Document:

Exhibit
10.1

ADVISORY AGREEMENT

BY AND BETWEEN

CORNERSTONE GROWTH AND INCOME REIT, INC.

(“COMPANY”)

AND

CORNERSTONE LEVERAGED REALTY ADVISORS, LLC

(“ADVISOR”)

TABLE OF CONTENTS

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1. 

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  2. 

  	
  Appointment

  	
  9

  
	
   

  	
   

  	
   

  
	
  3. 

  	
  Authority of the Advisor

  	
  9

  
	
   

  	
   

  	
   

  
	
  4. 

  	
  Duties of the Advisor

  	
  9

  
	
   

  	
   

  	
   

  
	
  5. 

  	
  Bank Accounts

  	
  16

  
	
   

  	
   

  	
   

  
	
  6. 

  	
  Records; Financial Statements

  	
  16

  
	
   

  	
   

  	
   

  
	
  7. 

  	
  Limitations on Activities

  	
  16

  
	
   

  	
   

  	
   

  
	
  8.  

  	
  Fees

  	
  17

  
	
   

  	
   

  	
   

  
	
  9. 

  	
  Expenses

  	
  21

  
	
   

  	
   

  	
   

  
	
  10. 

  	
  Other Activities of the Advisor

  	
  23

  
	
   

  	
   

  	
   

  
	
  11. 

  	
  Time Commitment

  	
  24

  
	
   

  	
   

  	
   

  
	
  12. 

  	
  Relationship of Advisor and Company

  	
  25

  
	
   

  	
   

  	
   

  
	
  13. 

  	
  Non-Solicitation

  	
  24

  
	
   

  	
   

  	
   

  
	
  14. 

  	
  Representations and Warranties

  	
  25

  
	
   

  	
   

  	
   

  
	
  15. 

  	
  Board Nominees

  	
  26

  
	
   

  	
   

  	
   

  
	
  16. 

  	
  Term; Termination of Agreement

  	
  26

  
	
   

  	
   

  	
   

  
	
  17. 

  	
  Termination

  	
  27

  
	
   

  	
   

  	
   

  
	
  18. 

  	
  Payments to and Duties of Advisor upon
  Termination

  	
  27

  
	
   

  	
   

  	
   

  
	
  19. 

  	
  Assignment to an Affiliate

  	
  28

  
	
   

  	
   

  	
   

  
	
  20. 

  	
  Indemnification by the Company

  	
  28

  
	
   

  	
   

  	
   

  
	
  21. 

  	
  Advisor’s Liability

  	
  28

  
	
   

  	
   

  	
   

  
	
  22. 

  	
  Notices

  	
  28

  
	
   

  	
   

  	
   

  
	
  23. 

  	
  Modification

  	
  29

  
	
   

  	
   

  	
   

  
	
  24. 

  	
  Severability

  	
  29

  
	
   

  	
   

  	
   

  
	
  25. 

  	
  Construction

  	
  29

  
	
   

  	
   

  	
   

  
	
  26.  

  	
  Entire Agreement

  	
  29

  
	
  27. 

  	
  Indulgences, Not Waivers

  	
  29

  
	
   

  	
   

  	
   

  
	
  28. 

  	
  Gender

  	
  29

  
	
   

  	
   

  	
   

  
	
  29. 

  	
  Titles Not to Affect Interpretation

  	
  29

  
	
   

  	
   

  	
   

  
	
  30. 

  	
  Execution in Counterparts

  	
  30

  

 

 i
 

 

	
  31. 

  	
  Initial Investment

  	
  30

  
	
   

  	
   

  	
   

  
	
  32. 

  	
  Name

  	
  30

  

 

 ii

ADVISORY AGREEMENT

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

W I T N E S S E
T H

WHEREAS, the Company desires to avail itself of the
knowledge, experience, sources of information, advice, assistance and certain
facilities available to the Advisor and to have the Advisor undertake the
duties and responsibilities hereinafter set forth, on behalf of, and subject to
the supervision of the Board of Directors of the Company all as provided
herein; and

WHEREAS, the Advisor is willing to undertake to render
such services, subject to the supervision of the Board of Directors of the
Company, on the terms and conditions hereinafter set forth.

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

1. Definitions.  As used in this Agreement, the following
terms have the definitions hereinafter indicated:

“Acquisition Expenses”
means all expenses, excluding the fee payable to the Advisor pursuant to
Section 8(a), incurred by the Company, the Advisor, or any Affiliate of either
in connection with the Company’s sourcing, selection, evaluation and
acquisition of, and or development of any property or other potential
investment in, Properties, Loans, or other Permitted Investments whether or not
acquired or made, including but not limited to legal fees and expenses, travel
and communications expenses, costs of appraisals and surveys, nonrefundable
option payments on Property, Loans, or other Permitted Investments not
acquired, accounting fees and expenses, computer use-related expenses,
architectural and engineering reports, environmental reports, title insurance
and escrow fees.

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

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

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

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

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

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

“Average Invested Assets”
means, for a specified period, the average of the aggregate GAAP basis book
carrying values of the assets of the Company invested, directly or indirectly,
in Properties, Loans and other Permitted Investments before reserves for
depreciation or bad debts or other similar non-cash reserves, computed by
taking the average of such values at the end of each month during such period
(or if such specified period is a single month, then the average of such values
during such month).

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

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

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

“Cash from Sales”
means the net cash proceeds realized by the Company from the sale, exchange or
other disposition of any of its Assets after deduction of all expenses incurred
in connection therewith.  In the case of
a transaction described in clause (i)(C) of the definition of

 2
 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 3
 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 4
 

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

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

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

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

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

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

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

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

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

 5
 

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

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

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

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

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

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

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

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

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

 6
 

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

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

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

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

“Securities”
means any class or series of units or shares of the Company, including common
shares or preferred units or shares and any other evidences of equity or
beneficial or other interests, voting trust certificates, bonds, debentures,
notes or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as “Securities”
or any certificates of interest, shares or participations in, temporary or
interim certificates for, receipts for, guarantees of, or warrants, options or
rights to subscribe to, purchase or acquire, any of the foregoing.

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

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

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

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

 7
 

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

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

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

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

 8
 

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

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

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

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

3. Authority of the Advisor.

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

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

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

(d) Modification
or Revocation of Authority of Advisor.  The Board may, at any time upon the giving of
notice to the Advisor, modify or revoke the authority or approvals set forth in
Sections 3 and 4; provided, however, that such modification or revocation shall
be effective upon receipt by the Advisor and shall not be applicable to
investment transactions to which the Advisor has committed the Company prior to
the date of receipt by the Advisor of such notification.

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

 9
 

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

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

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

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

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

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

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

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

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

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

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

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

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

 10
 

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

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

(iii) as necessary, furnish the Board of Directors with advice and
recommendations with respect to the making of investments consistent with the
investment objectives and policies of the Company and in connection with
borrowings proposed to be undertaken by the Company, if any;

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

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

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

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

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

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

 11
 

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

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

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

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

(c) Asset
Management and Operational Services.

(i) Real Estate Services. 
The Advisor shall:

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

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

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

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

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

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

 12

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

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

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

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

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

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

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

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

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

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

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

 13
 

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

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

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

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

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

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

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

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

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

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

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

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

 14
 

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

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

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

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

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

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

(d) Stockholder
Services.  The Advisor shall:

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

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

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

 15
 

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

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

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

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

5. Bank Accounts.  The Advisor may establish and maintain one or
more bank accounts in its own name for the account of the Company or in the name
of the Company and may collect and deposit into any such account or accounts,
and disburse from any such account or accounts, any money on behalf of the
Company, under such terms and conditions as the Board may approve, provided
that no funds shall be commingled with the funds of the Advisor; and the
Advisor shall from time to time render appropriate accountings of such
collections and payments to the Board and to the auditors of the Company.

