Document:

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                                                                    EXHIBIT 10.4

                          CORPORATE PROPERTY ASSOCIATES
                           INTERNATIONAL INCORPORATED
                              50 ROCKEFELLER PLAZA
                               NEW YORK, NY 10020

                             SALES AGENCY AGREEMENT

                                                               ______ ____, 2003

Carey Financial Corporation
50 Rockefeller Plaza
New York, NY 10020

Ladies and Gentlemen:

         Corporate Property Associates International Incorporated, a Maryland
corporation (the "Company"), hereby confirms its agreement with you as follows:

         1. Introduction. This Sales Agency Agreement (the "Agreement") sets
forth the understandings and agreements between the Company and you whereby you
will offer and sell on a best efforts basis for the account and risk of the
Company, along with a group of selected dealers (the "Selected Dealers") and
registered investment advisors (the "Selected Investment Advisors") to be formed
with your assistance, shares of common stock of the Company, par value $0.001
per share, registered on Form S-11 at $10 per share (subject to certain volume
discounts), which consist of (i) 25,000,000 shares (the "Firm Shares") of its
common stock and (ii) for the sole purpose of covering over-allotments in
connection with the sale of the Firm Shares, at your option up to an additional
3,750,000 shares (the "Additional Shares") of its common stock. The Firm Shares
and any Additional Shares are referred to herein as the "Shares." The Shares are
more fully described in the Registration Statement referred to below.

         2. Representations and Warranties of the Company

         The Company represents, warrants and agrees that:

         (a) Registration Statement and Prospectus. The Company has filed with
the Securities and Exchange Commission (the "Commission") a registration
statement on Form S-11 (File No. 333-xxxxxx), containing a related preliminary
prospectus, for the registration of the Shares under the Securities Act of 1933,
as amended (the "Securities Act and the regulations thereunder (the
"Regulations"), and will prepare and file with the Commission any amendments to
the registration statement necessary for them to become effective, including an
amended preliminary prospectus. The registration statement, as amended, and the
amended prospectus on file with the Commission at the time the registration
statement becomes effective (including financial statements, exhibits and all
other documents related thereto filed as a part thereof or incorporated

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therein), and any registration statement filed under Rule 462(b) of the
Securities Act, are herein called the "Registration Statement" and the
"Prospectus," respectively, except that if the Registration Statement is amended
by a post-effective amendment, the term "Registration Statement" shall, from and
after the declaration of effectiveness of such post-effective amendment, refer
to the Registration Statement as so amended and the term "Prospectus" shall
refer to the prospectus as so amended, and if the Prospectus filed by the
Company pursuant to Rule 424(b) or 424(c) of the Regulations shall differ from
the Prospectus on file at the time the Registration Statement or any
post-effective amendment shall become effective, the term "Prospectus" shall
refer to the Prospectus filed pursuant to either of such Rules from and after
the date on which it shall have been mailed for filing with the Commission.
Further, if a separate prospectus is filed and becomes effective with respect
solely to the Distribution Reinvestment and Stock Purchase Plan ("DRIP")(a "DRIP
Prospectus"), the term "Prospectus" shall refer to such DRIP Prospectus from and
after the declaration of effectiveness of such DRIP Prospectus.

         (b) Compliance with the Securities Act. The Registration Statement has
been prepared and filed by the Company in conformity with the Securities Act and
the applicable instructions and Regulations. The Commission has not issued any
order preventing or suspending the use of any prospectus or preliminary
prospectus filed with the Registration Statement or any amendments thereto. At
the time the Registration Statement becomes effective (the "Effective Date") and
at the time that any post-effective amendments thereto become effective and at
all times subsequent thereto up to the Termination Date (as defined in Section
3(d) hereof), the Registration Statement and Prospectus (as amended or as
supplemented) will contain all statements which are required to be stated
therein in accordance with the Securities Act and the Regulations and will in
all respects conform to the requirements of the Securities Act and the
Regulations, and will not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, and each preliminary prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the Securities Act, complied when so filed
in all material respects with the Securities Act and Regulations and did not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

         (c) The Company. The Company has been duly incorporated and validly
exists as a corporation in good standing under the laws of the State of Maryland
with full power and authority to conduct the business in which it is engaged in
as described in the Prospectus. The Company is duly qualified to do business as
a foreign corporation and is in good standing in each other jurisdiction in
which it owns or leases property of a nature, or transacts business of a type
that would make such qualification necessary.

         (d) The Shares. The Shares, when issued, will be duly and validly
issued, fully paid and non-assessable and will conform to the description
thereof contained in the Prospectus; no holder thereof will be subject to
personal liability for the obligations of the Company solely by reason of being
such a holder; such Shares are not subject to the preemptive rights of any
shareholder of

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the Company; and all corporate action required to be taken for the
authorization, issue and sale of such Shares has been validly and sufficiently
taken.

         (e) Violations. The Company is not in violation of its Articles of
Incorporation ("Articles") or Bylaws or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument to which it is a party or by which it or any of
its properties is bound.

         (f) Taxes. The Company has filed all Federal, state and foreign income
tax returns which have been required to be filed on or before the due date
(taking into account all extensions of time to file) and has paid or provided
for the payment of all taxes indicated by said returns and all assessments
received by the Company to the extent that such taxes or assessment have become
due.

         (g) Pending Action. There is no action, suit or proceeding pending or,
to the best of the knowledge, information and belief of the Company, threatened
to which the Company is a party, before or by any court or governmental agency
or body.

         (h) Financial Statements. The financial statements of the Company filed
as part of the Registration Statement and those included in the Prospectus
present fairly the financial position of the Company as of the date indicated
and the results of its operations for the periods specified; said financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis; and PricewaterhouseCoopers LLP, whose
report is filed with the Commission as a part of the Registration Statement, are
independent accountants as required by the Securities Act and the Regulations.

         (i) No Subsequent Material Events. Since the respective dates as of
which information is given in the Registration Statement and the Prospectus,
except as may otherwise be stated in or contemplated by the Registration
Statement and the Prospectus, (a) there has not been any material adverse change
in the condition (financial or otherwise) of the Company or in the earnings,
affairs or business prospects of the Company, whether or not arising in the
ordinary course of business, and (b) there have not been any material
transactions entered into by the Company except in the ordinary course of
business.

         (j) Investment Company Act. The Company does not intend to conduct its
business so as to be an "investment company" as that term is defined in the
Investment Company Act of 1940, as amended and the rules and regulations
thereunder, and it will exercise reasonable diligence to ensure that it does not
become an "investment company" within the meaning of the Investment Company Act
of 1940.

         (k) Authorization of Agreement. This Agreement and the Advisory
Agreement (the "Advisory Agreement") between the Company and W. P. Carey
International LLC (the "Advisor") have been duly and validly authorized,
executed and delivered by the Company and constitute the valid agreements of the
Company enforceable in accordance with their terms. The execution and delivery
of this Agreement and the Advisory Agreement, the consummation of the

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transactions herein and therein contemplated and the compliance with the terms
of this Agreement and the Advisory Agreement by the Company will not conflict
with or constitute a default under the Articles or bylaws or any indenture,
mortgage, deed of trust, lease or other agreement or instrument to which the
Company is a party, or any law, order, rule or regulation, writ, injunction or
decree of any government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Company, or any of its property, except to
the extent that the enforceability of the indemnity and/or contribution
provisions contained in Section 8 of this Agreement may be limited under
applicable securities law; and no consent, approval, authorization or order of
any court or other governmental agency or body has been or is required for the
performance of this Agreement or the Advisory Agreement by the Company, or for
the consummation of the transactions contemplated hereby and thereby (except
such as have been obtained under the Securities Act or as may be required under
state securities or "blue sky" laws in connection with the distribution of the
Shares).

         (l) Description of Agreements. The Company is not a party to or bound
by any contract or other instrument of a character required to be described in
the Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described and filed as required.

         (m) Qualification as a Real Estate Investment Trust. The Company
intends to satisfy the requirements of the Internal Revenue Code of 1986 as
amended (the "Code") for qualification of the Company as a real estate
investment trust. The Company has elected to be treated as a real estate
investment trust under the Code and will direct the investment of the proceeds
of the offering of the Shares in such a manner, and will otherwise operate the
business of the Company, so as to comply with such requirements.

         (n) Description of Properties. On the Effective Date and at all times
subsequent thereto up to the Termination Date, the section of the Prospectus
entitled "Description of Properties" will include, among other things, the
location and general character of all materially important real properties held
or intended to be acquired by the Company, the nature of the Company's title to
or other interest in such properties and the nature and amount of all material
mortgages or other liens or encumbrances against such properties and the
principal terms of any lease of any such properties and the lessee thereof and
such descriptions will be correct in all material respects.

         (o) Gramm-Leach-Bliley Act and USA Patriot Act. The Company complies
with the applicable privacy provision of the Gramm-Leach-Bliley Act and the
applicable provisions of the USA Patriot Act, in all material respects.

         3. Sales of Shares. On the basis of the representations, warranties and
covenants herein contained, but subject to the terms and conditions herein set
forth, the Company hereby appoints you as its sales agent ("Sales Agent") to
solicit purchasers, along with the Selected Dealers and Selected Investment
Advisors (as defined in Section 3(c)), for the Shares during the period (the
"Effective Term") from the Effective Date to the Termination Date, including the
Shares pursuant to the DRIP, each in the manner described in the Registration
Statement. Subject to the performance by the Company of all obligations to be
performed by it hereunder and the completeness and accuracy of all of its
representations and warranties, you agree to use your best

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efforts as Sales Agent, promptly following written or telegraphic receipt of
notice of the Effective Date from the Company, to offer and sell such number of
Shares as contemplated by this Agreement at the price stated in the Prospectus.
In addition, the Company hereby grants to you the option to offer up to
3,750,000 Additional Shares at the same purchase price per share set forth in
Section 3(a) below, for the sole purpose of covering over-allotments in your
sale of Firm Shares. This option may be exercised at any time and from time to
time, in whole or in part, on or before the thirtieth day preceding the second
anniversary of the date of the Prospectus, by written notice by you to the
Company. Such notice shall set forth the aggregate number of Additional Shares
as to which the option is being exercised.

         (a) Purchase of Shares. The purchase of Shares must be made during the
offering period described in the Prospectus, or after such offering period in
the case of purchases made pursuant to the DRIP (each such purchase hereinafter
defined as an "Order"). Persons desiring to purchase Shares are required to (i)
deliver to you, the appropriate Selected Dealer or Selected Investment Advisor a
check in the amount of $10 per Share purchased (subject to certain volume
discounts or other discounts as described in the prospectus, or such other per
share price as may be applicable pursuant to the DRIP) payable to The Bank of
New York, as escrow agent (the "Escrow Agent"), or (ii) authorize a debit of
such amount to the account such purchaser maintains with you, the appropriate
Selected Dealer or Selected Investment Advisor. For investors residing in
certain states, an order form in the form attached to the Prospectus (each an
"Order Form") must be completed and submitted to the Company. On a daily basis,
you will submit all checks received from investors and transfer, via Federal
Reserve bank wire, the total amount debited from investor accounts for the
purchase of Shares along with a list including the name, address and telephone
number of, the social security number or taxpayer identification number of, the
brokerage account number of (if applicable), the number of Shares purchased by,
any election to participate in the DRIP by, and the total dollar amount of
investment by, each investor on whose behalf checks are submitted or the wire
transfer is made. You also will forward all Order Forms to the Company. You
shall use your best efforts to wire such funds or transmit checks to the Escrow
Agent not later than noon of the next business day after receipt by you from
your customer of each Order. You will advise the Escrow Agent whether the funds
you are submitting are attributable to individual retirement accounts, Keogh
plans, or any other employee benefit plan subject to Title I of the Employee
Retirement Income Security Act of 1974 or from some other type of investor.

