Document:

Unassociated Document

    

    Exhibit
      10.1

    

    OPERATING
      AGREEMENT OF

    

    WO
      GRAND HOTEL, LLC

    (A
      New
      Jersey Limited Liability Company)

     

    

    Dated
      as
      of June 2, 2005

     

    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

     

    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

                

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        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

                  

          

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

           

          
            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

              

      

    

     

    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    

    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

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    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. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (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.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    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. 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    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;

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (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.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    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.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (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;

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (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.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    (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.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    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. 

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    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.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    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;

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    (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

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    (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. 

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    (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:

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    (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.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    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.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    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]

    

    
      
        
           

        

        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    

    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:

      

    

     

    
      
        
           

        

        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    

    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.

     

    
      
        
           

        

        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    

    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.

            

    

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    
      	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.

            

    

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

     

    
      	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.

            

    

     

    

    
      
        
           

        

        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    

    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).

            

    

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    
      	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.

            

    

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    
      	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;

            

    

    
       

      
        
          
          

        

        
          36

          
            

          

        

        
          
          

        

      

       

      
        	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.

            

    

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    
      	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:

            

    

    
       

      
        
          
          

        

        
          38

          
            

          

        

        
          
          

        

      

       

      
        	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.

            

    

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    
      	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.

            

    

    

    
      
        
           

        

        
        

      

      
        40

        
          

        

      

      
        
        

      

    

    

    Exhibit
      D

    

    Certificate
      of Formation

    

    

    
      
        
           

        

        
        

      

      
        41

        
          

        

      

      
        
        

      

    

    

    Exhibit
      E

    

    Bargain
      and Sale Deed with Covenants Against Grantor’s Acts

    

    

    
      
        
           

        

        
        

      

      
        42

        
          

        

      

      
        
        

      

    

    

    Exhibit
      F

    

    Assignment
      of the Loans and Loan Documents

    

    N/A
      

    

    
      
        
           

        

        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

     

    Exhibit
      G

    

    General
      Assignment and Bill of Sale 

    

    
      
        
           

        

        
        

      

      
        44

        
          

        

      

      
        
        

      

    

    
       

      Exhibit
        H

      

      Allonge
        to the Notes

      
         

        
          
            
            

          

          
            45

            
              

            

          

          
            
            

          

        

      

      Exhibit
        I

      

      Assignment
        of Mortgages

       

      
        
          
          

        

        
          46

          
            

          

        

        
          
          

        

      

       

      Exhibit
        J

      

      Permitted
        Encumbrances

      
         

        
          
            
            

          

          
            47Exhibit
        10.2

      

      Agreement
        for Purchase and Sale dated as of July 29, 2005 between Avondale Multi-Family
        Limited Partnership and Wilshire Enterprises, Inc.

      
         

        
          
            
            

          

          
            48

            
              

            

          

          
            
            

          

        

      

      AGREEMENT
        FOR PURCHASE AND SALE

      

      

      This
        Agreement for Purchase and Sale (“Agreement”)
        is
        dated as of July _____, 2005 (the “Effective
        Date”),
        and
        is entered into between AVONDALE MULTI-FAMILY LIMITED PARTNERSHIP, an Arizona
        limited partnership (“Seller”),
        and
        WILSHIRE ENTERPRISES, INC., a New Jersey corporation (“Purchaser”)
        (collectively, the “Parties”,
        or
        individually, the “Party”).

      

      
        	1.  	
                Definitions.
                  As
                  used in this Agreement, the following terms shall have the following
                  meanings:

              

      

       

      
        	1.1  	
                “Property”
                  means:

              

      

       

      
        	(a)  	
                that
                  certain real property situated at 1700 North 103rd Avenue, Avondale
                  Arizona 85323, commonly known as The Village at Gateway Pavilions
                  Apartments (the “Real
                  Property”
                  that, together with the “Personal Property,” shall be defined as the
                  “Property”), consisting of 240 apartment units, as more particularly
                  described on Exhibit
                  A
                  attached hereto and incorporated herein by reference, together
                  with any
                  and all improvements thereon and all easements, licenses, rights-of-way
                  and other appurtenances thereto;

              

      

       

      
        	(b)  	
                the
                  personal property presently owned by Seller and associated with
                  the
                  ownership, operation and maintenance of the Real Property (the
                  “Personal
                  Property”);
                  and

              

      

       

      
        	(c)  	
                the
                  following intangible personal
                  property:

              

      

       

      
        	(1)  	
                The
                  name “The Village at Gateway Pavilions Apartments” (“Trade
                  Name”);

              

      

       

      
        	(2)  	
                Leases
                  with tenants (“Tenant
                  Leases”)
                  and refundable security deposits (“Tenant
                  Deposits”)
                  related thereto; 

              

      

       

      
        	(3)  	
                To
                  the extent assignable, all licenses, permits and certificates of
                  occupancy
                  for the Property (“Permits”);

              

      

       

      
        	(4)  	
                To
                  the extent assignable, warranties and guarantees on Personal Property
                  purchased, if any (“Warranties”);
                  and

              

      

       

      
        	(5)  	
                To
                  the extent assignable, all plans, specifications, surveys, and
                  other
                  studies in Seller’s possession and all other general
                  intangibles.

              

      

       

      
        
          
          

        

        
          49

          
            

          

        

        
          
          

        

      

       

      
        	1.2  	
                “Escrow
                  Agent”
                  means Title Security Agency of Arizona, Inc., 3850 East Baseline
                  Road,
                  Suite 103, Mesa , Arizona 85206, Attn: Ms. Marian
                  Sprague.

              

      

       

      
        	2.  	
                Purchase
                  and Sale.
                  Seller agrees to sell to Purchaser, and Purchaser agrees to purchase
                  from
                  Seller, all of Seller’s right, title and interest in and to the Property,
                  on the terms and conditions set forth in this
                  Agreement.

              

      

       

      
        	3.  	
                Purchase
                  Price.
                  The purchase price for the Property is Twenty Eight Million One
                  Hundred
                  Forty Thousand Dollars ($28,140,000.00) (the “Purchase
                  Price”),
                  paid at Closing (as defined below) as
                  follows:

              

      

       

      
        	3.1  	
                Earnest
                  Money Deposit.
                  Upon full execution of this Agreement, Purchaser agrees to deposit
                  One
                  Hundred Thousand Dollars ($100,000.00) in cash with Escrow Agent
                  as
                  Purchaser’s Earnest Money Deposit (the “Initial
                  Deposit”).
                  Upon delivery of the Initial Deposit to Escrow Agent, (a) the
                  Initial
                  Deposit shall be non-refundable to Purchaser, unless Seller breaches
                  this
                  Agreement beyond any applicable cure period or a damage/condemnation
                  event
                  in Sections 14 or 15 shall have occurred and Purchaser timely elects
                  to
                  cancel this Agreement pursuant to the applicable section; and (b) the
                  Initial Deposit shall be paid by Escrow Agent to Seller on the
                  twenty
                  second (22nd) day following the Effective Date, unless Purchaser
                  sooner
                  has given the Purchaser Title CN (as each such term is defined
                  in Section
                  5.2 below) to Seller and Escrow Agent. In addition, Purchaser agrees
                  to
                  deposit an additional Four Hundred Thousand Dollars ($400,000)
                  in cash
                  (the “Second
                  Deposit”)
                  on the twenty second (22nd)
                  day after the Effective Date, which shall be non-refundable to
                  Purchaser,
                  except in the event of Seller’s breach of its obligations under this
                  Agreement beyond any applicable cure period or a damage/condemnation
                  event
                  in Sections 14 or 15 shall have occurred and Purchaser timely elects
                  to
                  cancel this Agreement pursuant to the applicable section; from
                  this Second
                  Deposit, Fifty Thousand Dollars ($50,000) shall be paid by Escrow
                  Agent to
                  Seller on the business day following that on which Purchaser makes
                  the
                  Second Deposit. The balance of the Second Deposit shall be placed
                  in an
                  interest bearing account of a federally insured depositary of a
                  major
                  money center bank, and the interest accruing thereon shall belong
                  to the
                  party entitled to the Initial Deposit or the Second Deposit, as
                  the case
                  may be. If upon the 66th
                  day following the Effective Date Purchaser fails to apply to HUD
                  for the
                  assumption of the PFC Encumbrance as set forth in Section 13.3(d),
                  an
                  additional One Hundred Thousand Dollars ($100,000) of the Second
                  Deposit
                  shall become non-refundable and shall immediately be released to
                  Seller.
                  Additionally, if prior to Closing Purchaser cancels this Agreement
                  for any
                  reason other than Seller’s breach of this Agreement beyond the applicable
                  cure period or a condemnation or casualty event described in Sections
                  14
                  or 15, the Second Deposit balance shall be paid, along with accrued
                  interest thereon, to Seller without further instructions to Escrow
                  Agent.
                  