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

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

 16
 

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

8. Fees.

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

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

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

 17
 

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

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

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

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

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

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

When determining whether
the above thresholds have been met:

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

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

 18
 

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

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

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

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

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

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

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

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

 19
 

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

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

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

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

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

Interest on the Performance Fee Note will accrue
beginning on the Termination Date at a rate of LIBOR plus 200 basis
points.  The Company shall repay the
Performance Fee Note at such time as the Company completes the first Sale after
the Termination Date using Cash from Sales. 
If the Cash from Sales from the first Sale after the Termination Date is
insufficient to pay the Performance Fee Note in full, including accrued
interest, then the Performance Fee Note shall be paid in part from the Cash
from Sales from the first Sale, and in part from the Cash From Sales from each
successive Sale until the Performance Fee Note is repaid in full, with
interest.  If the Performance Fee Note
has not been paid in full within five years from the Termination Date, then the
holder of the Performance Fee Note, its successors or assigns, may elect to
convert the balance of the fee, including accrued but unpaid interest, into
Common Stock at a price per share

 20
 

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

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

9. Expenses.

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

(i) the Organization and Offering Expenses; provided, however, that
within 60 days after the end of the month in which an Offering terminates, the
Advisor shall reimburse the Company to the extent (i) Organization and Offering
Expenses borne by the Company (excluding selling commissions and dealer manager
fees) exceed 3.5% of the Gross Proceeds raised in a completed Offering
(excluding Gross Proceeds from the sales of shares of Common Stock through a
Reinvestment Plan) and (ii) Organization and Offering Expenses borne by the
Company (including selling commissions and dealer manager fees) exceed 15% of
the Gross Proceeds raised in a completed Offering;

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

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

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

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

 21
 

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

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

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

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

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

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

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

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

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

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

(xvi) all other out-of-pocket costs incurred by the Advisor in
performing its duties hereunder.

 22
 

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

(c) Timing
of and Additional Limitations on Reimbursements.

(i) Expenses incurred by the Advisor on behalf of the Company and
reimbursable pursuant to this Section 9 shall be reimbursed no less frequently
than monthly to the Advisor.  The Advisor
shall prepare a statement documenting the expenses of the Company during each
quarter, and shall deliver such statement to the Company within 45 days after
the end of each quarter.

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

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

10. Other Activities of the Advisor.

(a) General.  Nothing herein contained shall prevent the
Advisor from engaging in other activities, including, without limitation, the
rendering of advice to other Persons (including other REITs) and the management
of other programs advised, sponsored or organized by the Advisor or its
Affiliates; nor shall this Agreement limit or restrict the right of any
manager, director, officer, employee, or equity holder of the Advisor or its
Affiliates to engage in any other business or to render services of any kind to
any other Person.  The Advisor may, with

 23
 

respect to any investment in which the Company is a participant, also
render advice and service to each and every other participant therein.  The Advisor shall report promptly to the
Board the existence of any condition or circumstance, existing or anticipated,
of which it has knowledge, that creates or could create a conflict of interest
between the Advisor’s obligations to the Company and its obligations to or its
interest in any other Person.

(b) Policy
with Respect to Allocation of Investment Opportunities.  The Advisor shall be required to use
commercially reasonable efforts to present a continuing and suitable investment
program to the Company that is consistent with the investment policies and
objectives of the Company, but neither the Advisor nor any Affiliate of the
Advisor shall be obligated generally to present any particular investment
opportunity to the Company even if the opportunity is of character that, if
presented to the Company, could be taken by the Company.  In the event an investment opportunity is
located, the allocation procedure set forth under the caption “Conflicts of
Interest – Certain Conflict Resolution Procedures – Allocation of Investment
Opportunities” in the Registration Statement shall govern the allocation of the
opportunity among the Company and Affiliates of the Advisor.

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

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

13. Non-Solicitation.

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

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

 24
 

Agreement and (ii) any hiring of any employee of the Company or any
subsidiary of the Company will not be prohibited where such hiring is not the
result of a solicitation by the Advisor or an Affiliate of the Advisor.

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

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

14. Representations and Warranties.

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

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

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

 25
 

such case in a
manner that would have a material adverse effect on the ability of the Company
to perform any of its obligations under this Agreement.

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

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

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

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

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

16. Term; Termination of Agreement.  Subject to Section 17 hereof, this Agreement
shall continue in force until the first anniversary of the date hereof.  Thereafter, this Agreement may be renewed for
an unlimited number of successive one-year terms upon mutual consent of the
parties.  The Company, acting through the
Board, including a majority of the Independent Directors Committee, will
evaluate the performance of the Advisor annually before renewing the Agreement,
and each such renewal shall be for a term of no more than one year.

 26
 

17. Termination.

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

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

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

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

(a) After the Termination Date, the Advisor
shall not be entitled to compensation for further services hereunder except it
shall be entitled to receive from the Company within 30 days after the
effective date of such termination the following:

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

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

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

 27
 

(c) The Advisor shall promptly upon
termination:

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

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

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

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

19. Assignment to an Affiliate..  This Agreement may be assigned by the Advisor
to an Affiliate with the approval of the Independent Directors Committee.  The Advisor may assign any rights to receive
fees or other payments under this Agreement without obtaining the approval of
the Directors.  This Agreement shall not
be assigned by the Company without the consent of the Advisor, except in the
case of an assignment by the Company to a corporation or other organization
which is a successor to all of the assets, rights and obligations of the
Company, in which case such successor organization shall be bound hereunder and
by the terms of said assignment in the same manner as the Company is bound by
this Agreement.

20. Indemnification by the Company.  The Company shall indemnify, defend and hold
harmless the Advisor and its Affiliates, including their respective officers,
directors, equity holders, partners and employees, from all liability, claims,
damages or losses arising in the performance of their duties hereunder, and
related expenses, including reasonable attorneys’ fees, to the extent such
liability, claims, damages or losses and related expenses are not fully
reimbursed by insurance, subject to any limitations imposed by the Company’s
Charter and the laws of the State of Maryland. 
Any indemnification of the Advisor may be made only out of the net
assets of the Company.

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

22. Notices.  Any notice, report or other communication
required or permitted to be given hereunder shall be in writing unless some
other method of giving such notice, report or other communication is required
by the Charter, the Bylaws, or accepted by the party to whom it is given, and
shall be given by being delivered by hand or by overnight mail or other
overnight delivery service to the addresses set forth herein:

	
  To the Board and to the Company:

  	
  Cornerstone Growth and Income REIT, Inc.

  1920 Main Street, Suite 400

  Irvine, California 92614

  Attention: Chief Executive Officer

  

 

 28
 

 

 

	
  To the Advisor:

  	
  Cornerstone
  Leveraged Realty Advisors, LLC

  1920 Main Street, Suite 400

  Irvine, California 92614

  Attention: Managing Member

  

 

Either party may at any time give notice in writing to
the other party of a change in its address for the purposes of this Section 22.

23. Modification.  This Agreement shall not be changed,
modified, terminated, or discharged, in whole or in part, except by an
instrument in writing signed by both parties hereto, or their respective
successors or assignees.

24. Severability.  Severability. The provisions of this
Agreement are independent of and severable from each other, and no provision
shall be affected or rendered invalid or unenforceable by virtue of the fact
that for any reason any other or others of them may be invalid or unenforceable
in whole or in part.

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

26. Entire Agreement.  This Agreement contains the entire agreement
and understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or
written, of any nature whatsoever with respect to the subject matter hereof.
The express terms hereof control and supersede any course of performance and/or
usage of the trade inconsistent with any of the terms hereof. This Agreement
may not be modified or amended other than by an agreement in writing.

