Document:

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                                                                    Exhibit 4.01

            This Note is a Global Security within the meaning of the Indenture
hereinafter referred to and is registered in the name of the Depository named
below or a nominee of the Depository. This Note is not exchangeable for Notes
registered in the name of a Person other than the Depository or its nominee
except in the limited circumstances described herein and in the Indenture, and
no transfer of this Note (other than a transfer of this Note as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository) may be registered except in
the limited circumstances described herein.

            Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation (the "Depository"), to
the Company or its agent for registration of transfer, exchange, or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of the Depository (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of the Depository), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.

                                 CITIGROUP INC.
                       4.125% NOTES DUE FEBRUARY 22, 2010

REGISTERED                                                     REGISTERED

                                                      CUSIP: 172967 CU 3
                                                    ISIN: US172967 CU 34
                                                  Common Code: 021300802

No. R-                                                                 $

            CITIGROUP INC., a Delaware corporation (the "Company", which term
includes any successor Person under the Indenture), for value received, hereby
promises to pay to Cede & Co., or registered assigns, the principal sum of
$____________ on February 22, 2010 and to pay interest thereon from and
including February 22, 2005 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semi-annually, on February 22
and August 22 of each year, commencing August 22, 2005, at the rate of 4.125%
per annum, until the principal hereof is paid or made available for payment. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in the Indenture, be paid to the Person in whose
name this Note is registered at the close of business on the Record Date for
such interest, which shall be the February 15 and August 15 (whether or not a
Business Day) immediately preceding such Interest Payment Date.

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            Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the holder on such Record Date and may either
be paid to the Person in whose name this Note is registered at the close of
business on a subsequent Record Date, such subsequent Record Date to be not less
than five days prior to the date of payment of such defaulted interest, notice
whereof shall be given to holders of Notes of this series not less than 15 days
prior to such subsequent Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Notes of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture.

            Interest hereon will be calculated on the basis of a 360-day year
comprised of twelve 30-day months.

            If either an Interest Payment Date or the Maturity of the Notes
falls on a day that is not a Business Day, such Interest Payment Date or
Maturity will be the next succeeding Business Day. If a date for payment of
interest or principal on the Notes falls on a day that is not a business day in
the place of payment, such payment will be made on the next succeeding business
day in such place of payment as if made on the date the payment was due. No
interest will accrue on any amounts payable for the period from and after the
due date for payment of such principal or interest.

            For these purposes, "Business Day" means any day which is a day on
which commercial banks settle payments and are open for general business in The
City of New York.

            Payment of the principal of and interest on this Note will be made
at the office or agency of the Trustee maintained for that purpose in The City
of New York.

            Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

            Unless the certificate of authentication hereon has been executed by
the Trustee or by an authenticating agent on behalf of the Trustee by manual
signature, this Note shall not be entitled to any benefit under the Indenture or
be valid or obligatory for any purpose.

                                        2
<PAGE>

            IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.

Dated:  February 22, 2005

                                    CITIGROUP INC.

                                    By:_________________________________
                                    Title: Treasurer

ATTEST:

By:___________________________
Title: Assistant Secretary

                                        3
<PAGE>

            This is one of the Notes of the series issued under the
within-mentioned Indenture.

Dated:  February 22, 2005

                                      THE BANK OF NEW YORK,
                                      as Trustee

                                      By:_________________________________
                                         Name:
                                         Title:

                                      -or-

                                      CITIBANK, N.A.,
                                      as Authenticating Agent

                                      By:_________________________________
                                         Name:
                                         Title:

                                        4
<PAGE>

      This Note is one of a duly authorized issue of Securities of the Company
(the "Notes"), issued and to be issued in one or more series under the
Indenture, dated as of March 15, 1987 (as amended and supplemented to date, the
"Indenture"), between the Company and The Bank of New York, as Trustee (the
"Trustee", which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the holders of the Notes
and of the terms upon which the Notes are, and are to be, authenticated and
delivered. This Note is one of the series designated on the face hereof,
initially limited in aggregate principal to $2,000,000,000.

