EXHIBIT 10.8


 


CONTRIBUTION AGREEMENT


 


THIS CONTRIBUTION AGREEMENT
(the “Agreement”) is made as of this 11th day of April, 2008 (the “Effective
Date”), between CALIFORNIA MORTGAGE AND REALTY, INC.,
a Delaware corporation (“CMR”), and DAVID CHOO, an
individual (“Choo”), for the benefit of CMR MORTGAGE FUND, LLC,
a California limited liability company, CMR MORTGAGE FUND II, LLC,
a California limited liability company and CMR MORTGAGE FUND III, LLC,
a California limited liability company (collectively, the “Funds”).


 


RECITALS


 


A.                                    CMR
and Choo acknowledge that CMR is indebted to the Funds for various sums as more
particularly set forth in the respective audited financial statements for each
of the Funds.


 


B.                                    Choo,
indirectly through various family trusts and other affiliated entities, is the
controlling principal of CMR and has an economic interest in the financial
stability and solvency of CMR.


 


C.                                    CMR
is the sole manager of the Funds and, as such, has a fiduciary duty to manage
the Funds in a prudent manner and also will receive indirect benefits from the
solvency and profitability of the Funds.


 


D.                                    Due
to current extraordinary conditions in the real estate credit and capital
markets, the Funds are experiencing cash flow shortages.  Choo wishes to contribute or otherwise
advance to CMR funds to enable CMR to pay debts and obligations owed to the
Funds by CMR, which will provide the Funds with cash for use in protecting and
preserving assets and paying their expenses during a period of reduced cash
flow from their mortgage investments. 
Choo also wishes to provide CMR with operating capital to conduct its
business operations and satisfy other debts and obligations.


 


E.                                      Through
various limited liability companies that Choo directly or indirectly owns
and/or controls, Choo indirectly owns various real property assets with
substantial equity that can be liquidated to provide cash to meet the needs
described above.


 


AGREEMENT


 


NOW, THEREFORE, for
good and valuable consideration, the parties agree as follows:


 


1.                                      Sale
or Refinance of Real Estate Assets.  Commencing on the date of this Agreement, Choo
covenants and agrees to use his diligent, good faith and best efforts to sell
or cause to be sold,  some or all of the
real property assets listed in Exhibit A attached hereto (each
individually, a “Property,” and collectively, the “Properties”) to the extent
necessary to 


 


1

















 


satisfy the
requirements of Section 3 below. 
Choo shall promptly cause the ownership entity for each Property Choo
decides to sell to enter into a listing agreement with a reputable real estate
brokerage firm appropriate for the marketing and sale of each such
Property.  Choo further covenants and
agrees to accept the best reasonable offer obtained for each Property selected
to be sold within a time period that is reasonably adequate to enable all such
sales to close within ninety (90) to one hundred eighty (180) days after the
date hereof.  Each Property is encumbered
by various mortgages and liens and agreements with various lenders.  Choo may elect to refinance or
cross-collateralize one or more of the Properties to raise cash proceeds to
contribute or advance to CMR and/or to obtain forbearances or extensions from
existing lenders.  Prior to the sale of
any of the Properties, Choo retains the right to encumber any of the Properties
with further liens, pay off liens or replace collateral for existing secured or
unsecured debts of Choo and/or his affiliates. 
Choo is currently in discussions with various lenders regarding existing
secured and unsecured debts.


 


2.                                      Use
of Proceeds by Choo; Contribution to CMR.  Choo covenants and agrees that he will use and
apply a substantial portion of the net cash sales proceeds or refinance
proceeds from the Property sales described above for the sole and exclusive
purposes of (a) contributing or advancing (or causing to be contributed or
advanced) all such proceeds to CMR within two (2) business days after the
close of escrow for the sale of each Property until the requirements of Section 3
below have been satisfied; (b) paying operating expenses, debt service and
other expenditures reasonably necessary to protect and preserve other
Properties and/or to maximize the sales proceeds obtainable from any sales
thereof; and (c) paying or adequately providing for Choo’s state and
federal income tax liabilities.


 


3.                                      Use
of Proceeds by CMR.  CMR covenants
and agrees to use funds that it receives pursuant to Section 2 above
solely for the following purposes:


 


(a)           To pay and satisfy
in full all of its debts and obligations to the Funds (including both the
current and long-term portions of any such debts and obligations) up to an
aggregate maximum of $5,000,000 and all of its debts to third parties; and


 


(b)           To fund an operating
reserve of at least One Million Five Hundred Thousand Dollars ($1,500,000.00),
of which $400,000 has already been advanced in April of 2008, by
depositing such funds into a deposit account in CMR’s name at CMR’s primary
bank.  The funds in said operating
reserve shall be used solely for the overhead and operating costs of CMR.


 


4.                                      Term.  This Agreement shall continue until the
earlier of (a) the date that the independent registered public accounting
firm(s) employed by each of the Funds and CMR confirms that it/they would
issue an opinion regarding the financial statements of CMR and each Fund
without a qualification as to the ability of CMR or that Fund to continue in
business as a going concern, or (b) the termination of this Agreement by
written agreement of all parties hereto.


