Execution
Version




AGREEMENT
AND PLAN OF CONVERSION AND CONTRIBUTION





by
and among





IMH
SECURED LOAN FUND, LLC


INVESTORS
MORTGAGE HOLDINGS, INC.


IMH
HOLDINGS, LLC


SHANE
C. ALBERS


WILLIAM
MERIS


STEVE
DARAK


BRIAN
PETERSON


RYAN
MURANAKA





TABLE
OF CONTENTS





Article; Section
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  PageARTICLE
      I
                                                                                                  
                                                                                                  THE
      CONVERSION
                                                                                                  
                                                                                                  21.1
                                                                                                  
                                                                                                  The
      Conversion
                                                                                                  
                                                                                                  21.2
                                                                                                  
                                                                                                  Closing
                                                                                                  
                                                                                                  21.3
                                                                                                  
                                                                                                  Effect
      of the Conversion
                                                                                                  
                                                                                                  21.4
                                                                                                  
                                                                                                  Certificate
      of Incorporation and Bylaws
                                                                                                  
                                                                                                  31.5
                                                                                                  
                                                                                                  Directors
      and Officers
                                                                                                  
                                                                                                  3ARTICLE
      II
                                                                                                  
                                                                                                  EFFECT
      ON THE MEMBERSHIP UNITS OF THE FUND
                                                                                                  
                                                                                                  32.1
                                                                                                  
                                                                                                  Conversion
      of Units
                                                                                                  
                                                                                                  3(a)
                                                                                                  Conversion
      Generally
                                                                                                  
                                                                                                  3(b)
                                                                                                  Cancellation
      of Treasury Units
                                                                                                  
                                                                                                  42.2
                                                                                                  
                                                                                                  Exchange
      of Securities
                                                                                                  
                                                                                                  4(a)
                                                                                                  Custodian
                                                                                                  
                                                                                                  4(b)
                                                                                                  Exchange
      Procedures
                                                                                                  
                                                                                                  4(c)
                                                                                                  Distributions
      with Respect to Unexchanged Shares of Restricted Common
    Stock
                                                                                                  
                                                                                                  4(d)
                                                                                                  Further
      Rights in Units
                                                                                                  
                                                                                                  4(e)
                                                                                                  Fractional
      Shares
                                                                                                  
                                                                                                  5(f)
                                                                                                  No
      Liability
                                                                                                  
                                                                                                  52.3
                                                                                                  
                                                                                                  Unit
      Registry
                                                                                                  
                                                                                                  52.4
                                                                                                  
                                                                                                  Withholding
                                                                                                  
                                                                                                  62.5
                                                                                                  
                                                                                                  Stock
      Appreciation Rights
                                                                                                  
                                                                                                  6ARTICLE
      III
                                                                                                  
                                                                                                  CONTRIBUTION
      BY INVESTORS
                                                                                                  
                                                                                                  63.1
                                                                                                  
                                                                                                  Contribution
                                                                                                  
                                                                                                  63.2
                                                                                                  
                                                                                                  Authorization
      of Issuance
                                                                                                  
                                                                                                  73.3
                                                                                                  
                                                                                                  Section
      351 Exchange
                                                                                                  
                                                                                                  7ARTICLE
      IV
                                                                                                  
                                                                                                  REPRESENTATIONS
      AND WARRANTIES
                                                                                                  
                                                                                                  74.1
                                                                                                  
                                                                                                  Representations
      and Warranties of the Investors
                                                                                                  
                                                                                                  7(a)
                                                                                                  Acknowledgment
                                                                                                  
                                                                                                  7(b)
                                                                                                  Equity
      Interest Ownership
                                                                                                  
                                                                                                  7(c)
                                                                                                  Investment
      Intent
                                                                                                  
                                                                                                  7


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TABLE
OF CONTENTS


(continued)


Article; Section
                                                                                                                                    
                                                                                                                                    
                                                                                                                                    
                                                                                                                                    
                                                                                                                                    
                                                                                                                                    Page(d)
                                                                                                                                    
                                                                                                                                    Accredited
      Investor
                                                                                                                                    
                                                                                                                                    7(e)
                                                                                                                                    
                                                                                                                                    Information;
      Disclosure
                                                                                                                                    
                                                                                                                                    8(f)
                                                                                                                                    
                                                                                                                                    Authority;
      Binding Obligation
                                                                                                                                    
                                                                                                                                    8(g)
                                                                                                                                    
                                                                                                                                    No
      Conflict; Required Filings and Consents
                                                                                                                                    
                                                                                                                                    84.2
                                                                                                                                    
                                                                                                                                    Representations
      and Warranties of the Fund
                                                                                                                                    
                                                                                                                                    8(a)
                                                                                                                                    
                                                                                                                                    Organization
                                                                                                                                    
                                                                                                                                    8(b)
                                                                                                                                    
                                                                                                                                    Authority;
      Binding Obligation
                                                                                                                                    
                                                                                                                                    9(c)
                                                                                                                                    
                                                                                                                                    Capitalization
                                                                                                                                    
                                                                                                                                    9(d)
                                                                                                                                    
                                                                                                                                    No
      Brokers
                                                                                                                                    
                                                                                                                                    9(e)
                                                                                                                                    
                                                                                                                                    Financial
      Statements
                                                                                                                                    
                                                                                                                                    9(f)
                                                                                                                                    
                                                                                                                                    No
      Conflict; Required Filings and Consents
                                                                                                                                    
                                                                                                                                    9(g)
                                                                                                                                    
                                                                                                                                    Absence
      of Undisclosed Liabilities
                                                                                                                                    
                                                                                                                                    10(h)
                                                                                                                                    
                                                                                                                                    Absence
      of Certain Changes or Events
                                                                                                                                    
                                                                                                                                    10(i)
                                                                                                                                    
                                                                                                                                    Compliance
      with Law; Permits
                                                                                                                                    
                                                                                                                                    10(j)
                                                                                                                                    
                                                                                                                                    Litigation
                                                                                                                                    
                                                                                                                                    104.3
                                                                                                                                    
                                                                                                                                    Representation
      and Warranties Regarding the Manager.
                                                                                                                                    
                                                                                                                                    10(a)
                                                                                                                                    
                                                                                                                                    Organization
                                                                                                                                    
                                                                                                                                    10(b)
                                                                                                                                    
                                                                                                                                    Authority;
      Binding Obligation
                                                                                                                                    
                                                                                                                                    11(c)
                                                                                                                                    
                                                                                                                                    Capitalization
                                                                                                                                    
                                                                                                                                    11(d)
                                                                                                                                    
                                                                                                                                    No
      Brokers
                                                                                                                                    
                                                                                                                                    11(e)
                                                                                                                                    
                                                                                                                                    Financial
      Statements
                                                                                                                                    
                                                                                                                                    11(f)
                                                                                                                                    
                                                                                                                                    No
      Conflict; Required Filings and Consents
                                                                                                                                    
                                                                                                                                    11(g)
                                                                                                                                    
                                                                                                                                    Absence
      of Undisclosed Liabilities
                                                                                                                                    
                                                                                                                                    12(h)
                                                                                                                                    
                                                                                                                                    Absence
      of Certain Changes or Events
                                                                                                                                    
                                                                                                                                    12(i)
                                                                                                                                    
                                                                                                                                    Compliance
      with Law; Permits
                                                                                                                                    
                                                                                                                                    12(j)
                                                                                                                                    
                                                                                                                                    Litigation
                                                                                                                                    
                                                                                                                                    124.4
                                                                                                                                    
                                                                                                                                    Representations
      and Warranties Regarding Holdings
                                                                                                                                    
                                                                                                                                    12(a)
                                                                                                                                    
                                                                                                                                    Organization
                                                                                                                                    
                                                                                                                                    12(b)
                                                                                                                                    
                                                                                                                                    Authority;
      Binding Obligation
                                                                                                                                    
                                                                                                                                    12(c)
                                                                                                                                    
                                                                                                                                    Capitalization
                                                                                                                                    
                                                                                                                                    13


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TABLE
OF CONTENTS


(continued)




Article; Section
                                                                                                                                                                                  
                                                                                                                                                                                  
                                                                                                                                                                                  
                                                                                                                                                                                  
                                                                                                                                                                                  
                                                                                                                                                                                  Page(d)
                                                                                                                                                                                  
                                                                                                                                                                                  No
      Brokers
                                                                                                                                                                                  
                                                                                                                                                                                  13(e)
                                                                                                                                                                                  
                                                                                                                                                                                  Financial
      Statements
                                                                                                                                                                                  
                                                                                                                                                                                  13(f)
                                                                                                                                                                                  
                                                                                                                                                                                  No
      Conflict; Required Filings and Consents
                                                                                                                                                                                  
                                                                                                                                                                                  13(g)
                                                                                                                                                                                  
                                                                                                                                                                                  Absence
      of Undisclosed Liabilities
                                                                                                                                                                                  
                                                                                                                                                                                  14(h)
                                                                                                                                                                                  
                                                                                                                                                                                  Absence
      of Certain Changes or Events
                                                                                                                                                                                  
                                                                                                                                                                                  14(i)
                                                                                                                                                                                  
                                                                                                                                                                                  Compliance
      with Law; Permits
                                                                                                                                                                                  
                                                                                                                                                                                  14(j)
                                                                                                                                                                                  
                                                                                                                                                                                  Litigation
                                                                                                                                                                                  
                                                                                                                                                                                  144.5
                                                                                                                                                                                  
                                                                                                                                                                                  Non-Survival
      of Representations, Warranties and Covenants
                                                                                                                                                                                  
                                                                                                                                                                                  14ARTICLE
      V
                                                                                                                                                                                  
                                                                                                                                                                                  
                                                                                                                                                                                  
