Document:

Exhibit 10.3

Exhibit 10.3          

PROMISSORY NOTE
$24,000,000.00    Effective as of October 20, 2014
FOR VALUE RECEIVED, IMH GABELLA, LLC, a Delaware limited liability company (whether one or more, "Borrower"), hereby promises to pay to the order of BANK OF THE OZARKS (together with its successors and assigns and any subsequent holders of this Promissory Note, the "Lender"), as hereinafter provided, the principal sum of TWENTY-FOUR MILLION AND NO/100 DOLLARS ($24,000,000.00) or so much thereof as may be advanced by Lender from time to time hereunder to or for the benefit or account of Borrower, together with interest thereon at the Note Rate (as hereinafter defined), and otherwise in strict accordance with the terms and provisions hereof.
ARTICLE I
DEFINITIONS
Section 1.1    Definitions.  As used in this Promissory Note, the following terms shall have the following meanings:
Additional Costs:  As defined in Section 2.11(a) of this Note.
Amortization Commencement Date:  The earlier of (i) the Payment Date first occurring during the twenty-fifth (25th) month after the date hereof and (ii) the Payment Date first occurring after Stabilization.
Amortization Term:  A period of three hundred (300) months less the number of regularly scheduled Amortizing Principal Reduction Payments then having been made by Borrower and received by Lender.
Amortizing Principal Reduction Payments:  A principal payment in an amount equal to the principal portion of an installment payment that would be owing for such particular calendar month based upon a Mortgage Style Amortization over an Amortization Term calculated using the Outstanding Principal Balance and the Note Rate as of the corresponding Reamortization Date.
Borrower:  As identified in the introductory paragraph of this Note.
Business Day:  A weekday, Monday through Friday, except a legal holiday or a day on which banking institutions in Dallas, Texas are authorized or required by law to be closed.  Unless otherwise provided, the term "days" when used herein shall mean calendar days.
Charges:  All fees, charges and/or any other things of value, if any, contracted for, charged, received, taken or reserved by Lender in connection with the transactions relating to this Note and the other Loan Documents, which are treated as interest under applicable law.
Debt:  The indebtedness evidenced by this Note.

Exhibit 10.3          

Debtor Relief Laws:  Title 11 of the United States Code, as now or hereafter in effect, or any other applicable law, domestic or foreign, as now or hereafter in effect, relating to bankruptcy, insolvency, liquidation, receivership, reorganization, arrangement or composition, extension or adjustment of debts or similar laws affecting the rights of creditors.
Default Interest Rate:  An interest rate per annum equal to the Note Rate plus eight percent (8%), but in no event in excess of the Maximum Lawful Rate.
Event of Default:  As defined in the Loan Agreement.
First Extension Option:  As defined in the Loan Agreement.
First Extension Period:  A period of one (1) year, commencing on the day after the Original Maturity Date.
Lender:  As identified in the introductory paragraph of this Note.
LIBOR Rate:  The interest rate per annum (rounded upwards, if necessary, to the nearest 1/10,000 of 1%) as published in the "Latest" "three month" London interbank offered rate" in the "Money Rates" section of The Wall Street Journal.  Any change in the rate will take effect on the effective date as indicated in The Wall Street Journal.  Interest will accrue on any non-Business Day at the rate in effect on the immediately preceding Business Day.  In the event The Wall Street Journal ceases to be available to Lender for any reason or ceases to provide such rate listing, then the LIBOR Rate shall mean the London Interbank Offered Rate for the applicable period and amount as quoted by another comparable reference source selected by Lender.
Lien Instrument:  That certain Mortgage, Security Agreement, and Fixture Financing Statement dated as of the date hereof, executed by Borrower for the benefit of Lender relating to the Mortgaged Property.  The Debt and the obligations created hereby are secured by, among other things, the Lien Instrument and the other Loan Documents.
Loan Agreement:  That certain Construction Loan Agreement dated as of the date hereof by and between Borrower and Lender as such agreement may have been modified, supplemented, restated, extended, amended or renewed and in effect from time to time.
Loan Documents:  This Note, the Lien Instrument, the Loan Agreement, the Environmental Indemnity Agreement, the Guaranty and any and all other agreements, documents and instruments now or hereafter executed by Borrower, Guarantor or any other Person or party in connection with the loan evidenced by this Note or in connection with the payment of the Debt and/or the Related Indebtedness or the performance and discharge of the obligations related hereto or thereto, together with any and all renewals, modifications, amendments, restatements, consolidations, substitutions, replacements, extensions and supplements hereof or thereof.
Loan Term:  The period from the effective date hereof to the Maturity Date.

Exhibit 10.3          

Maturity Date:  The Original Maturity Date; subject however, to (a) the First Extension Option, (b) the Second Extension Option and (c) the right of acceleration as provided in the Loan Documents.
Maximum Lawful Rate:  The maximum lawful rate of interest which may be contracted for, charged, taken, received or reserved by Lender in accordance with the applicable laws of the State of Texas (or applicable United States federal law to the extent that it permits Lender to contract for, charge, take, receive or reserve a greater amount of interest than under Texas law), taking into account all Charges made in connection with the transaction evidenced by this Note and the other Loan Documents.  To the extent that Lender is relying on Chapter 303 of the Texas Finance Code to determine the Maximum Lawful Rate payable on the Debt and/or the Related Indebtedness, Lender will utilize the weekly ceiling from time to time in effect as provided in such Chapter 303, as amended.  To the extent United States federal law permits Lender to contract for, charge, take, receive or reserve a greater amount of interest than under Texas law, Lender will rely on United States federal law instead of such Chapter 303 for the purpose of determining the Maximum Lawful Rate.  Additionally, to the extent permitted by applicable law now or hereafter in effect, Lender may, at its option and from time to time, utilize any other method of establishing the Maximum Lawful Rate under such Chapter 303 or under other applicable law by giving notice, if required, to Borrower as provided by applicable law now or hereafter in effect.
Minimum Rate:  An interest rate of four and twenty-five hundredths percent (4.25%) per annum.
Mortgaged Property:  That certain real property located in Dakota County, Minnesota, as more particularly described in the Lien Instrument, together with certain other rights, estates, interests, collateral and benefits now or at any time hereafter securing the payment of the Debt and/or the Related Indebtedness, whether by virtue of the Loan Documents or otherwise.
Mortgage-Style Amortization:  A method of calculating level-payment monthly installments to be made against a specified indebtedness whereby each monthly payment is a blended combination of all accrued and unpaid interest plus a principal reduction component such that, by virtue of the fact that the aggregate principal indebtedness is ever decreasing, the principal portion of each successive month's installment payment is ever increasing; provided, however, Borrower acknowledges that although a Mortgage-Style Amortization calculation method is to be used in the instances specified in this Note, the amount of the actual monthly payments may still not be "level-payment" inasmuch as the Note Rate hereunder may vary in accordance with the terms of this Note.
Note:  This Promissory Note.
Note Rate:  The lesser of (a) the Maximum Lawful Rate, or (b) the greater of (i) the Minimum Rate, or (ii) the rate of interest adjusted daily equal to the LIBOR Rate plus three and seventy-five hundredths percent (3.75%) (i.e., plus 375 basis points).
Original Maturity Date:  That date that is three (3) years from the effective date hereof.

Exhibit 10.3          

Outstanding Principal Balance:  The amount of principal then advanced and outstanding and payable from Borrower to Lender in accordance with this Note.
Payment Date:  The first (1st) day of each and every calendar month during the term of this Note.
Person:  Any corporation, limited liability company, limited liability partnership, general partnership, limited partnership, association, joint venture, trust or any other association or legal entity, including any public or governmental body, quasi-governmental body, agency or instrumentality, as well as any natural person.
Prepayment Premium:  To the extent a prepayment occurs on or before the date that is exactly twenty-four (24) months from the date hereof, an amount determined by Lender so as to be equal to twenty-four (24) months of interest obligations calculated based upon the then applicable Note Rate and a fully funded Loan amount throughout such 24‐month period less the aggregate amount of non‐default interest that has accrued and been paid as of the date of such prepayment; provided, however, it is expressly agreed and understood that (i) any partial prepayments or series of prepayments shall be calculated pursuant to the Prepayment Protocol, and (ii) no Prepayment Premium shall be applicable with respect to (a) any prepayment after the date that is exactly twenty four (24) months from the date hereof, (b) any prepayment resulting from application of insurance or condemnation proceeds as provided in the Loan Agreement at any time during the term of the Loan, (c) any instance when the foregoing calculation results in a Prepayment Premium which is zero (0) or a negative number, or (d) any prepayment resulting from the application of the Additional Tax Increment Financing Proceeds at any time during the term of the Loan.
Prepayment Protocol:  To the extent the Outstanding Principal Balance is subject to a partial prepayment, then the Prepayment Premium with respect to such partial prepayment and all subsequent prepayments (whether partial or full) shall be subject to the following calculation methodologies:
(a)    The Prepayment Premium with respect to any partial prepayment of the Note will equal the Prepayment Percentage (hereinafter defined) times the Prepayment Premium that would have been due and owing on the date such partial prepayment was made if Borrower had prepaid the entire Loan on such date.  For purposes hereof, the "Prepayment Percentage" shall be the percentage derived by the amount of the partial principal prepayment being made by Borrower divided by the entire Loan Amount (inclusive of any unadvanced portions of the Loan Amount).
(b)    If, after previously making one or more partial prepayments, Borrower thereafter prepays the remaining Outstanding Principal Balance of the Loan, the applicable Prepayment Premium shall be calculated as a full prepayment of the Loan but subject to a deduction for any Prepayment Premiums previously paid as a product of prior partial prepayment(s).
Reamortization Date:  The first (1st) day of the calendar month immediately preceding (i) the Amortization Commencement Date, and (ii) each succeeding Payment Date thereafter.

