

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

Termination Fee. An amount equal to 15% of the amount, if any, by which (1) the fair value of
the Investment Assets, less the amount of all indebtedness secured by such Investment Assets and
less any fees (other than the Termination Fee) payable to the Advisor, in each case as of the
Termination Date, exceeds (2) the total of the Adjusted Investor Capital plus an amount equal to
the Preferred Return through the Termination Date reduced by the total Distributions paid by the
Company from its inception through the Termination Date (other than Distributions made from Cash
from Sales and Financings that are counted in determining Adjusted Investor Capital). For purposes
of calculating this Fee (i) the fair value of any Property shall be its Appraised Value, and (ii)
any payments in respect of redeemed Shares (other than in respect of Redemptions intended to
qualify as a liquidity event for purposes of this Agreement), Shares received by the Advisor or its
Affiliates for any consideration other than cash and the Distributions in respect of such Shares
shall be excluded.

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

Triggering Event. With regard to any Investment Asset, the occurrence of any of the following
during the six months after the closing date of the acquisition of the Investment Asset: (a) the
failure by an obligor on an Investment Asset to pay rent, interest or principal, or other material
payment, to the Company when due (after giving effect to all applicable grace periods) or (b) the
obligor on an Investment (including a guarantor) (1) commences a voluntary case or proceeding under
applicable

 

7

 

bankruptcy or reorganization law, (2) consents to the entry of a decree or order for relief in
an involuntary proceeding under applicable bankruptcy law, (3) consents to the filing of a petition
or the appointment of a custodian, receiver or liquidator, (4) makes an assignment for the benefit
of creditors, (5) admits in writing its inability to pay its debts as they come due; (6) is the
subject of a decree or order for relief entered by a court of competent jurisdiction in respect of
such obligor in an involuntary bankruptcy case or proceeding, or a decree or order adjudging such
obligor bankrupt or insolvent or appointing a custodian, receiver or liquidator for the obligor.

2. APPOINTMENT. The Company hereby appoints the Advisor to serve as its advisor on the terms
and conditions set forth in this Agreement, and the Advisor hereby accepts such appointment.

3. DUTIES OF THE ADVISOR. The Advisor undertakes to use its best efforts to present to the
Company potential investment opportunities and to provide a continuing and suitable investment
program consistent with the investment objectives and policies of the Company as determined and
adopted from time to time by the Board. In performance of this undertaking, subject to the
supervision of the Board and consistent with the provisions of the Articles of Incorporation and
Bylaws of the Company and any Prospectus pursuant to which Shares are offered, the Advisor shall,
either directly or by engaging an Affiliate:

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

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

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

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

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

 

8

 

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

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

(h) negotiate on behalf of the Company with banks or lenders for loans to be made to
the Company, and negotiate on behalf of the Company with investment banking firms and
broker-dealers or negotiate private sales of Shares and Securities or obtain loans for the
Company, but in no event in such a way so that the Advisor shall be acting as broker-dealer
or underwriter; and provided, further, that any fees and costs payable to third parties
incurred by the Advisor in connection with the foregoing shall be the responsibility of the
Company;

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

(j) obtain for, or provide to, the Company such services as may be required in
acquiring, managing and disposing of Investment Assets, including, but not limited to:
(i) the negotiation, making and servicing of Loans; (ii) the disbursement and collection of
Company monies; (iii) the payment of debts of and fulfillment of the obligations of the
Company; and (iv) the handling, prosecuting and settling of any claims of or against the
Company, including, but not limited to, foreclosing and otherwise enforcing mortgages and
other liens securing the Loans;

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

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

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

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

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

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

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

 

9

 

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

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

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

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

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

4. AUTHORITY OF ADVISOR.

(a) Pursuant to the terms of this Agreement (and subject to the restrictions included
in Paragraphs (b), (c) and (d) of this Section 4 and in Section 7 hereof), and subject to
the continuing and exclusive authority of the Board over the management of the Company, the
Board hereby delegates to the Advisor the authority to: (1) locate, analyze and select
investment opportunities; (2) structure the terms and conditions of transactions pursuant to
which investments will be made or acquired for the Company; (3) acquire Property, make or
acquire Loans and make or acquire Other Permitted Investment Assets in compliance with the
investment objectives and policies of the Company; (4) arrange for financing or refinancing,
or make changes in the asset or capital structure of, and dispose of or otherwise deal with,
Investment Assets; (5) enter into leases and service contracts for Properties, and perform
other property level operations; (6) oversee non-affiliated property managers and other
non-affiliated Persons who perform services for the Company; and (7) undertake accounting
and other record-keeping functions at the Investment Asset level.

