Exhibit 10.1

OPERATING AGREEMENT OF

WO GRAND HOTEL, LLC
(A New Jersey Limited Liability Company)
 

Dated as of June 2, 2005
 
 

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TABLE OF CONTENTS

         
Article I
   
PURPOSES, POWERS AND FORMATION OF THE COMPANY
6
 
Section 1.01
 
Formation
6
 
Section 1.02
 
Purposes and Powers
6
 
Section 1.03
 
Designation of Authorized Persons
6
 
Section 1.04
 
Principal Place of Business
6
 
Section 1.05
 
Registered Office
6
 
Section 1.06
 
Term
6
 
Section 1.07
 
Agent for Service of Process
6
 
Section 1.08
 
Liability to Third Parties
6
Article II
   
MEMBERS; CAPITAL CONTRIBUTIONS
6
 
Section 2.01
 
Member’s Interests.
6
 
Section 2.02
 
Capital Contributions.
6
 
Section 2.03
 
Required Funds; Loans by Members.
6
 
Section 2.04
 
Capital, Profits, Losses and Distributions
6
 
Section 2.05
 
Status of Interests
6
 
Section 2.06
 
No Issuance of Certificates
6
 
Section 2.07
 
Register
6
 
Section 2.08
 
Registered Owner
6
 
Section 2.09
 
Capital Contributions.
6
 
Section 2.10
 
Additional Contributions to Capital.
6

 

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TABLE OF CONTENTS
(continued)
 
Article III
   
Representations and Warranties.
6
 
Section 3.01
 
Representations and Warranties of Wilshire
6
 
Section 3.02
 
Representations and Warranties of Proud Three
6
 
Section 3.03
 
Further Representations and Warranties
6
Article IV
 
 
MANAGEMENT OF THE COMPANY; CONDUCT OF BUSINESS; POWERS; OTHER ACTIVITIES
6
 
Section 4.01
 
Management by the Managing Member
6
 
Section 4.02
 
Termination of the Loans
6
Article V
   
DUTIES OF MEMBERS; RESTRICTIONS ON MEMBERS
6
 
Section 5.01
 
Confidentiality
6
 
Section 5.02
 
Company Property
6
 
Section 5.03
 
Engaging In Other Activities
6
Article VI
 
 
ACCOUNTING PROVISIONS
6
 
Section 6.01
 
Fiscal Year
6
 
Section 6.02
 
Books and Accounts.
6
 
Section 6.03
 
Financial Reports.
6
 
Section 6.04
 
Tax Elections
6
 
Section 6.05
 
Tax Audits.
6
Article VII
   
TRANSFER OF INTERESTS
6
 
Section 7.01
 
Admission of Substitute Members
6
 
Section 7.02
 
Restrictions on Transfers
6
Article VIII
   
DISTRIBUTIONS AND ALLOCATIONS
6
 
Section 8.01
 
Distributions of Net Cash Flow and Net Proceeds.
6
 
Section 8.02
 
Allocation of Net Profits
6
 
Section 8.03
 
Allocation of Net Losses
6
 
Section 8.04
 
Allocation of Net Profits and Net Losses from Net Proceeds or upon liquidation.
6
 
Section 8.05
 
No Return of Distributions
6
 
Section 8.06
 
Allocations between Assignor and Assignee Members
6
 
Section 8.07
 
Deficit Capital Accounts
6
 
Section 8.08
 
Amounts Withheld
6

 

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TABLE OF CONTENTS
(continued)
 
Article IX
   
LIQUIDATION AND TERMINATION OF THE COMPANY
6
 
Section 9.01
 
General.
6
 
Section 9.02
 
Statements on Termination
6
 
Section 9.03
 
Priority on Liquidation
6
 
Section 9.04
 
Distribution of Non-Liquid Assets.
6
 
Section 9.05
 
Deficit upon Liquidation
6
 
Section 9.06
 
Source of Distributions
6
Article X
   
EXCULPATION AND INDEMNIFICATION OF MEMBERS
6
 
Section 10.01
 
Exculpation.
6
 
Section 10.02
 
Indemnification
6
Article XI
   
MISCELLANEOUS PROVISIONS
6
 
Section 11.01
 
Right of First Refusal.
6
 
Section 11.02
 
Call Option.
6
 
Section 11.03
 
Dispute Resolution.
6
 
Section 11.04
 
Applicable Law
6
 
Section 11.05
 
Modification
6
 
Section 11.06
 
Notices
6
 
Section 11.07
 
Captions
6
 
Section 11.08
 
Construction
6
 
Section 11.09
 
Pronouns
6
 
Section 11.10
 
Amendments
6
 
Section 11.11
 
Binding Effect
6
 
Section 11.12
 
Separability
6
 
Section 11.13
 
Further Assurances
6
 
Section 11.14
 
Counterparts
6
 
Section 11.15
 
Consent to Jurisdiction
6

 
Exhibits

     
Exhibit A
 
Description of the Property
Exhibit B
 
Description of the Loans and Mortgages
Exhibit C
 
Definitions
Exhibit D
 
Certificate of Formation
Exhibit E
 
Bargain and Sale Deed with Covenants Against Grantor’s Acts
Exhibit F
 
Assignment of the Loans and Loan Documents
Exhibit G
 
General Assignment and Bill of Sale
Exhibit H
 
Allonge to the Notes
Exhibit I
 
Assignment of Mortgages
Exhibit J
 
Permitted Encumbrances

 
 

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OPERATING AGREEMENT
OF
WO GRAND HOTEL, LLC
 
OPERATING AGREEMENT of WO GRAND HOTEL, LLC dated as of June 2, 2005, by and
among (i) WO GRAND HOTEL, LLC, a New Jersey limited liability company, with
offices at 350 Pleasant Valley Way, West Orange, New Jersey 07052 (the
“Company”); (ii) WILSHIRE ENTERPRISES, INC., a Delaware corporation, with
offices at 1 Gateway Center, Newark, New Jersey 07102 (“Wilshire” or “Managing
Member”); and (iii) PROUD THREE, LLC, a New Jersey limited liability company,
with offices at c/o Herrick, Feinstein LLP, 2 Penn Plaza, Newark, New Jersey
07105, attn: Daniel A. Swick, Esq. (“Proud Three”).

RECITALS

WHEREAS, the Company was formed as a limited liability company pursuant to the
New Jersey Limited Liability Company Act, as amended (the “Act”) on May 2, 2005;

WHEREAS, the Company has been formed to own and operate the real property (and
improvements located thereon) located at 350 Pleasant Valley Way, Township of
West Orange, Essex County, New Jersey, Lot 1428, Block 152.22, as more fully
described on Exhibit A attached hereto (such real property and improvements, the
“Property”) and to manage and further its interests in the Property (the
“Business”); and
 
WHEREAS, Wilshire desires to assign, transfer and convey to the Company all if
its right, title and interest in and to the Property in consideration for its
ownership interest in the Company pursuant to the terms of this Agreement; and

WHEREAS, Wilshire has entered into a certain lease dated March 8, 2001 between
Wilshire, as lessor, and West Orange Hotel Associates, L.L.C. (“WOHA”), as
lessee, covering certain space in the improvements located on the Property (the
“Hotel Lease”); and

WHEREAS, Wilshire has entered into a certain lease dated September 11, 2002
between Wilshire, as lessor, and West Orange Catering Associates, L.L.C.
(“WOCA”), as lessee, covering certain space in the improvements located on the
Property (the “Catering Lease”); and

WHEREAS, Proud Three is the maker of certain loans to WOHA and WOCA as more
fully described on Exhibit B (the “Loans”), which loans are secured by certain
leasehold mortgages and assignment of leases as more fully described on Exhibit
B (the “Mortgages”); and

WHEREAS, pursuant to that certain Forbearance and Settlement Agreement dated as
of June 2, 2005 by and among Proud Three, WOHA, WOCA, et al. (the “Settlement
Agreement”) and effective as of the date of the Settlement Agreement, WOHA and
Wilshire are terminating the Hotel Lease; and

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WHEREAS, pursuant to the Settlement Agreement and effective as of the date of
the Settlement Agreement, WOCA and Wilshire are terminating the Catering Lease;
and

WHEREAS, Proud Three desires to assign, transfer and convey to the Company all
of its rights, title, interests and obligations in, to and under the Loans and
the Mortgages as consideration for its ownership interest in the Company
pursuant to the terms of this Agreement; and

WHEREAS, the Members and the Company desire to enter into this Agreement in
order to state the terms and conditions of the ongoing operation and management
of the Company and the Business; and

WHEREAS, any capitalized terms used herein and not otherwise defined, shall have
the meaning ascribed thereto in Exhibit C attached hereto.

NOW, THEREFORE, in consideration of the premises, the parties hereby agree as
follows:
 
PURPOSES, POWERS AND FORMATION OF THE COMPANY
 
Section 1.01 Formation. The Company was formed pursuant to the Act, upon the
filing of Certificate of Formation with the Treasurer of the State of New Jersey
on May 2, 2005 under the name of “WO GRAND HOTEL, LLC”. A copy of the
Certificate of Formation is attached hereto as Exhibit D.
 
Section 1.02 Purposes and Powers. The Company was formed to conduct the
Business. In connection with the Business, the Company shall have the powers to
engage in all legal activities as shall be necessary or desirable in connection
with or incidental to operating the Business. The Company shall also have the
power to (i) engage in any lawful act or activity for which limited liability
companies may be formed under the Act; (ii) accomplish any lawful business
whatsoever or which shall at any time appear conducive to or expedient for the
protection or benefit of the Company and its assets; and (iii) engage in all
activities necessary, customary, convenient or incident to any of the
foregoing. 
 
Section 1.03 Designation of Authorized Persons. The Members shall, from time to
time, designate one or more “Authorized Persons” as defined in the Act (an
“Authorized Person”), to execute, deliver and file any amendments, restatements,
corrections or cancellation of the Company’s Certificate of Formation and to
perform such other actions on behalf of the Company as authorized by the
Managing Member, all in accordance with the provisions of this Agreement.
 
Section 1.04 Principal Place of Business.The principal place of business of the
Company shall be located at 350 Pleasant Valley Way, West Orange, New Jersey
07052, or at any other place or places as the Managing Member may from time to
time determine.
 
Section 1.05 Registered Office.The Company’s initial registered office in the
State of New Jersey shall be at c/o Greenbaum, Rowe, Smith & Davis LLP, Metro
Corporate Campus I, Woodbridge, New Jersey 07095. The registered office may be
changed from time to time by the Managing Member by filing the address of the
new registered office with the Treasurer of the State of New Jersey pursuant to
the Act.
 
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Section 1.06 Term.The term of the Company commenced on the date its Certificate
of Formation was filed in the office of the Treasurer of the State of New
Jersey, and shall continue until the winding up and liquidation of the Company
and its business is completed as provided in Article IX.
 
Section 1.07 Agent for Service of Process.The registered agent for service of
process on the Company in the State of New Jersey shall be W. Raymond Felton, or
any successor as appointed by the Managing Member.
 
Section 1.08 Liability to Third Parties. The debts, obligations and liabilities
of the Company, whether arising in contract, tort or otherwise, shall be solely
the debts, obligations and liabilities of the Company and no Member shall be
obligated personally for any such debt, obligation or liability of the Company
solely by reason of being a Member of the Company. Except as otherwise provided
in this Agreement, the liability of the Members, as such, shall be limited to
the amount of capital contributions that the Members have made to the Company.
 
ARTICLE II
 
MEMBERS; CAPITAL CONTRIBUTIONS
 
Section 2.01 Member’s Interests. 
 
(a) Subject to the terms of this Agreement, the Managing Member may from time to
time create such classes of Units in the Company, to be designated as the
Managing Member shall determine. The holders of record of such Units shall have
such rights and obligations associated with such Units as are provided herein
and in the resolution, if any, of the Managing Member creating such Units.
 
(b) Until the Managing Member determines otherwise, the interest of each Member
in the Company shall be the number of each class of Units set forth opposite its
name in the chart below, as the same may be adjusted from time to time in
accordance with the terms of this Agreement:
 
MEMBER
 
CLASS A UNITS
 
CLASS B UNITS
Wilshire
 
750
   
Proud Three
     
750

 
Section 2.02 Capital Contributions. 
 