Exhibit 10.3          

Regulatory Change:  As defined in Section 2.11(a) of this Note.
Related Indebtedness:  Any and all debt paid or payable by Borrower to Lender pursuant to the Loan Documents or any other communication or writing by or between Borrower and Lender related to the transaction or transactions that are the subject matter of the Loan Documents, except such debt which has been paid or is payable by Borrower to Lender under this Note.
Second Extension Option:  As defined in the Loan Agreement.
Second Extension Period:  A period of one (1) year, commencing on the day after the last day of the First Extension Period.
Stabilization:  As defined in the Loan Agreement.  
Section 1.2    Capitalized Terms.  Any capitalized term used in this Note and not otherwise defined herein shall have the meaning ascribed to each such term in the Loan Agreement.
Section 1.3    Additional Definitions.  As used herein, the following terms shall have the following meanings:  (i) "hereof," "hereby," "hereto," "hereunder," "herewith" and similar terms mean of, by, to, under and with respect to this Note or to the other documents or matters being referenced; (ii) "heretofore" means before, "hereafter" means after, and "herewith" means concurrently with the date of this Note; (iii) all pronouns, whether in masculine, feminine or neuter form, shall be deemed to refer to the object of such pronoun whether same is masculine, feminine or neuter in gender, as the context may suggest or require; (iv) "including" means including, without limitation; and (v) all terms used herein, whether or not defined in Section 1.1 hereof, and whether used in singular or plural form, shall be deemed to refer to the object of such term whether such is singular or plural in nature, as the context may suggest or require.
ARTICLE II
INTEREST RATE AND PAYMENT TERMS
Section 2.1    Interest Rate.  Interest on the Outstanding Principal Balance shall accrue and be adjusted daily at the Note Rate.  Upon the occurrence and during the continuation of a default in the payment of any principal or interest obligations hereunder, upon the occurrence and during the continuation of any other Event of Default and at all times after maturity of the Debt (by acceleration or otherwise), in addition to any other remedies then available to Lender, the Outstanding Principal Balance shall bear interest at the Default Interest Rate.
Section 2.2    Payment of Principal and Interest.
(a)    All accrued but unpaid interest on the Outstanding Principal Balance shall be due and payable in monthly installments beginning on November 1, 2014, and continuing on each Payment Date thereafter through and including the Maturity Date.
(b)    Commencing on the Amortization Commencement Date and continuing on each Payment Date thereafter until the Maturity Date, Borrower shall pay to Lender, in 

Exhibit 10.3          

addition to the interest payment due on each such date, Amortizing Principal Reduction Payments.  BORROWER AGREES TO PAY THE PERIODIC INSTALLMENTS REQUIRED BY THIS SECTION 2.2(b) AS THEY MAY BE RECALCULATED BY LENDER, IN ACCORDANCE WITH THE TERMS HEREOF, FROM TIME TO TIME, AND ACKNOWLEDGES THAT A RECALCULATION SHALL NOT AFFECT THE MATURITY DATE OR THE OTHER TERMS AND PROVISIONS OF THIS NOTE.
(c)    The Outstanding Principal Balance and any and all accrued but unpaid interest thereon shall be due and payable in full on the Maturity Date or upon the earlier maturity hereof, whether by acceleration or otherwise.
Section 2.3    Application.  Except as expressly provided herein to the contrary, all payments on this Note shall be applied in accordance with the provisions of the Loan Agreement.
Section 2.4    Payments.  All payments under this Note made to Lender shall be made in immediately available funds at 8201 Preston Road, Suite 700, Dallas, Texas 75225 (or at such other place as Lender, in Lender's sole discretion, may have established by delivery of written notice thereof to Borrower from time to time), without offset, in lawful money of the United States of America, which shall at the time of payment be legal tender in payment of all debts and dues, public and private.  Payments by check or draft shall not constitute payment in immediately available funds until the required amount is actually received by Lender in full.  Payments in immediately available funds received by Lender in the place designated for payment on a Business Day prior to 11:00 a.m. Central Standard Time or Central Daylight Time, as applicable, at said place of payment shall be credited prior to the close of business on the Business Day received, while payments received by Lender on a day other than a Business Day or after 11:00 a.m. Central Standard Time or Central Daylight Time, as applicable, on a Business Day shall not be credited until the next succeeding Business Day.  If any payment of principal or interest on this Note shall become due and payable on a day other than a Business Day, such payment shall be made on the immediately following Business Day.  Any such extension of time for payment shall be included in computing interest which has accrued and shall be payable in connection with such payment.
Section 2.5    Computation Period.  Except for the computation of the Maximum Lawful Rate which shall be undertaken on the basis of a three hundred sixty‐five (365) or three hundred sixty‐six (366) day year, as the case may be, interest on the Debt and/or Related Indebtedness shall be computed on the basis of a three hundred sixty (360) day year and shall accrue on the actual number of days elapsed for any whole or partial month in which interest is being calculated.  In computing the number of days during which interest accrues, the day on which funds are initially advanced shall be included regardless of the time of day such advance is made, and the day on which funds are repaid shall be included unless repayment is credited prior to the close of business on the Business Day received as provided in Section 2.4 hereof.
Section 2.6    Prepayment.  Subject to the terms of this Section 2.6, Borrower shall have the right to prepay, at any time and from time to time, without fee, premium or penalty except as described herein the entire unpaid principal balance of this Note or any portion thereof, but must also pay the amount of the then accrued but unpaid interest on the amount of principal being so prepaid; provided, however, any such prepayment must be accompanied by Lender's simultaneous 

Exhibit 10.3          

receipt of the applicable Prepayment Premium from Borrower.  Any tender of funds by Borrower characterized as a prepayment may be allocated by Lender to such outstanding amounts due hereunder or under the Loan Agreement as Lender may elect, including, without limitation, an application first to any costs or expenses as may then be owing by Borrower to Lender.  Any such partial payments of principal shall be applied in an inverse order of maturity to the last maturing installment(s) of principal.
Section 2.7    Unconditional Payment.  Borrower is and shall be obligated to pay all principal, interest and any and all other amounts which become payable under this Note or under any of the other Loan Documents absolutely and unconditionally and without any abatement, postponement, diminution or deduction whatsoever and without any reduction for counterclaim or setoff whatsoever.  If at any time any payment received by Lender hereunder shall be deemed by a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under any Debtor Relief Law, then the obligation to make such payment shall survive any cancellation or satisfaction of this Note or return thereof to Borrower and shall not be discharged or satisfied with any prior payment thereof or cancellation of this Note, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof, and such payment shall be immediately due and payable upon demand.
Section 2.8    Partial or Incomplete Payments.  Remittances in payment of any part of this Note other than in the required amount in immediately available funds at the place where this Note is payable shall not, regardless of any receipt or credit issued therefor, constitute payment until the required amount is actually received by Lender in full in accordance herewith and shall be made and accepted subject to the condition that any check or draft may be handled for collection in accordance with the practice of the collecting bank or banks.  Acceptance by Lender of any payment in an amount less than the full amount then due shall be deemed an acceptance on account only, and the failure to pay the entire amount then due shall be and continue to be an Event of Default in the payment of this Note.
Section 2.9    Late Charge.  If any payment is not received in full by Lender within ten (10) days following the date when due, then in addition to interest accruing at the Default Interest Rate on such overdue payment from the date due until paid, Borrower shall also pay to Lender a late charge in an amount equal to five percent (5%) of the amount of such overdue payment.  Borrower acknowledges that it would be extremely difficult or impracticable to determine Lender's actual damages resulting from any late payment or Event of Default, and such late charges and accrued interest are reasonable estimates of those damages and do not constitute a penalty.
Section 2.10    Extension Options.  Borrower shall have the right and option to extend the Maturity Date from the Original Maturity Date to a date ending upon the expiration of the First Extension Period, and then again from the last day of the First Extension Period to a date ending upon the expiration of the Second Extension Period, all in accordance with and subject to the terms and conditions of the Loan Agreement.  Upon any extension of the Maturity Date, the terms and provisions of the Note shall be in full force and effect without any amendments or modifications thereto except as otherwise agreed to in writing by Borrower and Lender.

Exhibit 10.3          

Section 2.11    Additional Costs and Alternative Index.
(a)    The Borrower shall pay to Lender from time to time such amounts as Lender may determine to be necessary to compensate Lender for any costs incurred by Lender or any reduction in any amount receivable by Lender under the Loan Documents (such increases in costs and reductions in amounts receivable being herein called "Additional Costs"), resulting from any change after the date of this Note in U.S. federal, state, municipal, or foreign laws or regulations, or the adoption or making after such date of any interpretations, directives, or requirements applying to a class of banks including Lender under any U.S. federal, state, municipal, or any foreign laws or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof ("Regulatory Change"), which: (1) changes the basis of taxation of any amounts payable to Lender under this Note in respect of any such indebtedness (other than taxes imposed on the overall net income of Lender by the jurisdiction where the Lender's principal office or applicable lending office is located); or (2) imposes or modifies any reserve, special deposit, compulsory loan, or similar requirements relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, Lender; or (3) imposes any other condition affecting this Note (or any of such extensions of credit or liabilities).  Lender will notify the Borrower of any event occurring after the date of this Agreement that will entitle Lender to compensation pursuant to this Section 2.11(a) as promptly as practicable after it obtains knowledge thereof and determines to request such compensation.  Determinations by Lender for purposes of this Section 2.11(a) of the effect of any Regulatory Change, and of the additional amounts required to compensate Lender in respect of any Additional Costs, shall be conclusive, provided that such determinations are made on a reasonable basis.
(b)    If (i) at any time, Lender determines (which determination shall be conclusive in the absence of manifest error) that any applicable law or regulation or any change therein or the interpretation or application thereof or compliance therewith by Lender prohibits, restricts or makes impossible the charging of interest based on the index and basis described herein, or (ii) at the time of or prior to the determination of the Note Rate, Lender determines (which determination shall be conclusive in the absence of manifest error) that by reason of circumstances affecting the index described herein and/or general market circumstances with respect to the calculation thereof, the Note Rate does not adequately and fairly reflect the cost to Lender of making or maintaining the loan, due to changes in administrative costs, fees, tariffs and taxes and other matters outside of Lender's reasonable control, or (iii) adequate and fair means do not or will not exist for determining the Note Rate as set forth in this Note, then Lender shall give Borrower prompt notice thereof, and this Note shall bear interest, and continue to bear interest until Lender determines that the applicable circumstance described in the foregoing clauses (i), (ii) or (iii) no longer pertains, at a comparable rate determined by Lender by reference to a prime rate or other index as Lender may reasonably designate; provided, however, any adjustment pursuant to this Section 2.11(b) shall only be applicable to the extent such circumstance is the result of a general change in the calculation or regulation of the determination of LIBOR Rate or costs imposed with respect thereto generally to institutional lenders similar in nature to Lender and shall not 