 

10

 

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

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

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

(e) The Board may, at any time upon the giving of notice to the Advisor, modify or
revoke the authority set forth in this Section 4. If and to the extent the Board so
modifies or revokes the authority contained herein, the Advisor shall henceforth comply with
such modification or revocation, provided however, that such modification or revocation
shall be effective upon receipt by the Advisor and shall not be applicable to investment
transactions to which the Advisor has committed the Company prior to the date of receipt by
the Advisor of such notification.

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

6. RECORDS; ACCESS. The Advisor shall maintain appropriate records of all its activities
hereunder and make such records available for inspection by the Board and by counsel, auditors and
authorized agents of the Company, at any time or from time to time during normal business hours.
The Advisor shall at all reasonable times have access to the books and records of the Company.

 

11

 

7. LIMITATIONS ON ACTIVITIES. Anything else in this Agreement to the contrary
notwithstanding, the Advisor shall refrain from taking any action which, in its sole judgment made
in good faith, would adversely affect the status of the Company as a REIT, subject the Company to
regulation under the Investment Company Act of 1940, would violate any law, rule, regulation or
statement of policy of any governmental body or agency having jurisdiction over the Company, its
Shares or its Securities, or otherwise not be permitted by the Articles of Incorporation or Bylaws,
except if such action shall be ordered by the Board, in which case the Advisor shall notify
promptly the Board of the Advisor’s judgment of the potential impact of such action and shall
refrain from taking such action until it receives further clarification or instructions from the
Board. In such event the Advisor shall have no liability for acting in accordance with the
specific instructions of the Board so given. Notwithstanding the foregoing, the Advisor, its
shareholders, directors, officers and employees, and partners, shareholders, directors and officers
of the Advisor’s shareholders and Affiliates of any of them, shall not be liable to the Company, or
to the Directors or Shareholders for any act or omission by the Advisor, its shareholders,
directors, officers and employees, or partners, shareholders, directors or officers of the
Advisor’s shareholders except as provided in Sections 20 and 22 hereof.

8. RELATIONSHIP WITH DIRECTORS. There shall be no limitation on any shareholder, director,
officer, employee or Affiliate of the Advisor serving as a Director or an officer of the Company,
except that no employee of the Advisor or its Affiliates who also is a Director or officer of the
Company shall receive any compensation from the Company for serving as a Director or officer other
than for reasonable reimbursement for travel and related expenses incurred in attending meetings of
the Board; for the avoidance of doubt, the limitations of this Section 8 shall not apply to any
compensation paid by the Advisor or any Affiliate for which the Company reimbursed the Advisor or
Affiliate in accordance with Section 10 hereof.

9. FEES.

(a) ASSET MANAGEMENT FEE. The Company shall pay to the Advisor as compensation for the
advisory services rendered to the Company hereunder an amount equal to one percent per annum
of the Adjusted Invested Assets of the Company (the “Asset Management Fee”) calculated as
set forth below. The Asset Management Fee will be calculated monthly, beginning with the
month in which the Company first makes an investment in Investment Assets, on the basis of
one-twelfth of one percent of the Adjusted Invested Assets for that month, computed as a
daily average. The Asset Management Fee shall be prorated for the number of days during the
month that the Company owns an Investment Asset. One-half of the Asset Management Fee with
respect to an Investment Asset will be paid on the first business day of each month,
beginning on the first business day after the month in which the Investment Asset was
acquired or originated. The remaining one-half of the Asset Management Fee shall be
subordinated to the extent described below and shall be payable quarterly. The subordinated
Asset Management Fee for any quarter shall be payable only if the Company has generated cash
flow from operations in the aggregate of no less than 7% of Gross Offering Proceeds for the
period beginning with the Initial Closing Date and ending on the last day of the most
recently completed fiscal quarter. Any portion of the subordinated Asset Management Fee not
paid due to the Company’s failure to meet the foregoing threshold shall be paid by the
Company, to the extent it is not restricted by the 2%/25% Guidelines as described below, at
the end of the next fiscal quarter through which the Company has met the foregoing
threshold. If at the end of any fiscal quarter, the Company’s Operating Expenses exceed the
2%/25% Guidelines over the immediately preceding 12 months, payment of the subordinated
Asset Management Fee will be withheld consistent with Section 13. For purposes of
calculating the value per share of restricted stock given for payment of the Asset
Management Fee, the price per share shall be: (i) the net asset value per share as
determined by the most recent appraisal performed by an independent

