Exhibit
10.1


ADVISORY AGREEMENT


BY AND BETWEEN


CORNERSTONE GROWTH & INCOME REIT, INC.


(“COMPANY”)


AND


CORNERSTONE LEVERAGED REALTY ADVISORS, LLC


(“ADVISOR”)















TABLE OF CONTENTS


	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1. Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  2. Appointment

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  3. Authority of the
  Advisor

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  4. Duties of the Advisor

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  5. Bank Accounts

  	
   

  	
  16

  
	
   

  	
   

  	
   

  
	
  6. Records; Financial
  Statements

  	
   

  	
  16

  
	
   

  	
   

  	
   

  
	
  7. Limitations on
  Activities

  	
   

  	
  16

  
	
   

  	
   

  	
   

  
	
  8. Fees

  	
   

  	
  17

  
	
   

  	
   

  	
   

  
	
  9. Expenses

  	
   

  	
  21

  
	
   

  	
   

  	
   

  
	
  10. Other Activities of the
  Advisor

  	
   

  	
  23

  
	
   

  	
   

  	
   

  
	
  11. Time Commitment

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
  12. Relationship of Advisor
  and Company

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
  13. Non-Solicitation

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
  14. Representations and
  Warranties

  	
   

  	
  25

  
	
   

  	
   

  	
   

  
	
  15. Board Nominees

  	
   

  	
  26

  
	
   

  	
   

  	
   

  
	
  16. Term; Termination of
  Agreement

  	
   

  	
  26

  
	
   

  	
   

  	
   

  
	
  17. Termination

  	
   

  	
  27

  
	
   

  	
   

  	
   

  
	
  18. Payments to and Duties
  of Advisor upon Termination

  	
   

  	
  27

  
	
   

  	
   

  	
   

  
	
  19. Assignment to an
  Affiliate

  	
   

  	
  28

  
	
   

  	
   

  	
   

  
	
  20. Indemnification by the
  Company

  	
   

  	
  28

  
	
   

  	
   

  	
   

  
	
  21. Advisor’s Liability

  	
   

  	
  28

  
	
   

  	
   

  	
   

  
	
  22. Notices

  	
   

  	
  28

  
	
   

  	
   

  	
   

  
	
  23. Modification

  	
   

  	
  29

  
	
   

  	
   

  	
   

  
	
  24. Severability

  	
   

  	
  29

  
	
   

  	
   

  	
   

  
	
  25. Construction

  	
   

  	
  29

  
	
   

  	
   

  	
   

  
	
  26. Entire Agreement

  	
   

  	
  29

  
	
   

  	
   

  	
   

  
	
  27. Indulgences, Not
  Waivers

  	
   

  	
  29

  
	
   

  	
   

  	
   

  
	
  28. Gender

  	
   

  	
  29

  
	
   

  	
   

  	
   

  
	
  29. Titles Not to Affect
  Interpretation

  	
   

  	
  30

  
	
   

  	
   

  	
   

  
	
  30. Execution in
  Counterparts

  	
   

  	
  30

  



 











 


	
  31. Initial Investment

  	
   

  	
  30

  
	
   

  	
   

  	
   

  
	
  32. Name

  	
   

  	
  30

  



 
















ADVISORY AGREEMENT


THIS ADVISORY AGREEMENT, dated as of                ,
2007 (the “Agreement”), is entered into
between CORNERSTONE GROWTH & INCOME REIT, INC., a Maryland corporation (the
“Company”), and CORNERSTONE LEVERAGED
REALTY ADVISORS, LLC, a Delaware limited liability company (the “Advisor”).


W I T N E S S E
T H


WHEREAS, the Company desires to avail itself of the
knowledge, experience, sources of information, advice, assistance 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 undertake to render
such services, subject to the supervision of the Board of Directors of the
Company, 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”
means all expenses, excluding the fee payable to the Advisor pursuant to
Section 8(a), incurred by the Company, the Advisor, or any Affiliate of either
in connection with the Company’s sourcing, selection, evaluation and
acquisition of, and or development of any property or other potential
investment in, Properties, Loans, or other Permitted Investments whether or not
acquired or made, including but not limited to legal fees and expenses, travel
and communications expenses, costs of appraisals and surveys, nonrefundable
option payments on Property, Loans, or other Permitted Investments not
acquired, accounting fees and expenses, computer use-related expenses,
architectural and engineering reports, environmental reports, title insurance
and escrow fees.


“Acquisition Fees”
means the fee payable to the Advisor pursuant to Section 8(a), plus any and all
fees and commissions, exclusive of Acquisition Expenses, paid by any Person to
any other Person (including any fees or commissions paid by or to any Affiliate
of the Company or the Advisor) in connection with the making or investing in
any Property, Loans, or other Permitted Investments or the purchase,
development or construction of a Property by the Company.  Included in the computation of such fees
shall be any real estate commissions, acquisition fees, finder’s fees,
selection fees, Development Fees and Construction Fees (except as provided in
the following sentence), nonrecurring management fees, consulting fees, loan
fees, points, or any other fees or commissions of a similar nature, however
designated.  Excluded shall be any
commissions or fees incurred in connection with the leasing of any Property,
and Development Fees or Construction Fees paid to any Person or entity not
Affiliated with the Advisor in connection with the actual development and
construction of any Property.



     
 









“Advisor” means
(i) CORNERSTONE LEVERAGED REALTY ADVISORS, LLC, a Delaware limited liability
company, or (ii) any successor advisor to the Company.


“Affiliate” or “Affiliated” means, as to any Person, (i) any Person directly
or indirectly controlling, controlled by, or under common control with such
other Person; (ii) any Person, directly or indirectly owning, controlling, or
holding with the power to vote ten percent (10%) or more of the outstanding
voting securities of such other Person; (iii) any legal entity for which such
Person acts as an executive officer, director, trustee, or general partner;
(iv) any Person ten percent (10%) or more of whose outstanding voting
securities are directly or indirectly owned, controlled, or held, with power to
vote, by such other Person; and (v) any executive officer, director, trustee,
or general partner of such other Person. 
An entity shall not be deemed to control or be under common control with
an Advisor-sponsored program unless (i) the entity owns ten percent (10%) or
more of the voting equity interests of such program or (ii) a majority of the
board (or equivalent governing body) of such program is comprised of Affiliates
of the entity.


“Appraised Value”
means value according to an appraisal made by an Independent Appraiser.


“Assets” means
any and all GAAP assets including but not limited to Property, Loans, and other
Permitted Investments (including interests in Joint Ventures), tangible or
intangible, owned or held by, or for the account of, the Company or the
Operating Partnership, whether directly or indirectly through another entity or
entities, but excluding Property or Loans held through Joint Ventures.


“Asset Management Fee”
has the meaning set forth in Section 8(b).


“Average Invested Assets”
means, for a specified period, the average of the aggregate GAAP basis book
carrying values of the assets of the Company invested, directly or indirectly,
in Properties, Loans and other Permitted Investments 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
(or if such specified period is a single month, then the average of such values
during such month).


“Board of Directors”
or “Board” means the individuals holding
such office, as of any particular time, under the Charter of the Company,
whether they be the Directors named therein or additional or successor
Directors.


“Bylaws” means
the bylaws of the Company, as the same may be amended from time to time.


“Cash from Financings”
means the net cash proceeds realized by the Company from the financing of
Properties, Loans or other Permitted Investments or from the refinancing of any
Company indebtedness (after deduction of all expenses incurred in connection
therewith).


“Cash from Sales”
means the 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.  In the case of
a transaction described in clause (i)(C) of the definition of 



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Sale, Cash From Sales means the proceeds of any such
transaction actually distributed to the Company from the Joint Venture.  Cash from Sales shall not include Cash from
Financings.


“Cash from Sales and
Financings” means Cash from Sales plus Cash from Financings.


“Charter” means
the charter of the Company, including the Articles of Incorporation and all
Articles of Amendment, Articles Supplementary and other modifications thereto
as filed with the State Department of Assessments and Taxation of the State of
Maryland (the “SDAT”).


“Code” means the
Internal Revenue Code of 1986, as amended from time to time, or any successor
statute thereto.  Reference to any
provision of the Code shall mean such provision as in effect from time to time,
as the same may be amended, and any successor provision thereto, as interpreted
by any applicable regulations as in effect from time to time.


“Common Stock”
means shares of the Company’s common stock, $.001 par value per share, the
terms and conditions of which are set forth in the Charter.


“Common Stockholders”
means the registered holders of the Company’s Common Stock.


“Company” means
Cornerstone Growth & Income REIT, Inc., a corporation organized under the
laws of the State of Maryland.


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


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


“Contract
Sales Price” means the total consideration received by the
Company for the sale of a Property.


“Dealer Manager”
means Pacific Cornerstone Capital, Inc., an Affiliate of the Advisor and a
member of the National Association of Securities Dealers, Inc., or such other
Person or entity selected by the Board of Directors to act as the dealer
manager for the offering of Stock.


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


“Director” means
an individual who is a member of the Board of Directors.


