FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (this “Amendment”), dated as
of September 1, 2017, is made by and between 29 EAST MACARTHUR, LLC, a
California limited liability company (“Seller”) and IMH FINANCIAL CORPORATION, a
Delaware corporation (“Purchaser”).
RECITALS
A.
The parties have entered into that certain Purchase and Sale Agreement, dated as
of August 2, 2017 (the “Agreement”), pursuant to which the Seller has agreed to
sell certain Property to Purchaser and Purchaser has agreed to purchase the
Property from Seller on the terms and subject to the conditions set forth in the
Agreement.

B.
The parties desire to amend the Agreement upon the terms and subject to the
conditions set forth in this Amendment.

NOW, THEREFORE, in consideration of the foregoing recitals and mutual covenants
and conditions contained herein, the parties agree as follows:
AGREEMENT
1.    Definitions. Capitalized terms used but not otherwise defined herein shall
have the meanings ascribed thereto in the Agreement.
2.    [Due Diligence Contingency. This Amendment shall serve as notice to Seller
that, effective immediately upon the mutual execution of this Amendment by
Seller and Purchaser, Purchaser hereby waives the Due Diligence Contingency
pursuant to Section 4.1(a) of the Agreement. Purchaser will deposit the
Additional Deposit with Escrow Agent on or before September 5, 2017.]
3.    Amendment. In addition to and not in lieu of the other covenants of Seller
set forth in the Agreement, from the date of this Amendment until the Closing,
Seller shall cooperate with Purchaser in good faith and use commercially
reasonable efforts, at no material cost or expense to Seller, to obtain prior to
the Closing: (1) an easement from the City of Sonoma for the use of the
irrigation well and well house and irrigation pipes located on the property
adjacent to the Property, [substantially] in the form attached hereto as Exhibit
“A”; and (2) all entitlements, permits and other governmental approvals that
Purchaser deems necessary or desirable to allow Purchaser to further develop and
operate the Property from and after the Closing in accordance with Purchaser’s
business plan.
4.    Effect of Amendment. Except as expressly amended hereby, the Agreement
shall remain unchanged. The Agreement, as amended hereby, shall remain in full
force and effect. From and after the date of this Amendment, references to the
Agreement shall be deemed to refer

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to the Agreement as amended hereby. In the event of a conflict between this
Amendment and the Agreement, this Amendment shall control.
5.    Headings. The titles and subtitles used in this Amendment are used for
convenience only and shall not be considered in construing or interpreting this
Amendment.
6.    No Third Party Beneficiaries. Except as expressly provided herein, nothing
in this Amendment, express or implied, is intended to confer upon any party
other than the parties hereto, or their respective successors and assigns, any
rights, remedies, obligations, or liabilities under or by reason of this
Amendment.
7.    Counterparts and Signature Pages. This Amendment may be executed in any
number of counterparts, each of which shall be deemed to be one and the same
instrument. The exchange of copies of this Amendment and of signature pages by
facsimile or other electronic transmission shall constitute effective execution
and delivery of this Amendment as to the parties and may be used in lieu of the
original Amendment for all purposes. Signatures of the parties transmitted by
facsimile or other electronic means shall be deemed to be their original
signatures for all purposes.
[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties have executed this First Amendment to Purchase
and Sale Agreement effective as of the date first set forth above.
 
SELLER:
 
 
 
 
29 EAST MACARTHUR, LLC,
 a California limited liability company
 
 
 
 
By:
/s/ Suzanne Brangham
 
Name:
Suzanne Brangham
 
Title:
Managing Member
 
 
 
 
 
 
 
PURCHASER:
 
 
 
 
IMH FINANCIAL CORPORATION,
a Delaware corporation
 
 
 
 
By:
/s/ Lawrence D. Bain
 
Name:
Lawrence D. Bain
 
Title:
Chairman and CEO

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EXHIBIT “A” TO FIRST AMENDMENT

RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:

                
                
                