                                                                                                                                                                                  COVENANTS
                                                                                                                                                                                  
                                                                                                                                                                                  145.1
                                                                                                                                                                                  
                                                                                                                                                                                  Interim
      Operations
                                                                                                                                                                                  
                                                                                                                                                                                  145.2
                                                                                                                                                                                  
                                                                                                                                                                                  Further
      Assurances; Cooperation
                                                                                                                                                                                  
                                                                                                                                                                                  155.3
                                                                                                                                                                                  
                                                                                                                                                                                  Efforts
      to Close
                                                                                                                                                                                  
                                                                                                                                                                                  155.4
                                                                                                                                                                                  
                                                                                                                                                                                  Securities
      Laws
                                                                                                                                                                                  
                                                                                                                                                                                  155.5
                                                                                                                                                                                  
                                                                                                                                                                                  Non-Competition
                                                                                                                                                                                  
                                                                                                                                                                                  16(a)
                                                                                                                                                                                  
                                                                                                                                                                                  Time-Frame;
      Non-Competition Provisions
                                                                                                                                                                                  
                                                                                                                                                                                  16(b)
                                                                                                                                                                                  
                                                                                                                                                                                  Exceptions
                                                                                                                                                                                  
                                                                                                                                                                                  16(c)
                                                                                                                                                                                  
                                                                                                                                                                                  Conditions
                                                                                                                                                                                  
                                                                                                                                                                                  16(d)
                                                                                                                                                                                  
                                                                                                                                                                                  Remedies
                                                                                                                                                                                  
                                                                                                                                                                                  16(e)
                                                                                                                                                                                  
                                                                                                                                                                                  Cure
      Period
                                                                                                                                                                                  
                                                                                                                                                                                  17ARTICLE
      VI
                                                                                                                                                                                  
                                                                                                                                                                                  CONDITIONS
      TO CLOSING
                                                                                                                                                                                  
                                                                                                                                                                                  176.1
                                                                                                                                                                                  
                                                                                                                                                                                  Closing
      Conditions
                                                                                                                                                                                  
                                                                                                                                                                                  17ARTICLE
      VII
                                                                                                                                                                                  
                                                                                                                                                                                  TERMINATION
                                                                                                                                                                                  
                                                                                                                                                                                  187.1
                                                                                                                                                                                  
                                                                                                                                                                                  Termination
      by the Fund
                                                                                                                                                                                  
                                                                                                                                                                                  187.2
                                                                                                                                                                                  
                                                                                                                                                                                  Termination
      by the Fund, the Manager or Holdings
                                                                                                                                                                                  
                                                                                                                                                                                  18ARTICLE
      VIII
                                                                                                                                                                                  
                                                                                                                                                                                  MISCELLANEOUS
                                                                                                                                                                                  
                                                                                                                                                                                  188.1
                                                                                                                                                                                  
                                                                                                                                                                                  Implementation
      and Interpretation; Amendment
                                                                                                                                                                                  
                                                                                                                                                                                  188.2
                                                                                                                                                                                  
                                                                                                                                                                                  Third
      Party Beneficiaries
                                                                                                                                                                                  
                                                                                                                                                                                  188.3
                                                                                                                                                                                  
                                                                                                                                                                                  Notices
                                                                                                                                                                                  
                                                                                                                                                                                  198.4
                                                                                                                                                                                  
                                                                                                                                                                                  Severability
                                                                                                                                                                                  
                                                                                                                                                                                  198.5
                                                                                                                                                                                  
                                                                                                                                                                                  Governing
      Law
                                                                                                                                                                                  
                                                                                                                                                                                  19


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TABLE
OF CONTENTS


(continued)




Article; Section
                          
                          
                          
                          Page8.6
                          
                          Counterparts
                          
                          198.7
                          
                          Successors
      and Assigns
                          
                          198.8
                          
                          No
      Waiver
                          
                          198.9
                          
                          Advice
      of Counsel
                          
                          198.10
                          
                          Entire
      Agreement
                          
                          198.11
                          
                          Expenses
                          
                          19





Schedules and
Exhibits:





Schedule C — Equity
Interests





Exhibit 1.4(a) —
Certificate of Incorporation





Exhibit 1.4(b) —
Bylaws





Exhibit 1.5 —
Directors and Officers





Schedule 2.5 —
Issuance of Class B-3 Common





Schedule 4.1(b) —
Equity Interests in Manager





Schedule 4.1(g) —
Governmental Authority Issues





Schedule 4.2(f) —
Governmental Authority Issues





Schedule 4.4(f) —
Governmental Authority Issues





Schedule 4.5(f) —
Governmental Authority Issues





Schedule 4.2(g) —
Governmental Authority Issues





Schedule 4.2(h) —
Governmental Authority Issues





Schedule 4.2(i) —
Governmental Authority Issues




Schedule 4.2(j) —
Governmental Authority Issues
 
 Schedule 4.4(g) —
Governmental Authority Issues
 
 Schedule 4.4(h) —
Governmental Authority Issues





-iv-


TABLE
OF CONTENTS


(continued)


Article; Section
                          
                          
                          
                          Page





Schedule 4.4(i) —
Governmental Authority Issues





Schedule 4.4(j) —
Governmental Authority Issues





Schedule 4.5(g) —
Governmental Authority Issues





Schedule 4.5(h) —
Governmental Authority Issues





Schedule 4.5(i) —
Governmental Authority Issues





Schedule 4.5(j) —
Governmental Authority Issues


-v-




AGREEMENT
AND PLAN OF CONVERSION AND CONTRIBUTION




THIS
AGREEMENT AND PLAN OF CONVERSION AND CONTRIBUTION (this “ Agreement ”), is made as of
May 10, 2010, by and among (i) IMH Secured Loan Fund, LLC, a Delaware limited
liability company (the “ Fund ”), (ii) Investors
Mortgage Holdings, Inc., an Arizona corporation (the “ Manager ”), (iii) IMH
Holdings, LLC, an Arizona limited liability company (“ Holdings ”), (iv) Shane C.
Albers (“ Albers ”), (v)
William Meris (“ Meris
”), (vi) Steve Darak (“ Darak ”), (vii) Brian Peterson
(“ Peterson ”), and
(viii) Ryan Muranaka (“ Muranaka ,” and together
Albers, Meris, Darak and Peterson, each an “ Investor ” and collectively,
the “ Investors
”).




THE
PARTIES ENTER INTO THIS AGREEMENT ON THE BASIS OF THE FOLLOWING FACTS,
INTENTIONS AND UNDERSTANDINGS.




A.  The
board of directors of the Manager and the members of Holdings deem it advisable
and in the best interests of each entity and its members or stockholders that
the Fund convert to a corporate form pursuant to which the Conversion (as
defined below) and the Contribution (as defined below) shall occur.




B.  The
Manager has approved this Agreement, the conversion of the Fund into a Delaware
corporation named IMH Financial Corporation (the “Corporation”) pursuant to
which the Units (as defined below) shall be exchanged for Restricted Common
Stock (as defined below) and the SARs (as defined below) shall be cancelled in
exchange for the issuance of Class B-3 Common (as defined below) (the “Conversion ”) and the other
transactions contemplated by this Agreement, and has determined that the
Conversion and this Agreement are advisable and in the best interests of the
Fund and the members of the Fund (the “Members”) and has also
determined to recommend to the Members the adoption of this Agreement, subject
to the terms and conditions hereof and in accordance with the provisions of the
Delaware Limited Liability Company Act (the “LLC Act”) and the General
Corporation Law of the State of Delaware (the “Corporation
Law”).




C.  Each
Investor desires to contribute to the Corporation (collectively, the “Contribution”) any and all
equity interests or rights to receive equity interests (whether granted by the
Manager, Holdings, the Corporation or another Investor) in each of the Manager
and/or Holdings held by them as set forth opposite such Investor’s name on Schedule C hereto
(collectively, the “Equity
Interests”) in exchange for the issuance by the Corporation of that
number of shares of Class B-3 Common or B-4 Common (as defined below), in each
case as set forth opposite such Investor’s name on Schedule C hereto
(collectively, the “Securities”), and the
Corporation desires to acquire and accept the Equity Interests and issue the
Securities in exchange therefor.




D.  The
parties intend that the Conversion and the Contribution and the issuance of the
Securities shall be undertaken as part of an integrated transaction and that the
transaction shall be treated for tax purposes as part of an exchange described
in Section 351 of the Internal Revenue Code of 1986, as amended (the “Code”).


1




E.  The
parties intend for this Agreement to terminate, replace and supersede in all
respects (i) that certain Agreement and Plan of Merger, dated as of February 11,
2010, by and among the Fund, IMH Financial Corporation, the Manager and its
stockholders and Holdings and its members, and (ii) that certain Agreement and
Plan of Conversion and Contribution, dated as of May 5, 2010, by and among the
Fund, the Manager and its stockholders and Holdings and its
members.





NOW, THEREFORE, in
consideration of the representations and warranties herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:




ARTICLE
I




THE
CONVERSION




1.1The
Conversion.  Upon the terms and subject to the satisfaction or
waiver of the conditions set forth in this Agreement, and in accordance with the
LLC Act and the Corporation Law, at the Effective Time (as defined below), the
Fund shall convert into the Corporation. As a result of the Conversion, the
separate corporate existence of the Fund shall cease and the Corporation shall
continue as the surviving corporation after the Conversion
(the   “Surviving
Corporation”).