“Disposition Fee”
means the disposition fee as defined in Section 8(d) of this Agreement.



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“Distributions”
means any distributions of money or other property by the Company to the
holders of Common Stock, including distributions that may constitute a return
of capital for federal income tax purposes.


“Excess Expense Guidelines”
is defined in Section 9(c)(iii)hereof.


“GAAP” means
accounting principles generally accepted in the United States.


“Gross Proceeds”
means the aggregate purchase price of all Stock sold for the account of the
Company through an Offering, including Stock sold pursuant to the Reinvestment
Plan, without deduction for Organization and Offering Expenses.


“Independent Appraiser”
means a Person with no material current or prior business or personal
relationship with the Advisor or the Directors, who is engaged to a substantial
extent in the business of rendering opinions regarding the value of assets of
the type held by the Company, and who is a qualified appraiser of real estate
as determined by the Board.  Membership
in a nationally recognized appraisal society such as the Appraisal Institute
shall be conclusive evidence of such qualification.


“Independent Director”
has the meaning ascribed to such term in the Charter.


“Independent Directors
Committee” has the meaning ascribed to such term in the Charter.


“Invested Capital”  means the amount calculated by multiplying the total number
of shares of Common Stock issued by the Company by the price paid for each such
share of Common Stock, reduced by an amount equal to the total number of shares
of Common Stock repurchased from Common Stockholders by the Company (pursuant
to the Company’s plan for the repurchase of shares of Common Stock) multiplied
by the price initially paid for each such redeemed share of Common Stock when
initially purchased from the Company.


“Joint Venture”
or “Joint Ventures” means any joint
venture, general partnership or limited liability company or other Affiliate of
the Company that owns, in whole or in part, on behalf of the Company any
Properties, Loans or other Permitted Investments.


“Leasing Agent”
means an entity that has been retained to perform and carry out leasing
activities for one or more of the Properties.


“Listed” and “Listing” have the meaning ascribed to such terms in the
Charter.


“Listing Date”
means the date that the Common Stock is first Listed.


“Loans” means
mortgage loans and other types of debt financing purchased by the Company.


“Market Value”
means the aggregate market value of all of the outstanding shares of Common
Stock, measured by taking the average closing price or average of bid and asked
price,



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as the case may be, during the consecutive 30-day
period commencing 180 days following Listing.


“NASAA” means
the North American Securities Administrators Association, Inc.


“NASAA Net Income”
means, 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,
NASAA Net Income for purposes of calculating total allowable Operating Expenses
shall exclude the gain from the sale of the Company’s Assets.


“NASAA REIT Guidelines”
means the Statement of Policy Regarding Real Estate Investment Trusts published
by the North American Securities Administrators Association in effect on the
date hereof.


“Offering” means
an offering of Stock that is registered with the U.S. Securities and Exchange
Commission, excluding Stock offered under any employee benefit plan.


“Operating Cash Flow”
means Operating Revenue Cash Flows minus the sum of (i) Operating Expenses,
(ii) all principal and interest payments on indebtedness and other sums paid to
lenders, (iii) the expenses of raising capital such as Organization and
Offering Expenses, legal, audit, accounting, underwriting, brokerage, listing,
registration, and other fees, printing and other such expenses and tax incurred
in connection with the issuance, distribution, transfer, registration and
Listing of Stock, (iv) taxes, (v) Acquisition Fees and Acquisition
Expenses, (vi) real estate commissions on the Sale of Assets, and other
expenses connected with the acquisition, disposition, and ownership of Assets
(such as the costs of foreclosure, insurance premiums, legal services,
maintenance, repair and improvement of property), and (vii) incentive fees paid
in compliance with the NASAA REIT Guidelines.


“Operating Expenses”
means all direct and indirect costs and expenses incurred by the Company, as
determined under GAAP, which in any way are related to the operation of the
Company or to Company business, including fees paid to the Advisor, but
excluding (i) the expenses of raising capital such as Organization and Offering
Expenses, legal, audit, accounting, underwriting, brokerage, listing,
registration, and other fees, printing and other such expenses and taxes
incurred in connection with the issuance, distribution, transfer, registration
and Listing of Stock, (ii) interest payments, (iii) taxes, (iv) non-cash
expenditures such as depreciation, amortization and bad debt reserves, (v)
Acquisition Fees and Acquisition Expenses, (vi) real estate commissions on the Sale
of Assets, and other expenses connected with the acquisition disposition and
ownership of Assets (such as the costs of foreclosure, insurance premiums,
legal services, maintenance, repair, and improvement of property) and (vii) any
incentive fees which may be paid in compliance with the NASAA REIT Guidelines.


“Operating Partnership”
means Cornerstone Growth & Income Operating Partnership, L.P. which is the
partnership through which the Company may own Properties, Loans, and other
Permitted Investments.


“Operating Partnership
Agreement” means the Limited Partnership Agreement of the Operating
Partnership, as amended from time to time.



 5
 









“Operating Revenue Cash
Flows” means the Company’s cash flow from ownership and operation of
Properties, Loans, interests in properties owned by any Joint Venture or
partnership in which the Company is a co-venturer or partner, Permitted
Investments, and short-term investments.


“OP Unit” means
a unit of limited partnership interest in the Operating Partnership.


“Organization and Offering
Expenses” means any and all costs and expenses incurred by or on
behalf of the Company in connection with and in preparing the Company for
registration of and subsequently offering and distributing its Stock to the
public, whether incurred before or after the date of this Agreement, which may
include but are not limited to total underwriting and brokerage discounts and
commissions (including fees of the underwriters’ attorneys), legal, accounting
and escrow fees; any expense allowance granted by the Company to the
underwriter or any reimbursement of expenses of the underwriter by the Company;
expenses for printing, engraving, and mailing; salaries of employees while
engaged in sales activities; charges of transfer agents, registrars, trustees,
escrow holders, depositories, and experts; and fees, expenses and taxes related
to the filing, registration and qualification of the sale of Stock under
Federal and State laws, including accountants’ and attorneys’ fees and other
accountable offering expenses.


“Permitted Investments”
means all investments that the Company may acquire pursuant to its Charter,
Bylaws and the investment objectives and policies adopted by the Board of
Directors of the Company from time to time, other than short-term investments
acquired for purposes of cash management.


“Person” shall
mean any natural person, partnership, corporation, association, trust, limited
liability company or other legal entity and also includes a group as that term
is used for purposes of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended.


“Property” or “Properties” means the real properties or real estate
investments which are transferred or conveyed to the Company either directly or
through the Operating Partnership, Joint Ventures, partnerships or other
entities.


“Property Manager”
means any entity that has been retained to perform and carry out at one or more
of the Properties property management services, excluding persons, entities or
independent contractors retained or hired to perform facility management or
other services or tasks at a particular Property, the costs for which are
passed through to and ultimately paid by the tenant at such Property.


“Prospectus”
means any document, notice, or other communication satisfying the standards set
forth in Section 10 of the Securities Act and contained in a currently
effective registration statement filed by the Company with, and declared
effective by, the Securities and Exchange Commission, or if no registration
statement is currently effective, then the Prospectus contained in the most
recently filed amendment to a registration statement.


“Registration Statement”
means the registration statement filed by the Company with the Securities and
Exchange Commission on Form S-11 (Reg. No. 333-139704), as amended from time to
time, in connection with the initial public offering of the Company’s Stock.



 6
 









“Reinvestment Plan”
means any plan adopted by the Company allowing Stockholders to reinvest
Distributions in shares of Common Stock.


“REIT” means a “real
estate investment trust” under Sections 856 through 860 of the Code.


“REIT Shares Amount”
has the meaning set forth in the Operating Partnership Agreement.


“Sale” or “Sales” means (i) any transaction or series of transactions
whereby: (A) the Company or the Operating Partnership sells, grants, transfers,
conveys or relinquishes its ownership of any Property, Loan or other Permitted
Investment or portion thereof, including the transfer (including by lease) of
any Property that is the subject of a ground lease, and including any event
with respect to any Property, Loan or other Permitted Investment that gives
rise to a significant amount of insurance proceeds or condemnation awards; (B)
the Company or the Operating Partnership sells, grants, transfers, conveys or
relinquishes its ownership of all or substantially all of the interest of the
Company or the Operating Partnership in any Joint Venture in which it is a
co-venturer or partner; (C) any Joint Venture in which the Company or the
Operating Partnership is a co-venturer or partner sells, grants, transfers,
conveys or relinquishes its ownership of any Property, Loan or other Permitted
Investment or portion thereof, including any event with respect to any
Property, Loan or other Permitted Investment that gives rise to insurance
claims or condemnation awards; but (ii) not including any transaction or series
of transactions specified in clause (i) (A), (i) (B), or (i) (C) above in which
the proceeds of such transaction or series of transactions are reinvested in
one or more Properties, Loans or other Permitted Investments within 180 days
thereafter.