      If an event of default (as defined in the Indenture) with respect to Notes
of this series shall occur and be continuing, the principal of the Notes of this
series may be declared due and payable in the manner and with the effect
provided in the Indenture.

      The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Note upon compliance by the Company with certain conditions
set forth in Sections 11.03 and 11.04 thereof, which provisions apply to this
Note.

      The Indenture contains provisions permitting the Company and the Trustee,
without the consent of the holders of the Securities, to establish, among other
things, the form and terms of any series of Securities issuable thereunder by
one or more supplemental indentures, and, with the consent of the holders of not
less than 66 2/3% in aggregate principal amount of Securities at the time
outstanding which are affected thereby, to modify the Indenture or any
supplemental indenture or the rights of the holders of Securities of such series
to be affected, provided that no such modification will (i) extend the fixed
maturity of any Securities, reduce the rate or extend the time of payment of
interest thereon, reduce the principal amount thereof or the premium, if any,
thereon, reduce the amount of the principal of Original Issue Discount
Securities payable on any date, change the currency in which Securities are
payable, or impair the right to institute suit for the enforcement of any such
payment on or after the maturity thereof, without the consent of the holder of
each Security so affected, or (ii) reduce the aforesaid percentage of Securities
of any series the consent of the holders of which is required for any such
modification without the consent of the holders of all Securities of such series
then outstanding, or (iii) modify, without the written consent of the Trustee,
the rights, duties or immunities of the Trustee.

      No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency, herein prescribed.

      This Note is a Global Security registered in the name of a nominee of the
Depository. This Note is exchangeable for Notes registered in the name of a
person other than the Depository or its nominee only in the limited
circumstances hereinafter described. Unless and until it is exchanged in whole
or in part for definitive Notes in certificated form, this Note may not be

                                        5
<PAGE>

transferred except as a whole by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another nominee of the
Depository.

      The Notes represented by this Global Security are exchangeable for
definitive Notes in certificated form of like tenor as such Notes in
denominations of $1,000 and integral multiples thereof only if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for the Notes or (ii) the Depository ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended, or (iii) the
Company in its sole discretion decides to allow the Notes to be exchanged for
definitive Notes in registered form. Any Notes that are exchangeable pursuant to
the preceding sentence are exchangeable for certificated Notes issuable in
authorized denominations and registered in such names as the Depository shall
direct. As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of definitive Notes in certificated form is registrable
in the register maintained by the Company in The City of New York for such
purpose, upon surrender of the definitive Note for registration of transfer at
the office or agency of the registrar, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
registrar duly executed by, the holder thereof or his attorney duly authorized
in writing, and thereupon one or more new Notes of this series and of like
tenor, of authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees. Subject to the
foregoing, this Note is not exchangeable, except for a Global Security or Global
Securities of this issue of the same principal amount to be registered in the
name of the Depository or its nominee.

      No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

      Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

      The Company will pay additional amounts ("Additional Amounts") to the
beneficial owner of any Note that is a non-United States person in order to
ensure that every net payment on such Note will not be less, due to payment of
U.S. withholding tax, than the amount then due and payable. For this purpose, a
"net payment" on a Note means a payment by the Company or a paying agent,
including payment of principal and interest, after deduction for any present or
future tax, assessment or other governmental charge of the United States. These
Additional Amounts will constitute additional interest on the Note.

      The Company will not be required to pay Additional Amounts, however, in
any of the circumstances described in items (1) through (13) below.

      (1)   Additional Amounts will not be payable if a payment on a Note is
            reduced as a result of any tax, assessment or other governmental
            charge that is imposed or withheld solely by reason of the
            beneficial owner:

                                        6
<PAGE>

            (a)   having a relationship with the United States as a citizen,
                  resident or otherwise;
            (b)   having had such a relationship in the past or
            (c)   being considered as having had such a relationship.

      (2)   Additional Amounts will not be payable if a payment on a Note is
            reduced as a result of any tax, assessment or other governmental
            charge that is imposed or withheld solely by reason of the
            beneficial owner:

            (a)   being treated as present in or engaged in a trade or business
                  in the United States;
            (b)   being treated as having been present in or engaged in a trade
                  or business in the United States in the past or
            (c)   having or having had a permanent establishment in the United
                  States.