              

      

       

      
        
          
          

        

        
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        	3.2  	
                Balance
                  of Purchase Price.
                  On or before the Closing Date (as defined in Section 4 below),
                  Purchaser
                  shall deposit with Escrow Agent and Escrow Agent shall immediately
                  release
                  to Seller the amount equal to (a) the Purchase Price (less
                  the
                  Initial Deposit and the Second Deposit specified in Section 3.1
                  above),
                  minus (b) the principal balance of the PFC Encumbrance (as
                  defined
                  below) as of the Closing Date, plus (c) any amounts owed
                  to the
                  holder of the PFC Encumbrance in consideration of Purchaser’s assumption
                  thereof (including without limitation any assumption fee and the
                  replacement of all deposits held in reserve by the Lender or HUD)
                  plus or
                  minus other sums (e.g.,
                  escrow fees and tax prorations share) necessary to close, as
                  applicable.

              

      

       

      
        	4.  	
                Closing
                  Date.
                  The closing of the transaction contemplated by this Agreement (the
                  “Closing
                  Date”
                  or “Closing”)
                  shall occur in the office of Escrow Agent (or, if required by the
                  federal
                  government, at the HUD office so designated therefore) not later
                  than the
                  tenth (10th) day after the date on which HUD approves the TPA (as
                  defined
                  below) or such earlier date as the parties may agree, but in no
                  event
                  later than one hundred eighty (180) calendar days following the
                  Effective
                  Date (the “Outside Closing Date”) , unless Purchaser elects to extend the
                  Closing as set forth herein. The Closing may be extended for up
                  to thirty
                  (30) days as follows: Upon Purchaser’s written notice to be given to
                  Seller at least ten (10) days prior to the Outside Closing Date,
                  Purchaser
                  shall have the right to extend the Closing Date for one (1) thirty
                  (30)
                  day period, so long as (i) Purchaser has made formal application
                  to
                  HUD for the assumption of the PFC Encumbrance as set forth in Section
                  13.3(d), and (ii) Purchaser demonstrates in the notice to
                  Seller good
                  faith, diligent efforts to prosecute the application with HUD and
                  shares
                  with Seller Purchaser’s written communications with HUD demonstrating
                  progress in processing the HUD approval of the TPA, and
                  (iii) Purchaser instructs Escrow Agent, concurrently with
                  its
                  notification of extension of the Closing Date, to release an additional
                  One Hundred Thousand Dollars ($100,000.00) from the Second Deposit
                  in
                  consideration of Seller granting the thirty (30) day extension
                  period,
                  such additional deposit to be non-refundable to Purchaser. Escrow
                  Agent
                  hereby is instructed to release the One Hundred Thousand Dollar
                  ($100,000)
                  sum from the Second Deposit to Seller promptly upon its receipt
                  of
                  Purchaser’s notice of intention to extend the
                  Closing.

              

      

       

      
        	5.  	
                Title
                  and Title Insurance.

              

      

       

      
        	5.1  	
                Condition
                  of Title.
                  At closing, title to the Real Property shall be marketable of record
                  free
                  of (and title insurance shall insure that title is free of) encumbrances
                  or defects, except Permitted Exceptions (as defined below). “Permitted
                  Exceptions” include (i) nondelinquent taxes, (ii) usual rights
                  of tenants as identified in the rental agreements or leases,
                  (iii) building or use restrictions general to the area in
                  which the
                  Real Property is located, (iv) the “Regulatory Agreement for
                  Multifamily Housing Projects” for FHA Project No. 123-35386, recorded as
                  Instrument No. 2003-1502707 in the official records of Maricopa
                  County,
                  Arizona (the “HUD
                  Covenant”),
                  and (v) other exceptions as are approved, or deemed approved
                  or
                  waived, by Purchaser pursuant to Section
                  5.2.

              

      

       

      
        
          
          

        

        
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        	5.2  	
                Preliminary
                  Title Commitment.
                  Within seven (7) days after the Effective Date, Escrow Agent will
                  make
                  available to Purchaser a commitment for title insurance (“Preliminary
                  Commitment”),
                  along with legible copies of all recorded exceptions to title,
                  issued by
                  First American Title Insurance Company (the “Title
                  Company”)
                  showing the condition of title to the
                  Property.

              

      

       

      Purchaser
        shall give written notice to Seller on or before seven (7) days following
        the
        date of Purchaser’s receipt of the Preliminary Commitment (the “PO Notice”) of
        any defects or exceptions to title to which Purchaser objects. Within five
        (5)
        days of receipt of Purchaser’s notice, Seller shall notify Purchaser in writing
        whether Seller intends to remove, at or prior to closing, the defects or
        exceptions to title to which Purchaser objects, which Seller shall have the
        sole
        election whether to remove. Seller must remove all monetary encumbrances
        against
        title to the Real Property (except the PFC Encumbrance, as defined below),
        which
        Seller has consensually granted in writing as a lien against the Property
        and
        any mechanic’s liens (or bond over such disputed mechanic’s lien) unless
        resulting from the acts or omissions of Purchaser). If Seller notifies Purchaser
        of its agreement to remove any of the defects or exceptions, then Seller
        shall
        remove such defects or exceptions on or before the Closing Date.

       

      If
        Seller
        notifies Purchaser that Seller will not remove one or more of such defects
        or
        exceptions noted in the PO Notice (the “SR Refusal Notice”), Purchaser may elect
        to accept such defects or exceptions to title as Seller declines to, or fails
        to
        offer to, cure or, alternatively, elect to terminate this Agreement. If
        Purchaser elects to terminate this Agreement, it must do so in writing within
        five (5) days of Seller’s election not to remove all defects to which Purchaser
        objected (the “Purchaser Title CN”), whereupon the Initial Deposit shall be
        refunded to Purchaser and all rights and obligations of Seller and Purchaser
        under this Agreement shall terminate and be of no further force or effect.
        Purchaser’s failure to timely provide the notice described in the preceding
        sentence shall be deemed to be Purchaser’s election to accept such defects or
        exceptions and a waiver of Purchaser’s right to terminate this Agreement
        pursuant to this Section 5.2. If a mechanic’s lien not resulting from the acts
        or omissions of Purchaser, is recorded between the date of Purchaser’s receipt
        of the Preliminary Commitment and the Closing Date, Purchaser shall have
        the
        right to cause Seller to pay or bond over such monetary lien or encumbrance
        through escrow at closing. Other than the removal of any consensual monetary
        lien granted in writing by Seller, any mechanic’s lien arising from work
        authorized by Seller, and any other encumbrance executed by Seller after
        issuance of the Preliminary Commitment and prior to Closing, Seller shall
        have
        no obligation to cure any title defect or remove any matter from title to
        the
        Property, and Purchaser’s sole remedy in the event of Seller’s inability or
        unwillingness to cure or remove any exception to title to which Purchaser
        objects will be to terminate this Agreement and obtain the return of its
        Initial
        Deposit.

       

      
        
          
          

        

        
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        	5.3  	
                Title
                  Policy.
                  The Title Company shall deliver to Purchaser as soon as practicable
                  after
                  Closing, at Seller’s expense, an ALTA standard coverage owner’s policy of
                  title insurance insuring Purchaser’s fee simple title to the Real Property
                  in the face amount of the Purchase Price and containing no exclusions
                  other than the form printed exclusions and no exceptions other
                  than the
                  Permitted Exceptions and those created or caused by Purchaser (the
                  “Title
                  Policy”).
                  Purchaser, at Purchaser’s sole expense, may require the Title Company to
                  issue an ALTA extended coverage owner’s title policy, and if it does so,
                  Purchaser shall bear all additional costs associated with obtaining
                  the
                  extended coverage policy or any endorsements
                  thereto.