(a) In consideration of its initial 750 Class A Units set forth in Section
2.01(b) above, on the date hereof, Wilshire shall contribute the Property to the
capital of the Company, free and clear of all Encumbrances other than Permitted
Encumbrances (“Wilshire’s Capital Contribution”). In order to properly effect
the transfer of the Property to the Company, Wilshire shall execute and deliver
to the Company, simultaneously with the execution and delivery of this
Agreement, a Bargain and Sale Deed with Covenants Against Grantor’s Acts, in the
form attached hereto as Exhibit E, and such other instruments of transfer and
conveyance in form and substance satisfactory to the Company, as may be required
to vest good and marketable title to the Property in the Company. Wilshire shall
take any further actions (including the execution and delivery of such further
instruments and documents) which are necessary or desirable to effectuate the
transfer of the Property to the Company as the Company or any other Member may
reasonably request.
 
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(b) In consideration of its initial 750 Class B Units set forth in Section
2.01(b) above, Proud Three shall contribute the Loans and the Mortgages to the
capital of the Company, free and clear of all Encumbrances (“Proud Three’s
Capital Contribution”). In order to properly effect the transfer of the Loans
and the Mortgages to the Company, Proud Three shall execute and deliver to the
Company, simultaneously with the execution and delivery of this Agreement, an
Assignment of the Loans and Loan Documents, a General Assignment and Bill of
Sale, an Allonge to the Notes and an Assignment of Mortgage, in the forms
attached hereto as Exhibits F, G, H and I respectively, and such other
instruments of transfer and conveyance in form and substance satisfactory to the
Company, as may be required to vest in the Company all right and privileges
arising under the Loans and the Mortgages. Proud Three shall take any further
actions (including the execution and delivery of such further instruments and
documents) which are necessary or desirable to effectuate the transfer of the
Loans and the Mortgages to the Company as the Company or any other Member may
reasonably request.
 
(c) A Capital Account shall be established for each Member on the books of the
Company. It is understood and agreed that: (i) Wilshire’s initial Capital
Account shall be $7,500,000; and (ii) Proud Three’s initial Capital Account
shall be $7,500,000. The initial amount credited to each Member’s Capital
Account shall be referred to as its “Capital Investment”.
 
Section 2.03 Required Funds; Loans by Members. 
 
(a) The Members acknowledge that funds will be required by the Company to
complete the construction at the Property and to fund certain operating expenses
of the Company (the “Required Funds”). The Members agree that the Managing
Member shall first use reasonable efforts to borrow the Required Funds from a
lending institution on market terms.
 
(b) In the event that: (i) the Managing Member is unable to borrow the Required
Funds in accordance with Section 2.03(a), or (ii) the Managing Member
determines, at any time that additional cash is needed or reasonably required to
enable the Company to conduct its business and affairs, then any such Required
Funds or additional cash may be provided in the nature of a loan to the Company
from any of the Members (“Member Loans”). If the Managing Member in unable to
borrow the Required Funds in accordance with Section 2.03(a) or determines that
any such loan is otherwise needed or reasonably required, the Managing Member
shall offer all of the Members the opportunity to make such a loan by providing
written notice thereof, including all of the terms of such loan to each of the
Members (the “Loan Notice”). If more than one Member desires to make such loan,
such Members shall be entitled to fund up to a portion of such loan pro rata in
accordance with the number of Units owned by the Members (unless the other
Members also desiring to make such loan agree otherwise). Each Member electing
to make such loan shall give written notice of such election to the Managing
Member not later than ten (10) days after receipt of a Loan Notice. Interest
shall accrue and be payable on all Member Loans at a per annum rate as shall be
established by the Managing Member and set forth in the Loan Notice. All Member
Loans shall constitute an obligation and liability of the Company. Unless
otherwise agreed to in writing between the Members and the Company, the Members
shall not have personal obligation or liability for the repayment of Member
Loans and the same shall be collectible only from Company assets. No Member Loan
shall be deemed a contribution to the capital of the Company and Member Loans
shall not in any respect increase a Member’s equity interest or Units in the
Company. Member Loans and any interest accrued thereon shall be repaid
pari-passu to the Member(s) making such loans prior to any distributions being
made to Members under Section 8.01 or Article IX.
 
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Section 2.04 Capital, Profits, Losses and Distributions. Each Unit shall have
such interests in the capital, profits and losses, and distributions of the
Company as provided in this Agreement. 
 
Section 2.05 Status of Interests. The Units issued pursuant to this Agreement
(including additional Units hereafter authorized and issued) shall be deemed to
be fully paid and non-assessable if the entire amount of consideration therefore
has been received by the Company. 
 
Section 2.06 No Issuance of Certificates. A Unit shall not be represented by a
certificate unless otherwise provided by the Managing Member; provided, however,
if the Managing Member elects to certificate any Units, all the Units shall be
so certificated. Any certificate representing a Unit shall have a legend
endorsed thereon and be in the form approved by the Managing Member. 
 
Section 2.07 Register. The Company shall keep a register that shall provide for
the registration and transfer of Units, if the Managing Member reasonably
determines that such register is necessary. In such event, an Authorized Person
shall act as registrar and transfer agent for the purpose of registering Units
and transferring Units.
 
Section 2.08 Registered Owner. The Company shall be entitled to treat the record
holder of any Unit as the Member holding such Unit. The Company shall not be
bound to recognize any equitable or other claim to or interest in such Unit on
the part of any other Person, whether or not the Company shall have actual or
other notice hereof. 
 
Section 2.09 Capital Contributions.
 
(a) Uses of Capital Contributions. Any funds received by the Company pursuant to
this Article II shall be utilized by the Company for Company purposes and for
perpetuating the Business.
 
(b) Withdrawal of Capital. Unless the prior written consent of all of the
Members shall have been obtained and except as provided in Article VIII, no
Member shall have the right to withdraw any part of such Member’s Capital
Account prior to the liquidation and termination of the Company pursuant to
Article IX. This Section shall not in any way limit the ability of the Company
to distribute any or all the Members’ Capital Accounts in accordance with
Article VIII.
 
(c) Source of Distributions of Capital Contributions. No Member nor any of their
respective Affiliates, shall be personally liable for the return of the Capital
Contributions of any other Member, or any portion thereof, it being expressly
understood that any such return shall be made solely from the Company’s assets.
 
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Section 2.10 Additional Contributions to Capital. 
 
(a) The Managing Member may, at any time, or from time to time, determine that
additional capital in excess of prior capital contributions is necessary for the
operation of the Company (a “Capital Call”). In the event of a Capital Call, the
Managing Member shall serve written notice (the “Capital Call Notice”) of such
Capital Call upon each Member. The Capital Call Notice shall set forth: (i) the
amount of additional capital required (the “Capital Call Amount”); (ii) the
specific purpose for the Capital Call Amount; (iii) the number and class of
Units to be issued for the Capital Call Amount; (iv) the preferred return, if
any, on the Units, whether the return shall be cumulative, and, if so, from
which date or dates, and the relative rights of priority, if any, of payment of
the preferred return; (v) whether the Units shall have voting rights, in
addition to the voting rights provided by law, and, if so, the terms of such
voting rights; (vi) the rights of the Units to distributions, whether before or
in connection with the liquidation, dissolution or winding up of the Company,
and the relative rights of priority, if any, of any such payments on Units; and
(vii) any other relative rights, preferences and limitations of the Units. Each
Member may contribute, within thirty (30) days following receipt of the Capital
Call Notice (the “Capital Call Period”), a pro rata amount of the Capital Call
Amount based on the number of Units owned by the Members (as to each Member, the
“Additional Capital”).
 
(b) Within thirty (30) days after the date of the giving of any such Capital
Call Notice, each Member electing to contribute to the Capital Call Amount shall
pay to the Company its pro rata portion of the Capital Call Amount in the manner
directed in the Capital Call Notice as a Capital Contribution. Any Member who
shall fail to make any Capital Contribution to the Company pursuant to this
Section within said thirty (30) day period is herein referred to as a
“Non-Contributing Member”; and any Member who shall make the required Additional
Capital Contribution within said thirty (30) day period is herein called a
“Contributing Member.”
 
(c) If within such thirty (30) timeframe referred to Section 2.10(b) any Member
fails to make its Capital Contribution pursuant to this Section, the Managing
Member shall give notice to all the Members, setting forth (i) the name of the
Non-Contributing Member(s); and (ii) the total of the Capital Contribution which
the Non-Contributing Member(s) failed to contribute to the Company pursuant to
such Capital Call Notice (herein called the “Capital Call Deficit”). Within
fifteen (15) days after the giving of such notice, each Contributing Member
shall have the right (but not the obligation) to contribute a pro rata portion
of the Capital Call Deficit (as same exists at the time of such contribution) as
a Capital Contribution to the Company based upon the number of Units owned by
the Contributing Members (as to each Contributing Member, the “Additional
Capital”).
 
ARTICLE III
 
REPRESENTATINS AND WARRANTIES.
 
Section 3.01 Representations and Warranties of Wilshire. Wilshire hereby
represents and warrants to the Company and each other Member that:
 
(a) Wilshire is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, and it is registered or qualified
to conduct business in all other jurisdictions in which the failure to be so
registered or qualified would materially and adversely affect the ability of
Wilshire to perform its obligations hereunder.
 
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(b) Wilshire has taken all necessary action to authorize the execution, delivery
and performance of this Agreement by Wilshire. This Agreement and all the
obligations of Wilshire hereunder are the legal, valid and binging obligations
of Wilshire enforceable in accordance with the terms of this Agreement, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization or
other laws affecting the enforcement of creditors’ rights generally and by
general principals of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
 
(c) The execution and delivery of this Agreement and the performance by Wilshire
of it obligations hereunder will not conflict with or be in breach by Wilshire
of any material provisions of any law, regulation, judgment, order, decree,
writ, injunction, contract, agreement or instrument to which Wilshire is
subject; and Wilshire has obtained any consent, approval, authorization or order
of any court or governmental agency, if any, required for the execution,
delivery and performance by Wilshire of this Agreement.
 
(d) There is no commenced, or to the Knowledge of Wilshire, threatened
litigation against Wilshire which prohibits Wilshire from contributing the
Property to the Company.
 
(e) Wilshire has good, marketable and insurable (at regular rates) title to the
Property, free and clear of all Encumbrances, other than Permitted Encumbrances.
 
(f) To the Knowledge of Wilshire, there are no lawsuits, claims, suits,
proceedings or investigations pending relating to the Property. To the Knowledge
of Wilshire, there are no injunctions, orders, awards or decrees of any
Governmental Body currently in effect with respect to the Property.
 
(g) To the Knowledge of Wilshire, the buildings and improvements located on the
Property are in compliance with all applicable laws.
 
Section 3.02 Representations and Warranties of Proud Three. Proud Three hereby
represents and warrants to the Company and each other Member that:
 
(a) Proud Three is duly formed, validly existing and in good standing under the
laws of the jurisdiction of its formation, and it is registered or qualified to
conduct business in all other jurisdictions in which the failure to be so
registered or qualified would materially and adversely affect the ability of
Proud Three to perform its obligations hereunder.
 
(b) Proud Three has taken all necessary action to authorize the execution,
delivery and performance of this Agreement by Proud Three. This Agreement and
all the obligations of Proud Three hereunder are the legal, valid and binging
obligations of Proud Three enforceable in accordance with the terms of this
Agreement, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors’ rights
generally and by general principals of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
 
(c) The execution and delivery of this Agreement and the performance by Proud
Three of it obligations hereunder will not conflict with or be in breach by
Proud Three of any material provisions of any law, regulation, judgment, order,
decree, writ, injunction, contract, agreement or instrument to which Proud Three
is subject; and Proud Three has obtained any consent, approval, authorization or
order of any court or governmental agency, if any, required for the execution,
delivery and performance by Proud Three of this Agreement.
 
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(d) There is no commenced, or to the Knowledge of Proud Three, threatened
litigation against Proud Three which prohibits Proud Three from contributing the
Loans and the Mortgages to the Company.
 
(e) Proud Three is the owner and holder of the Loans, the Mortgages and the Loan
Documents and Proud Three has not previously assigned, transferred or conveyed
the Loans or the Mortgages, or any portion thereof or any interest therein, to
any other Person.
 
(f) To the Knowledge of Proud Three, Exhibit B accurately sets forth (i) a
description of each Note including its principal amount and execution date, (ii)
the Obligor of each Note, and (iii) the outstanding amount of the Loans as of
the date hereof.
 