27. Indulgences, Not Waivers.  Neither the failure nor any delay on the part
of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.

28. Gender.  Words used herein regardless of the number
and gender specifically used, shall be deemed and construed to include any
other number, singular or plural, and any other gender, masculine, feminine or
neuter, as the context requires.

29. Titles Not to Affect Interpretation.  The titles of paragraphs and subparagraphs
contained in this Agreement are for convenience only, and they neither form a
part of this Agreement nor are they to be used in the construction or
interpretation hereof.

 29
 

30. Execution in Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. 
This Agreement shall become binding when the counterparts hereof, taken
together, bear the signatures of all of the parties reflected hereon as the
signatories.

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

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

 30

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

	
  

  	
  CORNERSTONE GROWTH AND INCOME REIT,

  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Terry G.
  Roussel, President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CORNERSTONE LEVERAGED REALTY

  ADVISORS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  CIP Leveraged Fund Advisors, LLC, its

  managing member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Terry G.
  Roussel, President

  
	
   

  	
   

  	
   

  
	
  For purposes of Section 32 of this Agreement:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  CORNERSTONE VENTURES, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Terry G.
  Roussel, PresidentExhibit 10.2

FORM OF

EMPLOYEE
AND DIRECTOR LONG-TERM  INCENTIVE PLAN

OF

CORNERSTONE GROWTH AND INCOME REIT,
INC.

TABLE OF
CONTENTS

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Purposes of the Plan and Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Purposes

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.2

  	
  Definitions.

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Eligible Persons

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Shares of Stock Subject to this Plan

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Administration

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Committee

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  Duration, Removal, Etc

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3  

  	
  Meetings and Actions of Committee

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.4

  	
  Committee’s Powers

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.5

  	
  Term of Plan

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Grant of Options

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Written Agreement

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2

  	
  Annual $100,000 Limitation on ISOs

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Certain Terms and Conditions of Options and Other
  Awards

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  All Awards

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.2

  	
  Terms and Conditions to Which Only NQOs Are Subject

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.3

  	
  Terms and Conditions to Which Only ISOs Are Subject

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.4

  	
  Surrender of Options

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Restricted Stock

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Grant

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2

  	
  Restrictions

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.3

  	
  Dividends

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.4

  	
  Forfeiture of Restricted Stock

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Stock Appreciation Rights

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Dividend Equivalent Rights

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  General

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.2

  	
  Rights and Options

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.3

  	
  Payments

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.4

  	
  Termination of Employment

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Other Equity-Based Awards

  	
   

  	
  14

  

 

 i
 

 

	
  

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Grant.

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.2

  	
  Terms and Conditions

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.3

  	
  Payment or Settlement

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.4

  	
  Employee Status

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.5

  	
  Stockholder Rights

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  Compliance with Laws

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  Employment or Other Relationship

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  Amendment, Suspension and Termination of this Plan

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  Liability and Indemnification of the Committee

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  Securities Law Legends

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  Severability

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  Effective Date and Stockholder Approval

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  Miscellaneous

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  18.1

  	
  Loans

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  18.2

  	
  Forfeiture Provisions

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  18.3

  	
  Limitations Applicable to Section 16

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  18.4

  	
  Effect of Plan Upon Other Incentive and Compensation
  Plans

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  18.5

  	
  Section 83(b) Election Prohibited

  	
   

  	
  17

  

 

 ii

FORM OF

EMPLOYEE
AND DIRECTOR LONG-TERM INCENTIVE PLAN

OF

CORNERSTONE GROWTH AND INCOME
REIT, INC.

1.  Purposes of the Plan
and Definitions

1.1  Purposes.  The purposes of the Employee and Director Long-Term
Incentive Plan (the “Plan”) of Cornerstone Growth and Income REIT, Inc. (the “Company”)
are to:

(a) 
provide incentives to individuals chosen to receive share-based awards
because of their ability to improve operations and increase profits;

(b)  encourage selected persons
to accept or continue employment with the Company or any Advisor or Affiliate
of the Company; and

(c)  increase the interest of
Directors in the Company’s welfare through their participation in the growth in
value of the Company’s Stock.

To accomplish these purposes, this Plan provides a
means whereby Employees of the Company or any Advisor or Affiliate of the
Company, Directors and other enumerated persons may receive Awards.

1.2  Definitions.  For purposes of this Plan, the following
terms have the following meanings:

“Advisor” means the Person or Persons, if any,
appointed, employed or contracted with by the Company responsible for directing
or performing the day-to-day business affairs of the Company, including any
Person to whom the Advisor subcontracts substantially all of such functions.  The initial Advisor is Cornerstone Leveraged
Realty  Advisors, LLC.

“Affiliate” means any Person (other than an Advisor),
whose employees (as such term is defined in the Form S-8 registration statement
under the Securities Act) are eligible to receive Awards under the Plan.  The determination of whether a Person is an
Affiliate shall be made by the Committee acting in its sole and absolute
discretion.

“Applicable Laws” means the requirements relating to
the administration of Awards under U.S. state corporate laws, U.S. Federal and
state securities laws, the Code, any stock exchange or quotation system on
which the shares of Stock are listed or quoted and the applicable laws of any
foreign country or jurisdiction where Awards are, or will be, granted under the
Plan.

“Articles of Incorporation” means the articles of
incorporation of the Company as the same may be amended from time to time.

“Award” means any award under this Plan, including any
grant of Options, Restricted Shares, Stock Appreciation Rights, Dividend
Equivalent Rights or Other Equity-Based Award.

 1
 

“Award Agreement” means, with respect to each Award,
the written agreement executed by the Company and the Participant or other
written document approved by the Committee setting forth the terms and
conditions of the Award.

“Board” means the Board of Directors of the Company.

“Cause,” unless otherwise defined in an Employee’s
employment agreement, means (i) gross negligence or willful misconduct, (ii) an
uncured breach of any of the Employee’s material duties under his or her
employment agreement, (iii) fraud or other conduct against the material best
interests of his or her employer or the Company, or (iv) a conviction of a
felony, if such conviction has a material adverse effect on his or her employer.  If “Cause” is otherwise defined in an
Employee’s employment agreement, the definition in the employment agreement
shall be effective for purposes of the Plan with respect to the Employee in
question.

“Code” means the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute.

“Committee” has the meaning given it in Section 4.1.

“Common Stock” or “Stock” means common shares of
capital stock of the Company, $0.001 par value per share.

“Company” has the meaning given it in Section 1.1.

“Director” means a person elected or appointed and
serving as director of the Company in accordance with the Articles of
Incorporation and the Maryland General Corporation Law.

“Dividend Equivalent Right” means an Award of rights
pursuant to Section 9.

“Effective Date” has the meaning given it in Section
18.

“Employee” has the meaning ascribed to it for purposes
of Section 3401(c) of the Code and the Treasury Regulations adopted under that
Section.  An employee includes an officer
or a Director who is an employee of the Company.

“Employment Termination” means that a Participant has
ceased, for any reason and with or without Cause, to be an Employee or Director
of, or a consultant to, the Company, the Advisor or any Affiliate of the
Company.  However, the term “Employment
Termination” shall not include a Non-Employee Director’s ceasing to be a
Director or a transfer of a Participant from the Company to the Advisor or an
Affiliate or vice versa, or from one Affiliate to another, or a leave of
absence duly authorized by the Company unless the Committee has provided
otherwise.

“ERISA” means the Employee Retirement Income Security
Act of 1974, as amended from time to time.

“Exchange Act” means the Securities Exchange Act of
1934, as amended from time to time, and any successor statute.

 2
 

“Exercise Notice” has the meaning given it in Section
6.1(f).