1.2Closing.  The
closing of the Conversion and the Contribution (as defined below) (the “Closing”) shall take place on
the date on which all of the conditions set forth in Article VI are satisfied or
waived (excluding conditions that, by their nature, cannot be satisfied until
the Effective Time and will in fact be satisfied at the Effective Time), at the
offices of O’Melveny & Myers LLP, Two Embarcadero Center, 28th Floor, San
Francisco, California 94111, at 6:00 a.m. local time, or at such other date,
time or place as the parties hereto shall agree to in writing (the date of the
Closing being referred to as the “Closing Date”). On the Closing
Date, the Corporation shall cause the Conversion to be consummated by filing a
certificate of conversion relating to the Conversion (the “Certificate of Conversion”)
with the Secretary of State of the State of Delaware, in such form as required
by, and executed in accordance with the relevant provisions of, the LLC Act and
the Corporation Law (the date and time of such filing, or if a later date and
time are specified in such filing, such specified later date and time, being the
“Effective
Time”).




1.3Effect of the
Conversion.  At the Effective Time, the effect of the
Conversion shall be as provided in the appropriate provisions of the LLC Act and
the Corporation Law. Without limiting the generality of the foregoing, at the
Effective Time, the IMH Secured Loan Fund LLC Restated Limited Liability
Operating Agreement (the “Operating Agreement”) shall
terminate and cease to exist, all the property, assets (including, without
limitation, all mortgage loans), rights, privileges, powers and franchises of
the Fund shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Fund (including, without limitation, the Surviving Corporation
shall indemnify and hold harmless the Manager and its affiliates of the Manager
which performed services for the Fund in respect of any loss or liability
suffered by the Manager in such capacity as Manager, subject to the limitations
in the Operating Agreement) shall become the debts, liabilities and duties of
the Surviving Corporation.


2




1.4Certificate of Incorporation
and Bylaws.




(a)           At
the Effective Time, the Certificate of Incorporation of the Surviving
Corporation shall be substantially as set forth in Exhibit 1.4(a)
attached hereto (the “Certificate of
Incorporation”).




(b)           At
the Effective Time, the Bylaws of the Surviving Corporation shall be amended to
read substantially as set forth in Exhibit 1.4(b)
attached hereto (the “Bylaws”), and shall be adopted
as such by the board of directors of the Corporation.




1.5Directors and
Officers.  The directors and officers of the Surviving
Corporation immediately after the Effective Time shall be those individuals set
forth on Exhibit 1.5
attached hereto.  The Fund and, after the Effective Time, the
Surviving Corporation and its board of directors shall take such actions to
cause each of such individuals to be appointed as a director and/or officer, as
the case may be, of the Surviving Corporation.




ARTICLE
II




EFFECT
ON THE MEMBERSHIP UNITS OF THE FUND




2.1Conversion of
Units.  At the Effective Time, by virtue of the Conversion and
without any action on the part of the Fund or the Corporation, the issued and
outstanding membership units of the Fund (the “Units”) shall be converted as
follows:




(a)           Conversion
Generally.  Subject to Section 2.2(e), each
Unit issued and outstanding immediately prior to the Effective Time (other than
any Units to be cancelled pursuant to Section 2.1(b) and
any Units that would be converted into fractional shares in accordance with
Section 2.2(e))
shall be converted into the right to receive either (i) if a holder of any Units
(a “Holder”) so elects
pursuant to the terms of Section 2.2(b), or if
no election is made by a Holder, a combination of (A) 55 validly issued, fully
paid and nonassessable shares of Class B-1 Common Stock, par value $0.01 per
share of the Corporation (the “Class B-1 Common”), (B) 55
validly issued, fully paid and nonassessable shares of Class B-2 Common Stock,
par value $0.01 per share of the Corporation (the “Class B-2 Common”) and (C)
110.3419 validly issued, fully paid and nonassessable shares of Class B-3 Common
Stock, par value $0.01 per share of the Corporation (the “Class B-3 Common” and together
with the Class B-1 Common and the Class B-2 Common, the “Class B Common”); or (ii) if a
Holder makes such an election pursuant to the terms of Section 2.2(b)
hereof, 220.3419 validly issued, fully paid and nonassessable shares of Class C
Common Stock, par value $0.01 per share of the Corporation (the “Class C Common” and together
with the Class B Common Stock, the “Restricted Common Stock”) in
each case with and subject to the applicable terms and conditions set forth in
the Certificate of Incorporation (the shares of Restricted Common Stock so
issued, the “Conversion
Consideration”). At the Effective Time, all such Units shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist, and
any certificate previously representing any such Unit shall thereafter represent
the right to receive the Conversion Consideration payable in respect of such
Units pursuant to the terms hereof.




3




(b)           Cancellation of Treasury
Units.  Any Unit held in treasury by the Fund and each Unit, if
any, owned by any wholly-owned subsidiary of the Fund immediately prior to the
Effective Time shall be cancelled and extinguished without any conversion
thereof.




2.2Exchange of
Securities.




(a)           Custodian.  The
Corporation shall cause a bank or trust company designated by the Corporation
(the “Custodian”) to
serve as an exchange agent for purposes of the Conversion pursuant to the terms
of this Agreement, the Certificate of Incorporation and such other documents or
agreements as the Custodian may require. All shares of Restricted Common Stock
issued pursuant to this Section 2.2 shall be
held by the Custodian for the benefit of the applicable Holders or otherwise
held in book-entry form subject to the transfer restrictions set forth in the
Certificate of Incorporation in the records maintained by the transfer agent
until such time as such shares of Restricted Common Stock are converted into
shares of Common Stock, par value $0.01 per share of the Company (the “Common Stock”), any other
terms related to such release are satisfied and the Custodian is instructed to
release them.




(b)           Exchange
Procedures.  Prior to the Effective Time, the Corporation (or
the Custodian at the direction of the Corporation) shall mail to each Holder of
record a consent (a “Consent”) which shall offer
each Holder the opportunity to irrevocably elect whether to receive either Class
B Common, Class C Common or a combination thereof in exchange for such Holder’s
Units in the manner provided in Section 2.1 (provided
that if no such election is made within the time period set forth in the
Consent, the Holder shall be deemed to have elected to receive only Class B
Common pursuant to Section 2.1 in
exchange for all Units held by such Holder). Upon surrender of a Consent,
properly completed and duly executed, and such other documents as may be
reasonably required pursuant to the instructions contained therein, such Holder
shall be entitled to receive in exchange therefor the shares of the class of
Restricted Common Stock elected by such Holder payable in respect of such
Holder’s Units and any dividends or other distributions to which such Holder is
entitled pursuant to Section 2.2(c), in
each case, without any interest thereon.




(c)           Distributions with Respect
to Unexchanged Shares of Restricted Common Stock.  No dividends
or other distributions declared or made with respect to shares of Restricted
Common Stock, with a record date after the Effective Time, shall be paid to the
Holder of any unsurrendered Units, unless and until the Holder of such Units
shall have complied with Section 2.2(c) in a
manner that properly transfers such Units. Subject to the effect of abandoned
property, escheat or other applicable laws, following compliance with Section 2.2(c) in a
manner that properly transfers such Units, there shall be paid to the Holder
thereof, without interest, (i) promptly, the amount of dividends or other
distributions with a record date at or after the Effective Time theretofore paid
with respect to the Restricted Common Stock issuable in exchange for such Units,
and (ii) at the appropriate payment date, the amount of dividends or other
distributions, with a record date at or after the Effective Time but prior to
such surrender and a payment date subsequent to such surrender, payable with
respect to such Units.




(d)           Further Rights in
Units.  The Conversion Consideration issued upon conversion of
a Unit in accordance with the terms of this Agreement and any dividends or other
distributions with a record date at or after the Effective Time to which each
Holder is entitled, in each case, without any interest thereon, shall be deemed
to have been issued in full satisfaction of all rights pertaining to such
Unit.


4




(e)           Fractional
Shares.  In the event that the application of the conversion
procedures set forth in Section 2.1(a) or the
formula in Section 2.5
would result in the issuance of fractional shares of a class or series of
Restricted Common Stock, the following steps shall be
followed:  (i) first, all fractional
shares of each series or class of Restricted Common Stock otherwise issuable to
each Holder shall be aggregated for such Holder and any resulting whole number
of shares of such series or class, as applicable, shall be issued to such
Holder, (ii) second, to the extent
any fractional shares of one or more series of Class B Common or of
Class C Common would be issuable to a Holder following the application of
clause (i), all such fractional shares shall be combined as a single class,
and to the extent the sum of such fractional shares of Class B Common or of
Class C Common, as applicable, is greater than one, an additional share of
Class B-3 Common (with respect to Class B Common) or Class C
Common (with respect to Class C Common), as applicable, shall be issued to
such Holder in respect of each such whole share.  After application of
the immediately preceding sentence, no certificates or scrip representing
fractional shares of any class or series of Restricted Common Stock shall be
issued in exchange for Units, but in lieu thereof (A) each Holder of Units
who would otherwise be entitled to a fraction of a share of the applicable class
and series of Restricted Common Stock greater than or equal to 0.5 shall receive
an additional share of Class B-3 Common (with respect to Class B
Common) or Class C Common (with respect to Class C Common), as
applicable, as consideration for such fractional interest upon surrender of such
Holder’s Units, and (B) each Holder of Units who would otherwise be
entitled to a fraction of a share of the applicable class and series of
Restricted Common Stock less than 0.5 shall forfeit such fractional interest and
receive no consideration in respect thereof.




(f)           No
Liability.  Neither the Fund nor the Surviving Corporation
shall be liable to any Holder for the Conversion Consideration (or dividends or
distributions with respect thereto) or any cash amounts delivered to a public
official pursuant to any abandoned property, escheat or other applicable
law.