 

12

 

third party at the time such Asset Management Fee was earned or, if an appraisal has
not yet been made and accepted by the Company, (ii) $10 per share. Any part of the Asset
Management Fee that has been subordinated pursuant to this subsection (a) shall not be
deemed earned until such time as payable hereunder.

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

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

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

(e) LOAN REFINANCING FEE. The Company shall pay to the Advisor for all qualifying loan
refinancings of Properties a Loan Refinancing Fee in the amount up to one percent of the
principal amount of the refinanced loan. Any Loan Refinancing Fee shall be due and payable
upon the funding of the related loan or as soon thereafter as is reasonably practicable.

 

13

 

A refinancing will qualify for a Loan Refinancing Fee only if the refinanced loan is
secured by Property and (i) the maturity date of the refinanced loan (which must have a term
of five years or more) is less than one year from the date of the refinancing; or (ii) the
terms of the new loan represent, in the judgment of a majority of the Independent Directors,
an improvement over the terms of the refinanced loan; or (iii) the new loan is approved by
the Board, including a majority of the Independent Directors and, in each case, the Loan
Refinancing Fee is found, in the judgment of a majority of the Independent Directors, to be
in the best interest of the Company.

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

(g) SUBORDINATED DISPOSITION FEE. If the Advisor or an Affiliate provides a
substantial amount of services in the sale of a Property or Loan, the Advisor or such
Affiliate shall receive a fee equal to the lesser of: (i) 50% of the Competitive Real Estate
Commission and (ii) three percent of the Contract Sales Price of such Property (the
“Subordinated Disposition Fee”). The Subordinated Disposition Fee will be paid only if
Shareholders have received in the aggregate a return of 100% of Initial Investor Capital
(through liquidity or Distributions) plus a Preferred Return through the end of the fiscal
quarter immediately preceding the date the Subordination Disposition Fee is paid. The
return requirement will be deemed satisfied if the total Distributions paid by the Company
have satisfied the Preferred Return requirement and the Market Value of the Company equals
or exceeds Adjusted Investor Capital. To the extent that Subordinated Disposition Fees are
not paid by the Company on a current basis due to the foregoing limitation, the unpaid fees
will be due and paid at such time as the limitation has been satisfied. The Subordinated
Disposition Fee may be paid in addition to real estate commissions paid to non-Affiliates,
provided that the total of all real estate commissions in respect of a Property paid to all
Persons by the Company and the Subordinated Disposition Fee shall not exceed an amount equal
to the lesser of: (i) six percent of the Contract Sales Price of such Property or (ii) the
Competitive Real Estate Commission. The Advisor shall present to the Independent Directors
such information as they may reasonably request to review the level of services provided by
the Advisor in connection with a disposition and the basis for the calculation of the amount
of the accrued Subordinated Disposition Fees on an annual basis. The amount of any accrued
Subordinated Disposition Fee shall be deemed conclusively established once it has been
approved by the Independent Directors, absent a subsequent finding of error. No payment of
Subordinated Disposition Fees shall be made prior to review and approval of such information
by the Independent Directors. If this Agreement is terminated prior to such time as the
Shareholders have received (through liquidity or Distributions) a return of 100% of Initial
Investor Capital plus a Preferred Return through the date of termination of this Agreement,
an appraisal of the Properties then owned by the Company shall be made and any unpaid
Subordinated Disposition Fee on Properties sold prior to the date of termination will be
payable if the Appraised Value of the Properties then owned by the Company plus
Distributions to Shareholders prior to the date of termination of this Agreement (through
liquidity or Distributions) is equal to or greater than 100% of Initial Investor Capital
plus an amount sufficient to pay a Preferred Return through the date of termination of this
Agreement. If the Company’s Shares are listed on a national securities exchange or included
for quotation on Nasdaq and, at the time of such listing, the Advisor or an Affiliate has
provided a substantial amount of services in the sale of Property, for purposes of
determining whether the subordination conditions for the payment of the Subordinated
Disposition Fee have been satisfied, Shareholders will be deemed to have received a
Distribution in an amount equal to the Market Value of the Company.