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EASEMENT AGREEMENT
This EASEMENT AGREEMENT (this “Agreement”), dated as of the ____ day of
_________________, 2017 (the “Effective Date”), by and between the CITY OF
SONOMA, CALIFORNIA, a California municipal corporation (hereinafter, the
“Grantor”), having an address at [                                ] and 29 EAST
MACARTHUR, LLC, a California limited liability company (hereinafter, the
“Grantee”), having an address at 29 East MacArthur Street, Sonoma, CA 95476.
RECITALS:

WHEREAS, Grantor is the fee owner of certain land located in the City of Sonoma,
Sonoma County, California, more particularly described in Exhibit A attached
hereto and made a part hereof (the “City Parcel”);
WHEREAS, Grantee is the fee owner of certain land located in the City of Sonoma,
Sonoma County, California, more particularly described in Exhibit B attached
hereto and made a part hereof (the “Hotel Parcel”);
WHEREAS, Grantee previously conveyed the City Parcel to Grantor pursuant to a
Grant Deed recorded in the Official Records of Sonoma County, California on
November 22, 2000, as Instrument #2000123042 (the “Original Grant Deed”);
WHEREAS, the Original Grant Deed contained reservation language reserving to
Grantee or its successors the right to use and maintain the well and well house
presently located on the City Parcel (the “Well”), as more particularly depicted
on Exhibit C attached hereto and made a part hereof, and the underground
electric utility service installed by Grantee to service the Well, and to draw
water from the Well across the creek for the purpose of irrigating the Hotel
Parcel (collectively, the “Reserved Uses”);

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WHEREAS, the Original Grant Deed further provided that Grantor agreed to permit
Grantee or its successors the future right to improve or rebuild the well house
on the City Parcel subject to obtaining all necessary governmental permits, to a
size not to exceed ten percent greater than the current size, or two hundred and
twelve (212) square feet.
WHEREAS, Grantor is willing to grant to Grantee an easement for the Reserved
Uses over such portion of the City Parcel (the “Easement Area”), more
particularly described by a metes and bounds description and a diagrammatic
sketch [with a cross hatched portion indicating the Easement Area], on Exhibit C
attached hereto and made a part hereof;
NOW, THEREFORE, for good and valuable consideration paid by Grantee to Grantor
and the mutual covenants, terms and conditions set forth herein, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1.    Grant. Grantor hereby grants and conveys to Grantee, its heirs, legal
representatives, successors and assigns, and to any future owner of the Hotel
Parcel, a perpetual, non-exclusive easement (the “Easement”) in, under, upon,
about, over and through the Easement Area located on the City Parcel, for the
benefit of the Hotel Parcel, for the purposes of (i) drawing water from the Well
across the Easement Area onto the Hotel Parcel for the purpose of irrigating the
Hotel Parcel; (ii) reconstructing, removing, replacing, repairing, maintaining,
operating and using the existing well, well house, irrigation pipes, underground
electric utility service to the well and well house, and all fixtures,
facilities and equipment related to any of the foregoing, whether now or
hereafter constructed or installed (collectively, the “Easement Facilities”),
and (iii) access in connection therewith.
2.    Access. Grantee shall be permitted reasonable access under, upon, about,
over and through the City Parcel for the purpose of ingress and egress to the
Easement and the Easement Facilities and to perform improvements, maintenance
and repairs as further described herein. Grantee may only access the City Parcel
between the hours of 5:00 a.m. Pacific time and 11:00 p.m. Pacific time, seven
days a week, unless in the case of an emergency or otherwise consented to in
writing by Grantor. Grantee agrees not to unreasonably interrupt Grantor’s use
of the City Parcel, and if such interruption is necessary, such interruption
shall be temporary in nature and designed to limit any interruption of access to
and from the City Parcel. In the event of emergency, Grantee shall provide
verbal notice to Grantor prior to entering onto the City Parcel.
3.    Additional Improvements. Grantee may construct or place additional
Easement Facilities over, under, in, along, across and upon the Easement Area
that are reasonably related to both the purpose of the Easement and Grantee’s
use and enjoyment of the Easement; provided, however, that (a) any such
additional Easement Facilities made over, under, in, along, across and upon the
Easement Area, shall not interfere with the Grantor’s, or any other occupant’s,
use and enjoyment of the City Parcel; (b) any such additional Easement
Facilities shall be constructed in a workmanlike manner and in compliance with
the applicable statutes, ordinances, rules and regulations of all governing
public authorities as those statutes, ordinances, rules and regulations are
amended from time to time; and (c) the size of the existing well house (or any
replacement well house) may not exceed ten percent greater than the current size
or two hundred and twelve (212) square feet.

