Document:

ex10_01.htm

Exhibit 10.01

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (this "Agreement") is entered into as of May 28, 2009, by and between SOUTHWALL TECHNOLOGIES INC., a Delaware corporation ("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").

 

RECITALS

Borrower has requested that Bank extend or continue credit to Borrower as described below, and Bank has agreed to provide such credit to Borrower on the terms and conditions contained herein.

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Bank and Borrower hereby agree as follows:

ARTICLE I

CREDIT TERMS

SECTION 1.1.   LINE OF CREDIT.

(a)             Line of Credit.  Subject to the terms and conditions of this Agreement, Bank hereby agrees to make advances to Borrower from time to time
up to and including June 1, 2010, not to exceed at any time the aggregate principal amount of Three Million Dollars ($3,000,000.00) ("Line of Credit"), the proceeds of which shall be used to finance Borrower’s working capital requirements.  Borrower's obligation to repay advances under the Line of Credit shall be evidenced by a promissory note dated as of May 28, 2009 ("Line of Credit Note"), all terms of which are incorporated herein by this reference.

(b)             Borrowing and Repayment.  Borrower may from time to time during the term of the Line of Credit borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and conditions contained herein or in the Line of Credit Note; provided however, that Bank shall not be obligated to make any advance which would cause the outstanding principal balance of the Line of Credit to exceed $1,500,000.00 unless (i) Borrower has notified Bank in writing that it intends to request such an advance at least 30 days prior to the date of such requested advance, and (ii) Bank shall have performed and approved an audit of Borrower’s
accounts receivable (the “Audit” - with  Borrower liable for all expenses thereof, including internally allocated costs and expenses), and with the conditions in clauses (i) and (ii) referred to as the “Borrowing Base Conditions.”

(c)             Limitation on Borrowings.   Following satisfaction of the Borrowing Base Conditions, outstanding borrowings under the Line of Credit,
shall at all times be available in an amount equal to the lesser of $3,000,000.00 or the Borrowing Base.  The term “Borrowing Base” is defined as an amount equal to the Specified Percentage of Borrower's eligible accounts receivable.  The term “Specified Percentage” means a percentage (in no event to exceed 80%) determined by Bank based on its review of the Audit.  Borrower acknowledges that in determining the Specified Percentage, Bank will consider, among
other items, the rate of Borrower’s returns, rebates, discounts, credits and allowances (the Dilution Rate”).  If the Dilution Rate increases materially, or if there at any time exists any other matters, events, conditions or contingencies which Bank reasonably believes may affect payment of any portion of Borrower's accounts, Bank, in its sole discretion, may reduce the Specified Percentage to a percentage appropriate to reflect such additional dilution and/or establish additional reserves
against Borrower's eligible accounts receivable.

  

  

  

As used herein, "eligible accounts receivable" shall consist solely of trade accounts created in the ordinary course of Borrower's business, upon which Borrower's right to receive payment is absolute and not contingent upon the fulfillment of any condition whatsoever, and in which Bank has
a perfected security interest of first priority, and shall not include:

              (i)   any account which is unpaid 90 days after invoice date;

              (ii)  that portion of any account for which there exists any right of setoff, defense or discount (except regular discounts allowed in the ordinary course of business to promote prompt payment) or for which
any defense or counterclaim has been asserted;

              (iii) any account which represents an obligation of any state or municipal government or of the United States government or any political subdivision thereof (except accounts which represent obligations of the
United States government and for which the assignment provisions of the Federal Assignment of Claims Act, as amended or recodified from time to time, have been complied with to Bank's satisfaction);

              (iv) any account which represents an obligation of an account debtor located in a foreign country other than an account debtor located in a Canadian province or territory, so long as, in Bank's determination,
such Canadian jurisdiction recognizes Bank's first priority security interest in and right to collect such account as a consequence of any security agreements and UCC filings in favor of Bank, except to the extent any such account, in Bank's determination, is supported by a letter of credit or insured under a policy of foreign credit insurance, in each case in form, substance and issued by a party acceptable to Bank;

              (v)  any account which arises from the sale or lease to or performance of services for, or represents an obligation of, an employee, affiliate, partner, member, parent or subsidiary of Borrower;

              (vi) that portion of any account, which represents interim or progress billings or retention rights on the part of the account debtor;

              (vii)any account which represents an obligation of any account debtor when twenty percent (20%) or more of Borrower's accounts from such account debtor are not eligible pursuant to (i) above;

              (viii)that portion of any account from an account debtor which represents the amount by which Borrower's total accounts from said account debtor exceeds fifteen percent (15%) of Borrower's total accounts except
for Saint Gobain, V-Kool and Huper Optik Int’l, which respect to which Bank shall establish a percentage following credit verifications;

              (ix)  any account deemed ineligible by Bank when Bank, in its sole discretion, deems the creditworthiness or financial condition of the account debtor, or the industry in which the account debtor is engaged,
to be unsatisfactory.

SECTION 1.2.   INTEREST/FEES.

(a)             Interest.  The outstanding principal balance of each credit subject hereto shall bear interest at the rate of interest set forth in each
promissory note or other instrument or document executed in connection therewith.

  

  

  

(b)             Computation and Payment.  Interest shall be computed on the basis of a 360-day year, actual days elapsed.  Interest shall be
payable at the times and place set forth in each promissory note or other instrument or document required hereby.

(c)             Commitment Fee.  Borrower shall pay to Bank a non-refundable commitment fee for the Line of Credit equal to Twelve Thousand Dollars ($12,000.000),
which fee shall be due and payable in full on the date of this Agreement.

(d)             Unused Commitment Fee.  Borrower shall pay to Bank a fee equal to one-half percent (0.50%) per annum (computed on the basis of a 360-day
year, actual days elapsed) on the average daily unused amount of the Line of Credit, which fee shall be calculated on a calendar quarter basis by Bank and shall be due and payable by Borrower in arrears on each June 30, September 30, December 31 and March 31.

SECTION 1.3.  COLLECTION OF PAYMENTS.  Borrower authorizes Bank to collect all interest and fees due under each credit subject hereto by charging Borrower's deposit account number 4121-148894 with Bank, or any other deposit account maintained by Borrower with Bank, for the full
amount thereof.  Should there be insufficient funds in any such deposit account to pay all such sums when due, the full amount of such deficiency shall be immediately due and payable by Borrower.

SECTION 1.4.  COLLATERAL.

As security for all indebtedness and other obligations of Borrower to Bank subject hereto, Borrower hereby grants to Bank security interests of first priority in all Borrower's accounts receivable and other rights to payment, general intangibles, investment property, deposit accounts, inventory
and equipment.

All of the foregoing shall be evidenced by and subject to the terms of such security agreements, financing statements, deeds or mortgages, and other documents as Bank shall reasonably require, all in form and substance satisfactory to Bank.  Borrower shall pay to Bank immediately upon demand the full amount of all charges,
costs and expenses (to include fees paid to third parties and all allocated costs of Bank personnel), expended or incurred by Bank in connection with any of the foregoing security, including without limitation, filing and recording fees and costs of appraisals, audits and title insurance.

ARTICLE II

REPRESENTATIONS AND WARRANTIES

Borrower makes the following representations and warranties to Bank, which representations and warranties shall survive the execution of this Agreement and shall continue in full force and effect until the full and final payment, and satisfaction and discharge, of all obligations of Borrower
to Bank subject to this Agreement.

SECTION 2.1.  LEGAL STATUS.  Borrower is a corporation, duly organized and existing and in good standing under the laws of Delaware, and is qualified or licensed to do business (and is in good standing as a foreign corporation, if applicable) in all jurisdictions in which such
qualification or licensing is required or in which the failure to so qualify or to be so licensed could have a material adverse effect on Borrower.

SECTION 2.2.  AUTHORIZATION AND VALIDITY.  This Agreement and each promissory note, contract, instrument and other document required hereby or at any time hereafter delivered to Bank in connection herewith (collectively, the "Loan Documents") have been duly authorized, and upon
their execution and delivery in accordance with the provisions hereof will constitute legal, valid and binding agreements and obligations of Borrower or the party which executes the same, enforceable in accordance with their respective terms.

  

  

  

SECTION 2.3.  NO VIOLATION.  The execution, delivery and performance by Borrower of each of the Loan Documents do not violate any provision of any law or regulation, or contravene any provision of the Articles of Incorporation or By-Laws of Borrower, or result in any breach
of or default under any contract, obligation, indenture or other instrument to which Borrower is a party or by which Borrower may be bound.

SECTION 2.4.  LITIGATION.  There are no pending, or to the best of Borrower's knowledge threatened, actions, claims, investigations, suits or proceedings by or before any governmental authority, arbitrator, court or administrative agency which could have a material adverse effect
on the financial condition or operation of Borrower other than those disclosed by Borrower to Bank in writing prior to the date hereof.

SECTION 2.5.  CORRECTNESS OF FINANCIAL STATEMENT.  The annual financial statement of Borrower dated December 31, 2008, and all interim financial statements delivered to Bank since said date, true copies of which have been delivered by Borrower to Bank prior to the date hereof,
(a) are complete and correct and present fairly the financial condition of Borrower, (b) disclose all liabilities of Borrower that are required to be reflected or reserved against under generally accepted accounting principles, whether liquidated or unliquidated, fixed or contingent, and (c) have been prepared in accordance with generally accepted accounting principles consistently applied.  Since the dates of such financial statements there has been no material adverse change in the financial condition
of Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or otherwise encumbered any of its assets or properties except in favor of Bank or as otherwise permitted by Bank in writing.

SECTION 2.6.  INCOME TAX RETURNS.  Borrower has no knowledge of any pending assessments or adjustments of its income tax payable with respect to any year.

 

SECTION 2.7.  NO SUBORDINATION.  There is no agreement, indenture, contract or instrument to which Borrower is a party or by which Borrower may be bound that requires the subordination in right of payment of any of Borrower's obligations subject to this Agreement to any
other obligation of Borrower.

SECTION 2.8. PERMITS, FRANCHISES.  Borrower possesses, and will hereafter possess, all permits, consents, approvals, franchises and licenses required and rights to all trademarks, trade names, patents, and fictitious names, if any, necessary to enable it to conduct the business
in which it is now engaged in compliance with applicable law.

SECTION 2.9.  ERISA.  Borrower is in compliance in all material respects with all applicable provisions of the Employee Retirement Income Security Act of 1974, as amended or recodified from time to time ("ERISA"); Borrower has not violated any provision of any defined employee
pension benefit plan (as defined in ERISA) maintained or contributed to by Borrower (each, a "Plan"); no Reportable Event as defined in ERISA has occurred and is continuing with respect to any Plan initiated by Borrower; Borrower has met its minimum funding requirements under ERISA with respect to each Plan; and each Plan will be able to fulfill its benefit obligations as they come due in accordance with the Plan documents and under generally accepted accounting principles.

SECTION 2.10.  OTHER OBLIGATIONS.  Borrower is not in default on any obligation for borrowed money, any purchase money obligation or any other material lease, commitment, contract, instrument or obligation.

SECTION 2.11.  ENVIRONMENTAL MATTERS.  Except as disclosed by Borrower to Bank in writing prior to the date hereof, Borrower is in compliance in all material respects with all applicable federal or state environmental, hazardous waste, health and safety statutes, and any
rules or regulations adopted pursuant thereto, which govern or affect any of Borrower's operations and/or properties, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act of 1976, and the Federal Toxic Substances Control Act, as any of the same may be amended, modified or supplemented from time to time.  None of the operations of Borrower
is the subject of any federal or state investigation evaluating whether any remedial action involving a material expenditure is needed to respond to a release of any toxic or hazardous waste or substance into the environment.  Borrower has no material contingent liability in connection with any release of any toxic or hazardous waste or substance into the environment.

  

  

  

ARTICLE III

CONDITIONS

SECTION 3.1.  CONDITIONS OF INITIAL EXTENSION OF CREDIT.  The obligation of Bank to extend any credit contemplated by this Agreement is subject to the fulfillment to Bank's satisfaction of all of the following conditions:

(a)             Approval of Bank Counsel.  All legal matters incidental to the extension of credit by Bank shall be satisfactory to Bank's counsel.

(b)             Documentation.  Bank shall have received, in form and substance satisfactory to Bank, each of the following, duly executed:

	
  
	
(i)
	
This Agreement and each promissory note or other instrument or document required hereby.

	
  
	
(ii)
	
Certificate of Incumbency.

	
  
	
(iii)
	
Corporate Resolution: Borrowing.

	
  
	
(iv)
	
Disbursement Order.

	
  
	
(v)
	
Continuing Security Agreement: Rights to Payment and Inventory.

	
  
	
(vi)
	
Security Agreement Equipment.

	
  
	
(vii)
	
Such other documents as Bank may require under any other Section of this Agreement.

(c)             Financial Condition.  There shall have been no material adverse change, as determined by Bank, in the financial condition or business
of Borrower, nor any material decline, as determined by Bank, in the market value of any collateral required hereunder or a substantial or material portion of the assets of Borrower.

(d)             Insurance.  Borrower shall have delivered to Bank evidence of insurance coverage on all Borrower's property, in form, substance, amounts,
covering risks and issued by companies satisfactory to Bank, and where required by Bank, with loss payable endorsements in favor of Bank.