              

      

       

      
        	6.  	
                Entry
                  and Inspection.
                  Purchaser shall have rights of physical inspection of the Property
                  or the
                  books and records thereof, including without limitation examination
                  of
                  those due diligence matters contained within the items reflected
                  on
                  Exhibit
                  B
                  attached hereto. Seller agrees to promptly furnish the necessary
                  documents
                  stated on Exhibit B for inspection not later than ten (10) days
                  from
                  Effective Date. Purchaser, within twenty one (21) days from the
                  Effective
                  Date (the “Due
                  Diligence Period”),
                  shall specifically approve in writing all matters contained in
                  the items
                  set forth on Exhibit B as well as the forms of the Closing documents,
                  and
                  affirm that Purchaser will proceed with the transaction contemplated
                  by
                  the Agreement for the full Purchase Price. If Purchaser fails to
                  provide
                  timely such unambiguous written approval to Seller by the last
                  day of the
                  Due Diligence Period, this Agreement shall terminate and be of
                  no further
                  force or effect except that Purchaser shall forfeit its Initial
                  Deposit to
                  Seller, and thereafter the Parties shall have no obligations to
                  each other
                  except for any express surviving indemnity obligations contained
                  herein.
                  Notwithstanding the foregoing, the Due Diligence Period shall be
                  extended
                  by one (1) day for each day or portion thereof beyond the aforesaid
                  ten
                  (10) day period for delivery of the necessary documents stated
                  on Exhibit
                  B that any of said documents have not been delivered by Seller.
                  Except as
                  otherwise expressly provided in Section 13.1 below or in the Closing
                  documents, the sale of the Property is and will be made on an “AS IS,
                  WHERE IS” basis, with all defects of any nature, and Seller has not made,
                  does not make and specifically negates and disclaims, any representations,
                  warranties or guaranties of any kind or character whatsoever, whether
                  express or implied, oral or written, past, present or future of,
                  as to,
                  concerning or with respect to the Property or any other matter
                  whatsoever,
                  including without limitation its income, its tenancies, its value,
                  its
                  zoning, its environmental condition, and its compliance with any
                  other
                  laws.

              

      

       

      
        	7.  	
                Purchaser’s
                  Contingencies.
                  The obligation of Purchaser to purchase the Property pursuant to
                  this
                  Agreement is expressly contingent upon approval or waiver of the
                  following
                  contingency (“Purchaser’s
                  Contingency”)
                  in Purchaser’s reasonable discretion within the time period specified for
                  each condition:

              

      

       

      
        
          
          

        

        
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      Purchaser
        obtaining approval of (i) the assumption of the existing first deed of trust
        and
        promissory note due April 1, 2045, encumbering the Property in favor of Capstone
        Realty Advisors, LLC (“Lender”),
        which
        succeeded to the interest of PFC (“PFC
        Encumbrance”)
        and
        (ii) the transfer of physical assets under HUD Form 92266 (or its successor
        application form), provided that Purchaser shall timely submit the necessary
        assumption documents to each person from whom consent to assume is required
        within the time frame described in the terms of Section 13.3(d)
        hereof.

       

      
        	8.  	
                Confidentiality.
                  Except as may be required by law (in which event Purchaser shall
                  give not
                  less than five (5) business days notice to Seller of such legal
                  obligation
                  in advance of the intended disclosure) Purchaser and Purchaser’s agents
                  and representatives hereby covenant with Seller that Purchaser
                  and its
                  agents and representatives, without the prior written consent of
                  Seller
                  (which consent may be withheld for any reason or none) shall not
                  disclose
                  to any other person beyond its accountants and legal counsel, by
                  any means
                  whatsoever, (i) any information pertaining to this Agreement
                  and the
                  transaction contemplated hereby, or (ii) any information,
                  data or
                  documents provided by Seller or its agents or representatives regarding
                  Seller, its business and the
                  Property.

              

      

       

      
        	9.  	
                Prorations.

              

      

       

      
        	9.1  	
                Taxes.
                  Property taxes shall be prorated as of the Closing Date based upon
                  a three
                  hundred sixty-five (365) day year.

              

      

       

      
        	9.2  	
                Rents.
                  All non-delinquent rents shall be prorated on an accrual basis;
                  however,
                  Purchaser shall receive no credit for any outstanding rental concessions
                  or future rent credits. Purchaser shall receive credit for rents
                  on the
                  day of Closing. In the event Seller receives any payments of rent
                  from
                  tenants subsequent to Closing that are applicable to any period
                  after
                  Closing, such payments shall be endorsed by Seller in favor of
                  Purchaser
                  and promptly delivered to Purchaser. In the event Purchaser receives
                  any
                  payments of any delinquent rent from tenants subsequent to Closing
                  that
                  are applicable to periods prior to the Closing, such payments shall,
                  as
                  applicable, either be endorsed by Purchaser in favor of Seller
                  and
                  promptly delivered to Seller or promptly paid to Purchaser by Seller.
                  Purchaser shall use commercially reasonable efforts to collect
                  delinquent
                  rent from tenants owed to Seller prior to Closing, but Purchaser
                  shall not
                  be obligated to commence eviction efforts in an effort to collect
                  rents.
                  Purchaser shall be entitled to apply all payments by tenants first
                  to the
                  payment of current rent and other charges and second to the payment
                  of
                  pre-Closing delinquent rent when the current month’s rent is past due; but
                  rent payments received more than ten (10) days prior to their due
                  date
                  during the two (2) months next following the month of the Closing
                  Date
                  shall be presumed to be a “catch-up” payment of pre-Closing delinquent
                  rent (unless any such payment is accompanied by a notation from
                  the tenant
                  indicating to the contrary) and shall be remitted to Seller. The
                  refundable portion of all tenant deposits and accrued interest
                  as to those
                  leases that provide that the landlord shall pay interest on such
                  deposits
                  shall be credited by Seller to Purchaser at Closing. Purchaser
                  shall
                  receive no credit for any non-refundable fees or deposits unless
                  the date,
                  circumstance or event which makes same non-refundable has not occurred
                  as
                  of the Closing Date. 

              

      

       

      
        
          
          

        

        
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        	9.3  	
                Utilities
                  and Operating Expenses.
                  Purchaser agrees to open accounts with the utility companies serving
                  the
                  Property and to cooperate with Seller in requesting readings as
                  of the
                  Closing Date. If readings cannot be obtained as of the Closing
                  Date, the
                  Parties shall prorate all utility charges relating to the Property,
                  including water, gas, electricity, sewer and the like, outside
                  of escrow,
                  with such prorations to be finalized as soon as practicable following
                  Closing. Expenses under any Approved Contracts assumed by Purchaser
                  shall
                  be prorated as of the Closing Date. If any errors or omissions
                  are made
                  regarding adjustments or prorations, the parties shall make the
                  appropriate corrections promptly upon the discovery thereof. If
                  any
                  estimates are made regarding adjustments or prorations, the Parties
                  shall
                  make the appropriate correction promptly when accurate information
                  becomes
                  available. Any corrected adjustment or proration shall be paid
                  in cash
                  outside of escrow to the party entitled thereto. The obligations
                  of the
                  Parties under this Section 9.3 shall survive for a period of twelve
                  (12)
                  months after the Closing Date.

              

      

       

      
        	10.  	
                Closing
                  Costs.

              

      

       

      
        	10.1  	
                Seller’s
                  Closing Costs.
                  Seller shall pay the following:

              

      

       

      
        	(a)  	
                One-half
                  of Escrow Agent’s fee;

              

      

       

      
        	(b)  	
                The
                  cost of an ALTA standard coverage owner’s Title Policy, including search
                  fees; 

              

      

       

      
        	(c)  	
                Real
                  estate sales commissions as set forth in Section
                  18;

              

      

       

      
        	(d)  	
                Seller’s
                  attorneys’ fees in connection with the transaction contemplated by this
                  Agreement (which shall not include any fees of attorneys engaged
                  by
                  Purchaser with regard to the assumption of the PFC Encumbrance);
                  and

              

      

       

      
        	(e)  	
                Recording
                  fees customarily paid by sellers.

              

      

       

      
        	10.2  	
                Purchaser’s
                  Closing Costs.
                  Purchaser shall pay:

              

      

       

      
        	(a)  	
                One-half
                  of Escrow Agent’s fee;

              

      

       

      
        
          
          

        

        
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        	(b)  	
                Any
                  sales/use tax in connection with transfer of the Personal
                  Property;

              

      

       

      
        	(c)  	
                That
                  portion of the cost of obtaining a satisfactory title insurance
                  policy
                  that is in excess of the cost of the Title Policy, including the
                  costs of
                  an ALTA survey, if required;

              

      

       

      
        	(d)  	
                All
                  costs and fees associated with assumption of the PFC Encumbrance
                  on the
                  Property and replacement of all reserves held by the holder of
                  the PFC
                  Encumbrance and HUD, and upon the Closing Date, any tax, insurance,
                  replacement reserve, operating deficiency reserve, and any other
                  impounds
                  maintained by Lender in accordance with the HUD Loan (collectively,
                  the
                  “Impounds”)
                  shall be reimbursed by Purchaser to Seller. The amount of the Impounds
                  as
                  of the Closing Date is to be determined by the Escrow Agent by
                  obtaining
                  written confirmation from the Lender. Also, Purchaser shall pay
                  all its
                  attorneys’ fees in connection with the transaction contemplated by this
                  Agreement and those fees charged by the PFC Encumbrance holder
                  or HUD in
                  connection with the assumption of same, including without limitation
                  the
                  fees of its legal counsel; all costs incurred in connection with
                  the
                  consummation of Purchaser’s IRC Section 1031 exchange; and those recording
                  fees customarily paid by purchasers, including without limitation
                  all the
                  PFC Encumbrance assumption instruments.