“Securities”
means any class or series of units or shares of the Company, including common
shares or preferred units or shares and any other evidences of equity or
beneficial or other interests, 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 certificates of interest, shares or participations in, temporary or
interim certificates for, receipts for, guarantees of, or warrants, options or
rights to subscribe to, purchase or acquire, any of the foregoing.


“Securities Act”
means the Securities Act of 1933, as amended.


“Stock” means
shares of capital stock of the Company of any class or series.


“Stockholders”
means the registered holders of the Company’s Stock.


“Stockholders’
6% Return” means, as of any date, an aggregate amount equal to a 6%
cumulative, non-compounded, annual return on Invested Capital (calculated like
simple interest on a daily basis based on a three hundred sixty-five day
year).  For purposes of calculating the
Stockholders’ 6% Return, “Invested Capital” shall be determined for each day
during the period for which the Stockholders’ 6% Return is being calculated and
shall be calculated net of (1) Distributions of Operating Cash Flow to the
extent such Distributions of Operating Cash Flow provide a cumulative,
non-compounded, annual return in excess of 6%, as such amounts are computed on
a daily basis based on a three hundred sixty-five day year, (2) Distributions
of Cash 



 7
 









from Sales and Financings,
except to the extent such Distributions would be required to supplement
Distributions of Operating Cash Flow in order to achieve a cumulative,
non-compounded, annual return of 6%, as such amounts are computed on a daily
basis based on a three hundred sixty-five day year, and (3) consistent with the
second clause of the definition of Invested Capital, an amount equal to the
total number of shares of Common Stock repurchased from Common Stockholders by
the Company (pursuant to the Company’s plan for the repurchase of shares of
Common Stock) multiplied by the price initially paid for each such redeemed
share of Common Stock when initially purchased from the Company.


“Stockholders’
8% Return” means, as of any date, an aggregate amount equal to a 8%
cumulative, non-compounded, annual return on Invested Capital (calculated like
simple interest on a daily basis based on a three hundred sixty-five day
year).  For purposes of calculating the
Stockholders’ 8% Return, “Invested Capital” shall be determined for each day
during the period for which the Stockholders’ 8% Return is being calculated and
shall be calculated net of (1) Distributions of Operating Cash Flow to the
extent such Distributions of Operating Cash Flow provide a cumulative,
non-compounded, annual return in excess of 8%, as such amounts are computed on
a daily basis based on a three hundred sixty-five day year, (2) Distributions
of Cash from Sales and Financings, except to the extent such Distributions
would be required to supplement Distributions of Operating Cash Flow in order
to achieve a cumulative, non-compounded, annual return of 8%, as such amounts
are computed on a daily basis based on a three hundred sixty-five day year, and
(3) consistent with the second clause of the definition of Invested Capital, an
amount equal to the total number of shares of Common Stock repurchased from
Common Stockholders by the Company (pursuant to the Company’s plan for the
repurchase of shares of Common Stock) multiplied by the price initially paid
for each such redeemed share of Common Stock when initially purchased from the
Company.


“Stockholders’
10% Return” means, as of any date, an aggregate amount equal to a
10% cumulative, non-compounded, annual return on Invested Capital (calculated
like simple interest on a daily basis based on a three hundred sixty-five day
year).  For purposes of calculating the
Stockholders’ 10% Return, “Invested Capital” shall be determined for each day
during the period for which the Stockholders’ 10% Return is being calculated
and shall be calculated net of (1) Distributions of Operating Cash Flow to the
extent such Distributions of Operating Cash Flow provide a cumulative,
non-compounded, annual return in excess of 10%, as such amounts are computed on
a daily basis based on a three hundred sixty-five day year, (2) Distributions
of Cash from Sales and Financings, except to the extent such Distributions
would be required to supplement Distributions of Operating Cash Flow in order
to achieve a cumulative, non-compounded, annual return of 10%, as such amounts
are computed on a daily basis based on a three hundred sixty-five day year, and
(3) consistent with the second clause of the definition of Invested Capital, an
amount equal to the total number of shares of Common Stock repurchased from
Common Stockholders by the Company (pursuant to the Company’s plan for the
repurchase of shares of Common Stock) multiplied by the price initially paid
for each such redeemed share of Common Stock when initially purchased from the
Company.


“Subordinated
Incentive Fee” means the fee payable to the Advisor under
certain circumstances if the Common Stock is Listed, as calculated in Section
8(f).



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“Subordinated
Performance Fee Due Upon Termination” has the meaning set forth in Section 8(g).


 “Subordinated Share of Cash
Flows” has the meaning set forth in Section 8(e).


“Termination Date”
means the date of termination of this Agreement.


2. Appointment.  The Company, through the powers vested in the
Board of Directors, hereby appoints the Advisor to serve as its advisor and
asset manager on the terms and conditions set forth in this Agreement, and the
Advisor hereby accepts such appointment.


3. Authority of the Advisor.


(a) General.  All rights and powers to manage and control
the day-to-day business and affairs of the Company shall be vested in the
Advisor.  The Advisor shall have the
power to delegate all or any part of its rights and powers to manage and
control the business and affairs of the Company to such officers, employees,
Affiliates, agents and representatives of the Advisor or the Company as it may
from time to time deem appropriate.  Any
authority delegated by the Advisor to any other Person shall be subject to the
limitations on the rights and powers of the Advisor specifically set forth in
this Agreement or the Charter.


(b) Powers
of the Advisor.  Subject to
the express limitations set forth in this Agreement and the continuing and
exclusive authority of the Board of Directors over the management of the
Company, the power to direct the management, operation and policies of the
Company shall be vested in the Advisor, which shall have the power by itself
and shall be authorized and empowered on behalf and in the name of the Company
to carry out any and all of the objectives and purposes of the Company and to
perform all acts and enter into and perform all contracts and other
undertakings that it may in its sole discretion deem necessary, advisable or
incidental thereto to perform its obligations under this Agreement.


(c) Approval
by the Board of Directors. 
Notwithstanding the foregoing, the Advisor may not take any action on
behalf of the Company without the prior approval of the Board of Directors or
duly authorized committees thereof if the Charter or Maryland General
Corporation law requires the prior approval of the Board of Directors or the
Independent Directors Committee.  The
Advisor will deliver to the Board of Directors all documents required by it to
properly evaluate a proposed investment (and any related financing).


(d) Modification
or Revocation of Authority of Advisor.  The Board may, at any time upon the giving of
notice to the Advisor, modify or revoke the authority or approvals set forth in
Sections 3 and 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.


4. Duties of the Advisor.  The Advisor is responsible for managing,
operating, directing and supervising the operations and administration of the
Company and its assets.  The Advisor
undertakes to use its commercially reasonable efforts to perform its
obligations as set forth in this Agreement, subject to the limitations set
forth in this Agreement, including Sections 3 and 7, 



 9
 









and the continuing and
exclusive authority of the Board of Directors over the management of the
Company.  The Advisor shall make
available the full benefit of the knowledge, judgment, experience and advice of
the members of the Advisor’s organization and staff with respect to the duties
it will perform under this Agreement. 
The Advisor shall, either directly or by engaging an Affiliate or third
party, perform the following duties:


(a) Organization
and Offering Services.  The
Advisor shall manage and supervise:


(i) development of the product offering, including the determination of
the specific terms of the Securities to be offered by the Company and whether
the Securities shall be sold as part of a registered public offering or a
private placement;


(ii) the organization of the Company, preparation of all offering and
related documents, and obtaining of all required regulatory approvals of such
documents;


(iii) along with the Dealer Manager, approval of the participating
broker dealers and negotiation of the related selling agreements;


(iv) coordination of the due diligence process relating to
participating broker dealers and their review of the Prospectus and other
Offering and Company documents;


(v) preparation and approval of all marketing materials contemplated to
be used by the Dealer Manager or others in the offering of the Company’s
Securities;


(vi) along with the Dealer Manager, negotiation and coordination with
the transfer agent for the receipt, collection, processing and acceptance of
subscription agreements, commissions, and other administrative support
functions;


(vii) creation and implementation of various technology and electronic
communications related to the offering of the Company’s Securities; and


(viii) all other services related to organization of the Company or the
Offering, whether performed and incurred by the Advisor or its Affiliates;


provided, however, that,
notwithstanding anything to the contrary above, the Advisor shall not perform
any services (i) delegated exclusively to the Dealer Manager in the dealer
manager agreement, (ii) that the Company elects to perform directly, or (iii)
that would require the Advisor to register as a broker dealer with the
Securities and Exchange Commission or any other jurisdiction.