      (3)   Additional Amounts will not be payable if a payment on a Note is
            reduced as a result of any tax, assessment or other governmental
            charge that is imposed or withheld solely by reason of the
            beneficial owner being or having been any of the following (as such
            terms are defined in the Internal Revenue Code of 1986, as amended):

            (a)   personal holding company;
            (b)   foreign personal holding company;
            (c)   foreign private foundation or other foreign tax-exempt
                  organization;
            (d)   passive foreign investment company;
            (e)   controlled foreign corporation or
            (f)   corporation which has accumulated earnings to avoid United
                  States federal income tax.

      (4)   Additional Amounts will not be payable if a payment on a Note is
            reduced as a result of any tax, assessment or other governmental
            charge that is imposed or withheld solely by reason of the
            beneficial owner owning or having owned, actually or constructively,
            10 percent or more of the total combined voting power of all classes
            of stock of the Company entitled to vote or by reason of the
            beneficial owner being a bank that has invested in a Note as an
            extension of credit in the ordinary course of its trade or business.

For purposes of items (1) through (4) above, "beneficial owner" means a
fiduciary, settlor, beneficiary, member or shareholder of the holder if the
holder is an estate, trust, partnership, limited liability company, corporation
or other entity, or a person holding a power over an estate or trust
administered by a fiduciary holder.

      (5)   Additional Amounts will not be payable to any beneficial owner of a
            Note that is a:

                                        7
<PAGE>

            (a)   fiduciary;
            (b)   partnership;
            (c)   limited liability company or
            (d)   other fiscally transparent entity

            or that is not the sole beneficial owner of the Note, or any portion
            of the Note. However, this exception to the obligation to pay
            Additional Amounts will only apply to the extent that a beneficiary
            or settlor in relation to the fiduciary, or a beneficial owner or
            member of the partnership, limited liability company or other
            fiscally transparent entity, would not have been entitled to the
            payment of an Additional Amount had the beneficiary, settlor,
            beneficial owner or member received directly its beneficial or
            distributive share of the payment.

      (6)   Additional Amounts will not be payable if a payment on a Note is
            reduced as a result of any tax, assessment or other governmental
            charge that is imposed or withheld solely by reason of the failure
            of the beneficial owner or any other person to comply with
            applicable certification, identification, documentation or other
            information reporting requirements. This exception to the obligation
            to pay Additional Amounts will only apply if compliance with such
            reporting requirements is required by statute or regulation of the
            United States or by an applicable income tax treaty to which the
            United States is a party as a precondition to exemption from such
            tax, assessment or other governmental charge.

      (7)   Additional Amounts will not be payable if a payment on a Note is
            reduced as a result of any tax, assessment or other governmental
            charge that is collected or imposed by any method other than by
            withholding from a payment on a Note by the Company or a paying
            agent.

      (8)   Additional Amounts will not be payable if a payment on a Note is
            reduced as a result of any tax, assessment or other governmental
            charge that is imposed or withheld by reason of a change in law,
            regulation, or administrative or judicial interpretation that
            becomes effective more than 15 days after the payment becomes due or
            is duly provided for, whichever occurs later.

      (9)   Additional Amounts will not be payable if a payment on a Note is
            reduced as a result of any tax, assessment or other governmental
            charge that is imposed or withheld by reason of the presentation by
            the beneficial owner of a Note for payment more than 30 days after
            the date on which such payment becomes due or is duly provided for,
            whichever occurs later.

      (10)  Additional Amounts will not be payable if a payment on a Note is
            reduced as a result of any:

            (a)   estate tax;
            (b)   inheritance tax;

                                        8
<PAGE>

            (c)   gift tax;
            (d)   sales tax;
            (e)   excise tax;
            (f)   transfer tax;
            (g)   wealth tax;
            (h)   personal property tax or
            (i)   any similar tax, assessment, withholding, deduction or other
                  governmental charge.