2.3Unit
Registry.  At the Effective Time, the list of holders of Units
of the Fund shall be closed and thereafter there shall be no further
registration of transfers of Units theretofore outstanding on the records of the
Fund.  From and after the Effective Time, the Holders of Units
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such Units except as otherwise provided in this Agreement
or the Bylaws.  On or after the Effective Time, any Units transferred
to the Custodian or the Surviving Corporation for any reason shall solely
represent the right to receive the Conversion Consideration payable in respect
of such Units and any dividends or other distributions to which the Holders
thereof are entitled pursuant to Section 2.2(c), in
each case, without any interest thereon.




5


2.4Withholding.  The
Surviving Corporation or the Custodian shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
Holder, holder of a SAR or of securities convertible into or exchangeable for
Units, such amounts as the Surviving Corporation or the Custodian are required
to deduct and withhold under the Code, or any tax law, with respect to the
making of such payment.  To the extent that amounts are so withheld by
the Surviving Corporation or the Custodian, such withheld amounts (or the value
thereof) shall be promptly remitted to the applicable taxing authorities in
accordance with the Code or other applicable tax law and shall be treated for
all purposes of this Agreement as having been paid to the Holder, holder of a
SAR or of securities convertible into or exchangeable for Units, as applicable,
in respect of whom such deduction and withholding was made by the Surviving
Corporation or the Custodian.




2.5Stock Appreciation
Rights.  Each Stock Appreciation Right (each, a “SAR”) outstanding pursuant to
the Manager’s Management Incentive Plan adopted by the Manager’s board of
directors on June 29, 2007 (the “Plan”) shall be cancelled at
the Effective Time, and subject to compliance with the requirements of the Plan
and the applicable SAR, each holder thereof shall be issued a number of shares
of Class B-3 Common as set forth opposite such holder’s name on Schedule 2.5
hereto (which such amount already reflects the reduction in the number of shares
to address withholding tax obligations as set forth in Section 2.4).  Upon
such cancellation, all such SARs shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist, and any certificate or
agreement previously representing any such SAR shall thereafter represent the
right to receive the shares of Class B-3 Common payable in respect of such
SAR pursuant to the terms hereof.




ARTICLE
III




CONTRIBUTION
BY INVESTORS




3.1Contribution.  Subject
to the terms and conditions set forth herein, immediately following the
Effective Time, at the Closing, each of the Investors shall (and subject to the
occurrence of the Closing hereby does) deliver and contribute to the Surviving
Corporation all of such Investor’s right, title and interest in and to the
Equity Interests held by such Investor as set forth opposite such Investor’s
name on Schedule Chereto and in consideration thereof, the Surviving Corporation shall
issue the Securities to each such Investor as set forth opposite such Investor’s
name on Schedule Chereto (subject to adjustment pursuant to this Section 3.1). Without
limiting the foregoing, each Investor acknowledges and agrees that the issuance
of the Securities as set forth on Schedule C hereto (subject to
adjustment pursuant to this Section 3.1) shall satisfy in full any prior
agreements, understandings or arrangements between the Investors with respect to
the issuance or transfer of Equity Interests in the Manager, Holdings and the
Corporation, and all such prior agreements, understandings or arrangements
between the Investors with respect to the transfer of Equity Interests shall be
expressly superseded by the terms of this Agreement unless this Agreement shall
have been terminated pursuant to its terms. All of the parties hereto
acknowledge and agree that (i) all distributions of earnings of the Manager
through the year ended December 31, 2009 shall be allocated to the Investors in
proportion to their ownership interest in the Manager in accordance with Schedule C, (ii) the
consolidated net income or net losses of the Manager and Holdings for the period
from January 1, 2010 through effective date shall be allocable to the Investors,
and (iii) any net profits of the Manager from the period of January 1, 2010 to
Closing Date will be retained by the Corporation.  Any reduction in the
number of shares issuable to the Investors shall be allocated pro rata among the
Investors based on their pro rata share of the amounts set forth on Schedule C. The aggregate
number of shares to be issued to all Investors as set forth in Schedule C shall be reduced,
on a pro rata basis, by one share for each $20 of the consolidated net loss for
the period ended on the Closing Date. The Corporation shall seek to have
the consolidated net loss/net profits for the period audited by a reputable
accounting firm as soon as practicable following consummation of the Conversion
Transactions, and the number of shares issued to the Investors shall be adjusted
accordingly.




6




3.2Authorization of
Issuance.  The Manager has authorized the issuance and the sale
of the Securities to the Investors.  Upon the Closing, the Surviving
Corporation shall issue the Securities set forth opposite such Investor’s name
on Schedule C
hereto to each Investor, and each such Investor shall be the record and
beneficial holder of such Securities.




3.3Section 351
Exchange.  The parties hereto acknowledge and agree that the
Merger and the Contribution and issuance of the Securities in exchange
therefore, together, are intended to be treated for tax purposes as part of an
exchange described in Section 351 of the Code.




ARTICLE
IV




REPRESENTATIONS
AND WARRANTIES




4.1Representations and
Warranties of the Investors.  Each Investor hereby severally
and not jointly represents and warrants to the Fund and the Corporation that the
following statements are true and correct with respect to such
Investor:




(a)           Acknowledgment.  Such
Investor understands and acknowledges that such Investor’s ability to sell or
dispose of the Securities is limited by applicable law, including by Rule 144
promulgated under the Securities Act of 1933, as amended (the “Securities Act”) and the
provisions of the Securities Act that limit transfer by “affiliates” of the
Surviving Corporation, which may include certain directors and officers of the
Surviving Corporation.  In addition, such Investor may be restricted
by insider trading or similar policies that may be enacted by the Surviving
Corporation from time to time.  Such Investor represents that the
Investor is familiar with the foregoing rules and restrictions.




(b)           Equity Interest
Ownership.  Except as set forth on Schedule 4.1(b), such
Investor is transferring to the Surviving Corporation good and valid title to
the Equity Interests free and clear of any lien, option, pledge, security
interest, restriction on transfer or other adverse claim or interest of any kind
except for such as may be imposed by applicable securities laws.




(c)           Investment
Intent.  Such Investor is acquiring the Securities for the
Investor’s own account and not as a nominee or agent for any other person, for
investment purposes only and without a view to the distribution of the
Securities or any interest therein in violation of the Securities Act, and the
Securities will not be disposed of in contravention of the Securities Act or any
applicable state securities laws.




(d)           Accredited
Investor.  Any such Investor that so indicated on materials
furnished by such Investor to the Fund or the Corporation is an “Accredited
Investor,” as such term is defined in Regulation D under the Securities
Act.  Such Investor either has a preexisting personal or business
relationship with the Surviving Corporation or any of its partners, officers,
directors or controlling persons, or members of its board of directors, or has
business or financial experience or the business or financial experience of its
professional adviser, who is unaffiliated with and who is not compensated by the
Surviving Corporation or any affiliate of the Surviving Corporation or selling
agent of the Surviving Corporation directly or indirectly, from which it could
be reasonably assumed that such Investor has the capacity to protect its own
interest in connection with the transaction.


7




(e)           Information;
Disclosure.  Such Investor has been provided, to the Investor’s
satisfaction, the opportunity to ask questions concerning the terms and
conditions of the transaction and sale of the Securities, has had all such
questions answered to the Investor’s satisfaction and has been supplied all
additional information requested by the Investor to verify the accuracy of the
information furnished to the Investor.




(f)           Authority; Binding
Obligation.  Such Investor has full legal capacity to enter
into this Agreement and to carry out the transactions contemplated
hereby.  This Agreement has been duly executed and delivered by such
Investor and constitutes a valid and binding obligation of such Investor,
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors’ rights generally and by general principles of
equity.




(g)           No Conflict; Required
Filings and Consents.  The execution, delivery and performance
by such Investor of this Agreement and the consummation by such Investor of the
transactions contemplated hereby do not and shall not (i) violate any
federal, state or local statute, law, regulation, order, writ, judgment,
injunction or decree (“Law”) applicable to such
Investor, (ii) conflict, in either case, with, create a breach or
constitute a default (with or without the giving of notice or passage of time or
both) under, require any approval or consent of or notice to, or give to any
party any right of modification, acceleration or cancellation of, or result in
the creation of any lien upon any property or right (including the Equity
Interests) of such Investor pursuant to, any contract, agreement, mortgage,
loan, credit agreement, license, Permit (as defined below) or other instrument
or arrangement (“Contract”) or provision
thereof to which such Investor is a party or by which such Investor or any of
such Investor’s properties, assets or rights may be bound, affected or
benefited, or (iii) require any consent or approval of, registration or
filing with, or notice to any federal, state or local governmental, regulatory,
administrative, judicial or arbitral body or authority or any agency or
instrumentality thereof (a “Governmental Authority”),
except in items (i) through (iii) above, or as otherwise set forth in Schedule 4.1(g), as
would not be reasonably likely to have a material adverse effect on such
Investor’s ability to consummate the transactions contemplated
hereby.




4.2Representations and
Warranties of the Fund.  The Fund represents and warrants to
the other parties hereto that the following statements are true and
correct:




(a)           Organization.  The
Fund is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization and has the requisite limited liability
company power and authority to carry on its business as now being
conducted.


8


(b)           Authority; Binding
Obligation.  The Fund has all requisite limited liability
company power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby.  Subject to obtaining any required
approval of the Members, the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by the Fund have been duly
authorized by all necessary action on the part of the Fund.  This
Agreement has been duly executed and delivered by the Fund and, assuming the due
execution and delivery by the Investors, the Corporation, the Manager and
Holdings, constitutes the valid and binding obligation of the Fund, enforceable
against the Fund in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ rights generally and by general principles of
equity.