(b) Property Acquisition, Disposition, and Financing Services.  The Advisor shall:


(i) present to the Company potential
investment opportunities to provide a continuing and suitable investment
program consistent with (a) the investment objectives and policies of the
Company as determined and adopted by the Board, as amended from 



 10
 









time to time, and (b) the investment allocation method described at
Section 10(b) of this Agreement;


(ii) subject to the provisions of Section 3(c) and 4 hereof, (A)
locate, analyze and select potential investments in Assets, (B) structure and
negotiate the terms and conditions of transactions pursuant to which investment
in Assets will be made; (C) perform due diligence on prospective investments
and summarize the results of such work, (D) make investments in Assets on
behalf of the Company or the Operating Partnership in compliance with the
investment objectives and policies of the Company; (E) if necessary, arrange
for financing and refinancing and make other changes in the asset or capital
structure of Assets; and (F) dispose of, reinvest or distribute the proceeds
from the sale of, or otherwise deal with the investments in, Assets;


(iii) as necessary, furnish the Board of 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
borrowings proposed to be undertaken by the Company, if any;


(iv) provide the Board of Directors with periodic reports regarding
prospective investments which include recommendations and supporting documentation
required by them to properly evaluate the proposed investment;


(v) obtain the prior approval of the Independent Directors Committee
(provided that such approval also constitutes a majority of the Board) or of
the Board for any and all investments in Properties, Loans, or other Permitted
Investments (as well as any financing acquired by the Company or the Operating
Partnership in connection with such investment);


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


(vii) as reasonably necessary, act, or obtain the services of others to
act, as attorney-in-fact or agent of the Company in making, acquiring and
disposing of investments, disbursing, and collecting the funds, paying the
debts and fulfilling the obligations of the Company and handling, prosecuting
and settling any claims of the Company, including foreclosing and otherwise
enforcing mortgage and other liens and security interests securing investments;


(viii) assist in negotiations on behalf of the Company with investment
banking firms and other institutions or investors for public or private sales
of Securities of the Company or for other financing on behalf of the Company,
but in no event in such a way that the Advisor shall be acting as a broker,
dealer, underwriter or investment advisor in Securities of or for the Company;


(ix) negotiate on behalf of the Company with banks or lenders for loans
to be made to the Company or Operating Partnership or any Joint Venture if
necessary, and negotiate on behalf of such entity with investment banking firms
and broker-dealers or



 11
 









negotiate
private sales of Securities or obtain loans for the Company or Operating
Partnership or any Joint Venture if necessary, but in no event in such a way so
that the Advisor shall be acting as broker-dealer or underwriter; and provided,
further, that any fees and costs payable to third parties incurred by the
Advisor in connection with the foregoing shall be the responsibility of the
Company or Operating Partnership or any Joint Venture;


(x) upon request of the Board of Directors, invest and reinvest any
money of the Company;


(xi) from time to time, or at any time reasonably requested by the
Board, make reports to the Board of the investment opportunities it has
presented to other Advisor-sponsored programs or that it has pursued directly
or through an Affiliate;


(xii) promptly advise the Board of any material deviations from the
investment allocation guidelines described in the Registration Statement and
Section 10(b) of this Agreement.


(c) Asset
Management and Operational Services.


(i) Real Estate Services. 
The Advisor shall:


(1) manage, administer, promote, operate, maintain, improve, finance
and refinance, market, lease, and dispose of the Properties, Loans, and other
Permitted Investments on an overall portfolio basis in a diligent manner.  The services of the Advisor are to be of scope
and quality not less than those generally performed by professional asset
managers of other similar property portfolios;


(2) obtain and supervise the services of Property Managers and Leasing
Agents, which may include the Advisor or its Affiliates, to manage, promote,
and lease the Properties;


(3) enter into leases and service contracts for Assets, including
oversight of Affiliated companies that perform property management services for
the Company, if any;


(4) oversee non-affiliated property managers and other non-affiliated
Persons who perform services for the Company;


(5) to the extent necessary, perform all other operational functions
for the maintenance and administration of Assets;


(6) consult with the officers and the Board of Directors of the Company
and assist the Board of Directors in the formulation and implementation of the
Company’s financial policies;



 12
 









(7) notify the Board of all proposed material transactions before they
are completed;


(8) serve as the Company’s investment and financial advisor and provide
the Board with relevant market research and economic and statistical data in
connection with the Company’s Assets and investment objectives and policies;


(9) obtain reports (which may be prepared by unrelated third parties,
the Advisor, or its Affiliates), where appropriate, concerning the value of
Assets of the Company;


(10) formulate and oversee the implementation of strategies for the
administration, promotion, management, operation, maintenance, improvement,
financing and refinancing, marketing, leasing, and disposition of Assets on an
overall portfolio basis;


(11) monitor applicable markets and obtain reports (which may be
prepared by unrelated third parties, the Advisor or Affiliates) where
appropriate, concerning the values of existing or prospective investments of
the Company and monitor and evaluate the performance of the Company’s Assets;


(12) conduct periodic on-site property visits to some or all (as the
Advisor deems reasonably necessary) of the Properties to inspect the physical
condition of the Properties and to evaluate the performance of the related
Property Managers and Leasing Agents of its duties;


(13) oversee the performance by the Property Managers of their duties,
including collection and proper deposits of rental payments and payment of
Property expenses and maintenance;


(14) deliver to the Board or maintain on behalf of the Company copies
of all appraisals obtained in connection with the investments in Properties,
Loans, or other Permitted Investments (whether in connection with Asset
management services or acquisition services);


(15) obtain and maintain, with respect to any Property and to the
extent available, title insurance or other assurance of title and customary
fire, casualty and public liability insurance;


(16) consult with the officers and Directors and assist the Directors
in evaluating and obtaining adequate insurance coverage based upon risk
management determinations;


(17) perform and supervise the various management and operational
functions related to the Company’s investments in Assets;



 13
 









(18) coordinate and manage relationships between the Company and any
joint venture partners; and


(19) undertake and perform all services or other activities necessary
and proper to carry out the investment objectives of the Company.


(ii) Financial and Administrative Services.  The Advisor shall:


(1) manage, and perform and supervise the various administrative
functions reasonably necessary for the management of the day-to-day operations
of the Company;


(2) review, analyze and comment upon the operating budgets, capital
budgets and leasing plans prepared and submitted by each Property Manager and
leasing agent and aggregate these property budgets into the Company’s overall
budget and financial reports;


(3) review and analyze on-going financial information pertaining to
each Property and the overall portfolio of Properties;


(4) to the extent not set forth herein, provide for or arrange for any
administrative services and items, legal and other services, office space,
furnishings, equipment, personnel, and other overhead items necessary and
incidental to the Company’s business and operations;


(5) provide the Company with all necessary cash management services,
including maintaining debt service obligations;


(6) perform all reporting, record keeping, internal controls and
similar matters in a manner to allow the Company to comply with applicable law
including the Sarbanes-Oxley Act;


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


(8) coordinate with the Company’s independent accountants and auditors
the preparation and delivery to the Board of Directors of a report not less
than annually concerning the Advisor’s compliance with certain material aspects
of this Agreement and as otherwise requested by the Board of Directors;


(9) provide the officers and Directors with timely updates related to
the overall regulatory environment affecting the Company, as well as managing
compliance with such matters, including but not limited to compliance with the
Sarbanes-Oxley Act of 2002;



 14
 









(10) consult with the Board of Directors relating to the corporate
governance structure and appropriate policies and procedures related thereto;


(11) provide or arrange for tax and compliance services and coordinate
with third parties on related tax matters, in particular the Company’s
compliance with the REIT provisions of the Code;


(12) supervise the preparation on behalf of the Company of all reports
and returns required by the Securities and Exchange Commission, Internal
Revenue Service and other state or federal governmental agencies;


(13) maintain and preserve the books and records of the Company and
maintaining the accounting and other record-keeping functions at the Property
and Company levels;


(14) 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, lenders, technical advisors, attorneys, brokers,
underwriters, corporate fiduciaries, escrow agents, depositaries, custodians,
agents for collection, insurers, insurance agents, banks, builders, developers,
construction companies, 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;
and


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


(d) Stockholder
Services.  The Advisor shall:


(i) undertake communications with Stockholders in accordance with
applicable law and the Charter, provided, however, that Affiliates of the
Advisor have no obligations to the Company other than as expressly stated
herein;


(ii) manage communications with Stockholders, including answering phone
calls, preparing and sending written and electronic reports and other
communications;


(iii) establish technology infrastructure to assist in providing
shareholder support and service;



 15
 









(iv) appoint and supervise the Company’s transfer agent in the
maintenance of a stock ledger reflecting a record of the Stockholders and their
ownership of Stock; and


(v) manage and coordinate with the transfer agent the periodic dividend
process and the payments to Stockholders.


(e) Other.  The Advisor shall perform all other services
reasonably requested by the Company within the overall scope of this Agreement.


The Advisor has a fiduciary responsibility to the
Company and to the Stockholders in carrying out its duties under this
Agreement.  In providing advice and
services hereunder, the Advisor shall not (i) engage in any activity which
would require it to be registered as an “Investment Advisor,” as that term is
defined in the Investment Advisors Act of 1940 or in any state securities law
or (ii) cause the Company to make such investments as would cause the Company
to become an “Investment Company,” as that term is defined in the Investment
Company Act of 1940.


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, under such terms and conditions as the Board may approve,
provided that no funds shall be commingled with the funds of the Advisor; and
the Advisor shall from time to time render appropriate accountings of such
collections and payments to the Board and to the auditors of the Company.