         All Orders solicited by you will be strictly subject to review and
acceptance by the Company and the Company reserves the right in its absolute
discretion to reject any Order or to accept or reject Orders in the order of
their receipt by the Company or otherwise. Within 30 days of receipt of an
Order, the Company must accept or reject such Order. If the Company elects to
reject such Order, within 10 business days after such rejection, it will notify
the purchaser of such fact and cause the return of such purchaser's funds
submitted with such application and any interest earned thereon. If you receive
no notice of rejection within the foregoing time limits or if funds submitted by
the purchaser are released from escrow to the Company within the foregoing time
limits, the Order shall be deemed accepted. You agree to make every reasonable
effort to determine that the purchase of Shares is a suitable and appropriate
investment for each potential purchaser of Shares based on information provided
by such purchaser regarding such purchaser's financial situation and investment
objectives. You

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agree to maintain, for at least six years, records of the information used by
you to determine whether an investment in Shares is suitable and appropriate for
a potential purchaser of Shares.

         (b) Closing Dates and Delivery of Shares. In no event shall a sale of
shares to an investor be completed until at least five business days after the
date the investor receives a copy of the Prospectus. On the date Shares are
first issued to Shareholders (such date being herein referred to as the "Initial
Closing Date"), the Escrow Agent will at such time and place as instructed by
you and the Company (which instruction shall be subject to the satisfaction on
such date of the conditions contained herein), deliver to the Company or its
designee immediately available funds in an amount equal to the Escrow Funds on
deposit in the Escrow Account prior to the date designated by the Company. If,
after the Initial Closing Date, additional sales of Shares are made, on each
such date (each such date being referred to as an "Additional Closing Date") and
at each such time and place as instructed by you and the Company (which
instruction shall be subject to the satisfaction on each such date of the
conditions contained herein), the Escrow Agent shall be required to deliver to
the Company or its designee immediately available funds in an amount equal to
the Escrow Funds on deposit in the Escrow Account prior to the date specified by
the Company. The Initial Closing Date and each Additional Closing Date are each
herein referred to as a "Closing Date." Closing dates for purchases made
pursuant to the DRIP will be as set forth in the DRIP.

         (c) Selected Dealers and Selected Investment Advisors. The Shares
offered and sold under this Agreement shall be offered and sold only by you as
Sales Agent and by a selling group of brokers or dealers (the "Selected
Dealers"), all of whom must be members in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"), who execute Selected
Dealer Agreements with you substantially in the form attached hereto as Exhibit
A, and Selected Investment Advisors, who execute Selected Investment Advisor
Agreements substantially in the form attached hereto as Exhibit B, all of whom
are acceptable to the Company and you (which acceptance shall not be
unreasonably withheld by you). You will assist the Company in forming the
selling group of Selected Dealers and Selected Investment Advisors. No firm
shall be invited to join the selling group of Selected Dealers or Selected
Investment Advisors if it is (i) currently subject to any suspension or
expulsion pursuant to the rules and regulations of the Commission, the state
securities commissions of any of the fifty states, the New York Stock Exchange,
Inc. or the American Stock Exchange, Inc. as those rules and regulations relate
to broker-dealers and registered investment advisors, or the rules and
regulations of the NASD or (ii) a "discount broker" as that term is commonly
understood in the brokerage industry. The Company and the Advisor or an
affiliate thereof agree to participate in your marketing efforts to the extent
that you may reasonably request and, without limiting the generality of the
foregoing, agree to visit the offices of Selected Dealers and Selected
Investment Advisors as you may reasonably designate.

         (d) Compensation. In consideration for your execution of this
Agreement, and for the performance of your obligations hereunder, the Company
agrees to pay or cause to be paid to you a selling commission (the "Selling
Commission") of six and one-half percent ($0.65) of the price of each Share
(except for Shares sold pursuant to the DRIP) sold by you or by a Selected
Dealer, provided that no commissions shall be paid for shares sold by Selected
Investment

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Advisors; provided further, however, that your Selling Commission shall be
reduced with respect to volume sales of Shares to "Single Purchasers" (as
defined in the Prospectus). In the case of such volume sales to Single
Purchasers, on orders of $250,000 or more your Selling Commission shall be
reduced by the amount of the Share purchase price discount. In the case of such
volume sales to Single Purchasers, your selling commission will be reduced for
each incremental share purchase in the total volume ranges set forth in the
table below. Such reduced share price will not affect the amount received by the
Company for investment. The following table sets forth the reduced Share
purchase price and Selling Commission payable to you:

<TABLE>
<CAPTION>
                                  PURCHASE PRICE PER            SELLING COMMISSION PER
     VOLUME DISCOUNT            SHARE FOR INCREMENTAL          SHARE ON TOTAL SALE FOR
       RANGE FOR A                  SHARE IN VOLUME              INCREMENTAL SHARE IN
    SINGLE PURCHASER                DISCOUNT RANGE              VOLUME DISCOUNT RANGE
    ----------------            ---------------------          -----------------------
<S>                             <C>                            <C>
$     2,000 - $  250,000                $10.00                          $0.65
$   250,001 - $  500,000                $ 9.85                          $0.50
$   500,001 - $  750,000                $ 9.70                          $0.35
$   750,001 - $1,000,000                $ 9.60                          $0.25
$ 1,000,001 - $5,000,000                $ 9.50                          $0.15
</TABLE>

         As an example, a single purchaser would receive 50,380 Shares rather
than 50,000 Shares for his/her or its investment of $500,000 and the Selling
Commission would be $28,940. On the first $250,000 of the investment there would
be no discount and the purchaser would receive 25,000 shares at $10 per share.
On the remaining $250,000, the per share price would be $9.85 and the purchaser
would receive 25,380 shares.

         A refund will be made to the purchaser for any fractional Shares based
on the public offering price if such refund is in excess of $1.00. In the
foregoing example, $7.00 would be refunded for the fractional Share.

         Selling Commissions for purchases of $5,000,000 or more are negotiable
but in no event will the proceeds to the Company be less than $9.35 per Share.
Selling Commissions paid will in all cases be the same for the same level of
sales.

         Notwithstanding the foregoing, Selling Commissions for all purchases
made by an investor pursuant to the DRIP shall be five percent of the purchase
price of each Share purchased pursuant to the DRIP.

         The Company will pay to you for reallowance to Selected Dealers only,
the amount of any due diligence expense reimbursement paid to the Selected
Dealers which you have agreed to pay in the amount of up to one-half percent of
the price of each Share sold by each Selected Dealer to which you have agreed to
pay such a fee.

         From your total commissions, you agree to reallow to each Selected
Dealer with whom you have entered into a Selected Dealer Agreement (no such
reallowance will be made for Selected Investment Advisors) an amount of up to
$0.65 commission per Share (except in the

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case of Shares purchased under the DRIP in which case the commission reallowance
will be an amount up to $0.50 per Share) for Shares sold by the Company pursuant
to Orders solicited by such Selected Dealer and the full amount of any Selected
Dealer Fee paid to you by the Company on behalf of any Selected Dealer. The
Company will also reimburse you for the amount of the Selected Dealer Fee paid
to Selected Dealers, which fee will be one and one-half percent of the price of
each Share sold by the Selected Dealer. Additionally, the Company will pay to
you the Selected Dealer Fee of one and one-half percent for Shares sold directly
by you. No payment of commissions will be made by the Company with respect to
Orders placed by the Selected Investment Advisors and Orders (or portions
thereof), which are rejected by the Company. Selling Commissions will be paid on
any Closing Date with respect to the Shares sold to purchasers whose Shares are
issued on such Closing Date. The Company will not pay a Selected Dealer Fee for
Shares sold through the DRIP.

         The Company represents that neither it nor any of its Affiliates have
offered or sold any Shares pursuant to this Offering and agrees that, through
the date on which the Offering is terminated (the "Termination Date"), the
Company will not offer or sell any Shares otherwise than through you as herein
provided.

         (e) Finders Fee. Neither the Company, any Selected Dealer nor any
Selected Investment Advisor participating in the Offering shall, directly or
indirectly, pay or award any finder's fees, commissions or other compensation to
any person engaged by a potential investor for investment advice as an
inducement to such advisor to advise the purchase of Shares; provided, however,
that normal Selling Commissions payable to a registered broker-dealer or other
properly licensed person for selling Shares shall not be prohibited hereby.

         (f) Wholesaling Activities. You hereby agree to provide the following
additional services for the Company:

         (1) developing and preparing sales literature to be used by the Company
in the offer and sale of the Shares, which sales literature shall comply with
the Securities Act and the Regulations thereunder, the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. (the "RFP") and the "blue
sky" laws of any jurisdiction in which such material is used ("Blue Sky Law").
The sales literature may include, but not be limited to, a slide presentation, a
property acquisition report, a brochure and seminar invitations for presentation
and distribution to the public and an audio program, a video program and a
brochure for presentation and distribution to broker-dealers;

         (2) assisting broker-dealers and registered investment advisors
participating in the Offering by coordinating broker-dealer and registered
investment advisor seminars, informational meetings, preparing and distributing
brochures and other sales literature designed for broker-dealers and registered
investment advisors and providing information and answering any questions with
regard to the Offering; and

         (3) assisting the Company in enlisting broker-dealers and registered
investment advisors to participate in the Offering as selected dealers.

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         4. Covenants. The Company covenants to you and each Selected Dealer
that it will:

         (a) Commission Orders. Use its best efforts to cause the Registration
Statement and any subsequent amendments thereto, to become effective as promptly
as possible, and will notify you immediately, and confirm the notice in writing,
(i) when the Registration Statement and any post-effective amendment thereto
become effective, (ii) of the issuance by the Commission of any stop order or of
the initiation, or the threatening, of any proceedings for that purpose or of
the suspension of the qualification of the Shares for offering or sale in any
jurisdiction or of the institution or threatening of any proceedings for any of
such purposes, (iii) of the receipt of any comments from the Commission with
respect to the Registration Statement, and (iv) of any request by the Commission
for any amendment to the Registration Statement as filed or any amendment or
supplement to the Prospectus or for additional information relating thereto. The
Company will make every reasonable effort to prevent the issuance by the
Commission of a stop order or a suspension order and if the Commission shall
enter a stop order or suspension order at any time, the Company will make every
reasonable effort to obtain the lifting of such order at the earliest possible
moment.