(h) OTHER PERMITTED INVESTMENT ASSETS FEE. The Advisor may receive as compensation for
services rendered in connection with the investigation, selection, acquisition

 

14

 

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

(i) SUBORDINATED INCENTIVE FEE. A fee shall be payable to the Advisor in an amount
equal to 15% of Cash from Sales distributable to Shareholders after Shareholders have
received a return of 100% of Initial Investor Capital (through liquidity or Distributions)
plus a Preferred Return through the date payment is made (the “Subordinated Incentive Fee”).
For these purposes the Shareholders will be deemed to have been provided liquidity if the
Shares are listed on a national security exchange or included for quotation on Nasdaq. In
the event the Shares are listed on a national securities exchange or included for quotation
on Nasdaq, the Advisor shall be paid the Subordinated Incentive Fee in an amount equal to
12% of the excess (the “Excess Return”) of (A) the sum (the “Hypothetical Return”) of (i)
the Market Value of the Company plus (ii) the total of the Distributions paid to
Shareholders from the Initial Closing Date until the date the Shares are listed or included
for quotation over (B) the sum of (i) 100% of Initial Investor Capital and (ii) the total
amount of the Distributions required to be paid to Shareholders in order to pay the
Preferred Return through the date the Market Value is determined. The Subordinated
Incentive Fee shall be increased to 13% of the Excess Return if the Hypothetical Return is
an amount sufficient to return to investors 100% of Initial Investor Capital plus a
Cumulative Return of 8% or more but less than 9%; 14% if the Hypothetical Return is an
amount sufficient to return 100% of Initial Investor Capital plus a Cumulative Return of 9%
or more but less than 10%; and 15% if the Hypothetical Return is an amount sufficient to
return 100% of Initial Investor Capital plus a Cumulative Return of 10% or more. The
Cumulative Return shall be measured from the Initial Closing Date through the last day on
which the Market Value is determined. The fee may only be paid if the average closing price
of the Shares over any consecutive three-month period ending within 24 months of the date of
listing is sufficient, when added to Distributions previously paid from the Initial Closing
Date through the end of such three-month period, to return 100% of Initial Investor Capital
plus a 6% Cumulative Return from the Initial Closing Date through the last day of such
three-month period. The return requirement will also be deemed satisfied if the total
Distributions paid by the Company has satisfied the Preferred Return requirement and the
Market Value of the Company equals or exceeds Adjusted Investor Capital. The Company shall
have the option to pay such fee in the form of a promissory note or as set forth in Section
9(l). The promissory note shall be fully amortizing over five years, provide for quarterly
payments and bear interest at the prime rate announced from time to time in The Wall Street
Journal.

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

 

15

 

(k) CHANGES TO FEE STRUCTURE. In the event the Shares are listed on a national
securities exchange or are included for quotation on Nasdaq, the Company and the Advisor
shall negotiate in good faith to establish a fee structure appropriate for an entity with a
perpetual life. A majority of the Independent Directors must approve the new fee structure
negotiated with the Advisor. In negotiating a new fee structure, the Independent Directors
may consider any of the factors they deem relevant, including but not limited to: (a) the
size of the Advisory Fee in relation to the size, composition and profitability of the
Company’s portfolio; (b) the success of the Advisor in generating opportunities that meet
the investment objectives of the Company; (c) the rates charged to other REITs and to
investors other than REITs by Advisors performing similar services; (d) additional revenues
realized by the Advisor and its Affiliates through their relationship with the Company,
including loan administration, underwriting or broker commissions, servicing, engineering,
inspection and other fees, whether paid by the Company or by others with whom the Company
does business; (e) the quality and extent of service and advice furnished by the Advisor;
(f) the performance of the investment portfolio of the Company, including income, conversion
or appreciation of capital, frequency of problem investments and competence in dealing with
distress situations; and (g) the quality of the portfolio of the Company in relationship to
the investments generated by the Advisor for its own account. The new fee structure can be
no more favorable to the Advisor than the current fee structure. The Independent Directors
shall not approve any new fee structure that is in their judgment more favorable (taken as a
whole) to the Advisor than the current fee structure.