6. Records; Financial Statements.  The Advisor, in the conduct of its
responsibilities to the Company, shall maintain adequate and separate books and
records for the Company’s operations in accordance with GAAP, which shall be supported
by sufficient documentation to ascertain that such books and records are
properly and accurately recorded.  Such
books and records shall be the property of the Company and shall be available
for inspection by the Board or its counsel, auditors, or other authorized
agents at any time during normal business hours.  Such books and records shall include all
information necessary to calculate and audit the fees or reimbursements paid
under this Agreement.  The Advisor shall
utilize procedures to attempt to ensure such control over accounting and
financial transactions as is reasonably required to protect the Company’s
assets from theft, error or fraudulent activity.  All financial statements that the Advisor
delivers to the Company shall be prepared on an accrual basis in accordance
with GAAP, except for special financial reports that by their nature require a
deviation from GAAP.  The Advisor shall
liaise with the Company’s officers and independent auditors and shall provide
such officers and auditors with such reports and other information as the
Company shall request.


7. Limitations on Activities.  Notwithstanding any provision in this
Agreement to the contrary, the Advisor shall refrain from taking any action
that, in its sole judgment made in good faith, would (a) adversely affect the
ability of the Company to qualify or to continue to qualify as a REIT under the
Code, (b) subject the Company to regulation under the Investment Company Act of
1940, as amended, (c) violate any law, rule, regulation or statement of policy
of any governmental body or agency having jurisdiction over the Company, its
Stock or its other 



 16















Securities, (d) violate
the Charter or Bylaws, or (e) require the Advisor to register as a
broker-dealer with the Securities and Exchange Commission or any other
jurisdiction.  If any action would
violate subsections (a) through (e) of this section but such action has been
ordered by the Board, the Advisor shall notify promptly the Board of the
Advisor’s judgment of the potential impact of such action and shall refrain
from taking such action until it receives further clarification or instructions
from the Board.  In such event the
Advisor shall have no liability for acting in accordance with the specific
instructions of the Board so given.


8. Fees.


(a) Advisor
Acquisition Fees.  As
compensation for the investigation, selection and acquisition (by purchase, investment
or exchange) of Properties, Loans and other Permitted Investments, the Company
shall pay Acquisition Fees to the Advisor for each such investment.  With respect to the acquisition of a Property
to be wholly owned by the Company, the Acquisition Fee payable to the Advisor
shall equal 2.0% of the sum of the amount actually paid or allocated to the purchase, development,
construction or improvement of such Property, inclusive of the Acquisition
Expenses associated with such Property, and the amount of any debt attributable
to such Property.  With respect to the
acquisition of real property through any Joint Venture or partnership in which
the Company is  a co-venturer or partner,
the Acquisition Fee payable to the Advisor shall equal 2.0% of the portion of the amount actually paid or allocated to the purchase, development,
construction or improvement of the property, inclusive of the Acquisition
Expenses associated with such property, plus the amount of any outstanding debt
associated with such property that is attributable to the Company’s investment
in the Joint Venture or partnership. 
With respect to Loans and other Permitted Investments, the Acquisition
Fee payable to the Advisor
shall equal 2.0% of the cost of such investment, inclusive of Acquisition
Expenses associated with such investment. 
Notwithstanding anything herein to the contrary, the payment of
Acquisition Fees by the Company shall be subject to the limitations contained
in the Company’s Charter. The Advisor shall submit an invoice to the Company
following the closing or closings of each acquisition, accompanied by a
computation of the Acquisition Fee. The Acquisition Fee payable to the Advisor
shall be paid in an amount equal to 2.0% of Gross Proceeds, other than Gross
Proceeds from Stock purchased under the Reinvestment Plan, payable by the
Company upon the Company’s receipt of such Gross Proceeds with the balance to
be paid at the time the Company acquires a Property, investment in Joint
Venture, Loan or Permitted Investment; provided that upon termination of this
Agreement, the Advisor will be obligated to reimburse the Company for any
Advisor Acquisition Fee that has not been allocated to the purchase price of
Company Properties, Loans, and other Permitted Investments.


(b) Asset
Management Fee.  Subject to
the overall limitations contained below in Section 9(c), commencing on the date
hereof, the Company shall pay the Advisor for the asset management services
included in the services described in Section 4 a monthly fee (the “Asset Management Fee”) in an amount equal
to one-twelfth of 1.0% of the Average Invested Assets for such month,
calculated on a monthly basis as of the last day of each month.


(c) Property
Management and Leasing Fees. 
If the Company retains the Advisor or its Affiliates to manage or lease
any of its Properties, the Company will pay the Advisor or its Affiliates a
market-based fee in accordance with a separately negotiated Property 



 17
 









Management, Leasing and Development Agreement to be approved by a
majority of the Independent Directors Committee, which such agreement may
provide for fees similar to what other management or leasing companies
generally charge for the management or leasing of similar properties, and which
may include reimbursement for the costs and expenses the Advisor or its
Affiliates incurs in managing or leasing the Properties.


(d) Disposition
Fees.  If the Advisor or an
Affiliate provides a substantial amount of the services (as determined by a
majority of the Directors, including a majority of the Independent Directors
Committee) in connection with the Sale of one or more Properties, the Advisor
or such Affiliate shall receive at
closing a Disposition Fee equal to 3.0% of the sales price of such Property or
Properties, which fee may be waived, in whole or in part, by the Advisor.  Any Disposition Fee payable under this
section may be paid in addition to real estate commissions paid to
non-Affiliates, provided that the total real estate commissions (including such
Disposition Fee) paid to all Persons by the Company for each Property shall not
exceed an amount equal to the lesser of (i) 6.0% of the aggregate Contract
Sales Price of each Property or (ii) the Competitive Real Estate Commission for
each Property.  The Company will pay the
Disposition Fees for a Property at the time the Property is sold.


(e) Subordinated
Share of Cash Flows.  The
Subordinated Share of Cash Flows shall be payable to the Advisor in an amount
equal to the sum of:


(i) 5% of Operating Cash Flow and Cash from Sales and Financings
remaining after the Common Stockholders have received Distributions of
Operating Cash Flow and of Cash from Sales and Financings such that the owners
of all outstanding shares of Common Stock have received Distributions in an
aggregate amount equal to the sum of (1) the Stockholders’ 6% Return and (2)
Invested Capital; plus


(ii) 5% of Operating Cash Flow and Cash from Sales and Financings
remaining after the Common Stockholders have received Distributions of
Operating Cash Flow and of Cash from Sales and Financings such that the owners
of all outstanding shares of Common Stock have received Distributions in an
aggregate amount equal to the sum of (1) the Stockholders’ 8% Return and (2)
Invested Capital; plus


(iii) 5% of Operating Cash Flow and Cash from Sales and Financings
remaining after the Common Stockholders have received Distributions of
Operating Cash Flow and of Cash from Sales and Financings such that the owners
of all outstanding shares of Common Stock have received Distributions in an
aggregate amount equal to the sum of (1) the Stockholders’ 10% Return and (2)
Invested Capital.


When determining whether
the above thresholds have been met:


(A)                              Any
stock dividend shall not be included as a Distribution;


(B)                                Distributions
paid on shares of Common Stock redeemed by the Company (and thus not included
in the determination of Invested Capital), shall not be included as a
Distribution; and



 18
 









(C)                               Operating
Cash Flow and Cash from Sales and Financings shall not be considered available
for purposes of determining whether the thresholds in subparagraphs (ii) and
(iii) have been met to the extent of payments out of Operating Cash Flow and
Cash from Sales and Financings are used to pay the Subordinated Share of Cash
Flows pursuant to subparagraphs (i) and (ii), respectively.


Following Listing, no
Subordinated Share of Cash Flows will be paid to the Advisor.


(f) Subordinated
Incentive Listing Fee.  Upon
Listing, the Advisor shall be entitled to the Subordinated Incentive Fee in an
amount equal to the sum of:


(i) 5% of the amount by which (i) the Market Value, plus the total of
all Distributions paid to Common Stockholders (excluding any stock dividends
and Distributions paid on shares of Common Stock redeemed by the Company) from
the Company’s inception until the date that Market Value is determined, exceeds
(ii) the sum of (A) Invested Capital and (B) the total Distributions required
to be paid to the Common Stockholders in order to pay the Stockholders’ 6%
Return from inception through the date Market Value is determined; plus


(ii) 5% of the amount by which (i) the Market Value, plus the total of
all Distributions paid to Common Stockholders (excluding any stock dividends
and Distributions paid on shares of Common Stock redeemed by the Company) from
the Company’s inception until the date that Market Value is determined, exceeds
(ii) the sum of (A) Invested Capital and (B) the total Distributions required
to be paid to the Common Stockholders in order to pay the Stockholders’ 8%
Return from inception through the date Market Value is determined; plus


(iii) 5% of the amount by which (i) the Market Value, plus the total of
all Distributions paid to Common Stockholders (excluding any stock dividends
and Distributions paid on shares of Common Stock redeemed by the Company) from
the Company’s inception until the date that Market Value is determined, exceeds
(ii) the sum of (A) Invested Capital and (B) the total Distributions required
to be paid to the Common Stockholders in order to pay the Stockholders’ 10%
Return from inception through the date Market Value is determined.