         (b) Registration Statement. Deliver to you, Selected Dealers and
Selected Investment Advisors without charge such number of copies of each
preliminary prospectus filed with the Registration Statement and each amendment
thereto, and as soon as the Registration Statement or any amendment or
supplement thereto become effective, such number of copies of the Prospectus (as
amended or supplemented), the Registration Statement and supplements and
amendments thereto, if any (without exhibits), as you may reasonably request.
The Company hereby consents to the use of the Prospectus or any amendment or
supplement thereto by you, the Selected Dealers and Selected Investment Advisors
both in connection with the Offering and for such period of time thereafter as
the Prospectus is required to be delivered in connection therewith.

         (c) "Blue Sky" Qualifications. Endeavor in good faith, in cooperation
with you, the Selected Dealers and counsel to the Selected Dealers, at or prior
to the time the Registration Statement becomes effective, to seek the approval
of the Offering by the NASD, and to qualify the Shares for offering and sale
under the securities laws of all 50 states and the District of Columbia, except
in those jurisdictions you may reasonably designate (the "Designated
Jurisdictions"), provided, however, the Company shall not be obligated to
subject itself to taxation as a party doing business in any such jurisdiction.
In each jurisdiction where such qualification shall be effected, the Company
will, unless you agree that such action is not at the time necessary or
advisable, file and make such statements or reports as are or may reasonably be
required by the laws of such jurisdiction.

         (d) Amendments and Supplements. If during the time when a Prospectus is
required to be delivered under the Securities Act, any event relating to the
Company shall occur as a result of which it is necessary, in the opinion of the
Company's counsel, to amend or supplement the Prospectus in order to make the
Prospectus not misleading in light of the circumstances existing at the time it
is delivered to an investor, the Company will forthwith prepare and furnish
without expense to you, the Selected Dealers and Selected Investment Advisors, a
reasonable number of copies of an amendment or amendments of, or a supplement or
supplements to, the Prospectus

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which will amend or supplement the Prospectus so that as amended or supplemented
it will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances existing at the time the
Prospectus is delivered to an investor, not misleading. During the time when a
Prospectus is required to be delivered under the Securities Act, the Company
shall comply so far as it is able with all requirements imposed upon it by the
Securities Act, as from time to time in force, so far as necessary to permit the
continuance of sales of the Shares in accordance with the provisions hereof and
the Prospectus.

         (e) Copies of Reports. During the period the Shares remain outstanding,
you will be furnished with the following:

                  (i) as soon as practicable after they have been sent by the
                  Company to the Shareholders or to any class of security
                  holders of the Company or filed with the Commission, two
                  copies of each annual and interim financial and each other
                  report, application or document;

                  (ii) as soon as practicable, two copies of every press release
                  issued by the Company and every material news item and article
                  in respect of the Company or its affairs released by the
                  Company; and

                  (iii) additional documents and information with respect to the
                  Company and its affairs as you may from time to time
                  reasonably request.

         (f) Sales Material. Will deliver to you from time to time, all
advertising and supplemental sales material (whether designated solely for
broker-dealer use or otherwise) proposed to be used or delivered in connection
with the Offering, prior to the use or delivery to third parties of such
material, and will not so use or deliver, in connection with the Offering, any
such material to which you or your counsel shall reasonably object or disapprove
within seven days of delivery of such material to you or which shall be
reasonably disapproved by your counsel within such seven-day period.

         (g) Use of Proceeds. Apply the proceeds from the sale of Shares as set
forth in the section of the Prospectus entitled "Estimated Use of Proceeds" and
operate the business of the Company in accordance with the descriptions of its
business set forth in the Prospectus.

         (h) Prospectus Delivery. In case you, any Selected Dealer or Selected
Investment Advisor is required to deliver a Prospectus in connection with sales
of any of the Shares at any time nine months or more after the Effective Date,
upon your or such Selected Dealer or Selected Investment Advisor's request, the
Company will, at its expense, prepare and deliver to you, such Selected Dealer
or Selected Investment Advisor as many copies as you may request of an amended
or supplemented Prospectus complying with Section 10(a)(3) of the Securities
Act.

         (i) Financial Statements. Make generally available to its security
holders as soon as practicable, but not later than 60 days after the close of
the period covered thereby, an earnings statement of the Company (in form
complying with the provisions of Rule 158 under the

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Securities Act) covering a period of 12 months beginning after the Effective
Date but not later than the first day of the Company's fiscal quarter next
following the Effective Date.

         (j) Compliance with Exchange Act. Comply with the requirements of the
Securities Exchange Act of 1934 ("Exchange Act") relating to the Company's
obligation to file periodic reports including annual reports on Form 10-K,
quarterly reports on Form 10-Q and current reports on Form 8-K.

         5.       Covenants of the Sales Agent. You covenant and agree with the
Company as follows;

         (a) Compliance with Laws. In connection with the offer and sale of
Shares, you shall comply with any applicable requirements of the Securities Act,
the Exchange Act and the applicable state securities or "blue sky" laws, and the
rules and regulations thereunder.

         (b) Accuracy of Information. No information supplied by you for use in
the Registration Statement will contain any untrue statements of a material fact
or omit to state any material fact necessary to make such information not
misleading.

         (c) No Additional Information. You will not give any information or
make any representation in connection with the offering of the Shares other than
that contained in the Prospectus.

         (d) Sale of Shares. You shall act as Sales Agent and solicit, directly
or through Selected Dealers and Selected Investment Advisors, purchasers of the
Shares only in the jurisdictions in which you have been advised by the Company
that such solicitations can be made and in which you, the soliciting Selected
Dealer or Selected Investment Advisor, as the case may be, are qualified to so
act.

         6. Payment of Expenses.

         (a) Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or if this Agreement is terminated, the Company will
pay, in addition to the underwriting compensation described in Section 3(d)
(which you may retain up to the point of termination unless this agreement is
terminated without any shares being sold, in which case no such underwriting
compensation shall be paid), all fees and expenses incurred in connection with
the formation, qualification and registration of the Company and in marketing,
distributing and processing the Shares under applicable Federal and state law,
and any other fees and expenses actually incurred and directly related to the
offering and sale of the Shares and your other obligations under this Agreement,
including such fees and expenses as: (i) the preparing, printing, filing and
delivering of the Registration Statement (as originally filed and all amendments
thereto) and of any preliminary prospectus and of the Prospectus and any
amendments thereof or supplements thereto and the preparing and printing of the
Selected Dealer Agreements, this Agreement and Order Forms, including the cost
of all copies thereof and any financial statements or exhibits relating to the
foregoing supplied to you, Selected Dealers and Selected Investment Advisors in
quantities reasonably requested by you; (ii) the preparing and printing of the
solicitation material and related documents and the filing and/or recording of
such

                                       11

<PAGE>

certified certificates or other 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 Company; (iii) the issuance and delivery of the
Shares, including any transfer or other taxes payable thereon; (iv) any escrow
arrangements in connection with the transactions described herein, including any
compensation or reimbursement to an escrow agent for its services as such; (v)
the qualification or registration of the Shares under state securities or "blue
sky" laws; (vi) the filing fees payable to the Commission and to the NASD; (vii)
the preparation and printing of advertising material in connection with and
relating to the Offering, including the cost of all sales literature and
investor and broker-dealer sales and information meetings; (viii) the cost and
expenses of counsel and accountants of the Company; and (ix) any other expenses
of issuance and distribution of the Shares. The Company shall also reimburse
directly all other entities for the expenses of the type described in clauses
(i) through (ix) of the preceding sentence incurred directly by those entities
at your request.

         (b) Sales Incentive Programs. Subject to the satisfactory completion of
any regulatory reviews and examinations which may be required, the prior review
and approval and the rules of the NASD (including Rule 2710 (c)(6)(B)(xii)) and
approval by the Company or the Advisor, the Company, the Advisor and Affiliates
of the Advisor may establish sales incentive programs for your associated
persons or the associated persons of Selected Dealers only. Sales incentives
will be deemed to be additional underwriting compensation. The aggregate value
of incentives paid directly to an individual associated person during the
Offering will not exceed $100 in any given year.

         (c) Limitation. Notwithstanding the foregoing, the total underwriting
compensation paid to the Sales Agent and Selected Dealers from any source in
connection with the Offering pursuant to Section 3(d) hereof and this Section 6
shall not exceed 10% of the gross proceeds of the sale of the Shares, plus
one-half of one percent of such gross proceeds for bona fide due diligence
expenses. The Company and you agree to monitor the payment of all fees and
expense reimbursements to assure that this limit is not exceeded.

         7. Conditions of Your Obligations. Your obligations hereunder shall be
subject to the continued accuracy throughout the Effective Term of the
representations, warranties and agreements of the Company, to the performance by
the Company of its obligations hereunder and to the following terms and
conditions:

         (a) Effectiveness of Registration Statement. The Registration Statement
shall have initially become effective not later than 5:30 P.M., Eastern time, on
the date of this Agreement or such later date and time as shall be consented to
in writing by you and, at any time during the term of this Agreement, no stop
order shall have been issued or proceedings therefor initiated or threatened by
the Commission; and all requests for additional information on the part of the
Commission and state securities administrators shall have been complied with to
the reasonable satisfaction of your counsel and no stop order or similar order
shall be in effect in any jurisdiction in which the Company intends to offer
Shares (except in the Designated Jurisdictions).

                                       12

<PAGE>

         (b) Opinion of Counsel. At the Effective Date, you shall receive the
favorable opinion of Reed Smith LLP, counsel for the Company, dated the
Effective Date, addressed to you substantially to the effect that:

                  (i) the Company has been duly incorporated and validly exists
                  as a corporation in good standing under the laws of the State
                  of Maryland and is duly qualified to do business as a foreign
                  corporation and is in good standing in each other jurisdiction
                  in which it owns or leases property of a nature, or transacts
                  business of a type, that would make such qualification
                  necessary;

                  (ii) the Shares have been duly authorized and, after being
                  duly issued and sold in accordance with the terms set forth in
                  the Registration Statement, will be validly issued, fully paid
                  and non-assessable Shares; and no holder thereof is or will be
                  subject to personal liability for the obligations of the
                  Company solely by reason of being such a holder; such Shares
                  are not subject to the preemptive rights of any stockholder of
                  the Company, and all corporate action required to be taken for
                  the authorization, issue and sale of such Shares has been
                  validly and sufficiently taken;

                  (iii) this Agreement has been duly and validly authorized,
                  executed and delivered by or on behalf of the Company and
                  constitutes the valid, binding and enforceable agreement of
                  the Company except: (A) as may be subject to bankruptcy,
                  insolvency, reorganization, moratorium or other similar laws
                  relating to creditors' rights generally; (B) that the remedy
                  of specific performance and injunctive and other forms of
                  equitable relief may be subject to equitable defenses and to
                  the discretion of the court before which any proceedings may
                  be brought; and (C) that rights to indemnity may be limited by
                  federal or state securities laws or the public policy
                  underlying such laws;

                  (iv) the Registration Statement is effective under the
                  Securities Act and, to the best of such counsel's knowledge,
                  no stop order has been issued nor are proceedings for a stop
                  order pending or threatened under the Securities Act;