(g) To the Knowledge of Proud Three, the Notes and the other Loan Documents
delivered by Proud Three to the Company prior to the execution of this Agreement
are true, complete and correct copies of the documents they purport to be and
have not been superseded, amended, modified, canceled or otherwise changed. To
the Knowledge of Proud Three, Exhibit B is a true, correct and complete list and
description of all Loan Documents, including, notes (and modifications thereto),
mortgages (and modifications thereto) assignments of leases and rents,
guarantees and UCC-1 financing statements evidencing or securing the Loans.
 
(h) To the Knowledge of Proud Three, the Notes and the other Loan Documents are
the legal, valid and binding obligations of the Obligor thereof, enforceable
against such Obligor in accordance with their terms (a) except as such
enforcement may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors’ rights generally and by
general equity principals (regardless of whether such enforcement is considered
in a proceeding in equity or at law) and (b) except to the extent that the
inability to enforce any particular provision or provisions does not affect the
ability of the holder thereof to foreclose the Loan Documents for any payment
default by the maker or Obligor thereunder or the practical realization of the
intended benefits of the Loan Documents.
 
(i) Proud Three acknowledges that Wilshire is conveying the Property to the
Company: (i) without any representations as to the physical conditions of the
Property, including any improvements thereon, (ii) except as otherwise provided
in this Agreement, without any representations as to the environmental condition
of the Property, including the presence or absence of hazardous materials, or
(iii) without any representations as to the value of the Property. Proud Three
acknowledges that the Company is acquiring the Property as is and that the
Company may be required to incur significant costs in order to improve the
Property to make it suitable for its intended business purpose.
 
Section 3.03 Further Representations and Warranties. Each Member hereby
represents and warrants to the Company that: (a) such Member is acquiring its
interest in the Company for the Member’s own account as an investment and
without an intent to distribute the interest; and (b) such Member acknowledges
that the interests have not been registered under the Securities Act of 1933, as
amended, or any state securities laws, and may not be resold or transferred by
the Member without appropriate registration or the availability of exemption
from such requirements.
 
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ARTICLE IV
 
MANAGEMENT OF THE COMPANY;
 
CONDUCT OF BUSINESS; POWERS; OTHER ACTIVITIES
 
Section 4.01 Management by the Managing Member. Wilshire shall have the right
and power to make, and only the affirmative vote or consent of Wilshire (the
“Managing Member”) shall be required for, all significant decisions (being a
decision which may have important ramifications for the Company and the value of
its assets) concerning the Business or the Company, including, but not limited
to, the following: 
 
(a) commencing any business or line of business which is inconsistent with the
Business or making any fundamental changes to the nature of the Business;
 
(b) requesting that the Members make additional capital contributions pursuant
to Section 2.10 hereof and amending this Agreement to take account of any
additional Units issued in connection with such additional capital
contributions;
 
(c) incurring any indebtedness or otherwise borrowing any money;
 
(d) loaning any money, guaranteeing the payment of any money or debt of another
Person, guaranteeing the performance of any other obligation of another Person
or indemnifying any other Person against any losses or damages or costs except
as incurred in the ordinary course of the Company’s business;
 
(e) filing a voluntary petition by the Company pursuant to Title11 of the U.S.
Code;
 
(f) admitting a new member or otherwise issuing or selling additional Units in
the Company or any security, warrant, option or right (whether contingent or
otherwise) to purchase or acquire any Unit in the Company (collectively,
“Subsequent Securities”) to any Person and amending this Agreement to take
account of Subsequent Securities issued in connection with such admission,
issuance or sale; provided, however that the Members shall have the right, pro
rata in accordance with the number of Units owned by the Members, to subscribe
(within a thirty (30) day period following receipt of notice of such issuance or
sale from the Managing Member) for such Subsequent Securities on the same terms
and conditions as proposed to be sold or issued by the Managing Member;
 
(g) making capital expenditures;
 
(h) retaining or discharging any manager which performs day-to-day operations,
asset management services and/or construction management services to the Company
and amending or terminating any agreement relating thereto to which the Company
is a party;
 
(i) changing the accounting principles used by the Company or adopting any
material changes to the Company's financial reporting practices, procedures or
standards, except to the extent required by generally accepted accounting
principles;
 
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(j) retaining an accounting firm and any other professional advisors;
 
(k) entering into any transactions between the Company and its Members or their
Affiliates;
 
(l) acquiring all or substantially all of the assets of, or acquiring a
controlling interest in, any other Person;
 
(m) amending the Certificate of Formation;
 
(n) entering into any contract or arrangement or executing any document
involving payments by the Company, or the terminating or amending such contract
or arrangement;
 
(o) entering into any material agreements not in the ordinary course including,
without limitation, any non-compete or non-solicitation agreement, or any
confidentiality agreement which directly or indirectly binds or affects any
Member;
 
(p) settling or defending any legal or regulatory action, or commencing any
legal action, on behalf of the Company, or releasing, compromising, assigning or
transferring any material claims or material rights of the Company;
 
(q) making capital contributions and/or loans to any other Person;
 
(r) subject to Section 11.02(e), selling, transferring, conveying, leasing,
mortgaging, refinancing, pledging or otherwise disposing or encumbering the
Property or any portion thereof;
 
(s) merging, consolidating or reorganizing the Company with any other Person;
 
(t) entering into any joint venture, partnership or similar arrangement with any
other Person;
 
(u) voluntarily liquidating or dissolving the Company; or
 
(v) any other decisions reserved to the Managing Member pursuant to this
Agreement.
 
Section 4.02 Termination of the Loans. Simultaneously with, or promptly
following, the contribution of the initial Capital Investments to the Company,
the Company shall: (i) cancel the Loans, (ii) cause the Mortgages to be
discharged, (iii) cause the UCCs set forth on Exhibit B to be terminated, and
(iv) cause the guarantees set forth on Exhibit B to be terminated.
 
ARTICLE V
 
DUTIES OF MEMBERS; RESTRICTIONS ON MEMBERS
 
Section 5.01 Confidentiality. Each Member, on behalf of such Member and such
Member’s Affiliates, covenants and agrees that such Member and such Member’s
Affiliates shall retain in strict confidence, and shall not use for any purpose
whatsoever, or divulge, disseminate or disclose to any third party (other than
in furtherance of the business purposes of the Company or as may be required by
law, including without limitation any securities law applicable to such Member
or Member’s Affiliate) all proprietary or confidential information relating to
the Company’s Business or the Company’s investments or activities. The
provisions of this Section 5.01 shall survive and continue to bind the Company’s
Members notwithstanding any Member ceasing to be a Member of, or otherwise
affiliated with, the Company.
 
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Section 5.02 Company Property. All confidential and proprietary information of
the Company shall be the exclusive property and proprietary rights of the
Company, and to the extent any Member has participated in the development
thereof, such Member shall assign all such rights to the Company and such
Member’s work effort shall be considered “works for hire” for the Company.
 
Section 5.03 Engaging In Other Activities. Notwithstanding any provision
contained in this Agreement to the contrary, each Member may engage in, invest
in, participate in or otherwise enter into other business ventures of any kind,
nature and description, alone or with others, including, without limitation, the
acquisition, ownership, financing, leasing, operation, management or development
of any interests in any business or asset, and neither the Company nor any other
Member shall have any right in or to any such activities or the income or
profits derived therefrom. 
 
ARTICLE VI
 
ACCOUNTING PROVISIONS
 
Section 6.01 Fiscal Year. The fiscal and taxable year of the Company shall end
on December 31 of each calendar year, unless otherwise determined by the
Managing Member (“Fiscal Year”).
 
Section 6.02 Books and Accounts.
 
(a) Books and accounts shall be kept and maintained by the Company at the
principal place of business of the Company or such other place as the Managing
Member may determine. Such books and accounts shall be kept in accordance with
generally accepted accounting principals and shall include a separate Capital
Account for each Member. The Company’s books and records shall also include a
list of the name and address of each Member, the number and class of Units held
by each Member, which information shall be updated by the Company to reflect all
issuances, redemptions and transfers of Units. Each Member or its duly
authorized representative, at its own expense, may at all reasonable times by
appointment during business hours upon reasonable notice have access to, and may
inspect and make copies of, such books and accounts of the Company.
 
(b) All funds received by the Company shall be deposited in the name of the
Company or a designee or agent of the Company in such bank account or other
accounts as the Managing Member may designate from time to time, and withdrawals
therefrom shall be made upon the signature of an Authorized Person of the
Company as the Members may designate from time to time.
 
Section 6.03 Financial Reports.
 
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(a) The Company shall cause to be prepared at the Company’s expense, and shall
deliver to each Member the following reports:
 
(i) Within the period required by the Code after each Fiscal Year, all
information required to be provided to each Member for the preparation of such
Member’s federal income tax returns (i.e., Form K-1 or a reasonable substitute
therefore);
 
(ii) Within 60 days after March 31, June 30, September 30 and December 31, the
Company shall provide to each Member an unaudited balance sheet, income
statement and statement of cash flow as of the end of and for the immediately
preceding three month period;
 
(iii) Within 90 days after the end of each Fiscal Year, the Company shall
provide to each Member a balance sheet, income statement and statement of cash
flows, each prepared in accordance with generally accepted accounting principals
as of and for the annual period ending the last day of the immediately preceding
Fiscal Year.
 
No cause of action may be maintained against the Company or any Member for any
delay in provision of reports and returns referred to in this Section 6.03 due
to the delay of the Company’s independent public accountants or any other reason
not under the control of the Company.
 
Section 6.04 Tax Elections. The Company, at the request of any Member, shall
make an election pursuant to the provisions of Code Section 754. Any other
elections required or permitted to be made by the Company under the Code shall
be made by Wilshire.
 
Section 6.05 Tax Audits.
 
(a) Wilshire (or such other Person designated by the Members) shall serve as the
tax matters partner for the Company pursuant to Code Section 6231 and the
Treasury Regulations promulgated thereunder (the “Tax Matters Partner”). Each
Member by the execution hereof consents to Wilshire serving as the Tax Matters
Partner and agrees to execute, certify, acknowledge, deliver, swear to, file and
record at the appropriate public offices such documents as may be necessary or
appropriate to evidence such consent. To the extent and in the manner provided
by applicable law and regulations, the Tax Matters Partner shall furnish the
name, address, profits interest, and taxpayer identification number of each
Member to the Secretary of the Treasury or his delegate (the “Secretary”). The
Tax Matters Partner shall keep the Members informed of any final administrative
or judicial determination regarding the adjustment at the Company level of any
item required to be taken into account by a Member for income tax purposes (such
administrative determination referred to hereinafter as a “tax audit” and such
judicial determination referred to hereinafter as “judicial review”).
 
(b) The Tax Matters Partner may take any of the following actions:
 
(i) to enter into any settlement with the Internal Revenue Service or the
Secretary with respect to any tax audit or judicial review, in which the Tax
Matters Partner may expressly state that such agreement binds the Members;
 
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(ii) in the event that a notice of a final partnership administrative adjustment
at the Company level of any item required to be taken into account by a Member
for tax purposes (a “final adjustment”) is mailed to the Tax Matters Partner, to
seek judicial review of such final adjustment, including the filing of a
petition for readjustment with the Tax Court, the District Court of the United
States for the district in which the Company’s principal place of business is
located, or the United States Court of Federal Claims;
 
(iii) to intervene in any action brought by any Member for judicial review of a
final adjustment (for purposes of this clause (iii), the consent of all Members
other than the Member that brought such action shall be required for the Tax
Matters Partner to intervene in such action);
 
(iv) to file a request for an administrative adjustment with the Secretary at
any time and, if any part of such request is not allowed by the Secretary, to
file a petition for judicial review with respect to such request;
 
(v) to enter into an agreement with the Internal Revenue Service to extend the
period for assessing any tax which is attributable to any item required to be
taken into account by a Member for tax purposes, or an item affected by such
item; and
 
(vi) to take any other action on behalf of the Members of the Company in
connection with any administrative or judicial tax proceeding to the extent
permitted by applicable law or regulations.
 
(c) The Company shall indemnify and reimburse the Tax Matters Partner for all
expenses, including legal and accounting fees, claims, liabilities, losses, and
damages incurred in connection with any administrative or judicial proceeding
with respect to the tax liability of the Members. The payment of all such
expenses shall be made before any distributions are made to Members or any
discretionary reserves are set aside by the Members. The taking of any action
and the incurring of any expense by the Tax Matters Partner in connection with
any such proceeding, except to the extent required by law, is a matter in the
sole discretion of the Tax Matters Partner and the provisions on limitations of
liability and indemnification set forth herein shall be fully applicable to the
Tax Matters Partner in its capacity as such.
 