“Fair Market Value” means with respect to Stock:

(i)  If the Stock is listed on
any established stock exchange or a national market system, including, without
limitation, the NASDAQ National Market System, the Fair Market Value of shares
of Stock shall be the closing sales price for the Stock, or the mean between
the high bid and low asked prices if no sales were reported, as quoted on such
system or exchange (or, if the Stock is listed on more than one exchange, then
on the largest such exchange) for the date the value is to be determined (or if
there are no sales or bids for such date, then for the last preceding business
day on which there were sales or bids), as reported in The Wall Street Journal
or similar publication.

(ii)  If the Stock is regularly
quoted by a recognized securities dealer but selling prices are not reported,
or if there is no market for the Stock, the Fair Market Value of the shares of
Stock shall be determined in good faith by the Committee, with reference to the
Company’s net worth, prospective earning power, dividend-paying capacity and
other relevant factors, including the goodwill of the Company, the economic
outlook in the Company’s industry, the Company’s position in the industry and
its management, and the values of stock of other enterprises in the same or
similar lines of business.

“Grant Date” has the meaning given it in Section
6.1(d).

“Incentive Stock Option” or “ISO” means any Option
intended to be and designated as an “incentive stock option” within the meaning
of Section 422 of the Code, and any successor provision.

“Non-Employee Director” means a person who is a
non-employee director as defined in Rule 16b-3 or a person who is an outside
director as defined in Treasury Regulation 1.162-27(e)(3).

“Non-Qualified Share Option” or “NQO” means any Option
that is not an Incentive Stock Option.

“Operating Partnership” means Cornerstone Growth and
Income Operating Partnership, L.P.

“Option” means an option granted under Section 5.

“Other Equity-Based Award” means any award other than
an Option, Stock Appreciation Right, a Restricted Stock Award or Dividend
Equivalent Right Award which, subject to such terms and conditions as may be
prescribed by the Committee, entitles a Participant to receive shares of Common
Stock or rights or units valued in whole or in part by reference to, or
otherwise based on, shares of Common Stock or dividends on shares of Common
Stock.

“Participant” means an eligible person who is granted
an Award.

“Person” means a corporation, partnership, trust,
association or any other entity.

 3
 

“Plan” means this Employee and Director Incentive
Stock Plan.

“Related Corporation” means a parent or subsidiary
corporation of the Company, as those terms are defined in Sections 424(e) and
(f) of the Code.

“Restricted Stock” means an Award granted under
Section 7.

“Rule 16b-3” means Rule 16b-3 adopted under Section
16(b) of the Exchange Act or any successor rule, as it may be amended from time
to time, and references to paragraphs or clauses of Rules 16b-3 refer to the
corresponding paragraphs or clauses of Rule 16b-3 as it exists at the Effective
Date or the comparable paragraph or clause of Rule 16b-3 or successor rule, as
that paragraph or clause may thereafter be amended.

“Section 16(b)” means Section 16(b) under the Exchange
Act.

“Securities Act” means the Securities Act of 1933, as
amended from time to time, and any successor statute.

“Stock Appreciation Right” means an Award granted
under Section 8.

“Ten Percent Stockholder” means any person who, at the
time this definition is being applied, owns, directly or indirectly (or is
treated as owning by reason of attribution rules currently set forth in Code
Section 424 or any successor statute), shares of the Company constituting more
than 10% of the total combined voting power of all classes of outstanding
capital stock of the Company or any Related Corporation.

2.  Eligible Persons

Every person who, at or as of the Grant Date, is (a) a
full-time Employee of the Company, the Advisor or any Affiliate of the Company,
(b) a Director of the Company or a director of any Affiliate of the Company, or
(c) someone whom the Committee designates as eligible for an Award (other than
for Incentive Stock Options) because the person (i) performs bona fide
consulting or advisory services for the Company, the Advisor or any Affiliate
of the Company pursuant to a written agreement (other than services in
connection with the offer or sale of securities in a capital-raising
transaction), and (ii) has a direct and significant effect on the financial
development of the Company or any Affiliate of the Company, shall be eligible
to receive Awards hereunder.

3.  Shares of Stock
Subject to this Plan

The total number of shares of Stock that may be issued
under Awards is a number of shares equal to ten percent (10%) of the Company’s
outstanding Stock.  The maximum number of
shares of Stock with respect to which ISOs may be granted under the Plan is
5,000,000.  Such shares of Stock may
consist, in whole or in part, of authorized and unissued Stock or shares of
Stock reacquired in private transactions or open market purchases, but all
shares of Stock issued under the Plan, regardless of their source, shall be
counted against the Stock limitation. 
Any shares of Stock that are retained by the Company upon exercise or
settlement of an Award in order to satisfy the exercise price in whole or in
part, or to pay withholding taxes due with 

 4
 

respect to such exercise
or settlement, shall be treated as issued to the Participant and will
thereafter not be available under the Plan. 
Any shares of Stock subject to unexercised portions of Options granted
under the Plan which shall have been terminated, cancelled or that have expired
may again be subject to Options hereunder. Other Equity-Based Awards covering
Operating Partnership units that are convertible (directly or indirectly) into
Common Stock shall reduce the maximum aggregate number of shares of Common
Stock that may be issued under this Plan on a one-for-one basis, i.e. , each
such unit shall be treated as an award of Common Stock.  Awards settled in cash will not reduce the
maximum aggregate number of shares of Common Stock that may be issued under the
Plan.  The number of shares of Stock
reserved for issuance under this Plan is subject to adjustment in accordance
with the provisions for adjustment in Section 6.1.

4.  Administration

4.1  Committee.

(a)  In
General.  This Plan shall be administered
by a committee (the “Committee”) appointed by the Board.  The number of persons who shall constitute
the Committee shall be determined from time to time by a majority of all the
members of the Board; provided, however, that the Committee shall not consist
of fewer than two persons.

(b) 
Section 162(m).  To the extent the
Board desires to qualify Awards granted under this Plan as “performance based
compensation” within the meaning of section 162(m) of the Code, the Plan shall
be administered by a Committee of two or more “outside directors” as defined in
Treasury Regulation 1.162-27(e)(3).

(c) 
Rule 16b-3.  To the extent
desirable to qualify transactions under this Plan as exempt under Rule 16b-3, a
Committee consisting solely of two or more “non-employee directors” as defined
in Rule 16b-3, must approve such transactions.

4.2  Duration,
Removal, Etc.  The members of the
Committee shall serve at the pleasure of the Board, which shall have the power,
at any time and from time to time, to remove members from or add members to the
Committee.  Removal from the Committee
may be with or without cause.  Any
individual serving as a member of the Committee shall have the right to resign
from the Committee by giving at least three days’ prior written notice to the
Board.  The Board, and not the remaining
members of the Committee, shall have the power and authority to fill vacancies
on the Committee, however caused.  The
Board shall promptly fill any vacancy that causes the number of members of the
Committee to be fewer than two or any other minimum number required to comply
with Rule 16b-3 or section 162(m) of the Code, (unless the Board expressly
determines not to have Awards under the Plan comply with Rule 16b-3 or section
162(m) of the Code, respectively).

4.3  Meetings
and Actions of Committee.  The Board
shall designate which of the Committee members shall be the chairperson of the
Committee.  If the Board fails to
designate a chairperson for the Committee, the members of the Committee shall
elect one of the Committee members as chairperson, who shall act as chairperson
until he or she ceases to be a member of the Committee or until the Board (or
the Committee) elects a new chairperson. 
The Committee 

 5
 

may make any rules and regulations for the conduct of its business that
are not inconsistent with this Plan, the Articles of Incorporation, the Bylaws
of the Company or Applicable Laws.