                  (v) the Advisory Agreement has been duly and validly
                  authorized, executed and delivered by or on behalf of the
                  Company and the Advisor and constitutes the valid, binding and
                  enforceable agreement of the Company and the Advisor except:
                  (A) as may be subject to bankruptcy, insolvency,
                  reorganization, moratorium or other similar laws relating to
                  creditors' rights generally; and (B) that the remedy of
                  specific performance and injunctive and other forms of
                  equitable relief may be subject to equitable defenses and to
                  the discretion of the court before which any proceedings may
                  be brought;

                  (vi) to the best of such counsel's knowledge and information,
                  there is no litigation or governmental proceeding pending or
                  threatened against the Company which might materially and
                  adversely affect the business, properties, condition
                  (financial or otherwise) or earnings of the Company, except as
                  referred to in the Prospectus, and no consent, approval,
                  authorization, registration, qualification, license or order
                  of

                                       13

<PAGE>

                  any court, regulatory or other governmental agency or body is
                  required in connection with the consummation of the
                  transactions contemplated by this Agreement or the
                  Registration Statement and the Prospectus, except such as may
                  be necessary under the Securities Act or state "blue sky" or
                  securities laws in connection with the Offering or such as may
                  have been previously obtained;

                  (vii) neither the execution and delivery of this Agreement or
                  the Advisory Agreement nor compliance with the terms and
                  provisions hereof or thereof will, and consummation of the
                  transactions contemplated herein and in the Prospectus do not
                  and will not, result in any violation of the Articles or
                  bylaws, conflict with or result in a breach of or default (or
                  an event which with the giving of notice or lapse of time or
                  both would constitute a default) under, any of the terms,
                  provisions or conditions of any statute, order, judgment,
                  writ, injunction, decree, agreement, rule, regulation,
                  instrument or organizational document known to such counsel,
                  to which the Company is a party or, to the best of such
                  counsel's knowledge and information, by which the Company is
                  bound;

                  (viii) the Advisor has been duly formed and validly exists as
                  a limited partnership in good standing under the laws of the
                  Commonwealth of Pennsylvania as a limited partnership with
                  full power and authority to conduct the business in which it
                  proposes to engage as described in the Prospectus and is duly
                  qualified to do business and is in good standing in each other
                  jurisdiction in which it transacts business of a type that
                  would make such qualification necessary;

                  (ix) Carey Financial Corporation has been duly incorporated
                  and validly exists as a corporation in good standing under the
                  laws of the Commonwealth of Pennsylvania with full power and
                  authority to conduct the business in which it engages as
                  described in the Prospectus. Carey Financial Corporation is
                  duly qualified to do business as a foreign corporation and is
                  in good standing in each other jurisdiction in which it owns
                  or leases property of the nature or transacts business of a
                  type, that would make such qualification necessary;

                  (x) the statements in the Prospectus under the captions "Risk
                  Factors -- Failure to qualify as a REIT could adversely affect
                  our operations and ability to make distributions,"
                  "Description of Shares" and "United States Federal Income Tax
                  Considerations" insofar as they are, or refer to, statements
                  of law or legal conclusions, are correct and fairly present
                  the information required to be shown therein; and

                  (xi) at the time the Registration Statement was filed and at
                  the time it initially became effective, such Registration
                  Statement and the Prospectus (other than the financial
                  statements and the prior performance tables included therein,
                  as to which no opinion is rendered) complied as to form in all
                  material respects with the requirements of the Securities Act
                  and the Regulations and nothing came to such counsel's
                  attention which would lead such counsel to believe that either
                  the Registration Statement or the Prospectus, at the time they
                  initially became effective,

                                       14

<PAGE>

                  contained any untrue statement of a material fact or omitted
                  to state a material fact required to be stated therein or
                  necessary to make the statements therein, in light of the
                  circumstances under which they were made, not misleading.

In rendering the opinions set forth above, counsel may rely, as to matters of
law of states other than Pennsylvania, upon the opinions of other counsel, in
each case satisfactory in form and substance to you, and counsel shall state
such opinions are satisfactory in form and scope to them and that they believe
you may rely on them, and as to matters of fact, upon communications, statements
and certificates from public officials, and certifications and statements from
officers of the Company.

         (c) Accountant's Letter. On the Effective Date you shall have received
from PricewaterhouseCoopers LLP a letter, in form and substance satisfactory to
you in all respects (including the nonmaterial nature of the changes and
decreases, if any, referred to in clause (iii) herein), advising that:

                  (i) they are independent certified public accountants as
                  required by the Securities Act and the Regulations and the
                  answer to Item 27 of the Registration Statement does not
                  require any statement relating to them;

                  (ii) it is their opinion that the financial statements and
                  supporting schedules filed as part of the Registration
                  Statement and those included in the Prospectus, and covered by
                  their opinions therein, comply as to form in all material
                  respects with the applicable accounting requirements of the
                  Securities Act and the Regulations relating to financial
                  statements in the registration statement on Form S-11;

                  (iii) based on the limited review set forth in detail in such
                  letter, nothing came to their attention that caused them to
                  believe that during the period from the date of the balance
                  sheet of the Company contained in the Prospectus to a
                  specified date not more than five (5) days prior to the date
                  on which the Registration Statement initially becomes
                  effective, there was any change in the stockholder's equity,
                  liabilities or net assets of the Company as compared with the
                  amounts shown in such balance sheet other than as such change
                  may have been contemplated by or set forth in the Registration
                  Statement or Prospectus;

                  (iv) based on procedures consisting of a reading of the
                  percentages and dollar amounts and related text set forth in
                  the Prospectus and the Registration Statement under the
                  captions "Prior Offerings by Affiliates" and "Prior
                  Performance Tables" (including Table VI included as an exhibit
                  to the Registration Statement), and all dollar amounts in the
                  related notes referenced therein, inquiry of officers and
                  other employees of the corporate general partner of Corporate
                  Property Associates, Corporate Property Associates 2,
                  Corporate Property Associates 3, Corporate Property Associates
                  4, a California limited partnership, Corporate Property
                  Associates 5, Corporate Property Associates 6 - a California
                  limited partnership, Corporate Property Associates 7 - a
                  California limited partnership, Corporate Property Associates
                  8, L.P., and Corporate Property Associates 9, L.P.,
                  (collectively

                                       15

<PAGE>

                  the "CPA(R) Partnerships") and the officers and other
                  employees of Corporate Property Associates 10 Incorporated,
                  Carey Institutional Properties Incorporated, Corporate
                  Property Associates 12 Incorporated, Corporate Property
                  Associates 14, Incorporated and Corporate Property Associates
                  15 Incorporated (collectively the "CPA(R) REITs"), and counsel
                  for the CPA(R) Partnerships and the CPA(R) REITs, they have
                  found such percentages and dollar amounts to be in agreement
                  with the respective relevant accounting and financial records
                  of the CPA(R) Partnerships and CPA(R) REITs; and

                  (v) they have conducted such other procedures as may be
                  mutually agreed by the Company, Selected Dealers and Selected
                  Investment Advisors.

         (d) Stop Orders. On the Effective Date and during the Effective Term no
order suspending the sale of the Shares in any jurisdiction (except the
Designated Jurisdictions) nor any stop order issued by the Commission shall have
been issued, and on the Effective Date and during the Effective Term no
proceedings relating to any such suspension or stop orders shall have been
instituted, or to the knowledge of the Company, shall be contemplated.

         (e) Information Concerning the Advisor. On the Effective Date, you
shall receive a letter dated the Effective Date from the Advisor, confirming
that: (1) the Advisory Agreement has been duly and validly authorized, executed
and delivered by the Advisor and constitutes a valid agreement of the Advisor
enforceable in accordance with its terms; (2) the execution and delivery of the
Advisory Agreement, the consummation of the transactions therein contemplated
and compliance with the terms of the Advisory Agreement by the Advisor will not
conflict with or constitute a default under its partnership agreement or any
indenture, mortgage, deed of trust, lease or other agreement or instrument to
which the Advisor is a party, or any law, order, rule or regulation, writ,
injunction or decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Advisor, or any of its
property; (3) no consent, approval, authorization or order of any court or other
governmental agency or body has been or is required for the performance of the
Advisory Agreement by the Advisor, or for the consummation of the transactions
contemplated thereby; and (4) the Advisor is a corporation duly formed, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified to do business as a foreign corporation in each other
jurisdiction in which the nature of its business would make such qualification
necessary.

         If any of the conditions specified in this Section 7 shall not have
been fulfilled when and as required by this Agreement, this Agreement and all
your obligations hereunder may be canceled by you by notifying the Company of
such cancellation in writing or by telecopy at any time, and any such
cancellation or termination shall be without liability of any party to any other
party except as otherwise provided in Sections 3(d), 6, 8, 9 and 10 hereof.

         All certificates, letters and other documents referred to in this
Section 7 will be in compliance with the provisions hereof only if they are
reasonably satisfactory in form and substance to you and your counsel. The
Company will furnish you with conformed copies of such certificates, letters and
other documents, as you shall reasonably request.

                                       16

<PAGE>

         8. Indemnification.

         (a) Indemnification by the Company. Subject to the conditions set forth
below and those included in the Articles and Bylaws, the Company agrees to
indemnify and hold harmless you, each Selected Dealer, each Selected Investment
Advisor and each person, if any, who controls you, any such Selected Dealer or
Selected Investment Advisor within the meaning of Section 15 of the Securities
Act, from and against any and all loss, liability, claim, damage and expense
whatsoever (including but not limited to any and all expenses whatsoever
reasonably incurred in investigating, preparing for, defending against or
settling any litigation, commenced or threatened, or any claim whatsoever)
arising out of or based upon: (1) any untrue or alleged untrue statement of a
material fact contained (i) in the Registration Statement or the Prospectus (as
from time to time amended or supplemented) or any related preliminary
prospectus; or (ii) in any application or other document (in this Section 8
collectively called "application") executed by the Company or based upon
information furnished by the Company and filed in any jurisdiction in order to
qualify the Shares under the securities laws thereof; or (2) the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances under
which they were made not misleading, unless any such statement or omission was
made in reliance upon and in conformity with written information furnished to
the Company by you expressly for use in the Registration Statement or related
preliminary prospectus or Prospectus or any amendment or supplement thereof or
in any of such applications or in any such sales as the case may be.
Notwithstanding the foregoing, the Company shall not indemnify the Sales Agent
for any losses, liabilities or expenses arising from or out of an alleged
violation of federal or state securities laws unless: (i) there has been a
successful adjudication on the merits of each count involving alleged securities
law violations as to the particular indemnitee, (ii) such claims have been
dismissed with prejudice on the merits by a court of competent jurisdiction as
to the particular indemnitee or (iii) a court of competent jurisdiction approves
a settlement of the claims against a particular indemnitee and finds that
indemnification of the settlement and the related costs should be made, and the
court considering the request for indemnification has been advised of the
position of the 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 violations of Securities laws.

         (b) Indemnification by You. Subject to the conditions set forth below,
you agree to indemnify and hold harmless the Company, each of its directors,
those of its officers who have signed the Registration Statement and each other
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act to the same extent as the foregoing indemnity from the Company
but only with respect to an untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact in the
Registration Statement (as from time to time amended or supplemented) or
Prospectus, or any related preliminary prospectus, any application made in
reliance upon or, in conformity with, written information furnished by you
expressly for use in such Registration Statement or Prospectus or any amendment
or supplement thereto, in any related preliminary prospectus or in any of such
applications.