ARTICLE VII
 
TRANSFER OF INTERESTS
 
Section 7.01 Admission of Substitute Members. Any Person who shall have acquired
all or any portion of the Units of one or more Members pursuant to a written
assignment shall be admitted to the Company as a substitute member (provided
that the provisions of this Article VII shall have been complied with) and shall
be deemed, and have all the right and obligations of, a “Member” under this
Agreement, except as otherwise expressly provided in this Agreement.
 
Section 7.02 Restrictions on Transfers. No Member shall sell, transfer, assign,
gift, pledge, hypothecate, grant a security interest in or otherwise encumber,
or transfer (a “Transfer”) all or any portion of such Member’s Units, except
upon receipt by such Member of the written consent to such Transfer from all
other Members, which consent may be granted or withheld by a Member, in such
Member’s sole and absolute discretion. Notwithstanding the foregoing, Proud
Three may transfer its Units to the Siggi B. Wilzig Trust without the consent of
any other Member. Nothing in this Section 7.02 shall be deemed to prohibit the
Transfer of all or any portion of the issued and outstanding shares of stock of
Wilshire.
 
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ARTICLE VIII
 
DISTRIBUTIONS AND ALLOCATIONS
 
Section 8.01 Distributions of Net Cash Flow and Net Proceeds. 
 
(a) Except as otherwise required by this Agreement (including, without
limitation Section 2.03) and subject to the making of the Tax Distributions
pursuant to Section 8.01(b) below, Net Cash Flow and Net Proceeds shall be
distributed at such times as the Managing Member shall determine, as follows:
 
(i) First, to the Member owning Class A Units, until such Member shall have
received payment of an amount equal to such Member’s unreturned Capital
Investment.
 
(ii) Second, to the Member owning Class B Units, until such Member shall have
received payment of an amount equal to such Member’s unreturned Capital
Investment.
 
(iii) Third, pari passu (equal in priority) as follows:
 
fifty percent (50%) to the Member owning Class A Units; and
 
fifty percent (50%) to the Member owning Class B Units.
 
(b) In preference to any other distributions pursuant to this Section 8.01, the
Managing Member shall cause the Company to distribute cash of the Company to the
Members holding Class A Units and Class B Units, on a quarterly (or other
reasonable) basis, at least sufficient for each such Member to meet such
Member's required federal, state and local income tax payments in respect of
such Member's allocable share of the Company’s taxable income for the current or
the prior fiscal year calculated at the marginal tax rates applicable to the
Member with the highest marginal tax rate (which tax payments shall include (i)
estimated tax payments in respect of the current fiscal year and (ii) any
remaining payments of income tax on account of the prior fiscal year not funded
out of Tax Distributions in respect of estimated payments for such prior fiscal
year) (the “Tax Distributions”). For purposes hereof, if a Member is a
“pass-through” entity for income tax purposes, the Tax Distributions required
hereby shall be calculated by deeming the owners of such Member to be the Member
hereunder.
 
(c) Notwithstanding Section 8.01(a) to the contrary, in the event that prior to
the exercise of the Call Option by Proud Three pursuant to Section 11.02 of this
Agreement and the occurrence of the Call Option Closing, Jeffrey T. Masessa
(“Masessa”) exercises the Masessa Call Option pursuant to the terms and
conditions of that certain Agreement dated the date of this Agreement by and
among the Members, the Company and Masessa (the “Masessa Rights Agreement”) and
the Masessa Call Option Closing (as defined in the Masessa Rights Agreement)
occurs, then: (i) fifty percent (50%) of the Base Purchase Price (as defined in
the Masessa Rights Agreement) shall be allocated and distributed to Wilshire;
(ii) fifty percent (50%) of the Base Purchase Price shall be allocated and
distributed to Proud Three; (iii) the Wilshire Additional Capital (as defined in
the Masessa Rights Agreement shall be allocated and distributed to Wilshire; and
(iv) the Proud Three Additional Capital (as defined in the Masessa Rights
Agreement) shall be allocated and distributed to Proud Three.
 
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(d) In the event that Masessa exercises the Call Option pursuant to the terms
and conditions of the Masessa Rights Agreement and the Masessa Call Option
Closing occurs after the occurrence of the Call Option Closing pursuant to
Section 11.02 of this Agreement, then the Company agrees to pay to Wilshire the
sum of $1,125,000.
 
(e) In the event that Proud Three exercises the Call Option pursuant to Section
11.02 during the First Year (as defined in Section 11.02) and: (i) during the
period commencing on the date of the Call Option Closing and the date that is
one (1) year thereafter, the Company enters into a binding contract to sell the
Property (a “Binding Contract”), and (ii) the amount of the Net Distributions
(as hereinafter defined) from the closing of the sale of the Property pursuant
to the Binding Contract is greater than $10,500,000 (the “Target Net
Distributions”), then the Company agrees to pay to Wilshire at the closing of
the sale of the Property, an amount equal to fifty percent (50%) of the Net
Distributions in excess of the Target Net Distributions. For purposes of this
Section 8.01(e), the term “Net Distributions” means: (i) the Net Proceeds of
such sale, minus (ii) the aggregate amount of all additional capital
contributions made by Proud Three (or any Affiliate of Proud Three) to the
Company.
 
(f) In the event that the Company sells the Property during the Black Out Period
for an amount equal to or greater than the Release Price, then the Company
agrees to pay over and distribute the Net Proceeds thereof to the Members as
follows: (i) fifty percent (50%) of the Base Release Price shall be allocated
and distributed to Wilshire; (ii) fifty percent (50%) of the Base Release Price
shall be allocated and distributed to Proud Three; (iii) the Wilshire Additional
Contributions shall be allocated and distributed to Wilshire; and (iv) the Proud
Three Additional Contributions shall be allocated and distributed to Proud
Three.
 
Section 8.02 Allocation of Net Profits. Net Profits (other than from Net
Proceeds or upon liquidation) shall be allocated to the Members owning Class A
Units and Class B Units, pari passu (equal in priority), pro rata in accordance
with the number of Units owned by such Members.
 
Section 8.03 Allocation of Net Losses. Net Losses (other than from Net Proceeds
or upon liquidation) shall be allocated to the Members owning Class A Units and
Class B Units, pari passu (equal in priority), pro rata in accordance with the
number of Units owned by such Members.
 
Section 8.04 Allocation of Net Profits and Net Losses from Net Proceeds or upon
liquidation.
 
Net Profits and Net Losses from Net Proceeds or upon liquidation shall be
allocated among the persons who were Members during such period in a manner that
will reduce, proportionately, the differences between their respective
Partially-adjusted Capital Accounts and Target Capital Accounts for such period.
No portion of the Net Losses for any fiscal year shall be allocated to a Member
whose Target Capital Account is greater than or equal to its Partially-adjusted
Capital Account for such fiscal year. No portion of the Net Profits for any
period shall be allocated to any Member whose Partially-adjusted Capital Account
is greater than or equal to its Target Capital Account for such period. For the
purpose hereof, “Partially-adjusted Capital Account” means, with respect to any
Member for any period, the Capital Account of such Member at the beginning of
such period, adjusted for all contributions and distributions made during such
period and all special allocations pursuant to Section 8.04 with respect to such
period, but before giving effect to any allocations of Net Profits or Net Losses
for such period made pursuant to this Section 8.04. For the purpose hereof, the
“Target Capital Account” of a Member for a period shall be an amount (which may
be either a positive or a deficit balance) equal to:
 
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(i) the amount of the hypothetical distribution (if any) that such Member would
receive if, on the last day of such fiscal year, (A) all assets of the Company,
including cash, were sold for cash equal to their book values, taking into
account any adjustments thereto for such fiscal year, (B) all liabilities of the
Company were satisfied by the payment of cash according to their terms (limited,
with respect to each nonrecourse liability, to the book values of the assets
securing such liability), and (C) the net proceeds thereof (after satisfaction
of such liabilities) were distributed in full pursuant to Section 9.03, less
 
(ii) the sum of (A) the amount, if any, without duplication, that such Member
would be obligated to contribute to the capital of the Company pursuant to any
provision of this Agreement, (B) such Member’s share of Company Minimum Gain
determined pursuant to Section 1.704-2(g), and (C) such Member’s share of Member
Nonrecourse Debt Minimum Gain determined pursuant to Regulations Section
1.704-2(j), all calculated immediately prior to the hypothetical sale described
in Section 8.04(a)(i) hereof.
 
(b) Determination of Items Comprising Allocations of Net Profits and Net Loss:
 
(i) If the Company has Net Profits for a period,
 
(A) for any Member whose Capital Account balance should be reduced by reason of
the application of Section 8.04(a) above, the allocation required by Section
8.04(a) shall consist of a proportionate share (based upon the relative amounts
of the reductions in the Capital Account balances of all Members whose Capital
Account balances then should be reduced by reason of the application of Section
8.04(a) of each of the Company’s items of expense or loss entering into the
computation of Net Profits for such period to the extent necessary to eliminate
to the maximum extent possible for the period in question, the difference
between the Partially-adjusted Capital Account and the Target Capital Account of
such Member; and
 
(B) the allocation pursuant to Section 8.04(a) hereof in respect of each Member
(other than a Member referred to in Section 8.04(b)(i) above) shall consist of a
proportionate share (based upon the relative amounts of the increases of the
Capital Account balances of all Members (other than Members referred to in
Section 8.04(b)(i) above) of each item of income, gain, expense and loss
entering into the computation of Net Profits for such period (other than the
portion of each item of expense or loss, if any, that is allocated pursuant to
Section 8.04(a)).
 
(ii) If the Company has Net Loss for a period,
 
(A) for any Member whose Capital Account balance needs to be increased pursuant
to Section 8.04(a) hereof, the allocation required by Section 8.04(a) shall
consist of a proportionate share (based upon the relative amounts of the
increases in the Capital Account balances of all Members whose Capital Account
balances then should be reduced by reason of the application of Section 8.04(a))
of each of the Company’s items of income and gain entering into the computation
of Net Loss for such period to the extent necessary to eliminate to the maximum
extent possible for the period in question, the difference between the
Partially-adjusted Capital Account and the Target Capital Account of such
Member; and
 
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(B) the allocation pursuant to Section 8.04(a) hereof in respect of each Member
(other than a Member referred to in Section 8.04(b)(ii)(A) above) shall consist
of a proportionate share (based upon the relative amounts of the reductions of
the Capital Account balances of all Members (other than Members referred to in
Section 8.04(b)(ii)(A)) of each Company item of income, gain, expense and loss
entering into the computation of Net Loss for such period (other than the
portion of each Company item of income and gain, if any, that is allocated
pursuant to Section 8.04(a)).
 
(c) To the maximum extent possible in each fiscal year, the items of taxable
income and gain that are required to be specially allocated among any Members
who should be allocated items of expense and loss entering into the computation
of Net Profit under Section 8.04(a) shall be allocated among them in the same
proportion as the total of all items of expense or loss entering into the
computation of Net Profit that should be allocated among them under Section
8.04(a). Correspondingly, to the maximum extent possible in each period, the
items of tax-deductible items of expense and loss that are required to be
specially allocated among all Members who need to be allocated items of expense
and loss entering into the computation of Net Loss under Section 8.04(a) shall
be allocated among them in the same proportion as the total of all items of
income or gain entering into the computation of Net Loss that should be
allocated among them under Section 8.04(a). The purpose of this subsection is to
assure that such taxable and tax-deductible items are fairly allocated among the
Members in each period.
 
(d) Notwithstanding anything to the contrary contained in this Section 8.04, in
the event that the Masessa Call Option Closing occurs and the Net Proceeds are
distributed to the Members pursuant to Section 8.01(c) hereof or in the event
that the Property is sold during the Black Out Period and the Net Proceeds are
distributed to the Members pursuant to Section 8.01(f) hereof, then Net Profits
shall be allocated:
 
(i) Fifty percent (50%) to Wilshire; and
 
(ii) Fifty percent (50%) to Proud Three.
 
Section 8.,05 No Return of Distributions. No Member shall have any obligation to
refund to the Company any amount that shall have been distributed to such Member
pursuant to this Agreement, subject, however, to applicable law.
 