SECTION 3.2.  CONDITIONS OF EACH EXTENSION OF CREDIT.  The obligation of Bank to make each extension of credit requested by Borrower hereunder shall be subject to the fulfillment to Bank's satisfaction of each of the following conditions:

(a)             Compliance.  The representations and warranties contained herein and in each of the other Loan Documents shall be true on and as of the
date of the signing of this Agreement and on the date of each extension of credit by Bank pursuant hereto, with the same effect as though such representations and warranties had been made on and as of each such date, and on each such date, no Event of Default as defined herein, and no condition, event or act which with the giving of notice or the passage of time or both would constitute such an Event of Default, shall have occurred and be continuing or shall exist.

(b)             Documentation.  Bank shall have received all additional documents which may be required in connection with such extension of credit.

  

  

  

ARTICLE IV

AFFIRMATIVE COVENANTS

Borrower covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower shall, unless Bank otherwise consents in writing:

SECTION 4.1.  PUNCTUAL PAYMENTS.  Punctually pay all principal, interest, fees or other liabilities due under any of the Loan Documents at the times and place and in the manner specified therein , and immediately upon demand by Bank, the amount by which the outstanding principal
balance of any credit subject hereto at any time exceeds any limitation on borrowings applicable thereto.

SECTION 4.2.  ACCOUNTING RECORDS.  Maintain adequate books and records in accordance with generally accepted accounting principles consistently applied, and permit any representative of Bank, at any reasonable time, to inspect, audit and examine such books and records, to make
copies of the same, and to inspect the properties of Borrower.

SECTION 4.3.  FINANCIAL STATEMENTS.  Provide to Bank all of the following, in form and detail satisfactory to Bank:

(a)             not later than 30 days after and as of the end of each fiscal year, Borrower-prepared projections for each fiscal quarter of the fiscal year then commending;

(b)             not later than 120 days after and as of the end of each fiscal year, a 10-K report filed with the Securities Exchange Commission, to include an annual unqualified audited financial statement of Borrower, prepared
by a certified public accountant acceptable to Bank, to include balance sheet, income statement, statement of cash flow together with all supporting schedules and footnotes;

(c)             not later than 60 days after and as of the end of each fiscal quarter end, a 10-Q report filed with the Securities Exchange Commission, prepared by a certified public accountant acceptable to Bank, to include
balance sheet, income statement, statement of cash flow together with all supporting schedules and footnotes;

(d)             not later than 25 days after and as of the end of each month, a financial statement of Borrower, prepared by Borrower, to include balance sheet and income statement;

(e)             following the satisfaction of the Borrowing Base Conditions, not later than 15 days after and as of the end of each month, a borrowing base certificate, an aged listing of accounts receivable and accounts payable,
and a reconciliation of accounts, and immediately upon each request from Bank, a list of the names and addresses of all Borrower's account debtors;

(f)             from time to time such other information as Bank may reasonably request.

SECTION 4.4.  COMPLIANCE.  Preserve and maintain all licenses, permits, governmental approvals, rights, privileges and franchises necessary for the conduct of its business; and comply with the provisions of all documents pursuant to which Borrower is organized and/or which govern
Borrower's continued existence and with the requirements of all laws, rules, regulations and orders of any governmental authority applicable to Borrower and/or its business.

SECTION 4.5.  INSURANCE.  Maintain and keep in force, for each business in which Borrower is engaged, insurance of the types and in amounts customarily carried in similar lines of business, including but not limited to fire, extended coverage, public liability, flood, property
damage and workers' compensation, with all such insurance carried with companies and in amounts satisfactory to Bank, and deliver to Bank from time to time at Bank's request schedules setting forth all insurance then in effect.

  

  

  

SECTION 4.6.  FACILITIES.  Keep all properties useful or necessary to Borrower's business in good repair and condition, and from time to time make necessary repairs, renewals and replacements thereto so that such properties shall be fully and efficiently preserved and maintained.

SECTION 4.7.  TAXES AND OTHER LIABILITIES.  Pay and discharge when due any and all indebtedness, obligations, assessments and taxes, both real or personal, including without limitation federal and state income taxes and state and local property taxes and assessments, except
(a) such as Borrower may in good faith contest or as to which a bona fide dispute may arise, and (b) for which Borrower has made provision, to Bank's satisfaction, for eventual payment thereof in the event Borrower is obligated to make such payment.

SECTION 4.8.  LITIGATION.  Promptly give notice in writing to Bank of any litigation pending or threatened against Borrower.

SECTION 4.9.  FINANCIAL CONDITION.  Maintain Borrower's financial condition as follows using generally accepted accounting principles consistently applied and used consistently with prior practices (except to the extent modified by the definitions herein):

(a)             Liquid assets (defined as the aggregate of cash and readily marketable securities acceptable to Bank) in amounts at all times in excess of Three Million Five Hundred Thousand Dollars ($3,500,000.00).

(b)             Net profit after tax not less than $1.00 on a quarterly basis, determined as of each fiscal quarter end.

SECTION 4.10.  ACCOUNTS.  Maintain Borrower’s primary operating accounts at Bank.

SECTION 4.11.  NOTICE TO BANK.  Promptly (but in no event more than five (5) days after the occurrence of each such event or matter) give written notice to Bank in reasonable detail of:  (a) the occurrence of any Event of Default, or any condition, event or act
which with the giving of notice or the passage of time or both would constitute an Event of Default; (b) any change in the name or the legal structure of Borrower; (c) the occurrence and nature of any Reportable Event or Prohibited Transaction, each as defined in ERISA, or any funding deficiency with respect to any Plan; or (d) any termination or cancellation of any insurance policy which Borrower is required to maintain, or any uninsured or partially uninsured loss through liability or property
damage, or through fire, theft or any other cause affecting Borrower's property.

ARTICLE V

NEGATIVE COVENANTS

Borrower further covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of
all obligations of Borrower subject hereto, Borrower will not without Bank's prior written consent:

SECTION 5.1.  USE OF FUNDS.  Use any of the proceeds of any credit extended hereunder except for the purposes stated in Article I hereof.

SECTION 5.2. OTHER INDEBTEDNESS.  Create, incur, assume or permit to exist any indebtedness or liabilities resulting from borrowings, loans or advances, whether secured or unsecured, matured or unmatured, liquidated or unliquidated, joint or several, except (a) the liabilities
of Borrower to Bank, (b) any other liabilities of Borrower existing as of, and disclosed to Bank prior to, the date hereof, and (c) new purchase money debt in an amount not to exceed an aggregate of $3,000,000.00 in any fiscal year.

  

  

  

SECTION 5.3.  MERGER, CONSOLIDATION, TRANSFER OF ASSETS.  Merge into or consolidate with any other entity; make any substantial change in the nature of Borrower's business as conducted as of the date hereof; acquire all or substantially all of the assets of any other entity;
nor sell, lease, transfer or otherwise dispose of all or a substantial or material portion of Borrower's assets except in the ordinary course of its business.

SECTION 5.4.  GUARANTIES.  Guarantee or become liable in any way as surety, endorser (other than as endorser of negotiable instruments for deposit or collection in the ordinary course of business), accommodation endorser or otherwise for, nor pledge or hypothecate any assets
of Borrower as security for, any liabilities or obligations of any other person or entity, except any of the foregoing in favor of Bank.

SECTION 5.5.  LOANS, ADVANCES, INVESTMENTS.  Make any loans or advances to or investments in any person or entity, except any of the foregoing existing as of, and disclosed to Bank prior to, the date hereof, and additional advances to or investments in Southwall Insulating
Glass, LLC.

SECTION 5.6.  PLEDGE OF ASSETS.  Mortgage, pledge, grant or permit to exist a security interest in, or lien upon, all or any portion of Borrower's assets now owned or hereafter acquired, except (a) any of the foregoing in favor of Bank or which is existing as of, and disclosed
to Bank in writing prior to, the date hereof, and (b) purchase money liens to the extent they secure purchase money debt permitted under Section 5.2. hereof.

ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.1. The occurrence of any of the following shall constitute an "Event of Default" under this Agreement:

(a)             Borrower shall fail to pay when due any principal, interest, fees or other amounts payable under any of the Loan Documents.

(b)             Any financial statement or certificate furnished to Bank in connection with, or any representation or warranty made by Borrower or any other party under this Agreement or any other Loan Document shall prove to
be incorrect, false or misleading in any material respect when furnished or made.

(c)             Any default in the performance of or compliance with any obligation, agreement or other provision contained herein or in any other Loan Document (other than those referred to in subsections (a) and (b) above),
and with respect to any such default which by its nature can be cured, such default shall continue for a period of twenty (20) days from its occurrence.

(d)             Any default in the payment or performance of any obligation, or any defined event of default, under the terms of any contract or instrument (other than any of the Loan Documents) pursuant to which Borrower, any
guarantor hereunder or any general partner or joint venturer in Borrower if a partnership or joint venture (with each such guarantor, general partner and/or joint venturer referred to herein as a "Third Party Obligor") has incurred any debt or other liability to any person or entity, including Bank.

(e)             The filing of a notice of judgment lien against Borrower or any Third Party Obligor; or the recording of any abstract of judgment against Borrower or any Third Party Obligor in any county in which Borrower or
such Third Party Obligor has an interest in real property; or the service of a notice of levy and/or of a writ of attachment or execution, or other like process, against the assets of Borrower or any Third Party Obligor; or the entry of a judgment against Borrower or any Third Party Obligor.

  

  

  

(f)             Borrower or any Third Party Obligor shall become insolvent, or shall suffer or consent to or apply for the appointment of a receiver, trustee, custodian or liquidator of itself or any of its property, or shall
generally fail to pay its debts as they become due, or shall make a general assignment for the benefit of creditors; Borrower or any Third Party Obligor shall file a voluntary petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the United States Code, as amended or recodified from time to time ("Bankruptcy Code"), or under any state or federal law granting relief to debtors, whether now
or hereafter in effect; or any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors is filed or commenced against Borrower or any Third Party Obligor, or Borrower or any Third Party Obligor shall file an answer admitting the jurisdiction of the court and the material allegations of any involuntary petition; or Borrower or any Third Party Obligor shall be adjudicated a bankrupt, or an order
for relief shall be entered against Borrower or any Third Party Obligor by any court of competent jurisdiction under the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors.

(g)             There shall exist or occur any event or condition which Bank in good faith believes impairs, or is substantially likely to impair, the prospect of payment or performance by Borrower of its obligations under any
of the Loan Documents.

(h)             The death or incapacity of Borrower or any Third Party Obligor if an individual.  The dissolution or liquidation of Borrower or any Third Party Obligor if a corporation, partnership, joint venture or
other type of entity; or Borrower or any such Third Party Obligor, or any of its directors, stockholders or members, shall take action seeking to effect the dissolution or liquidation of Borrower or such Third Party Obligor.

(i)             Any change in control of Borrower or any entity or combination of entities that directly or indirectly control Borrower, with “control” defined as ownership of an aggregate of twenty-five percent (25%)
or more of the common stock, members' equity or other ownership interest (other than a limited partnership interest).

SECTION 6.2. REMEDIES.  Upon the occurrence of any Event of Default:  (a) all indebtedness of Borrower under each of the Loan Documents, any term thereof to the contrary notwithstanding, shall at Bank's option and without notice become immediately due and payable
without presentment, demand, protest or notice of dishonor, all of which are hereby expressly waived by Borrower; (b) the obligation, if any, of Bank to extend any further credit under any of the Loan Documents shall immediately cease and terminate; and (c) Bank shall have all rights, powers and remedies available under each of the Loan Documents, or accorded by law, including without limitation the right to resort to any or all security for any credit subject hereto and to exercise any or all of the
rights of a beneficiary or secured party pursuant to applicable law.  All rights, powers and remedies of Bank may be exercised at any time by Bank and from time to time after the occurrence of an Event of Default, are cumulative and not exclusive, and shall be in addition to any other rights, powers or remedies provided by law or equity.

ARTICLE VII

MISCELLANEOUS

SECTION 7.1.  NO WAIVER.  No delay, failure or discontinuance of Bank in exercising any right, power or remedy under any of the Loan Documents shall affect or operate as a waiver of such right, power or remedy; nor shall any single or partial exercise of any such right, power
or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power or remedy.  Any waiver, permit, consent or approval of any kind by Bank of any breach of or default under any of the Loan Documents must be in writing and shall be effective only to the extent set forth in such writing.

  

  

  

SECTION 7.2.  NOTICES.  All notices, requests and demands which any party is required or may desire to give to any other party under any provision of this Agreement must be in writing delivered to each party at the following address:

 

	
BORROWER:
	
SOUTHWALL TECHNOLOGIES INC.

Attn:  Chief Executive Officer

3788 Fabian Way

Palo Alto, CA 94303

	
BANK:
	
WELLS FARGO BANK, NATIONAL ASSOCIATION

Santa Clara Technology RCBO

121 Park Center Plaza, 2nd Floor

San Jose, CA 95113

or to such other address as any party may designate by written notice to all other parties.  Each such notice, request and demand shall be deemed given or made as follows:  (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or three (3) days after deposit
in the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy, upon receipt.

SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS' FEES.  Borrower shall pay to Bank immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorneys' fees (to include outside counsel fees and all allocated costs of Bank's
in-house counsel), expended or incurred by Bank in connection with (a) the negotiation and preparation of this Agreement and the other Loan Documents, Bank's continued administration hereof and thereof, and the preparation of any amendments and waivers hereto and thereto, (b) the enforcement of Bank's rights and/or the collection of any amounts which become due to Bank under any of the Loan Documents, and (c) the prosecution or defense of any action in any way related to any of the Loan Documents,
including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to Borrower or any other person or entity.