         (c) Procedure for Making Claims. Each indemnified party shall give
prompt notice to each indemnifying party of any claim or action (including any
governmental investigation)

                                       17

<PAGE>

commenced against it in respect of which indemnity may be sought hereunder, but
failure to so notify any indemnifying party shall not relieve it from any
liability that it may have otherwise than on account of this indemnity
agreement. The indemnifying party, jointly with any other indemnifying parties
receiving such notice, shall assume the defense of such action with counsel
chosen by it and approved by the indemnified parties defendant in such action,
unless such indemnified parties reasonably object to such assumption on the
ground that there may be legal defenses available to them which are different
from or in addition to those available to such indemnifying party. Any
indemnified party shall have the right to employ a separate counsel in any such
action and to participate in the defense thereof but the fees and expenses of
such counsel shall be borne by such party unless such party has objected in
accordance with the preceding sentence, in which event such fees and expenses
shall be borne by the indemnifying parties. Except as set forth in the preceding
sentence, if an indemnifying party assumes the defense of such action, the
indemnifying party shall not be liable for any fees and expenses of separate
counsel for the indemnified parties incurred thereafter in connection with such
action. In no event shall the indemnifying parties be liable for the fees and
expenses of more than one counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. The
indemnity agreements contained in this Section 8 and the warranties and
representations contained in this Agreement shall remain in full force and
effect regardless of any investigation made by or on behalf of the indemnified
party and shall survive any termination of this Agreement. An indemnifying party
shall not be liable to an indemnified party on account of any settlement of any
claim or action effected without the consent of such indemnifying party. The
Company agrees promptly to notify you of the commencement of any litigation or
proceedings against the Company in connection with the issue and sale of the
Shares or in connection with the Registration Statement or Prospectus.

         (d) Contribution. Subject to the limitations set forth in Section 8(a)
hereof and in order to provide for just and equitable contribution where the
indemnification provided for in this Section 8 is unavailable to or insufficient
to hold harmless an indemnified party under subsection (a) or (b) above in
respect of any losses, liabilities, claims, damages or expenses (or actions in
respect thereof) referred to therein, except by reason of the terms thereof, the
Company on the one hand and you on the other shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, liabilities,
claims, damages or expenses (or actions in respect thereof) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and you on the other from the Offering based on the public offering
price of the Shares sold and the Selling Commissions received by you with
respect to such Shares sold. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits referred
to above but also the relative fault of the Company on the one hand and you on
the other in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and you on the other shall be
deemed to be in the same proportion as the total proceeds from the Offering (net
of underwriting commissions but before deducting expenses) received by the
Company bear to the total underwriting commissions

                                       18

<PAGE>

received by you. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
Company on the one hand or you on the other. The Company agrees with you that it
would not be just and equitable if contribution pursuant to this subsection (d)
were determined by pro rata allocation, or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this subsection (d). The amount paid or payable by an indemnified party as a
result of the losses, liabilities, claims, damages or expenses (or action in
respect thereof) referred to above in this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), you shall not be required
to contribute any amount in excess of the amount by which the total price of the
Shares sold by you to the public exceeds the amount of any damages which you
have otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act or
Section 10(b) of the Securities Exchange Act of 1934, as amended) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, any person that controls you
within the meaning of Section 15 of the Securities Act shall have the same right
to contribution as you, and each person who controls the Company within the
meaning of Section 15 of the Securities Act shall have the same right to
contribution as the Company.

         9. Representations and Agreements to Survive. All representations,
warranties and agreements contained in this Agreement or in certificates shall
remain operative and in full force and effect regardless of any investigation
made by any party, and shall survive the Termination Date.

         10. Effective Date, Term and Termination of this Agreement.

         (a) This Agreement shall become effective as of the date it is executed
by all parties hereto. You or the Company may elect to terminate this Agreement
prior to the time the Registration Statement is declared effective by the
Commission without liability of any party to any other party, except as provided
in Section 10(e) hereof.

         (b) You shall have the right to terminate this Agreement at any time
during the Effective Term without liability of any party to any other party
except as provided in Section 10(e) hereof if: (i) any representations or
warranties hereunder shall be found to have been incorrect or misleading; or
(ii) the Company shall fail, refuse or be unable to perform any condition of its
obligations hereunder, or (iii) the Prospectus shall have been amended or
supplemented despite your objection to such amendment or supplement as provided
in subsection (a) of Section 2 hereof, or (iv) all trading on the New York Stock
Exchange or the American Stock Exchange shall have been suspended, or minimum or
maximum prices for trading generally shall have been fixed, or maximum ranges
for prices for all securities shall have been required, on the New York Stock
Exchange or the American Stock Exchange by such exchanges or by order of the
Commission or any other governmental authority having jurisdiction; or (v) the
United States shall have become involved in a war or major hostilities; or (vi)
a banking moratorium shall have

                                       19

<PAGE>

been declared by a state or federal authority or person; or (vii) the Company
shall have sustained a material or substantial loss by fire, flood, accident,
hurricane, earthquake, theft, sabotage or other calamity or malicious act which,
whether or not said loss shall have been insured, will in your opinion make it
inadvisable to proceed with the offering and sale of the Shares; or (viii) there
shall have been, subsequent to the dates information is given in the
Registration Statement and the Prospectus, such change in the business,
properties, affairs, condition (financial or otherwise) or prospects of the
Company whether or not in the ordinary course of business or in the condition of
securities markets generally as in your sole judgment would make it inadvisable
to proceed with the offering and sale of the Shares, or which would materially
adversely affect the operations of the Company.

         (c) If this Agreement shall be terminated for reason of any failure on
the part of the Company to perform any undertaking or satisfy any condition of
this Agreement to be performed or satisfied by them pursuant to Section 7
hereof, you may elect to terminate this Agreement without liability of any party
to any other party except as provided in Section 10(e) hereof.

         (d) The Company shall have the right to terminate this Agreement
without cause on 60 days' notice in writing to you without penalty, subject to
liability as provided in Section 10(e) hereof.

         (e) In the event this Agreement is terminated by any party pursuant to
Sections 10(a), 10(b), 10(c) or 10(d) hereof, the Company shall pay all expenses
of the Offering as required by Section 6 hereof and no party will have any
additional liability to any other party except for any liability which may exist
under Section 8 hereof; and provided further, that if you terminate your
participation in the Offering in other than good faith, the Company shall not be
responsible for the expenses described in clause (vii) of subsection (a) of
Section 6 hereof other than expenses of counsel to the Selected Dealers or
Selected Investment Advisors. In no event will the Company be liable to
reimburse you for expenses other than your actual out-of-pocket expenses.

         (f) If you elect to terminate this Agreement as provided in this
Section 10, you shall notify the Company promptly by telephone or telegram with
confirmation by letter. If the Company elects to terminate this Agreement as
provided in this Section 10, the Company shall notify you promptly by telephone
or telegram with confirmation by letter.

         11. Notices.

         (a) All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and if sent to you shall be mailed,
or personally delivered, to you at 50 Rockefeller Plaza, New York, New York
10020, and if sent to the Company shall be mailed, or personally delivered, to
the Company at 50 Rockefeller Plaza, New York, New York 10020, Attention: Mr.
Wm. Polk Carey and Mr. Gordon DuGan.

         (b) Notice shall be deemed to be given by you to the Company or by the
Company to you when it is mailed or personally delivered as provided in
subsection (a) of this Section 11.

                                       20

<PAGE>

         12. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon you, the Company, and the controlling persons, directors
and officers referred to in Section 8 hereof, and their respective successors,
legal representatives and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained,
except that the Selected Dealers and Selected Investment Advisors shall have the
rights granted to them pursuant to Section 8 hereof. Notwithstanding the
foregoing, this Agreement may not be assigned without the consent of the parties
hereto.

         13. Construction. This Agreement shall be construed in accordance with
the laws of the State of New York applicable to agreements to be made and
performed entirely within such state.

         14. Finders' Fees. You shall have no liability for any finders' fees
owed in connection with the transactions contemplated by this Agreement.

         15. Severability. Any provision of this Agreement, which is invalid or
unenforceable in any jurisdiction, shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provisions in
any other jurisdiction.

         16. Additional Offerings. The terms of this Agreement may be extended
to cover additional offerings of shares of the Company by the execution by the
parties hereto of an addendum identifying the shares and registration statement
relating to such additional offering. Upon execution of such addendum, the terms
"Shares", "Offering", "Registration Statement" and "Prospectus" set forth herein
shall be deemed to be amended as set forth in such addendum.

         If the foregoing correctly sets forth the understanding between you and
the Company, please so indicate in the space provided on the attached page for
that purpose, whereupon this letter shall constitute a binding agreement between
us.

                                        CORPORATE PROPERTY ASSOCIATES
                                        INTERNATIONAL INCORPORATED

                                        By:_____________________________

                                        Its:____________________________

Accepted as of the

                                       21

<PAGE>

Date first above
Written:

CAREY FINANCIAL CORPORATION

By:________________________

Its:_______________________

Exhibit Index

Exhibit A - Selected Dealer Agreement
Exhibit B - Selected Investment Advisor Agreement

                                       22<PAGE>

                                                                    EXHIBIT 10.5

                               ADVISORY AGREEMENT

      THIS ADVISORY AGREEMENT, dated as of _____ __, 2003, is between CORPORATE
PROPERTY ASSOCIATES INTERNATIONAL INCORPORATED, a Maryland corporation (the
"Company"), and W. P. CAREY INTERNATIONAL LLC, a Delaware limited liability
company and a 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 desires 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;

      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:

            Acquisition Expense Allowance. An amount equal to one half percent
      of the total purchase price of properties acquired, to be paid to the
      Advisor to provide for the payment of Acquisition Expenses by the Advisor.

            Acquisition Expenses. Those expenses, including but not limited to
      travel and communications expenses, nonrefundable option payments on
      Property not acquired, accounting fees and expenses and miscellaneous
      expenses, related to selection and acquisition of Properties, whether or
      not acquired. Acquisition Expenses shall not include Acquisition Fees.

            Acquisition Fees. The total of all fees and commissions (including
      any interest thereon) paid by any party to any party in connection with
      the making or investing in mortgage loans or 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. Included in the computation of such fees or commissions
      shall be 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.

<PAGE>

            Adjusted Investor Capital. As of any date, the Initial Investor
      Capital for such date reduced by any distributions on or prior to such
      date deemed by the Board to be from Cash from Sales and Financings, but
      only to the extent such distributions exceed the amount necessary to
      satisfy any accrued but unpaid portion of the Preferred Return not
      satisfied by distributions of cash generated through operations through
      the date Cash from Sales or Financings are distributed by the Company.

            Advisor. W. P. Carey International LLC, a limited liability company
      organized under the laws of the State of Delaware and a subsidiary of 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 (iv) 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.

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

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

            Average Invested Assets. The average of the aggregate book value of
      the assets of the Company invested, directly or indirectly, in Properties
      and in Loans secured by real estate, before reserves for depreciation or
      bad debts or 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 Properties 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.

                                       -2-
<PAGE>

            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 or a breach of this Agreement by the
      Advisor.