Section 8.06 Allocations between Assignor and Assignee Members. In the case of a
Transfer, the assignor and assignee shall each be entitled to receive
distributions of Net Cash Flow and allocations of Net Profits or Net Losses and
Nonrecourse Deductions as follows:
 
(a) Unless the assignor and assignee agree to the contrary and shall so provide
in the instrument effecting the Transfer, distributions shall be made to the
Person owning the Units on the date of the distribution; and
 
(b) Net Profits or Net Losses and Nonrecourse Deductions shall be allocated by
the number of days of the periods each Person held the Units; provided that Net
Profits or Net Losses attributable to a Capital Transaction shall be allocated
to the member owning the Units when a recognition event occurred for federal
income tax purposes.
 
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Section 8.07 Deficit Capital Accounts. Except as otherwise provided herein or
under the Act, no Member shall be required at any time to make up any deficit in
such Member’s Capital Account.
 
Section 8.08 Amounts Withheld. All amounts withheld pursuant to the Code or any
provisions of state or local tax law with respect to any payment or distribution
to the Company or to the Members or any allocation of taxable income to the
Company or the Members shall be treated as amounts distributed to the Members
pursuant to this Article for all purposes under this Agreement. The Company is
authorized to withhold from distributions, or with respect to allocations, to
the Members and to pay over any federal, state or local government any amounts
required to be withheld pursuant to the Code or any provisions of any other
federal, state or local law and shall allocate such amounts to the Members with
respect to whom such amounts were withheld. If the amount required to be
withheld with respect to a Member exceeds the amount which otherwise would have
been distributed to such Member, such Member shall pay to the Company the amount
of such excess within five days after the giving of written demand therefore by
the other Member(s). If such Member (herein called a “Delinquent Member”) shall
fail to pay such excess within said five day period, then (i) interest shall
accrue thereon at or equal to the lesser of 24% per annum or the maximum rate
permitted by law, (ii) such excess amount together with interest accrued thereon
as aforesaid shall be a lien upon the Units of the Delinquent Member in favor of
the Company and may be recovered from the first distributions to which the
Delinquent Member would otherwise have been entitled from the Company until such
excess amount is fully repaid together with interest thereon as aforesaid, and
(iii) the Company, in addition to and without limiting any of its other rights
and remedies, may institute an action against the Delinquent Member for
collection of such excess amount and interest; in any such action, the Company
shall be entitled to recover, in addition to such excess amount and interest,
all reasonable attorneys’ fees, disbursements and court costs incurred by the
Company in connection with its efforts to collect the amounts due from such
Delinquent Member. In addition, such Delinquent Member shall indemnify and hold
harmless the Company and each of the other Members and the employees of the
Company from all liabilities, losses, costs and expenses, including, without
limitation, penalties imposed by the Internal Revenue Service or any state or
local taxing authority, for failure to remit the required amount of taxes to the
appropriate governmental authority.
 
ARTICLE IX
 
LIQUIDATION AND TERMINATION OF THE COMPANY
 
Section 9.01 General. 
 
(a) The Company shall be dissolved and its affairs shall be wound up upon the
first to occur of any of the following (the “Termination Date”):
 
(i) The vote or written consent of Wilshire;
 
(ii) The entry of a decree of judicial dissolution under Section 42:2B-49 of the
Act; or
 
(iii) Any other event requiring the dissolution of the Company pursuant to
applicable law.
 
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(b) From and after the Termination Date, the Company shall be dissolved and its
affairs shall be wound up in accordance with this Article and the Act. The
dissolution and the winding up of the Company’s affairs shall be conducted and
supervised by the Managing Member, or if the Managing Member is unable to
conduct and supervise the dissolution and winding up of the Company, by an
Authorized Person (such Authorized Agent being herein referred to as the
“Liquidating Agent”). The Liquidating Agent shall have all the rights and powers
with respect to the assets and liabilities of the Company in connection with the
dissolution, winding up and termination of the Company that the Members have
with respect to the assets and liabilities of the Company. Without limiting the
foregoing, the Liquidating Agent is hereby expressly authorized and empowered to
execute and deliver any and all documents necessary or desirable to effectuate
the liquidation and termination of the Company and to transfer any asset or
liability of the Company. The Liquidating Agent shall have the right from time
to time, by revocable powers of attorney, to delegate to one or more Persons any
or all of such rights and powers and such authority and power to execute and
deliver documents, and, in connection therewith, to fix the reasonable
compensation of each such Person, which compensation shall be charged as an
expense of liquidation. The Liquidating Agent is also expressly authorized to
distribute the Company’s property to the Members, which property may be subject
to liens.
 
Section 9.02 Statements on Termination. Each Member shall be furnished with a
statement prepared by the Company’s independent certified public accountant
setting forth the assets and liabilities of the Company as of the date of the
complete liquidation of the Company, and each Member’s share thereof or interest
therein. Upon compliance with the distribution plan of the Company adopted by
the Members, the Units in the Company shall represent only an unsecured right to
receive the net proceeds of liquidation in accordance with this Article, and the
Liquidating Agent shall cause to be filed with the Treasurer of the State of New
Jersey the Certificate of Cancellation of the Company or any applicable form
with similar effect in each state in which the Company is qualified to do
business.
 
Section 9.03 Priority on Liquidation. The Liquidating Agent shall, to the extent
feasible, liquidate the marketable assets of the Company as promptly as
practicable. To the extent the proceeds are sufficient therefore, as the
Liquidating Agent shall deem appropriate, the proceeds of such liquidation shall
be applied in the following order of priority:
 
(a) To pay the reasonable costs and expenses of the liquidation and termination;
 
(b) To pay the matured or fixed debts and liabilities of the Company (including,
without limitation, all Member Loans);
 
(c) To establish any reserve that the Liquidating Agent may deem necessary for
any contingent, unmatured or unforeseen liability of the Company; and
 
(d) The balance, if any, shall be distributed to the Members in the same manner
that Net Proceeds are distributable pursuant to Section 8.01.
 
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Section 9.04 Distribution of Non-Liquid Assets. 
 
(a) If after the Termination Date the Liquidating Agent shall determine that it
is not practicable to liquidate all the assets of the Company (pursuant to the
exercise of its discretion in accordance with Section 9.03 with respect to
assets that are illiquid or are not marketable, or otherwise), then the
Liquidating Agent shall distribute such assets as follows:
 
(i) The Liquidating Agent shall cause the Company to retain assets having a fair
market value equal to the amount, if any, by which the net proceeds of
liquidated assets are insufficient to satisfy the debts and liabilities of the
Company (other than any debt or liability for which neither the Company nor any
Member is personally liable), to pay the costs and expenses of the dissolution
and liquidation, and to establish reserves, all subject to the provisions of
Section 9.03. The foregoing shall not be construed, however, to prohibit the
Liquidating Agent from distributing, pursuant to Section 9.04(b), property
subject to liens.
 
(ii) The remaining assets shall be distributed to the Members by way of
undivided interests therein in such proportions as shall be equal to the
respective amounts to which each Member is entitled pursuant to Section 9.03(d).
If, in the judgment of the Liquidating Agent, it shall not be practicable to
distribute to each Member an undivided share of each asset, the Liquidating
Agent may allocate and distribute specific assets to one or more Members as
tenants-in-common as the Liquidating Agent shall determine to be fair and
equitable, taking into consideration, inter alia, the basis for tax purposes of
each asset distributed. Without limiting the foregoing the Liquidating Agent may
transfer assets to a liquidating trust in which each Member shall receive an
interest with rights to distributions equivalent to its rights pursuant to
Section 9.03.
 
(b) Nothing contained in this Article or elsewhere in this Agreement is intended
to cause any in-kind distributions to be treated as sales for value.
 
Section 9.05 Deficit upon Liquidation. Upon liquidation, no Member shall be
liable to the Company for any deficit in its Capital Account, nor shall such
deficit be deemed an asset of the Company, other than to the extent required by
law.
 
Section 9.06 Source of Distributions. No Member shall be personally liable for
the return of the capital contributions of any other Member, or any portion
thereof, it being expressly understood that any such return shall be made solely
from Company assets. 
 
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ARTICLE X
 
EXCULPATION AND INDEMNIFICATION OF MEMBERS
 
Section 10.01 Exculpation.
 
(a) No Member nor any Affiliate of any Member (collectively, the “Related
Group”) shall have any personal liability to the Company or the Members for
damages for any breach of duty in such capacity, provided that nothing in this
Section 10.01 shall eliminate or limit the liability of any person within the
Related Group if a judgment or other final adjudication adverse to such person
establishes: (i) that such acts were the result of active and deliberate
dishonesty and were material to the cause of action so adjudicated; or (ii) that
such person personally gained in fact a financial profit or other advantage to
which such person was not legally entitled. The termination of a proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that: (x) such acts were
committed in bad faith or were the result of active and deliberate dishonesty
and were material to the cause of action so adjudicated; or (y) such Person
personally gained in fact a financial profit or other advantage to which such
Person was not legally entitled (unless there has been a final adjudication in
the proceeding that such is the case).
 
(b) Notwithstanding any of the foregoing to the contrary, the provisions of this
Section 10.01 shall not be construed so as to relieve (or attempt to relieve)
any Person within the Related Group from or against any liability, to the extent
(but only to the extent) that such liability may not be waived, modified or
limited under applicable law, but shall be construed so as to effectuate the
provisions of this Section 10.01 to the fullest extent permitted by law.
 
Section 10.02 Indemnification. The Company shall indemnify each Person within
the Related Group thereof made or threatened to be made a party in any civil or
criminal action or proceeding, including actions under federal and state
securities laws, by reason of the fact that such Person or such Person’s
Affiliate is or was a Member of the Company, against judgments, fines, amounts
paid in settlement and reasonable expenses, including without limitation, court
costs, attorneys’ fees and disbursements and those of accountants, appraisers
and other experts and consultants incurred as a result of such action or
proceeding or any appeal therein, all of which expenses as incurred shall be
advanced by the Company pending the final disposition of such action or
proceeding. Such required indemnification shall be subject only to the exception
that no indemnification may be made to or on behalf of any of the Related Group
in the event and to the extent that a judgment or other final adjudication
adverse to the such indemnitee establishes that: (i) such acts were committed in
bad faith or were the result of active and deliberate dishonesty and were
material to the cause of action so adjudicated, or (ii) such Person personally
gained in fact a financial profit or other advantage to which such Person was
not legally entitled; provided that indemnification shall be made upon any
successful appeal of any such adverse judgment or final adjudication. The
foregoing right of indemnification shall not be deemed exclusive of any other
rights to which any such Person in the Related Group may be entitled apart from
this provision, including, without limitation, indemnification provisions
included in the certificate of organization of any subsidiary or the directors
and officers, errors and omissions insurance.
 
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ARTICLE XI
 
MISCELLANEOUS PROVISIONS
 
Section 11.01 Right of First Refusal. 
 
(a) If: (i) the Company shall receive any bona fide offer (an “Offer”) from any
Person to purchase, or enter into any other capital transaction with respect to,
the Property at any time (the “Option Period”); and (ii) the Company were to
sell, or enter into any such other capital transaction with respect to, the
Property pursuant to such Offer, upon distribution of the Net Proceeds thereof
following such sale or such other capital transaction, Proud Three would not
receive greater than the amount that is One Million Dollars ($1,000,000) less
than its then unreturned Capital Investment, then the Managing Member shall
notify Proud Three, in writing of the Offer (the “Offer Notice”). The Offer
Notice shall contain a copy of the Offer and all other applicable terms and
conditions. Proud Three shall then have the right to purchase, or otherwise
enter into such other capital transaction with respect to, the Property at the
price (the “Offer Price”) and on the other terms and conditions set forth in
Offer Notice. Proud Three’s right under this Section 11.01 is referred to as the
“Right of First Refusal”.
 
(b) Proud Three shall exercise the Right of First Refusal, if at all, by
providing the Managing Member with written notice (the “Notice of Exercise”)
within thirty (30) days after receipt by Proud Three of the Offer Notice. If
Proud Three does not timely provide the Managing Member with the Notice of
Exercise, the Company may sell the Property to, or enter into any such other
capital transaction with, a third party at the Offer Price or any amount in
excess of the Offer Price, on the terms set forth in Offer Notice, and the Right
of First Refusal shall thereupon terminate, provided that if the Property is not
conveyed, or such other capital transaction is not entered into, at the Offer
Price or any amount in excess of the Offer Price, on the terms set forth in the
Offer Notice within ninety (90) days after the date of the Offer Notice with
respect to that Offer, then the Right of First Refusal shall again be
applicable.
 