4.4  Committee’s
Powers.  Subject to the express
provisions of this Plan, the Committee shall have the authority, in its sole
discretion:

(a)  to grant Awards upon such terms
and conditions (not inconsistent with the provisions of this Plan), as the
Committee may consider appropriate;

(b)  to adopt, amend and rescind
administrative and interpretive rules and regulations relating to the Plan;

(c)  to determine the eligible
persons to whom, and the time or times at which, Awards shall be granted;

(d)  to determine the number of
shares of Stock that shall be the subject of each Award;

(e)  to determine the terms and
provisions of each Award Agreement (which need not be identical) and any
amendments thereto, including provisions defining or otherwise relating to:

(i) 
the period or periods and extent of exercisability of any Option or
Stock Appreciation Right;

(ii) 
the methods by which the exercise price of an Option may be paid, the
form of payment, including, without limitation, cash, Stock, or other property
(including “cashless exercise” arrangements), and the methods by which Stock
shall be delivered or deemed to be delivered to Participants; provided,
however, that if Stock is used to pay the exercise price of an Option, such
Stock must have been held by the Participant for at least six months;

(iii) 
the extent to which the transferability of shares of Stock issued or
transferred pursuant to any Award is restricted;

(iv) 
the effect of Employment Termination on an Award; and

(v) 
the effect of approved leaves of absence;

(f)  to accelerate the time of
exercisability of any Option, Dividend Equivalent Right, Stock Appreciation Right
or Other Equity-Based Award;

(g)  to construe the respective
Award Agreements and the Plan;

(h)  to make determinations of the
Fair Market Value of shares of Stock;

(i)  to waive any provision,
condition or limitation set forth in an Award Agreement;

 6
 

(j)  to delegate its duties under
the Plan to such agents as it may appoint from time to time; provided, however,
that the Committee may not delegate its duties with respect to making or
exercising discretion with respect to Awards to eligible persons if such
delegation would cause Awards not to qualify for the exemptions provided by
Rule 16b-3 or section 162(m) of the Code (unless the Board expressly determines
not to have Awards under the Plan comply with Rule 16b-3 or section 162(m) of
the Code, respectively); and

(k)  to
make all other determinations, perform all other acts and exercise all other
powers and authority necessary or advisable for administering the Plan.

The Committee may discriminate among Eligible
Participants and Participants and among Awards granted to a Participant in
exercising its discretion pursuant to this Plan.  The Committee may correct any defect, supply
any omission or reconcile any inconsistency in the Plan, in any Award or in any
Award Agreement in the manner and to the extent it deems necessary or desirable
to implement the Plan, and the Committee shall be the sole and final judge of
that necessity or desirability.  The
determinations of the Committee on the matters referred to in this Section 4.4
shall be final and conclusive.

4.5  Term
of Plan.  No Awards shall be granted
under this Plan after 10 years from the Effective Date of this Plan.

5.  Grant of Options

5.1  Written
Agreement.  Each Option shall be
evidenced by an Award Agreement.  The
Award Agreement shall specify whether each Option it evidences is an NQO or an
ISO.

5.2  Annual
$100,000 Limitation on ISOs.  To the
extent that the aggregate Fair Market Value of shares of Stock with respect to
which ISOs first become exercisable by a Participant in any calendar year
exceeds $100,000, taking into account ISOs granted under this Plan and any
other plan of the Company or any Related Corporation, the Options covering such
additional shares of Stock becoming exercisable in that year shall cease to be
ISOs and thereafter be NQOs.  For this
purpose, the Fair Market Value of shares of Stock subject to Options shall be
determined as of the date the Options were granted.  In reducing the number of Options treated as
ISOs to meet this $100,000 limit, the most recently granted Options shall be
reduced first.

6.  Certain Terms and
Conditions of Options and Other Awards

Each Option shall be designated as an ISO or an NQO
and shall be subject to the terms and conditions set forth in Section 6.1.  Notwithstanding the foregoing, the Committee
may provide for different terms and conditions in any Award Agreement or
amendment thereto as provided in Section 4.4.

6.1  All
Awards.  All Options and other Awards
shall be subject to the following terms and conditions:

(a) 
Changes in Capital Structure.  If
the number of outstanding shares of Stock is increased by means of a share
dividend payable in shares of Stock, a share split or other subdivision or by a
reclassification of Stock, then, from and after the record date for such 

 7
 

dividend, subdivision or reclassification, the number of shares of
Stock and class of Stock subject to this Plan and each outstanding Award shall
be increased in proportion to such increase in outstanding Stock and the
then-applicable exercise price of each outstanding Award shall be
correspondingly decreased.  If the number
shares of outstanding Stock is decreased by means of a share split or other
subdivision or by a reclassification of Stock, then, from and after the record
date for such split, subdivision or reclassification, the number of shares of
Stock and class of Stock subject to this Plan and each outstanding Award shall
be decreased in proportion to such decrease in outstanding Stock and the
then-applicable exercise price of each outstanding Award shall be
correspondingly increased.

(b) 
Certain Corporate Transactions. 
In the case of any reclassification or change of outstanding Stock
issuable upon exercise of an outstanding Award or in the case of any
consolidation or merger of the Company with or into another entity (other than
a merger in which the Company is the surviving entity and which does not result
in any reclassification or change in the then-outstanding Stock) or in the case
of any sale or conveyance to another entity of the property of the Company as
an entirety or substantially as an entirety, then, as a condition of such
reclassification, change, consolidation, merger, sale or conveyance, the
Company or such successor or purchasing entity, as the case may be, shall make
lawful and adequate provision whereby the holder of each outstanding Award
shall thereafter have the right, on exercise of such Award, to receive the kind
and amount of securities, property and/or cash receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of securities issuable upon exercise of such Award immediately
before such reclassification, change, consolidation, merger, sale or
conveyance.  Such provision shall include
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in Section 6.1(a). 
Notwithstanding the foregoing, if such a transaction occurs, in lieu of
causing such rights to be substituted for outstanding Awards, the Committee
may, upon 20 days’ prior written notice to Participants in its sole discretion:
(i) shorten the period during which Awards are exercisable, provided they
remain exercisable, to the extent otherwise exercisable, for at least 20 days
after the date the notice is given, or (ii) cancel an Award upon payment to the
Participant in cash, with respect to each Award to the extent then exercisable,
of an amount which, in the sole discretion of the Committee, is determined to
be equivalent to the amount, if any, by which the Fair Market Value (at the
effective time of the transaction) of the consideration that the Participant
would have received if the Award had been exercised before the effective time
exceeds the exercise price of the Award. 
The actions described in this Section 6.1(b) may be taken without regard
to any resulting tax consequences to the Participant.

(c) 
Grant Date.  Each Award Agreement
shall specify the date as of which it shall be effective (the “Grant Date”).

(d) 
Time of Exercise; Vesting.  Awards
may, in the sole discretion of the Committee, be exercisable or may vest, and
restrictions may lapse, as the case may be, at such times and in such amounts
as may be specified by the Committee in the grant of the Award.

(e) 
Nonassignability of Rights. 
Awards shall not be transferable other than with the consent of the
Committee (which consent will not be granted in the case of ISOs unless the
conditions for transfer of ISOs specified in the Code have been satisfied) or
by will or the laws of the descent and distribution.  Awards requiring exercise shall be
exercisable only by the 

 8
 

Participant, assignees that were approved by the Committee, executors,
administrators or beneficiaries of the Participant (who are the permitted
transferees hereunder), guardians or members of a committee for an incompetent
Participant, or similar persons duly authorized by law to administer the estate
or assets of a Participant.