            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 of Directors; (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 of
      Directors; 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 of Directors' positions next up for
      election.

            Code. Internal Revenue Code of 1986, as amended.

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

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

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

            Contract Purchase Price. The amount actually paid for or allocated
      (as of the date of purchase) to the purchase, development, construction or
      improvement of a Property, exclusive of Acquisition Fees and Acquisition
      Expenses.

            Contract Sales Price. The total consideration received by the
      Company for the sale of a Property.

            Cumulative Return. For the period for which the calculation is being
      made, the percentage resulting from dividing (A) the total Dividends paid
      on each Dividend payment date during such period (not including Dividends
      paid out of Cash from Sales and Financings), by (B) the product of (i) the
      average Adjusted Investor Capital for such period

                                      -3-
<PAGE>

      (calculated on a daily basis), and (ii) the number of years (including
      fractions thereof) elapsed during such period.

            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.

            Dividends. Dividends declared by the Board.

            Equity Interest. The stock of or other interests in, or warrants or
      other rights to purchase the stock of or other interests in, any entity
      that has borrowed money from the Company or that is a tenant of the
      Company or that is a parent or controlling Person of any such borrower or
      tenant.

            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.

            Gross Offering Proceeds. The aggregate purchase price of Shares sold
      in the public offering of common stock by the Company.

            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 is not
      associated and has not been associated within the last two years, directly
      or indirectly, with the Sponsor or the Advisor. A Director shall be deemed
      to be associated with the Sponsor or the Advisor if he or she: (i) owns an
      interest in, is employed by, has any material business or professional
      relationship with, or is an officer or director of, the Sponsor, the
      Advisor, or any of their Affiliates, other than as a director or trustee
      or officer of not more than two other REITs organized by the Sponsor or
      advised by the Advisor; or (ii) performs services, other than as a
      Director, for the Company. An indirect relationship shall include
      circumstances in which a Director's spouse, parents, children, siblings,
      mothers- or fathers-in-law, sons- or daughters-in-law, or brothers- or
      sisters-in-law is or has been associated with the Sponsor, the Advisor,
      any of their Affiliates or the Company.

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

                                      -4-
<PAGE>

            Initial Closing Date. The first date on which Shares are issued
      pursuant to a public offering of equity.

            Initial Investor Capital. The total amount of capital invested from
      time to time by Shareholders (computed using the purchase price per Share
      for every Share including those Shares for which reduced selling
      commissions were paid in connection with their purchase from the Company).

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

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

            Net Income. For any period, the total revenues applicable to such
      period, less the total expenses applicable to such period excluding
      additions to reserves for depreciation, bad debts or other similar
      non-cash reserves; provided, however, Net Income for purposes of
      calculating total allowable Operating Expenses shall exclude the gain from
      the sale of the Company's assets.

            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 generally
      accepted accounting principles, except the following: (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) expenses
      connected with the acquisition, disposition, 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)
      the Acquisition Fee or Subordinated Disposition Fee payable to the Advisor
      or any other party; and (vi) non-cash items, such as depreciation,
      amortization, depletion, and additions to reserves for depreciation,
      amortization, depletion, losses and bad debts. Notwithstanding anything
      herein to the contrary, Operating Expenses shall include the Asset
      Management Fee, the Performance Fee and the Loan Refinancing Fee.

                                      -5-
<PAGE>

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

            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 five 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.

            Property Management Fee. The Property Management Fee as defined in
      Section 9(e) hereof.

            Prospectus. Any final 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.

            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 of common stock of the Company),
      voting trust certificates, bonds, debentures, notes or other evidences of
      indebtedness, secured or unsecured, convertible, subordinated or otherwise
      or in general any instruments commonly known as "securities" or any
      certificate of interest, shares or participation in temporary or interim
      certificates for receipts (or, guarantees of, or warrants, options or
      rights to subscribe to,

                                      -6-
<PAGE>

      purchase or acquire any of the foregoing), which subsequently may be
      issued by the Company.

            Selected Dealer Fee. A due diligence and management fee payable to
      Selected Dealers by the Company (through the Sales Agent) of up to one and
      one-half percent of the price of each Share sold by those Selected Dealers
      to which the Sales Agent agrees to pay such due diligence and management
      fee.

            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.

            Selected Investment Advisors. An investment advisor under the
      Investment Advisers Act of 1940, as amended, and presently registered or
      licensed as an investment advisor by the appropriate regulatory agency of
      each state in which the advisor has clients, or exempt from each state's
      registration requirements. The advisor is not a registered broker-dealer
      or registered representative with the NASD. The advisor is in compliance
      with all applicable federal and state securities laws. The advisor
      maintains the records, required by Section 204 of the Investment Advisers
      Act of 1940, as amended, and rule 204-2 thereunder, in the form and for
      the periods required thereby.

            Shareholders. Those Persons who at any particular time 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 all other shares of common stock of the Company issued in the
      Offering or any subsequent offering.

            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 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(f) hereof.

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

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

                                      -7-
<PAGE>

            Termination Fee. An amount equal to 15% of the amount, if any, by
      which (1) the Appraised Value of the Properties on the Termination Date,
      less the amount of all indebtedness secured by such Properties, exceeds
      (2) the total of the Initial Investor Capital plus an amount equal to the
      Preferred Return through the Termination Date reduced by the total
      Dividends paid by the Company from its inception through the Termination
      Date.

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

            Two Percent/25% Guidelines. The requirement that, in any 12-month
      period, the Operating Expenses not exceed the greater of two percent of
      the Company's Average Invested Assets during such 12-month period or 25%
      of the Company's Net Income over the same 12-month period.

            Underlying Real Property. Property serving as collateral for any
      Loan.

            Valuation. An estimate of value of the assets of the Company as
      determined by a Person approved by the Independent Directors, which Person
      shall be independent of the Company and the Advisor.

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

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

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

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

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

                                      -8-
<PAGE>

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 the officers and Directors of the Company and
assist the Directors in the formulation and implementation of the Company's
financial policies, and, as necessary, furnish the Directors with advice and
recommendations with respect to the making of investments consistent with the
investment objectives and policies of the Company and in connection with any
borrowings proposed to be undertaken by the Company;

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

               (f) provide the Directors with periodic reports regarding
prospective investments in Properties and Loans;

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

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

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

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

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

                                      -9-
<PAGE>

               (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 so requested concerning the investment activities of the Company as
shall be required to prepare and to file all periodic financial reports and
returns required to be filed with the Securities and Exchange Commission and any
other regulatory agency, including annual financial statements;

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

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

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

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

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

               (t) deliver to or maintain on behalf of the Company copies of all
appraisals obtained in connection with investments in Properties and Loans; and

      4. AUTHORITY OF ADVISOR.

               (a) Pursuant to the terms of this Agreement (including the
restrictions included in this Section 4 and in Section 7 hereof), and subject to
the continuing and exclusive authority of the Directors over the management of
the Company, the Directors hereby delegate to the Advisor the authority to: (1)
locate, analyze and select investment opportunities; (2) structure the terms and
conditions of transactions pursuant to which investments will be made or
acquired for the Company; (3) acquire Property and make Loans in compliance with
the investment objectives and policies of the Company; (4) arrange for financing
or refinancing, or make changes in the asset or capital structure of, and
dispose of or otherwise deal with, Property and Loans; (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 Property level.

                                      -10-
<PAGE>

               (b) Notwithstanding the foregoing, any investment in Property,
including any acquisition of any Property by the Company (as well as any
financing acquired by the Company in connection with such acquisition), will
require the prior approval of the Directors unless, prior to completion of any
such transaction, the Advisor provides the Company with:

                  (i) an appraisal for the Property indicating that the Total
            Property Cost of the Property does not exceed the Appraised Value of
            the Property; and

                  (ii) a representation from the Advisor that the Property, in
            conjunction with the Company's other investments and proposed
            investments, at the time the Company is committed to purchase the
            Property, is reasonably expected to fulfill the Company's investment
            objectives and policies as established by the Directors and then in
            effect.

               (c) If a transaction requires approval by the Independent
Directors, the Advisor will deliver to the Independent Directors all documents
required by them to properly evaluate the proposed investment in such Property
or such Loan.

      Notwithstanding the foregoing, the prior approval of the Directors,
including a majority of the Independent Directors, will be required for
transactions involving: (a) investments in Properties in respect of which all of
the requirements specified in Section 4(b) hereof have not been satisfied; (b)
investments in Properties made through joint venture arrangements with
Affiliates of the Advisor; (c) investments in Properties which are not
contemplated by the terms of a Prospectus; (d) transactions that present issues
which involve conflicts of interest for the Advisor (other than conflicts
involving the payment of fees or the reimbursement of expenses); and (e) the
lease of assets to the Sponsor, any Director or the Advisor.

      The Directors 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 Directors so modify or revoke the authority contained herein, the Advisor
shall henceforth comply with such modification, 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 Directors 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
Directors and by counsel, auditors and authorized agents of the Company, at any
time or from time to time during normal business hours. The Advisor shall at all
reasonable times have access to the books and records of the Company.

                                      -11-
<PAGE>

      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 Directors, in which case the Advisor shall notify promptly the Directors of
the Advisor's judgment of the potential impact of such action and shall refrain
from taking such action until it receives further clarification or instructions
from the Directors. In such event the Advisor shall have no liability for acting
in accordance with the specific instructions of the Directors so given.
Notwithstanding the foregoing, the Advisor, its shareholders, directors,
officers and employees, and partners, stockholders, directors and officers of
the Advisor's partners shall not be liable to the Company, or to the Directors
or Shareholders for any act or omission by the Advisor, its partners or
employees, or partners, stockholders, directors or officers of the Advisor's
partners except as provided in Sections 20 and 22 hereof.

      8. RELATIONSHIP WITH DIRECTORS. Shareholders, directors, officers and
employees of the Advisor or partners in the Advisor or any corporate parents of
a partner, or directors, officers or stockholders of any partner or corporate
parent of a partner may serve as a Director and as officers of the Company,
except that no partner in or employee of the Advisor or its Affiliates who also
is a Director or officer of the Company shall receive any compensation from the
Company for serving as a Director or officer other than for reasonable
reimbursement for travel and related expenses incurred in attending meetings of
the Directors.