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

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

(i) all Acquisition Expenses;

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

(iii) expenses other than Acquisition Expenses incurred in connection with the
investment of the funds of the Company, including, without limitation, costs of
retaining industry or economic consultants and finder’s fees and similar payments,
to the

 

16

 

extent not paid by the seller of the Investment Asset or another third party,
regardless of whether such expenses were incurred in transactions where a fee is not
payable to the Advisor;

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

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

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

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

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

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

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

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

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

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

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

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

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

 

17

 

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

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

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

13. LIMITATION ON EXPENSES.

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

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

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

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

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

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

 

18

 

14. OTHER ACTIVITIES OF THE ADVISOR. Nothing herein contained shall prevent the Advisor from
engaging in other activities, including without limitation direct investment by the Advisor and its
Affiliates in assets that would be suitable for the Company, the rendering of advice to other
investors (including other REITs) and the management of other programs advised, sponsored or
organized by the Advisor or its Affiliates; nor shall this Agreement limit or restrict the right of
the Advisor or any of its Affiliates or of any director, officer, employee or shareholder of the
Advisor or its Affiliates to engage in any other business or to render services of any kind to any
other partnership, corporation, firm, individual, trust or association. The Advisor may, with
respect to any investment in which the Company is a participant, also render advice and service to
each other participant therein. Without limiting the generality of the foregoing, the Company
acknowledges that the Advisor provides or will provide services to other CPA REIT funds, whether
now in existence or formed hereafter, and that the Advisor and its Affiliates may invest for their
own account. The Advisor shall be responsible for promptly reporting to the Board the existence of
any actual or potential conflict of interest that arises that may affect its performance of its
duties under this Agreement. If the Sponsor, Advisor, Director or Affiliates thereof has or have
sponsored other investment programs with similar investment objectives which have investment funds
available at the same time as the Company, it shall be the duty of the Advisor to adopt a
reasonable method by which properties are to be allocated to the competing investment entities and
to use its best efforts to apply such method fairly to the Company.

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

If the Advisor or its Affiliates is presented with a potential investment which might be made
by the Company and by another investment entity which the Advisor or its Affiliates advises or
manages, the Advisor shall consider, among other things, the investment portfolio of each entity,
cash flow of each entity, the effect of the acquisition on the diversification of each entity’s
portfolio, rental payments during any renewal period, the estimated income tax effects of the
purchase on each entity, the policies of each entity relating to leverage, the funds of each entity
available for investment, the amount of equity required to make the investment and the length of
time such funds have been available for investment.

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

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

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

(a) If the Advisor shall breach this Agreement; provided that such breach (i) is of a
material term or condition of this Agreement and (ii) the Advisor has not cured such breach

 

19

 

within 30 days of written notice thereof or, in the case of any breach that cannot be
cured within 30 days by reasonable effort, has not taken all necessary action within a
reasonable time period to cure such breach;

(b) If the Advisor shall be adjudged bankrupt or insolvent by a court of competent
jurisdiction, or an order shall be made by a court of competent jurisdiction for the
appointment of a receiver, liquidator, or trustee of the Advisor, for all or substantially
all of its property by reason of the foregoing, or if a court of competent jurisdiction
approves any petition filed against the Advisor for reorganization, and such adjudication or
order shall remain in force or unstayed for a period of 30 days; or

(c) If the Advisor shall institute proceedings for voluntary bankruptcy or shall file a
petition seeking reorganization under the federal bankruptcy laws, or for relief under any
law for relief of debtors, or shall consent to the appointment of a receiver for itself or
for all or substantially all of its property, or shall make a general assignment for the
benefit of its creditors, or shall admit in writing its inability to pay its debts,
generally, as they become due.