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4.    Costs. Grantee shall bear and promptly pay without the imposition of any
lien or charge on or against all or any portion of the City Parcel, all costs
and expenses incurred by Grantee in connection with the construction and
maintenance of the Easement Facilities. Grantee hereby acknowledges and agrees
that if any lien is filed against the City Parcel as a result of the Easement or
Grantee’s activities in the Easement Area and Grantee has not had such lien
removed of record within ninety (90) days of the date of the initial filing of
such lien, Grantee shall be in default of this Agreement, and Grantor shall have
the right to exercise all of its remedies pursuant to this Agreement, at law and
in equity.
5.    Compliance with Laws. Grantee shall maintain the Easement Facilities in
compliance with the applicable statutes, ordinances, rules and regulations of
all governing public authorities as those statutes, ordinances, rules and
regulations are amended from time to time.
6.    Maintenance and Repair. In the event the surface of any portion of the
Easement Area or the City Parcel is disturbed by Grantee’s exercise of any of
its easement rights under this Agreement, such area shall be restored to the
condition in which it existed as of the commencement of such activity. Grantee
hereby assumes the obligation, including all costs and expenses, to maintain and
repair the Easement Area. In addition to the foregoing, Grantee shall perform
necessary maintenance so as to keep the Easement Area at all times in the same
condition as existed on the Effective Date of this Agreement, reasonable wear
and tear excepted.
7.    Reservation of Rights. All right, title and interest in and to the
Easement Area and the City Parcel under this Agreement (other than the Reserved
Uses), which may be used and enjoyed without interfering with the rights
conveyed by this Agreement are reserved to Grantor, provided, however, that
Grantor shall not enact or maintain any buildings which may cause damage to or
interfere with the Easement Facilities within the Easement Area. Grantor shall
not grant any other easement rights within the Easement Area to any other
individual or entity (“Other Interest Holder”) without first obtaining from
Grantee and Other Interest Holder an indemnity agreement reasonably satisfactory
to Grantee, which agreement shall be between Grantee, Grantor and Other Interest
Holder and shall provide Grantee with an indemnification from Other Interest
Holder in connection with Other Interest Holder’s use of the Easement Area.
Grantor’s use and enjoyment of the Easement Area shall not interfere with, or
adversely affect any of Grantee’s rights herein.
8.    Representations and Warranties. Grantor hereby represents and warrants to
Grantee that: (a) it has the full right, power, title and interest to make the
within grant of Easement to Grantee; (b) such grant of Easement and any rights
granted under this Agreement may be fully and thoroughly enjoyed and utilized by
Grantee pursuant to the terms hereof; and (c) Grantee’s easement rights
hereunder shall not be defeased, impaired and adversely affected by superior
title.
9.    Grantor’s Use of Property. Grantor reserves the right to use the City
Parcel in any manner and for any purpose that does not interfere with the
Reserved Uses, Grantee’s easement rights and Grantee’s use of the Easement.

