Document:

Exhibit

GUARANTY
THIS GUARANTY (this “Guaranty”), dated as of March 23, 2016, is made and entered into by IMH FINANCIAL CORPORATION, a Delaware corporation (“Guarantor”), to and for the benefit of SRE MONARCH LENDING, LLC, a Delaware limited liability company (together with its successors and assigns, the Lender”), with an address for notice hereunder of c/o Singerman Real Estate, LLC, 980 North Michigan Avenue, Suite 1660, Chicago, Illinois 60611.
RECITALS
A.    Buena Yuma, LLC, an Arizona limited liability company (“Borrower”), and Lender have entered into a certain Loan Agreement of even date herewith (as the same may be amended, modified, supplemented or restated from time to time, the “Loan Agreement”).  All capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Loan Agreement.  
B.    Guarantor directly or indirectly owns an interest in the Borrower and will derive material financial benefit from the making of the Loan and the financial accommodations extended to Borrower pursuant to the Loan Agreement and the other Transaction Documents.
C    Lender has relied on the statements and agreements contained herein in agreeing to make the Loan.  The execution and delivery of this Guaranty by Guarantor is a condition precedent to the making of the Loan by Lender.  
NOW, THEREFORE, in consideration of the matters described in the Recitals, which Recitals are incorporated herein and made apart hereof, and for other good and valuable consideration, the receipt, and sufficiency of which are acknowledged, Guarantor hereby unconditionally, absolutely and irrevocably guarantee to Lender, its successors and assigns, the due payment, fulfillment and performance of the “Guaranteed Obligations” (as hereinafter defined).  Guarantor hereby irrevocably and unconditionally covenants and agrees that it is liable for and shall pay the Guaranteed Obligations as primary obligor, this Guaranty being upon the following terms and conditions:
1.    Guaranteed Obligations.  As used herein, the term “Guaranteed Obligations” means the full, complete and punctual observance, performance, payment and satisfaction of all of the Obligations, including without limitation, the Additional Interest, plus Enforcement Costs (as defined in Section 20).  The failure by Guarantor to pay or perform any Guaranteed Obligations or any other covenant, agreement or obligation of Guarantor under this Guaranty or the inaccuracy when made, or deemed made, of any representations, certifications and warranties of Guarantor in this Guaranty or in any certificate, agreement or document provided by, or on behalf of Guarantor, pursuant to this Guaranty or any of the other Transaction Documents shall constitute an “Event of Default” for purposes of this Guaranty.
2.    Continuing Guaranty.  This is an irrevocable, absolute, continuing guaranty of payment and performance and not of collection.  This Guaranty may not be revoked by Guarantor and shall continue to be effective with respect to the Guaranteed Obligations arising or created after 

Guaranty

any attempted revocation by Guarantor and after Guarantor’s dissolution (in which event this Guaranty shall be binding upon Guarantor’s successors and assigns).  It is the intent of Guarantor that the obligations and liabilities of Guarantor hereunder are absolute and unconditional under any and all circumstances and that until the Guaranteed Obligations are fully, finally and indefeasibly satisfied, such obligations and liabilities shall not be discharged or released in whole or in part, by any act or occurrence which might, but for the provisions of this Guaranty, be deemed a legal or equitable discharge or release of Guarantor.  Each and every default in payment of any amounts due or performance of any obligation required under this Guaranty shall give rise to a separate cause of action hereunder, and separate suits may be brought hereunder as each cause of action arises, or, in the discretion of Lender, may be brought as a consolidated suit or suits.   This is a guaranty of payment and performance and not of collection.  
3.    Waivers.
(a)    Guarantor hereby assents to all terms and agreements heretofore or hereafter made by Borrower with Lender, and, except as such waiver may be expressly prohibited by law, waives notice of:
(i)    Any loans or advances made by Lender to Borrower under the Transaction Documents;
(ii)    The present existence or future incurring of any of the Indebtedness pursuant to the Note or any future modifications thereof or any terms or amounts thereof or any Guaranteed Obligations or any terms or amounts thereof;
(iii)    The obtaining or release of any guaranty or surety agreement (in addition to this Guaranty), pledge, assignment, or other security for any of the Indebtedness evidenced by the Note, or any Guaranteed Obligations; and
(iv)    Notice of protest, default, notice of intent to accelerate and notice of acceleration in relation to any instrument relating to the Indebtedness evidenced by the Note or any Guaranteed Obligations.
(b)    Guarantor hereby waives any rights and defenses that any Guarantor might have as a result of any representation, warranty or statement made by Lender or its agents to Guarantor in order to induce Guarantor to execute this Guaranty and further waives any other circumstance that might otherwise constitute a legal or equitable discharge or defense of the Guarantor.
(c)    Upon a default by Borrower, Lender in its sole discretion, without prior notice to or consent of Guarantor, may elect to:  (i) foreclose either judicially or nonjudicially against any real or personal property security it may hold for the Loan, (ii) accept a transfer of any such security in lieu of foreclosure, (iii) compromise or adjust the Loan or any part of it or make any other accommodation with Borrower or Guarantor, or (iv) exercise any other remedy against Borrower or any security.  No such action by Lender shall release or limit the liability of Guarantor, which shall remain liable under this Guaranty after the action, even if the effect of the action is to deprive Guarantor of any subrogation rights, rights of indemnity, or other rights to collect reimbursement from Borrower for any sums paid to Lender, whether contractual or arising by operation of law or 