The Company shall have the option to pay such fee in the form of cash,
shares of Common Stock, a promissory note bearing interest at a rate of LIBOR
plus 200 basis points or any combination of the foregoing. The Subordinated
Incentive Listing Fee will be reduced by the amount of any prior payment to the
Advisor of a Subordinated Share of Cash Flows. 
In the event the Subordinated Incentive Listing Fee is paid to the Advisor
following Listing, no other performance fee will be paid to the Advisor.


(g) Subordinated
Performance Fee Due Upon Termination.  If (1) the Company terminates this Agreement
for any reason other than a material breach hereof by the Advisor, (2) the
Agreement is not renewed because the Company is unwilling to renew this
Agreement on substantially similar terms, or (3) the Advisor terminates the
Agreement because of a material breach hereof by the Company, then, subject to
the limitations in Section 18(a)(ii),



 19
 









the Company shall pay the Subordinated Performance Fee Due Upon
Termination, payable in the form of an interest bearing promissory note (the “Performance Fee Note”), in a principal
amount equal to the sum of:


(i) 5% of the amount, if any, by which (a) the Appraised Value of the
Company’s Properties at the Termination Date, less amounts of all indebtedness
secured by the Company’s Properties, plus the net asset value of all other
Loans and Permitted Investments of the Company plus total Distributions
(excluding any stock dividend and Distributions paid on shares of Common Stock
redeemed by the Company pursuant to a plan for repurchase of the Company’s
Common Stock) through the Termination Date exceeds (b) the sum of Invested
Capital plus total Distributions required to be made to the Common Stockholders
in order to pay the Stockholders’ 6% Return from inception through the
Termination Date; plus


(ii) 5% of the amount, if any, by which (a) the Appraised Value of the
Company’s Properties at the Termination Date, less amounts of all indebtedness
secured by the Company’s Properties, plus the net asset value of all other
Loans and Permitted Investments of the Company plus total Distributions
(excluding any stock dividend and Distributions paid on shares of Common Stock
redeemed by the Company pursuant to a plan for repurchase of the Company’s
Common Stock) through the Termination Date exceeds (b) the sum of Invested
Capital plus total Distributions required to be made to the Common Stockholders
in order to pay the Stockholders’ 8% Return from inception through the
Termination Date; plus


(iii) 5% of the amount, if any, by which (a) the Appraised Value of the
Company’s Properties at the Termination Date, less amounts of all indebtedness
secured by the Company’s Properties, plus the net asset value of all other
Loans and Permitted Investments of the Company plus total Distributions
(excluding any stock dividend and Distributions paid on shares of Common Stock
redeemed by the Company pursuant to a plan for repurchase of the Company’s
Common Stock) through the Termination Date exceeds (b) the sum of Invested
Capital plus total Distributions required to be made to the Common Stockholders
in order to pay the Stockholders’ 10% Return from inception through the
Termination Date; less


(iv) any prior payment to the Advisor of a Subordinated Share of Cash
Flows.


The Company shall repay the Performance Fee Note at
such time as the Company completes the first Sale of a Property held at the
Termination Date using Cash from Sales in an amount equal to the value such Property
contributed to the Performance Fee Note. 
If such amount is insufficient to pay the Performance Fee Note in full,
then the Performance Fee Note shall be paid in part from the Cash from Sales
from the first Sale of a Property held at the Termination Date, and in part
from the Cash from Sales from each successive Sale of Properties held at the
Termination Date in an amount equal to the value such Properties contributed to
the Performance Fee Note until the Performance Fee Note is repaid in full.  If the Performance Fee Note has not been paid
in full within five years from the Termination Date, then the holder of the
Performance Fee Note, its successors or assigns, may elect to convert the
balance of the fee into Common Stock at a price per share equal 



 20
 









to the average closing price of the shares of Common
Stock over the ten trading days immediately preceding the date of such election
if the Common Stock is Listed at such time. 
If the Common Stock is not Listed at such time, the holder of the
Performance Fee Note, its successors or assigns, may elect to convert the
balance of the fee into shares of Common Stock at a price per share equal to
the fair market value for such Shares as determined by the Board of Directors
based upon the Appraised Value of Company’s Properties, Loans, and other
Permitted Investments, net of any debt thereon, on the date of election.


(h) Changes
to Fee Structure.  In the
event of Listing, the Company and the Advisor shall negotiate in good faith to
establish a fee structure appropriate for a perpetual-life entity.


9. Expenses.


(a) Reimbursable
Expenses.  In addition to the
compensation paid to the Advisor pursuant to Section 8 hereof, the Company
shall pay directly or reimburse the Advisor for all of the expenses paid or
incurred by the Advisor or its Affiliates on behalf of the Company (to the
extent not reimbursable by another party, such as the Dealer Manager) in
connection with the services provided to the Company pursuant to this Agreement,
including, but not limited to:


(i) Acquisition Fees and Acquisition Expenses incurred in connection
with the selection and acquisition of Properties, Loans and other Permitted
Investments, including such expenses incurred related to assets pursued or
considered by not ultimately acquired by the Company, provided that,
notwithstanding anything herein to the contrary, the payment of Acquisition
Fees and Acquisition Expenses by the Company shall be subject to the
limitations contained in the Company’s Charter;


(ii) the actual out-of-pocket cost of goods and services used by the
Company and obtained from entities not affiliated with the Advisor including
brokerage and other fees paid in connection with the purchase, operation and
sale of Assets;


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


(iv) taxes and assessments on income or Properties and taxes as an
expense of doing business and any taxes otherwise imposed on the Company, its
business or income;


(v) costs associated with insurance required in connection with the
business of the Company or by its officers and the Board;


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


(vii) all out-of-pocket expenses in connection with payments to
Directors and meetings of the Directors and Stockholders;



 21
 









(viii) expenses associated with Listing or with the issuance and
distribution of Securities other than the Stock issued in the Company’s initial
public offering of its shares of Common Stock, such as selling commissions and
fees, advertising expenses, taxes, legal and accounting fees, listing and
registration fees;


(ix) expenses connected with payments of distributions in cash or
otherwise made or caused to be made by the Company to the Stockholders;


(x) expenses of organizing, converting, modifying, merging, liquidating
or dissolving the Company or of amending the Charter or the Bylaws;


(xi) out-of-pocket expenses of maintaining communications with
Stockholders, including the cost of preparation, printing, and mailing annual
reports and other Stockholder reports, proxy statements and other reports
required by governmental entities;


(xii) administrative service expenses, including all direct and
indirect costs and expenses incurred by Advisor in fulfilling its duties
hereunder and including personnel and related employment costs; provided,
however, that no reimbursement shall be made for costs of personnel to the
extent that such personnel perform services in transactions for which the
Advisor receives the Acquisition Fee or Disposition Fee.  Such direct and indirect costs and expenses
may include reasonable wages and salaries and other employee-related expenses
of all employees of Advisor who are engaged in the management, administration,
operations, and marketing of the Company, including taxes, insurance and
benefits relating to such employees, and legal, travel and other out-of-pocket expenses
which are directly related to their services provided hereunder;


(xiii) audit, accounting and legal fees, and other fees for
professional services relating to the operations of the Company and all such
fees incurred at the request, or on behalf of, the Independent Directors
Committee or any committee of the Board of Directors;


(xiv) out-of-pocket costs for the Company to comply with all applicable
laws, regulation and ordinances;


(xv) all other out-of-pocket costs incurred by the Advisor in performing
its duties hereunder; and


(xvi) with respect to Organization and Offering Expenses, these
expenses shall be borne by the Advisor, except that the Company shall pay
directly the selling commissions and dealer manager fee, until the Company has
raise $1.0 million in the Company’s initial public offering of its shares of
Common Stock; provided, however, that within 60 days after the end of the month
in which an Offering terminates, the Advisor shall reimburse the Company to the
extent (i) Organization and Offering Expenses borne by the Company (excluding
selling commissions and dealer manager fees) exceed 3.5% of the Gross Proceeds
raised in a completed Offering (excluding Gross Proceeds from the sales of
shares of Common Stock through a Reinvestment Plan) and (ii) Organization and



 22
 









Offering
Expenses borne by the Company (including selling commissions and dealer manager
fees) exceed 15% of the Gross Proceeds raised in a completed Offering.


(b) Other
Services.  Should the
Directors request that the Advisor or any director, officer or employee thereof
render services for the Company other than set forth in Section 4, such
services shall be separately compensated at such rates and in such amounts as
are agreed by the Advisor and a majority of the Independent Directors
Committee, subject to the limitations contained in the Charter, and shall not
be deemed to be services pursuant to the terms of this Agreement.


(c) Timing
of and Additional Limitations on Reimbursements.