 


5.                                      General.


 


2

















 


(a)           Governing Law.  This Agreement and performance under it will
be governed by and construed in accordance with the laws of the State of
California.


 


(b)           Attorneys’ Fees.  If any legal or arbitration action or
proceeding is commenced by any party to enforce or interpret any provision of
this Agreement, the prevailing party shall be entitled to recover its
reasonable attorneys’ fees and other costs incurred by such prevailing party in
such action or proceeding.


 


(c)           Further
Assurances.  The parties covenant and
agree that, subsequent to the execution and delivery of this Agreement and
without any additional consideration, each of the parties will execute and
deliver any further legal instruments and perform any acts which are or may
become reasonably necessary to effectuate this Agreement.


 


(d)           Assignment.  This Agreement will be binding on the parties
hereto and their respective successors and assigns.


 


(e)           Entire Agreement;
Amendment.  This Agreement, including
any Exhibits referred to herein and attached hereto constitute the entire
agreement between the parties with respect to the subject matter contained in
this Agreement and supersede all prior agreements, whether written or oral,
with respect to such subject matter.  No
modification, waiver, or discharge hereof will be valid unless in writing and
signed by the parties hereto.


 


(f)            Counterparts.  This Agreement may be executed in several
counterparts, all of which taken together will constitute one single agreement
between the parties.


 


(g)           Headings.  Headings contained in this Agreement are for
convenience only and are not -part of this Agreement and do not in any way
interpret, limit, or amplify the scope, extent, or intent of this Agreement or
any of the provisions hereof.


 


(h)           Severability.  The invalidity of any provision of this
Agreement will not affect the validity and binding effect of any other
provision, and any invalid provision will be severed from this Agreement and
the remainder of the Agreement will be enforced to the maximum extent permitted
by applicable law and in keeping with the original intention of the parties.


 


(i)            Authority.  Each person executing this Agreement hereby
covenants and warrants that he or she is duly and validly authorized to do so.


 


(j)            No Third Party
Beneficiaries.  This Agreement is
entered into solely for the benefit of the parties hereto and is not intended
to benefit, nor shall it be enforceable by, any third party not a party
thereto.


 


 


(Signature page follows.)


 


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IN WITNESS
WHEREOF, the parties have each caused this Agreement
to be signed and delivered as of the date first set forth above.


 


	
  “CMR”

  	
   

  	
  “FUNDS”

  
	
   

  	
   

  	
   

  
	
  CALIFORNIA MORTGAGE AND REALTY, 

  	
   

  	
  CMR MORTGAGE FUND, LLC, 

  
	
  INC., a Delaware corporation 

  	
   

  	
  a California limited liability company 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By: 

  	
  California Mortgage and Realty, Inc., 

  
	
  By: 

  	
   /s/ James Gala 

  	
   

  	
   

  	
  its Manager 

  
	
   

  	
  James Gala, Chief Executive Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:  

  	
   /s/ James Gala 

  
	
   

  	
   

  	
   

  	
   

  	
  James Gala, Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
  “CHOO”

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CMR MORTGAGE FUND, II LLC, 

  
	
   

  	
   

  	
  a California limited liability company 

  
	
   /s/ David Choo 

  	
   

  	
   

  	
   

  
	
  DAVID CHOO

  	
   

  	
  By: 

  	
  California Mortgage and Realty, Inc., 

  
	
   

  	
   

  	
   

  	
   

  	
  its Manager 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:  

  	
   /s/ James Gala 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  James Gala, Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  CMR MORTGAGE FUND III, LLC, 

  
	
   

  	
   

  	
  a California limited liability company 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  California Mortgage and Realty, Inc., 

  
	
   

  	
   

  	
   

  	
   

  	
  its Manager 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:  

  	
   /s/ James Gala 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  James Gala, Chief Executive Officer

  
							



 


4

















 


EXHIBIT A


 


PROPERTIES TO BE SOLD


 


CMR Capital, David Choo and Related Entities - Assets Listed for Sale
4/11/2008


 


	
  Asset

  	
   

  	
  Listing
  Agent

  	
   

  	
   

  
	
  First
  and Mission - SF, CA

  	
   

  	
  CBRE
  and Eastdil Secured

  	
   

  	
   

  
	
  524
  Howard Street - SF, CA

  	
   

  	
  Colliers

  	
   

  	
   

  
	
  25
  Seaview - Piedmont, CA

  	
   

  	
  Grubb
  Co.

  	
   

  	
   

  
	
  2836
  Washington Street - SF, CA

  	
   

  	
  TRI
  Coldwell Banker

  	
   

  	
   

  
	
  Scotts
  Valley - CA

  	
   

  	
  In
  Contract

  	
   

  	
   

  
	
  St.
  Regis Condo - SF, CA

  	
   

  	
  Pacific
  Union

  	
   

  	
   

  
	
  NYC
  Condo

  	
   

  	
  Prudential
  Douglas Elliman

  	
   

  	
   

  
	
  St.
  Helena, CA

  	
   

  	
  Morgan
  Lane

  	
   

  	
   

  
	
  Washington
  Street - Las Vegas, NV

  	
   

  	
  In
  Contract

  	
   

  	
   

  



 


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