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otherwise.  Guarantor expressly agrees that  under no circumstances shall it be deemed to have any right, title, interest or claim in or to any real or personal property held by Lender or any third party after any foreclosure or transfer in lieu of foreclosure of any security for the Loan.
(d)    Regardless of whether Guarantor may have made any payments to Lender, until the Loan is indefeasibly paid in full and except as set forth in Section 10 hereof, Guarantor hereby waives: (i) all rights of subrogation, indemnification, contribution and any other rights to collect reimbursement from Borrower or any other party for any sums paid to Lender, whether contractual or arising by operation of law (including the United States Bankruptcy Code or any successor or similar statute) or otherwise, (ii) all rights to enforce any remedy that Lender may have against Borrower, and (iii) all rights to participate in any security now or later to be held by Lender for the Loan.
(e)    Guarantor further waives any defense to the recovery by Lender against Guarantor of any deficiency or otherwise to the enforcement of this Guaranty or any security for this Guaranty based upon Lender’s election of any remedy against Guarantor or Borrower, including the defense to enforcement of this Guaranty by virtue of any “anti-deficiency” statutes and their application following a non-judicial foreclosure sale.
(f)    Guarantor waives all rights and defenses arising out of an election of remedies by Lender, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a Guaranteed Obligation may adversely affect Guarantor’s right of subrogation and reimbursement against Borrower.
4.    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 rights and defenses (excluding the rights to notice, if any, as herein provided or as required by law) which Guarantor might have otherwise as a result of or in connection with any of the following:
(a)    any and all extensions, modifications, adjustments, indulgences, forbearances or compromises that might be granted or given by Lender to Borrower, including, without limitation, any and all amendments, modifications, supplements, extensions or restatements of any of the Transaction Documents;
(b)    the insolvency, bankruptcy, rearrangement, adjustment, composition, liquidation, disability, dissolution or lack of power of Borrower or any other party at any time liable for the payment of all or part of the Indebtedness evidenced by the Note or any Obligations; or any dissolution, consolidation or merger 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 ownership, partners or members of Borrower or Guarantor;
(c)    the invalidity, illegality or unenforceability of all or any part of the Indebtedness evidenced by the Note or any Guaranteed Obligations, or any document or agreement executed in connection with the Indebtedness evidenced by the Note or any Guaranteed Obligations, for any reason whatsoever, including, without limitation, the fact that the Indebtedness evidenced by the Note, or any part thereof exceeds the amount permitted by law, the act of creating the 