      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 Average 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 Properties or Loans, on the basis of
one-twelfth of one half percent of the Average Invested Assets for the preceding
month, computed as a daily average. One-half of the Asset Management Fee
calculated with respect to each month shall be payable monthly on the last day
of such month, or the first business day following the last day of such month.
One-half of the Asset Management Fee calculated with respect to each month shall
be payable on a quarterly basis on the last day of the first month of the
immediately following fiscal quarter. Payment of this fee for any quarter shall
be payable only if the Shareholders have received a Preferred Return. Any
portion of the Performance Fee not paid due to the Company's failure to pay the
Preferred Return shall be paid by the Company, to the extent it is not
restricted by the 2%/25% Guidelines as described below, at the end of the next
fiscal quarter through which the Company has paid the Preferred Return. If at
the end of any fiscal quarter, the Company's Operating Expenses exceed the
2%/25% Guidelines over the immediately preceding 12 months, payment of the Asset
Management Fee will be withheld to the extent necessary to cause the Company to
satisfy the 2%/25% Guidelines. Any portion of the Asset Management Fee not paid
due to the Company's failure to satisfy the 2%/25% Guidelines shall be paid at
the end of the next fiscal quarter to the extent such payment

                                      -12-
<PAGE>

would not cause the Company to fail to satisfy the 2%/25% Guidelines if such
payment were to be included in the Company's Operating Expenses for the 12
months preceding such payment. For purposes of calculating the value per share
of restricted stock given for payment of the Asset Management Fee, the price per
share shall be: (i) the net asset value per share as determined by the most
recent appraisal performed by an independent third party or, if an appraisal has
not yet been performed, (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 for
services rendered in connection with the investigation, selection and
acquisition (by purchase, investment or exchange) of Property an Acquisition Fee
payable by the Company. The total 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
purchased by the Company with proceeds from all Offerings (calculated after all
such proceeds are invested) unless a majority of the Directors (including a
majority of the Independent Directors) not otherwise interested in any
transaction approve the excess as being commercially competitive, fair and
reasonable to the Company. The total amount of Acquisition Fees (including
Subordinated Acquisition Fees and any interest thereon) and Acquisition Expenses
paid by the Company may not exceed six percent of the aggregate Contract
Purchase Price of all Properties purchased by the Company unless a majority of
the Board (including a majority of the Independent Directors) not otherwise
interested in any transaction approves fees in excess of this limit as being
commercially competitive, fair and reasonable to the Company.

               (c) SUBORDINATED ACQUISITION FEE. In addition to the Acquisition
Fee described in Section 9(c) above, the Advisor may receive as additional
compensation for services rendered in connection with the investigation,
selection and acquisition (by purchase, investment or exchange) of a Property a
Subordinated Acquisition Fee payable by the seller of such Property or the
Company. The total Subordinated Acquisition Fees payable to the Advisor and its
Affiliates plus Subordinated Acquisition Fees payable by the Company to any
other party may not exceed two percent of the aggregate Total Property Cost of
all Properties purchased by the Company with proceeds from all Offerings
(calculated after all such proceeds are invested) unless a majority of the
Directors (including a majority of the Independent Directors) not otherwise
interested in any transaction approve the excess as being commercially
competitive, fair and reasonable to the Company. The unpaid portion of the
Subordinated Acquisition Fee with respect to any Property shall bear interest at
the rate of five percent per annum from the date of acquisition of such Property
until such portion is paid. Subject to the following sentence, the Subordinated
Acquisition Fee with respect to any Property shall be payable in equal annual
installments on January 1 of each of the three calendar years following the date
such Property was purchased; accrued interest or all unpaid Subordinated
Acquisition Fees shall also be payable on such dates. The portion of the
Subordinated Acquisitions Fees, and accrued interest thereon, otherwise payable
for any year on January 1 of the following year shall be payable only if the
Shareholders have received a Preferred Return. Any portion of the Subordinated
Acquisitions Fees, and accrued interest thereon, not paid due to the Company's
failure to pay the Preferred Return for the most recently completed fiscal year
shall be paid by the Company on January 1 following the fiscal year through
which the Company has paid the Preferred Return. In the event that the Shares
are listed for trading on a national securities exchange or are included

                                      -13-
<PAGE>

for quotation on Nasdaq, all Subordinated Acquisition Fees, and accrued interest
thereon, shall be due and payable on the date of such listing or inclusion.

               (d) 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 any loan secured by a
Property. Any Loan Refinancing Fee shall be due and payable upon the funding of
the related mortgage loan or as soon thereafter as is reasonably practicable. A
refinancing will qualify for a Loan Refinancing Fee only if: the new loan is
approved by a majority of the independent directors and found to be in the best
interest of the Company, the terms of the new loan represent an improvement over
the terms of the refinanced loan, the new loan materially increases the total
debt secured by a particular Property or 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.

               (e) PROPERTY MANAGEMENT FEE. The Advisor may cause the Company to
pay Property Management Fees for property management services rendered by the
Advisor or its Affiliates in connection with Properties acquired directly or
through foreclosure. The Advisor or an Affiliate will provide property
management services only if a Property becomes vacant or requires more active
management than contemplated at the time such Property is acquired. In either
event, the Company, by approval of the Directors (including a majority of the
Independent Directors), may engage the Advisor or an Affiliate, subject to such
Advisor's or such Affiliate's qualifying as an "independent contractor" pursuant
to Section 856(d)(3) of the Code, to provide property management services. If
such services are rendered by the Advisor or an Affiliate, the maximum Property
Management Fees which may be paid to the Advisor or an Affiliate will be six
percent of gross revenues from commercial Properties and five percent of gross
revenues from residential Properties, plus reimbursed expenses, paid monthly,
where such entity performs property management and leasing, re-leasing and
leasing related services, or three percent of the gross revenues of the Property
if only property management services are performed by such entity. Property
Management Fees payable to the Advisor or an Affiliate for an industrial or
commercial Property leased on a long-term (defined as at least ten years,
excluding renewals) triple net basis, may not exceed one percent of the gross
revenues from such Property, except for a one-time initial leasing fee equal to
three percent of total base rents payable for the first five years of the lease,
payable in five equal annual installments. Such fees to the Advisor or its
Affiliate cannot exceed the usual and customary amounts charged for similar
services in the same geographic area.

               (f) SUBORDINATED DISPOSITION FEE. If the Advisor or an Affiliate
provides a substantial amount of the services (as determined by a majority of
the Independent Directors) in the sale of a Property, the Advisor or an
Affiliate shall receive a Subordinated Disposition Fee equal to the lesser of:
(i) 50% of the Competitive Real Estate Commission and (ii) three percent of the
Contract Sales Price of such Property. The Subordinated Disposition Fee will be
paid only if Shareholders have received a return of 100% of Initial Investor
Capital (through liquidity or distributions) plus an annual Cumulative Return of
six percent from the date shares were purchased from the Company through the
date payment is made. The return requirement will be deemed satisfied if the
total distributions paid by CPA(R):I satisfy the six percent annual Cumulative
Return requirement and the market value of CPA(R):I equals or exceeds 100% of
the capital raised by CPA(R):I (less any amounts distributed from the sale of
refinancing of any

                                      -14-
<PAGE>

property). To the extent that Subordinated Disposition Fees are not paid by the
Company on a current basis due to the foregoing limitation, the unpaid fees will
be accrued and paid at such time as the limitation has been satisfied. The
Subordinated Disposition Fee may be paid in addition to real estate commissions
paid to non-Affiliates, provided that the total real estate commissions paid to
all Persons by the Company shall not exceed an amount equal to the lesser of:
(i) six percent of the Contract Sales Price of a Property or (ii) the
Competitive Real Estate Commission. In the event this Agreement is terminated
prior to such time as the Shareholders have received a return of 100% of Initial
Investor Capital plus an amount sufficient to pay a Cumulative Return of six
percent from the date shares were purchased from the Company through the date of
termination of this Agreement, an appraisal of the Properties then owned by the
Company shall be made and the Subordinated Disposition Fee on Properties
previously sold will be deemed earned if the Appraised Value of the Properties
then owned by the Company plus return to Shareholders received prior to the date
of termination of this Agreement is equal to 100% of Initial Investor Capital
(through liquidity or distributions) plus an amount sufficient to pay a
Cumulative Return of six percent from the date shares were purchased from the
Company through the date of termination of this Agreement. In the event the
Company's Shares are listed on a national securities exchange or included for
quotation on Nasdaq and, at the time of such listing, the Advisor has accrued a
Subordinated Disposition Fee which has not been paid, for purposes of
determining whether the subordination conditions have been satisfied,
Shareholders will be deemed to have received a Dividend in an amount equal to
the product of the total number of outstanding Shares and the average of the
closing prices (or average bid and asked quotes) of the Shares over a period,
beginning 180 days after listing of the Shares, of 30 days during which the
Shares are traded.

               (g) SUBORDINATED INCENTIVE FEE. The Subordinated Incentive Fee
shall be payable to the Advisor in an amount equal to 15% of Cash from Sales and
Financings distributed to the Shareholders after the Shareholders have received
a return of 100% of Initial Investor Capital (through liquidity or
distributions) plus an annual Cumulative Return of six percent from the date
shares were purchased from the Company through date payment is made. Once
Shareholders have been provided with liquidity the Advisor will be paid any
Subordinated Incentive Fee and any Subordinated Disposition Fee it has earned
and does earn if the return requirements are satisfied. For these purposes
Shareholder will be deemed to have been provided liquidity if the Shares are
listed on a national security exchange or over-the-counter market, included for
quotation on Nasdaq, if shares can be redeemed through the CPA(R):I redemption
plan on a quarterly basis without delay or some other liquidity terms has been
provided which enables Shareholders to receive cash or marketable securities for
their Shares no less frequently than quarterly. The return requirement will be
deemed satisfied if the total distributions paid by CPA(R):I satisfy the six
percent annual Cumulative Return requirement and the market value of CPA(R):I
equals or exceeds 100% of the capital raised by CPA(R):I (less any amounts
distributed from the sale of refinancing of any property). The market value will
be calculated on the basis of the average market value of the Shares over the 30
trading days beginning 180 days after the Shares are first listed on a stock
exchange if the Shares are listed or included for quotation. If liquidity is
provided through the redemption plan, the value of CPA(R):I will be the
redemption price, net of any surrender fee, multiplied by the total number of
outstanding Shares. A similar measurement will be used for other forms of
liquidity. The Company shall have the option to pay such fee in the form of
cash, a promissory note or any combination thereof. The promissory note shall be
fully amortizing over five years, provide for

                                      -15-
<PAGE>

quarterly payments and bear interest at the prime rate announced from time to
time in The Wall Street Journal.

               (h) LOANS FROM AFFILIATES. If any loans are made to the Company
by the Advisor or an Affiliate of the Advisor, the maximum amount of interest
that may be charged by such Affiliate shall be the lesser of (i) one percent
above the prime rate of interest published in The Wall Street Journal and (ii)
the rate that would be charged to the Company by unrelated lending institutions
on comparable loans for the same purpose in the locality of the Property. The
terms of any such loans shall be no less favorable than the terms available
between non-Affiliated Persons for similar commercial loans.

               (i) 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 a 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 shall
consider all 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.

               (j) 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 of the form in which the fee
shall be paid. 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 as of the end of the immediately preceding year 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 of Directors of the Company to account for
significant capital transactions. Fees paid in the form of stock shall be paid
pursuant to the terms of the form of the Restricted Stock Agreement attached
hereto as Exhibit A or such other terms as the Advisor and the Company may from
time to time agree.

                                      -16-
<PAGE>

      10. EXPENSES. In addition to the compensation paid to the Advisor pursuant
to Section 9 hereof, the Company shall pay directly or reimburse the Advisor for
the following expenses:

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

               (ii) expenses other than Acquisition Expenses incurred in
      connection with the investment of the funds of the Company;

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

               (iv) taxes and assessments on income or Property and taxes as an
      expense of doing business;

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

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

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

               (viii) fees and expense of non-affiliated auditors and
      accountants for the Company;

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

               (x) expenses associated with listing the Shares and Securities on
      a securities exchange or Nasdaq if requested by the Directors or with the
      issuance and distribution of Shares and Securities, such as selling
      commissions and fees, taxes, legal and accounting fees, listing and
      registration fees, and other Organization and Offering Expenses;

               (xi) expenses connected with payments of Dividends in cash or
      otherwise made or caused to be made by the Directors to the Shareholders;

                                      -17-
<PAGE>

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

               (xiii) 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;

               (xiv) 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; and

               (xv) 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.