      (11)  Additional Amounts will not be payable if a payment on a Note is
            reduced as a result of any tax, assessment, or other governmental
            charge required to be withheld by any paying agent from a payment of
            principal or interest on a Note if such payment can be made without
            such withholding by any other paying agent.

      (12)  Additional amounts will not be payable if a payment on a Note is
            reduced as a result of any tax, assessment or other governmental
            charge that is required to be made pursuant to any European Union
            directive on the taxation of savings income or any law implementing
            or complying with, or introduced to conform to, any such directive.

      (13)  Additional Amounts will not be payable if a payment on a Note is
            reduced as a result of any combination of items (1) through (12)
            above.

      Except as specifically provided herein, the Company will not be required
to make any payment of any tax, assessment or other governmental charge imposed
by any government or a political subdivision or taxing authority of such
government.

      As used in this Note, "United States person" means:

      (a)   any individual who is a citizen or resident of the United States;
      (b)   any corporation, partnership or other entity created or organized in
            or under the laws of the United States;
      (c)   any estate if the income of such estate falls within the federal
            income tax jurisdiction of the United States regardless of the
            source of such income and
      (d)   any trust if a United States court is able to exercise primary
            supervision over its administration and one or more United States
            persons have the authority to control all of the substantial
            decisions of the trust.

      Additionally, "non-United States person" means a person who is not a
United States person, and "United States" means the United States of America,
including the States and the District of Columbia, but excluding its territories
and its possessions.

      Except as provided below, the Notes may not be redeemed prior to maturity.

      (1)   The Company may, at its option, redeem the Notes if:

                                        9
<PAGE>

            (a)   the Company becomes or will become obligated to pay Additional
                  Amounts as described above;
            (b)   the obligation to pay Additional Amounts arises as a result of
                  any change in the laws, regulations or rulings of the United
                  States, or an official position regarding the application or
                  interpretation of such laws, regulations or rulings, which
                  change is announced or becomes effective on or after February
                  14, 2005 and
            (c)   the Company determines, in its business judgment, that the
                  obligation to pay such Additional Amounts cannot be avoided by
                  the use of reasonable measures available to it, other than
                  substituting the obligor under the Notes or taking any action
                  that would entail a material cost to the Company.

      (2)   The Company may also redeem the Notes, at its option, if:

            (a)   any act is taken by a taxing authority of the United States on
                  or after February 14, 2005, whether or not such act is taken
                  in relation to the Company or any affiliate, that results in a
                  substantial probability that the Company will or may be
                  required to pay Additional Amounts as described above;
            (b)   the Company determines, in its business judgment, that the
                  obligation to pay such Additional Amounts cannot be avoided by
                  the use of reasonable measures available to it, other than
                  substituting the obligor under the Notes or taking any action
                  that would entail a material cost to the Company and
            (c)   the Company receives an opinion of independent counsel to the
                  effect that an act taken by a taxing authority of the United
                  States results in a substantial probability that the Company
                  will or may be required to pay the Additional Amounts
                  described under above, and delivers to the Trustee a
                  certificate, signed by a duly authorized officer, stating that
                  based on such opinion the Company is entitled to redeem the
                  Notes pursuant to their terms.

Any redemption of the Notes as set forth in clauses (1) or (2) above shall be in
whole, and not in part, and will be made at a redemption price equal to 100% of
the principal amount of the Notes Outstanding plus accrued interest thereon to
the date of redemption. Holders shall be given not less than 30 days nor more
than 60 days prior notice by the Trustee of the date fixed for such redemption.

      All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture. The Notes are governed by the
laws of the State of New York.

                                       10<PAGE>

                                                                    Exhibit 10.5

                     AMENDED AND RESTATED ADVISORY AGREEMENT

      THIS AMENDED AND RESTATED ADVISORY AGREEMENT, dated as of February 17,
2005 is between CORPORATE PROPERTY ASSOCIATES 12 INCORPORATED, a Maryland
corporation (the "Company"), and W. P. CAREY & CO. LLC, a Delaware limited
liability company (the "Advisor") and amends the Amended and Restated Advisory
Agreement dated June 28, 2000 between the Company and the Advisor.