SECTION 7.4. SUCCESSORS, ASSIGNMENT.  This Agreement shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties; provided however, that Borrower may not assign or transfer its interests
or rights hereunder without Bank's prior written consent.  Bank reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Bank's rights and benefits under each of the Loan Documents.  In connection therewith, Bank may disclose all documents and information which Bank now has or may hereafter acquire relating to any credit subject hereto, Borrower or its business, or any collateral required hereunder.

SECTION 7.5.  ENTIRE AGREEMENT; AMENDMENT.  This Agreement and the other Loan Documents constitute the entire agreement between Borrower and Bank with respect to each credit subject hereto and supersede all prior negotiations, communications, discussions and correspondence
concerning the subject matter hereof.  This Agreement may be amended or modified only in writing signed by each party hereto.

SECTION 7.6.  NO THIRD PARTY BENEFICIARIES.  This Agreement is made and entered into for the sole protection and benefit of the parties hereto and their respective permitted successors and assigns, and no other person or entity shall be a third party beneficiary of, or
have any direct or indirect cause of action or claim in connection with, this Agreement or any other of the Loan Documents to which it is not a party.

  

  

  

SECTION 7.7.  TIME.  Time is of the essence of each and every provision of this Agreement and each other of the Loan Documents.

SECTION 7.8.  SEVERABILITY OF PROVISIONS.  If any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision
or any remaining provisions of this Agreement.

SECTION 7.9.  COUNTERPARTS.  This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be deemed to be an original, and all of which when taken together shall constitute one and the same Agreement.

SECTION 7.10. GOVERNING LAW.  This Agreement shall be governed by and construed in accordance with the laws of the State of California.

SECTION 7.11. ARBITRATION.

(a)           Arbitration.  The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies between or
among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise in any way arising out of or relating to (i) any credit subject hereto, or any of the Loan Documents, and their negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination; or (ii) requests for additional credit.

(b)           Governing Rules.  Any arbitration proceeding will (i) proceed in a location in California selected by the American Arbitration Association (“AAA”);
(ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration
shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “Rules”).  If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control.  Any party who fails or refuses to submit to arbitration following a demand
by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute.  Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. Sec.91 or any similar applicable state law.

(c)           No Waiver of Provisional Remedies, Self-Help and Foreclosure.  The arbitration requirement does not limit the right of any party to (i) foreclose against
real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding.  This exclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder, including
those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph.

  

  

  

(d)           Arbitrator Qualifications and Powers.  Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will be decided by a single
arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00.  Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations.  The arbitrator will be a neutral attorney licensed in the State of California or a neutral retired judge of the state or federal judiciary of
California, in either case with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated.  The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim.  In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator's discretion) any pre-hearing motions which are similar to motions to dismiss
for failure to state a claim or motions for summary adjudication.  The arbitrator shall resolve all disputes in accordance with the substantive law of California and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award.  The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems
necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the California Rules of Civil Procedure or other applicable law.  Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction.  The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration
if any other party contests such action for judicial relief.

(e)           Discovery.  In any arbitration proceeding, discovery will be permitted in accordance with the Rules.  All discovery shall be expressly limited
to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date.  Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party's presentation and that no alternative means for obtaining information is available.

(f)            Class Proceedings and Consolidations.  No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except
parties who have executed any Loan Document, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity.

(g)           Payment Of Arbitration Costs And Fees.  The arbitrator shall award all costs and expenses of
the arbitration proceeding.

(h)           Real Property Collateral; Judicial Reference.  Notwithstanding anything herein to the contrary, no dispute shall be submitted to arbitration if the
dispute concerns indebtedness secured directly or indirectly, in whole or in part, by any real property unless (i) the holder of the mortgage, lien or security interest specifically elects in writing to proceed with the arbitration, or (ii) all parties to the arbitration waive any rights or benefits that might accrue to them by virtue of the single action rule statute of California, thereby agreeing that all indebtedness and obligations of the parties, and all mortgages, liens and security interests securing
such indebtedness and obligations, shall remain fully valid and enforceable.  If any such dispute is not submitted to arbitration, the dispute shall be referred to a referee in accordance with California Code of Civil Procedure Section 638 et seq., and this general reference agreement is intended to be specifically enforceable in accordance with said Section 638.  A referee with the qualifications required herein for arbitrators shall be selected pursuant to the AAA’s selection procedures.  Judgment
upon the decision rendered by a referee shall be entered in the court in which such proceeding was commenced in accordance with California Code of Civil Procedure Sections 644 and 645.

  

  

  

(i)            Miscellaneous.  To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration
proceeding within 180 days of the filing of the dispute with the AAA.  No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation.  If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the Loan Documents or
the subject matter of the dispute shall control.  This arbitration provision shall survive termination, amendment or expiration of any of the Loan Documents or any relationship between the parties.

(j)            Small Claims Court.  Notwithstanding anything herein to the contrary, each party retains the right to pursue in Small Claims Court any dispute within
that court’s jurisdiction.  Further, this arbitration provision shall apply only to disputes in which either party seeks to recover an amount of money (excluding attorneys’ fees and costs) that exceeds the jurisdictional limit of the Small Claims Court.

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

	  	  	  	
WELLS FARGO BANK,

	
SOUTHWALL TECHNOLOGIES INC.
	  	
NATIONAL ASSOCIATION

	  	  	  	  	  
	
By:
	
 
	  	
By:
	 	
 

	
Dennis Capovilla
	  	  	
Karen A. Byler
	 
	
Chief Executive Officer / President
	  	  	
Vice President
	 
	  	  	  	  	  
	  	  	  	  	  
	
By:
	
 
	  	  	  
	
Mallorie Burak
	  	  	  
	
Chief Accounting Officerex10_1.htm

Exhibit 10.1

CORNERSTONE CORE PROPERTIES REIT, INC.

DEALER MANAGER AGREEMENT

Up to 77,350,000 Shares of Common Stock

Pacific Cornerstone Capital, Incorporated

1920 Main Plaza, Suite 400

Irvine, California 92614

Dear Sirs:

Cornerstone Core Properties REIT, Inc., a Maryland corporation (the “Company”), is registering for public sale a maximum of 77,350,000 shares of its common stock, $0.001 par value per share, (the “Shares”),
to be issued and sold for an aggregate maximum purchase price of $610,360,000 (56,250,000 Shares to be offered to the public in a primary offering with an aggregate maximum purchase price of $450,000,000 (the “Primary Offering”) and 21,100,000 Shares to be offered pursuant to the Company's distribution reinvestment plan with an aggregate maximum purchase price of $160,360,000 (“DRP”)). The Shares are to be sold to selected persons
or entities acceptable to the Company, upon the terms and subject to the conditions set forth in the enclosed Prospectus.

The Company hereby invites you, Pacific Cornerstone Capital, Inc., a California corporation (the “Dealer Manager”), to become the dealer manager in connection with the offer and sale of the Shares. By your acceptance hereof, you agree to act in such capacity and to use commercially
reasonable efforts to find purchasers for the Shares in accordance with the terms and conditions of the Prospectus (defined below) and this dealer manager agreement (the “Agreement”), but with no obligation or understanding, express or implied, that you are making a commitment to purchase or sell the Shares. You agree to use commercially reasonable efforts to find purchasers of Shares both directly and indirectly through a selling group consisting
of participating brokers (the “Participating Brokers”) with whom you shall contract pursuant to a participating broker agreement substantially in the form attached as Attachment 1 hereto (the “Participating Broker Agreement”) or such other form as may be requested by a Participating Broker provided the consent of the Company is obtained for the use of such form.

Accompanying this Agreement is a copy of the Prospectus and the Supplemental Material (defined below) prepared by the Company for use in conjunction with the offer and sale of the Shares. You are not authorized to use any solicitation material other than that referred to in this section, which material has been furnished by the Company.

Except as described in the Prospectus or in Sections 3(f) and (g) hereof, the Shares are to be sold for a per Share cash price as follows:

	
Distribution Channel
	 	
Primary Offering
	 	 	
DRP Offering
	 
	
Participating Brokers
	 	$	8.00	 	 	$	7.60	 
	
Participating Brokers Deferring Commission*
	 	$	7.52	 	 	$	7.60	 
	
Fee for Service Investment Advisers
	 	$	7.44	 	 	$	7.60	 

* For a period of six years following the date of purchase, an additional $0.10 per share will be deducted annually from cash distributions otherwise payable to the purchaser and will be used to pay deferred commissions.

	
1.
	
Representations and Warranties of the Company

The Company represents and warrants to Dealer Manager and Participating Brokers that:

  

  

  

(a)           The Company has prepared and filed with the Securities and Exchange Commission (the “SEC”) a registration statement (Registration No. 333-155640) for the registration of the Shares under the Securities Act
of 1933, as amended (the “Securities Act”), and the applicable rules and regulations promulgated thereunder. Copies of such registration statement as initially filed and each amendment thereto have been or will be delivered to the Dealer Manager. The registration statement and the prospectus contained therein, as finally amended at the effective date of the registration statement, are respectively hereinafter referred to as the “Registration
Statement” and the “Prospectus,” except that if the Company files a prospectus or prospectus supplement pursuant to Rule 424(b) under the Securities Act, or if the Company files a post-effective amendment to the Registration Statement, the term “Prospectus” includes the prospectus filed pursuant to Rule 424(b) or the prospectus included in such post-effective amendment. The term “Preliminary
Prospectus” as used herein shall mean a preliminary prospectus related to the Shares as contemplated by Rule 430 or Rule 430A under the Securities Act included at any time as part of the Registration Statement.

(b)           On the date that any Preliminary Prospectus was filed with the SEC, on the effective date of the Registration Statement, on the date of the Prospectus, and when any post-effective amendment to the Registration Statement becomes effective or any amendment or supplement to
the Prospectus is filed with the SEC, the Registration Statement, each Preliminary Prospectus and the Prospectus, as applicable, including the financial statements contained therein, complied or will comply with the Securities Act and the applicable rules and regulations promulgated thereunder. On the effective date, the Registration Statement did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading. On the date of the Prospectus, as amended or supplemented, as applicable, the Prospectus did not or will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the foregoing provisions of this Section 1(b) will not extend to such
statements contained in or omitted from the Registration Statement or the Prospectus, as amended or supplemented, as are primarily within the knowledge of the Dealer Manager or any of the Participating Brokers and are based upon information furnished by the Dealer Manager in writing to the Company specifically for inclusion therein.

(c)           All additional written, audio or audio-visual material, including an investment summary, audio tape, video tape and internet site prepared by the Company for use in conjunction with the offer or sale of the Shares (“Supplemental
Material”) will be distributed by the Company only in full compliance with the requirements of the Act (including, without limitation, the requirement that such Supplemental Material not be delivered to any prospective purchaser unless accompanied or preceded by a Prospectus), and at the time the Registration Statement is declared effective and at all times subsequent thereto up to and including the Offering Termination Date (as defined in Section 5 below), such Supplemental Material has not contained
and will not contain any untrue statement of material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(d)           No order preventing or suspending the use of any Preliminary Prospectus or the Prospectus has been issued and no proceedings for that purpose are pending, threatened, or, to the knowledge of the Company, contemplated by the SEC; and to the knowledge of the Company, no order
suspending the offering of the Shares in any jurisdiction has been issued and no proceedings for that purpose have been instituted or threatened or are contemplated.

(e)           The Company intends to use the funds received from the sale of the Shares as set forth in the Prospectus.

(f)            The Company has obtained an opinion of DLA Piper LLP (US) confirming that, the Company has qualified for taxation as a REIT commencing with the taxable year ended December 31, 2006.  The conditions on which the opinion was issued were met at the time of such issuance
and will continue to exist during the Offering Period unless the board of directors of the Company determines that qualification as a REIT is no longer in the best interests of the Company, in which case the Company will promptly provide the Dealer Manager notice of such determination.

(g)           The accounting firm that has certified or shall certify the financial statements filed and to be filed with the SEC as part of the Registration Statement and the Prospectus is a registered public accounting firm, as required by the Act and the rules and regulations promulgated
thereunder.

  

  

  

(h)           The Company is a corporation duly organized under the laws of the State of Maryland, is validly existing as a corporation under such laws and has power and authority to conduct business as described in the Prospectus under the laws of the State of Maryland and every other
jurisdiction in which it conducts business or owns or leases property.

(i)             The Company has full legal right, power and authority to enter into this Agreement and to perform the transactions contemplated hereby, and the Company has duly authorized, executed and delivered this Agreement.

(j)            This Agreement is a valid, legal, and binding agreement of the Company enforceable in accordance with its terms, except to the extent that the enforceability of the indemnity provisions contained in Section 8 hereof may be limited under applicable securities laws and to
the extent that the enforceability of this Agreement may be limited by bankruptcy, insolvency or similar laws affecting the rights of creditors generally.

(k)           The execution and delivery of this Agreement, the consummation of the transactions herein contemplated and the compliance with the terms of this Agreement by the Company will not conflict with or constitute a default or violation under any charter, by-law, contract, indenture,
mortgage, deed of trust, lease, rule, regulation, writ, injunction or decree of any government, governmental instrumentality or court, domestic or foreign, having jurisdiction over the Company.

(l)             No further consent, approval, authorization or other order of any governmental authority is required in connection with the execution or delivery by the Company of this Agreement or the issuance and sale by the Company of the Shares, except such as may be required
under the securities laws of certain states, if any, which we have identified to you.

