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Exhibit 10
 
 
AMENDMENT NO. 3 TO CREDIT AGREEMENT
 
THIS AMENDMENT NO. 3 TO CREDIT AGREEMENT (this “Amendment”) is dated as of June
__, 2008, by and among Cornerstone Operating Partnership, L.P., a Delaware
limited partnership (the “Administrative Borrower”), each of the “Borrowing Base
Subsidiaries” party hereto (together with the Administrative Borrower, each a
“Borrower” and collectively, “Borrowers”), the “Guarantors” signatory hereto
(together with Borrowers, the “Credit Parties”), HSH Nordbank AG, New York
Branch, a German banking corporation acting through its New York branch, as
lender (together with its successors and assigns, each a “Lender” and
collectively the “Lenders”), and HSH Nordbank AG, New York Branch, a German
banking corporation acting through its New York branch, in its capacity as
administrative agent for the Lenders (in its capacity as administrative agent
for the Lenders, together with any permitted successor administrative agent, the
“Administrative Agent”) and arranger.  Capitalized terms not defined herein
shall have the respective meanings set forth in the Credit Agreement (as defined
below).
 
Recitals
 
WHEREAS, Borrowers, Guarantors, Lenders and Administrative Agent have entered
into that certain Credit Agreement dated as of June 30, 2006 (the “Original
Credit Agreement”), as amended by that certain Amendment and Waiver No. 1 to
Credit Agreement, dated as of July 31, 2007 (the “First Amendment”) and that
certain Amendment No. 2 to Credit Agreement, dated as of November 14, 2007 (the
“Second Amendment”, together with the Original Credit Agreement,  and the First
Amendment, and as otherwise modified or supplemented from time to time,
collectively, the “Credit Agreement”);
 
WHEREAS, pursuant to (i) that certain Joinder and Amendment Agreement dated as
of November 30, 2006, among COP-Goldenwest, LLC, a California limited liability
company (“COP-Goldenwest”), Administrative Borrower, the Guarantors, Lenders and
Administrative Agent, (ii) that certain Joinder Agreement dated as of November
30, 2006, among, COP-Western Ave., LLC a California limited liability company
(“COP-Western”), COP-Goldenwest, Administrative Borrower, the Guarantors,
Lenders and Administrative Agent, (iii) that certain Joinder Agreement dated as
of January 19, 2007, among COP-Deer Valley, LLC, an Arizona limited liability
company (“COP-Deer Valley”), COP-Western, COP-Goldenwest, Administrative
Borrower, the Guarantors, Lenders and Agent, and (iv) that certain Joinder
Agreement dated as of September 28, 2007, among COP-Pinnacle Peak, LLC, an
Arizona limited liability company (“COP-Pinnacle Peak”), COP-Western,
COP-Goldenwest, COP-Deer Valley, Administrative Borrower, the Guarantors,
Lenders and Agent, each of COP-Goldenwest, COP-Western, COP-Deer Valley and
COP-Pinnacle Peak were joined to the Credit Agreement and the other Financing
Documents, each as a “Borrower” and as a “Borrowing Base Subsidiary.”
 