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10.    Covenants Run with Land. The parties to this Agreement hereby acknowledge
and agree that the easements and other rights conferred by this Agreement are
intended to, and do, constitute covenants that run with the land and shall inure
to the benefit of and be binding upon the parties and their respective grantees,
heirs, successors and assigns. This Agreement is made with the intent of
satisfying Section 1468 of the California Civil Code.
11.    Default and Remedies. In the event of a default by Grantor or Grantee,
the non-defaulting party may seek any and all remedies permitted by law.
12.    Indemnification. Grantee shall indemnify, defend and hold Grantor
harmless from and against any and all losses, costs, damages, liens, claims,
liabilities or expenses (including, but not limited to, reasonable attorneys’
fees, court costs and disbursements) actually and reasonably incurred by Grantor
(collectively, “Losses”) arising from or by reason of Grantee’s access to or use
of the Easement Area or Grantee’s access to or use of the City Parcel for the
purpose of accessing or using the Easement Area. Notwithstanding the foregoing,
in no event shall the term “Losses” include consequential, punitive, or special
damages.
13.    Attorneys’ Fees. In the event of any dispute between the parties
regarding the enforcement or effect of this Agreement, including one subject to
arbitration, the non-prevailing party in any such dispute shall pay the
prevailing party’s reasonable attorneys’ fees and costs incurred. In the event
of arbitration, the fees of the arbitrator and the cost of the arbitration shall
be paid by the non-prevailing party. In the event that neither party wholly
prevails, the court or arbitrator, as applicable, may apportion the costs or
fees as the court or arbitrator deems appropriate.
14.    Notice. Each party shall deliver all notices, requests, consents, claims,
demands, waivers and other communications under this Agreement (each, a
“Notice”) in writing and addressed to the other party at its address set out
below (or to any other address that the receiving party may designate from time
to time in accordance with this Section 14). Each party shall deliver all
Notices by nationally recognized overnight courier (with all fees pre-paid) or
certified or registered mail (in each case, return receipt requested, postage
prepaid). Except as otherwise provided in this Agreement, a Notice is effective
only: (a) upon receipt by the receiving party and (b) if the party giving the
Notice has complied with the requirements of this Section 14.

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To Grantor:
             
             
             
            

 
with a copy to:
             
             
             
            

 
To Grantee:
29 East MacArthur, LLC
Attention: Suzanne Brangham
29 East MacArthur Street
Sonoma, CA 95476

 
with a copy to:
Kevin J. McCullough
Spaulding McCullough & Tansil LLP
90 South E Street, Suite 200
Santa Rosa, CA 95404

15.    Amendment. This Agreement may not be modified, amended or terminated
except in a writing signed by each party hereto.
16.    Time of the Essence. Both parties agree that time is of the essence and
that time specifications contained herein shall be strictly construed.
17.    Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
18.    Authority. Both parties represent and warrant that they have the
authority to execute this Agreement and each individual signing on behalf of a
party to this Agreement states that he or she is the duly authorized
representative of the signing party and that his or her signature on this
Agreement has been duly authorized by, and creates the binding and enforceable
obligation of, the party on whose behalf the representative is signing.
19.    Further Cooperation. Each of the parties to this Agreement agree to
execute such other documents and to perform such other acts as may be reasonably
necessary or desirable to further the expressed and intent purpose of this
agreement.
[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
 
GRANTOR:
 
 
 
 
CITY OF SONOMA, 
a municipal corporation
 
 
 
 
By:
 
 
Name:
 
 
Title:
 
 
 
 
 
 
 
 
GRANTEE:
 
 
 
 
29 EAST MACARTHUR, LLC,
 a California limited liability company
 
 
 
 
By:
 
 
Name:
Suzanne Brangham
 
Title:
Managing Member

[INSERT NOTARIAL CERTIFICATES]

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EXHIBIT A
LEGAL DESCRIPTION OF CITY PARCEL

Lot 3 as shown on City of Sonoma Parcel Map No. 112 recorded September 9, 1997
in Book 569 of Maps, pages 15 and 16, Official Records of Sonoma County.

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EXHIBIT B
LEGAL DESCRIPTION OF HOTEL PARCEL

LOTS ONE AND TWO, AS SHOWN ON THAT CERTAIN MAP ENTITLED, "CITY OF SONOMA PARCEL
MAP NO. 112", FILED IN THE OFFICE OF THE COUNTY RECORDER OF SONOMA COUNTY, STATE
OF CALIFORNIA, ON SEPTEMBER 8, 1997, IN BOOK 569 OF MAPS AT PAGES 15-16, SONOMA
COUNTY RECORDS.

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EXHIBIT C
LEGAL DESCRIPTION AND DEPICTION OF EASEMENT AREA
[to be attached]

4835-7790-6766, v. 1

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