(i) Expenses incurred by the Advisor on behalf of the Company and
reimbursable pursuant to this Section 9 shall be reimbursed no less frequently
than monthly to the Advisor.  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.


(ii) Notwithstanding anything else in this Section 9 to the contrary,
the expenses enumerated in this Section 9 shall not become reimbursable to the
Advisor unless and until the Company has raised $1.0 million in the Company’s
initial public offering of its shares of Common Stock.


(iii) The Company shall not reimburse the Advisor at the end of any
fiscal quarter Operating Expenses that, in the four consecutive fiscal quarters
then ended (the “Expense Year”)
exceed (the “Excess Amount”) the
greater of 2% of Average Invested Assets or 25% of NASAA Net Income (the “Excess Expense Guidelines”) for such year
unless the Independent Directors Committee determines that such excess was
justified, based on unusual and nonrecurring factors which they deem
sufficient.  If the Independent Directors
Committee does not approve such excess as being so justified, any Excess Amount
paid to the Advisor during a fiscal quarter shall be repaid to the
Company.  If the Independent Directors
Committee determines such excess was justified, then, within 60 days after the
end of any fiscal quarter of the Company for which total reimbursed Operating
Expenses for the Expense Year exceed the Excess Expense Guidelines, the Advisor,
at the direction of the Independent Directors Committee, shall send to the
Stockholders a written disclosure of such fact, together with an explanation of
the factors the Independent Directors Committee considered in determining that
such excess expenses were justified.  The
Company will ensure that such determination will be reflected in the minutes of
the meetings of the Board of Directors. 
All figures used in the foregoing computation shall be determined in
accordance with GAAP applied on a consistent basis.


10. Other Activities of the Advisor.


(a) General.  Nothing herein contained shall prevent the
Advisor from engaging in other activities, including, without limitation, the
rendering of advice to other Persons (including other REITs) and the management
of other programs advised, sponsored or organized 



 23
 









by the Advisor or its Affiliates; nor shall this Agreement limit or
restrict the right of any manager, director, officer, employee, or equity
holder of the Advisor or its Affiliates to engage in any other business or to
render services of any kind to any other Person.  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 promptly to the
Board the existence of any condition or circumstance, existing or anticipated,
of which it has knowledge, that 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 Person.


(b) Policy
with Respect to Allocation of Investment Opportunities.  The Advisor shall be required to use
commercially reasonable efforts to present a continuing and suitable investment
program to the Company that is consistent with the investment policies and
objectives of the Company, but 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 that, if
presented to the Company, could be taken by the Company.  In the event an investment opportunity is
located, the allocation procedure set forth under the caption “Conflicts of
Interest – Certain Conflict Resolution Procedures – Allocation of Investment
Opportunities” in the Registration Statement shall govern the allocation of the
opportunity among the Company and Affiliates of the Advisor.


11. Time Commitment.  The Advisor shall, and shall cause its
Affiliates and their respective employees, officers and agents to, devote to
the Company such time as shall be reasonably necessary to conduct the business
and affairs of the Company in an appropriate manner consistent with the terms
of this Agreement.  The Company
acknowledges that the Advisor and its Affiliates and their respective
employees, officers and agents may also engage in activities unrelated to the
Company and may provide services to Persons other than the Company or any of
its Affiliates.


12. Relationship of Advisor and Company.  The Company and the Advisor are not partners
or joint venturers with each other, and nothing in this Agreement shall be
construed to make them such partners or joint venturers or impose any liability
as such on either of them.


13. Non-Solicitation.


(a) By
Company.  Until the third
anniversary of the date of termination of this Agreement, the Company shall not
hire or solicit to perform services (as an employee, consultant or otherwise)
any employee of the Advisor or any employee of an Affiliate of the Advisor;
provided, however, that (i) general solicitations of employment published in a
journal, newspaper or other publication of general circulation or listed on any
Internet job site and not specifically directed towards such employees shall
not be deemed to constitute solicitation for purposes of this Agreement and
(ii) any hiring of any employee of the Advisor or any employee of an Affiliate
of the Advisor will not be prohibited where such hiring is not the result of a
solicitation by the Company.


(b) By
Advisor.  Until the third
anniversary of the date of termination of this Agreement, the Advisor shall not
hire or solicit to perform services (as an employee, consultant or otherwise)
any employee of the Company or any subsidiary of the Company; provided,



 24
 









however, that (i) general solicitations of employment published in a
journal, newspaper or other publication of general circulation or listed on any
internet job site and not specifically directed towards such employees shall
not be deemed to constitute solicitation for purposes of this Agreement and
(ii) any hiring of any employee of the Company or any subsidiary of the Company
will not be prohibited where such hiring is not the result of a solicitation by
the Advisor or an Affiliate of the Advisor.


(c) Reasonableness;
Interpretation.  Each of the
Company and the Advisor specifically acknowledges and agrees that the time and
activity restrictions set forth in this Section 13 are reasonable and properly
required for the protection of the Company and the Advisor, respectively.  However the Company and the Advisor further
agree that if any provision of this Section 13 is found by any court of
competent jurisdiction (or legally empowered agency) to be in violation of
applicable law or unenforceable for any reason whatsoever, then it is the
intention of the parties hereto that such provision or provisions be deemed to
be automatically amended to the extent necessary to comply with applicable law
and permit enforcement.


(d) Injunctive
Relief.  The Company and the
Advisor agree that a monetary remedy for breach under this Section 13 shall be
inadequate, and will be impracticable and extremely difficult to prove, and
further agree (i) that a breach of Section 13(a) will cause the Advisor
irreparable harm, and that, in addition to any other rights or remedies
available to it, the Advisor is entitled to temporary and permanent injunctive
relief without the necessity of proving actual damages, with a bond or other
form of security not being required and specifically waived hereby and (ii)
that a breach of Section 13(b) will cause the Company irreparable harm, and
that, in addition to any other rights or remedies available to it, the Company
is entitled to temporary and permanent injunctive relief without the necessity
of proving actual damages, with a bond or other form of security not being
required and specifically waived hereby.


14. Representations and Warranties.


(a) Of the
Company.  To induce the
Advisor to enter into this Agreement, the Company hereby represents and
warrants that:


(i) The Company is a corporation, duly organized, validly existing and
in good standing under the laws of the State of Maryland with all requisite
corporate power and authority and all material licenses, permits and
authorizations necessary to carry out the transactions contemplated by this
Agreement.


(ii) The Company’s execution, delivery and performance of this
Agreement has been duly authorized by the Board of Directors.  This Agreement constitutes the valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms.  The Company’s
execution and delivery of this Agreement and its fulfillment of and compliance
with the respective terms hereof do not and will not (i) conflict with or
result in a breach of the terms, conditions or provisions of, (ii) constitute a
default under, (iii) result in the creation of any lien, security interest,
charge or encumbrance upon the assets of the Company pursuant to, (iv) give any
third party the right to modify, terminate or accelerate any obligation under,
(v) result in a violation of or (vi) require any authorization, consent,
approval, exception or other action 



 25
 









by or notice
to any court or administrative or governmental body pursuant to, the Charter or
Bylaws or any law, statute, rule or regulation to which the Company is subject,
or any agreement, instrument, order, judgment or decree by which the Company is
bound, in any such case in a manner that would have a material adverse effect
on the ability of the Company to perform any of its obligations under this
Agreement.


(b) Of the
Advisor.  To induce the
Company to enter into this Agreement, the Advisor represents and warrants that:


(i) The Advisor is a limited liability company, duly organized, validly
existing and in good standing under the laws of the State of Delaware with all
requisite corporate power and authority and all material licenses, permits and
authorizations necessary to carry out the transactions contemplated by this
Agreement.


(ii) The Advisor’s execution, delivery and performance of this
Agreement has been duly authorized.  This
Agreement constitutes a valid and binding obligation of the Advisor,
enforceable against the Advisor in accordance with its terms.  The Advisor’s execution and delivery of this
Agreement and its fulfillment of and compliance with the respective terms
hereof do not and will not (i) conflict with or result in a breach of the
terms, conditions or provisions of, (ii) constitute a default under, (iii)
result in the creation of any lien, security interest, charge or encumbrance
upon the Advisor’s assets pursuant to, (iv) give any third party the right to
modify, terminate or accelerate any obligation under, (v) result in a violation
of or (vi) require any authorization, consent, approval, exemption or other
action by or notice to any court or administrative or governmental body
pursuant to, the Advisor’s articles of organization or operating agreement, or
any law, statute, rule or regulation to which the Advisor is subject, or any
agreement, instrument, order, judgment or decree by which the Advisor is bound,
in any such case in a manner that would have a material adverse effect on the
ability of the Advisor to perform any of its obligations under this Agreement.


(iii) The Advisor has received copies of the Charter, the Bylaws, the
Registration Statement, and the Operating Partnership’s limited partnership
agreement and is familiar with the terms thereof, including without limitation
the investment limitations included therein. 
The Advisor warrants that it will use reasonable care to avoid any act
or omission that would conflict with the terms of the Charter, the Bylaws, the
Registration Statement, or the Operating Partnership’s limited partnership
agreement in the absence of the express direction of the Independent Directors
Committee.