Section 11.02 Call Option. 
 
(a) Proud Three shall have the option (the “Call Option”) to purchase all of the
Units owned by Wilshire provided that Proud Three exercises the Call Option by
giving Wilshire written notice of its exercise of the Call Option on or prior to
the date that is ninety (90) days prior to the date that is five (5) years after
the date of this Agreement (the “Call Option Notice”). In the event that Proud
Three exercises the Call Option, then the total purchase price for all of the
Units owned by Wilshire shall be:
 
(i) In the event that the Call Option Closing is deemed to occur for purposes of
this Section 11.02(a) during the period commencing on the date hereof and ending
on the date that is one (1) year after the date hereof (the “First Year”) -
$5,250,000;
 
(ii) In the event that the Call Option Closing is deemed to occur for purposes
of this Section 11.02(a) during the period commencing on the date immediately
following the end of the First Year and ending on the date that is one (1) year
thereafter (the “Second Year”) - $6,250,000;
 
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(iii) In the event that the Call Option Closing is deemed to occur for purposes
of this Section 11.02(a) during the period commencing on the date immediately
following the end of the Second Year and ending on the date that is one (1) year
thereafter (the “Third Year”) - $7,500,000;
 
(iv) In the event that the Call Option Closing is deemed to occur for purposes
of this Section 11.02(a) during the period commencing on the date immediately
following the end of the Third Year and ending on the date that is one (1) year
thereafter (the “Fourth Year”) - $8,100,000; and
 
(v) In the event that the Call Option Closing is deemed to occur for purposes of
this Section 11.02(a) on or after the date immediately following the end of the
Fourth Year - $8,748,000.
 
For purposes of this Section 11.02(a), the Call Option Closing is deemed to
occur on the date that the Call Option Closing is to occur pursuant to Section
11.02(b); provided, however, if the Call Option Closing fails to occur on the
date specified in Section 11.02(b) as a result of a delay caused by Proud
Three’s default, then the Call Option Closing is deemed to occur for purposes of
this Section 11.02(a) on the actual date of the Call Option Closing; and further
provided, however, in the event that Proud Three exercises the Call Option by
providing Wilshire with the Call Option Notice on or prior to the date that is
one (1) year after the date of this Agreement, then, notwithstanding that the
Call Option Closing shall occur after the date that is one (1) year after the
date of this Agreement, the Call Option Closing shall be deemed to occur during
the First Year.
 
(b) If Proud Three exercises the Call Option, the closing of the transaction of
purchase and sale of all of the Units owned by Wilshire (the “Call Option
Closing”) shall take place at 10 o’clock in the forenoon at the principal place
of business of the Company (or such other location as Proud Three and Wilshire
shall agree), on a date ninety (90) days after Wilshire receives the Call Option
Notice (or if such date shall be a Sunday or holiday, then on the first business
day immediately succeeding such date).
 
(c) At the Call Option Closing:
 
(i) Wilshire shall assign and convey to Proud Three all of its Units, free and
clear of all Encumbrances and shall execute and deliver to Proud Three any
agreements and/or documents that may be reasonably requested by Proud Three to
effectuate such assignment and conveyance and ensure that Wilshire’s Units are
being transferred free and clear of all Encumbrances, including, without
limitation an agreement executed and delivered by Wilshire pursuant to which it
represents and warrants to Proud Three that it owns the Units free and clear of
all Encumbrances;
 
(ii) any deed, documentary, stamp, transfer or similar taxes or fees due in
connection with the sale shall be paid by Wilshire; and
 
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(iii) Proud Three shall cause any guarantees for debts or other obligations of
the Company that had been made by Wilshire or any of its affiliates to be
released or otherwise discharged, with no further liability to such guarantor(s)
thereunder.
 
(d) In the event that Wilshire defaults in its obligation to complete the
transaction on or prior to the date specified in Section 11.02(b) hereof, then:
(i) Proud Three shall be entitled to all available legal and equitable remedies
against Wilshire, including, without limitation, specific performance of
Wilshire’s obligation to complete the transaction and recovery of all losses of
Proud Three caused by Wilshire’s default (including attorney’s fees and costs
paid or incurred in any legal or equitable action); and (ii) Wilshire shall
immediately cease to be, and to serve as, the Managing Member, and Proud Three
shall be the Managing Member, and for all purposes under this Agreement, the
term “Managing Member” shall mean Proud Three.
 
(e) Notwithstanding anything contained hereinabove to the contrary, but subject
to the following provisions of this Section 11.02(e), during the period
commencing on the date hereof and ending on the later to occur of: (i) six (6)
months and twenty (20) days after the date of this Agreement (the “Marketing
Period”), and (ii) in the event that the Company enters into a binding contract
to sell the Property during the Marketing Period, the date of termination of
such binding contract, Proud Three shall not have the right to exercise the Call
Option (the “Black Out Period”). During the Black Out Period, the Managing
Member, on behalf of the Company, shall have the right to sell the Property for
an amount equal to or greater than the sum of: (i) $12,750,000 (the “Base
Release Price”); (ii) the aggregate amount of all additional capital
contributions made by Wilshire (or any Affiliate of Wilshire) to the Company on
or after the date of this Agreement (the “Wilshire Additional Contributions”);
(iii) the aggregate amount of all additional capital contributions made by Proud
Three (or any Affiliate of Proud Three) to the Company on or after the date of
this Agreement (the “Proud Three Additional Contributions”); and (iv) the
aggregate amount of all indebtedness for borrowed money of the Company
(including, without limitation, any and all amounts due to trade creditors) (the
“Release Price”). During the Black Out Period, the consent of all Members shall
be required to sell the Property for an amount less than the Release Price. In
the event that the Property is sold during the Black Out Period, any and all
right of Proud Three to exercise the Call Option shall terminate and expire.
 
(f) Notwithstanding anything contained hereinabove to the contrary, but subject
to the following provisions of this Section 11.02(f), at any time after the date
that is one (1) year after the date of this Agreement and prior to Proud Three
exercising the Call Option, Wilshire shall have the right to provide written
notice to Proud Three that it desires to offer the Property for sale (a
“Proposed Sale Notice”), whereupon Proud Three shall not have the right to
exercise the Call Option at any time during the period commencing on the date
that is forty-five (45) days following receipt by Proud Three of a Proposed Sale
Notice (a “Start Date”) and ending on the date that is eight (8) months after
such Start Date (a “Subsequent Black Out Period”). In the event that the
Property is not sold during a Subsequent Black Out Period, Wilshire shall not
have the right to provide another Proposed Sale Notice to Proud Three until
after the date that is six (6) months after the last date of such Subsequent
Black Out Period.
 
Section 11.03 Dispute Resolution. 
 
(a) In the event of a dispute between or among any two or more of the Members
relating to this Agreement, such dispute shall be finally determined by
arbitration conducted in Newark, New Jersey, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then existing or any
successor body of similar function, by a panel of three (3) arbitrators selected
as hereinafter described. The party desiring arbitration shall appoint an
individual person as arbitrator on its behalf and give notice thereof to the
other party who shall, within ten (10) business days after receipt of said
notice, appoint a second individual as arbitrator on its behalf and give notice
thereof to the first party. The arbitrators thus appointed shall appoint a
disinterested third individual, and said three (3) arbitrators shall, as
promptly as possible, determine the matter which is the subject of the
arbitration. If the second arbitrator shall not timely be appointed as
aforesaid, the first arbitrator shall proceed to determine the matter in
dispute.
 
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(b) If, within fifteen (15) days after the appointment of the second arbitrator,
the two (2) arbitrators appointed by the parties shall be unable to agree upon
the appointment of a third arbitrator, they shall give notice to the parties of
such failure to agree. If the parties fail to agree upon the selection of such
third arbitrator within five (5) business days after receipt of such notice from
the appointed arbitrators, then within five (5) business days thereafter either
of the parties upon notice to the other party may request such appointment by
the American Arbitration Association (or any organization successor thereto), or
in its absence, refusal, failure or inability to act, may apply to any court of
competent jurisdiction to appoint such arbitrator.
 
(c) The majority of the arbitrators shall render their decision and award within
thirty (30) days after the appointment of the third arbitrator. Such decision
and award shall be in writing and shall be conclusive and binding on the
parties, and counterpart copies thereof shall be delivered to each of the
parties. Judgment on the award may be entered in a court of competent
jurisdiction.
 
(d) Each party shall pay (i) the fees and expenses of the original arbitrator
appointed by or for such party and (ii) the fees and disbursements of its own
attorneys and the expenses of its proof. The fees and expenses of the third
arbitrator and all other expenses of the arbitration shall be borne equally by
the parties.
 
Section 11.04 Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey governing agreements made
wholly within such State (without regard to principles of conflicts of laws).
 
Section 11.05 Modification. This Agreement constitutes the entire understanding
among the parties hereto with respect to the subject matter hereof. No waiver or
modification of the provisions hereof shall be valid unless it is in writing
and, except as otherwise expressly permitted by Section 11.10 below, signed by
the party to be charged and then only to the extent therein set forth.
 
Section 11.06 Notices. All notices, demands, solicitations of consent or
approval, consents and other communications permitted or required to be given
hereunder shall be in writing and shall be made by hand-delivery, first-class
mail (registered or certified, return receipt requested), telecopier, or
overnight air courier guaranteeing next business day delivery to the address set
forth below or at such other address as any of the parties may designate in
writing in conformity herewith:
 
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(a) if to the Company, to:
 
WO GRAND HOTEL, LLC
350 Pleasant Valley Way
West Orange, New Jersey 07052
 
with a copy to all of the parties set forth in Sections 11.06(b) and 11.06(c)
below.
 
(b) if to Wilshire, to:
 
Wilshire Enterprises, Inc.
1 Gateway Center
Newark, New Jersey 07102
Attn: Daniel C. Pryor
Facsimile: (201) 420-6012

 
with a copy to:

 
Greenbaum, Rowe, Smith & Davis LLP
Metro Corporate Campus One
P. O. Box 5600
Woodbridge, New Jersey 07095-0988
Attn: W. Raymond Felton, Esq.
Facsimile: (732) 549-1881
 
(c) if to Proud Three, to:
 
Proud Three, LLC
c/o Herrick, Feinstein LLP
2 Penn Plaza, 11th Floor
Newark, New Jersey 07105
Attn: Daniel A. Swick, Esq.
Facsimile: (973) 274-2500
 
with a copy to:

 
Herrick, Feinstein LLP
2 Penn Plaza, 11th Floor
Newark, New Jersey 07105
Attn: Daniel A. Swick, Esq.
Facsimile: (973) 274-2500
 
Except as otherwise provided in this Agreement, each such notice shall be deemed
given at the time delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and the next business day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next business day
delivery.
 
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Section 11.07 Captions. The captions used herein are intended for convenience of
reference only, shall not constitute any part of this Agreement and shall not
modify or affect in any manner the meaning or interpretation of any of the
provisions of this Agreement.
 
Section 11.08 Construction. Any word or term used in this Agreement in any form
shall be masculine, feminine, neuter, singular or plural, as proper reading
requires. The words “herein”, “hereof”, “hereby” or “hereto” shall refer to this
Agreement unless otherwise expressly provided. Any reference herein to a Section
or any exhibit or schedule shall be a reference to a Section of, and an exhibit
or schedule to, this Agreement unless the context otherwise requires. Any
reference herein to a “business day” shall mean a day in which the New York
branch of the Federal Reserve Bank is open for business during its normal hours
of operation.
 
Section 11.09 Pronouns. All pronouns and any variation thereof shall be deemed
to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the Person or Persons may require.
 
Section 11.10 Amendments. This Agreement may only be amended by the affirmative
vote of all of the Members. Any amendment made pursuant to this Section 11.10
shall become effective as of the date such amendment is approved, except that,
at the option of the Members, such amendment may provide that it shall be made
effective as of a later date. 
 
Section 11.11 Binding Effect. Except as otherwise provided herein, this
Agreement shall be binding upon and shall inure to the benefit of the respective
heirs, executors, administrators, legal representatives, and permitted
successors and assigns of the parties hereto.
 
Section 11.12 Separability. In case any one or more of the provisions contained
in this Agreement or any application thereof shall be deemed invalid, illegal or
unenforceable in any respect, such affected provisions shall be construed and
deemed rewritten so as to be enforceable to the maximum extent permitted by law,
thereby implementing to the maximum extent possible, the intent of the parties
hereto, and the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.
 