Any notice of termination under Section 16 or 17 shall be effective on the date specified in
such notice, which may be the day on which such notice is given or any date thereafter. The
Advisor agrees that if any of the events specified in Section 17(b) or (c) shall occur, it shall
give written notice thereof to the Board within 15 days after the occurrence of such event.

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

19. ASSIGNMENT PROHIBITION. This Agreement may not be assigned by the Advisor without the
approval of the Board (including a majority of the Independent Directors); provided, however, that
such approval shall not be required in the case of an assignment to a corporation, partnership,
association, trust or organization which may take over the assets and carry on the affairs of the
Advisor, provided: (i) that at the time of such assignment, such successor organization shall be
owned substantially by an entity directly or indirectly controlled by the Sponsor and only if such
entity has a net worth of at least $5,000,000, and (ii) that the board of directors of the Advisor
shall deliver to the Board a statement in writing indicating the ownership structure and net worth
of the successor organization and a certification from the new Advisor as to its net worth. Such
an assignment shall bind the assignees hereunder in the same manner as the Advisor is bound by this
Agreement. The Advisor may assign any rights to receive fees or other payments under this
Agreement without obtaining the approval of the Board. This Agreement shall not be assigned by the
Company without the consent of the Advisor, except in the case of an assignment by the Company to a
corporation or other organization which is a successor to the Company, in which case such successor
organization shall be bound hereunder and by the terms of said assignment in the same manner as the
Company is bound by this Agreement.

20. PAYMENTS TO AND DUTIES OF ADVISOR UPON TERMINATION.

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

 

20

 

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

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

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

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

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

(vi) all earned but unpaid Property Management Fees payable to the Advisor or
its Affiliates relating to the management of any property prior to the termination
of this Agreement.

(b) Notwithstanding the foregoing, if this Agreement is terminated by the Company for
Cause or by the Advisor other than for Good Reason, the Advisor will not be entitled to
receive the sums in Section 20(a) above.

(c) If this Agreement is terminated by the Company for any reason other than Cause, by
either party in connection with a Change of Control, or by the Advisor for Good Reason, the
Advisor shall be entitled to payment of the Termination Fee. Notwithstanding the foregoing,
the Advisor shall not be entitled to payment of the Termination Fee if:

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

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

(d) Any and all amounts payable to the Advisor pursuant to Section 20(a) and Section
20(c) that, irrespective of the termination, were payable on a current basis prior to the
Termination Date either because they were not subordinated or all conditions to their
payment had been satisfied, shall be paid within 90 days after the Termination Date. All
other amounts payable to the Advisor pursuant to Section 20(a) and Section 20(c)shall be
paid in a manner determined by the Board, but in no event on terms less favorable to the
Advisor than those represented by a note (i) maturing upon the liquidation of the Company or
three years from the Termination Date, whichever is earlier, (ii) with no less than twelve
equal quarterly installments and (iii) bearing a fair, competitive and commercially
reasonable interest rate (the “Note”) . The Note, if any, may be prepaid by the Company at
any time prior to maturity with accrued interest to the date of payment but without premium
or penalty. Notwithstanding the foregoing, any

 

21

 

amounts that relate to Investment Assets (i) shall be an amount which provides
compensation to the Advisor only for that portion of the holding period for the respective
Investment Assets during which the Advisor provided services to the Company, (ii) shall not
be due and payable until the Investment Asset to which such amount relates is sold or
refinanced, and (iii) shall not bear interest until the Investment Asset to which such
amount relates is sold or refinanced. A portion of the amount shall be paid as each
Investment Asset owned by the Company on the Termination Date is sold. The portion of such
amount payable upon each such sale shall be equal to (i) such amount multiplied by (ii) the
percentage calculated by dividing the fair value (at the Termination Date) of the Investment
Asset sold by the Company divided by the total fair value (at the Termination Date) of all
Investment Assets owned by the Company on the Termination Date.