WHEREAS, the payment of the Obligations and the performance of the other
obligations of Borrowers under the Credit Agreement and the other Financing
Documents are secured by, amongst other things, (i) that certain Deed of Trust,
Assignment of Leases and Rents, Fixture Filing and Security Agreement, by
COP-Goldenwest, as grantor, in favor of Commonwealth Land Title Company, solely
as trustee, for the benefit of Administrative Agent, recorded as of December 1,
2006 in the Official Records of Orange County, California, as Instrument No.
2006000808373 (the “Goldenwest Deed of Trust), (ii) that certain Assignment of
Leases and Rents, by COP-Goldenwest, in favor of Administrative Agent, recorded
as of December 1, 2006 in the Official Records of Orange County, California, as
Instrument No. 2006000808374 (the “Goldenwest Assignment”), (iii) that certain
Deed of Trust, Assignment of Leases and Rents, Fixture Filing and Security
Agreement, by COP-Western, as grantor, in favor of Commonwealth Land Title
Company, solely as trustee, for the benefit of Administrative Agent, recorded as
of December 1, 2006 in the Official Records of Los Angeles County, California,
as Instrument No. 2006266762 (the “Western Deed of Trust), (iv) that certain
Assignment of Leases and Rents, by COP-Western, in favor of Administrative
Agent, recorded as of December 1, 2006 in the Official Records of Los Angeles
County, California, as Instrument No. 20062667663 (the “Western Assignment”),
(v) that certain Deed of Trust, Assignment of Leases and Rents, Fixture Filing
and Security Agreement, by COP-Deer Valley, as grantor, in favor of Magnus Title
Agency, solely as trustee, for the benefit of Administrative Agent, recorded as
of January 22, 2007 in the Official Records of Maricopa County, Arizona, as
Instrument No. 20070081545 (the “Deer Valley Deed of Trust”), (vi) that certain
Assignment of Leases and Rents, by COP-Deer Valley, in favor of Administrative
Agent, recorded as of January 22, 2007 in the Official Records of Maricopa
County, Arizona, as Instrument No. 20070081546 (the “Deer Valley Assignment”),
and (vii) that certain Deed of Trust, Assignment of Leases and Rents, Fixture
Filing and Security Agreement, by COP-Pinnacle Peak, as grantor, in favor of
Lawyers Title Insurance Corporation, solely as trustee, for the benefit of
Administrative Agent, recorded as of October 2, 2007 in the Official Records of
Maricopa County, Arizona, as Instrument No. 20071083931 (the “Pinnacle Peak Deed
of Trust) and (viii) that certain Assignment of Leases and Rents, by
COP-Pinnacle Peak, in favor of Administrative Agent, recorded as of October 2,
2007 in the Official Records of Maricopa County, Arizona, as Instrument No.
20071083932 (the “Pinnacle Peak Assignment”).  The Goldenwest Deed of Trust, the
Western Deed of Trust, the Deer Valley Deed of Trust and the Pinnacle Peak Deed
of Trust hereafter collectively the “Existing Deeds of Trust”.  The Goldenwest
Assignment, the Western Assignment, the Deer Valley Assignment and the Pinnacle
Peak Assignment hereafter collectively the “Existing Assignments.”

 
 

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NOW THEREFORE in consideration of the promises and mutual covenants contained
herein, the parties hereto agree as follows:
 
1.   Amendments.  Upon satisfaction of all of the conditions of effectiveness
set forth in Section 2 below, the following amendments shall take effect:
 
1.1       Definitions.  The following definitions are added to and made a part
of Section 1.01 of the Credit Agreement:
 
““Cash or Cash Equivalents” means (i) cash, (ii) marketable securities issued or
directly and fully guaranteed or insured by the United States or any agency or
instrumentality thereof (provided, that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than one (1)
year from the date of acquisition, (iii) time deposits and certificates of
deposit of any commercial bank having, or which is the principal banking
subsidiary of a bank holding company organized under the laws of the United
States or any State thereof having, capital, surplus and undivided profits
aggregating in excess of $200,000,000, with maturities of not more than one (1)
year from the date of acquisition by REIT, (iv) commercial paper issued by any
Person incorporated in the United States rated at least A-1 or the equivalent
thereof by Standard & Poor’s Corporation or at least P-1 or the equivalent
thereof by Moody’s Investors Service, Inc. and in each case maturing not more
than one (1) year after the date of acquisition by REIT and (v) investments in
money market or mutual funds substantially all of whose assets are comprised of
securities of the types described in clauses (i) through (iv) above, in each
case, which are owned by REIT on an individual basis (as opposed to being owned
jointly with any other Person).

 
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“Unencumbered Cash or Cash Equivalents” means Cash or Cash Equivalents that have
not been pledged to any Person as security for any obligation of Guarantor or
any other Person.”
 
1.2       Cash or Cash Equivalents.  The following language is added to and made
a part of the Credit Agreement as Section 5.16:
 
“Section 5.16.      Cash of Cash Equivalents.  REIT shall, at all times,
maintain Unencumbered Cash or Cash Equivalents of not less than $5,000,000,
measured as of the last day of each calendar quarter based upon the certificate
to be provided by Administrative Borrower pursuant to Section 5.01(e)(iv)
hereof.”
 
1.3       Financial Reporting.  Section 5.01(e) of the Credit Agreement is
hereby deleted and replaced its entirety with the following:
 
“(e)     Promptly after the preparation thereof, and no later than sixty (60)
days after the last day of each calendar quarter, (i) computations of Borrowing
Base Net Operating Income for each Borrowing Base Property, (ii) Debt Service
Coverage Ratio as of the last day of such calendar quarter, (iii) a Borrowing
Base Certificate executed by a Financial Officer of the Administrative Borrower
setting forth its computation of the Borrowing Base Loan Amount as of the last
day of such calendar quarter for such calendar quarter and (iv) a certificate
executed by a Financial Officer of REIT certifying the amount of Unencumbered
Cash or Cash Equivalents maintained by REIT, which certificate shall be in
detail, scope and presentation acceptable to Administrative Agent, in its sole
discretion.  The Administrative Agent shall notify the Administrative Borrower
in writing of any calculation errors or other errors in the calculation of
Borrowing Base Net Operating Income required by the Administrative Agent
pursuant to the definition of “Borrowing Base Net Operating Income” herein and
any corresponding adjustments to the Borrowing Base Loan Amount (if any).”
 