              

      

       

      
        	11.  	
                Closing
                  Deliveries.
                  On
                  or before the Closing Date, the Parties shall cause to be delivered
                  to
                  Escrow Agent fully executed originals of the following documents,
                  satisfactory in form and substance to both Seller and Purchaser,
                  together
                  with escrow instructions, funds required to close and any other
                  documents
                  reasonably required to complete the transaction contemplated by
                  this
                  Agreement:

              

      

       

      
        	11.1  	
                Seller’s
                  Deliveries.

              

      

       

      
        	(a)  	
                Special
                  Warranty Deed conveying title to the Property to Purchaser and
                  containing
                  a reference to the HUD Covenant and a restriction prohibiting converting
                  the use of the Property into condominiums, a horizontal property
                  regime or
                  other form of separate ownership as to any of the dwelling units,
                  for a
                  period of ten (10) years from the date of issuance of the final
                  certificate of occupancy upon completion of the improvements to
                  the
                  Property, in form and substance identical, subject to any corrections
                  or
                  revisions jointly agreed to by the parties or required by law,
                  to that
                  instrument to be delivered to Purchaser within fourteen (14) days
                  after
                  the Effective Date (the “Deed”);

              

      

       

      
        	(b)  	
                Bill
                  of Sale conveying title to the Personal Property to
                  Purchaser;

              

      

       

      
        
          
          

        

        
          56

          
            

          

        

        
          
          

        

      

       

      
        	(c)  	
                Rent
                  Roll, certified as correct as of the Closing Date by Seller, identifying
                  each unit, the tenant of each unit, the lease expiration date,
                  the monthly
                  rent, the status of payment of rent, all refundable tenant deposits
                  and/or
                  prepaid rents on deposit from tenants to be transferred by Seller
                  to
                  Purchaser at Closing, and any rental concessions to tenants then
                  in
                  effect;

              

      

       

      
        	(d)  	
                Assignment
                  and Assumption of Leases assigning to Purchaser all of Seller’s interests
                  in all of the Tenant Leases;

              

      

       

      
        	(e)  	
                Assignment
                  and Assumption of Contracts and Intangibles assigning to Purchaser
                  all of
                  Seller’s rights and obligations under the contracts affecting the Property
                  which Purchaser has elected to assume in accordance with the terms
                  of this
                  Agreement (collectively, the “Approved
                  Contracts”);

              

      

       

      
        	(f)  	
                General
                  Assignment assigning to Purchaser all of Seller’s interest in warranties
                  and other intangible Personal
                  Property;

              

      

       

      
        	(g)  	
                Non-foreign
                  affidavit stating that Seller is not a “foreign person” for purposes of
                  Section 1445 of the Internal Revenue Code;

              

      

       

      
        	(h)  	
                An
                  Affidavit of Property Value required in connection with the conveyance
                  of
                  the Real Property and such other documents as are customary for
                  similar
                  transactions or as may be reasonably required by the Title Company
                  in its
                  capacities as underwriter or escrow agent;
                  and

              

      

       

      
        	(i)  	
                A
                  certificate updating Seller’s representations and warranties as of the
                  Closing Date.

              

      

       

      Additionally,
        Seller shall cause fully executed originals of the following documents to
        be
        delivered directly to Purchaser on or before the Closing Date:

       

      
        	 	
                (a)

              	
                Originals
                  of all Tenant Leases (or copies, if any original has been lost)
                  and any
                  material correspondence related thereto, i.e, all tenant
                  files;

              

      

       

      
        	 	
                (b)

              	
                Originals
                  of all Approved Contracts and any material correspondence related
                  thereto;

              

      

       

      
        	 	
                (c)

              	
                Materials
                  relating to the intangible Personal Property assigned to Purchaser
                  that
                  Seller has in its possession and/or
                  control;

              

      

       

      
        
          	 	
                  (d)

                	
                  All
                    soils, seismic, geologic, drainage, toxic waste and environmental
                    reports,
                    surveys, “as-built” plans and specifications, working drawings, grading
                    plans, elevations and similar information with respect to the
                    Real
                    Property which Seller has in its possession and/or control to
                    the extent
                    that originals of such items have not been delivered previously
                    by Seller
                    to Purchaser; and

                

        

        
          	 	 	 

        

        
          	 	(e)	
                  All
                    keys to the improvements located on the Real Property which Seller
                    or
                    Seller’s agents have in their possession, which keys shall include at
                    least one (1) key for every apartment unit, and which keys shall
                    be
                    properly tagged for identification;
                    and

                

        

        
          	 	 	 

        

        
          	 	(f)	
                  The
                    originals of the certificate of occupancy for the improvements
                    on the Real
                    Property and any other document readily accessible by Seller
                    that is
                    identified on Exhibit B.

                

        

      

       

      
        	11.2  	
                Purchaser’s
                  Deliveries.
                  Purchaser shall deliver on the Closing Date, the Purchase Price
                  for the
                  Property in accordance with Sections 3.1 and 3.2 above and any
                  documents
                  necessary to complete the transaction contemplated by this Agreement,
                  which shall include without limitation a letter from Purchaser’s President
                  authorizing (for so long as Purchaser owns the Property) Seller’s
                  affiliates to enter upon the Property (with due concern for the
                  rights of
                  tenants) upon forty-eight (48) hours prior written notice to Purchaser
                  to
                  tour the Real Property with prospective investors in or lenders
                  to
                  Seller’s affiliates’ other developments. Such deliveries shall be made in
                  a timely manner to allow for disbursement of the Purchase Price
                  to Seller
                  on the Closing Date.

              

      

       

      
        	12.  	
                Seller’s
                  Obligations Pending
                  Closing.

              

      

       

      
        	12.1  	
                Maintenance
                  of Property; Agreements Affecting Property.
                  From the Effective Date until the Closing Date, Seller will continue
                  to
                  conduct its business on and to manage the Property in a manner
                  similar to
                  Seller’s current conduct and will maintain the Property in its current
                  condition, subject to normal wear and tear, depreciation and damage
                  by
                  insured casualty. Seller will maintain Morrison Ekre & Bart as
                  property manager and will not terminate Morrison, Ekre & Bart as
                  property manager unless for cause or with the consent of Purchaser
                  which
                  shall not be unreasonably withheld. Seller has not previously entered
                  into
                  any agreements with respect to the operation of the business conducted
                  on
                  the Property (other than Tenant Leases, and any other agreements
                  which
                  would be disclosed by the documents described in Exhibit B
                  attached to this Agreement) which will be binding on Purchaser
                  after the
                  Closing Date, and following the Effective Date, Seller will not
                  enter into
                  any such agreement which will be binding on Purchaser without the
                  consent
                  in writing of Purchaser. Seller will not sell, assign or convey
                  any right,
                  title or interest in the Property to any third party or permit
                  to exist
                  any lien, encumbrance or charge thereon without discharging the
                  same prior
                  to the Closing Date.

              

      

       

      
        
          
          

        

        
          57

          
            

          

        

        
          
          

        

      

       

      
        	12.2  	
                Property
                  Insurance.
                  Until the Closing Date, Seller shall maintain its insurance policy
                  or
                  policies insuring the Property in full force and
                  effect.

              

      

       

      
        	13.  	
                Representations
                  and Warranties.

              

      

       

      
        	13.1  	
                Seller’s
                  Representations and Warranties.
                  The phrase “Seller’s Knowledge” or “Seller has not received written
                  notice” or “Seller has no knowledge of” or other phrases of similar import
                  shall mean and be limited to information actually known to or acquired
                  by,
                  in each case as of the Effective Date and without any special inquiry,
                  David K. Lu and Devan F. Wastchak, who are principals
                  of Seller.
                  In addition to other representations herein, Seller represents
                  and
                  warrants to Purchaser as of the date hereof and as of the Closing
                  Date
                  that:

              

      

       

      
        	(a)  	
                Seller
                  is an Arizona limited partnership, duly formed and validly existing
                  in the
                  State of Arizona. Seller, and the persons and entities signing
                  on behalf
                  of Seller, have full power and right to enter into and perform
                  their
                  obligations under this Agreement and the documents contemplated
                  herein,
                  including, without limitation, conveying the Property as herein
                  provided;
                  

              

      

       

      
        	(b)  	
                Neither
                  Seller nor any of the persons or entities constituting Seller is
                  a
                  “foreign person” within the meaning of Section 1445 of the United States
                  Internal Revenue Code of 1986, as amended, and the regulations
                  issued
                  thereunder, and Seller and each of the persons and entities constituting
                  Seller shall execute an affidavit at Closing, in form acceptable
                  to
                  Purchaser, confirming such matters; additionally, Seller is not,
                  and shall
                  not be at any time, a person with whom the Lenders are restricted
                  from
                  doing business under the regulations of the Office of Foreign Asset
                  Control ("OFAC") of the Department of Treasury of the United States
                  of
                  America (including those Persons named on OFAC's Specially Designated
                  and
                  Blocked Persons list) or under any statute, executive order (including,
                  the September 24, 2001 Executive Order Blocking Property and Prohibiting
                  Transactions With Persons Who Commit, Threaten to Commit, or Support
                  Terrorism), or other governmental action and is not and shall not
                  engage
                  in any dealings or transactions or otherwise be associated with
                  such
                  persons. In addition, the Borrower hereby agrees to provide to
                  the
                  Administrative Agent any information that the Administrative Agent
                  deems
                  necessary from time to time in order to ensure compliance with
                  all
                  applicable Laws concerning money laundering and similar
                  activities.