(e) The Advisor shall promptly upon termination:

(i) pay over to the Company all money collected and held for the account of the
Company pursuant to this Agreement, after deducting any accrued compensation and
reimbursement for its expenses to which it is then entitled;

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

(iii) deliver to the Board all assets, including Properties and Loans, and
documents of the Company then in the custody of the Advisor; and

(iv) cooperate with the Company to provide an orderly management transition.

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

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

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

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

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

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

 

22

 

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

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

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

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

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

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

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

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

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

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

	 	 	 	 	 
	 

	 	To the Board 

and to the Company:
	 	Corporate Property Associates 14 Incorporated

50 Rockefeller Plaza

New York, NY 10020
	 
	 	 	 	 
	 

	 	To the Advisor:
	 	Carey Asset Management Corp.

50 Rockefeller Plaza

 

23

 

New York, NY 10020

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

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

25. SEVERABILITY. The provisions of this Agreement are independent of and severable from each
other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the
fact that for any reason any other or others of them may be invalid or unenforceable in whole or in
part.

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

27. ENTIRE AGREEMENT. This Agreement contains the entire agreement and understanding among
the parties hereto with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or
written, of any nature whatsoever with respect to the subject matter hereof. The express terms
hereof control and supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof. This Agreement may not be modified or amended other than by an agreement
in writing.

28. INDULGENCES, NOT WAIVERS. Neither the failure nor any delay on the part of a party to
exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude
any other or further exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver.

29. GENDER. Words used herein regardless of the number and gender specifically used, shall be
deemed and construed to include any other number, singular or plural, and any other gender,
masculine, feminine or neuter, as the context requires.

30. TITLES NOT TO AFFECT INTERPRETATION. The titles of Sections and subsections contained in
this Agreement are for convenience only, and they neither form a part of this Agreement nor are
they to be used in the construction or interpretation hereof.

31. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original as against any party whose signature appears
thereon, and all of which shall together constitute one and the same instrument. This Agreement
shall become binding when one or more counterparts hereof, individually or taken together, shall
bear the signatures of all of the parties reflected hereon as the signatories.

32. NAME. W.P. Carey & Co. LLC has a proprietary interest in the name “Corporate Property
Associates” and “CPA(R)” Accordingly, and in recognition of this right, if at any time the Company
ceases to retain Carey Asset Management Corp., or an Affiliate thereof to perform the services of
Advisor, the Company will, promptly after receipt of written request from Carey Asset Management
Corp., cease to conduct business under or use the name “Corporate Property Associates” or “CPA(R)”
or any diminutive thereof and the Company shall use its best efforts to change the name of the
Company to a

 

24

 

name that does not contain the name “Corporate Property Associates” or “CPA(R)” or any other
word or words that might, in the sole discretion of the Advisor, be susceptible of indication of
some form of relationship between the Company and the Advisor or any Affiliate thereof. Consistent
with the foregoing, it is specifically recognized that the Advisor or one or more of its Affiliates
has in the past and may in the future organize, sponsor or otherwise permit to exist other
investment vehicles (including vehicles for investment in real estate) and financial and service
organizations having “Corporate Property Associates” or “CPA(R)” as a part of their name, all
without the need for any consent (and without the right to object thereto) by the Company or its
Directors.

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

 

25

 

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

	 	 	 	 	 
	 	CORPORATE PROPERTY ASSOCIATES 

14 INCORPORATED

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

Chief Financial Officer 	 
	 
	 	CAREY ASSET MANAGEMENT CORP.

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

 

 

 

SCHEDULE A

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

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

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

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

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

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

Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have occurred for
purposes of the foregoing clause (i) solely as the result of an acquisition of securities by the
Company which, by reducing the number of Shares of Common Stock outstanding, increases (A) the
proportionate number of Shares beneficially owned by any person to 25% or more of the Shares then
outstanding, or

 

Sch A-1

 

(B) the proportionate voting power represented by the Shares beneficially owned by any person
to 25% or more of the combined voting power of all then outstanding voting Securities; provided,
however, that if any person referred to in clause (A) or (B) of this sentence shall thereafter
become the beneficial owner of any additional Shares or other Voting Securities (other than
pursuant to a Share split, Share dividend, or similar transaction), then a “Change of Control”
shall be deemed to have occurred for purposes of the foregoing clause (i).

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

 

Sch A-2

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