(m)           At the time of the issuance of the Shares, the Shares will have been duly authorized and, upon payment therefor as provided in this Agreement, will be validly issued, fully paid and nonassessable and will conform to the description thereof contained in the Prospectus.

(n)           At all times subsequent to the date of this Agreement and up to and including the Offering Termination Date (as defined in Section 5 below), the representations and warranties made in this Section l will be true and correct with the same effect as if they had been made on
and as of such time, except as may subsequently be disclosed in writing to the Dealer Manager.

	
2.
	
Representations and Warranties of the Dealer Manager

As an inducement to the Company to enter into this Agreement, the Dealer Manager represents and warrants to the Company that:

(a)           The Dealer Manager is a member of the Financial Industry Regulatory Authority (“FINRA”) in good standing and a broker-dealer registered as such under the Securities Exchange Act of 1934, as amended, and
under the securities laws of the states in which the Shares are to be offered and sold. The Dealer Manager and its employees and representatives have all required licenses and registrations to act under this Agreement.

(b)           The Dealer Manager has full legal right, power and authority to enter into this Agreement and to perform the transactions contemplated hereby, and the Dealer Manager has duly authorized, executed and delivered this Agreement.

(c)           This Agreement is a valid, legal, and binding agreement of the Dealer Manager enforceable in accordance with its terms, except to the extent that the enforceability of the indemnity provisions contained in Section 8 hereof may be limited under applicable securities laws
and to the extent that the enforceability of this Agreement may be limited by bankruptcy, insolvency or similar laws affecting the rights of creditors generally.

(d)           The execution and delivery of this Agreement, the consummation of the transactions herein contemplated and the compliance with the terms of this Agreement by the Dealer Manager will not conflict with or constitute a default or violation under any charter, by-law, contract,
indenture, mortgage, deed of trust, lease, rule, regulation, writ, injunction or decree of any government, governmental instrumentality or court, domestic or foreign, having jurisdiction over the Dealer Manager.

  

  

  

(e)            No consent, approval, authorization or other order of any governmental authority is required in connection with the execution, delivery or performance by the Dealer Manager of this Agreement.

(f)            The Dealer Manager represents and warrants to the Company and each person that signs the Registration Statement that the information under the caption “Plan of Distribution” in the Prospectus and all other information furnished to the Company by the Dealer Manager
in writing expressly for use in the Registration Statement, any Preliminary Prospectus, or the Prospectus, does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading.

(g)           All training and education meetings held by the Dealer Manager will be in compliance with Rule 5110 (i)(2) of the FINRA rules. Dealer Manager will require each Participating Broker to represent that all training and education meetings held by the Participating Broker will
be in compliance with Rule 5110(i)(2) of the FINRA rules.

(h)           Dealer Manager will obtain FINRA approval of any sales incentive program developed by the Dealer Manager prior to its implementation. Dealer Manager will require each Participating Broker to represent that all sales incentive and bonus programs designed by the Participating
Broker for its registered representatives will comply with the FINRA rules.  For purposes of this Agreement, references to “FINRA rules,” “rules of FINRA” or similar variations, shall include, unless otherwise expressly stated or context otherwise requires, NASD and FINRA rules currently in effect and any successor or subsequent rules adopted by FINRA as part of its consolidated rulebook or otherwise.

(i)             Dealer Manager has established and will maintain, and will require Participating Brokers to establish and maintain, a customer identification program which requires Dealer Manager, or the Participating Broker, as applicable, to (i) verify the identify of any person
seeking to purchase the Shares through Dealer Manager, or the Participating Broker, as applicable, to the extent reasonable and practicable, (ii) maintain records of the information used to verify the person's identity and (iii) determine whether the person appears on any lists of known or suspected terrorists or terrorist organizations provided to brokers or dealers by any government agency, in all accordance with the requirements of 31 C.F.R. Section 103.122.

(j)             Dealer Manager has established and will maintain an anti-money laundering compliance program in accordance with applicable laws and regulations, including the USA Patriot Act of 2001, and in accordance with NASD Rule 3011 (or successor FINRA rule) and the related
interpretive guidance described in NASD’s IM-3011-1 and IM-3011-2 (or successor FINRA interpretive guidance), and Dealer Manager will require each of the Participating Brokers to establish and maintain such a program.

	
3.
	
Obligations and Compensation of Dealer Manager

(a)            The Company hereby appoints the Dealer Manager as its agent and principal distributor during the Offering Period (as defined in Section 3(c)) for the purpose of finding, on a best efforts basis, purchasers for the Shares for cash through the Participating Brokers, all of
whom shall be members of FINRA. The Dealer Manager may also arrange for the sale of Shares for cash directly to its own clients and customers at the public offering price and subject to the terms and conditions stated in the Prospectus. The Dealer Manager hereby accepts such agency and distributorship and agrees to use its best efforts to find purchasers for the Shares on said terms and conditions, commencing as soon as practicable.

(b)           The “Offering Period” shall mean that period during which Shares may be offered for sale, commencing on the date the registration was made effective by the SEC, during which period offers and sales of the
Shares shall occur continuously in the jurisdictions in which the Shares are registered or qualified or exempt from registration (as confirmed in writing by the Company to the Dealer Manager) unless and until the Offering is terminated as provided herein, except that the Dealer Manager and the Participating Brokers shall suspend or terminate offering of the Shares upon request of the Company at any time and shall resume offering the Shares upon subsequent request of the Company. The Offering Period shall in all
events terminate upon the sale of all of the Shares. Upon termination of the Offering Period, the Dealer Manager's agency and this Agreement shall terminate without obligation on the part of the Dealer Manager or the Company except as set forth in this Agreement.

(c)            Except as may be provided in the “Plan of Distribution” section of the Prospectus, as compensation for the services rendered by the Dealer Manager, the Company agrees that it will pay to the Dealer Manager selling commissions plus a dealer manager fee as follows
(based on a selling price of $8.00 per Share):

  

  

  

	  	 	
Selling Commissions
	 
	
Distribution Channel
	 	
Primary Offering
	 	 	
DRP Offering
	 
	
Participating Brokers
	 	 	7.0	%	 	 	0.0	%
	
Fee for Service Investment Advisers
	 	 	0.0	%	 	 	0.0	%

	  	 	
Dealer Manager Fee
	 
	
Distribution Channel
	 	
Primary Offering
	 	 	
DRP Offering
	 
	
Participating Brokers
	 	 	3.0	%	 	 	0.0	%
	
Fee for Service Investment Advisers
	 	 	3.0	%	 	 	0.0	%

If the Dealer Manager, the Participating Broker and the investor agree, the selling commissions can be paid on a deferred basis for Shares sold in the primary offering. In these instances, the Company will sell the Shares at a reduced price as set forth above and pay the Dealer Manager a correspondingly reduced sales commission at the time
of sale. The balance of the normal commission would be paid to the Dealer Manager over six years for Shares sold in the primary offering, out of the dividends or other distributions that are declared and paid with respect to the reduced-priced shares sold through the Dealer Manager or Participating Broker. The amount by which by the investor's dividends are reduced in these cases would be paid by the Company as deferred commissions to the Dealer Manager (and by the Dealer Manager to the Participating Brokers
for Shares sold by the Participating Brokers).

As an example, investors electing the deferred commission option for Shares purchased in the primary offering will pay, on the date of purchase, $7.52 per Share (which includes a commission of $0.08 per Share). For a period of six years following the date of purchase, an additional $0.08 per Share will be deducted annually from dividends
or other cash distributions otherwise payable to the investor and will be used to pay deferred commissions. The net proceeds to the Company will not be affected by the election of the deferred commission option. Under this arrangement, an investor electing the deferred commission option will pay a 1% commission upon subscription, rather than a 7% commission, and an amount equal to a 1% commission per year thereafter for the next six years, or longer if required to satisfy outstanding deferred commission obligations,
will be deducted from dividends or other cash distributions otherwise payable to such stockholder. The Company may also use other deferred commission structures, but the Company will not pay total commissions in excess of 7% of the offering price of the Shares.

If at any time prior to the satisfaction of the Company's remaining deferred commission obligations, the Company decides to list its common stock for trading on national securities exchange, or the Company begins a liquidation of its properties, the Company may accelerate the remaining commissions due under the deferred commission option.
To the extent that the distributions prior to listing are insufficient to satisfy the remaining commissions due, the obligations of the Company and the investor to pay any further deferred commissions will terminate, and the Dealer Manager and the Participating Brokers will not be entitled to receive any further portion of their deferred commissions following listing of the Company's common stock.

In addition, if an investor that has elected the deferred commission option decides to participate in the Company’s share redemption program or requests that the Company transfer such stockholder’s Shares for any reason prior to the time that the remaining deferred selling commissions have been deducted from such stockholder’s
cash distributions, the Company will accelerate the selling commissions due under the Deferred Commission Option as set forth in the Prospectus.

  

  

  

(d)           The Company will also reimburse the Dealer Manager for all items of underwriter compensation referenced in the Prospectus to the extent the Prospectus indicates that they will be paid by the Company, provided that the Company’s reimbursement payments shall not cause
(i) total underwriting compensation (excluding reimbursement of bona fide invoiced due diligence expenses) to exceed 10% of gross offering proceeds from the sale of the 56,250,000 shares offered to the public or (ii) total Organization and Offering Expenses (as defined in Article IV of the Company’s charter included as an exhibit to the Registration Statement) to exceed 15% of gross offering proceeds from the sale of the 56,250,000 shares offered to the public.

(e)            In conformity with NASD Conduct Rule 2810(b)(4)(B)(vii) (or successor FINRA rule), the Company will also pay the Dealer Manager for bona fide due diligence expenses of the Dealer Manager and the Participating Brokers, and subject to the terms and conditions, as may be allowed
by any subsequent FINRA Rule or Notice to Members.

(f)            As described in the Prospectus, the Dealer Manager agrees to sell Shares in the primary offering to persons identified by the Company as affiliates of the Company.  The purchase price for Shares under this program will be $7.60 per share, reflecting that selling
commissions in the amount of $0.40 per Share will not be payable in connection with such sales.  The Dealer Manager agrees to work together with the Company to implement this program and to execute sales under the program according to the procedures agreed upon by the Dealer Manager and the Company.

(g)           In addition, as described in the Prospectus, the Dealer Manager may sell shares to Dealers, their retirement plans, their representatives and the family members, IRAs and the qualified plans of their representatives at a purchase price of $7.60 per share, reflecting that
selling commissions in the amount of $0.40 per share will not be payable in consideration of the services rendered by such Dealers and representatives in the Offering.  For purposes of this discount, a family member includes such person’s spouse, parent, child, sibling, mother- or father-in-law, son- or daughter-in law or brother- or sister-in-law.

	
4.
	
Sale of the Shares

(a)           A subscription agreement (“Subscription Agreement”) must be completed by each person desiring to purchase Shares, or, at Dealer Manager's or Participating Broker's option, by Dealer Manager or Participating
Broker on behalf of each such person, and returned by Dealer Manager or Participating Broker together with any other documents that may be required under state securities laws or by the Company, to the Company at 1920 Main Plaza, Suite 400, Irvine, California 92614, Attention: Terry G. Roussel. The Dealer Manager or Participating Broker shall ascertain that the Subscription Agreement has been properly completed in full and signed by the prospective purchaser prior to its return.

(b)           All subscription checks shall be made payable to the order of CORNERSTONE CORE PROPERTIES REIT, INC.   If Dealer Manager or Participating Broker receives a check not conforming to the foregoing instructions, Dealer Manager and/or Participating Broker must
return such check directly to the subscriber not later than the end of the next business day following its receipt.  Checks conforming to the foregoing instructions shall be transmitted by Dealer Manager for deposit directly to the Company, at Cornerstone Core Properties REIT, Inc., c/o Phoenix American Financial Services, Inc., 2401 Kerner Boulevard, San Rafael, CA 94901, as soon as practicable but in any event by the end of the second business day following receipt by Dealer Manager.  Checks
conforming to the foregoing instructions shall be transmitted by Participating Broker for deposit directly to the Company, at Cornerstone Core Properties REIT, Inc., c/o Phoenix American Financial Services, Inc., 2401 Kerner Boulevard, San Rafael, CA 94901, as soon as practicable but in any event by the end of the next business day following receipt by Participating Broker.  In the event Participating Broker's final internal supervisory review is conducted at a different location, then checks must be
transmitted to Participating Broker's final review office by the end of the next business day following receipt by Participating Broker and Participating Broker's final review office must in turn by the end of the next business day following receipt by it, transmit the check for deposit directly to Cornerstone Core Properties REIT, Inc., c/o Phoenix American Financial Services, Inc., 2401 Kerner Boulevard, San Rafael, CA 94901.

(c)            Upon receipt of the Subscription Agreement, the Company, will determine promptly (and in any event within thirty (30) days after such receipt) whether it wishes to accept the proposed purchaser as a stockholder of the Company, it being understood that the Company reserves
the right to reject the tender of any Subscription Agreement. Should the Company determine to accept the tender of the Subscription Agreement, the Company will promptly advise Dealer Manager or Participating Broker of such action. Should the Company determine to reject the tender it will promptly notify in writing the prospective purchaser, Dealer Manager and Participating Broker, if any, of such determination and will promptly return the tendered Subscription Agreement and the purchase price of the Shares directly
to the prospective purchaser.