              

      

       

      
        	(c)  	
                Seller’s
                  interest in the Personal Property, Warranties, Permits, Tenant
                  Leases,
                  Tenant Deposits, Approved Contracts, and Trade Name is free of
                  any liens
                  or encumbrances, including without limitation any leases or financing
                  (with the exception of the PFC Encumbrance and the HUD Covenant).
                  There
                  shall not be any obligations of Seller in connection with the Property
                  that will be binding upon Purchaser after the Closing Date, except
                  for the
                  Tenant Leases, the Approved Contracts, and the Permitted
                  Exceptions;

              

      

       

      
        
          
          

        

        
          58

          
            

          

        

        
          
          

        

      

       

      
        	(d)  	
                The
                  execution and delivery of this Agreement and the documents contemplated
                  herein, and the consummation of the transactions contemplated herein,
                  will
                  not result in the breach of any agreement, indenture, or other
                  instrument
                  to which Seller is a party or is otherwise bound, so long as the
                  PFC
                  Encumbrance and the HUD Covenant are fully assumed by Purchaser
                  with each
                  lienholder’s consent;

              

      

       

      
        	(e)  	
                Except
                  for the consent of the Lender and HUD, no consent, approval, authorization
                  or order of any court or governmental agency or body or other third
                  party
                  is required in connection with Seller’s execution and delivery of this
                  Agreement or in connection with Seller’s performance of its obligations
                  under this Agreement;

              

      

       

      
        	(f)  	
                Seller
                  has not received written notice and has no actual knowledge (a) that
                  any permits required for the Property’s present use and status have not
                  been obtained or that any conditions contained in any permits have
                  not
                  been satisfied, except as set forth in subsection (k) of this Section
                  13.1, or (b) of any attachments, executions, or assignments
                  for the
                  benefit of creditors, or voluntary proceedings in bankruptcy or
                  under any
                  other debtor relief laws contemplated by or pending or threatened
                  by or
                  against any of the persons or entities constituting
                  Seller;

              

      

       

      
        	(g)  	
                Except
                  for the Tenant Leases, and those recorded exceptions set forth
                  in the
                  Preliminary Commitment, there are no options, rights of first refusal,
                  occupancy agreements (written or oral), licenses, contracts, restrictive
                  covenants, parking agreements, or any other agreements affecting
                  the
                  Property or the ownership, use, occupancy, operation, construction
                  or
                  maintenance of the Property;

              

      

       

      
        	(h)  	
                Seller
                  has not received written notice and has no actual knowledge that
                  any
                  water, sewer, gas, electricity, telephone, cable TV, drainage or
                  other
                  utility or system required by law or necessary for the use, occupancy,
                  operation and maintenance of the Property (i) is not installed
                  across
                  public property (or across valid easements which will inure to
                  the benefit
                  of Purchaser pursuant to this Agreement) to the boundary lines
                  of the Real
                  Property; (ii) is not connected pursuant to valid permits;
                  (iii) is not paid current as of the date of mutual acceptance
                  of this
                  Agreement and will be paid current as of the Closing Date; or (iv) is
                  not billed at normal metered charges for apartment
                  use;

              

      

       

      
        
          
          

        

        
          59

          
            

          

        

        
          
          

        

      

       

      
        	(i)  	
                No
                  services, material or work have been supplied to the Property by
                  or on
                  behalf of Seller for which payment has not been made in full in
                  a timely
                  manner, or which will not be paid in full before the Closing
                  Date;

              

      

       

      
        	(j)  	
                All
                  financial information about the Property heretofore or hereafter
                  prepared
                  by Seller and furnished to Purchaser is true, complete, and correct
                  in all
                  material respects as of the date therein specified and presents
                  fairly the
                  financial condition of the
                  Property;

              

      

       

      
        	(k)  	
                Seller
                  has received no written notices and Seller has no actual knowledge
                  (a) concerning any actual or alleged violation of or claim
                  relating
                  to any applicable governing regulation relating to the Property,
                  including
                  without limitation the Americans with Disabilities Act, or Seller’s use of
                  the Property; (b) that any of the uses or structures on
                  the Real
                  Property constitute a nonconforming use or structure under the
                  applicable
                  governmental regulation, provided, a secondary fire access issue
                  is being
                  discussed between the City of Avondale and Seller’s contractor and shall
                  reach final resolution prior to Closing; (c) that a variance
                  or
                  special exception from any Board of Adjustment of the City of Avondale
                  or
                  from any other applicable governmental entity has been obtained
                  by Seller,
                  or that any such variance or special exception is required for
                  the
                  Property or its use, occupancy, and operation to fully comply with
                  the
                  applicable governmental regulation; (d) that any federal,
                  state,
                  county, municipal or other governmental plans to change the highway
                  or
                  road system in the vicinity of the Property or to restrict or change
                  access from any such highway or road to the Property; or (e) of
                  any
                  violation of any covenant, or condition applicable to the
                  Property;

              

      

       

      
        	(l)  	
                Seller
                  has received no written notice of and Seller has no actual knowledge
                  of:
                  (i) any claim, action, suit, proceeding (including without
                  limitation
                  any proceeding in the nature of eminent domain) or investigation
                  pending
                  or threatened before any agency, court or other governmental authority
                  or
                  by any tenant, supplier or material man which relates to the ownership,
                  use, occupancy, value, operation of or title to the Property or
                  any
                  portion thereof; or (ii) any pending or contemplated special
                  or
                  general assessments, whether or not a lien on the Property, affecting
                  any
                  portion of the Property which will not be paid in full by Seller
                  prior to
                  the Closing Date; or (iii) any proceeding for any increase
                  in the
                  assessed valuation of any portion of the Property (other than normal
                  reassessment for ad
                  valorem
                  tax purposes which is part of a continuing and ongoing process);
                  

              

      

       

      
        	(m)  	
                Seller
                  has disclosed to Purchaser, in writing, information to the extent
                  of
                  Seller’s Knowledge in respect to (a) current, pending, or threatened
                  litigation involving the Property or any portion thereof, and (b) any
                  pending or threatened litigation involving any tenants, suppliers,
                  or
                  materialmen; and 

              

      

       

      
        
          
          

        

        
          60

          
            

          

        

        
          
          

        

      

       

      
        	(n)  	
                The
                  PFC Encumbrance has an outstanding principal balance in the approximate
                  amount of $14,694,000 and accrues interest at an annual rate of
                  five and
                  four-tenths percent (5.4%). The note evidencing such financing
                  was
                  obtained through the U.S. Department of Housing and Urban Development
                  (“HUD”),
                  and such note is assumable in accordance with its terms, upon the
                  prior
                  written approval of the HUD
                  Secretary.

              

      

       

      
        	13.2  	
                Seller’s
                  Disclaimer.
                  Except to the extent expressly set forth in this Section 13 and
                  elsewhere
                  in this Agreement, Seller makes no representations or warranties
                  with
                  respect to, and shall have no liability for: (i) the condition
                  of the
                  Property or the suitability of the Property for habitation or for
                  Purchaser’s intended use or for any use whatsoever; (ii) any
                  applicable building, zoning, fire or life safety laws or regulations
                  or
                  with respect to compliance therewith or with respect to the existence
                  of
                  or compliance with any required permits, if any, of any government
                  agency,
                  other than that described in Section 13.1(k) above; (iii) the
                  availability or existence of any water, sewer or other utilities,
                  any
                  rights thereto, or any water, sewer or other utility districts;
                  or
                  (iv) the presence of any environmentally hazardous wastes,
                  substances
                  or materials on, in or under the property or any adjacent properties.
                  PURCHASER ACKNOWLEDGES TO SELLER THAT PURCHASER WAS OFFERED, BUT
                  AT THE
                  CLOSE OF THE DUE DILIGENCE PERIOD SHALL HAVE WAIVED, THE OPPORTUNITY
                  UNDER
                  THIS AGREEMENT TO FURTHER INSPECT THE PROPERTY IN ALL RESPECTS
                  AND EXCEPT
                  TO THE EXTENT OF SELLER’S EXPRESS REPRESENTATIONS HEREUNDER, PURCHASER
                  ASSUMES THE RESPONSIBILITY AND RISKS OF ALL DEFECTS AND CONDITIONS,
                  INCLUDING SUCH DEFECTS AND CONDITIONS, IF ANY, THAT CANNOT BE OBSERVED
                  BY
                  CASUAL INSPECTION AND ALL RISKS ASSOCIATED WITH ADVERSE PHYSICAL
                  CHARACTERISTICS AND EXISTING ENVIRONMENTAL CONDITIONS ON, IN OR
                  AT THE
                  PROPERTY OR ANY ADJACENT PROPERTIES. Purchaser acknowledges and
                  agrees
                  that neither Seller not any member, manager, employee or agent
                  of Seller
                  has made any representations or warranties regarding the truth,
                  accuracy
                  or thoroughness of any reports, studies or assessments relating
                  to the
                  Property which Seller may have delivered or otherwise made available
                  to
                  Purchaser, except as otherwise expressly set forth in this Agreement.
                  Purchaser acknowledges that Seller would not agree to sell the
                  Property to
                  Purchaser on the terms and conditions of this Agreement but for
                  Purchaser’s acknowledgements and agreements set forth in this Section
                  13.2.