Exhibit 10.3          

include any special charges, costs or taxes imposed selectively on Lender as a punitive measure as a result of failing performance metrics or similar circumstances.
Section 2.1    No Revolver Features.  It is expressly agreed and understood that this Note does not evidence a revolving facility and that no principal amount prepaid or otherwise paid by Borrower may be reborrowed by Borrower.
ARTICLE III
EVENTS OF DEFAULT AND REMEDIES
Section 3.1    Default.  Borrower shall be in default hereunder immediately upon the occurrence and during the continuance of an "Event of Default".
Section 3.2    Remedies.  Upon the occurrence of an Event of Default, Lender shall have the immediate right, at the sole discretion of Lender and without notice, presentment for payment, demand, notice of nonpayment or nonperformance, protest, notice of protest, notice of intent to accelerate, notice of acceleration or any other notice or any other action (ALL OF WHICH BORROWER HEREBY EXPRESSLY WAIVES AND RELINQUISHES) (i) to declare the entire unpaid balance of the Debt and/or the Related Indebtedness (including the Outstanding Principal Balance hereof, including all sums advanced or accrued hereunder or under any other Loan Document, and all accrued but unpaid interest thereon) at once immediately due and payable (and upon such declaration, the same shall be at once immediately due and payable) and may be collected forthwith, whether or not there has been a prior demand for payment and regardless of the stipulated date of maturity; (ii) to foreclose any liens and security interests securing payment hereof or thereof (including any liens and security interests covering any portion of the Mortgaged Property); and (iii) to exercise any of Lender's other rights, powers, recourses and remedies under this Note, under any other Loan Document or at law or in equity, and the same (a) shall be cumulative and concurrent, (b) may be pursued separately, singly, successively or concurrently against Borrower or others obligated for the repayment of this Note or any part hereof, or against any one or more of them, or against the Mortgaged Property, at the sole discretion of Lender, (c) may be exercised as often as occasion therefor shall arise, it being agreed by Borrower that the exercise, discontinuance of the exercise of or failure to exercise any of the same shall in no event be construed as a waiver or release thereof or of any other right, remedy or recourse, and (d) are intended to be, and shall be, nonexclusive.  All rights and remedies of Lender hereunder and under the other Loan Documents shall extend to any period after the initiation of foreclosure proceedings, judicial or otherwise, with respect to the Mortgaged Property or any portion thereof.  Without limiting the provisions of Section 4.18 hereof, if the Debt and/or the Related Indebtedness, or any part hereof, is collected by or through an attorney‐at‐law, Borrower agrees to pay all costs and expenses of collection, including Lender's attorneys' fees, whether or not any legal action shall be instituted to enforce this Note.  This Note is also subject to acceleration as provided in the Loan Agreement.
ARTICLE IV
MISCELLANEOUS

Exhibit 10.3          

Section 4.1    No Waiver; Amendment.  No failure to accelerate the Debt and/or the Related Indebtedness by reason of an Event of Default hereunder, acceptance of a partial or past due payment or indulgences granted from time to time shall be construed (i) as a novation of this Note or as a reinstatement of the Debt and/or the Related Indebtedness or as a waiver of such right of acceleration or of the right of Lender thereafter to insist upon strict compliance with the terms of this Note, or (ii) to prevent the exercise of such right of acceleration or any other right granted under this Note, under any of the other Loan Documents or by any applicable laws.  Borrower hereby expressly waives and relinquishes the benefit of any statute or rule of law or equity now provided, or which may hereafter be provided, which would produce a result contrary to or in conflict with the foregoing.  The failure to exercise any remedy available to Lender shall not be deemed to be a waiver of any rights or remedies of Lender under this Note or under any of the other Loan Documents, or at law or in equity.  No extension of the time for the payment of this Note or any installment due hereunder, made by agreement with any Person now or hereafter liable for the payment of this Note, shall operate to release, discharge, modify, change or affect the original liability of Borrower under this Note, either in whole or in part, unless Lender specifically, unequivocally and expressly agrees otherwise in writing.  This Note may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change or modification is sought.
Section 4.2    WAIVERS.  EXCEPT AS SPECIFICALLY PROVIDED IN THE LOAN DOCUMENTS TO THE CONTRARY, BORROWER AND ANY ENDORSERS OR GUARANTORS HEREOF SEVERALLY WAIVE AND RELINQUISH PRESENTMENT FOR PAYMENT, DEMAND, NOTICE OF NONPAYMENT OR NONPERFORMANCE, PROTEST, NOTICE OF PROTEST, NOTICE OF INTENT TO ACCELERATE, NOTICE OF ACCELERATION OR ANY OTHER NOTICES OR ANY OTHER ACTION.  BORROWER AND ANY ENDORSERS OR GUARANTORS HEREOF SEVERALLY WAIVE AND RELINQUISH, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO THE BENEFITS OF ANY MORATORIUM, REINSTATEMENT, MARSHALING, FORBEARANCE, VALUATION, STAY, EXTENSION, REDEMPTION, APPRAISEMENT, EXEMPTION AND HOMESTEAD NOW OR HEREAFTER PROVIDED BY THE CONSTITUTION AND LAWS OF THE UNITED STATES OF AMERICA AND OF EACH STATE THEREOF, BOTH AS TO ITSELF AND IN AND TO ALL OF ITS PROPERTY, REAL AND PERSONAL, AGAINST THE ENFORCEMENT AND COLLECTION OF THE OBLIGATIONS EVIDENCED BY THIS NOTE OR BY THE OTHER LOAN DOCUMENTS.
Section 4.3    Interest Provisions.
(a)    Savings Clause.  It is expressly stipulated and agreed to be the intent of Borrower and Lender at all times to comply strictly with the applicable Texas law governing the maximum rate or amount of interest payable on the Debt and the Related Indebtedness (or applicable United States federal law to the extent that it permits Lender to contract for, charge, take, reserve or receive a greater amount of interest than under Texas law).  If the applicable law is ever judicially interpreted so as to render usurious any amount (i) contracted for, charged, taken, reserved or received pursuant to this Note, any of the other Loan Documents or any other communication or writing by or between Borrower and Lender 

Exhibit 10.3          

related to the transaction or transactions that are the subject matter of the Loan Documents; (ii) contracted for, charged, taken, reserved or received by reason of Lender's exercise of the option to accelerate the Maturity Date and/or the maturity of the Related Indebtedness; or (iii) Borrower will have paid or Lender will have received by reason of any voluntary prepayment by Borrower of the Debt and/or the Related Indebtedness, then it is Borrower's and Lender's express intent that all amounts charged in excess of the Maximum Lawful Rate shall be automatically canceled, ab initio, and all amounts in excess of the Maximum Lawful Rate theretofore collected by Lender shall be credited on the principal balance of the Debt and/or the Related Indebtedness (or, if the Debt and all Related Indebtedness have been or would thereby be paid in full, refunded to Borrower), and the provisions of this Note and the other Loan Documents shall immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder; provided, however, if the Debt has been paid in full before the end of the stated term of this Note, then Borrower and Lender agree that Lender shall, with reasonable promptness after Lender discovers or is advised by Borrower that interest was received in an amount in excess of the Maximum Lawful Rate, either refund such excess interest to Borrower and/or credit such excess interest against the Debt and/or any Related Indebtedness then owing by Borrower to Lender.  Borrower hereby agrees that as a condition precedent to any claim seeking usury penalties against Lender, Borrower will provide written notice to Lender, advising Lender in reasonable detail of the nature and amount of the violation, and Lender shall have sixty (60) days after receipt of such notice in which to correct such usury violation, if any, by either refunding such excess interest to Borrower or crediting such excess interest against the Debt and/or the Related Indebtedness then owing by Borrower to Lender.  All sums contracted for, charged, taken, reserved or received by Lender for the use, forbearance or detention of the Debt and/or the Related Indebtedness shall, to the extent permitted by applicable law, be amortized or spread, using the actuarial method, throughout the stated term of this Note and/or the Related Indebtedness (including any and all renewal and extension periods) until payment in full so that the rate or amount of interest on account of the Debt and/or the Related Indebtedness does not exceed the Maximum Lawful Rate from time to time in effect and applicable to the Debt and/or the Related Indebtedness for so long as debt is outstanding.  In no event shall the provisions of Chapter 346 of the Texas Finance Code (which regulates certain revolving credit loan accounts and revolving triparty accounts) apply to the Debt and/or any of the Related Indebtedness.  Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, it is not the intention of Lender to accelerate the maturity of any interest that has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration.
(b)    Ceiling Election.  To the extent that Lender is relying on Chapter 303 of the Texas Finance Code to determine the Maximum Lawful Rate payable on the Debt and/or the Related Indebtedness, Lender will utilize the weekly ceiling from time to time in effect as provided in such Chapter 303, as amended.  To the extent United States federal law permits Lender to contract for, charge, take, receive or reserve a greater amount of interest than under Texas law, Lender will rely on United States federal law instead of such Chapter 303 

Exhibit 10.3          

for the purpose of determining the Maximum Lawful Rate.  Additionally, to the extent permitted by applicable law now or hereafter in effect, Lender may, at its option and from time to time, utilize any other method of establishing the Maximum Lawful Rate under such Chapter 303 or under other applicable law by giving notice, if required, to Borrower as provided by applicable law now or hereafter in effect.
Section 4.4    Use of Funds.  Borrower hereby warrants, represents and covenants that (i) the loan evidenced by this Note is made to Borrower solely for the purpose of acquiring or carrying on a business or commercial enterprise; (ii) all proceeds of this Note shall be used only for business and commercial purposes; and (iii) no funds disbursed hereunder shall be used for personal, family, agricultural or household purposes.
Section 4.5    Further Assurances and Corrections.  From time to time, at the request of Lender, Borrower will (i) promptly correct any defect, error or omission which may be discovered in the contents of this Note or in any other Loan Document or in the execution or acknowledgment thereof; (ii) execute, acknowledge, deliver, record and/or file (or cause to be executed, acknowledged, delivered, recorded and/or filed) such further documents and instruments (including, as applicable, further deeds of trust, mortgages, security agreements, financing statements, continuation statements and assignments of rents) and perform such further acts and provide such further assurances as may be reasonably necessary, desirable or proper, in Lender's opinion, (a) to carry out more effectively the purposes of this Note and the other Loan Documents and the transactions contemplated hereunder and thereunder, (b) to confirm the rights created under this Note and the other Loan Documents, (c) to protect and further the validity, priority and enforceability of this Note and the other Loan Documents and the liens and security interests created thereby, and (d) to subject to the Loan Documents any property of Borrower intended by the terms of any one or more of the Loan Documents to be encumbered by the Loan Documents; and (iii) pay all costs in connection with any of the foregoing.
Section 4.6    WAIVER OF JURY TRIAL.  BORROWER, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY KNOWINGLY, INTENTIONALLY, IRREVOCABLY, UNCONDITIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF OR IN ANY WAY RELATING TO THIS NOTE OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR BORROWER, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH LENDER OR BORROWER, IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
Section 4.7    Governing Law; Submission to Jurisdiction.
(a)    This Note is executed and delivered as an incident to a lending transaction substantially negotiated and consummated in Dallas County, Texas, and shall be governed by and construed in accordance with the laws of the State of Texas; provided, however, (i) that any matters with respect to the creation, perfection, validity and enforcement of any 