(c)           Capitalization.  All
of the outstanding Units have been duly authorized, validly issued and are fully
paid and nonassessable, have been issued in compliance with all federal and
state securities laws and are not issued in violation of or subject to any
preemptive, co-sale or other rights to subscribe for or purchase
securities.  The authorized equity of the Fund is determined in the
discretion of the Manager, and there are 73,038 Units outstanding immediately
prior to the Closing.  Except as set forth herein, as of the date of
this Agreement (i) there are no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any membership units of
the Fund, or arrangements by which the Fund is or may become bound to issue
additional membership units, and (ii) the Fund has no membership units
reserved for issuance.




(d)           No
Brokers.  There are no brokers or finders entitled to
compensation in connection with the transactions contemplated by this
Agreement.




(e)           Financial
Statements.  The audited financial statements of the Fund as of
and for the years ended December 31, 2007, 2008 and 2009 are accurate and
complete in all material respects and fairly present the financial position of
the Fund as of the dates thereof and the result of its operations and cash flows
for the period then ended in conformity with United States Generally Accepted
Accounting Principals (“GAAP”).




(f)           No Conflict; Required
Filings and Consents.  The execution, delivery and performance
by the Fund of this Agreement and the consummation of the transactions
contemplated hereby do not and shall not (i) violate any federal, state or
local Law applicable to the Fund, (ii) conflict, in either case, with,
create a breach or constitute a default (with or without the giving of notice or
passage of time or both) under, require any approval or consent of or notice to,
or give to any party any right of modification, acceleration or cancellation of,
or result in the creation of any lien upon any property or right of the Fund
pursuant to, any Contract, or provision thereof, to which the Fund is a party or
by which the Fund or any of its properties, assets or rights may be bound,
affected or benefited, or (iii) require any consent or approval of,
registration or filing with, or notice to any Governmental Authority, except in
items (i) through (iii) above, or as otherwise set forth in Schedule 4.2(f), as
would not be reasonably likely to have a material adverse effect on the Fund’s
ability to consummate the transactions contemplated
hereby.


9


(g)           Absence of Undisclosed
Liabilities.  Except as and to the extent adequately accrued or
reserved against in the financial statements described in Section 4.4(e), or as
set forth in the Form S-4 (including, without limitation, the financial
statements therein), or as set forth in Schedule 4.2(g), the
Fund has no material liability or material obligation, whether accrued,
absolute, contingent or otherwise, known or unknown, required by GAAP to be
reflected on a consolidated balance sheet of the Fund, except for liabilities
and obligations incurred in the ordinary course of business consistent with past
practice since the date of such financial statements that are not required by
GAAP to be reflected on a consolidated balance sheet of the Fund and are not
material in the aggregate.




(h)           Absence of Certain Changes
or Events.  Except as set forth in any documents publicly filed
with the SEC, including, without limitation, the Form S-4, or as set forth in
Schedule
4.2(h), since December 31, 2009:  (i) the Fund has
conducted its business in all material respects in the ordinary course
consistent with past practice subsequent to the suspension of identifying and
funding new loans; and (ii) the Fund has not received any written notice
from a third party that any event or development has occurred or developed that
has had or is reasonably likely to have a material adverse effect on the Fund;
excepting, however, with respect to items (i) and (ii) above, as set forth in
Schedule
4.2(h).




(i)           Compliance with Law;
Permits.  Except as set forth in Schedule 4.5(i), to
the knowledge of the Fund, the Fund is and has been in compliance in all
material respects with all Laws applicable to it, including, without limitation,
all environmental, labor, employment, securities and tax Laws.  To the
knowledge of the Fund, the Fund is in possession of all material approvals,
permits, licenses and other authorizations of any Governmental Authority (“Permits”) necessary for the
Fund to own, lease and operate its properties and to carry on its business as
currently conducted, and is and has been in compliance in all material respects
with all such Permits.  Except as set forth in Schedule 4.5(i), to
the knowledge of the Fund, the Fund has not received written notice from any
person regarding any currently outstanding actual, alleged or potential
violation of any Law or Permit applicable to the Fund or its business,
operations, assets or properties, and there is no basis for the revocation or
withdrawal of any Permit, in either case, that has had or is reasonably likely
to have a material adverse effect on the Fund.




(j)           Litigation.  Except
as set forth in Schedule 4.5(j),
there is no pending judicial action or government proceeding by or before any
Governmental Authority (i) by or against the Fund, (ii) affecting the Fund
or its officers, directors or managers with respect to their actions as such,
its assets or businesses, (iii) to restrain or prevent the consummation of
the transactions contemplated hereby, or (iv) that might adversely affect
the right of the Corporation to acquire and own the Equity
Interests.  There are no writs, judgments, decrees, injunctions or
similar orders of any Governmental Authority outstanding against the Fund, its
officers, directors or managers or its assets or properties.




4.3Representation and
Warranties Regarding the Manager. The Manager and the Investors who hold
Equity Interests of the Manager hereby jointly and severally represent and
warrant to the Fund and the Corporation that the following statements are true
and correct:




(a)           Organization.  The
Manager is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and has the requisite corporate power
and authority to carry on its business as now being
conducted.


10




(b)           Authority; Binding
Obligation.  The Manager has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby.  The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby by the Manager,
including the sale and issuance of the Securities to the Investors, have been
duly authorized by all necessary action on the part of the
Manager.  This Agreement has been duly executed and delivered by the
Manager and, assuming the due execution and delivery by the Fund, the
Corporation, Holdings and the Investors, constitutes the valid and binding
obligation of the Manager, enforceable against the Manager in accordance with
its terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and by general principles of equity.




(c)           Capitalization.  All
of the Manager’s outstanding shares of capital stock have been duly authorized,
validly issued and are fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws and are not issued in
violation of or subject to any preemptive, co-sale or other rights to subscribe
for or purchase securities.  The authorized capital stock of the
Manager consists of 10,000,000 shares of common stock, of which 10,000,000
shares are outstanding immediately prior to the Closing.  Except for
the holders of SARs set forth on Schedule 2.5 and
as otherwise set forth herein, as of the date of this Agreement (i) there
are no outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Manager, or arrangements by
which the Manager is or may become bound to issue additional shares of capital
stock of the Manager, and (ii) the Manager has no shares of capital stock
reserved for issuance.




(d)           No
Brokers.  There are no brokers or finders entitled to
compensation in connection with the transactions contemplated by this
Agreement.




(e)           Financial
Statements.  The audited financial statements of the Manager
and Holdings (on a consolidated basis) as of and for the years ended
December 31, 2007, 2008 and 2009 and the unaudited financial statements of
the Manager and Holdings (on a consolidated basis) as of and for the nine months
ended December 31, 2008 and 2009 are accurate and complete in all material
respects and fairly present the financial position of the Manager and Holdings
(on a consolidated basis) as of the dates thereof and the result of its
operations and cash flows for the period then ended in conformity with
GAAP.




(f)           No Conflict; Required
Filings and Consents.  The execution, delivery and performance
by the Manager of this Agreement and the consummation of the transactions
contemplated hereby do not and shall not (i) violate any federal, state or
local Law applicable to the Manager, (ii) conflict, in either case, with,
create a breach or constitute a default (with or without the giving of notice or
passage of time or both) under, require any approval or consent of or notice to,
or give to any party any right of modification, acceleration or cancellation of,
or result in the creation of any lien upon any property or right of the Manager
pursuant to, any Contract, or provision thereof, to which the Manager is a party
or by which the Manager or any of its properties, assets or rights may be bound,
affected or benefited, or (iii) require any consent or approval of,
registration or filing with, or notice to any Governmental Authority, except in
items (i) through (iii) above, or as otherwise set forth in Schedule 4.4(f), as
would not be reasonably likely to have a material adverse effect on the
Manager’s ability to consummate the transactions contemplated
hereby.


11




(g)           Absence of Undisclosed
Liabilities.  Except (i) as and to the extent adequately
accrued or reserved against in the financial statements described in Section 4.4(g), or
(ii) as set forth in the Form S-4 (including, without limitation, the
financial statements therein), or (iii) Schedule 4.4(g), the
Manager has no material liability or material obligation, whether accrued,
absolute, contingent or otherwise, known or unknown, required by GAAP to be
reflected on a consolidated balance sheet of the Manager, except for liabilities
and obligations incurred in the ordinary course of business consistent with past
practice since the date of such financial statements that are not required by
GAAP to be reflected on a consolidated balance sheet of the Manager and are not
material in the aggregate.




(h)           Absence of Certain Changes
or Events.  Except as set forth in any documents publicly filed
with the SEC, including, without limitation, the Form S-4, since December 31,
2009:  (i) the Manager has conducted its business in all material
respects in the ordinary course consistent with past practice subsequent to the
suspension of identifying and funding new loans; and (ii) the Manager has
not received any written notice from a third party that any event or development
has occurred or developed that has had or is reasonably likely to have a
material adverse effect on the Manager; excepting, however, with respect to
items (i) and (ii) above, as set forth in Schedule
4.4(h).




(i)           Compliance with Law;
Permits.  To the knowledge of the Manager, the Manager is and
has been in compliance in all material respects with all Laws applicable to
it.  To the knowledge of the Manager, the Manager is in possession of
all material Permits necessary for it to own, lease and operate its properties
and to carry on its business as currently conducted, and is and has been in
compliance in all material respects with all such Permits.  Except as
set forth in Schedule
4.4(i), to the knowledge of the Manager, except as set forth in Schedule 4.4(i), the
Manager has not received written notice from any person regarding any actual,
alleged or potential violation of any Law or Permit applicable to the Manager or
its business, operations, assets or properties, and there is no basis for the
revocation or withdrawal of any Permit, in either case, that has had or is
reasonably likely to have a material adverse effect on the Manager.