              

      

       

      Purchaser’s
        Initials:___________________________ 

       

      
        
          
          

        

        
          61

          
            

          

        

        
          
          

        

      

       

      
        	13.3  	
                Purchaser’s
                  Representations and Warranties.
                  Purchaser hereby represents and warrants to Seller as of the date
                  hereof,
                  and as of the Closing Date, that (a) Purchaser has full
                  power to
                  execute, deliver and carry out the terms and provisions of this
                  Agreement;
                  (b) Purchaser is a sophisticated purchaser who is familiar
                  with the
                  ownership and operation of real estate projects similar to the
                  Property;
                  (c) Purchaser has or will have adequate opportunity to complete
                  all
                  physical and financial examinations relating to the acquisition
                  of the
                  Property that it deems necessary, and will acquire the same solely
                  on the
                  basis of such examinations and the title insurance protection afforded
                  by
                  the owner’s policy and not on any information provided or to be provided
                  by Seller; and (d) Purchaser shall complete and submit to
                  HUD, HUD
                  Form 92266 (or its successor application form) and all other forms
                  and
                  information required to assume the PFC Encumbrance within sixty
                  six (66)
                  days after the Effective Date.

              

      

       

      
        	13.4  	
                Survival;
                  Knowledge.
                  All representations and warranties made in this Agreement shall
                  survive
                  the Closing for a period of twelve (12) months. Any and all claims
                  for
                  misrepresentation or breach of warranty under this Agreement must
                  be
                  commenced or filed within twelve (12) months from the date of Closing.
                  Purchaser shall have no recourse against Seller with respect to
                  any claim
                  for misrepresentation or breach of warranty arising out of facts
                  or
                  circumstances of which Purchaser or its employees or agents (excluding
                  real estate agents) were aware prior to Closing.
                  

              

      

       

      
        	14.  	
                Destruction
                  of Improvements.
                  Prior to Seller’s delivery of possession of the Property to Purchaser at
                  Closing, the risk of loss or damage to the Property shall remain
                  upon
                  Seller. The risk of loss transfers to Purchaser after delivery
                  of
                  possession of the Property to Purchaser at Closing. If, prior to
                  Closing,
                  the Property is materially damaged or destroyed by fire or other
                  casualty,
                  Seller shall promptly notify Purchaser of such fact. Purchaser
                  shall have
                  the option to terminate this Agreement upon notice to Seller given
                  not
                  later than five (5) days after receipt of Seller’s notice. If this
                  Agreement is so terminated, then the Initial and Second Deposits
                  and all
                  interest accrued thereon in the depository bank shall be refunded
                  to
                  Purchaser. Purchaser and Seller shall pay one-half (1/2) the cost
                  of any
                  cancellation fees and costs of Escrow Agent or Title Company in
                  such
                  event; and neither Purchaser nor Seller shall have any further
                  rights or
                  obligations under this Agreement except for any surviving indemnity
                  provisions of this Agreement. If Purchaser fails to notify Seller
                  of its
                  election within ten (10) days of receiving notification of the
                  material
                  damage or destruction, the Purchaser shall be deemed to have elected
                  to
                  proceed with Closing and the acquisition under this Agreement.
                  For
                  purposes of this Section 14, “material” damage or destruction shall mean
                  damage or destruction that costs in excess of two percent (2%)
                  of the
                  Purchase Price to repair or
                  replace.

              

      

       

      If
        Purchaser does not so terminate this Agreement or in the event any damage
        or
        destruction is not material, then neither Purchaser nor Seller shall have
        the
        right to either terminate this Agreement by reason of such damage or
        destruction, or waive its right to terminate, in which case Seller shall
        promptly comply with the terms and requirements of any Tenant Lease, the
        PFC
        Encumbrance or any other applicable agreement binding on Seller and/or the
        Real
        Property and any obligations under applicable law with regard to the repair
        or
        restoration of such damage, provided, however, that if the date of occurrence
        of
        the loss is such that it can not reasonably be repaired or restored prior
        to
        Closing and the failure to repair does not otherwise (a) prevent the Closing,
        including, without limitation, (i) the assumption of the PFC Encumbrance
        and
        (ii) the transfer of physical assets under HUD Form 92266 (or its successor
        application form), or (b) expose Purchaser or the Real Property to any claim
        for
        damages or penalty, then at Closing Seller shall assign and turn over to
        Purchaser all insurance proceeds paid or payable with respect to such damage
        or
        destruction, plus the amount of any deductible under Seller’s insurance policy
        and Purchaser and Seller shall proceed to close the transaction pursuant
        to the
        terms of this Agreement, without modifications of the terms of this Agreement
        and without any reduction in the Purchase Price. It is expressly understood
        and
        agreed to by Purchaser that except as provided in this paragraph Seller shall
        not and is not obligated to make any repairs to the Property in the event
        of
        damage or destruction by fire or other casualty and Seller’s assignment of the
        insurance proceeds and the payment of the deductible under Seller’s insurance
        policy to Purchaser is made so that Purchaser is responsible for any such
        repairs.

       

      
        
          
          

        

        
          62

          
            

          

        

        
          
          

        

      

       

      
        	15.  	
                Condemnation.
                  In
                  the event that, prior to the Closing Date, any governmental entity
                  shall
                  commence any actions of eminent domain or similar type proceedings
                  to take
                  any portion of the Real Property, Seller shall give prompt written
                  notice
                  thereof to Purchaser, and Purchaser shall have the option either
                  to (a)
                  elect to terminate this Agreement, or (b) complete the acquisition
                  of the
                  Property, in which case Purchaser shall be entitled to all the
                  proceeds of
                  such taking and Seller hereby agrees that it shall not settle or
                  compromise the proceedings without Purchaser’s prior written consent,
                  which consent shall not be unreasonably withheld or delayed. If
                  Purchaser
                  fails to notify Seller of its election within ten (10) days of
                  receiving
                  notification of the proceeding, then Purchaser shall be deemed
                  to have
                  elected to proceed with Closing and the acquisition under this
                  Agreement.

              

      

       

      
        	16.  	
                Default.

              

      

       

      
        	16.1  	
                Default
                  by Purchaser.
                  In the event the Purchaser fails, without legal excuse, to complete
                  the
                  purchase of the Property, Seller shall have the right to direct
                  the Escrow
                  Agent to pay the Deposit to Seller or to retain said Deposit to
                  the extent
                  already received by Seller, as liquidated damages for Purchaser’s failure.
                  The Parties agree that Seller’s actual damages would be difficult or
                  impossible to determine if Purchaser defaults, and that the Deposit
                  is the
                  best estimate of the amount and damages Seller would suffer. The
                  Deposit
                  shall be the amount that Seller is entitled to receive as liquidated
                  damages and shall be Seller’s sole and exclusive remedy for Purchaser’s
                  failure to complete the purchase of the Property. Payment of the
                  Deposit
                  in consequence of Purchaser’s default represents damages and not any
                  penalty against Purchaser. Notwithstanding anything to the contrary
                  in
                  this Agreement, Purchaser’s indemnity obligations under this Agreement are
                  separate and distinct obligations not subject to this Section 16.1.
                  