Exhibit 10.3          

security interest or lien with respect to the Mortgaged Property shall be governed and construed in accordance with the laws of the state where the Mortgaged Property is located including the laws governing foreclosure with respect thereto, and (ii) to the extent that any such state laws may now or hereafter be preempted by federal law, such federal law shall so govern and be controlling.
(b)    Borrower, for itself and its successors and assigns, hereby irrevocably (i) submits to the nonexclusive jurisdiction of the state and federal courts in Texas; (ii) waives, to the fullest extent permitted by law, any objection that it may now or in the future have to the laying of venue of any litigation arising out of or in connection with this Note or any Loan Document brought in the District Court of Dallas County, Texas, or in the United States District Court for the District and Division thereof located in Dallas County, Texas; (iii) waives any objection it may now or hereafter have as to the venue of any such action or proceeding brought in such court or that such court is an inconvenient forum; and (iv) agrees that any legal proceeding against any party to any of the Loan Documents arising out of or in connection with any of the Loan Documents may be brought in one of the foregoing courts.  Borrower agrees that service of process upon Borrower may be made by certified or registered mail, return receipt requested, at its address specified herein.  Nothing herein shall affect the right of Lender to serve process in any other manner permitted by law or shall limit the right of Lender to bring any action or proceeding against Borrower or with respect to any of Borrower's property in courts in other jurisdictions.  The scope of each of the foregoing waivers is intended to be all encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including contract claims, tort claims, breach of duty claims and all other common law and statutory claims.  Borrower acknowledges that these waivers are a material inducement to Lender's agreement to enter into the agreements and obligations evidenced by the Loan Documents and that Lender has already relied on these waivers and will continue to rely on each of these waivers in related future dealings.  The waivers in this Section 4.7 are irrevocable, meaning that they may not be modified either orally or in writing, and these waivers apply to any future renewals, extensions, amendments, modifications or replacements in respect of any and all of the applicable Loan Documents.  In connection with any litigation, this Note may be filed as a written consent to a trial by the court.
Section 4.8    Counting of Days.  If any time period referenced hereunder ends on a day other than a Business Day, such time period shall be deemed to end on the immediately following Business Day.
Section 4.9    Relationship of the Parties.  Notwithstanding any prior business or personal relationship between Borrower and Lender, or any officer, director or employee of Lender, that may exist or have existed, the relationship between Borrower and Lender is solely that of debtor and creditor.  Borrower and Lender are not partners or joint venturers, and no term or condition of any of the Loan Documents shall be construed so as to deem the relationship between Borrower and Lender to be other than that of debtor and creditor.  Lender has no fiduciary or other special relationship with or duty to Borrower and none is created hereby or may be inferred from any course of dealing, conduct, act or omission of Lender.

Exhibit 10.3          

Section 4.10    Successors and Assigns.  The terms and provisions hereof shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors, successors‐in‐title and assigns, whether by voluntary action of the parties, by operation of law or otherwise, and all other Persons claiming by, through or under them.  The terms "Borrower" and "Lender" as used hereunder shall be deemed to include their respective successors, successors‐in‐title and assigns, whether by voluntary action of the parties, by operation of law or otherwise, and all other Persons claiming by, through or under them.
Section 4.11    Joint and Several Liability.  If Borrower consists of more than one Person, each shall be jointly and severally liable to perform the obligations of Borrower under this Note.
Section 4.12    Time is of the Essence.  Time is of the essence with respect to all provisions of this Note and the other Loan Documents.
Section 4.13    Headings.  The Article, Section and Subsection entitlements hereof are inserted for convenience of reference only and shall in no way alter, modify, define, limit, amplify or be used in construing the text, scope or intent of such Articles, Sections or Subsections.
Section 4.14    Controlling Agreement.  In the event of any conflict between the provisions of this Note and the Loan Agreement, it is the intent of the parties hereto that the provisions of the Loan Agreement shall control.  In the event of any conflict between the provisions of this Note and any of the other Loan Documents (other than the Loan Agreement), it is the intent of the parties hereto that the provisions of this Note shall control.  The parties hereto acknowledge that they were represented by competent counsel in connection with the negotiation, drafting and execution of this Note and the other Loan Documents and that this Note and the other Loan Documents shall not be subject to the principle of construing their meaning against the party that drafted same.
Section 4.15    Notices.  All notices or other communications required or permitted to be given pursuant to this Note shall be in accordance with the notice provisions of the Loan Agreement.
Section 4.16    Severability.  If any provision of this Note or the application thereof to any Person or circumstance shall, for any reason and to any extent, be invalid or unenforceable, then neither the remainder of this Note nor the application of such provision to other Persons or circumstances nor the other instruments referred to herein shall be affected thereby, but rather shall be enforced to the greatest extent permitted by applicable law.
Section 4.17    Right of Setoff.  In addition to all liens upon and rights of setoff against the money, securities or other property of Borrower given to Lender that may exist under applicable law, Lender shall have and Borrower hereby grants to Lender a lien upon and a right of setoff against all money, securities and other property of Borrower, now or hereafter in possession of or on deposit with Lender, whether held in a general or special account or deposit, for safe-keeping or otherwise, and every such lien and right of setoff may be exercised without demand upon or notice to Borrower.  No lien or right of setoff shall be deemed to have been waived by any act or conduct on the part of Lender, or by any neglect to exercise such right of setoff or to enforce such lien, or by any delay in so doing, and every right of setoff and lien shall continue in full force and effect until such right of setoff or lien is specifically waived or released by an instrument in writing executed by Lender.

Exhibit 10.3          

Section 4.18    Costs of Collection.  If any holder of this Note retains an attorney‐at‐law in connection with any Event of Default or at maturity or to collect, enforce or defend this Note or any part hereof, or any other Loan Document in any lawsuit or in any probate, reorganization, bankruptcy or other proceeding, or if Borrower sues any holder in connection with this Note or any other Loan Document and does not prevail, then Borrower agrees to pay to each such holder, in addition to the principal balance hereof and all interest hereon, all costs and expenses of collection or incurred by such holder or in any such suit or proceeding, including reasonable attorneys' fees.
Section 4.19    Statement of Unpaid Balance.  At any time and from time to time, Borrower will furnish promptly, upon the request of Lender, a written statement or affidavit, in form satisfactory to Lender, stating the unpaid balance of the Debt and the Related Indebtedness and that there are no offsets or defenses against full payment of the Debt and the Related Indebtedness and the terms hereof, or if there are any such offsets or defenses, specifying them.
Section 4.20    NO ORAL AGREEMENTS.  THIS NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.  The provisions hereof and the other Loan Documents may be amended or waived only by an instrument in writing signed by Borrower and Lender.
[SIGNATURE PAGE FOLLOWS]

Exhibit 10.3          

EXECUTED to be effective as of the date first written above.
	
		
	 
	BORROWER:

	 
	 

	 
	IMH GABELLA, LLC,

	 
	a Delaware limited liability company

	 
	 

	 
	By:   SOUTHWEST ACQUISITIONS, LLC,

	 
	 a Delaware limited liability company,

	 
	its Sole Member

	 
	 

	 
	By:   IMH SPECIAL ASSET NT 175-AVN, LLC,

	 
	an Arizona limited liability company,

	 
	its Manager

	 
	 

	 
	By:   IMH FINANCIAL CORPORATION, 

	 
	a Delaware corporation,

	 
	its Sole Member 

	 
	 

	 
	By:   /s/Steven T. Darak                             

	 
	Name:    Steven T. Darak                       

	 
	Title:     Chief  Financial OfficerExhibit 10.4

Exhibit 10.4

GUARANTY 
(Completion)
THIS GUARANTY (this "Guaranty") is executed effective as of October 20, 2014, by IMH FINANCIAL CORPORATION, a Delaware corporation ("Guarantor"), for the benefit of BANK OF THE OZARKS (together with its successors and assigns, "Lender").
RECITALS:
WHEREAS, pursuant to that certain Promissory Note, dated of even date herewith, executed by IMH GABELLA, LLC, a Delaware limited liability company ("Borrower") and payable to the order of Lender in the original stated principal amount of $24,000,000.00 (together with all renewals, modifications, increases and extensions thereof, the "Note"), Borrower has become indebted and may from time to time be further indebted, to Lender with respect to a loan (the "Loan") which is made pursuant to that certain Construction Loan Agreement, dated of even date herewith, between Borrower and Lender (the "Loan Agreement"), which Loan is secured by, inter alia, that certain Mortgage, Security Agreement, and Fixture Financing Statement, dated of even date herewith, granted by Borrower in favor of Lender (the "Lien Instrument"), and further evidenced, secured or governed by other documents, instruments and agreements executed in connection with the Loan including, without limitation, that certain Environmental Indemnity Agreement, dated of even date herewith (the "Environmental Indemnity") (this Guaranty and all of the foregoing and all other documents related to the Loan, as the same may be amended, restated, supplemented, replaced or otherwise modified from time to time, being, collectively, the "Loan Documents");
WHEREAS, Lender is not willing to make the Loan, or otherwise extend credit, to Borrower unless Guarantor unconditionally guarantees to Lender the payment and performance of all obligations described herein and on the terms and conditions set forth herein (collectively, the "Guaranteed Obligations"); and
WHEREAS, Guarantor is the owner of a direct or indirect interest in Borrower and will directly or indirectly benefit from Lender making the Loan to Borrower.
NOW, THEREFORE, as an inducement to Lender to enter into the Loan Agreement and to make the Loan to Borrower, and to extend such additional credit as Lender may from time to time agree to extend, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Guarantor, intending to be legally bound hereby, represents and warrants to Lender and covenants and agrees with Lender as follows:
ARTICLE I
NATURE AND SCOPE OF GUARANTY
1.1    Guaranty and Agreement to be Primarily Obligated.  Guarantor hereby irrevocably and unconditionally, jointly and severally, guarantees to Lender and its successors and assigns the payment and performance of the Guaranteed Obligations as and when the same shall be due and payable, whether by lapse of time, by acceleration of maturity or otherwise.  Guarantor 