  

  

  

(d)           The Dealer Manager will use all reasonable efforts to offer Shares, and in its agreements with Participating Brokers will require that the Participating Brokers offer Shares, only to persons who meet the financial qualifications set forth in the Prospectus or in any suitability
letter or memorandum sent to it by the Company and will only make offers to persons in the states in which it is advised in writing that the Shares are qualified for sale or that such qualification is not required. In offering Shares, the Dealer Manager will, and in its agreements with Participating Brokers, the Dealer Manager will, require that the Participating Brokers comply with the provisions of all applicable rules and regulations relating to suitability of investors, including without limitation, the provisions
of Article III.C. of the Statement of Policy Regarding Real Estate Investment Trusts of the North American Securities Administrators Association, Inc. (the “NASAA Guidelines”). In making the determinations as to suitability required by the NASAA Guidelines, the Dealer Manager may rely on representations from (i) investment advisers who are not affiliated with a Participating Broker or (ii) banks acting as trustees or fiduciaries. With respect
to the maintenance of records required by the NASAA Guidelines, the Company agrees that the Dealer Manager can satisfy its obligations by contractually requiring such information to be maintained for a period of at least six (6) years by the investment advisers or banks discussed in the preceding sentence. Nothing contained in this Section 4(d) shall be construed to impose upon the Company the responsibility of assuring that prospective purchasers meet the suitability standards contained in the Prospectus and
the Subscription Agreement or to relieve Dealer Manager and Participating Brokers of the responsibility of complying with the rules of FINRA.

	
5.
	
Offering Termination Date

As used herein, the term “Offering Termination Date” shall mean the earliest to occur of (i) the date upon which subscriptions for the maximum number of Shares offered have been accepted by the Company which date the Company shall designate by notice to Dealer Manager in
writing; or (ii) June 10, 2011. The Company may terminate the offering of Shares at any time for any reason by written notice to the Dealer Manager at least two (2) business days prior to the date of termination.

	
6.
	
Covenants of the Company

(a)           The Company covenants and agrees that it will pay or cause to be paid (i) all expenses and fees in connection with the preparation, printing, filing, delivery and shipping of the Registration Statement (including this Agreement and all other exhibits to the Registration
Statement), the Prospectus (including any amendments or supplements thereto) and the Supplemental Material, including, without limitation, expenses associated with the production of slides and graphics, fees and expenses of any consultants engaged in connection with presentations with the prior approval of the Company and travel and lodging expenses of the representatives of the Company and any such consultants, (ii) filing fees, Company counsel's fees and expenses paid and incurred in connection with the registration
and qualification of the Shares for offer and sale by Dealer Manager and Participating Brokers under the Act and the securities or Blue Sky laws of the states in which offers are to be made, and (iii) filing fees, Company counsel's fees and expenses paid and incurred in connection with the review by FINRA of the underwriting terms of the offering of the Shares, and (iv) the fees and expenses of any registrar or transfer agent in connection with the Shares.

(b)           The Company will advise Dealer Manager and Participating Brokers promptly of the issuance of any stop order withdrawing the qualification for the offer and sale of the Shares or of the institution of any proceedings for that purpose, and will use its best efforts to prevent
the issuance of any such stop order and to obtain as soon as possible the lifting thereof, if issued.

(c)           If at any time when a Prospectus relating to the Shares is required to be delivered under the Act any event shall have occurred as a result of which, in the opinion of counsel for the Company, the Prospectus as amended or supplemented includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend the Prospectus to comply with the Act, the Company promptly will prepare and file with the SEC an appropriate amendment or supplement.

(d)           The Company will deliver to Dealer Manager and Participating Brokers from time to time without charge as many copies of the Prospectus (and, in the event of an amendment or supplement to the Prospectus pursuant to the provisions of this Agreement, of such amended or supplemented
Prospectus) and the Supplemental Material as Dealer Manager or Participating Brokers may reasonably request, which Prospectus(es), as from time to time amended or supplemented, and Supplemental Material the Company authorizes Dealer Manager and Participating Brokers to use in connection with the sale of the Shares.

  

  

  

(e)           The Company will use its best efforts to register and qualify the Shares for sale under the laws of those states and other jurisdictions where it is intended that offers and sales will be made and will comply to the best of its ability with the laws of those states so as
to permit the continuance of sales of the Shares thereunder. The Company covenants and agrees that neither the Company, nor any officer, manager or employee of either of them will make any offer or sale of the Shares unless such offer or sale is made in compliance with the Act and the rules and regulations promulgated thereunder.

(f)            The Company will comply with all requirements imposed upon it by the Securities Act and the Exchange Act, by the rules and regulations of the SEC promulgated thereunder and by all securities laws and regulations of those states in which an exemption has been obtained or
qualification of the Shares has been effected, to permit the continuance of offers and sales of the Shares in accordance with the provisions hereof and of the Prospectus.

(g)           The Company agrees to do or cause to be done all such filing, recording, publishing and other acts as may be appropriate to comply with the requirements of law for the operation of a foreign corporation in all jurisdictions, other than Maryland, where the Company shall desire
to conduct business or own properties as the case may be.

	
7.
	
Covenants of Dealer Manager

(a)           Dealer Manager covenants and agrees to comply, and to use commercially reasonable efforts to cause the Participating Brokers to comply, with any applicable requirements of the Act, and of the Exchange Act, and the rules and regulations promulgated thereunder, all applicable
state securities laws and regulations as from time to time in effect, any other state and federal laws and regulations applicable to the offering, the sale of Shares or the activities of the Dealer Manager pursuant to this Agreement, including without limitation the privacy standards and requirements of the Gramm-Leach-Bliley Act of 1999, the requirements of any applicable state privacy laws and the applicable provisions of the USA Patriot Act of 2001, this Agreement and the Prospectus as amended and supplemented
and the FINRA rules and, in particular, the conduct rules which require Dealer Manager (i) to recommend the purchase of Shares only when Dealer Manager has reasonable grounds to believe, on the basis of information obtained from the investor concerning his investment objectives, other investments, financial situation and needs, and any other information known by the Dealer Manager, that the investor is or will be in a financial position appropriate to enable him to realize to a significant extent the benefits
described in the prospectus, that the investor has a fair market net worth sufficient to sustain the risks inherent in the program, including loss of investment and lack of liquidity, and that the program is otherwise suitable for the investor, (ii) to maintain or require to be maintained certain files concerning the basis for Dealer Manager's determination of the suitability of the investor, (iii) to have reasonable grounds to believe, based on information made available to the Dealer Manager by the Company,
that all material facts are adequately and accurately disclosed and that such disclosed facts provide a basis for evaluating an investment in the Company, and (iv) to inform the prospective investor or require the prospective investor to be informed of all pertinent facts relating to the liquidity and marketability of the investment during the term of the investment. Dealer Manager also agrees not to deliver the Supplemental Material to any person unless the Supplemental Material is accompanied or preceded by
the Prospectus. The Dealer Manager will permit a Participating Broker to participate in the offering only if such Participating Broker is a member of FINRA and will reallow commissions only to such FINRA members.

(b)           Dealer Manager will not, and will require in its agreements with Participating Brokers that such Participating Brokers not, give any information or make any representation in connection with the offering of the Shares other than those contained in the Prospectus and Supplemental
Material furnished by the Company, publish, circulate or otherwise use any other advertisement or solicitation material in connection with the Offering. Dealer Manager is not authorized to act as agent of the Company in any transaction, and Dealer Manager agrees not to act as such agent and not to purport to do so without the prior written approval of the Company. Dealer Manager agrees that if and when the Company supplies Dealer Manager with copies of any supplement to the Prospectus, Dealer Manager will thereafter
distribute Prospectuses with such supplement. Dealer Manager further agrees to comply with all instructions from the Company concerning the destruction of out-dated Prospectuses and the use of supplemented or amended Prospectuses.

  

  

  

(c)           Dealer Manager agrees to solicit purchases of Shares only in the States and other jurisdictions in which the Company indicates that such solicitation can be made and in which Dealer Manager has determined that such solicitation can be made by Dealer Manager and in which
Dealer Manager is qualified to so act.

(d)           Dealer Manager will not sell the Shares pursuant to this Agreement unless the Prospectus is furnished to the purchaser at least five (5) business days prior to the execution of the Subscription Agreement, or is sent to such person under circumstances that it would be received
by the purchaser five (5) business days prior to his execution of the Subscription Agreement.

(e)           Dealer Manager will use reasonable efforts to select, and will require in its agreements with Participating Brokers that such Participating Brokers use reasonable efforts to select, investors who Dealer Manager reasonably believes meet the investor suitability requirements
which are set forth in the Prospectus and Subscription Agreement (Appendix A to the Prospectus) and such additional individual state requirements as are specified in the Subscription Agreement and which are confirmed by the investors by payment of the purchase price for the Shares including that each investor be of legal age in the state of his or her residence. Dealer Manager will maintain, for a period of six years, in Dealer Manager's files a copy of the Subscription Agreement for each investor for whom Dealer
Manager acts as Dealer Manager.

(f)            To the extent that information is provided to Dealer Manager marked “For Broker-Dealer Use Only,” Dealer Manager covenants and agrees not to provide such information to prospective investors.

(g)           The Dealer Manager will provide the Company with such information relating to the offer and sale of the Shares by it as the Company may from time to time reasonably request or as may be requested to enable the Company to prepare such reports of sale as may be required to be filed
under applicable federal or state securities laws.

	
8.
	
Indemnification

(a)           Subject to the limitations below, the Company will indemnify and hold harmless the Participating Brokers and (to the extent permitted by the Company's charter) the Dealer Manager, their officers and directors and each person, if any, who controls such Participating Broker
or Dealer Manager within the meaning of Section 15 of the Securities Act (the “Indemnified Persons”) from and against any losses, claims, damages or liabilities (“Losses”), joint or several, to which such Indemnified Persons may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such Losses (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a material fact contained (A) in the Registration Statement, the Prospectus, any Preliminary Prospectus used prior to the effective date of the Registration Statement or any post-effective amendment or supplement to any of them, (B) in any blue sky application or other document executed by the Company or on its behalf specifically for the purpose of qualifying any or all of the Shares for sale under the securities laws of any jurisdiction or based upon
written information furnished by the Company under the securities laws thereof (any such application, document or information being hereinafter called a “Blue Sky Application”), or (C) any Supplemental Material, or (ii) the omission or alleged omission to state in the Registration Statement, the Prospectus, any Preliminary Prospectus used prior to the effective date of the Registration Statement or any post-effective amendment or supplement to
any of them or in any Blue Sky Application or Supplemental Material a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company will reimburse each Indemnified Person for any legal or other expenses reasonably incurred by such Indemnified Person, in connection with investigating or defending such Loss upon final disposition of the proceeding giving rise to such Loss; provided that the
Company will not be liable in any such case to the extent that any such Loss or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished (x) to the Company by the Dealer Manager or (y) to the Company or the Dealer Manager by or on behalf of any Participating Broker specifically for use in the preparation of the Registration Statement or any such post-effective amendment thereto,
any such Blue Sky Application or any such Preliminary Prospectus or the Prospectus, and, further, the Company will not be liable in any such case if it is  determined that such Participating Broker or the Dealer Manager was at fault in connection with the Loss, expense or action.

(b)           Notwithstanding the foregoing, the Company shall not provide for indemnification of any Indemnified Persons for any liability or loss suffered by any such Indemnified Person, unless all of the following conditions are met: (i) the directors of the Company or the Advisor
or its affiliates have determined, in good faith, that the course of conduct that caused the loss or liability was in the best interests of the Company; (ii) the Indemnified Persons were acting on behalf of or performing services for the Company; (iii) such liability or loss was not the result of negligence or misconduct by the Indemnified Persons; and (iv) such indemnification or agreement to hold harmless is recoverable only out of the Company's Net Asset Value (as defined in the Company's charter) and not
from its stockholders.

  

  

  

(c)           In addition, the Company shall not indemnify or hold harmless an Indemnified Person for any Losses or expenses arising from or out of an alleged violation of federal or state securities laws by such party unless one or more of the following conditions are met: (i) there
has been a successful adjudication on the merits of each count involving alleged securities law violations as to the particular Indemnified Person, (ii) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the particular Indemnified Person and (iii) a court of competent jurisdiction approves a settlement of the claims against a particular Indemnified Person and finds that indemnification of the settlement and the related costs should be made, and the court considering
the request for indemnification has been advised of the position of the Securities and Exchange Commission and of the published position of any state securities regulatory authority in which securities of the Company were offered or sold as to indemnification for violations of securities laws.

(d)           The Dealer Manager will indemnify and hold harmless the Company, each director and officer of the Company (including any person named in the Registration Statement, with his consent, as about to become a director), each other person who has signed the Registration Statement
and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act (each a “Dealer Manager Indemnified Person”), from and against any Losses to which any of the Company Indemnitees may become subject, under the Securities Act or otherwise, insofar as such Losses (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained
(A) in the Registration Statement, the Prospectus, any Preliminary Prospectus used prior to the effective date of the Registration Statement or any post-effective amendment or supplement to any of them, (B) in any Blue Sky Application, or (C) any Supplemental Material, or (ii) the omission or alleged omission to state in the Registration Statement, the Prospectus, any Preliminary Prospectus used prior to the effective date of the Registration Statement or any post-effective amendment or supplement to any of them
or in any Blue Sky Application or Supplemental Material a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, in the case of each of clauses (i) and (ii) to the extent, but only to the extent, that such untrue statement or omission was made in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Dealer Manager specifically for use with reference
to the Dealer Manager in the preparation of Registration Statement, the Prospectus, any Preliminary Prospectus used prior to the effective date of the Registration Statement or any post-effective amendment or supplement to any of them or any such Blue Sky Application or Supplemental Material, (iii) any unauthorized use of sales materials, use of unauthorized verbal representations or use of “For Broker-Dealer Use Only” materials with members of the public concerning the Shares by the Dealer Manager;
(iv) any untrue statement made by the Dealer Manager or its representatives or agents or omission to state a fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading in connection with the offer and sale of the Shares (v) any material violation of this Agreement; (vi) any failure to comply with applicable laws governing money laundering abatement and anti-terrorism financing efforts, including applicable FINRA rules, SEC rules and the USA PATRIOT
Act of 2001; or (vii) any other failure to comply with applicable FINRA or SEC rules. The Dealer Manager will reimburse each Dealer Manager Indemnified Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending such Loss, expense or action. This indemnity agreement will be in addition to any liability that the Dealer Manager may otherwise have.