                              W I T N E S S E T H:

            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 Expenses. Those expenses, including but not limited to
      legal fees and expenses, travel and communications expenses, costs of
      appraisals, nonrefundable option payments on Property not acquired,
      accounting fees and expenses, title insurance 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), non-recurring management fee, mortgage placement
      fee, lease-up fee, transaction structuring fee or any fee of a similar
      nature, however designated. Acquisition Fees include Subordinated
      Acquisition Fees, as defined in that certain Acquisition Services
      Agreement between the Company and the Advisor. 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 & Co. LLC, a limited liability company
      organized under the laws of the State of Delaware.

            Affiliate. An Affiliate of another Person shall mean (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.

            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. Except as otherwise set forth in the
      penultimate sentence in Section 9(a) and (b) hereof, for a specified
      period, 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. For the purpose of
      calculating the Asset Management Fee and the Performance Fee, Average
      Invested Assets shall be calculated in accordance with Section 9(a) and
      9(b) hereof, respectively.

            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.

                                      -2-
<PAGE>

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

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

            Cause. With respect to the termination of this Agreement, fraud,
      criminal conduct, willful misconduct or willful or negligent breach of
      fiduciary duty by the Advisor 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 12 Incorporated, a
      corporation organized under the laws of the State of Maryland.

            Competitive Real Estate Commission. The real estate or brokerage
      commission paid in a competitive market 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.

                                      -3-
<PAGE>

            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 (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.

            Final Closing Date. The last date on which purchasers of Shares
      offered pursuant to the Prospectus were issued such Shares.

            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
      pursuant to the Offering.

            Independent Appraiser. A qualified appraiser of real estate as
      determined by the Board, who is not affiliated, directly or indirectly,
      with the Company, the Advisor or their respective Affiliates. Membership
      in a nationally recognized appraisal society such as

                                      -4-
<PAGE>

      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.

            Initial Closing Date. The first date on which purchasers of Shares
      offered pursuant to the Prospectus were issued such Shares.

            Initial Investor Capital. The total amount of capital invested from
      time to time by Shareholders (computed at a rate of $10 per Share for
      every Share including those Shares for which reduced selling commissions
      were paid in connection with their purchase from the Company). Upon
      completion of the Offering, the Initial Investor Capital shall be equal to
      the Gross Offering Proceeds.

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

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

            Monitoring Fee. Annual fee paid by the Company to the Sales Agent
      with respect to Shares sold to clients of the Sales Agent or Selected
      Dealers in an amount equal to .15% of the gross proceeds from the sale of
      such Shares, payable beginning on April 15, 1996 and on or before April 15
      of each succeeding year.

                                      -5-
<PAGE>

            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 the 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,
      distribution, transfer, registration and stock exchange listing 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 (as defined in that
      certain Acquisition Services Agreement between the Company and the
      Advisor) 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.

            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 preparing, printing, filing and delivery of the
      Registration Statement and the 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

                                      -6-
<PAGE>

      counsel, (vii) the fees of the Company's counsel and independent public
      accountants, (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, Monitoring
      Fees, marketing fees, incentive fees and wholesaling fees and expenses
      incurred in connection with the sale of the Shares.

            Performance Fee. The Performance Fee as defined in Section 9(b).

            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 7% 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(c) hereof.

            Prospectus. The final prospectus of the Company pursuant to which
      the Company offered up to 20,000,000 Shares, as the same from time to time
      may have been amended or supplemented after the effective date of the
      Registration Statement.

            Registration Statement. The Registration Statement on Form S-11 of
      which the Prospectus is a part.

            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, 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 1% of
      the price of each Share

                                      -7-
<PAGE>

      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.

            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.

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

            Termination Fee. An amount equal to 15% of the amount, if any, by
      which (1) the 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 on the Final Closing Date
      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.

            2%/25% Guidelines. The requirement that, in any 12-month period, the
      Operating Expenses not exceed the greater of 2% 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.