Exhibit 10.4

hereby irrevocably and unconditionally covenants and agrees that Guarantor is liable for the Guaranteed Obligations as a primary obligor.
1.2    Guaranty of Completion.
(a)    Guaranty.  Guarantor hereby unconditionally guarantees to and for the benefit of Lender the full, prompt and complete performance by Borrower of all the terms and provisions of the Loan Documents pertaining to Borrower's obligations with respect to the design, permitting, installation, construction and completion of, the Improvements.  Without limiting the generality of the foregoing, Guarantor guarantees that, subject to the terms and conditions of the Loan Documents:  (i) construction of the Improvements will commence by the Commencement Date and will be completed on or before the Completion Date; (ii) the Improvements will be constructed, installed and completed in accordance with the Plans, the Construction Contracts, the Loan Agreement and the other Loan Documents without substantial deviation therefrom; (iii) the Improvements will be constructed, installed and completed free and clear of any liens (other than liens granted to Lender under the Loan Documents and the Permitted Exceptions); and (iv) all costs of constructing the Improvements including any and all cost overruns will be paid when due.  Lender hereby agrees and acknowledges this Guaranty is not a repayment guaranty of the Indebtedness under the Loan Agreement.
(b)    Lien-Free Completion.  Completion of the Improvements free and clear of liens will be deemed to have occurred only upon:  (i)(A) the expiration of the applicable statutory periods of the state in which the Mortgaged Property is located within which valid construction, mechanics or materialmens' liens may be recorded and served by reason of the design, supply or construction of the Improvements with any such liens that have been filed having been released, discharged of record, or bonded as reasonably approved by Lender or, alternatively, Lender's receipt of valid, unconditional final lien releases thereof from all persons entitled to record such liens, and (B) Lender's receipt of those items listed in Section 3.4 of the Loan Agreement.
(c)    Obligations of Guarantor Upon Default By Borrower.  If (i) the Improvements with respect to the Loan are not commenced by the Commencement Date or completed on or before the Completion Date and constructed in the manner required by the Loan Agreement, (ii) construction of such Improvements should cease or be abandoned prior to Completion for such period of time that constitutes an Event of Default under the Loan Agreement, or (iii) any Event of Default under the Loan Agreement should otherwise exist with respect to the design, construction, permitting, or repair of the Improvements, or in the payment for labor, materials, and specially fabricated materials to be incorporated into the Improvements, as reasonably determined by Lender, then Guarantor will, promptly upon written demand of Lender: (A) diligently proceed to complete construction of the Improvements to Completion, and in connection therewith, Lender shall continue to fund Advances to Guarantor pursuant to the terms of the Loan Agreement and the other Loan Documents; provided, however, that prior to any such Advance after Guarantor commences performance of the Guaranteed Obligations Guarantor shall cure, or cause to be cured, all 

Exhibit 10.4

existing Events of Default with respect to the design, construction, permitting, or repair of the Improvements, or in the payment for labor, materials, and specially fabricated materials to be incorporated into the Improvements, as reasonably determined by Lender; provided, however, that if such cure cannot reasonably be accomplished prior to the requested date of such Advance, then Borrower shall commence such cure and shall diligently pursue the same to completion; (B) fully pay and discharge all claims for labor performed and material and services furnished in connection with the design, supply, construction or installation of the Improvements; and (C) release and discharge or bond all claims of construction liens and equitable liens that may arise in connection with the design, supply, construction or installation of the Improvements.
(d)    No Duty to Prove Loss, Etc.  To the extent that Lender suffers any Losses arising out of or in connection with Guarantor's failure to discharge the Guaranteed Obligations in the manner and within the time set forth herein, Guarantor shall pay Lender on demand all amounts incurred by Lender in connection with such Losses, without any requirement that Lender demonstrate that the Mortgaged Property provides inadequate security for the Loan or that Lender has otherwise exercised (to any degree) or exhausted any of Lender's rights or remedies with respect to Borrower, the Mortgaged Property, any other collateral for the Loan or any other guarantor.
(e)    Guarantor's Option to Pay Loan Balance.  Notwithstanding anything to the contrary set forth elsewhere in this Guaranty, Guarantor may (but shall not be obligated to), at any time after Lender's obligation to make Advances of Loan proceeds to Borrower has terminated, satisfy the Guaranteed Obligations under this Guaranty by paying to Lender in immediately available funds all amounts required for the indefeasible payment and discharge in full of the Indebtedness.
1.3    Remedies.  If Guarantor fails promptly to commence performance of the Guaranteed Obligations under this Guaranty within thirty (30) days after receipt of written notice from Lender requiring same, or thereafter fails to diligently achieve Completion as determined by Lender, Lender will have the following remedies in addition to all other remedies available to Lender under this Guaranty, the other Loan Documents or applicable law:
(a)    At Lender's option, and without any obligation to do so, Lender may proceed to perform on behalf of Guarantor all or any part of the Guaranteed Obligations under this Guaranty and Guarantor will, upon demand and whether or not construction is actually completed by Lender, pay to Lender, at any time and from time to time, all Losses incurred by Lender in performing such Guaranteed Obligations together with interest thereon at the rate of interest applicable to the principal balance of the Note; and
(b)    From time to time and without first requiring performance by Borrower or any other person or exhausting any or all security for the Loan, Lender may bring any action at law or in equity or both to compel Guarantor to perform its obligations under this Guaranty, and may collect in any such action compensation for all Losses sustained or incurred by Lender as a direct or indirect consequence of the failure of Guarantor to perform such Guaranteed Obligations together with interest thereon at the rate of interest applicable to 

Exhibit 10.4

the principal balance of the Note; provided, however, that Guarantor shall not be liable for any punitive or exemplary damages under this Guaranty.
1.4    Defined Terms.
(a)    "Borrower":  The term "Borrower" as used herein shall include any new or successor corporation, association, partnership (general or limited), limited liability company, joint venture, trust or other individual or organization formed as a result of any merger, reorganization, sale, transfer, devise, gift or bequest of Borrower or any interest in Borrower.
(b)    "Losses":  Any and all claims, suits, liabilities (including, without limitation, strict liabilities), actions, proceedings, obligations, debts, demands, causes of action, damages, actual out-of-pocket losses, fines, penalties, charges, fees, actual out-of-pocket costs and expenses (to the extent such costs and expenses are in excess of any undisbursed Loan proceeds remaining under the Budget) (including, without limitation, court costs and reasonable attorneys' fees and expenses), judgments, awards and amounts paid in settlement of whatever kind or nature (including, without limitation, court costs, reasonable attorneys' fees and expenses and other costs of defense) arising out of or in connection with Lender discharging, or causing to be discharged, the Guaranteed Obligations.  Losses shall be limited to actual losses and shall not include special or punitive damages.
(c)    Undefined Terms:  Capitalized terms used but not otherwise defined in this Guaranty shall have the meanings ascribed to such terms in the Loan Agreement.
1.5    Nature of Guaranty.  This Guaranty is an irrevocable, absolute, continuing guaranty of payment and performance and not a guaranty of collection.  This Guaranty may not be revoked by Guarantor and shall continue to be effective with respect to any Guaranteed Obligations arising or created after any attempted revocation by Guarantor and after (if Guarantor is a natural person) Guarantor's death (in which event this Guaranty shall be binding upon Guarantor's estate and Guarantor's legal representatives and heirs).  The fact that at any time or from time to time the Guaranteed Obligations may be increased, reduced or paid in full shall not release, discharge or reduce the obligation of Guarantor to Lender with respect to any indebtedness or obligations of Borrower thereafter incurred (or other Guaranteed Obligations thereafter arising) under the Note or otherwise.  This Guaranty may be enforced by Lender and any subsequent holder of the Note and shall not be discharged by the assignment, sale, pledge, transfer, participation or negotiation of all or part of the Note.
1.6    Guaranteed Obligations Not Reduced by Offset.  The Guaranteed Obligations and the liabilities and obligations of Guarantor to Lender hereunder shall not be reduced, discharged or released because or by reason of any existing or future offset, claim or defense of Borrower, or any other Person, against Lender or against payment or performance of the Guaranteed Obligations, whether such offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise and Guarantor hereby waives and relinquishes, to the fullest extent permitted by applicable Legal Requirements, all rights and remedies to any defense, right of offset or other claim which Guarantor may have against Lender.

Exhibit 10.4

1.7    Payment and Performance by Guarantor.  If all or any part of the Guaranteed Obligations shall not be punctually paid and performed when due, whether at demand, maturity or earlier by acceleration or otherwise, Guarantor shall, immediately upon demand by Lender, and without presentment, protest, notice of protest, notice of nonpayment or nonperformance, notice of intention to accelerate the maturity, notice of acceleration of the maturity, or any other notice whatsoever (all such notices being hereby expressly waived by Guarantor), pay in lawful money of the United States of America, the amount due on the Guaranteed Obligations to Lender at Lender's address as set forth herein.  Such demand may be made at any time coincident with or after the time for payment and performance of all or part of the Guaranteed Obligations, and may be made from time to time with respect to the same or different items of Guaranteed Obligations.  Such demand shall be deemed made, given and received in accordance with the notice provisions hereof.
1.8    No Duty to Pursue Others.  It shall not be necessary for Lender (and Guarantor hereby waives any rights which Guarantor may have to require Lender), in order to enforce the obligations of Guarantor hereunder, first to (i) institute suit or exhaust its remedies against Borrower or others liable on the Loan or the Guaranteed Obligations or any other Person, (ii) enforce Lender's rights against any collateral which shall ever have been given to secure the Loan or the Guaranteed Obligations, (iii) enforce Lender's rights against any other guarantors of the Guaranteed Obligations, (iv) join Borrower or any others liable on the Guaranteed Obligations in any action seeking to enforce this Guaranty, (v) exhaust any remedies available to Lender against any collateral which shall ever have been given to secure the Loan or the Guaranteed Obligations, or (vi) resort to any other means of obtaining payment and performance of the Guaranteed Obligations.  Lender shall not be required to mitigate damages or take any other action to reduce, collect or enforce the Guaranteed Obligations.
1.9    Agreement and Waiver of Notice.  Guarantor agrees to the provisions of the Loan Documents, and, to the extent permitted by law, hereby waives notice of, and any rights of consent to (i) any loans or advances made by Lender to Borrower, (ii) acceptance of this Guaranty, (iii) any amendment or extension of the Note, the Lien Instrument, the Loan Agreement or any other Loan Document, (iv) the execution and delivery by Borrower and Lender of any other loan or credit agreement or of Borrower's execution and delivery of any promissory notes or other documents, instruments or agreements arising under the Loan Documents or in connection with the Mortgaged Property, (v) the occurrence of any breach by Borrower of any of the terms or conditions of the Loan Agreement or any other Loan Document or the occurrence of any Event of Default, (vi) Lender's transfer, sale, assignment, pledge, participation or disposition of the Guaranteed Obligations, or any part thereof, (vii) the sale or foreclosure (or the posting or advertising for the sale or foreclosure) of any collateral for the Guaranteed Obligations, (viii) protest, proof of non‐payment or default by Borrower, and (ix) any other action at any time taken or not taken by Lender and, generally, all demands and notices of every kind in connection with this Guaranty, the other Loan Documents, and any other documents, instruments or agreements evidencing, securing or relating to any of the Guaranteed Obligations.
1.10    Payment of Expenses.  In the event that Guarantor should breach or fail to timely perform any provisions of this Guaranty, Guarantor shall, immediately upon demand by Lender, pay Lender all actual costs and expenses (including, without limitation, court costs and reasonable 