(j)           Litigation.  Except
as set forth in Schedule 4.4(j),
there is no pending judicial action or government proceeding by or before any
Governmental Authority pending or, to the knowledge of the Manager, threatened
(i) by or against the Manager, (ii) affecting the Manager or its
officers, directors or managers with respect to their actions as such, its
assets or businesses, (iii) to restrain or prevent the consummation of the
transactions contemplated hereby, or (iv) that might adversely affect the
right of the Corporation to acquire and own the Equity
Interests.  There are no writs, judgments, decrees, injunctions or
similar orders of any Governmental Authority outstanding against the Manager,
its officers, directors or managers or its assets or properties.




4.4Representations and
Warranties Regarding Holdings.  Holdings and the Investors who
hold Equity Interests of Holdings hereby jointly and severally represent and
warrant to the other parties hereto that the following statements are true and
correct:


12




(a)           Organization.  Holdings
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the requisite limited liability company
power and authority to carry on its business as now being
conducted.




(b)           Authority; Binding
Obligation.  Holdings has all requisite limited liability
company power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby.  The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby by
Holdings have been duly authorized by all necessary action on the part of
Holdings.  This Agreement has been duly executed and delivered by
Holdings and, assuming the due execution and delivery by the Fund, the
Corporation, the Manager and the Investors, constitutes the valid and binding
obligation of Holdings, enforceable against Holdings in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and by general principles of equity.




(c)           Capitalization.  All
of Holdings’ outstanding membership units have been duly authorized, validly
issued and are fully paid and nonassessable, have been issued in compliance with
all federal and state securities laws and are not issued in violation of or
subject to any preemptive, co-sale or other rights to subscribe for or purchase
securities.  The authorized equity of Holdings consists of membership
interests, all of which are allocated and outstanding immediately prior to the
Closing.  Except as set forth herein, as of the date of this Agreement
(i) there are no outstanding options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, any membership interests of Holdings, or
arrangements by which Holdings is or may become bound to issue additional
membership units, and (ii) Holdings has no membership interests reserved
for issuance.




(d)           No
Brokers.  There are no brokers or finders entitled to
compensation in connection with the transactions contemplated by this
Agreement.




(e)           Financial
Statements.  The audited financial statements of the Manager
and Holdings (on a consolidated basis) as of and for the years ended
December 31, 2007, 2008 and 2009 are accurate and complete in all material
respects and fairly present the financial position of the Manager and Holdings
(on a consolidated basis) as of the dates thereof and the result of its
operations and cash flows for the period then ended in conformity with
GAAP.




(f)           No Conflict; Required
Filings and Consents.  The execution, delivery and performance
by Holdings of this Agreement and the consummation of the transactions
contemplated hereby do not and shall not (i) violate any federal, state or
local Law applicable to Holdings, (ii) conflict, in either case, with,
create a breach or constitute a default (with or without the giving of notice or
passage of time or both) under, require any approval or consent of or notice to,
or give to any party any right of modification, acceleration or cancellation of,
or result in the creation of any lien upon any property or right of Holdings
pursuant to, any Contract, or provision thereof, to which Holdings is a party or
by which Holdings or any of its properties, assets or rights may be bound,
affected or benefited, or (iii) require any consent or approval of,
registration or filing with, or notice to any Governmental Authority, except in
items (i) through (iii) above, or as otherwise set forth in Schedule 4.5(f), as
would not be reasonably likely to have a material adverse effect on Holdings’
ability to consummate the transactions contemplated hereby.


13




(g)           Absence of Undisclosed
Liabilities.  Except as and to the extent adequately accrued or
reserved against in the financial statements described in Section 4.5(e), or as
set forth in the Form S-4 (including, without limitation, the financial
statements therein), or in Schedule 4.5(g),
Holdings has no material liability or material obligation, whether accrued,
absolute, contingent or otherwise, known or unknown, required by GAAP to be
reflected on a consolidated balance sheet of Holdings, except for liabilities
and obligations incurred in the ordinary course of business consistent with past
practice since the date of such financial statements that are not required by
GAAP to be reflected on a consolidated balance sheet of Holdings and are not
material in the aggregate.




(h)           Absence of Certain Changes
or Events.  Except as set forth in any documents publicly filed
with the SEC, including, without limitation, the Form S-4, since
September 30, 2009:  (i) Holdings has conducted its business
in all material respects in the ordinary course consistent with past practice
subsequent to the suspension of identifying and funding new loans; and
(ii) Holdings has not received any written notice from a third party that
any event or development has occurred or developed that has had or is reasonably
likely to have a material adverse effect on Holdings; excepting, however, with
respect to items (i) and (ii) above, as set forth in Schedule
4.5(h).




(i)           Compliance with Law;
Permits.  To the knowledge of Holdings, Holdings is and has
been in compliance in all material respects with all Laws applicable to
it.  To the knowledge of Holdings, Holdings is in possession of all
material Permits necessary for it to own, lease and operate its properties and
to carry on its business as currently conducted, and is and has been in
compliance in all material respects with all such Permits.  To the
knowledge of Holdings, except as set forth in Schedule 4.5(i),
Holdings has not received written notice from any person regarding any actual,
alleged or potential violation of any Law or Permit applicable to Holdings or
its business, operations, assets or properties, and there is no basis for the
revocation or withdrawal of any Permit, in either case, that has had or is
reasonably likely to have a material adverse effect on Holdings.




(j)           Litigation.  Except
as set forth in Schedule 4.5(j),
there is no pending judicial action or government proceeding by or before any
Governmental Authority pending or, to the knowledge of Holdings, threatened
(i) by or against Holdings, (ii) affecting Holdings or its officers,
directors or managers with respect to their actions as such, its assets or
businesses, (iii) to restrain or prevent the consummation of the
transactions contemplated hereby, or (iv) that might adversely affect the
right of the Corporation to acquire and own the Equity
Interests.  There are no writs, judgments, decrees, injunctions or
similar orders of any Governmental Authority outstanding against Holdings, its
officers, directors or managers or its assets or properties.




4.5Non-Survival of
Representations, Warranties and Covenants.  The representations
and warranties contained in this Agreement and in any certificate delivered
pursuant to this Agreement by and party hereto shall automatically terminate and
expire at the Effective Time or upon the termination of this
Agreement.


14




ARTICLE
V




COVENANTS




5.1Interim
Operations.  During the period from the date of this Agreement
until the Effective Time (or until termination of this Agreement in accordance
with Article VII
hereof (the “Termination
Date”)), and except (i) as may be required by applicable law,
(ii) as is required by this Agreement or in connection with the related
transactions referenced herein, or (iv) that Manager may make the Special
Distributions, and each of the Fund, the Manager, and Holdings covenants and
agrees that their respective businesses, and those of any of their respective
subsidiaries will be conducted in the ordinary course and consistent with past
practice subsequent to the suspension of identifying and funding of new
loans.




5.2Further Assurances;
Cooperation.




(a)           Each
party hereto agrees to execute and deliver, by the proper exercise of its
corporate, limited liability company or other powers, all such other and
additional instruments and documents and do all such other acts and things as
may be necessary or advisable to more fully effectuate this Agreement,
including, without limitation, increasing the authorized shares of capital stock
of the Corporation by means of the filing of the Certificate of
Incorporation.




(b)           If,
at any time after the Effective Time, the Surviving Corporation, the Manager or
Holdings shall determine or be advised that any deeds, bills of sale,
assignments, agreements, documents or assurances or any other acts or things are
necessary, desirable or proper, consistent with the terms of this Agreement,
(a) to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
privileges, immunities, powers, purposes, franchises, properties or assets of
the Fund, or (b) to otherwise carry out the purposes of this Agreement, the
Surviving Corporation, the Manager or Holdings and their respective proper
officers and directors (or their designees), are hereby authorized to solicit in
the name of the Fund any third-party consents or other documents required to be
delivered by any third-party, to execute and deliver, in the name and on behalf
of the Fund all such deeds, bills of sale, assignments, agreements, documents
and assurances and do, in the name and on behalf of the Fund, all such other
acts and things necessary, desirable or proper to vest, perfect or confirm its
right, title or interest in, to or under any of the rights, privileges,
immunities, powers, purposes, franchises, properties or assets of the Fund and
otherwise to carry out the purposes of this Agreement.




5.3Efforts to
Close.  Subject to the terms and conditions of this Agreement,
each of the parties to this Agreement shall use its commercially reasonable
efforts to obtain all consents and approvals and take, or cause to be taken, all
other actions, and to do, or cause to be done, all other things reasonably
necessary, proper, desirable, or advisable to permit the consummation of the
transactions contemplated by this Agreement as promptly as reasonably
practicable and otherwise to enable consummation of such transactions and shall
reasonably cooperate with the other parties hereto and thereto to that
end.




5.4Securities
Laws.  No Investor shall dispose of any of its Securities in a
manner that contravenes the Securities Act or any applicable state securities
laws.




15




5.5Non-Competition.




(a)           Time-Frame; Non-Competition
Provisions.  In further consideration of the receipt of the
Securities, Albers and Meris each agrees for itself only (and not for the other)
that, from and after the date of the consummation of an initial public offering
(and not prior thereto) until the first to occur of (i) the eighteen (18)
month anniversary of the Closing Date, or (ii) the sale, liquidation or
change of control of the Corporation (as that phrase shall be defined in the
applicable Albers and Meris Employment Agreements with the Corporation), Albers
and Meris, as applicable, shall not, and shall not permit any entity under the
control of Albers or Meris, as applicable, to, directly or indirectly, do any of
the following, except as may be permitted herein (the “Non-Competition
Provisions”):




(1)           compete
with the business of the Corporation (the “Competitive Activities”);
or




(2)           solicit
for employment or encourage to leave their employment, any employee of the
Corporation.