(e)           Each Participating Broker severally will indemnify and hold harmless the Company, the Dealer Manager, each of their officers and directors (including any person named in the Registration Statement, with his consent, as about to become a director), each other person who has
signed the Registration Statement and each person, if any, who controls the Company and the Dealer Manager within the meaning of Section 15 of the Securities Act (each, a “Participating Broker Indemnified Person”) from and against any Losses to which a Participating Broker Indemnified Person may become subject, under the Securities Act or otherwise, insofar as such Losses (or actions in respect thereof) arise out of or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained (A) in the Registration Statement, the Prospectus, any Preliminary Prospectus used prior to the effective date of the Registration Statement or any post-effective amendment or supplement to any of them, (B) in any Blue Sky Application, or (C) any Supplemental Material, or (ii) the omission or alleged omission to state in the Registration Statement, the Prospectus, any Preliminary Prospectus used prior to the effective date of the Registration
Statement or any post-effective amendment or supplement to any of them or in any Blue Sky Application or Supplemental Material a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, in the case of each of clauses (i) and (ii) to the extent, but only to the extent, that such untrue statement or omission was made in reliance upon and in conformity with written information furnished to the Company
by or on behalf of such Participating Broker specifically for use with reference to the Participating Broker in the preparation of Registration Statement, the Prospectus, any Preliminary Prospectus used prior to the effective date of the Registration Statement or any post-effective amendment or supplement to any of them or any such Blue Sky Application or Supplemental Material, (iii) any unauthorized use of sales materials, use of unauthorized verbal representations or use of “For Broker-Dealer Use Only”
materials with members of the public concerning the Shares by the Dealer Manager; (iv) any untrue statement made by such Participating Broker or its representatives or agents or omission to state a fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading in connection with the offer and sale of the Shares (v) any material violation of this Agreement; (vi) any failure to comply with applicable laws governing money laundering abatement and anti-terrorism
financing efforts, including applicable FINRA rules, SEC rules and the USA PATRIOT Act of 2001; or (vii) any other failure to comply with applicable FINRA or SEC rules. Each such Participating Broker will reimburse each Participating Broker Indemnified Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Loss, expense or action. This indemnity agreement will be in addition to any liability that such Participating Broker may otherwise have.

  

  

  

(f)            Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 8, notify in writing the indemnifying
party of the commencement thereof. The failure of an indemnified party so to notify the indemnifying party will relieve the indemnifying party from any liability under this Section 8 as to the particular item for which indemnification is then being sought, but not from any other liability that it may have to any indemnified party. In case any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled, to the
extent it may wish, jointly with any other indemnifying party similarly notified, to participate in the defense thereof, with separate counsel. Such participation shall not relieve such indemnifying party of the obligation to reimburse the indemnified party for reasonable legal and other expenses (subject to Section 8(e) incurred by such indemnified party in defending itself, except for such expenses incurred after the indemnifying party has deposited funds sufficient to effect the settlement, with prejudice,
of the claim in respect of which indemnity is sought. Any such indemnifying party shall not be liable to any such indemnified party on account of any settlement of any claim or action effected without the consent of such indemnifying party. Any indemnified party shall not be bound to perform or refrain from performing any act pursuant to the terms of any settlement of any claim or action effected without the consent of such indemnified party.

(g)           The indemnifying party shall pay all legal fees and expenses of the indemnified party in the defense of such claims or actions; provided, however, that the indemnifying party shall not be obliged to pay legal expenses and fees to more than one law firm in connection with
the defense of similar claims arising out of the same alleged acts or omissions giving rise to such claims notwithstanding that such actions or claims are alleged or brought by one or more parties against more than one indemnified party. If such claims or actions are alleged or brought against more than one indemnified party, then the indemnifying party shall only be obliged to reimburse the expenses and fees of the one law firm that has been selected by a majority of the indemnified parties against which such
action is finally brought; and in the event a majority of such indemnified parties is unable to agree on which law firm for which expenses or fees will be reimbursable by the indemnifying party, then payment shall be made to the first law firm of record representing an indemnified party against the action or claim. Such law firm shall be paid only to the extent of services performed by such law firm and no reimbursement shall be payable to such law firm on account of legal services performed by another law firm.

	
9.
	
Effective Date and Termination

Provided that at least one counterpart of this Agreement shall then have been executed and delivered, this Agreement shall become effective at 12:00 noon, California time, of the first full business day following the effective date of the Registration Statement or at such later time after the Registration Statement becomes effective as the
Company shall first release the Shares for sale to the public. For the purpose of this section the Shares shall be deemed to have been released for sale to the public upon release by the Company of correspondence or other notification to Dealer Manager indicating the effectiveness of the Registration Statement, whichever shall first occur.

  

  

  

This Agreement may be terminated by either party, at such party’s option, by giving notice to the other party. In any case, this Agreement will terminate at the close of business on the Offering Termination Date; provided, however, that all accrued fees, commissions and out-of-pocket accountable expenses payable to Dealer Manager under
the terms and conditions hereof shall be paid when due although this Agreement shall have theretofore been terminated.

Except as otherwise provided in Section 8, any termination of this Agreement pursuant to this Section 9 shall be without liability of the Company to Dealer Manager and without liability on Dealer Manager's part to the Company.

	
10.
	
Survival of Indemnities, Warranties and Representations

The indemnity agreements contained in Section 8 hereof, and the representations and warranties of the Company set forth in Section l hereof, shall remain operative and in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of the Company, the Dealer Manager or any
controlling person referred to in Section 8, and shall survive the delivery of and payment for the Shares, and any successor of Dealer Manager or the Company or of any such controlling person or any legal representative of any such controlling person, as the case may be, shall be entitled to the benefit of the respective indemnity agreements and representations and warranties.

	
11.
	
Notices

Except as in this Agreement otherwise provided, (a) whenever notice is required by the provisions of this Agreement or otherwise to be given to the Company, such notice shall be in writing addressed to the Company at 1920 Main Plaza, Suite 400 Irvine, California 92614, Attention: Terry G. Roussel, and (b) whenever notice is required by the
provisions of this Agreement or otherwise to be given to Dealer Manager, such notice shall be in writing addressed to Dealer Manager at 1290 Main Plaza, Suite 400 Irvine, California 92614. Any notice referred to herein may be given in writing or by facsimile or telephone and if by facsimile or telephone shall be immediately confirmed in writing. Notice (unless actual) shall be effective upon mailing or facsimile transmission with confirmation of receipt, as the case may be.

	
12.
	
Counterparts

This agreement may be executed in any number of counterparts.  Each counterpart, when executed and delivered, shall be an original contract, but all counterparts, when taken together, shall constitute one and the same agreement.

	
13.
	
Persons Entitled To Benefit of Agreement

Except as provided in the next sentence, this Agreement is made solely for the benefit of Dealer Manager, Participating Brokers, the Company or controlling persons thereof, and their respective successors and assigns, and no other person shall acquire or have any right by virtue of this Agreement, and the term “successors and assigns,”
as used in this Agreement, shall not include any purchaser, as such purchaser, of any of the Shares.

	
14.
	
Not a Separate Entity

Nothing contained herein shall constitute the Dealer Manager and Participating Brokers, or any of them, as an association, partnership, unincorporated business or other separate entity.

  

  

  

Please confirm your agreement to become Dealer Manager under the terms and conditions herein set forth by signing and returning the enclosed duplicate copy of this Agreement at once to the Company at the address specified in Section 11 above.

	  	
Very truly yours,
	  
	  	  	  	  
	  	
CORNERSTONE CORE PROPERTIES REIT, INC.,
	  
	  	
a Maryland corporation
	  
	  	  	  	  
	  	
By:
	
/s/ Terry G. Roussel
	  
	  	
Terry G. Roussel, President
	  

 

	
AGREED AND ACCEPTED:
	  
	  	  	  
	
PACIFIC CORNERSTONE CAPITAL, INC.,
	  
	
a California corporation
	  
	  	  	  
	
By:  
	
/s/ Terry G. Roussel
	  
	  	
Terry G. Roussel, President
	  
	  	  	  
	
Dated:  
	
June 10                          , 2009
	  

  

  

  

ATTACHMENT 1

TO DEALER MANAGER AGREEMENT

CORNERSTONE CORE PROPERTIES REIT, INC.

FORM OF PARTICIPATING BROKER AGREEMENT

Up to 77,350,000 Shares of Common Stock

Ladies and Gentlemen:

Cornerstone Core Properties REIT, Inc., a Maryland corporation (the “Company”), is registering for public sale a maximum of 77,350,000 shares of its common stock, $0.001 par value per share, (the “Shares”),
to be issued and sold for an aggregate maximum purchase price of $610,360,000 (56,250,000 Shares to be offered to the public in a primary offering with an aggregate maximum purchase price of $450,000,000 (the “Primary Offering”) and 21,100,000 Shares to be offered pursuant to the Company's distribution reinvestment plan with an aggregate maximum purchase price of $160,360,000 (“DRP”)). The Shares are to be sold to selected persons
or entities acceptable to the Company, upon the terms and subject to the conditions set forth in the enclosed Prospectus.

Pacific Cornerstone Capital, Incorporated, a California corporation (the “Dealer Manager”), has entered into a dealer manager agreement (“Dealer Manager Agreement”) with the Company pursuant to which it has
agreed to act as dealer manager in connection with the offer and sale of the Shares. The Dealer Manager has agreed to use commercially reasonable efforts to find purchasers of Shares both directly and indirectly through a selling group consisting of participating brokers (“Participating Brokers”).

The Dealer Manager hereby invites you to become a Participating Broker in connection with the offer and sale of the Shares. By your acceptance hereof, you agree to act in such capacity and to use your best efforts to find purchasers for the Shares in accordance with the terms of the Prospectus and this Agreement.

Accompanying this Agreement is a copy of the Prospectus. We may also provide you with written, audio or audio-visual material, including an investment summary, audio tape, video tape and internet site  prepared by the Company for use in conjunction with the offer and sale of the Shares (“Supplemental
Material”). You are not authorized to use any solicitation material other than the Prospectus and Supplemental Material referred to in this paragraph, which material has been furnished by the Company.

Except as described in the Prospectus or in Section 3(c) hereof, the Shares are to be sold for a per Share cash price as follows:

	  	 	
Primary Offering
	 	 	
DRP Offering
	 
	
Regular Commission
	 	$	8.00	 	 	$	7.60	 
	
Deferred Commission Option*
	 	$	7.52	 	 	$	7.60	 

* For a period of six years following the date of purchase, an additional $0.10 per share will be deducted annually from cash distributions otherwise payable to the purchaser and will be used to pay deferred commissions.

	
1.
	
Sale of the Shares.

(a)           A subscription agreement (“Subscription Agreement”) must be completed by each person desiring to purchase Shares, or, at your option, by you on behalf of each such person, and returned by you together
with any other documents that may be required under state securities laws or by the Company, to Cornerstone Core Properties REIT, Inc., c/o Phoenix American Financial Services, Inc., 2401 Kerner Boulevard, San Rafael, CA 94901. You shall ascertain that the Subscription Agreement has been properly completed in full and signed by the prospective purchaser prior to its return.

(b)           All subscription checks shall be made payable to the order of CORNERSTONE CORE PROPERTIES REIT, INC. If you receive a check not conforming to the foregoing instructions, you must return such check directly to the subscriber not later than the end of the next business
day following its receipt. Checks conforming to the foregoing instructions shall be transmitted by you for deposit directly to Cornerstone Core Properties REIT, Inc., c/o Phoenix American Financial Services, Inc., 2401 Kerner Boulevard, San Rafael, CA 94901 by the end of the next business day following receipt by you. In the event your final internal supervisory review is conducted at a different location, then checks must be transmitted to your final review office by the end of the next business day following
receipt by you and your final review office must in turn, by the end of the next business day following receipt by it, transmit the check for deposit directly to Cornerstone Core Properties REIT, Inc., c/o Phoenix American Financial Services, Inc., 2401 Kerner Boulevard, San Rafael, CA 94901.

  

  

  

(c)           Upon receipt of the Subscription Agreement, the Company, will determine promptly (and in any event within thirty (30) days after such receipt) whether it wishes to accept the proposed purchaser as a member in the Company, it being understood that the Company reserves
the right to reject the tender of any Subscription Agreement, in each case in its sole discretion. Should the Company determine to accept the tender of the Subscription Agreement, the Company will promptly advise you of such action. Should the Company determine to reject the tender, it will promptly notify in writing the prospective purchaser and you of such determination and will promptly return the tendered Subscription Agreement and the purchase price of the Shares directly to the prospective purchaser.