              

      

       

      
        
          
          

        

        
          63

          
            

          

        

        
          
          

        

      

       

      
        	16.2  	
                Default
                  by Seller.
                  Purchaser shall have as its sole remedy election, the right to
                  either:
                  (a) bring an action for specific performance, or (b) terminate
                  this Agreement and obtain the return of its Deposit. If Purchaser
                  fails to
                  file suit for its remedy of specific performance within thirty
                  (30) days
                  following the then-scheduled Closing Date, Purchaser shall be deemed
                  to
                  have waived its specific performance remedy. The remedies granted
                  to
                  Purchaser under this Section 16.2 apply only in the event of a
                  breach or
                  default or event that is not otherwise dealt with under terms of
                  this
                  Agreement. Under no circumstances shall Purchaser have the right
                  to sue
                  for damages of any nature. Notwithstanding anything to the contrary
                  in
                  this Agreement, Purchaser’s indemnity obligations under this Agreement are
                  separate and distinct obligations that are not subject to the liquidated
                  damages provisions contained in this Section 16.2. Further,
                  notwithstanding anything to the contrary contained in this Agreement,
                  the
                  liquidated damage provisions of this Section 16.2 will not limit
                  Seller’s
                  damages under A.R.S. sections 12-1103, 12-1191 or
                  33-420.

              

      

       

      
        	17.  	
                Notices.
                  All notices or other communications required or permitted to be
                  given to a
                  party to this Agreement shall be in writing and shall be personally
                  delivered, sent by reliable overnight courier which obtains a delivery
                  receipt, designated for next business day delivery and shipping
                  prepaid,,
                  sent via registered or certified mail, postage prepaid, return
                  receipt
                  requested, or sent by facsimile with hard copy sent on the same
                  day by one
                  of the means set forth above, to such party at the following respective
                  addresses:

              

      

       

      
        	
              	Purchaser:	
                Wilshire
                  Enterprises, Inc. 
                  1 Gateway
                    Center

                  11-43
                    Raymond Plaza West, 10th Floor

                  Newark,
                    New Jersey 07102

                  Attn:
                    Daniel C. Pryor

                  Phone
                    No.: (201) 420-2796

                  Fax
                    No.: (201) 420-6012

                  E-mail:
                    danpryor@wilshireenterprisesinc.com

                

              

      

      
        	 	 	 

      

      
        	 	With a copy
                to:	Wilentz, Goldman & Spitzer
                90
                  Woodbridge Center Drive

                P.O.
                  Box 10

                Woodbridge,
                  NJ 07095

                Attn:
                  Joseph J. Jankowski, Esq.

                Phone
                  No.: (732) 855-6059    

                Fax
                  No.: (732) 726-6512    

                E-mail:
                  jankoj@wilentz.com

              

      

      
      

       

      
        
          
          

        

        
          64

          
            

          

        

        
          
          

        

      

       

    

    
      
        	 	Seller:	
                Avondale
                  Multi-Family Limited Partnership

                Attn:
                  Devan Wastchak and David K. Lu 

                C/o
                  Foursite Development, L.L.C.

                2809
                  East Camelback Road, Suite 300

                Phoenix,
                  Arizona 85016

                Phone
                  No.: (602) 266-5888

                Fax
                  No.: (602) 266-5999

                E-mail:
                  dwastchack@foursite.com

              

      

      
        	 	 	 

      

      
        	 	With a copy to:	
                Michael N.
                  Widener, Esq.

                Bonnett,
                  Fairbourn, et al.

                2901 N.
                  Central Avenue, Suite 1000

                Phoenix,
                  AZ 85012

                Phone
                  No.: (602) 274-1100

                Fax
                  No.: (602) 274-1199

                E-mail:
                  mwidener@bffb.com

              

      

      
        	 	 	 

      

        

      Each
        such
        notice or other communication shall be deemed given, delivered and received
        upon
        its actual receipt, except that in the case of registered or certified mailings,
        these shall be deemed received on the fourth (4th) business day following
        its
        posting. 

       

      
        	18.  	
                Agency
                  and Commissions.
                  Each Party agrees to defend, indemnify and hold the other harmless
                  from
                  and against all liabilities, costs, damages and expenses, including,
                  without limitation, reasonable attorneys’ fees, resulting from any claims
                  or fees or commissions, based upon agreements by it, if any, to
                  pay any
                  additional broker’s commission and/or finder’s fee. Each Party represents
                  and warrants that no real estate brokers or finders were involved
                  in this
                  transaction that entitle any such person to a commission upon the
                  consummation of this purchase and
                  sale.

              

      

       

      
        	19.  	
                Disclosure
                  to Parties.
                  It
                  is hereby disclosed that Douglas A. Dragoo, an owner of an interest
                  in
                  Seller, is a licensed Arizona and Colorado real estate broker.
                  The Parties
                  understand and accept these disclosures and waive any rights that
                  may
                  otherwise relate to the described relationships. The disclosure
                  of such
                  relationship shall not in any way limit the scope of the representations
                  and warranties of the parties in Section 18 or limit the defense
                  or
                  indemnification obligations of the parties under Section 18.
                  

              

      

       

      
        	20.  	
                Transfer
                  in Accordance with HUD Requirements.
                  Notwithstanding any provision set forth in this Agreement, the
                  transaction
                  is conditioned upon preliminary approval by HUD of the transaction
                  as set
                  forth in Form HUD-92266, Application for Transfer of Physical Assets,
                  and
                  supporting documents submitted to HUD. No transfer of any interest
                  in the
                  Property under this Agreement shall be allowed or effective prior
                  to such
                  approval by HUD. Purchaser will not take possession of the Property
                  nor
                  assume benefits of property ownership prior to such approval by
                  HUD. The
                  Purchaser, its heirs, executors, administrators, or assigns shall
                  have no
                  right upon any breach by the Seller hereunder to seek damages,
                  directly or
                  indirectly, from the Property which is the subject of this transaction,
                  including from any assets, rents, issues or profits thereof, and
                  Purchaser
                  shall have no right to effect a lien upon this Property or the
                  assets,
                  rents, issues or profits thereof. At the Closing as defined herein,
                  Purchaser shall assume the loan made to the Seller and to be assumed
                  by
                  the Purchaser and insured by HUD in connection with this Project
                  (“HUD
                  Loan”).
                  Purchaser shall be responsible for applying for approval of a Transfer
                  of
                  Physical Assets (“TPA”)
                  with the HUD Phoenix Office in connection with the purchase of
                  the
                  Property and assumption of the HUD Loan. Purchaser shall pay for
                  the
                  services of Tiffany & Bosco, P.A. in connection with the preparation
                  and submission of the TPA, and Purchaser shall be responsible for
                  all
                  legal fees and costs associated with the TPA, whether or not the
                  TPA is
                  approved. Tiffany & Bosco, P.A. shall process the assumption of the
                  HUD Loan. The parties’ obligations under this Agreement shall be
                  contingent upon HUD’s approval of the TPA and Purchaser’s assumption of
                  the HUD Loan. If HUD does not approve of the TPA and Purchaser’s
                  assumption of the HUD Loan on or before the Close of Escrow, then
                  either
                  Party to this Agreement shall have the option at any time thereafter
                  to
                  terminate this Agreement; but in any event, One Hundred Thousand
                  Dollars
                  ($100,000) being the full Initial Deposit and Fifty Thousand Dollars
                  ($50,000) of the Second Deposit shall belong to Seller, and the
                  balance of
                  the Second Deposit shall be returned to Purchaser unless (i) Purchaser
                  failed to apply to HUD for the assumption of the PFC Encumbrance
                  as set
                  forth in Section 13.3(d), in which case an additional One Hundred
                  Thousand
                  Dollars ($100,000) of the Second Deposit shall belong to Seller
                  or (ii)
                  HUD’s disapproval of the TPA and Purchaser’s assumption of the HUD Loan is
                  a result of a) Purchaser’s failure to provide all requested items to HUD
                  and or the Lender within its control; b) Purchaser’s failure to perform
                  any HUD or Lender requirements within its control; c) a prior default
                  by
                  Purchaser on a HUD insured loan; or d) Purchaser’s insufficient credit, in
                  which case the balance of the Second Deposit shall be immediately
                  released
                  to and belong to Seller.

              

      

       

      
        
          
          

        

        
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        	21.  	
                Assignment
                  by Purchaser.
                  Purchaser may assign its rights and/or obligations under this Agreement
                  with the prior written consent of Seller, which consent shall not
                  be
                  unreasonably withheld, conditioned or delayed. Notwithstanding
                  the
                  foregoing, Seller’s consent shall not be required with respect to the
                  assignment of this Agreement to an entity in which Purchaser will
                  remain
                  as a manager and member, subject to HUD approval (and Seller shall
                  have no
                  responsibility for this approval). Any assignment shall be documented
                  and
                  notice given at least three (3) business days prior to the Closing
                  Date;
                  and the assignee must execute and deliver the license described
                  in Section
                  11.2 in favor of the Seller. Any permitted assignment by Purchaser
                  shall
                  not relieve Purchaser from performing the obligations of the buyer
                  under
                  this Agreement.