(b)           Exceptions.  Notwithstanding
anything in the foregoing to the contrary, nothing in this Agreement shall
prohibit Albers or Meris, respectively, from (i) serving in any capacity,
or investing in any company or other entity that is affiliated with, or approved
by, the independent members of the board of directors of the Corporation,
including, without limitation, Strategic Wealth & Income Fund, LLC, or
(ii) investing in any publicly-held company or privately-held company that
is engaged in Competitive Activities so long as neither Albers nor Meris is an
officer, director or controlling person thereof.  Nothing herein shall
prevent Albers or Meris from seeking a waiver of the Non-Competition Provisions
from the independent members of the board of directors of the Corporation and,
in the event of the receipt of such a waiver, the recipient thereof shall not be
in breach of this Agreement to the extent of the waiver.




(c)           Conditions.  The
Non-competition Provisions shall not be applicable unless the Corporation has
consummated an initial public offering and shall in any event terminate on the
first to occur of (i) the eighteen (18) month anniversary of the Closing
Date, or (ii) the sale, liquidation or change of control of the Corporation
(as that phrase shall be defined in the applicable Albers and Meris Employment
Agreements with the Corporation).




(d)           Remedies.  The
Corporation’s remedies at law for any actual or threatened breach of this
Agreement by Albers or Meris, as applicable, under this Section 5.5 may
be inadequate and, therefore, the Corporation, in addition to any other remedies
available to it for such breach or threatened breach, including the recovery of
damages, shall be entitled to injunctive relief restraining Albers or Meris, as
applicable, from such conduct.  If a bond is required to be posted in
order for the Corporation to secure an injunction, the Corporation, Albers and
Meris agree that the bond need not exceed the sum of $1,000.  If at
any time any of the provisions of this Section 5.5
shall be determined by a court of competent jurisdiction to be invalid or
unenforceable by reason of being vague, excessive or unreasonable as to
duration, area, scope of activity or otherwise, then this Section 5.5
shall be considered severable and divisible, and the invalid or unenforceable
provisions shall become and be deemed to be immediately amended to include only
such time, area, scope of activity and other restrictions, as shall be
determined to be reasonable and enforceable by the court or other body having
jurisdiction over the matter (with the other provisions to remain in full force
and effect), and each of the Corporation, Albers and Meris agrees that this
Agreement, as so amended, shall be valid and binding as though any invalid or
unenforceable provision had not been included herein.


16




(e)           Cure
Period.  Except with respect to the applicability of any
equitable remedies as aforesaid, neither Albers nor Meris shall be in breach of
this Section 5.5
unless or until either Albers or Meris, as applicable, has received not less
than thirty (30) days prior written notice from the Corporation of the alleged
breach of this Section 5.5 and
an opportunity to cure the alleged breach.




ARTICLE
VI




CONDITIONS
TO CLOSING




6.1Closing
Conditions.  The respective obligations of the Fund, the
Manager, Holdings and the Investors to complete the transactions contemplated by
this Agreement are subject to the satisfaction or waiver of the following
conditions prior to or concurrently with the transactions contemplated
hereby:




(a)           approval
of the adoption of this Agreement and the transactions contemplated by this
Agreement by the requisite consent of the Members (the “Requisite Vote”);




(b)           the
effectiveness of Corporation’s registration statement on Form S-4
registering the Securities to be issued in the Merger (the “Form S-4”), without the
issuance of a stop order or initiation of any proceeding seeking a stop order by
the Securities and Exchange Commission (the “SEC”);




(c)           the
receipt of all governmental and third party consents to the transactions
contemplated by this Agreement (including, without limitation, regulatory
approval to transfer the mortgage banker’s license in the State of Arizona and
the real estate broker’s license in the State of California to the Corporation
or a wholly-owned subsidiary thereof), except for consents which, if not
obtained, would not reasonably be expected to have a material adverse effect on
the business, financial condition or results of operations of the Corporation
and its subsidiaries taken as a whole;




(d)           delivery
by each Investor of any certificates representing Equity Interests held by such
Investor that are represented by certificates (or affidavits of loss
thereof);




(e)           adoption
by IMH Financial Corporation of the 2010 IMH Financial Corporation Employee
Stock Incentive Plan;




(f)
           all
representations and warranties of the parties hereto in Article IV
hereof shall be true and correct when made and as of the Closing;
and


17




(g)           each
holder of a SAR set forth on Schedule 2.5
shall have executed and delivered a letter agreement in a form satisfactory to
the Manager pursuant to which such holder agrees to the treatment of such SAR
provided in this Agreement.




ARTICLE
VII




TERMINATION




7.1Termination by the
Fund.  This Agreement may be terminated by the Manager on
behalf of the Fund at any time prior to the Closing, notwithstanding the
satisfaction of all the conditions set forth on Section 6.1.




7.2Termination by the Fund, the
Manager or Holdings.  This Agreement may be terminated at any
time prior to the Effective Time by any of the Fund, the Manager or Holdings, by
action of their respective boards of directors or equivalent entities, if either
of the following occur, in each case, without any requirement to obtain the
consent of any Investor:




(a)           the
Closing shall not have been consummated on or before April 30, 2010 (the
“Outside Date”); provided, however, that the
right to terminate this Agreement under this Section 7.2(a) shall
not be available to any party whose failure to perform in any material respect
any covenant or obligation under this Agreement has been the primary cause of or
resulted in the failure of the Closing to have been consummated on or before the
Outside Date; or




(b)           the
Agreement was not approved by the Requisite Vote.




ARTICLE
VIII




MISCELLANEOUS




8.1Implementation and
Interpretation; Amendment.  This Agreement shall be implemented
and interpreted, prior to the Effective Time, by the Manager on behalf of the
Fund and, following the Effective Time, by the board of directors of the
Surviving Corporation, (a) each of which shall have full power and
authority to delegate and assign any matters covered hereunder to any other
party(ies), including, without limitation, any officers of the Fund or the
Corporation, as the case may be, and (b) the interpretations and decisions
of which shall be final, binding, and conclusive on all parties.  Any
amendment, modification or waiver hereto shall be in writing signed by
(i) the Fund (or after the Effective Time, the Surviving Corporation),
(ii) the Corporation, (iii) the Manager, and (iv) Holdings; provided, however that if
such amendment, modification or waiver would materially and adversely affect the
rights of any Investor, the written consent of such Investor shall also be
required.




8.2Third Party
Beneficiaries.  This Agreement shall not confer any rights or
remedies upon any person or entity, including the Members, other than as
expressly provided herein.


18


8.3Notices.  Any
notice delivered in connection with this Agreement must be in writing and must
be either personally delivered, mailed by first class mail (postage prepaid and
return receipt requested), sent by reputable overnight courier services (charges
prepaid), or sent by facsimile, e-mail or other mode of electronic
communications with confirmation of receipt, to the recipient at the address
indicated on the signature page to this Agreement.




8.4Severability.  Whenever
possible, each provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Agreement is held to be prohibited by or invalid under applicable law, such
provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.




8.5Governing
Law.  This Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware, without regard to the conflict of
laws provisions thereof.




8.6Counterparts.  This
Agreement may be executed in any number of counterparts and by the different
parties hereto in separate counterparts, including by facsimile transmission,
with the same effect as if all parties had signed the same
document.  All such counterparts shall be deemed an original, shall be
construed together and shall constitute one and the same
instrument.




8.7Successors and
Assigns.  This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns.  Notwithstanding the foregoing, no Investor may assign such
Investor’s rights or obligations under this Agreement without the prior written
consent of the other parties hereto.




8.8No
Waiver.  No course of dealing or any delay or failure to
exercise any right, power or remedy hereunder on the part of any party hereto
shall operate as a waiver of or otherwise prejudice such party’s rights, powers
or remedies.




8.9Advice of
Counsel.  Each of the Investors, the Fund, the Manager and
Holdings agrees, acknowledges and represents that it has read and understood
this Agreement prior to signing it, is fully aware of its rights and obligations
under this Agreement, has entered into this Agreement freely and voluntarily and
has been advised to seek legal counsel (and has consulted with legal counsel or
has affirmatively chosen not to do so).




8.10Entire
Agreement.  Except as expressly provided otherwise herein, this
Agreement contains the entire agreement among the parties hereto with respect to
the subject matter contained herein, and supersedes all prior agreements,
negotiations and understandings, whether written or oral, with respect to the
subject matter hereof.




8.11Expenses.  Regardless
of whether the Merger is consummated or not, all costs and expenses incurred in
connection with the negotiation and execution of this Agreement and the
transactions contemplated by this Agreement, including the preparation and
filing of the Form S-4, shall be paid by the Fund.




Signature
pages follow.




19


IN
WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized as of
the date first written above.