Section 11.13 Further Assurances. The Members shall execute and deliver such
further instruments and documents and do such further acts and things as may be
required to carry out the intent and purposes of this Agreement.
 
Section 11.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and all of which shall
together constitute one agreement.
 
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Section 11.15 Consent to Jurisdiction. All actions and proceedings arising out
of, or relating to, this Agreement shall be heard and determined in any state or
federal court sitting in New Jersey. The parties hereto, by execution and
delivery of this Agreement, expressly and irrevocably consent and submit to the
personal jurisdiction of any of such courts in any such action or proceeding;
(ii) consent to the service of any complaint, summons, notice or other process
relating to any such action or proceeding by delivery thereof to such party by
hand or by certified mail, delivered or addressed as set forth in Section 11.06;
and (iii) waive any claim or defense in any such action or proceeding based on
any alleged lack of personal jurisdiction, improper venue or forum non
conveniens or any similar basis.
 
[SIGNATURE PAGE FOLLOWS]

 

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

       
WO GRAND HOTEL, LLC
 
   
   
    By:      

--------------------------------------------------------------------------------

Name:   Title:     Authorized Person

       
WILSHIRE ENTERPRISES, INC.
 
   
   
    By:      

--------------------------------------------------------------------------------

Name:   Title:

       
PROUD THREE, LLC
 
   
   
    By:      

--------------------------------------------------------------------------------

Name:   Title:

 
 

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Exhibit A

Description of the Property

That certain lot, piece or parcel of land, with the buildings and improvements
thereon erected, situate, lying and being in the Township of West Orange, County
of Essex and State of New Jersey, as follows:
 
Beginning at a point at the intersection of the southeasterly sideline of
Pleasant Valley Way with the northeasterly sideline of Kenz Terrace, said
sideline of Pleasant Valley Way having been established by the Essex County
Highway Department, and shown on Acquisition Map 6-E-6; thence
 

(1)
Northeasterly along said sideline of Pleasant Valley Way, along a curve to the
right having a radius of 915.37 feet, an arc distance of 42.12 feet to a point
of tangency; thence

 

(2)
Still along said sideline North 37 degrees 13 minutes 10 seconds East, a
distance of 826.17 feet to a point on the rear line of lots fronting on Ronald
Terrace, said point being 137.93 feet southwesterly from the southwesterly
sideline of Ronald Terrace; thence

 

(3)
South 50 degrees 29 minutes 50 seconds East a distance of 99.97 feet to a point;
thence

 

(4)
South 51 degrees 56 minutes 18 seconds East a distance of 737.40 feet to a
point; thence

 

(5)
South 36 degrees 34 minutes 36 seconds West a distance of 501.16 feet to a
point; thence

 

(6)
North 69 degrees 08 minutes 50 seconds West a distance of 359.64 feet to a
point; thence

 

(7)
North 60 degrees 23 minutes 50 seconds West a distance of 367.40 feet to a
point; thence

 

(8)
South 37 degrees 13 minutes 10 seconds West 148.55 feet to a point; thence

 

(9)
South 31 degrees 38 minutes 31 seconds West 35.70 feet to a point on the
northwesterly sideline of Kenz Terrace; thence

 

(10)
North 60 degrees 23 minutes 50 seconds West 137.32 feet to a point on the
southeasterly sideline of Pleasant Valley Way and the point and place of
beginning.

 
BEING commonly known as 350 Pleasant Valley Way, West Orange, New Jersey.
 
BEING also known as Lot 1428 in Block 152.22 on the current tax map of the
Township of West Orange.
 
 

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Exhibit B

Description of the Loans and Mortgages

WEST ORANGE LOAN DOCUMENTS
 

1.  
Commercial Mortgage Note dated April 10, 2001, executed and delivered by Hotel
to The Trust Company of New Jersey (“TCNJ”) in the original principal amount of
$6,900,000.00.

 

2.  
Commercial Mortgage dated April 10, 2001, executed and delivered by Hotel to
TCNJ in the original principal amount of $6,900,000.00, which was recorded in
the Essex County Register’s Office on April 30, 2001 in Mortgage Book 7743 at
Page 0016, et seq.

 

3.  
Guaranty dated April 10, 2001, executed and delivered by J.T. Mase and Jeffrey
Masessa to TCNJ.

 

4.  
Uniform Commercial Code Financing Statement No. 092244, filed in the Essex
County Register’s Office on April 30, 2001, and naming Hotel as the Debtor and
TCNJ as the Secured Party.

 

5.  
Uniform Commercial Code Financing Statement No. 2037223, filed with the State of
New Jersey on April 19, 2001, and naming Hotel as the Debtor and TCNJ as the
Secured Party.

 

6.  
Absolute Assignment of Leases, Rentals and Profits dated April 10, 2001,
executed and delivered by Hotel to TCNJ, which was recorded in the Essex County
Register’s Office on April 30, 2001 in Mortgage Book 7743 at Page 0050, et seq.

 

7.  
Note and Mortgage Modification and Extension Agreement dated October 21, 2002,
made by and between TCNJ, Hotel, Jeffrey Masessa and J.T. Mase, which was
recorded in the Essex County Register’s Office on October 25, 2002 in Book 452
at Page 536, et seq.

 

8.  
Amended and Restated Commercial Mortgage Note dated June 25, 2003, executed and
delivered by Hotel and Catering to TCNJ in the amount of $11,900,000.00.

 

9.  
Commercial Mortgage dated June 25, 2003, executed and delivered by Catering to
TCNJ in the original principal amount of $11,900,000.00, which was recorded in
the Essex County Register’s Office on July 1, 2003 in Mortgage Book 8973 at Page
695, et seq.

 

10.  
Mortgage Modification and Extension Agreement dated June 25, 2003, made by and
between Hotel and TCNJ, which was recorded in the Essex County Register’s Office
on July 1, 2003 in Book 461 at Page 22, et seq.

 
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11.  
Uniform Commercial Code Financing Statement No. 802388, filed in the Essex
County Register’s Office on July 1, 2003, and naming Catering as the Debtor and
TCNJ as the Secured Party.

 

12.  
Uniform Commercial Code Financing Statement No. 21672606, filed with the State
of New Jersey on July 1, 2003, and naming Catering as the Debtor and TCNJ as the
Secured Party.

 

13.  
Absolute Assignment of Leases, Rentals and Profits dated June 25, 2003, executed
and delivered by Catering to TCNJ, which was recorded in the Essex County
Register’s Office on July 1, 2003 in Mortgage Book 8973 at Page 725, et seq.

 

14.  
Guaranty dated June 25, 2003, executed and delivered by J.T. Mase, Denville
Nites, Inn at Rockaway, J.T. Mase Properties and Jeffrey Masessa to TCNJ.

 

15.  
Commercial Mortgage dated June 25, 2003, executed and delivered by Denville
Nites to TCNJ in the original principal amount of $11,900,000.00, which was
recorded in the Morris County Clerk’s Office on June 27, 2003 in Mortgage Book
14734 at Page 117, et seq.

 

16.  
Uniform Commercial Code Financing Statement No. 2003-107347, filed in the Morris
County Clerk’s Office on June 27, 2003, and naming Denville Nites as the Debtor
and TCNJ as the Secured Party.

 

17.  
Uniform Commercial Code Financing Statement No. 2167259-0, filed with the State
of New Jersey on July 1, 2003, and naming Denville Nites as the Debtor and TCNJ
as the Secured Party.

 

18.  
Absolute Assignment of Leases, Rentals and Profits dated June 25, 2003, executed
and delivered by Denville Nites to TCNJ, which was recorded in the Morris County
Clerk’s Office on June 27, 2003 in Mortgage Book 14734 at Page 133, et seq.

 

19.  
Commercial Mortgage dated June 25, 2003, executed and delivered by the Inn at
Rockaway to TCNJ in the original principal amount of $11,900,000.00, which was
recorded in the Morris County Clerk’s Office on June 27, 2003 in Mortgage Book
14735 at Page 038, et seq.

 

20.  
Uniform Commercial Code Financing Statement No. 2003-107384, filed in the Morris
County Clerk’s Office on June 27, 2003, and naming the Inn at Rockaway as the
Debtor and TCNJ as the Secured Party.

 

21.  
Uniform Commercial Code Financing Statement No. 2167103-6, filed with the State
of New Jersey on July 1, 2003, and naming the Inn at Rockaway as the Debtor and
TCNJ as the Secured Party.

 
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22.  
Absolute Assignment of Leases, Rentals and Profits dated June 25, 2003, executed
and delivered by the Inn at Rockaway to TCNJ, which was recorded in the Morris
County Clerk’s Office on June 27, 2003 in Mortgage Book 14735 at Page 055,
et seq.

 

 

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Exhibit C

Definitions

As used in the Operating Agreement of WO GRAND HOTEL, LLC, the following terms
shall have the following meanings:

1.  
“Affiliates” means, with respect to any Person, its officers, directors,
stockholders, members and managers, and any Person controlling, controlled by,
or under common control with, the Person in question. The term “control” (as
used in the terms “controlling”, “controlled” and “common control” means (a)
holding 51% or more of the outstanding equity securities of an issuer, (b)
holding 51% or more of the outstanding voting securities of an issuer, or (c)
holding the power to direct or cause the direction of the management and
policies of a Person, whether by contract or otherwise.

2.  
“Capital Account” means, with respect to any Member, the Capital Account
maintained for such Member in accordance with the following provisions:

a.  
To each Member’s Capital Account there shall be credited (A) an amount equal to
such Member’s Capital Investment and all additional Capital Contributions made
by such Member (in the aggregate, the “Capital Contribution Amount”), (C) such
Member’s distributive share of Net Profits and any items in the nature of income
or gain which are specially allocated pursuant to the Regulations, and (D) the
amount of any Company liabilities assumed by such Member or which are secured by
any property distributed to such Member;

b.  
To each Member’s Capital Account there shall be debited (A) the amount of money
and the Gross Asset Value of any property distributed to such Member pursuant to
any provision of this Agreement, (B) such Member’s distributive share of Net
Losses and any items in the nature of expenses or losses which are specially
allocated pursuant to the Regulations, and (C) the amount of any liabilities of
such Member assumed by the Company or which are secured by any property
contributed by such Member to the Company;

c.  
In the event of a Transfer of Units in accordance with the terms of this
Agreement, the transferee or assignee, if admitted as a Member, shall succeed to
the Capital Account of the transferring Member to the extent it relates to the
Transfer of Units; and

d.  
In determining the amount of any liability for purposes of subparagraphs (a) and
(b) above there shall be taken into account Code Section 752(c) and any other
applicable provisions of the Code and Regulations.

e.  
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Regulations
Section 1.704-1(b), and shall be interpreted and applied in a manner consistent
with such Regulations, including without limitation those Regulations relating
to qualified income offset and minimum gain chargeback. In the event the Members
shall determine that it is prudent to modify the manner in which the Capital
Accounts, or any debits or credits thereto (including, without limitation,
debits or credits relating to liabilities which are secured by contributed or
distributed property or which are assumed by the Company or any Members, are
computed in order to comply with such Regulations), the Members may make such
modification, provided that it is not likely to have a material effect on the
amounts distributed to any Person pursuant to Article IX upon the dissolution of
the Company. The Members also shall: (i) make any adjustments that are necessary
or appropriate to maintain equality between the Capital Accounts of the Members
and the amount of capital reflected on the Company’s balance sheet, as computed
for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(g);
and (ii) make any appropriate modifications in the event unanticipated events
might otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b).

 
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3.  
“Capital Transaction” means any capital transaction with respect to any capital
asset of the Company including: (i) any sale, exchange, condemnation (other than
a temporary taking) or other disposition of all or any portion of any capital
asset or any interest therein; (ii) any recovery of damages or insurance
proceeds (other than rental interruption insurance) as a result of damage to or
destruction of all or any portion of the improvements on a real property or
other capital assets of the Company or the loss of title thereto (all to the
extent not applied to the costs of repairing or replacing the assets damaged or
destroyed); (iii) any financing or refinancing by debt, sale and leaseback or
any other form of financing of all or any portion of any capital asset or any
indebtedness or the Company; and (iv) any other transaction, the proceeds of
which, in accordance with generally accepted accounting principles, are
considered to be capital in nature.

4.  
“Class A Unit” means the interest of a Member in the Company having such rights,
powers and preferences as specified in this Agreement and the Act.