      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.

      The Advisor shall be responsible for payment of all Acquisition Expenses.
The Company shall pay to the Advisor the Acquisition Expense Allowance, which
shall be used by the Advisor to pay Acquisition Expenses.

      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. The Advisor shall prepare a statement
documenting the expenses of the Company other than Acquisition Expenses during
each quarter, and shall deliver such statement to the Company within 45 days
after the end of each quarter.

      11. OTHER SERVICES. Should the Directors request that the Advisor or any
partner or employee thereof render services for the Company other than 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. REFUND BY ADVISOR. (a) Within 60 days after the end of any fiscal
quarter of the Company which begins following the date the Company first
commences operations, if Operating Expenses of the Company during the fiscal
year, ending at the end of such quarter exceed the greater of (i) two percent of
the Average Invested Assets or (ii) 25% of the Net Income of the Company during
that fiscal year and a majority of the Independent Directors find this excess
amount justified based on such unusual and non-recurring factors which they deem

                                      -18-
<PAGE>

sufficient, the Advisor may be reimbursed in future years for the full amount of
such excess expenses, 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 any such year. In no event shall the Operating Expenses
paid by the Company in any twelve month period ending at the end of a fiscal
quarter exceed the 2%/25% Guidelines. All figures used in the foregoing
computation shall be determined in accordance with generally accepted accounting
principles applied on a consistent basis. If the Advisor receives an incentive
fee for the sale of Property, Net Income, for purposes of calculating the
Operating Expenses, shall exclude the gain from the sale of such Property.

               (b) To the extent Organizational and Offering Expenses payable by
the Company exceeds 10.5% of the Gross Offering Proceeds, the excess will be
paid by the Advisor.

      14. OTHER ACTIVITIES OF THE ADVISOR. Nothing herein contained shall
prevent the Advisor from engaging in other activities, including without
limitation the rendering of advice to other investors (including other REITs)
and the management of other programs advised, sponsored or organized by the
Advisor or its Affiliates; nor shall this Agreement limit or restrict the right
of any director, officer, employee, partner or shareholder of the Advisor or its
Affiliates to engage in any other business or to render services of any kind to
any other partnership, corporation, firm, individual, trust or association. The
Advisor may, with respect to any investment in which the Company is a
participant, also render advice and service to each and every other participant
therein. The Advisor shall report to the Directors the existence of any
condition or circumstance, existing or anticipated, of which it has knowledge,
which creates or could create a conflict of interest between the Advisor's
obligations to the Company and its obligations to or its interest in any other
partnership, corporation, firm, individual, trust or association. The Advisor or
its Affiliates shall promptly disclose to the Directors knowledge of such
condition or circumstance. If the Sponsor, Advisor, Director or Affiliates
thereof have sponsored other investment programs with similar investment
objectives which have investment funds available at the same time as the
Company, it shall be the duty of the Directors (including the Independent
Directors) to adopt any method set forth in a Prospectus or another reasonable
method by which properties are to be allocated to the competing investment
entities and to use their best efforts to apply such method fairly to the
Company.

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

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

                                      -19-
<PAGE>

Advisor, the Advisor shall give priority to the investment entity, including the
Company, which has uninvested funds for the longest period of time. The Advisor
may consider the Property for private placement only if such Property is deemed
inappropriate for any investment entity which is advised or managed by the
Advisor, including the Company.

      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 shall continue in force
until December 31, 2004 and thereafter shall be automatically renewed from year
to year, 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 of 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 violate any material provision of this Agreement,
      and after written notice of such violation, shall not cure such default
      within 30 days or have begun action within 30 days to cure the default
      which shall be completed with reasonable diligence; or

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

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

      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 Directors 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

                                      -20-
<PAGE>

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 the Directors, 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 a majority of the Directors (including a
majority of the Independent Directors); provided, however, that such approval
shall not be required in the case of an assignment to a corporation,
partnership, association, trust or organization which may take over the assets
and carry on the affairs of the Advisor, provided: (i) that at the time of such
assignment, such successor organization shall be owned substantially by the then
partners of the Advisor or their Affiliates and only if such entity has a net
worth of at least $5,000,000, and (ii) that a general partner of the Advisor
shall deliver to the Directors a statement in writing indicating the ownership
structure and net worth of the successor organization and 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 Directors. This Agreement shall
not be assigned by the Company without the consent of the Advisor, except in the
case of an assignment by the Company to a corporation or other organization
which is a successor to the Company, in which case such successor organization
shall be bound hereunder and by the terms of said assignment in the same manner
as the Company is bound by this Agreement.

      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 except it shall be entitled to
receive from the Company within 30 days after the effective date of such
termination the following:

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

            (ii) all earned but unpaid Asset Management Fees and Performance
      Fees payable to the Advisor prior to the termination of this Agreement;

            (iii) all earned but unpaid Subordinated Acquisition Fees and all
      unaccrued Subordinated Acquisition Fees, in each case payable to the
      Advisor relating to the acquisition of any Property prior to the
      termination of this Agreement;

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

            (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 of this Agreement; and

                                      -21-
<PAGE>

            (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.

      Notwithstanding the foregoing, in the event this Agreement is terminated
by the Company for Cause or by the Advisor for other than Good Reason, the
Advisor will not be entitled to receive the sums in subparagraphs 20(a)(i)-(vi),
above. All amounts payable to the Advisor in the event of a termination shall be
evidenced by a non-interest bearing promissory note (the "Note") having a
principal amount of the unpaid amount payable to the Advisor.

      (b) If this Agreement is terminated by the Company for any reason other
than Cause, by either 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.

      (c) The Termination Fee shall be paid in a manner determined by the
Directors, but in no event shall any portion of the Termination Fee remain
unpaid three years after the termination, non-renewal or substantial
modification of this Agreement, nor shall the Termination Fee be paid in less
than 12 equal quarterly installments, with interest, on the unpaid balance at
the prime rate of interest then in effect as announced by The Bank of New York.
Notwithstanding the preceding sentence, any amounts which may be deemed payable
at the date the obligation to pay the Termination Fee is incurred (i) shall be
an amount which provides compensation to the Advisor only for that portion of
the holding period for the respective Properties during which the Advisor
provided services to the Company, (ii) shall not be due and payable until the
Property to which such fees relate is sold or refinanced, and (iii) shall not
bear interest until the Property to which such fees relate is sold or
refinanced. A portion of the Termination Fee shall be paid as each Property
owned by the Company on the Termination Date is sold. The portion of the
Termination Fee payable upon each such sale shall be equal to (i) the
Termination Fee multiplied by (ii) the percentage calculated by dividing the
Appraised Value (at the Termination Date) of the Property sold by the Company
divided by the total Appraised Value (at the Termination Date) of all Properties
owned by the Company on the Termination Date.

      The Note for amounts payable as described above shall mature upon the
liquidation of the Company (or ten years from date of issuance whichever is
earlier) and shall be payable at any time prior to maturity. The compensation
payable under this Subsection shall be paid or delivered to the Advisor within
30 days after funds shall become available to the Company for the making of such
payments.

      (d) Notwithstanding the foregoing, the Advisor shall not be entitled to
payment of the Termination Fee in the event this Agreement is terminated because
of failure of the Company and the Advisor to establish, pursuant to Section 9(j)
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.

      (e) The Advisor shall promptly upon termination:

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

                                      -22-
<PAGE>

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

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

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

      21. INDEMNIFICATION BY THE COMPANY. The Company shall indemnify and hold
harmless the Advisor and its Affiliates, including their respective officers,
directors, partners and employees, from all liability, claims, damages or losses
arising in the performance of their duties hereunder, and related expenses,
including reasonable attorneys' fees, to the extent such liability, claims,
damages or losses and related expenses are not fully reimbursed by insurance,
subject to any limitations imposed by the laws of the State of Maryland, the
Articles of Incorporation or the Bylaws of the Company. Notwithstanding the
foregoing, the Advisor shall not be entitled to indemnification or be held
harmless pursuant to this Section 21 for any activity which the Advisor shall be
required to indemnify or hold harmless the Company pursuant to Section 22.

      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 Directors                Corporate Property Associates International
    and to the Company:             Incorporated
                                             50 Rockefeller Plaza
                                             New York, NY  10020

    To the Advisor:                 W. P. Carey International LLC
                                             50 Rockefeller Plaza
                                                   New York, NY  10020

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

                                      -23-
<PAGE>

      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 the Advisor, or an
Affiliate thereof to perform the services of

                                      -24-
<PAGE>

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

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

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

                                      CORPORATE PROPERTY ASSOCIATES
                                      INTERNATIONAL INCORPORATED

                                      By:
                                         ---------------------------------------
                                      Name:
                                      Title:

                                      W. P. CAREY INTERNATIONAL LLC

                                      By:
                                         ---------------------------------------
                                      Name:
                                      Title:

                                      -25-
<PAGE>

                                    EXHIBIT A

                           RESTRICTED STOCK AGREEMENT

      This RESTRICTED STOCK AGREEMENT dated ------------------------ , by and
between Corporate Property Associates International Incorporated ("CPA(R):I "),
a Maryland corporation and W. P. Carey International LLC, a Delaware limited
liability company and subsidiary of W.P. Carey & Co. LLC (the "Advisor").

                                   WITNESSETH

      WHEREAS, CPA(R):I and Advisor entered into an Advisory Agreement (the
"Advisory Agreement") pursuant to which Advisor provides various services to
CPA(R):I ;

      WHEREAS, pursuant to the Advisory Agreement, CPA(R):I is required to pay
certain fees to the Advisor and the Advisor may request that certain fees be
paid with common stock of the Company; and

      WHEREAS, the Advisor has requested that CPA(R):I pay a portion of the fees
due to Advisor in the form of shares of common stock of CPA(R):I .

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

               1. Payment of Fees with Stock. CPA(R):I hereby grants to
Advisor________________________ shares of common stock of CPA(R):I (the
"Shares").

               2. 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.

               3. Immediate Vesting. Upon the expiration of the Advisory
Agreement for any reason other than a termination for Cause under paragraph 17
of the Advisory Agreement or upon a "Change of Control" of CPA(R):I (as defined
below), all Shares granted to the Advisor hereunder shall vest immediately and
all restrictions shall lapse. For purposes of this Agreement, a "Change of
Control" of the Company shall be deemed to have occurred if there has been a

                                      A-1
<PAGE>

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 Company's Board of Directors ("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 Company's
Board of Directors (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 of
Directors, 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, for
purposes of this Agreement, 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,

                                      A-2
<PAGE>

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 (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).

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

                                 CORPORATE PROPERTY ASSOCIATES
                                 INTERNATIONAL INCORPORATED

                                 By:
                                     -------------------------------------------

                                 W. P. CAREY INTERNATIONAL LLC

                                 By:
                                     -------------------------------------------

                                      A-3

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