“Fund”IMH
      Secured Loan Fund, LLCBy:
      Investors Mortgage Holdings, Inc.Its
      ManagerBy:
      /s/ Shane C.
      AlbersIts:  Chairman
      and CEOAddress
      for the Purpose of Notice:4900
      N. Scottsdale Rd #5000Scottsdale,
      AZ 85251




“Manager”Investors
      Mortgage Holdings, Inc.By:
      /s/ Shane C.
      AlbersIts:  Chairman
      and CEOAddress
      for the Purpose of Notice:4900
      N. Scottsdale Rd #5000Scottsdale,
      AZ 85251




[Signature
Page to Agreement and Plan of Conversion and Contribution]









“Holdings”IMH
      Holdings, LLCBy:/s/ Shane C.
      AlbersName:  Shane C.
      AlbersTitle:
      MemberAddress
      for the Purpose of Notice:4900
      N. Scottsdale Rd #5000Scottsdale,
      AZ 85251




“Investors”“Albers”Shane C.
      AlbersBy:/s/ Shane C.
      AlbersAddress
      for the Purpose of Notice:c/o
      IMH Financial Corporation4900
      N. Scottsdale Rd #5000Scottsdale,
      AZ 85251




“Meris”William
      MerisBy:/s/ William
      MerisAddress
      for the Purpose of Notice:c/o
      IMH Financial Corporation4900
      N. Scottsdale Rd #5000Scottsdale,
      AZ 85251




[Signature
Page to Agreement and Plan of Conversion and Contribution]









“Darak”Steve
      DarakBy:/s/ Steve
      DarakAddress
      for the Purpose of Notice:c/o
      IMH Financial Corporation4900
      N. Scottsdale Rd #5000Scottsdale,
      AZ 85251“Peterson”Brian
      PetersonBy:/s/ Brian
      PetersonAddress
      for the Purpose of Notice:c/o
      IMH Financial Corporation4900
      N. Scottsdale Rd #5000Scottsdale,
      AZ 85251“Muranaka”Ryan
      MuranakaBy:/s/ Ryan
      MuranakaAddress
      for the Purpose of Notice:c/o
      IMH Financial Corporation4900
      N. Scottsdale Rd #5000Scottsdale,
      AZ 85251




[Signature
Page to Agreement and Plan of Conversion and Contribution]









SCHEDULE C




EQUITY
INTERESTS








Investor
                      Equity
      Interests
                      SecuritiesManager(1)
                      Holdings
                      Class B-3 or B-4(1)(6)Shane C.
      Albers
                      7,500,000
                      45%
                      396,517(2)William
      Meris
                      2,500,000
                      45%
                      394,045(3)Steve
      Darak
                      0
                      5%
                      50,286(4)Brian
      Peterson
                      0
                      2.5%
                      27,740(4)Ryan
      Muranaka
                      0
                      2.5%
                      25,143(4)Other
      SARS Recipients (5)
                      0
                      0%
                      6,789Total
                      
                      
                      900,520(1)(2)(3)(4)





(1)  Messrs.
Albers and Meris will only be issued shares of Class B-4 common stock. The other
Investors will only be issued shares of Class B-3 common stock. Mr. Albers
previously agreed with Mr. Meris to transfer a number of shares equal to 20% of
the outstanding stock of the Manager to Mr. Meris, but Mr. Albers and Mr. Meris
have subsequently agreed that in lieu thereof (and subject to Albers receiving
$2,140,000 from a combination of (i) distribution of retained earnings of the
Manager and (ii) payment by Mr. Meris of $170,000), Mr. Meris will be issued
shares of Class B-4 Shares of Common Stock of the Corporation that Mr. Meris
would have received if the transfer of such shares had been completed prior to
the Merger, and the number of shares of Class B-4 Common Stock to be issued to
Mr. Albers will be reduced by a corresponding amount. Messrs. Albers and Meris
have also agreed that the number of shares of Class B-4 Common Stock will be
reduced on a pro rata basis by the number of shares issuable (prior to reduction
for withholding tax pursuant to Section 2.4 ) in respect of
SARs cancelled.




(2)  In
addition to shares issuable in exchange for Equity Interests in the Manager and
Holdings, includes shares issuable in exchange for 25.85 membership units in the
Fund.




(3)  In
addition to shares issuable in exchange for Equity Interests in the Manager and
Holdings, includes shares issuable in exchange for 14.63 membership units in the
Fund. Also includes 77,319 shares of B-4 Common Stock that will be issued to Mr.
Meris pursuant to an agreement between Mr. Meris and the Pierce Family Limited
Partnership upon the Closing of the Conversion and Contribution.




(4)  Includes
shares issuable in exchange for cancellation of SARs after deduction for
withholding amounts as set forth on Schedule 2.5.




(5)  Excludes
shares issuable to Messrs. Darak, Peterson and Muranaka in exchange for
cancellation of SARs as these amounts have been separately included in the total
for these individuals.




(6)  Subject
to downward adjustment pursuant to Section 3.1.











EXHIBIT1.4(a)




CERTIFICATE OF
INCORPORATION










EXHIBIT1.4(b)




BYLAWS










EXHIBIT1.5




DIRECTORS
AND OFFICERS OF IMH FINANCIAL CORPORATION


IMMEDIATELY FOLLOWING THE
EFFECTIVE TIME




Officers:




NAME
                TITLEShane C.
      Albers
                Chief
      Executive OfficerWilliam
      Meris
                PresidentSteven
      Darak
                Chief
      Financial OfficerTheresa
      Guske
                Senior
      Vice President — Loan ManagementBrian
      Peterson
                Senior
      Vice President —
Investments




Directors:




NAME
                TITLEShane C.
      Albers
                DirectorWilliam
      Meris
                Director




Ex.
1.5-1





SCHEDULE 2.5




ISSUANCE OF CLASS B
COMMON




Participant
                      
                      Class B-3
      Common(1)
                        (After Deduction for
                        Withholding)Steve
      Darak
                      
                      498Joe
      Joseph
                      
                      498John
      McVey
                      
                      498Terri
      Guske
                      
                      1,907Brian
      Peterson
                      
                      2,846Ryan
      Muranaka
                      
                      249Larry
      Stangler
                      
                      249Zach
      Forman
                      
                      249Jerry
      Shulak
                      
                      2,349George
      Sgouros
                      
                      1,555Total
                      
                      10,898




(1)  Subject
to downward adjustment pursuant to Section 3.1.











SCHEDULE
4.1(b)




A.           Equity
Interests of Albers in the Manager are subject to the following:




1.  Promissory
Note Secured by Stock, dated as of September 26, 2007, in the original
principal amount of $950,000, wherein Shane C. Albers is the maker and
General Lafountain is the payee.




2.  Amendment
To Promissory Note, dated October 21, 2008, by Gerald LaFountain, as
lender, and Shane C. Albers, as borrower.




3.  Short
Form Deed Of Trust And Assignment Of Rents, dated October 21, 2008, by and
among Shane C. Albers, as trustor, Stewart Title Of California, Inc., as
trustee, and Gerald LaFountain, as beneficiary.




4.  Substitution
of Trustee and Partial Reconveyance, dated December 12, 2008, and executed
by Gerald Lafountain.




5.  Promissory
Note Secured by Stock, dated as of September 26, 2007, in the original
principal amount of $1,000,000, wherein Shane C. Albers is the maker and
Michael R. and Janet H. Stephenson are the payees.




6.  Pledge
Agreement, dated as of September 26, 2007; between Shane C. Albers, as
pledgor, and Michael R. Stephenson and Janet H. Stephenson, as secured
party.




7.  The
Amendment To Promissory Note dated October 1, 2008, by Michael R.
Stephenson and Janet H. Stephenson, as lender, and Shane C. Albers, as
borrower.




8.  See
also Schedule C.




B.           Equity
Interests of Meris in the Manager are subject to the following:




1.  See
Schedule C.




2.  Pursuant
to an agreement between Meris and Pierce Family Limited Partnership, 77,319
shares of Class B-3 Common Stock will be issued to Meris upon the Closing
of the Merger and Contribution.










SCHEDULE
4.1(g)




GOVERNMENTAL AUTHORITY
ISSUES







1.
            Consent
      to the transfer of the mortgage banker’s license of Investors Mortgage
      Holdings, Inc. by the Arizona Department of Financial
      Institutions.




2.
            Consent
      to any transfer of the real estate broker’s license of Investors Mortgage
      Holdings California, Inc. by the State of California, Department of Real
      Estate.









SCHEDULE
4.2(f)




See Schedule
4.1(g).










SCHEDULE
4.4(f)




See Schedule
4.1(g).











SCHEDULE
4.5(f)




See Schedule
4.1(g).











SCHEDULE
4.2(g)





1.  From
time to time one or more of the parties to this Agreement have received input in
the form of correspondence, telephone conferences or at meetings from or on
behalf of members of the Fund alleging that one or more of the parties to this
Agreement are in violation of applicable law, the Operating Agreement of the
Fund, and/or the rules and regulations of the SEC and FINRA.  Any such
correspondence is a part of the official records of the Fund and/or the
Manager.  One or more of these allegations could result in litigation
or other claims against one or more of the parties hereto.





2.  From
time to time one or more of the parties to this Agreement have received input in
the form of correspondence, telephone conferences or at meetings from or on
behalf of members of the Fund objecting to the Conversion Transactions and other
matters set forth in the Form S-4 and alleging that one or more of the parties
to this Agreement are in violation of applicable law, the Operating Agreement of
the Fund, and/or the rules and regulations of the SEC and FINRA.  Any
such correspondence is a part of the official records of the Fund and/or the
Manager.  One or more of these allegations could result in litigation
or other claims against one or more of the parties hereto.











SCHEDULE
4.2(h)





See Schedule
4.2(g).











SCHEDULE
4.2(i)





See Schedule
4.2(g).











SCHEDULE
4.2(j)





See Schedule
4.2(g).










SCHEDULE
4.4(g)





See Schedule
4.2(g)











SCHEDULE
4.4(h)





See Schedule
4.2(g).










SCHEDULE
4.4(i)





See Schedule
4.2(g).










SCHEDULE
4.4(j)





See Schedule
4.2(g).










SCHEDULE
4.5(g)





See Schedule
4.2(g).











SCHEDULE
4.5(h)





See Schedule
4.2(g).










SCHEDULE
4.5(i)





See Schedule
4.2(g).










SCHEDULE
4.5(j)





See Schedule
4.2(g).




Schedule
4.5(j)- 1