(d)           You will use all reasonable efforts to offer Shares only to persons who meet the financial qualifications set forth in the Prospectus or in any suitability letter or memorandum sent to you by the Company and you will only make offers to persons in the states in which
it is advised in writing that the Shares are qualified for sale or that such qualification is not required. In offering Shares, you will comply with the provisions of all applicable rules and regulations relating to suitability of investors, including without limitation, the provisions of Article III.C. of the Statement of Policy Regarding Real Estate Investment Trusts of the North American Securities Administrators Association, Inc. (the “NASAA Guidelines”).
Nothing contained in this Section 1 shall be construed to impose upon the Company the responsibility of assuring that prospective purchasers meet the suitability standards contained in the Prospectus and the Subscription Agreement or to relieve you of the responsibility of complying with the rules of the Financial Industry Regulatory Authority (“FINRA”).  For purposes of this Agreement, references to “FINRA rules,” “rules
of FINRA” or similar variations, shall include, unless otherwise expressly stated or context otherwise requires, NASD and FINRA rules currently in effect and any successor or subsequent rules adopted by FINRA as part of its consolidated rulebook or otherwise.

	
2.
	
Offering Termination Date.

As used herein, the term “Offering Termination Date” shall mean the earliest to occur of (i) the date upon which subscriptions for the maximum number of Shares offered have been accepted by the Company which date the Company shall designate by notice to the Dealer Manager
in writing; or (ii) June 10, 2011; provided, however, that the Company may, by providing notice to Dealer Manager in writing, extend the Offering Termination Date for an additional period of up to one year, in which case the Offering Termination Date shall mean the date as set forth in such notice. The Company may terminate the offering of Shares at any time for any reason by written notice to the Dealer Manager at least two (2) business days prior to the date of termination.

	
3.
	
Obligations and Compensation of Participating Broker.

(a)           The Dealer Manager hereby appoints you as a distributor during the Offering Period (as defined in Section 3(b) for the purpose of finding, on a best efforts basis, purchasers for the Shares for cash. You hereby accept such agency and distributorship and agree to use your
best efforts to find purchasers for the Shares on said terms and conditions, commencing as soon as practicable.

(b)           The “Offering Period” shall mean that period during which Shares may be offered for sale, commencing on the date the registration was made effective by the SEC, during which period offers and sales of
the Shares shall occur continuously in the jurisdictions in which the Shares are registered or qualified or exempt from registration (as confirmed in writing by the Company to the Dealer Manager) unless and until the Offering is terminated as provided herein, except that you shall suspend or terminate offering of the Shares upon request of the Company or the Dealer Manager at any time and shall resume offering the Shares upon subsequent request of the Company or the Dealer Manager. The Offering Period shall in
all events terminate upon the sale of all of the Shares. Upon termination of the Offering Period, your agency and this Agreement shall terminate without obligation on your part or the part of the Dealer Manager or the Company except as set forth in this Agreement.

  

  

  

(c)           Except as may be provided in the “Plan of Distribution” section of the Prospectus, as compensation for the services rendered by you, the Dealer Manager agrees that it will pay to you selling commissions as follows (based on a selling price of $8.00 per Share):

	
Selling Commissions
	 
	
Primary Offering
	 	
DRP Offering
	 
	
7%
	 	 	0	%

If you and the investor agree, the selling commissions can be paid on a deferred basis for Shares sold in the primary offering. In these instances, the Company will sell the Shares at a reduced price as set forth above and the Dealer Manager will pay you a correspondingly reduced sales commission at the time of sale. The balance of the normal
commission would be paid by the Company to the Dealer Manager and by the Dealer Manager to you over six years for Shares sold in the primary offering out of the dividends or other distributions that are declared and paid with respect to the reduced-priced shares sold through you. The amount by which by the investor’s dividends or other distributions are reduced in these cases would be paid by the Company as deferred commissions to the Dealer Manager and by the Dealer Manager to you.

As an example, investors electing the deferred commission option for Shares purchased in the primary offering will pay, on the date of purchase, $7.52 per Share (which includes a commission of $0.08 per Share). For a period of six years following the date of purchase, an additional $0.08 per Share will be deducted annually from dividends
or other cash distributions otherwise payable to the investor and will be used to pay deferred commissions. The net proceeds to the Company will not be affected by the election of the deferred commission option. Under this arrangement, an investor electing the deferred commission option will pay a 1% commission upon subscription, rather than a 7% commission, and an amount equal to a 1% commission per year thereafter for the next six years, or longer if required to satisfy outstanding deferred commission obligations,
will be deducted from dividends or other cash distributions otherwise payable to such stockholder. The Company may also use other deferred commission structures, but the Company will not pay total commissions in excess of 7% of the offering price of the Shares.

If at any time prior to the satisfaction of the Company’s remaining deferred commission obligations, the Company decides to list its common stock for trading on national securities exchange, the Nasdaq Global Market or other over-the-counter market, or the Company begins a liquidation of its properties, the Company may accelerate the
remaining commissions due under the deferred commission option. To the extent that the distributions prior to listing are insufficient to satisfy the remaining commissions due, the obligations of the Company and the investor to pay any further deferred commissions will terminate, and the Dealer Manager and you will not be entitled to receive any further portion of their deferred commissions following listing of the Company’s common stock.

In addition, if an investor that has elected the deferred commission option decides to participate in the Company’s share redemption program or requests that the Company transfer such stockholder’s Shares for any reason prior to the time that the remaining deferred selling commissions have been deducted from such stockholder’s
cash distributions, the Company will accelerate the selling commissions due under the Deferred Commission Option as set forth in the Prospectus.

	
4.
	
Representations and Warranties of Participating Broker.

You represent and warrant to and covenant to the Dealer Manager and the Company that:

(a)           You are a member of FINRA in good standing and a broker-dealer registered as such under the Exchange Act and under the securities laws of the states in which the Shares are to be offered and sold. You and your employees and representatives have all required licenses and
registrations to act under this Agreement.

(b)           You have full legal right, power and authority to enter into this Agreement and to perform the transactions contemplated hereby, and you have duly authorized, executed and delivered this Agreement.

(c)           This Agreement is a valid, legal, and binding agreement of yours enforceable in accordance with its terms, except to the extent that the enforceability of the indemnity provisions contained in Section 6 hereof may be limited under applicable securities laws and to the
extent that the enforceability of this Agreement may be limited by bankruptcy, insolvency or similar laws affecting the rights of creditors generally.

  

  

  

(d)           The execution and delivery of this Agreement, the consummation of the transactions herein contemplated and the compliance with the terms of this Agreement by you will not conflict with or constitute a default or violation under any charter, by-law, contract, indenture,
mortgage, deed of trust, lease, rule, regulation, writ, injunction or decree of any government, governmental instrumentality or court, domestic or foreign, having jurisdiction over you.

(e)           No consent, approval, authorization or other order of any governmental authority is required in connection with the execution, delivery or performance by you of this Agreement.

(f)           You have not violated any of the “bad boy” disqualification provisions contained in the securities or “blue sky” laws of any jurisdiction in which the Shares may be offered.

	
5.
	
Covenants of Participating Broker

(a)           You will not make any written or oral statement with respect to the Company or the offering of Shares that is materially inconsistent with the statements in the Prospectus or Supplemental Material.

(b)           You will provide the Dealer Manager with such information relating to the offer and sale of the Shares as the Dealer Manager may from time to time reasonably request or as may be requested to enable the Dealer Manager or the Company, as the case may be, to prepare such
reports of sale as may be required to be filed under applicable federal or state securities laws and the rules and regulations thereunder.

(c)           You will cease making offers and soliciting subscriptions for Shares if so requested by the Dealer Manager in order to comply with applicable federal and state securities laws, and will forward to offerees for execution and delivery such additional documents and instruments
as the Dealer Manager may reasonably require.

(d)           You will: (i) maintain all representation letters, questionnaires and other materials utilized by you to ascertain the satisfaction of the above criteria by offerees and investors, for a period of at least six years from the date of the offering is completed; and (ii)
make such material available to the Dealer Manager upon its request.

(e)            Before, during or after the offering, except with the prior written consent of the Dealer Manager and except for internal-use only purposes or for the delivery to your advisors, will not duplicate any of the Supplemental Material or other similar selling documentation
furnished to you by the Dealer Manager or the Company.

(f)            You have not paid or awarded, and will not pay or award, directly or indirectly, any commission or other compensation to any person engaged to render investment advice to a potential subscriber as an inducement to advise the purchase of the Shares, except as such commissions
or other compensation may be paid or awarded to you or reallowed by you in connection with the sale of the Shares as described in the Prospectus.

(g)           All training and education meetings held by you will be in compliance with Rule 5110 (i)(2) of the FINRA rules.

(h)           All sales incentive and bonus programs designed by you for your registered representatives will comply with all applicable FINRA rules.

(i)            You have established and will maintain a customer identification program which requires you to (i) verify the identify of any person seeking to purchase the Shares through you to the extent reasonable and practicable, (ii) maintain records of the information used to
verify the person’s identity and (iii) determine whether the person appears on any lists of known or suspected terrorists or terrorist organizations provided to brokers or dealers by any government agency, in all accordance with the requirements of 31 C.F.R. Section 103.122.

(j)            You have established and will maintain an anti-money laundering compliance program in accordance with applicable laws and regulations, including the USA Patriot Act of 2001, and in accordance with NASD Rule 3011 (or successor FINRA rule) and the related interpretive
guidance described in NASD’s IM-3011-1 and IM-3011-2 (or successor FINRA interpretive guidance).

  

  

  

(k)           You covenant and agree to comply with any applicable requirements of the Act, and of the Exchange Act, and the published rules and regulations promulgated thereunder, all applicable state securities laws and regulations as from time to time in effect, any other state
and federal laws and regulations applicable to the offering, the sale of Shares or the activities of the Participating Broker pursuant to this Agreement, including without limitation the privacy standards and requirements of the Gramm-Leach-Bliley Act of 1999, the requirements of any applicable state privacy laws and the applicable provisions of the USA Patriot Act of 2001, this Agreement and the Prospectus as amended and supplemented and the FINRA rules and, in particular, the rules which require the Participating
Broker (i) to recommend the purchase of Shares only when the Participating Broker has reasonable grounds to believe, on the basis of information obtained from the investor concerning his investment objectives, other investments, financial situation and needs, and any other information known by the Participating Broker, that the investor is or will be in a financial position appropriate to enable him to realize to a significant extent the benefits described in the prospectus, that the investor has a fair market
net worth sufficient to sustain the risks inherent in the program, including loss of investment and lack of liquidity, and that the program is otherwise suitable for the investor, (ii) to maintain certain files concerning the basis for Participating Broker’s determination of the suitability of the investor, (iii) to have reasonable grounds to believe, based on information made available to the Participating Broker by the Company, that all material facts are adequately and accurately disclosed and that such
disclosed facts provide a basis for evaluating an investment in the Company, and (iv) to inform the prospective investor or require the prospective investor to be informed of all pertinent facts relating to the liquidity and marketability of the investment during the term of the investment. Participating Broker also agrees not to deliver the Supplemental Material to any person unless the Supplemental Material is accompanied or preceded by the Prospectus.

(l)            You will not give any information or make any representation in connection with the offering of the Shares other than those contained in the Prospectus and Supplemental Material furnished by the Company. You agree not to publish, circulate or otherwise use any other
advertisement or solicitation material. You are not authorized to act as agent of the Company or the Dealer Manager in any connection or transaction, and you agree not to act as such agent and not to purport to do so without the prior written approval of the Company and the Dealer Manager. You agree that if and when the Company or Dealer Manager supplies Participating Broker with copies of any supplement to the Prospectus, Participating Broker will thereafter distribute Prospectuses with such supplement.. You
further agree to comply with all instructions from the Company or the Dealer Manager concerning the destruction of out-dated Prospectuses and the use of supplemented or amended Prospectuses.

(m)           You agree to solicit purchases of Shares only in the States and other jurisdictions in which the Company indicates that such solicitation can be made and in which you have determined that such solicitation can be made by you and in which you are is qualified to so act.

(n)           You will not sell the Shares pursuant to this Agreement unless the Prospectus is furnished to the purchaser at least five (5) business days prior to the execution of the Subscription Agreement, or is sent to such person under circumstances that it would be received by
the purchaser five (5) business days prior to his execution of the Subscription Agreement.

(o)           You will use reasonable efforts to select investors who you reasonably believe meet the investor suitability requirements which are set forth in the Prospectus and Subscription Agreement (Appendix A to the Prospectus) and such additional individual state requirements
as are specified in the Subscription Agreement and which are confirmed by the investors by payment of the purchase price for the Shares including that each investor be of legal age in the state of his or her residence. You will, for a period of six years, maintain in your files a copy of the Subscription Agreement for each investor for whom you acts as Participating Broker.

(p)           You agree to comply with the record-keeping requirements imposed by (a) federal and state securities laws and the rules and regulations promulgated thereunder, (b) the applicable rules of FINRA and (c) the NASAA Guidelines, including the requirement to maintain records
(the “Suitability Records”) of the information used to determine that an investment in Shares is suitable and appropriate for each subscriber for a period of six years from the date of the sale of the Shares.   You further agree to make the Suitability Records available to the Dealer Manager and the Company upon request and to make them available to representatives of the SEC and FINRA and applicable state securities administrators
upon the Dealer’s receipt of a subpoena or other appropriate document request from such agency.

(q)           To the extent that information is provided to you marked “For Broker-Dealer Use Only,” you covenant and agree not to provide such information to prospective investors.