              

      

       

      
        	22.  	
                1031
                  Exchange.
                  Either Party may elect to qualify this transaction under Section
                  1031 of
                  the Internal Revenue Code (the “1031
                  Exchange”).
                  Each Party agrees to cooperate with the other to the extent necessary
                  to
                  qualify for the 1031 Exchange but neither shall be obligated to
                  incur any
                  out of pocket cost in connection therewith unless the exchanging
                  party
                  initiating the 1031 Exchange agrees to reimburse the cooperating
                  party for
                  such cost. Either Party may, without the other’s consent and in
                  furtherance of the 1031 Exchange, assign this Agreement and convey
                  the
                  Property to a person or entity (the “Exchange
                  Intermediary”)
                  at or prior to Closing on the following conditions: (a) the
                  assigning
                  Party shall not be released from its obligations under this Agreement;
                  (b) the other (non-assigning) party shall not bear any cost,
                  expense
                  or liability in connection with the conveyance or assignment; and
                  (c) the assigning Party shall indemnify and save the other
                  party
                  harmless from same.

              

      

       

      
        
          
          

        

        
          66

          
            

          

        

        
          
          

        

      

       

      
        	23.  	
                Attorneys’
                  Fees.
                  If
                  there is any litigation between Seller and Purchaser to enforce
                  or
                  interpret any provisions or rights of this Agreement, the unsuccessful
                  party in such litigation, as determined by the court, agrees to
                  pay the
                  successful party, as determined by the court, all reasonable out
                  of pocket
                  costs, legal fees, and expenses (through trial and appeal), including,
                  but
                  not limited to, reasonable attorneys’ fees incurred by the successful
                  party.

              

      

       

      
        	24.  	
                Time.
                  Time is of the essence of this Agreement, it being understood that
                  each
                  date set forth herein and the obligation of the Parties to be satisfied
                  by
                  such date have been the subject of specific negotiations by the
                  Parties.
                  The time for the performance of any obligation or the taking of
                  any action
                  under this Agreement will be deemed to expire at 5:00 p.m. (Phoenix
                  time)
                  on the last day of the applicable time period established in this
                  Agreement. In calculating any time period in this Agreement which
                  commences upon the receipt of any notice, request, demand, or document,
                  or
                  upon the happening of an event (e.g.,
                  the Opening of Escrow), the date upon which the notice, request,
                  demand,
                  or document is deemed received, as determined above, or the date
                  an event
                  occurs (or is deemed to have occurred) is not included with the
                  applicable
                  time period, but the applicable time period will commence on the
                  day
                  immediately following. If the time for the performance of any obligation
                  or taking any action under this Agreement expires on a Saturday,
                  Sunday,
                  or legal holiday, the time for performance or taking such action
                  will be
                  extended to the next succeeding day with is not a Saturday, Sunday,
                  or
                  legal holiday and during which Escrow Agent and both Purchaser’s and
                  Escrow Agent’s banks are open for
                  business.

              

      

       

      
        	25.  	
                Possession.
                  Possession of the Property shall be delivered by Seller to Purchaser
                  on
                  the Closing Date, subject to the right of
                  tenants.

              

      

       

      
        	26.  	
                Entire
                  Agreement.
                  This Agreement contains the entire agreement between the Parties
                  to this
                  Agreement with respect to the subject matter of this Agreement
                  and
                  supersedes all prior understandings, agreements, representations
                  and
                  warranties, if any, with respect to such subject
                  matter.

              

      

       

      
        	27.  	
                Modification
                  in Writing.
                  This Agreement may only be modified by a writing executed by both
                  Purchaser and Seller.

              

      

       

      
        
          
          

        

        
          67

          
            

          

        

        
          
          

        

      

       

      
        	28.  	
                Headings.
                  The headings of the various paragraphs of this Agreement have been
                  inserted only for convenience and shall not be deemed in any manner
                  to
                  modify or limit any of the provisions of this Agreement, or be
                  used in any
                  manner in the interpretation of this
                  Agreement.

              

      

       

      
        	29.  	
                Interpretation.
                  Whenever the context so requires, all words used in the singular
                  shall be
                  construed to have been used in the plural (and vice versa), each
                  gender
                  shall be construed to include any other gender, and the word “person”
                  shall be construed to include a natural person, a corporation,
                  a firm, a
                  partnership, a joint venture, an estate or any other
                  entity.

              

      

       

      
        	30.  	
                Effectiveness.
                  This Agreement shall become effective as a contract binding the
                  parties
                  if, and only when, it has been signed by, and delivered to, both
                  Purchaser
                  and Seller. There is no offer to sell represented by Seller’s forwarding
                  this Agreement draft to Purchaser. If this Agreement is executed
                  and
                  delivered by Purchaser to Seller prior to 5:00 p.m. Arizona time
                  on or
                  after July 29, 2005, it shall constitute Purchaser’s offer to acquire
                  the Property from Seller. Seller shall have the right to accept
                  other
                  offers to purchase the Property before or after July 29,
                  2005, so
                  long as Seller has not signed this Agreement and delivered it to
                  Purchaser.

              

      

       

      
        	31.  	
                Further
                  Assurances.
                  The Parties shall execute all instruments and documents and take
                  all
                  actions as may be reasonably required to effectuate this Agreement.
                  Prior
                  to the expiration of the Due Diligence Period, Purchaser and Seller
                  will
                  agree upon the form of all closing documents which are to be executed
                  at
                  Close of Escrow and which have not been attached to this Agreement
                  as
                  exhibits.

              

      

       

      
        	32.  	
                Counterparts.
                  This Agreement may be executed in any number of counterparts, or
                  with
                  signatures sent by facsimile, each of which shall be deemed an
                  original,
                  but all of which when taken together shall constitute but one and
                  the same
                  agreement.

              

      

       

      
        	33.  	
                Governing
                  Law.
                  The validity, meaning and effect of this Agreement shall be determined
                  in
                  accordance with the internal laws of the State of Arizona. Any
                  action
                  brought to interpret, enforce, or construe any provision of this
                  Agreement
                  must be commenced and maintained in the Superior Court of the State
                  of
                  Arizona, Maricopa County, or in the United States District Court
                  for the
                  District of Arizona. All parties irrevocably consent to this jurisdiction
                  and venue and agree not to transfer or remove any action commenced
                  in
                  accordance with this Agreement.

              

      

       

      
        	34.  	
                Successors.
                  The terms, covenants and conditions of this Agreement shall be
                  binding
                  upon and shall inure to the benefit of the heirs, executors,
                  administrators and assigns of the respective Parties
                  hereto.

              

      

       

      [Signatures
        Appear on the Following Page]

       

      
        
          
          

        

        
          68

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
        day
        and year first above written.

      

      
        	
                SELLER:

                 

                AVONDALE
                  MULTI-FAMILY LIMITED PARTNERSHIP, an Arizona limited
                  partnership

                 

                By Avondale
                  Investments, Inc., an Arizona corporation, its sole General
                  Partner

                 

                 

                 

                By__________________________________

                Devan F.
                  Wastchak, its Treasurer

              	
                PURCHASER:

                 

                WILSHIRE
                  ENTERPRISES, INC., a New Jersey corporation

                 

                 

                 

                By__________________________________

                Daniel
                  C. Pryor, its President

              

      

       

      
        
          
          

        

        
          69

          
            

          

        

        
          
          

        

      

      EXHIBIT
        A

      TO

      AGREEMENT
        FOR PURCHASE AND SALE

      

      Legal
        Description

      

      SEE
        ATTACHED LEGAL DESCRIPTION FROM TSA TITLE AGENCY

      

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

         

      

      EXHIBIT
        B

      TO

      AGREEMENT
        FOR PURCHASE AND SALE

      

      List
        of Due Diligence Items

       

      
        	
                Operating
                  Statements (2004 and year to date)

              
	
                Operating
                  Budget (2005)

              
	
                Capital
                  Improvements (2004 and year to date) 

              
	
                Current
                  Rent Roll

              
	
                Real
                  and Personal Property Tax Statements (2004) 

              
	
                ALTA
                  Survey

              
	
                Service
                  Contracts

              
	
                Personal
                  Property List

              
	
                Delinquency
                  Report

              
	
                Vendor
                  List

              
	
                Employee
                  Payroll

              
	
                Correspondence
                  received from governmental or municipal agencies concerning building
                  and
                  code violations of any nature, if any

              
	
                Certificates
                  of Occupancy

              
	
                Miscellaneous
                  Income Report

              
	
                Property
                  Management Agreement

              
	
                Certificate
                  of Insurance

              
	
                Phase
                  I Environmental

              
	
                Special
                  Warranty Deed - (To be provided within fourteen (14) days of the
                  Effective
                  Date)

              
	
                Copies
                  of all executed loan documents related to the PFC
                  Encumbrance

              

      

      

      
        
          
          

        

        
          2

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