Exhibit 10.4

attorneys' fees and expenses) incurred by Lender in the enforcement hereof or the preservation of Lender's rights hereunder, together with interest thereon at the Default Interest Rate from the date the payment of such expenses is requested by Lender until the date Lender receives payment in full of such expenses.  The covenant contained in this Section shall survive the payment and performance of the Guaranteed Obligations.
1.11    Effect of Bankruptcy.  In the event that, pursuant to any insolvency, bankruptcy, reorganization, receivership or other debtor relief law, or any judgment, order or decision thereunder, or any agreement, stipulation or settlement, Lender must rescind or restore any payment, or any part thereof, received by Lender in satisfaction of the Guaranteed Obligations, as set forth herein, any prior release or discharge from the terms of this Guaranty given to Guarantor by Lender shall be without effect, and this Guaranty shall remain (or shall be reinstated to be) in full force and effect.  It is the intention of Borrower and Guarantor that Guarantor's obligations hereunder shall not be discharged except by Guarantor's payment or performance of such obligations and then only to the extent of such payment or performance.
1.12    Waiver of Subrogation, Reimbursement and Contribution. Notwithstanding anything to the contrary contained in this Guaranty, Guarantor hereby unconditionally and irrevocably waives, releases and abrogates any and all rights it may now or hereafter have under any agreement, at law or in equity (including, without limitation, any law subrogating Guarantor to the rights of Lender) to assert any claim against, or seek contribution, indemnification or any other form of reimbursement from, Borrower (or any other Person liable for payment and performance of any or all of the Guaranteed Obligations) for any payment made by Guarantor under or in connection with this Guaranty or otherwise until all periods under applicable bankruptcy law and the Uniform Fraudulent Transfer Act to contest or seek avoidance of any payment as a preference, fraudulent transfer, or otherwise have expired or lapsed.
1.13    Multiple Guarantors.  If (i) this Guaranty is executed by more than one party constituting Guarantor, it is specifically agreed that Lender may enforce the provisions hereof with respect to one or more of such parties constituting Guarantor without seeking to enforce the same as to all or any such parties; or (ii) one or more additional guaranty agreements ("Other Guaranties") are executed by one or more additional guarantors ("Other Guarantors"), which guaranty, in whole or in part, any of the indebtedness or obligations evidenced by the Loan Documents, it is specifically agreed that Lender may enforce the provisions of this Guaranty or of the Other Guaranties with respect to one or more of the parties constituting Guarantor and/or one or more of the Other Guarantors under the Other Guaranties without seeking to enforce the provisions of this Guaranty or the Other Guaranties as to all or any of the parties constituting Guarantor or the Other Guarantors.  Each of the parties constituting Guarantor hereby waives any requirement of joinder (and shall not seek joinder) of all or any other of the parties constituting Guarantor or all or any of the Other Guarantors in any suit or proceeding to enforce the provisions of this Guaranty or of the Other Guaranties.  The liability hereunder of all parties constituting Guarantor shall be joint and several.

Exhibit 10.4

ARTICLE II
EVENTS AND CIRCUMSTANCES NOT REDUCING 
OR DISCHARGING GUARANTOR'S OBLIGATIONS
Guarantor hereby consents and agrees to each of the following, and agrees that Guarantor's obligations under this Guaranty shall not be released, diminished, impaired, reduced or adversely affected by any of the following, and waives any common law, equitable, statutory or other rights (including without limitation rights to notice) which Guarantor might otherwise have as a result of or in connection with any of the following:
2.1    Modifications.  (A) Any renewal, extension, increase, modification, alteration or rearrangement of all or any part of the Guaranteed Obligations, the Indebtedness, the Note, the other Loan Documents, or any other document, instrument, agreement, contract or understanding between Borrower and Lender or any other parties pertaining to the Guaranteed Obligations, or any failure of Lender to notify Guarantor of any such action, or (B) any sale, assignment or foreclosure (or delivery of a deed in lieu of foreclosure) of the Note, the Loan Agreement, the Security Instrument, or any other Loan Documents or any sale or transfer of the Property or any failure of Lender to notify Guarantor of any such action.
2.2    Adjustment.  Any adjustment, indulgence, forbearance or compromise that might be granted or given by Lender to Borrower, Guarantor or any Other Guarantor.
2.3    Condition of Borrower or Guarantor.  The insolvency, bankruptcy, arrangement, adjustment, composition, liquidation, disability, dissolution or lack of power of Borrower, Guarantor or any other Person at any time liable for the payment of all or part of the Guaranteed Obligations; or any dissolution of Borrower or Guarantor, or any sale, lease or transfer of any or all of the assets of Borrower or Guarantor, or any changes in the direct or indirect shareholders, partners or members, as applicable, of Borrower or Guarantor; or any reorganization of Borrower or Guarantor.
2.4    Invalidity of Guaranteed Obligations.  The invalidity, illegality or unenforceability of all or any part of the Guaranteed Obligations, or any document or agreement executed in connection with the Guaranteed Obligations, for any reason whatsoever, including without limitation the fact that (i) the Guaranteed Obligations, or any part thereof, exceeds the amount permitted by law, (ii) the act of creating the Guaranteed Obligations or any part thereof is ultra vires, (iii) the officers or representatives executing the Note or the other Loan Documents or otherwise creating the Guaranteed Obligations acted in excess of their authority, (iv) the Guaranteed Obligations violate applicable usury laws, (v) Borrower has valid defenses, claims or offsets (whether at law, in equity or by agreement) which render the Guaranteed Obligations wholly or partially uncollectible from Borrower, (vi) the creation, performance or repayment of the Guaranteed Obligations (or the execution, delivery and performance of any document or instrument representing part of the Guaranteed Obligations or executed in connection with the Guaranteed Obligations, or given to secure the repayment and performance of the Guaranteed Obligations) is illegal, uncollectible or unenforceable, or (vii) the Note or any of the other Loan Documents have been forged or otherwise are irregular or not genuine or authentic, it being agreed that Guarantor shall remain liable hereon 

Exhibit 10.4

regardless of whether Borrower or any other Person be found not liable on the Guaranteed Obligations or any part thereof for any reason.
2.5    Release of Obligors.  Any full or partial release of the liability of Borrower for the Guaranteed Obligations, or any part thereof, or of any co-guarantors, or any other Person now or hereafter liable, whether directly or indirectly, jointly, severally, or jointly and severally, to pay, perform, guarantee or assure the payment or performance of the Guaranteed Obligations, or any part thereof, by operation of law, Lender's voluntary act, or otherwise, it being recognized, acknowledged and agreed by Guarantor that Guarantor may be required to pay or perform the Guaranteed Obligations in full without assistance or support from any other Person, and Guarantor has not been induced to enter into this Guaranty on the basis of a contemplation, belief, understanding or agreement that other Persons (including Borrower) will be liable to pay or perform the Guaranteed Obligations, or that Lender will look to other Persons (including Borrower) to pay or perform the Guaranteed Obligations.
2.6    Other Collateral.  The taking or accepting of any other security, collateral or guaranty, or other assurance of payment and performance, for all or any part of the Guaranteed Obligations.
2.7    Release of Collateral.  Any release, surrender, exchange, subordination, deterioration, waste, loss or impairment (including without limitation negligent, willful, unreasonable or unjustifiable impairment) of any collateral, property or security, at any time existing in connection with, or assuring or securing payment and performance of, all or any part of the Guaranteed Obligations.
2.8    Care and Diligence.  The failure of Lender or any other party to exercise diligence or reasonable care in the preservation, protection, enforcement, sale or other handling or treatment of all or any part of any collateral, property or security, including, but not limited to, any neglect, delay, omission, failure or refusal of Lender (i) to take or prosecute any action for the collection of any of the Guaranteed Obligations or (ii) to foreclose, or initiate any action to foreclose, or, once commenced, prosecute to completion any action to foreclose upon any security therefor, or (iii) to take or prosecute any action in connection with any instrument or agreement evidencing or securing all or any part of the Guaranteed Obligations.
2.9    Unenforceability.  The fact that any collateral, security, security interest or lien contemplated or intended to be given, created or granted as security for the repayment and performance of the Guaranteed Obligations, or any part thereof, shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other security interest or lien, it being recognized, acknowledged and agreed by Guarantor that Guarantor is not entering into this Guaranty in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectability or value of any of the collateral for the Guaranteed Obligations.
2.10    Offset.  The Note, the Guaranteed Obligations and the liabilities and obligations of Guarantor to Lender hereunder shall not be reduced, discharged or released because of or by reason of any existing or future right of offset, claim or defense of Borrower or Guarantor against Lender, or any other party, or against payment of the Guaranteed Obligations, whether such right of offset, 

Exhibit 10.4

claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.
2.11    Merger.  The reorganization, merger or consolidation of Borrower into or with any other Person.
2.12    Preference.  Any payment by Borrower to Lender is held to constitute a preference under bankruptcy laws or for any reason Lender is required to refund such payment or pay such amount to Borrower or to any other Person.
2.13    Other Actions Taken or Omitted.  Any other action taken or omitted to be taken with respect to the Loan Documents, the Guaranteed Obligations, or the security and collateral therefor, whether or not such action or omission prejudices Guarantor or increases the likelihood that Guarantor will be required to pay or perform the Guaranteed Obligations pursuant to the terms hereof, it is the unambiguous and unequivocal intention of Guarantor that Guarantor shall be obligated to pay and perform the Guaranteed Obligations when due, notwithstanding any occurrence, circumstance, event, action, or omission whatsoever, whether contemplated or not contemplated, and whether or not otherwise or particularly described herein, which obligation and Guarantor's liability hereunder shall be deemed satisfied only upon the full and final payment, performance and satisfaction of the Guaranteed Obligations.
2.14    Representations.  The accuracy or inaccuracy of the representations and warranties made by Guarantor herein or by Borrower in any of the Loan Documents.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
To induce Lender to enter into the Loan Documents and extend credit to Borrower, Guarantor represents, warrants and covenants to Lender, as of the date hereof, as follows:
3.1    Benefit.  Guarantor is the owner of a direct or indirect interest in Borrower, and has received, or will receive, direct or indirect benefit from the making of the Loan to Borrower.
3.2    Familiarity and Reliance.  Guarantor is familiar with, and has independently reviewed books and records regarding, the financial condition of Borrower and is familiar with the value of any and all collateral intended to be created as security for the payment of the Note or payment and performance of the Guaranteed Obligations; provided, however, Guarantor is not relying on such financial condition or the collateral as an inducement to enter into this Guaranty.
3.3    No Representation by Lender.  Neither Lender nor any other party has made any representation, warranty or statement to Guarantor in order to induce Guarantor to execute this Guaranty.
3.4    Guarantor's Financial Condition.  As of the date hereof, and after giving effect to this Guaranty and the contingent obligations evidenced hereby, Guarantor (A) is, and will be, solvent, (B) has and will have assets which, fairly valued, exceed its obligations, liabilities (including 