5.  
“Class B Unit” means the interest of a Member in the Company having such rights,
powers and preferences as specified in this Agreement and the Act.

6.  
“Code” means the Internal Revenue Code of 1986, as amended.

7.  
“Collateral” means any and all real personal property mortgaged, pledged or
otherwise encumbered to secure the Loans.

8.  
“Company Minimum Gain” means the amount determined pursuant to the definition of
“partnership minimum gain” set forth in Regulation Sections 1.704-2(b)(2) and
1.704- 2(d).

9.  
“Depreciation” means, for each taxable year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for such taxable year, except that (A) with respect to any
asset whose Gross Asset Value differs from its adjusted basis for federal income
tax purposes and the difference is being eliminated by use of the “remedial
method” defined by Section 1.704-3T(d) of the Regulations, Depreciation for such
year shall be the amount of book basis recovered for such taxable year under the
rule described by Section 1.704-3T(d)(2) of the Regulations; and (B) with
respect to any other asset whose Gross Asset Value differs from its adjusted
basis for federal income tax purposes at the beginning of such taxable year,
Depreciation shall be an amount which bears the same ratio to such beginning
Gross Asset Value as the federal income tax depreciation, amortization, or other
cost recovery deduction for such taxable year bears to such beginning adjusted
tax basis; provided that if the adjusted basis for federal income tax purposes
of an asset at the beginning of such taxable year is zero, Depreciation shall be
determined with reference to such beginning Gross Asset value using any
reasonable method selected by the Members.

 
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10.  
“Encumbrances” means all liens, claims, security interests, mortgages, pledges,
easements, defects in title or other encumbrances.

11.  
“Governmental Body” means any court, government (federal, state, local or
foreign), department, commission, board, agency, bureau, official or other
regulatory, administrative or governmental authority.

12.  
“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis
for federal income tax purposes, except as follows:

a.  
The initial Gross Asset Value of any asset contributed by a Member to the
Company shall be the gross fair market value of such asset, as determined by the
Members.

b.  
The Gross Asset Values of all Company assets shall be adjusted to equal their
respective gross fair market values (taking Code Section 7701(g) into account),
as determined by the Members as of the following times: (A) the acquisition of
an additional interest in the Company by any new or existing Member in exchange
for more than a de minimis capital contribution; (B) the distribution by the
Company to a Member of more than a de minimis amount of Company property as
consideration for an interest in the Company; and (C) the liquidation of the
Company within the meaning of Regulations Section 1.704- 1(b)(2)(ii)(g),
provided that an adjustment described in clauses (A) and (B) of this paragraph
shall be made only if the Members reasonably determine that such adjustment is
necessary to reflect the relative economic interests of the Members in the
Company;

 
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c.  
The Gross Asset Value of any item of Company assets distributed to a Member
shall be adjusted to equal the gross fair market value (taking Code Section
7701(g) into account) of such asset on the date of distribution as determined by
the Members; and

d.  
The Gross Asset Values of Company assets shall be increased (or decreased) to
reflect any adjustments to the adjusted basis of such assets pursuant to Code
Section 734(b) or Code Section 743(b), but only to the extent that such
adjustments are taken into account in determining Capital Accounts pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m) and subparagraph (vi) of the definition
of “Net Profits” and “Net Losses”; provided that Gross Asset Values shall not be
adjusted pursuant to this subparagraph (iv) to the extent that an adjustment
pursuant to subparagraph (ii) is required in connection with a transaction that
would otherwise result in an adjustment pursuant to this subparagraph (iv).

e.  
If the Gross Asset Value of an asset has been determined or adjusted pursuant to
subparagraph (ii) or (iv), such Gross Asset Value shall thereafter be adjusted
by the Depreciation taken into account with respect to such asset, for purposes
of computing Net Profits and Net Losses.

13.  
“Knowledge” means, with respect to any individual, the actual knowledge of such
individual, and, with respect to any entity, the actual knowledge of any
directors, managers or officers of such entity.

14.  
“Loan Document” means each promissory note, mortgage, assignment of leases and
rents, security agreement, financing statement, personal, corporate or other
guaranty, pledge agreement, subordination agreement, collateral agreement, loan
agreement, escrow agreement, non-disturbance agreement, agency agreement or
other agreement or document, whether an original or a copy and whether or not
similar to those enumerated, evidencing, securing, guarantying or otherwise
documenting or giving notice of any Loan and any performance or payment
obligations with respect thereto. The term “Loan Documents” shall also include
each policy of title insurance, if any, insuring the lien of any deed of trust
or mortgage securing the Loans and each Loan File. The term “Loan Document”
shall include, without limitation, the documents set forth on Exhibit B.

15.  
“Loan File” means all instrument and documents in the files of Proud Three
pertaining to the Loans, including, without limitation, the Notes and any Loan
Documents.

16.  
“Member” and “Members” means Wilshire, Proud Three, and any Person that acquires
Units after the date of this Agreement and signs a counterpart signature page or
other instrument to become a part to this Agreement.

17.  
“Member Nonrecourse Debt” shall have the meaning ascribed to “partner
nonrecourse debt” in Regulation Section 1.704-2(b)(4).

18.  
“Member Nonrecourse Debt Minimum Gain” means an amount, with respect to each
Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if
such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined
in accordance with Section 1.704-2(i)(3) of the Regulations.

 
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19.  
“Net Cash Flow” means all cash receipts of the Company, plus any reserves
released by the Members, and the fair market value of any property received in
connection therewith, in any Fiscal Year from whatever source derived (other
than proceeds from borrowings or other Company indebtedness, Net Proceeds and
contributions to the capital of the Company such as the aggregate Capital
Contribution Amount of the Members), less payment of all the Company’s expenses,
including without limitation, debt service payments (including in connection
with any Member Loans) and Reserves, if any, as the Members shall elect to
establish.

20.  
“Net Proceeds” means, with respect to any Capital Transaction or any part
thereof,

a.  
the cash proceeds of any sale or other disposition of all or any part of a
capital asset, less all costs and expenses of such sale or disposition, which
shall include all commissions, finder fees, “points” in a loan transaction, and
all other transaction fees and expenses, including due diligence, legal and
accounting costs;

b.  
the proceeds of any financing or refinancing, by debt, sale or lease assignment
and leaseback or any other form of financing, of all or any part of any capital
asset, or any obligation or debt related to a capital asset, less the aggregate
cost of such capital asset and all costs and expenses thereof, including amounts
paid to discharge or obtain assignments of any mortgages or debts that are being
refinanced;

c.  
the proceeds of insurance received by the Company with respect to damage or
destruction to any capital asset (including title insurance proceeds payable to
the Company), less the costs and expenses incurred in connection therewith and
any amounts applied or held to be applied for restoration or repair or to be
deployed to purchase a capital asset within 12 months after the date such
proceeds are received by the Company;

d.  
the proceeds of any award as compensation for the taking of all or any portion
of a capital asset by exercise of the power of eminent domain or a transfer in
lieu thereof, less the costs and expenses incurred in connection therewith and
any amounts applied or held to be applied for restoration or replacement of
improvements on any capital asset or to be deployed to purchase a capital asset
within 12 months after the date such proceeds are received by the Company; and

e.  
the proceeds of any other Capital Transaction, less all expenses incurred in
connection with obtaining or collecting such proceeds in all cases.

 
The foregoing amounts shall be reduced by: (i) the amount required to pay the
matured or fixed debts, liabilities and expenses of the Company (including,
without limitation, all Member Loans), and (ii) such Realized and Unrealized
Losses, and Reserves, if any, as the Members shall elect to establish from such
proceeds.
 

21.  
“Net Profits” or “Net Losses” shall mean an amount equal to the Company’s
taxable income or loss for any taxable year, determined in accordance with code
Section 703(a) (for this purpose, all items of income, gain, loss or deduction
required to be stated separately pursuant to Code Section 703(a)(1) shall be
included in taxable income or loss) with the following adjustments:

 
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a.  
Any income of the Company that is exempt from federal income tax and not
otherwise taken into account in computing Net Profits or Net Losses pursuant to
this definition of “Net Profits” and “Net Losses” shall be added to such taxable
income or loss;

b.  
Any expenditures of the Company described in Code Section 705(a)(2)(B) or
treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations
Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into account in computing
Net Profits or Net Losses pursuant to this definition of “Net Profits” or “Net
Losses” shall be subtracted from such taxable income or loss;

c.  
In the event the Gross Asset Value of any Company asset is adjusted pursuant to
subparagraphs (a) or (b) of the definition of Gross Asset Value, the amount of
such adjustment shall be treated as an item of gain (if the adjustment increases
the Gross Asset Value of the asset) or an item of loss (if the adjustment
decreases the Gross Asset Value of the asset) from the disposition of such asset
and shall be taken into account for purposes of computing Net Profits or Net
Losses;

d.  
Gain or loss resulting from any disposition of property with respect to which
gain or loss is recognized for federal income tax purposes shall be computed by
reference to the Gross Asset Value of the property disposed of, notwithstanding
that the adjusted tax basis of such property differs from its Gross Asset Value;

e.  
In lieu of the depreciation, amortization, and other cost recovery deductions
taken into account in computing such taxable income or loss, there shall be
taken into account Depreciation of such taxable year, computed in accordance
with the definition of “Depreciation;”

f.  
To the extent an adjustment to the adjusted tax basis of any Company asset
pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in
determining Capital Accounts as a result of a distribution other than a complete
liquidation of a Member’s interest in the Company, the amount of such adjustment
shall be treated as an item of gain (if the adjustment increases the basis of
the asset) or loss (if the adjustment decreases the basis of the asset) from the
disposition of the asset and shall be taken into account for purposes of
computing Net Profits or Net Losses; and

g.  
Notwithstanding any other provision of this definition, any items which are
specially allocated pursuant to the Regulations shall not be taken into account
in computing Net Profits or Net Losses.

h.  
The amounts of the items of Company income, gain, loss or deduction available to
be specially allocated pursuant to the Regulations shall be determined by
applying rules analogous to those set forth in clauses (a) through (f) above.

22.  
“Nonrecourse Deductions” shall have the meaning set forth in Regulation
§1.704-2(b)(1).

23.  
“Nonrecourse Liability” has the meaning set forth in Section 1.704-2(b)(3) of
the Regulations.

 
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24.  
“Notes” means those certain promissory notes as set forth in Exhibit B,
evidencing the original principal indebtedness with respect to the Loans,
together with all amendments, modification and renewals thereof.

25.  
“Obligor” means the make and co-maker of any Note and any guarantor, surety or
other primary, secondary or other party obligated with respect to the Loans or
any performance or payment obligation in connection therewith, and any other
party who has granted Collateral for or whose property or any part thereof is
subject to any encumbrance securing the Loans or any performance or payment
obligation in connection therewith.

26.  
“Permitted Encumbrances” means those Encumbrances on the Property set forth on
Exhibit J attached hereto.

27.  
“Person” means an individual, partnership, corporation, trust, unincorporated
organization or other entity.

28.  
“Realized and Unrealized Losses” means amounts determined by the Members, at the
time of any distribution of Net Cash Flow, or Net Proceeds to reflect realized
losses incurred by the Company with respect to capital assets previously sold or
otherwise disposed of by the Company and/or unrealized losses incurred by the
Company with respect to capital assets held by the Company at the time of such
determination.

29.  
“Regulation” means the income tax regulations promulgated from time to time by
the U.S. Department of the Treasury.

30.  
“Reserves” means the aggregate amount of reserves that the Managing Member
determines to establish from time to time for future expenses of operating the
Company or liabilities in connection therewith as of the applicable date of
determination.

31.  
“Tax Return” means any return (including any information return), report,
statement, schedule, notice, form, estimate, or declaration of estimated tax
relating to or required to be filed with any Governmental Body in connection
with the determination, assessment, collection or payment of any tax.

32.  
“Unit” means a Class A Unit, a Class B Unit, or any other class of unit
designated and authorized by the Members.

 

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Exhibit D

Certificate of Formation

 

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Exhibit E

Bargain and Sale Deed with Covenants Against Grantor’s Acts

 

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Exhibit F

Assignment of the Loans and Loan Documents

N/A

 

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Exhibit G

General Assignment and Bill of Sale 

 

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Exhibit H

Allonge to the Notes
 
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Exhibit I

Assignment of Mortgages
 
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Exhibit J

Permitted Encumbrances
 
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