                                      -8-
<PAGE>

            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 manage the day to day affairs of the Company 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
Registration Statement, Articles of Incorporation and Bylaws of the Company, the
Advisor shall, either directly or by engaging an Affiliate:

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

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

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

                  (d) consult with 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) obtain reports (which may be prepared by the Advisor or
            its Affiliates), where appropriate, concerning the value

                                      -9-
<PAGE>

            of investments or contemplated investments of the Company in
            Property and/or Loans;

                  (f) 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;

                  (g) 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;

                  (h) 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;

                  (i) 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;

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

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

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

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

                  (n) 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;

            4. AUTHORITY OF ADVISOR.

                                      -10-
<PAGE>

            (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)
enter into leases and service contracts for Properties, and perform other
property level operations, (2) oversee non-affiliated property managers and
other non-affiliated Persons who perform services for the Company, and (3)
undertake accounting and other record-keeping functions at the Property level.

            Notwithstanding the foregoing, the prior approval of the Directors,
including a majority of the Independent Directors, will be required for
transactions involving 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).

            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; 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.

            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 partners and employees, and
partners, stockholders, directors and

                                      -11-
<PAGE>

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. Partners 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 .5% 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 .5%
of the Average Invested Assets during the previous month, computed as a daily
average. 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. 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 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 determining the amount of the Asset Management Fee, the Average
Invested Assets will be, in any particular month, (i) for all months during the
period from inception of the Company through December 31, 1998, the average of
the aggregate book value of the assets of the Company invested, directly or
indirectly, in equity interests, in Properties and in Loans secured by real
estate, before reserves for depreciation or bad debts or other similar non-cash
reserves, all as shown on the books of the Company on each day of such month and
(ii) for all months beginning after December 31, 1998, the estimated value of
all of the Properties determined in accordance with the most recently conducted
Valuation, plus the principal balance of all Loans. 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) PERFORMANCE FEE. In addition to the Asset Management Fee
described in Section 9(a) above, the Company shall also pay to the Advisor as
compensation for the advisory services rendered to the Company hereunder an
amount equal to .5% per annum of the Average

                                      -12-
<PAGE>

Invested Assets of the Company (the "Performance Fee") calculated as set forth
below. The Performance 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 .5% of the Average Invested Assets during the previous
month, computed as a daily average. The Performance 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, but only if the Company has
paid Dividends to Shareholders in an amount sufficient to pay the Preferred
Return for the period beginning with the Initial Closing Date and ending on the
last day of the most recently completed fiscal quarter. Any portion of the
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 Performance Fee will be
withheld to the extent necessary to cause the Company to satisfy the 2%/25%
Guidelines. Any portion of the Performance 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 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 determining the amount of the Performance Fee, the Average Invested
Assets will be, in any particular month, (i) for all months during the period
from inception of the Company through December 31, 1998, the average of the
aggregate book value of the assets of the Company invested, directly or
indirectly, in equity interests, in Properties and in Loans secured by real
estate, before reserves for depreciation or bad debts or other similar non-cash
reserves, all as shown on the books of the Company on each day of such month and
(ii) for all months beginning after December 31, 1998, the estimated value of
all of the Company's Properties determined in accordance with the most recently
conducted Valuation, plus the principal balance of all Loans. Any part of the
Performance Fee that has been subordinated pursuant to this subsection (b) shall
not be deemed earned until such time as payable hereunder.

            (c) 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 6% of
gross revenues from commercial Properties and 5% 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 3% 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

                                      -13-
<PAGE>

leased on a long-term (defined as at least ten years, excluding renewals) triple
net basis, may not exceed 1% of the gross revenues from such Property, except
for a one-time initial leasing fee equal to 3% 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.

            (d) 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) 1% above the prime
rate of interest charged from time to time by The Bank of New York 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.

            (e) LOAN REFINANCING FEE. The Company shall pay to the Advisor for
all qualifying loan refinancings of Properties a Loan Refinancing Fee in the
amount of 1% 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 (i) any new loan is approved by
the Independent Directors as being in the best interests of the Company, (ii)
payment of the fee is approved by a majority of the Independent Directors, and
(iii) 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.

            (f) 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.