Exhibit 10.4

contingent liabilities) and debts, and (C) has and will have property and assets sufficient to satisfy and repay its obligations, liabilities (including contingent liabilities) and debts, including, without limitation, the Guaranteed Obligations.
3.5    Legality.  The execution, delivery and performance by Guarantor of this Guaranty and the consummation of the transactions contemplated hereunder do not, and will not, contravene or conflict with any law, statute or regulation whatsoever to which Guarantor is subject or constitute a default (or an event which with notice or lapse of time or both would constitute a default) under, or result in the breach of, any indenture, mortgage, deed of trust, charge, lien, or any contract, agreement or other instrument to which Guarantor is a party or which may be applicable to Guarantor.  This Guaranty is a legal and binding obligation of Guarantor and is enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors' rights and by general principles of equity.
3.6    Liens.  Guarantor has not created nor is the beneficiary of any Liens encumbering the Mortgaged Property or any interest therein.
3.7    Financial Information.  All of the financial information provided by Guarantor to Lender is true and correct in all material respects as of the date hereof.  Furthermore, all such financial information reflects only Guarantor's sole and separate property and does not include community assets of Guarantor and Guarantor's spouse or any other assets whatsoever.
3.8    Statements and Reports.  Guarantor agrees to deliver to Lender, during the term of the Loan and until the Loan has been fully paid and satisfied, the following statements and reports:
(a)    Semi-annual, unaudited financial statements of Guarantor within thirty (30) days after the end of each calendar quarter (and accurate as of the last day of each such period), which shall include a balance sheet and income statement, together with a detailed schedule of all contingent liabilities and a statement of projected cash flows, which financial statement and related materials shall be prepared by Guarantor in accordance with Acceptable Accounting Standards and certified by the chief financial officer of Guarantor (or, in the case of an individual Guarantor, such Guarantor).
(b)    Copies of all state (if applicable) and federal tax returns prepared with respect to Guarantor within thirty (30) days of such returns being filed with the Internal Revenue Service or applicable state authority. 
(c)    Copies of extension requests or similar documents with respect to federal or state (if applicable) income tax filings for Guarantor within thirty (30) days of such documents being filed with the Internal Revenue Service or applicable state authority.
(d)    Such other reports and statements as Lender may reasonably require from time to time.
3.9    Financial Covenants.  Guarantor hereby covenants and agrees, as a material inducement to Lender to make the Loan to Borrower, to the following:  

Exhibit 10.4

(a)    Liquidity Covenant:  Guarantor shall, from the time of the first draw on the Loan proceeds after the Initial Advance, and thereafter at all times throughout the remaining term of the Loan, own and maintain minimum Liquid Assets of at least $7,500,000.00 as determined by Lender.  As used herein, the term "Liquid Assets" shall be deemed to mean assets of the following types and nature so long as such are not pledged, encumbered, hypothecated, subject to rights of offset or otherwise restricted:
(i)    readily marketable obligations issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof having maturities of not more than 360 days from the date of acquisition thereof; provided that the full faith and credit of the United States of America is pledged in support thereof;
(ii)    time deposits with, or insured certificates of deposit or bankers' acceptances of, any commercial bank that (i) (A) is Lender or (B) is organized under the laws of the United States of America, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States of America, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (iii) of this definition and (iii) has combined capital and surplus of at least $1,000,000,000, in each case with maturities of not more than 180 days from the date of acquisition thereof;
(iii)    commercial paper issued by any Person organized under the laws of any state of the United States of America and rated at least "Prime‐1" (or the then equivalent grade) by Moody's or at least "A‐1" (or the then equivalent grade) by S&P, in each case with maturities of not more than 180 days from the date of acquisition thereof; and
(iv)    money market accounts or similar investments classified in accordance with GAAP as current assets of Borrower, in money market investment programs registered under the Investment Company Act of 1940, which are administered by financial institutions that have the highest rating obtainable from either Moody's or S&P, and the portfolios of which are limited solely to Investments of the character, quality and maturity described in clauses (i), (ii) and (iii) of this definition.
(b)    Net Worth Covenant:  Guarantor shall, at all times throughout the term of the Loan, maintain a minimum Net Worth of at least $50,000,000.00.  As used herein, the term "Net Worth" shall mean, on any applicable date of determination, (i) the net book value of all assets of each Guarantor (excluding, however, receivables from Affiliates, patent rights, trademarks, trade names, franchises, copyrights, licenses, goodwill and other intangible assets), after all appropriate deductions in accordance with Acceptable Accounting Standards (including, without limitation, reserves for doubtful receivables, obsolescence, depreciation and amortization), less (ii) all liabilities of each Guarantor (including, without limitation, liabilities for taxes and a fair valuation of contingent or indirect liabilities), all as determined 

Exhibit 10.4

in accordance with Acceptable Accounting Standards and otherwise in Lender's reasonable discretion.
(c)    Other Financial Covenants:
(i)    Guarantor covenants and agrees to act, in all respects, in good faith with respect to the obligations and covenants described in this Section 3.9 and all calculations required hereunder.  Guarantor further agrees to promptly respond to any inquiries made by Lender or its agent with respect to Guarantor's ongoing compliance with the financial covenants described in this Section 3.9 or with respect to documentation with respect thereto.  The failure of Guarantor, at any time, to satisfy the foregoing financial covenants shall constitute a default hereunder and under the other Loan Documents.
(ii)    Guarantor shall not, at any time while a default in the payment of the Guaranteed Obligations has occurred and is continuing, either (i) enter into or effectuate any transaction with any Affiliate which would have the effect of reducing the Net Worth of Guarantor below that required in Section 3.9(b), including, without limitation, the payment of any dividend or distribution to a shareholder, partner or member as applicable, or the redemption, retirement, purchase or other acquisition for consideration of any stock or other ownership interest in Guarantor, or (ii) sell, pledge, mortgage or otherwise transfer to any Person any of Guarantor's assets, or any interest therein which would have the effect of causing a violation of the financial covenants in this Section 3.9.
3.10    No Litigation.  After due investigation and inquiry, there are no (i) material actions, suits or proceedings, at law or in equity, before any Governmental Authority or arbitrator pending or, to the best of Guarantor’s knowledge, threatened against or affecting Guarantor which are not disclosed in Guarantor's public filings as required under applicable law, or involving the Mortgaged Property; (ii) outstanding or unpaid judgments against Guarantor or the Mortgaged Property or against Guarantor which are not disclosed in Guarantor's public filings as required under applicable law; or (iii) material defaults by Guarantor with respect to any order, writ, injunction, decree or demand of any Governmental Authority or arbitrator which are not disclosed in Guarantor's public filings as required under applicable law.
3.11    Survival.  All representations and warranties made by Guarantor herein shall survive the execution hereof and payment in full of the Indebtedness.
ARTICLE IV
SUBORDINATION OF CERTAIN INDEBTEDNESS
4.1    Subordination of All Guarantor Claims.  As used herein, the term "Guarantor Claims" shall mean all debts and liabilities of Borrower to Guarantor, whether such debts and liabilities now exist or are hereafter incurred or arise, or whether the obligations of Borrower thereon be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective 

Exhibit 10.4

of whether such debts or liabilities are evidenced by note, contract, open account, or otherwise, and irrespective of the Person or Persons in whose favor such debts or liabilities may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by Guarantor.  Guarantor Claims shall include, without limitation, all rights and claims of Guarantor against Borrower (arising as a result of subrogation or otherwise) as a result of Guarantor's payment and performance of all or a portion of the Guaranteed Obligations.  So long as any portion of the Indebtedness, the Obligations or the Guaranteed Obligations remains outstanding, Guarantor shall not receive or collect, directly or indirectly, from Borrower or any other party any amount upon the Guarantor Claims.
4.2    Claims in Bankruptcy.  In the event of any receivership, bankruptcy, reorganization, arrangement, debtor's relief, or other insolvency proceeding involving Guarantor as debtor, Lender shall have the right to prove its claim in any such proceeding so as to establish its rights hereunder and receive directly from the receiver, trustee or other court custodian dividends and payments which would otherwise be payable upon Guarantor Claims.  Guarantor hereby assigns such dividends and payments to Lender.  Should Lender receive, for application against the Guaranteed Obligations, any such dividend or payment which is otherwise payable to Guarantor and which, as between Borrower and Guarantor, shall constitute a credit against the Guarantor Claims, then upon full payment and performance to Lender of the Guaranteed Obligations, Guarantor shall become subrogated to the rights of Lender to the extent that such payments to Lender on Guarantor Claims have contributed toward the liquidation of the Guaranteed Obligations, and such subrogation shall be with respect to that proportion of the Guaranteed Obligations which would have been unpaid if Lender had not received dividends or payments upon Guarantor Claims.
4.3    Payments Held in Trust.  Notwithstanding anything to the contrary in this Guaranty, in the event that Guarantor should receive any funds, payment, claim or distribution which is prohibited by this Guaranty, Guarantor agrees to hold in trust for Lender an amount equal to the amount of all funds, payments, claims and distributions so received, and agrees that it shall have absolutely no dominion over the amount of such funds, payments, claims or distributions so received except to pay them promptly to Lender, and Guarantor covenants promptly to pay the same to Lender.
4.4    Liens Subordinate.  Guarantor agrees that any liens, security interests, judgment liens, charges or other encumbrances upon Borrower's assets securing payment of Guarantor Claims shall be and remain inferior and subordinate to any liens, security interests, judgment liens, charges or other encumbrances upon Borrower's assets securing payment and performance of the Guaranteed Obligations, regardless of whether such encumbrances in favor of Guarantor or Lender presently exist or are hereafter created or attach.  Without the prior written consent of Lender, Guarantor shall not (i) create any Lien encumbering the Mortgaged Property or any interest therein, (ii) exercise or enforce any creditor's rights it may have against Borrower, or (iii) foreclose, repossess, sequester or otherwise take steps or institute any action or proceedings (judicial or otherwise, including, without limitation, the commencement of, or joinder in, any liquidation, bankruptcy, rearrangement, debtor's relief or insolvency proceeding) to enforce any liens, mortgages, deeds of trust, security interests, collateral rights, judgments or other encumbrances on assets of Borrower held by Guarantor.  The foregoing shall in no manner vitiate or amend, nor be deemed to vitiate or amend, 