(f) 
Notice and Payment.  To the extent
it is exercisable, an Award shall be exercisable only by written or recorded
electronic notice of exercise, in the manner specified by the Committee from
time to time, delivered to the Company or its designated agent during the term
of the Award (the “Exercise Notice”). 
The Exercise Notice shall: (i) state the number of shares of Stock with
respect to which the Award is being exercised; (ii) be signed by the holder of
the Award or by the person authorized to exercise the Award pursuant to Section
6.1(e); and (iii) include such other information, instruments and documents as
may be required to satisfy any other condition to exercise set forth in the
Award Agreement.  Except as provided
below, payment in full, in cash or check, shall be made for all shares of Stock
purchased at the time notice of exercise of an Award is given to the Company.  The proceeds of any payment shall constitute
general funds of the Company.  At the
time an Award is granted or before it is exercised, the Committee, in the
exercise of its sole discretion, may authorize any one or more of the following
additional methods of payment:

(i) 
for all Participants other than officers and Directors, acceptance of
each such Participant’s full recourse promissory note for some or all (to the
extent permitted by law) of the exercise price of the Stock being acquired,
payable on such terms and rate of interest as determined by the Committee, and
secured in such manner, if at all, as the Committee shall approve, including,
without limitation, by a security interest in the Stock which are the subject
of the Award or other securities;

(ii) 
for all Participants, delivery by each such Participant of Stock already
owned by such Participant for all or part of the exercise price of the Award
being exercised, provided that the Fair Market Value of such Stock is equal on
the date of exercise to the exercise price of the Award being exercised, or such
portion thereof as the Participant is authorized to pay and elects to pay by
delivery of such shares of Stock;

(iii) 
for all Participants, surrender by each such Participant, or withholding
by the Company from the Stock issuable upon exercise of the Award, of a number
of shares of Stock subject to the Award being exercised with a Fair Market
Value equal to some or all of the exercise price of the Stock being acquired,
together with such documentation as the Committee and the broker, if
applicable, shall require; or

(iv) 
for all Participants, payment may be made pursuant to a cashless
exercise arrangement approved by the Committee.

If the exercise price is satisfied in whole or in part
by the delivery of Stock pursuant to paragraph (ii) above, and provided that
all such Stock have been held by the Participant for at least six months, the
Committee may issue the Participant an additional Option, with terms identical
to those set forth in the option agreement governing the exercised Option,
except for the exercise price which shall be the fair market value used for
such delivery and the number of 

 9
 

shares of Stock subject
to such additional Option shall be the number of shares of Stock so delivered.

(g) 
Termination of Employment from the Company, the Advisor or any Affiliate
of the Company; Removal of a Director for Cause.  Any Award or portion thereof which has not
vested on or before the date of a Participant’s Employment Termination shall
expire on the date of such Employment Termination.  As to an Award or portion thereof that has
vested by the time of Employment Termination, the Committee shall establish, in
respect of each Award when granted, the effect of an Employment Termination on
the rights and benefits thereunder and in so doing may, but need not, make
distinctions based upon the cause of termination (such as retirement, death,
disability or other factors) or which party effected the termination (the
employer or the Employee).  All Awards
granted to a Director whether or not an Employee will lapse on the date the
Director ceases to be a Director of the Company as a result of his removal for
Cause.  Notwithstanding any other
provision in this Plan or the Award Agreement, the Committee may decide in its
discretion at the time of any Employment Termination (or within a reasonable
time thereafter) to extend the exercise period of an Award (but not beyond the
period specified in Section 6.2(b) or 6.3(b), as applicable) and not decrease
the number of shares of Stock covered by the Award with respect to which the
Award is exercisable or vested.  A
transfer of a Participant from the Company to the Advisor or an Affiliate or
vice versa, or from one Affiliate to another, or a leave of absence duly
authorized by the Company, shall not be deemed an Employment Termination or a
break in continuous employment unless the Committee has provided otherwise.

(h) 
Death, Disability or Retirement. 
Any Award or portion thereof which has not vested on or before the date
of the Participant’s death, disability or retirement shall expire on the date
of such Participant’s death, disability or retirement.  As to an Award or portion thereof that has
vested by the date of death, disability or retirement of the Participant, such
Awards or portions thereof must be exercised within two years of the date of
the Participant’s death, disability or retirement by the Participant or a
person authorized under this Plan to exercise such Award.

(i)  Other Provisions.  Each Award Agreement may contain such other
terms, provisions and conditions not inconsistent with this Plan, as may be
determined by the Committee, and each ISO granted under this Plan shall include
such provisions and conditions as are necessary to qualify such Option as an “incentive
stock option” within the meaning of Section 422 of the Code.

(j)  Withholding and Employment
Taxes.  At the time of exercise of an
Award, the lapse of restrictions on an Award or a disqualifying disposition of
shares of Stock issued under an ISO (within the meaning of Section 6.3(c)), the
Participant shall remit to the Company in cash all applicable Federal and state
withholding and employment taxes.  If and
to the extent authorized and approved by the Committee in its sole discretion,
a Participant may elect, by means of a form of election to be prescribed by the
Committee, to have shares of Stock which are acquired upon exercise of an Award
withheld by the Company or tender other shares of Stock owned by the
Participant to the Company at the time that the amount of such taxes is
determined, in order to pay the amount of such tax obligations, subject to any
limitations as the Committee determines are necessary or appropriate.  Any shares of Stock so withheld or 

 10
 

tendered shall
be valued by the Company as of the date they are withheld or tendered.  If shares of Stock are tendered to satisfy
such withholding tax obligation, the Committee may issue the Participant an
additional Option, with terms identical to those set forth in the option
agreement governing the Option exercised, except that the exercise price shall
be the Fair Market Value used by the Company in accepting the tender of shares
of Stock for such purpose and the number of shares of Stock subject to the
additional Option shall be the number of shares of Stock tendered by the
Participant.

(k)  Employee Status.  If the terms of any Award provides that it
may be earned or exercised only during employment or continued service or
within a specified period of time after termination of employment or continued
service, the Committee may decide to what extent leaves of absence for
governmental or military service, illness, temporary disability or other
reasons shall not be deemed interruptions of continuous employment or service.

(l)  Stockholder Rights.  A Participant, as a result of receiving an
Award, shall not have any rights as a stockholder until, and then only to the
extent that, the Award is earned and settled in shares of Common Stock.

6.2  Terms
and Conditions to Which Only NQOs Are Subject. 
Options granted under this Plan which are designated as NQOs shall be
subject to the following terms and conditions:

(a)  Exercise Price.  The exercise price of an NQO shall be
determined by the Committee; provided, however, that the exercise price of an
NQO shall not be less than the Fair Market Value of the Stock subject to the
Option on the Grant Date.

(b)  Option Term.  Unless the Committee specifies an earlier
expiration date at the Grant Date, each NQO shall expire 10 years after the
Grant Date.

6.3  Terms
and Conditions to Which Only ISOs Are Subject.  Options granted under this Plan which are
designated as ISOs shall be subject to the following terms and conditions:

(a)  Exercise Price.  The exercise price of an ISO shall be
determined in accordance with the applicable provisions of the Code and shall in
no event be less than the Fair Market Value of the Stock covered by the ISO at
the Grant Date; provided, however, that the exercise price of an ISO granted to
a Ten Percent Stockholder shall not be less than 110% of such fair market
value.

(b)  Option Term.  Unless an earlier expiration date is
specified by the Committee at the Grant Date, each ISO shall expire 10 years
after the Grant Date; provided, however, that an ISO granted to a Ten Percent
Stockholder shall expire no later than five years after the Grant Date.

(c)  Disqualifying
Dispositions.  If shares of Stock
acquired by exercise of an ISO are disposed of within two years after the Grant
Date or within one year after the transfer of the Stock to the optionee, the
holder of the Stock immediately before the disposition shall promptly notify
the Company in writing of the date and terms of the disposition, shall provide
such other information regarding the disposition as the Company may reasonably
require and shall pay the 

 11
 

Company any
withholding and employment taxes which the Company in its sole discretion deems
applicable to the disposition.