15. Board Nominees.  During the term of this Agreement, Advisor
will recommend two nominees to fill the board seats not to be filled by
Independent Directors.  The Company
agrees that it will use its best efforts to cause such nominees to be nominated
on stockholder ballots for the election of directors and will recommend to the
Stockholders that they vote FOR the election of such nominees.


16. Term; Termination of Agreement.  Subject to Section 17 hereof, this Agreement
shall continue in force until the first anniversary of the date hereof.  Thereafter, this Agreement may be renewed for
an unlimited number of successive one-year terms upon mutual consent of 



 26
 









the parties.  The Company, acting through the Board, including
a majority of the Independent Directors Committee, will evaluate the
performance of the Advisor annually before renewing the Agreement, and each
such renewal shall be for a term of no more than one year.


17. Termination.


(a) Termination by Either Party.  This Agreement may be terminated upon 60 days
written notice without cause or penalty, by either party (by the Independent
Directors Committee in the case of the Company or its managing member in the
case of the Advisor).


(b) Termination by the Advisor.  This Agreement may be terminated immediately
by the Advisor in the event of (i) the bankruptcy of the Company or
commencement of any bankruptcy or similar insolvency proceedings of the
Company, or (ii) any material breach of this Agreement by the Company not cured
by the Company within 30 days after written notice thereof.


The provisions of this sentence and Sections 1, 6, 7,
8(g), 9(c)(ii), 9(c)(iii), 12, 13, 17, 18, and 20 through 32 survive
termination of this Agreement.


18. Payments to and Duties of Advisor upon Termination.  Payments to the Advisor pursuant to this
Section 18 shall be subject to the Excess Expenses Guidelines to the extent
applicable.


(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 reimbursable expenses and all earned but unpaid fees
payable to the Advisor prior to termination of this Agreement; and


(ii) the Subordinated Performance Fee Due Upon Termination, provided
that no Subordinated Performance Fee Due Upon Termination will be paid if the
Company has paid or is obligated to pay the Subordinated Incentive Fee.


(b) In the event this Agreement expires
without the consent of the Advisor, or is terminated for any reason other than
by the Advisor pursuant to Section 17(a) or 17(b), the Company shall, at the
election of the Advisor or any of its Affiliates and at any time (and from time
to time) after the effective date of such expiration or termination, purchase
all or a portion of the OP Units held by the Advisor and its Affiliates subject
to Board approval and applicable law. 
The purchase price shall be paid in cash or, at the election of the
seller, Common Stock, and shall be payable within 120 days after the Advisor or
its Affiliates (as applicable) gives the Company written notice of its desire
to sell all or a portion of the OP Units held by such Person to the Company.  The Company agrees to keep a sufficient
number of authorized but unissued shares of Common Stock available for issuance
pursuant to this Section 18(b) and shall issue shares of Stock as may be
required hereunder.  The purchase price
of the OP Units sold to the Company pursuant to this Section 18(b) shall be (i)
in the event the seller elects to receive cash, the Cash Amount the seller
would receive under a redemption of such interests under Section 8.5(b) of the
Operating Partnership Agreement assuming the Company paid cash for such 



 27
 









redemption, or (ii) in the event the seller elects to receive Common
Stock, the REIT Shares Amount the seller would receive under a redemption of
such interests under Section 8.5(b) of the Operating Partnership Agreement
assuming the Company paid Common Stock for such redemption.


(c) 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, if any, after deducting any
accrued compensation and reimbursement for its expenses to which it is then
entitled;


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


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


(iv) cooperate with the Company to provide an orderly transition of
advisory functions.


19. Assignment to an Affiliate.  This Agreement may be assigned by the Advisor
to an Affiliate with the approval of the Independent Directors Committee.  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 all of the assets, rights and obligations of 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. Indemnification by the Company.  The Company shall indemnify, defend and hold
harmless the Advisor and its Affiliates, including their respective officers,
directors, equity holders, 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 Company’s
Charter and the laws of the State of Maryland. 
Any indemnification of the Advisor may be made only out of the net
assets of the Company.


21. Advisor’s Liability.  To the maximum extent permitted by the
Charter, the Advisor is hereby held harmless from any and all claims and rights
(including, without limitation, rights of set-off and recoupment, demands,
actions, obligations, and causes of action of any and every kind, nature and
character, known and unknown) as may be asserted by the Company.


22. 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 required
by the Charter, the Bylaws, or accepted by the party to whom it is



 28
 









given, and shall be given
by being delivered by hand or by overnight mail or other overnight delivery
service to the addresses set forth herein:


	
  To the Board and to the
  Company:

  	
   

  	
  Cornerstone Growth & Income REIT, Inc.

  1920 Main Street, Suite 400 

  Irvine, California 92614 

  Attention: Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  To the Advisor:

  	
   

  	
  Cornerstone Leveraged Realty Advisors, LLC 

  1920 Main Street, Suite 400 

  Irvine, California 92614

  Attention: Managing Member

  



 


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 22.


23. 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.


24. Severability.  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.


25. Construction.  The provisions of this Agreement shall be
construed and interpreted in accordance with the laws of the State of
California.


26. 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.


27. 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.


28. 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.



 29
 









29. Titles Not to Affect Interpretation.  The titles of paragraphs and subparagraphs
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.


30. 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 the counterparts hereof, taken
together, bear the signatures of all of the parties reflected hereon as the
signatories.


31. Initial Investment.  Terry G. Roussel, an Affiliate of the
Advisor, has purchased 100 shares of Common Stock for $1,000.  The Advisor has purchased OP Units for
$200,000.  The advisor is prohibited from
exchanging the OP Units purchased by it on November 9, 2006 for $200,000 cash
at any time prior to November 9, 2008. 
The Advisor may not sell any of the OP Units (or the Common Stock
received in exchange for the OP Units, if any) while the Advisor acts in such
advisory capacity to the Company, provided, that such Common Stock may be
transferred to Affiliates of the Advisor. 
Affiliates of the Advisor may not sell any of the OP Units (or the
Common Stock received in exchange for the OP Units, if any) while the Advisor
acts in such advisory capacity to the Company, provided, that such OP Units (or
the Common Stock received in exchange for the OP Units, if any) may be
transferred to the Advisor or other Affiliates of the Advisor.  The restrictions included above shall not
apply to any other Securities acquired by the Advisor or its Affiliates.  With respect to any Securities owned by the
Advisor, the Directors, or any of their Affiliates, neither the Advisor, nor
the Directors, nor any of their Affiliates may vote or consent on matters
submitted to the Stockholders regarding the removal of the Advisor, Directors
or any of their Affiliates or any transaction between the Company and any of
them.  In determining the requisite
percentage in interest of Securities necessary to approve a matter on which the
Advisor, Directors and any of their Affiliates may not vote or consent, any
Securities owned by any of them shall not be included.


32. Name.  Cornerstone Ventures, Inc. has a proprietary
interest in the name “Cornerstone.” 
Cornerstone Ventures, Inc. is an Affiliate of the Advisor.  Cornerstone Ventures, Inc. hereby grants to
the Company a non-transferable, non-assignable, non-exclusive royalty-free
right and license to use the name “Cornerstone” during the term of this
Agreement.  Accordingly, and in
recognition of this right, if at any time the Company ceases to retain an
Affiliate of Cornerstone Ventures, Inc. to perform the services of Advisor, the
Company and the Operating Partnership will, promptly after receipt of written
request from Cornerstone Ventures, Inc., cease to conduct business under or use
the name “Cornerstone” or any derivative thereof and the Company and the
Operating Partnership shall change the name of the Company and the Operating
Partnership to a name that does not contain the name “Cornerstone” or any other
word or words that might, in the reasonable discretion of the Advisor, be
susceptible of indication of some form of relationship between the Company and
the Advisor or any Affiliate thereof.  At
such time, the Company will also make any changes to any trademarks, service
marks or other marks necessary to remove any references to the word “Cornerstone.”  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 “Cornerstone” as a part
of their name, all without the need for any consent (and without the right to
object thereto) by the Company, the Board or the Operating Partnership.



 30















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


	
  

  	
   

  	
  CORNERSTONE GROWTH &
  INCOME REIT,

  INC.

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
   

  	 

	
   

  	
   

  	
   

  	
  Terry G.
  Roussel, President

  	 

	
   

  	
   

  	
   

  
	
  

  	
   

  	
  CORNERSTONE LEVERAGED REALTY

  ADVISORS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  CIP Leveraged Fund
  Advisors, LLC, its 

  managing member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Terry G.
  Roussel, President

  
	
   

  	 

	
   

  	 

	
  For purposes of Section 32
  of this Agreement:

  	 

	
   

  	 

	
  CORNERSTONE
  VENTURES, INC.

  	 

	
   

  	 

	
  By:

  	
   

  	
   

  	 

	
   

  	
  Terry G. Roussel, President