  

  

  

6.           Indemnification

(a)           Subject to the limitations below, the Company will indemnify and hold harmless the Participating Brokers and (to the extent permitted by the Company's charter) the Dealer Manager, their officers and directors and each person, if any, who controls such Participating Broker
or Dealer Manager within the meaning of Section 15 of the Securities Act (the “Indemnified Persons”) from and against any losses, claims, damages or liabilities (“Losses”), joint or several, to which such Indemnified Persons may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such Losses (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a material fact contained (A) in the Registration Statement, the Prospectus, any Preliminary Prospectus used prior to the effective date of the Registration Statement or any post-effective amendment or supplement to any of them, (B) in any blue sky application or other document executed by the Company or on its behalf specifically for the purpose of qualifying any or all of the Shares for sale under the securities laws of any jurisdiction or based upon
written information furnished by the Company under the securities laws thereof (any such application, document or information being hereinafter called a “Blue Sky Application”), or (C) any Supplemental Material, or (ii) the omission or alleged omission to state in the Registration Statement, the Prospectus, any Preliminary Prospectus used prior to the effective date of the Registration Statement or any post-effective amendment or supplement to
any of them or in any Blue Sky Application or Supplemental Material a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company will reimburse each Indemnified Person for any legal or other expenses reasonably incurred by such Indemnified Person, in connection with investigating or defending such Loss upon final disposition of the proceeding giving rise to such Loss; provided that the
Company will not be liable in any such case to the extent that any such Loss or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished (x) to the Company by the Dealer Manager or (y) to the Company or the Dealer Manager by or on behalf of any Participating Broker specifically for use in the preparation of the Registration Statement or any such post-effective amendment thereto,
any such Blue Sky Application or any such Preliminary Prospectus or the Prospectus, and, further, the Company will not be liable in any such case if it is  determined that such Participating Broker or the Dealer Manager was at fault in connection with the Loss, expense or action.

(b)           Notwithstanding the foregoing, the Company shall not provide for indemnification of any Indemnified Persons for any liability or loss suffered by any such Indemnified Person, unless all of the following conditions are met: (i) the directors of the Company or the Advisor
or its affiliates have determined, in good faith, that the course of conduct that caused the loss or liability was in the best interests of the Company; (ii) the Indemnified Persons were acting on behalf of or performing services for the Company; (iii) such liability or loss was not the result of negligence or misconduct by the Indemnified Persons; and (iv) such indemnification or agreement to hold harmless is recoverable only out of the Company's Net Asset Value (as defined in the Company's charter) and not
from its stockholders.

(c)           In addition, the Company shall not indemnify or hold harmless an Indemnified Person for any Losses or expenses arising from or out of an alleged violation of federal or state securities laws by such party unless one or more of the following conditions are met: (i) there
has been a successful adjudication on the merits of each count involving alleged securities law violations as to the particular Indemnified Person, (ii) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the particular Indemnified Person and (iii) a court of competent jurisdiction approves a settlement of the claims against a particular Indemnified Person and finds that indemnification of the settlement and the related costs should be made, and the court considering
the request for indemnification has been advised of the position of the Securities and Exchange Commission and of the published position of any state securities regulatory authority in which securities of the Company were offered or sold as to indemnification for violations of securities laws.

(d)           The Dealer Manager has agreed to indemnify and hold harmless the Company, each director and officer of the Company (including any person named in the Registration Statement, with his consent, as about to become a director), each other person who has signed the Registration
Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act (each a “Dealer Manager Indemnified Person”), from and against any Losses to which any of the Company Indemnitees may become subject, under the Securities Act or otherwise, insofar as such Losses (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact
contained (A) in the Registration Statement, the Prospectus, any Preliminary Prospectus used prior to the effective date of the Registration Statement or any post-effective amendment or supplement to any of them, (B) in any Blue Sky Application, or (C) any Supplemental Material, or (ii) the omission or alleged omission to state in the Registration Statement, the Prospectus, any Preliminary Prospectus used prior to the effective date of the Registration Statement or any post-effective amendment or supplement to
any of them or in any Blue Sky Application or Supplemental Material a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, in the case of each of clauses (i) and (ii) to the extent, but only to the extent, that such untrue statement or omission was made in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Dealer Manager specifically for use
with reference to the Dealer Manager in the preparation of Registration Statement, the Prospectus, any Preliminary Prospectus used prior to the effective date of the Registration Statement or any post-effective amendment or supplement to any of them or any such Blue Sky Application or Supplemental Material, (iii) any unauthorized use of sales materials, use of unauthorized verbal representations or use of “For Broker-Dealer Use Only” materials with members of the public concerning the Shares by the
Dealer Manager; (iv) any untrue statement made by the Dealer Manager or its representatives or agents or omission to state a fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading in connection with the offer and sale of the Shares (v) any material violation of this Agreement; (vi) any failure to comply with applicable laws governing money laundering abatement and anti-terrorism financing efforts, including applicable FINRA rules, SEC rules
and the USA PATRIOT Act of 2001; or (vii) any other failure to comply with applicable FINRA or SEC rules. The Dealer Manager will reimburse each Dealer Manager Indemnified Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending such Loss, expense or action. This indemnity agreement will be in addition to any liability that the Dealer Manager may otherwise have.

  

  

  

(e)           You and each other Participating Broker severally will indemnify and hold harmless the Company, the Dealer Manager, each of their officers and directors (including any person named in the Registration Statement, with his consent, as about to become a director), each other
person who has signed the Registration Statement and each person, if any, who controls the Company and the Dealer Manager within the meaning of Section 15 of the Securities Act (each, a “Participating Broker Indemnified Person”) from and against any Losses to which a Participating Broker Indemnified Person may become subject, under the Securities Act or otherwise, insofar as such Losses (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a material fact contained (A) in the Registration Statement, the Prospectus, any Preliminary Prospectus used prior to the effective date of the Registration Statement or any post-effective amendment or supplement to any of them, (B) in any Blue Sky Application, or (C) any Supplemental Material, or (ii) the omission or alleged omission to state in the Registration Statement, the Prospectus, any Preliminary Prospectus used prior to the effective date
of the Registration Statement or any post-effective amendment or supplement to any of them or in any Blue Sky Application or Supplemental Material a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, in the case of each of clauses (i) and (ii) to the extent, but only to the extent, that such untrue statement or omission was made in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Participating Broker specifically for use with reference to the Participating Broker in the preparation of Registration Statement, the Prospectus, any Preliminary Prospectus used prior to the effective date of the Registration Statement or any post-effective amendment or supplement to any of them or any such Blue Sky Application or Supplemental Material, (iii) any unauthorized use of sales materials, use of unauthorized verbal representations or use of “For Broker-Dealer
Use Only” materials with members of the public concerning the Shares by the Dealer Manager; (iv) any untrue statement made by such Participating Broker or its representatives or agents or omission to state a fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading in connection with the offer and sale of the Shares (v) any material violation of this Agreement; (vi) any failure to comply with applicable laws governing money laundering abatement
and anti-terrorism financing efforts, including applicable FINRA rules, SEC rules and the USA PATRIOT Act of 2001; or (vii) any other failure to comply with applicable FINRA or SEC rules. Each such Participating Broker will reimburse each Participating Broker Indemnified Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Loss, expense or action. This indemnity agreement will be in addition to any liability that such Participating Broker may
otherwise have.

(f)            Promptly after receipt by an indemnified party under this Section 6 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 6, notify in writing the indemnifying
party of the commencement thereof. The failure of an indemnified party so to notify the indemnifying party will relieve the indemnifying party from any liability under this Section 6 as to the particular item for which indemnification is then being sought, but not from any other liability that it may have to any indemnified party. In case any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled, to the
extent it may wish, jointly with any other indemnifying party similarly notified, to participate in the defense thereof, with separate counsel. Such participation shall not relieve such indemnifying party of the obligation to reimburse the indemnified party for reasonable legal and other expenses (incurred by such indemnified party in defending itself, except for such expenses incurred after the indemnifying party has deposited funds sufficient to effect the settlement, with prejudice, of the claim in respect
of which indemnity is sought. Any such indemnifying party shall not be liable to any such indemnified party on account of any settlement of any claim or action effected without the consent of such indemnifying party. Any indemnified party shall not be bound to perform or refrain from performing any act pursuant to the terms of any settlement of any claim or action effected without the consent of such indemnified party.

  

  

  

(g)           The indemnifying party shall pay all legal fees and expenses of the indemnified party in the defense of such claims or actions; provided, however, that the indemnifying party shall not be obliged to pay legal expenses and fees to more than one law firm in connection with
the defense of similar claims arising out of the same alleged acts or omissions giving rise to such claims notwithstanding that such actions or claims are alleged or brought by one or more parties against more than one indemnified party. If such claims or actions are alleged or brought against more than one indemnified party, then the indemnifying party shall only be obliged to reimburse the expenses and fees of the one law firm that has been selected by a majority of the indemnified parties against which such
action is finally brought; and in the event a majority of such indemnified parties is unable to agree on which law firm for which expenses or fees will be reimbursable by the indemnifying party, then payment shall be made to the first law firm of record representing an indemnified party against the action or claim. Such law firm shall be paid only to the extent of services performed by such law firm and no reimbursement shall be payable to such law firm on account of legal services performed by another law firm.

	
7.
	
Effective Date and Termination.

This Agreement shall become effective upon its execution and delivery by the Dealer Manager, the Company and you.  This Agreement may be terminated by you or the Dealer Manager at your or its option by giving written notice to the other and the Company. In any case, this Agreement will terminate at the close of business on the Termination
Date; provided, however, that all accrued fees payable to you under the terms and conditions hereof shall be paid when due although this Agreement shall have theretofore been terminated.

Except as otherwise provided in Section 8, any termination of this Agreement pursuant to this Section 7 shall be without liability of Dealer Manager and the Company to you and without liability on your part to the Dealer Manager or the Company, except with respect to compensation earned for accepted subscriptions.

	
8.
	
Survival of Indemnities, Warranties and Representations.

Your indemnity agreements contained in Section 6 hereof, and the representations and warranties of the Participating Broker set forth in Section 4 hereof, shall remain operative and in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of you, the Dealer Manager,
the Company, or any controlling person thereof, and shall survive the delivery of and payment for the Shares, and any successor of the Company, the Dealer Manager or of any such controlling person or any legal representative of any such controlling person, as the case may be, shall be entitled to the benefit of your indemnity agreements and representations and warranties.

	
9.
	
Notices.

Except as otherwise provided in this Agreement, (a) whenever notice is required by the provisions of this Agreement or otherwise to be given to the Company, such notice shall be in writing addressed to the Company at 1920 Main Street, Suite 400, Irvine, California 92614, Attention: Terry G. Roussel, (b) whenever notice is required by the
provisions of this Agreement or otherwise to be given to the Dealer Manager, such notice shall be in writing addressed to Dealer Manager at 1920 Main Street, Suite 400, Irvine, California 92614, and (c) whenever notice is required by the provisions of this Agreement or otherwise to be given to you, at the address set forth on the last page of this Agreement. Any notice referred to herein may be given in writing or by facsimile or telephone and if by telephone shall be immediately confirmed in writing. Notice
(unless actual) shall be effective upon mailing or facsimile transmission with confirmation of facsimile receipt, as the case may be.

  

  

  

	
10.
	
Counterparts

This agreement may be executed in any number of counterparts.  Each counterpart, when executed and delivered, shall be an original contract, but all counterparts, when taken together, shall constitute one and the same agreement

	
11.
	
Persons Entitled To Benefit of Agreement.

Except as provided in the next sentence, this Agreement is made solely for the benefit of you, the other Participating Brokers, the Dealer Manager, the Company or controlling persons thereof, and their respective successors and assigns, and no other person shall acquire or have any right by virtue of this Agreement, and the term “successors
and assigns,” as used in this Agreement, shall not include any purchaser, as such purchaser, of any of the Shares.

	
12.
	
Not a Separate Entity.

Nothing contained herein shall constitute you, the Dealer Manager or the other Participating Brokers, or any of them, as an association, partnership, unincorporated business or other separate entity.

13.           Assignability

Neither the rights nor the obligations of the Dealer Manager or the Participating Broker may be transferred or assigned, provided, however, that the Dealer Manager may assign its rights and obligations under this Agreement to any successor Dealer Manager under the Dealer Manager Agreement.  Any other purported assignment of this
Assignment or any of the rights and obligations hereunder shall be null, void and of no effect.

  

  

  

Please confirm your agreement to become a Participating Broker under the terms and conditions herein set forth by signing and returning the enclosed duplicate copy of this Agreement at once to the Dealer Manager at 1920 Main Street, Suite 400, Irvine, California 92614.

	  	
Very truly yours,

	  	  	  
	  	
PACIFIC CORNERSTONE CAPITAL,

	  	
INCORPORATED, a California corporation

	  	  	  
	  	
By:
	  
	  	  	 
	  	  	
Terry G. Roussel, President

	
AGREED AND ACCEPTED:
	  
	  	  
	  	  
	
(Broker Dealer Name)
	  
	  	  
	  	  
	
(Address)
	  
	  	  
	  	  
	
(City, State  Zip)
	  

 

	
By: 
	 	  

	
Print Name: 
	 	  

	
Title: 
	 	  

 

	
Dated___________, 2009
	 
	  	  	 
	
CORNERSTONE CORE PROPERTIES REIT, INC.
	 
	
a Maryland corporation
	 
	
By:
	  	 
	  	
 
	 
	  	
Terry G. Roussel, President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00162-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00162-of-00352.parquet"}]]