(d)  Termination of
Employment.  Notwithstanding Section
6.1(i), all vested ISOs must be exercised within three months of the Employment
Termination of the optionee, or at any time otherwise permissible in the case
of a Participant who dies within three months of Employment Termination, unless
such Employment Termination is due to the employee’s being disabled (within the
meaning of Section 22(e)(3) of the Code), in which case the ISO shall be
exercised within one year of the Employment Termination, notwithstanding
Section 6.1(i).

6.4  Surrender
of Options.  The Committee, acting in its
sole discretion, may include a provision in an Award Agreement allowing the optionee
to surrender the Option covered by the agreement, in whole or in part in lieu
of exercise in whole or in part, on any date that the Fair Market Value of the
Stock subject to the Option exceeds the exercise price and the Option is
exercisable (to the extent being surrendered). 
The surrender shall be effected by the delivery of the Award Agreement,
together with a signed statement which specifies the number of shares of Stock
as to which the optionee is surrendering the Option, together with a request
for such type of payment.  Upon such
surrender, the optionee shall receive (subject to any limitations imposed by
Rule 16b-3), at the election of the Committee, payment in cash or shares of
Stock, or a combination of the two, equal to (or equal in Fair Market Value to)
the excess of the Fair Market Value of the shares of Stock covered by the
portion of the Option being surrendered on the date of surrender over the
exercise price for such shares of Stock. 
The Committee, acting in its sole discretion, shall determine the form
of payment, taking into account such factors as it deems appropriate.  To the extent necessary to satisfy Applicable
Laws, the Committee may terminate an optionee’s rights to receive payments in
cash for fractional shares of Stock.  Any
Award Agreement providing for such surrender privilege shall also incorporate
such additional restrictions on the exercise or surrender of Options as may be
necessary to satisfy Applicable Law.

7.  Restricted Stock

Restricted Stock
shall be subject to the following terms and conditions:

7.1  Grant.  The Committee may grant one or more Awards of
Restricted Stock to any Participant. 
Each Award of Restricted Stock shall specify the number of shares of
Stock to be issued to the Participant, the date of issuance and the
restrictions imposed on the shares of Stock including the conditions of release
or lapse of such restrictions.  Unless
the Committee provides otherwise, the restrictions shall not lapse earlier than
six months after the date of the Award. 
Pending the lapse of restrictions, certificates evidencing Restricted
Stock (if any) shall bear a legend referring to the restrictions and shall be
held by the Company.  Prior to the
issuance of any Restricted Stock, the Participant receiving such Restricted Stock
shall pay to the Company an amount of cash equal to the exercise price of the
Restricted Stock, which at a minimum shall be the par value per share of
Restricted Stock multiplied by the number of shares of Restricted Stock to be
issued.  The exercise price of Restricted
Stock shall be stated in the applicable Award Agreement.  Upon the issuance of Restricted Stock, the
Participant may be required to furnish such additional documentation or other
assurances as the Committee may require in order to enforce the restrictions
applicable thereto.

 12
 

7.2  Restrictions.  Except as specifically provided elsewhere in
this Plan or the Award Agreement regarding Restricted Stock, Restricted Stock
may not be sold, assigned, transferred, pledged or otherwise disposed of or
encumbered, either voluntarily or involuntarily, until the restrictions have
lapsed and the rights to the shares of Restricted Stock have vested.  The Committee may in its sole discretion
provide for the lapse of such restrictions in installments and may accelerate
or waive such restrictions, in whole or in part, based on service, performance
or such other factors or criteria as the Committee may determine.

7.3  Dividends.  Unless otherwise determined by the Committee,
cash dividends with respect to Restricted Stock shall be paid to the recipient
of the Award of Restricted Stock on the normal dividend payment dates, and
dividends payable in shares of Stock shall be paid in the form of Restricted
Stock having the same terms as the Restricted Stock upon which such dividend is
paid.  Each Award Agreement for Awards of
Restricted Stock shall specify whether and, if so, the extent to which the
Participant shall be obligated to return to the Company any cash dividends paid
with respect to any shares of Restricted Stock which are subsequently
forfeited.

7.4  Forfeiture
of Restricted Stock.  Except to the
extent otherwise provided in the governing Award Agreement, when a Participant’s
Employment Termination occurs, the Participant shall automatically forfeit all Restricted
Stock still subject to restriction.

8.  Stock Appreciation
Rights

The Committee may grant
Stock Appreciation Rights to eligible persons. 
A Stock Appreciation Right shall entitle its holder to receive from the
Company, at the time of exercise of the right, an amount in cash equal to (or,
at the Committee’s discretion, shares of Stock equal in Fair Market Value to)
the excess of the Fair Market Value (at the date of exercise) of a share of
Stock over a specified price fixed by the Committee in the governing Award
Agreement multiplied by the number of shares of Stock as to which the holder is
exercising the Stock Appreciation Right. 
The specified price fixed by the Committee shall not be less than the
Fair Market Value of the shares of Stock on the Grant Date of the Stock
Appreciation Right.  Stock Appreciation
Rights may be granted in tandem with any previously or contemporaneously
granted Option or independent of any Option. 
The specified price of a tandem Stock Appreciation Right shall be the exercise
price of the related Option.  Any Stock
Appreciation Rights granted in connection with an ISO shall contain such terms
as may be required to comply with Section 422 of the Code.

9.  Dividend Equivalent
Rights

9.1  General.  The Committee shall have the authority to
grant Dividend Equivalent Rights to Participants upon such terms and conditions
as it shall establish, subject in all events to the following limitations and
provisions of general application set forth in this Plan.  Each Dividend Equivalent Right shall entitle
a holder to receive, for a period of time to be determined by the Committee, a
payment equal to the periodic dividends declared and paid by the Company on one
share of Stock.  If the Dividend Equivalent
Right relates to a specific Option, the period shall not extend beyond the
earliest of the date the Option is exercised, the date any Stock 

 13
 

Appreciation
Right related to the Option is exercised, or the expiration date set forth in
the Option.

9.2  Rights
and Options.  Each Dividend Equivalent
Right may relate to a specific Option granted under this Plan and may be
granted to the optionee either concurrently with the grant of such Option or at
such later time as determined by the Committee, or each Dividend Equivalent
Right may be granted independent of any Option.

9.3  Payments.  The Committee shall determine at the time of
grant whether payment pursuant to a Dividend Equivalent Right shall be
immediate or deferred and if immediate, the Company shall make payments
pursuant to each Dividend Equivalent Right concurrently with the payment of the
periodic dividends to holders of Common Shares. 
If deferred, the payments shall not be made until a date or the
occurrence of an event specified by the Committee and then shall be made within
30 days after the occurrence of the specified date or event, unless the
Dividend Equivalent Right is forfeited under the terms of the Plan or
applicable Award Agreement.  The
Committee shall also determine in its sole discretion whether any portion of
any payment shall be made in shares of Stock.

9.4  Termination
of Employment.  In the event of
Employment Termination, any Dividend Equivalent Right held by such Participant
on the date of Employment Termination shall automatically be forfeited, unless
otherwise expressly provided by the Committee.

10.  Other Equity-Based Awards

10.1  Grant. 
The Committee may grant one or more Other Equity-Based Awards to any
Participant.  Each Award specify the
number of shares of Common Stock or other equity interests covered by such
awards.

10.2  Terms and Conditions.  The Committee, at the time an Other
Equity-Based Award is made, shall specify the terms and conditions which govern
the award. The terms and conditions of an Other Equity-Based Award may prescribe
that a Participant’s rights in the Other Equity-Based Award shall be
forfeitable, nontransferable or otherwise restricted for a period of time or
subject to such other conditions as may be determined by the Committee, in its
discretion and set forth in the Agreement. Other Equity-Based Awards may be
granted to Participants, either alone or in addition to other awards granted
under the Plan, and Other Stock-Based Awards may be granted in the settlement
of other Awards granted under the Plan.