Exhibit 10.4

any prohibition in the Loan Documents against Borrower granting Liens in any of its assets to any Person other than Lender or Guarantor transferring any of its assets to any Person other than Lender.
4.5    No Limitations.  Nothing contained in this Guaranty shall affect or limit the ability of Lender to enforce any of Lender's rights or remedies with respect to the Mortgaged Property.  Nothing contained in this Guaranty shall affect or limit the rights of Lender to proceed against any other Person, including Borrower, or any other party with respect to the enforcement of any guarantees of payment, guarantees of performance and completion, hazardous materials indemnifications or agreements or other similar rights, including, without limitation, those indemnities contained in the Environmental Indemnity.
ARTICLE V
MISCELLANEOUS
5.1    Waivers and Related Agreements.  Guarantor hereby expressly waives:  (i) any right to revoke this Guaranty with respect to the Guaranteed Obligations; (ii) any right to require Lender to do any of the following before Guarantor is obligated to pay or perform the Guaranteed Obligations or before Lender may proceed against Guarantor: (A) sue or exhaust remedies against Borrower or any other Person liable for the Guaranteed Obligations or any portion thereof; (B) sue on an accrued right of action in respect of any of the Guaranteed Obligations or bring any other action, exercise any other right, or exhaust any other remedy; or (C) enforce rights against Borrower's assets or the collateral pledged by Borrower to secure the Guaranteed Obligations; (iii) any right relating to the timing, manner or conduct of Lender's enforcement of rights against Borrower's assets or the collateral pledged by Borrower to secure the Guaranteed Obligations; (iv) if Guarantor and Borrower (or any other Person) have each pledged assets to secure the Guaranteed Obligations, any right to require Lender to proceed first against collateral pledged by Borrower (or any other Person) before proceeding against the collateral pledged by Guarantor; (v) promptness, diligence, notice of any default, notice of nonpayment or nonperformance, notice of acceleration or intent to accelerate, demand for payment or performance, acceptance or notice of acceptance of this Guaranty, presentment, notice of protest, notice of dishonor, notice of the incurring by Borrower of additional indebtedness, notice of any suit or other action by Lender against Borrower or any other Person, any notice to any Person liable for the obligation which is the subject of the suit or action, and all other notices and demands with respect to the Guaranteed Obligations and this Guaranty; and (vi) each of the foregoing rights or defenses, regardless of whether they arise under any statute or law, common law, in equity, under contract or otherwise, or under any amendments, recodifications, supplements or any successor statute or law of or to any such statute or law.
5.2    Notices.  All notices or other communications required or permitted to be given pursuant hereto shall be in writing and shall be deemed properly given if (i) mailed by first class United States mail, postage prepaid, registered or certified with return receipt requested; (ii) by delivering same in person to the intended addressee; or (iii) by delivery to an independent third party commercial delivery service for same day or next day delivery and providing for evidence of receipt at the office of the intended addressee.  Notice so mailed shall be effective upon its deposit with the United States Postal Service or any successor thereto; notice sent by a commercial delivery service shall be effective upon delivery to such commercial delivery service; notice given by personal 

Exhibit 10.4

delivery shall be effective only if and when received by the addressee; and notice given by other means shall be effective only if and when received at the designated address of the intended addressee.  Either party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days notice to the other party in the manner set forth herein.  For purposes of such notices, the addresses of the parties shall be as follows: 
		
	Lender:
	Bank of the Ozarks 
8201 Preston Road 
Suite 700 
Dallas, Texas 75225 
Attention:  Brannon Hamblen

		
	With copy to:
	Bank of the Ozarks 
6th and Commercial 
P.O. Box 196 
Ozark, Arkansas 72949 
Attention:  Robert Lloyd

		
	With copy to:
	Winstead PC 
500 Winstead Building 
2728 N. Harwood Street 
Dallas, Texas  75201 
Attention:  Kevin A. Sullivan

		
	Guarantor: 
	IMH Financial Corporation 
7001 N. Scottsdale Road 
Suite 2050 
Scottsdale, Arizona  85253

		
	With a copy to:
	McVey Law Firm, P.L.L.C. 
P.O. Box 5360 
Scottsdale, Arizona  85261 
Attention:  John M. McVey

		
	With a copy to:
	Polsinelli PC 
One East Washington, Suite 1200 
Phoenix, Arizona  85004 
Attention:  Jonathan Brohard

5.3    GOVERNING LAW.  THE CONTRACTUAL AND OTHER GENERAL AGREEMENTS EVIDENCED BY THIS GUARANTY WILL BE GENERALLY GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS); PROVIDED, HOWEVER, (A)  ANY MATTERS WITH RESPECT TO THE CREATION, PERFECTION, VALIDITY AND ENFORCEMENT OF ANY LIEN OR SECURITY 

Exhibit 10.4

INTEREST WITH RESPECT TO THE MORTGAGED PROPERTY SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE WHERE SUCH MORTGAGED PROPERTY IS LOCATED, AND (B) TO THE EXTENT THAT ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY FEDERAL LAW, SUCH FEDERAL LAW SHALL SO GOVERN AND BE CONTROLLING.  ANY ACTION OR PROCEEDING AGAINST GUARANTOR UNDER OR IN CONNECTION WITH THIS GUARANTY MAY, AT LENDER'S OPTION, BE BROUGHT IN ANY STATE OR FEDERAL COURT IN DALLAS COUNTY, TEXAS.  GUARANTOR HEREBY IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS, AND (B) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM, AND (C) CONSENTS TO THE SERVICE OF PROCESS IN ANY MANNER AUTHORIZED BY TEXAS LAW.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST GUARANTOR OR WITH RESPECT TO ANY OF GUARANTOR'S PROPERTY IN COMPETENT COURTS IN OTHER JURISDICTIONS.  GUARANTOR AGREES THAT ANY ACTION OR PROCEEDING BY GUARANTOR AGAINST LENDER SHALL BE BROUGHT ONLY IN A STATE OR FEDERAL COURT LOCATED IN DALLAS COUNTY, TEXAS.
GUARANTOR DOES HEREBY DESIGNATE AND APPOINT LAWRENCE D. BAIN, AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN DALLAS, TEXAS, AND AGREES THAT SERVICE OF PROCESS UPON SAID AUTHORIZED AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO GUARANTOR IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON GUARANTOR IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF TEXAS.  GUARANTOR (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN DALLAS, TEXAS (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN DALLAS, TEXAS OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
5.4    Invalid Provisions.  If any provision of this Guaranty is held to be illegal, invalid, or unenforceable under present or future laws effective during the term of this Guaranty, such provision shall be fully severable and this Guaranty shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Guaranty, and the remaining provisions of this Guaranty shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Guaranty, unless 

Exhibit 10.4

such continued effectiveness of this Guaranty, as modified, would be contrary to the basic understandings and intentions of the parties as expressed herein.
5.5    Amendments.  This Guaranty may be amended only by an instrument in writing executed by the party against whom such amendment is sought to be enforced.
5.6    Parties Bound; Assignment.  This Guaranty shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, permitted assigns, heirs and legal representatives.  Lender shall have the right to assign or transfer its rights under this Guaranty in connection with any assignment of the Loan and the Loan Documents.  Any assignee or transferee of Lender shall be entitled to all the benefits afforded to Lender under this Guaranty.  No Guarantor shall have the right to assign or transfer its rights or obligations under this Guaranty without the prior written consent of Lender, and any attempted assignment without such consent shall be null and void.
5.7    Headings.  Section headings are for convenience of reference only and shall in no way affect the interpretation of this Guaranty.
5.8    Recitals.  The recital and introductory paragraphs hereof are a part hereof, form a basis for this Guaranty and shall be considered prima facie evidence of the facts and documents referred to therein.
5.9    Counterparts; Facsimile and Electronic Transmission.  To facilitate execution, this Guaranty may be executed in as many counterparts as may be convenient or required.  It shall not be necessary that the signature and acknowledgment of, or on behalf of, each party, or that the signature and acknowledgment of all Persons required to bind any party, appear on each counterpart.  All counterparts shall collectively constitute a single instrument.  It shall not be necessary in making proof of this Guaranty to produce or account for more than a single counterpart containing the respective signatures and acknowledgment of, or on behalf of, each of the parties hereto.  Any signature and acknowledgment page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures and acknowledgments thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature and acknowledgment pages.  This Guaranty shall become effective when it shall have been executed by Guarantor and when Lender shall have received counterparts hereof that, when taken together, bear the signatures of each of the parties hereto.  This Guaranty, and any and all signed certificates and other documents delivered hereunder or in connection herewith, may be transmitted and/or signed by facsimile or e-mail transmission (e.g. "pdf" or "tif").  The effectiveness of any such documents and signatures shall, subject to applicable Legal Requirements, have the same force and effect as manually-signed originals and shall be binding on all parties to this Guaranty.  Lender may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided, however, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile or e-mail document or signature.
5.10    Rights and Remedies.  If Guarantor becomes liable for any indebtedness owing by Borrower to Lender, by endorsement or otherwise, other than under this Guaranty, such liability shall not be in any manner impaired or affected hereby and the rights of Lender hereunder shall be 

Exhibit 10.4

cumulative of any and all other rights that Lender may ever have against Guarantor.  The exercise by Lender of any right or remedy hereunder or under any other instrument, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any other right or remedy.
5.11    ENTIRETY.  THIS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT OF GUARANTOR AND LENDER WITH RESPECT TO GUARANTOR'S GUARANTY OF THE GUARANTEED OBLIGATIONS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF.  THIS GUARANTY IS INTENDED BY GUARANTOR AND LENDER AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY, AND NO COURSE OF DEALING BETWEEN GUARANTOR AND LENDER, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY.  THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND LENDER.
5.12    WAIVER OF RIGHT TO TRIAL BY JURY.  GUARANTOR HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS GUARANTY, THE NOTE, THE LIEN INSTRUMENT, OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY GUARANTOR, AND IS INTENDED TO ENCOMPASS DISCRETELY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.  LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY GUARANTOR.
5.13    Reinstatement in Certain Circumstances.  If at any time any payment of the principal or interest under the Note or any other amount payable by Borrower under the Loan Documents is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of Borrower or otherwise, Guarantor's obligations hereunder with respect to such payment shall be reinstated as though such payment has been due but not made at such time.
[The Remainder of This Page Is Intentionally Left Blank.  Signature Page Follows.]

Exhibit 10.4

EXECUTED, effective as of the date first written above.

	
		
	 
	GUARANTOR:

	 
	 

	 
	IMH FINANCIAL CORPORATION, 

	 
	a Delaware corporation

	 
	 

	 
	By: /s/ Steven T. Darak                        

	 
	Name: Steven T. Darak                           

	 
	Title: Chief Financial Officer              

STATE OF ARIZONA    §
 
    §
 
COUNTY OF MARICOPA    §
This instrument was ACKNOWLEDGED before me this 26th day of September, 2014, by Steven T. Darak   the Chief Financial Officer of IMH FINANCIAL CORPORATION, a Delaware corporation, on behalf of said corporation. 

	
		
	[S E A L]
	/s/ Christie L Wilmot

	 
	Notary Public ‐ State of      Arizona     

	My Commission Expires: 
	 

	5/10/2015
	 

	 
	Christie L. Wilmot

	 
	Printed Name of Notary Public

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