2.   Effectiveness of this Amendment. The amendments set forth in Section 1
above shall not be effective or binding (without affecting the other provisions
of this Amendment) until the following conditions have been satisfied or waived
in writing by Administrative Agent, in Administrative Agent’s sole and absolute
discretion (the date on which all such conditions being satisfied or waived, the
“Effective Date”):

 
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2.1       Execution of Documents.  Administrative Agent shall have received each
of the following documents (collectively the “Transaction Documents”) duly
executed and delivered by each of the parties thereto:
 
(a)       this Amendment; and
 
(b)       such other documents and instruments requested by Administrative
Agent.
 
2.2       Title Updates. Administrative Agent shall have obtained, at Borrowers’
expense, such new lender’s title policies or modification, date-down or other
endorsements to Lenders’ existing title policies as Administrative Agent may
require to insure the continued validity of the Existing Deeds of Trust, as
amended, and their, respective, continuing first lien priority on each of the
Borrower Base Properties, subject of the Existing Deeds of Trust, over all
encumbrances not previously approved in writing by Administrative Agent.
 
2.3       No Defaults.  As of the Effective Date no Default or Event of Default
shall have occurred and be continuing.
 
2.4       Payment of Expenses.  Borrowers shall have paid to Administrative
Agent all costs and expenses incurred in connection with this Amendment as
provided in Section 7 hereof.
 
2.5       Representations and Warranties.  The representations and warranties of
the Credit Parties set forth in Section 3 of this Amendment shall be true and
correct in all material respects on and as of the Effective Date; provided that
any such representations and warranties that by their express terms are made as
of a specific date shall be true and correct in all material respects as of such
specific date.
 
3.   Representations and Warranties.  To induce Lenders and Administrative Agent
to enter into this Amendment, the Credit Parties hereby represent and warrant
that:
 
3.1       The execution, delivery and performance by each Credit Party of this
Amendment, the other Transaction Documents, and any other documents in
connection herewith, or therewith, to which it is a party are (a) within its
powers and have been duly authorized by all necessary action, (b) require no
action by or in respect of, or filing with, any Governmental Authority, any
property manager or other third party, (c) do not contravene, or constitute a
breach of or default under, any provision of applicable law or regulation, any
of its constitutive documents or of any judgment, injunction, order, decree,
permit, license, note, mortgage, agreement or other instrument binding upon such
Person or any of its Subsidiaries or their respective assets and (d) do not
result in the creation or imposition of any Lien on any asset of any Credit
Party or any of its Subsidiaries.
 
3.2       This Amendment, the other Transaction Documents and such other
documents and instruments executed by such Credit Party in connection herewith,
or therewith, have been duly executed and delivered by each Credit Party and
constitutes a valid and binding agreement of each Credit Party, in each case
enforceable in accordance with their respective terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or moratorium or other similar laws relating to the enforcement of creditors’
rights generally and by general equitable principles.

 
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3.3       Each of the representations and warranties contained in Article III of
the Credit Agreement, as modified herein, is true and correct as of the date
hereof, as though made on, and as of, the date hereof.
 
4.   Ratification of Credit Agreement.  Except as specifically amended hereby,
the terms and conditions of the Credit Agreement and the other Financing
Documents are in all respects ratified and confirmed and remain in full force
and effect.
 
5.   Governing Law.   THIS AMENDMENT, IN ACCORDANCE WITH SECTION 5-1401 OF THE
GENERAL OBLIGATION LAW OF THE STATE OF NEW YORK, SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO ANY CONFLICTS OF LAWS PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION
OF THE LAWS OF ANY OTHER JURISDICTION, as more fully set forth in Section 9.09
of the Credit Agreement, which Section 9.09 is incorporated herein mutatis
mutandis as though set forth herein in full.
 