10.3  Payment or Settlement.  Other Equity-Based Awards valued in whole or
in part by reference to, or otherwise based on, shares of Common Stock, shall
be payable or settled in shares of Common Stock, cash or a combination of
Common Stock and cash, as determined by the Committee in its discretion. Other
Equity-Based Awards denominated as equity interests other than shares of Common
Stock may be paid or settled in shares or units of such equity interests or
cash or a combination of both as determined by the Committee in its discretion.

11.  Compliance with Laws

This Plan, the
granting and vesting of Awards under this Plan, the issuance and delivery of
Stock, and the payment of money or other consideration allowable under this
Plan or under 

 14
 

Awards awarded hereunder
are subject to compliance with all applicable federal and state laws, rules and
regulations (including, but not limited to, state and federal securities laws
and federal margin requirements) and to such approvals by any listing,
regulatory or governmental authority as may, in the opinion of counsel for the
Committee, the Board or the Company, be necessary or advisable in connection
therewith.  Any securities delivered
under this Plan shall be subject to such restrictions, and the person acquiring
such securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Committee, the Board or the Company may
deem necessary or desirable to assure compliance with all applicable legal
requirements.  To the extent permitted by
applicable law, the Plan shall be deemed amended to the extent necessary to
conform to such laws, rules and regulations. 
Nothing in this Plan or in any Award or Award Agreement shall require
the Company to issue any Stock with respect to any Award if, in the opinion of
counsel for the Company, that issuance could constitute a violation of any
Applicable Laws.  As a condition to the
grant or exercise of any Award, the Company may require the Participant (or, in
the event of the Participant’s death, the Participant’s legal representatives,
heirs, legatees or distributees) to provide written representations concerning
the Participant’s (or such other person’s) intentions with regard to the
retention or disposition of the Stock covered by the Award and written
covenants as to the manner of disposal of such Stock as may be necessary or
useful to ensure that the grant, exercise or disposition thereof will not
violate the Securities Act, any other law or any rule of any applicable
securities exchange or securities association then in effect.  The Company shall not be required to register
any Stock under the Securities Act or register or qualify any Stock under any
state or other securities laws.

12.  Employment or Other
Relationship

Nothing in this Plan
or any Award shall in any way interfere with or limit the right of the Company,
the Advisor or any Affiliate of the Company to terminate any Participant’s
employment or status as a consultant or Director at any time, nor confer upon
any Participant any right to continue in the employ of, or as a Director or
consultant of, the Company, the Advisor or any Affiliate of the Company.

13.  Amendment,
Suspension and Termination of this Plan

The Board may at any
time amend, suspend or discontinue this Plan provided that such amendment, suspension
or discontinuance meets the requirements of Applicable Laws, including without
limitation, the requirements for stockholder approval.  Notwithstanding the above, an amendment,
alteration, suspension or discontinuation shall not be made if it would impair
the rights of any Participant under any Award previously granted, without the
Participant’s consent, except to conform this Plan and Awards granted to the
requirements of Applicable Laws.

14.  Liability and
Indemnification of the Committee

No person constituting, or
member of the group constituting, the Committee shall be liable for any act or
omission on such person’s part, including but not limited to the exercise of
any power or discretion given to such member under this Plan, except for those
acts or omissions resulting from such member’s gross negligence or willful
misconduct.  The Company shall indemnify
each present and future person constituting, or member of the group
constituting, the 

 15
 

Committee against, and each person or member of the
group constituting the Committee shall be entitled without further act on his
or her part to indemnity from the Company for, all expenses (including the
amount of judgments and the amount of approved settlements made with a view to
the curtailment of costs of litigation) reasonably incurred by such person in
connection with or arising out of any action, suit or proceeding to the fullest
extent permitted by law and by the Articles of Incorporation and Bylaws of the
Company.

15.  Securities Law
Legends

Certificates of
shares of Stock and Restricted Stock, if issued, may have the following legend
and statements of other applicable restrictions endorsed thereon:

THE SHARES OF
STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE LAWS.  THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD,
PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES
EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN THE SOLE DISCRETION THE ISSUER,
MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER) THAT SUCH OFFER,
SALE, PLEDGE, TRANSFER OR OTHER DISPOSITION WILL NOT VIOLATE ANY APPLICABLE
FEDERAL OR STATE SECURITIES LAWS.

This legend shall not be required for any shares of
Stock issued pursuant to an effective registration statement under the
Securities Act.

16.  Severability

If any provision of
this Plan is held to be illegal or invalid for any reason, that illegality or
invalidity shall not affect the remaining portions of the Plan, but such
provision shall be fully severable and the Plan shall be construed and enforced
as if the illegal or invalid provision had never been included in this
Plan.  Such an illegal or invalid
provision shall be replaced by a revised provision that most nearly comports to
the substance of the illegal or invalid provision.  If any of the terms or provisions of this
Plan or any Award Agreement conflict with the requirements of Applicable Laws,
those conflicting terms or provisions shall be deemed inoperative to the extent
they conflict with Applicable Law.

17.  Effective Date and
Stockholder Approval

This Plan was originally approved by the Company’s
Board on           .  It was approved in that form by the holder of
the Company’s voting Stock on           
(the “Effective Date”).

 16
 

18.  Miscellaneous

18.1  Loans.  An employer may, in its discretion, extend
one or more loans to Employees in connection with the exercise or receipt of an
Award granted under this Plan.  The terms
and conditions of any such loan shall be set by the board of directors of the
employer.

18.2  Forfeiture
Provisions.  Pursuant to its general
authority to determine the terms and conditions applicable to Awards granted
under the Plan, the Committee shall have the right (to the extent consistent
with the applicable exemptive conditions of Rule 16b-3) to provide, in the
terms of an Award Agreement, or by separate written instrument, that (i) any
proceeds, gains or other economic benefit actually or constructively received
by a Participant upon the receipt or exercise of the Award, or upon the receipt
or resale of any Stock underlying such Award, must be paid to the Company, and
(ii) the Award shall terminate and any unexercised portion of such Award
(whether or not vested) shall be forfeited, if (a) Employment Termination
occurs prior to a specified date, or within a specified time period following
receipt or exercise of the Award, or (b) the Participant, at any time, or
during a specified time period, engages in any activity in competition with his
employer or the Company, or which is inimical, contrary or harmful to the
interests of his employer or the Company, as may be further defined from time
to time by the Committee.

18.3  Limitations
Applicable to Section 16. 
Notwithstanding any other provision of this Plan, this Plan, and any
Award granted to any individual who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any amendment
to Rule 16b-3) that are requirements for the application of such exemptive
rule.  To the extent permitted by
applicable law, the Plan shall be deemed amended to the extent necessary to
conform to such applicable exemptive rule.

18.4  Effect
of Plan Upon Other Incentive and Compensation Plans.  The adoption of this Plan shall not affect
any other options or compensation or incentive plans in effect for the
Company.  Nothing in this Plan shall be
construed to limit the right of the Company (i) to establish any other forms of
incentives or compensation for employees of the Company, the Advisor or its
Affiliates, or (ii) to grant or assume options or other rights or awards
otherwise than under this Plan in connection with any proper corporate purpose
including, but not by way of limitation, the grant or assumption of options in
connection with the acquisition by purchase, lease, merger, consolidation or
otherwise of the business, stock or assets of any corporation, partnership,
limited liability company, firm or association.

18.5  Section
83(b) Election Prohibited.  No
Participant may make an election under Section 83(b) of the Code with respect
to any Award granted under this Plan without the Company’s consent.

 17

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