                                      -14-
<PAGE>

            (g) PAYMENT. Compensation payable to the Advisor pursuant to this
Section 9 shall be paid in cash; provided, however, that any fee payable
pursuant to Section 9 may be paid, at the option of the Advisor, in the form of
(i) cash, (ii) common stock of the Company or (iii) a combination of cash and
common stock. The Advisor shall notify the Company in writing of the form in
which the fee shall be paid. Such notice shall be provided no later than January
15 of each year. If no such notice is provided, the fee shall be paid in cash.
For purposes of the payment of compensation to the Advisor in the form of stock,
the value of each share of common stock shall be the Net Asset Value per Share
determined in accordance with the appraisal of the Company's assets performed as
of the end of the immediately preceding year by an Independent Appraiser. 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.

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

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

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

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

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

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

                  (vii) 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;

                                      -15-
<PAGE>

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

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

                  (x) 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;

                  (xi) 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

                  (xii) 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.

            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 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.

                                      -16-
<PAGE>

            13. REFUND BY ADVISOR. 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 (a) 2% of the
Average Invested Assets or (b) 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
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.

            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 the method set forth in the Registration Statement 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

                                      -17-
<PAGE>

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 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 10, 2005, 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 if, in addition to the
occurrence of events which would constitute Cause, 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

                                      -18-
<PAGE>

            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 by the Advisor by written notice of termination to
the Company upon the occurrence of events which would constitute Good Reason or
by the Company without cause or penalty 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;

                                      -19-
<PAGE>

                  (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 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)-(iii), 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) The Advisor shall promptly upon termination:

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

                  (ii) deliver to the 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.

                                      -20-
<PAGE>

            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 12
            and to the Company:      Incorporated
                                     50 Rockefeller Plaza
                                     New York, NY  10020

            To the Advisor:          W.P. Carey & Co. 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.

            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.

                                      -21-
<PAGE>

            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 W. P.
Carey & Co. LLC or an Affiliate thereof to perform the services of Advisor, the
Directors of the Company will, promptly after receipt of written request from W.
P. Carey & Co. LLC, 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

                                      -22-
<PAGE>

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 12 INCORPORATED

                                   By: /s/ John J. Park
                                       -----------------------------------------
                                   Name: John J. Park
                                   Title: Chief Financial Officer

                                   W. P. CAREY & CO. LLC

                                   By: /s/ John J. Park
                                       -----------------------------------------
                                   Name: John J. Park
                                   Title: Chief Financial Officer

                                      -23-
<PAGE>

                                    EXHIBIT A

                           RESTRICTED STOCK AGREEMENT

      This RESTRICTED STOCK AGREEMENT dated _______________________, by and
between Corporate Property Associates 12 Incorporated ("CPA(R):12"), a Maryland
corporation and W. P. Carey & Co. LLC ("Advisor"), a Delaware limited liability
company.

                                   WITNESSETH

      WHEREAS, CPA(R):12 and Advisor entered into an Advisory Agreement (the
"Advisory Agreement") pursuant to which Advisor provides various services to
CPA(R):12;

      WHEREAS, pursuant to the Advisory Agreement, CPA(R):12 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):12 pay a portion of the
fees due to Advisor in the form of shares of common stock of CPA(R):12.

      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):12 hereby grants to Advisor
___________ shares of common stock of CPA(R):12 (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):12 (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

<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 "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 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 12b-2 under the
Act) of such person, shall become the "beneficial owner" (as such term is
defined in Rule 13d-3 under the 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,

                                      -2-
<PAGE>

beneficially own (as such term is defined in Rule 13d-3 under the 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 Share of Common Stock outstanding, increases (x) the proportionate
number of Shares beneficially owned by any person to 25% or more of the Shares
then outstanding or (y) 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 (x) or (y) of this sentence shall thereafter become the
beneficial owner of any additional Shares or other Voting Securities (other than
pursuant to a Share split, Share dividend, or similar transaction), then a
"Change of Control" shall be deemed to have occurred for purposes of the
foregoing clause (i).

                                      -3-
<PAGE>

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

                                                CORPORATE PROPERTY ASSOCIATES 12
                                                INCORPORATED

                                                By: ____________________________

                                                W. P. CAREY & CO. LLC

                                                By: ____________________________

                                      -4-

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