6.   Compliance, Release.  As additional consideration for Administrative Agent
and Lenders to enter into this Amendment, the Credit Parties hereby acknowledge
and agree that, as of the date of this Amendment: (i) Administrative Agent and
Lenders have fully complied with all of their respective obligations under the
Financing Documents, (ii) the Credit Parties have no knowledge of any act or
omission on the part of Administrative Agent or Lenders that constitutes a
default by Administrative Agent or Lenders under any of the Financing Documents
(or that, with the giving of notice, the passage of time, or both, would
constitute a default by the Administrative Agent or Lenders thereunder), (iii)
the Credit Parties have no knowledge of any fact or circumstance that would
prevent or prohibit Administrative Agent or Lenders from enforcing the Financing
Documents, and (iv) the Credit Parties have no claims, demands, damages, suits,
cross-complaints, causes of action or debts of any kind or nature whatsoever
that can be asserted to reduce or eliminate all or any portion of its obligation
to repay the Loans or to seek any affirmative relief from Administrative Agent
or Lenders with respect to the Loans or the Borrowing Base Properties.  The
Credit Parties hereby release and forever discharge, and agree to indemnify,
defend and hold harmless, Administrative Agent and Lenders and their respective
agents, servants, employees, directors, officers, trustees, beneficiaries,
attorneys, branches, affiliates, subsidiaries, successors and assigns, of and
from all damages, losses, claims, demands, liabilities, obligations, actions,
suits and causes of action whatsoever, that the Credit Parties may now have or
claim to have against Administrative Agent or Lenders as of the date of this
Amendment, and whether presently known or unknown, and of every nature and
extent whatsoever, on account of or in any way concerning or arising out of the
Borrowing Base Properties or the Loans, or founded upon any of the Financing
Documents, including, but not limited to, all such loss or damage of any kind
heretofore sustained or that may arise as a consequence of the dealings between
the parties up to and including the date of this Amendment.  The Credit Parties
acknowledge and agree that this release is intended to extend to claims they do
not know or suspect to exist

 
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7.   Payment of Administrative Agent’s and Lenders’ Expenses.  Borrowers agree
to reimburse Administrative Agent and Lenders for all out-of-pocket expenses
incurred by Administrative Agent and Lenders in connection with the drafting,
negotiation, execution, delivery and performance of this Amendment and all
related documents, including, but not limited to, attorneys’ fees and costs
incurred by Administrative Agent and Lenders, premiums for any necessary new
title policy or endorsements to Lenders’ existing title policies, appraisal
fees, cost analysis, recording charges, escrow fees and all other costs.
 
8.   Counterparts; Integration; Effectiveness.  This Amendment may be executed
in counterparts (and by different parties hereto on different counterparts),
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract.  This Amendment, and the other Financing
Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof.  Except
as provided in Section 3 hereof, this Amendment shall become effective when it
shall have been executed by the Administrative Agent and when the Administrative
Agent shall have received counterparts hereof which, when taken together, bear
the signatures of each of the other parties hereto.  Delivery of an executed
counterpart of a signature page of this Amendment by telecopy shall be effective
as delivery of a manually executed counterpart of this Amendment.
 
 
Signatures on the following page.

 
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first set forth above.
 

 
“BORROWERS”
     
CORNERSTONE OPERATING PARTNERSHIP, L.P.
     
By:
Cornerstone Core Properties REIT, Inc.
   
its General Partner
                   
By:
       
Name:
     
Title:
         
COP-GOLDENWEST, LLC
         
By:
Cornerstone Operating Partnership, L.P.
   
its sole Member
           
By:
Cornerstone Core Properties REIT, Inc.
     
its General Partner
                         
By:
       
Name:
       
Title:
             
COP-WESTERN AVE., LLC
         
By:
Cornerstone Operating Partnership, L.P.
   
its sole Member
           
By:
Cornerstone Core Properties REIT, Inc.
     
its General Partner
                         
By:
       
Name:
       
Title:
 

signature page continues

 
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COP-DEER VALLEY, LLC
     
By:
Cornerstone Operating Partnership, L.P.
   
its sole Member
       
By:
Cornerstone Core Properties REIT, Inc.
     
its General Partner
             
By:
 
     
Name:
     
Title:
     
COP-PINNACLE PEAK, LLC
     
By:
Cornerstone Operating Partnership, L.P.
   
its sole Member
         
By:
Cornerstone Core Properties REIT, Inc.
     
its General Partner
             
By:
 
     
Name:
     
Title:
     
“GUARANTORS” and “RECOURSE LIABILITY PARTY”
     
CORNERSTONE CORE PROPERTIES REIT, INC.
         
By:
     
Name:
   
Title:
       
CORNERSTONE REALTY ADVISORS, LLC
         
By:
     
Name:
   
Title:
       
By:
     
Name:
   
Title:

 
signature page continues

 
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“ADMINISTRATIVE AGENT”
     
HSH NORDBANK AG, NEW YORK BRANCH
         
By  :
     
Name:
   
Title:
             
By  :
     
Name:
   
Title:
             
“LENDERS”
       
HSH NORDBANK AG, NEW YORK BRANCH
             
By  :
     
Name:
   
Title:
             
By  :
     
Name:
   
Title:

 
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