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Indebtedness evidenced by the Note or any Guaranteed Obligations or any part thereof is ultra vires, the representatives executing the Note or the other Transaction Documents or otherwise creating the Indebtedness evidenced by the Note or any Guaranteed Obligations acted in excess of their authority, the Indebtedness evidenced by the Note violates applicable usury laws, Borrower has valid defenses, claims or offsets (whether at law, in equity or by agreement) that render the Indebtedness evidenced by the Note or any Guaranteed Obligations wholly or partially uncollectible from Borrower, the creation, performance or repayment of the Indebtedness evidenced by the Note or any Guaranteed Obligations is illegal, uncollectible, legally impossible or unenforceable, or any of the other Transaction Documents pertaining to the Indebtedness evidenced by the Note or any Guaranteed Obligations are irregular or not genuine or authentic;
(d)    the taking or accepting of any other security, collateral or guaranty, or other assurance of the payment, for all or any of the Indebtedness evidenced by the Note or any Guaranteed Obligations;
(e)    any release, surrender or exchange of any Collateral, property or security, at any time existing in connection with, or assuring or securing payment of, all or any part of the indebtedness evidenced by the Note or the Guaranteed Obligations;
(f)    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 such Collateral, property or security;
(g)    the fact that any Collateral, security, security interest or lien contemplated or intended to be given, created or granted as security for the repayment of the Indebtedness evidenced by the Note or Guaranteed Obligations 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 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, collectibility or value of any of the Collateral for the Indebtedness evidenced by the Note or the Guaranteed Obligations;
(h)    any payment by Borrower to Lender is held to constitute a preference under the Bankruptcy Code, or for any reason Lender is required to refund such payment or pay such amounts to Borrower or any other Person; or
(i)    any other action taken or omitted to be taken with respect to the Deed of Trust, the Transaction Documents, the Indebtedness evidenced by the Note or the Guaranteed Obligations, 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 the Guaranteed Obligations.
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 uncontemplated, and whether or not otherwise or particularly described herein, except for the full and final payment and satisfaction of all Guaranteed Obligations.

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5.    Payment by Guarantor.  If the Guaranteed Obligations, or any part thereof, are not punctually paid or performed, as the case may be, Guarantor shall, immediately on demand and without protest or notice of protest, pay the amount due thereon to Lender, at its address set forth above or as otherwise designated by Lender.  Such demand(s) may be made at any time coincident with or after the time for payment or performance of all or part of the Guaranteed Obligations.  Such demand shall be deemed made if given in accordance with Section 17 hereof.  It shall not be necessary for Lender, in order to enforce such payment or performance by Guarantor, first to institute suit or exhaust its remedies against Borrower, or others liable to pay or perform such Guaranteed Obligations, or to enforce its rights against any security or Collateral that shall ever have been given to secure the Guaranteed Obligations.  Lender shall not be required to mitigate damages or take any other action to reduce, collect or enforce the indebtedness evidenced by the Note or Guaranteed Obligations.  No set-off, counterclaim, reduction, or diminution of any Obligations, or any defense of any kind or nature that Guarantor has or may hereafter have against Borrower or Lender shall be available hereunder to Guarantor.
6.    Indebtedness or Other Obligations of Guarantor.  If Guarantor is or becomes liable for any indebtedness owed by Borrower to Lender by endorsement or otherwise than under this Guaranty, such liability shall not be in any manner impaired or affected by this Guaranty, and the rights of Lender hereunder shall be 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 instrument or remedy at law or in equity and shall not preclude the concurrent or subsequent exercise of any other right or remedy.  Further, without in any way diminishing or limiting the generality of the foregoing, it is specifically understood and agreed that this Guaranty is given by Guarantor as an additional guaranty to any and all guaranties hereafter executed and delivered to Lender by Guarantor in favor of Lender relating to the Obligations of Borrower to Lender, and nothing herein shall ever be deemed to replace or be in lieu of any other of such previous or subsequent guaranties.
7.    Application of Payments.  If, at any time, there is any Indebtedness or Obligations (or any portion thereof) of Borrower to Lender that is not guaranteed by Guarantor, Lender, without in any manner impairing its rights hereunder, may, at its option, apply all amounts realized by Lender from Collateral or security held by Lender first to the payment of such unguaranteed Indebtedness or Obligations, with the remaining amounts, if any, to then be applied to the payment of the Indebtedness or Obligations guaranteed by Guarantor.
8.    Suits, Releases of Settlements with Others.  Guarantor agrees that Lender, in its sole discretion, may bring suit against any other Guarantor without impairing the rights of Lender or its successors and assigns against Guarantor or any other Guarantor of the Guaranteed Obligations; and Lender may settle or compromise with such other Guarantor for such sum or sums as Lender may see fit and release such other Guarantor from all further liability to Lender, all without impairing its rights against Guarantor.
9.    Warranties and Representations, Covenants and Agreements.
(a)    Guarantor warrants, represents, and agrees as follows:

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(i)    Guarantor has received, or will receive, direct or indirect benefit from the making of this Guaranty, the making of the Loan and the entering into and execution of the Loan Agreement and the Transaction Documents in connection therewith;
(ii)    Guarantor is familiar with, and has independently reviewed the financial condition of the Borrower and is familiar with the value of any and all Collateral intended to be created as security for the payment and performance of the Indebtedness evidenced by the Note and the Guaranteed Obligations, Guarantor assumes full responsibility for keeping fully informed as to such matters in the future, and Guarantor is not relying on such financial condition or the Collateral as an inducement to enter into this Guaranty;
(iii)    All financial statements concerning Guarantor that have been or will hereafter be furnished by Guarantor or Borrower to Lender pursuant to the Transaction Documents, have been or will be prepared in accordance with GAAP consistently applied (except as disclosed therein, to the extent Lender approves such disclosure) and, in all material respects, present fairly the financial condition of the Persons covered thereby as at the dates thereof and the results of their operations for the periods then ended;
(iv)    Guarantor is not an “employee benefit plan” (within the meaning of section 3(3) of ERISA) to which ERISA applies and Guarantor’s assets do not constitute plan assets.  No actions, suits or claims under any laws and regulations promulgated pursuant to ERISA are pending or, to Guarantor’s knowledge, threatened against Guarantor.  Guarantor has no knowledge of any material liability incurred by Guarantor that remains unsatisfied for any taxes or penalties with respect to any employee benefit plan or any Multiemployer Plan, or of any lien that has been imposed on Guarantor’s assets pursuant to section 412 of the Code or sections 302 or 4068 of ERISA.  The Loan, the execution, delivery and performance of the Transaction Documents and the transactions contemplated by this Guaranty are not a non-exempt prohibited transaction under ERISA; 
(v)    As of the date hereof, and after giving effect to this Guaranty and the contingent obligations evidenced hereby, Guarantor is and expects to be solvent at all times, and has and expects to have assets at all times that, fairly valued, exceed his or its obligations, liabilities and debts, and has and expects to have property and assets at all times sufficient to satisfy and repay his or its obligations and liabilities; 
10.    Subordination.  If, for any reason Borrower is now or hereafter becomes indebted to Guarantor (such indebtedness and all interest thereon being referred to as the “Affiliated Debt”), such Affiliated Debt shall, at all times, be subordinate in all respects to the full payment and performance of the Indebtedness and Obligations evidenced by the Note, and Guarantor shall not be entitled to enforce or receive payment thereof until all of the Indebtedness and Obligations evidenced by the Note have been fully paid.  Guarantor agrees that any liens, mortgages, deeds of trust, security interests, judgment liens, charges or other encumbrances upon Borrower’s assets securing payment of the Affiliated Debt shall be and remain subordinate and inferior to any liens, security interests, judgment liens, charge or other encumbrances upon Borrower’s assets securing the payment of the Indebtedness and Obligations evidenced by the Note and Guaranteed Obligations, and without the prior written consent of Lender, Guarantor shall not exercise or enforce any creditor’s rights of any nature against Borrower to collect the Affiliated Debt (other than demand payment 

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therefor).  In the event of the receivership, bankruptcy, reorganization, arrangement, debtor’s relief or other insolvency proceedings involving Borrower as a debtor, Lender shall have the right and authority, either in its own name or as attorney-in-fact for Guarantor, to file such proof of debt claim, petition or other documents and to take such other steps as are necessary to prove its rights hereunder.
11.    Waiver of Subrogation.  Notwithstanding any other provision of this Guaranty to the contrary, until the Loan is indefeasibly paid in full, Guarantor hereby waives any claim or other rights that Guarantor may now have or hereafter acquire against Borrower or any other guarantor of all or any of the obligations that arise from the existence or performance of Guarantor’s obligations under this Guaranty (all such claims and rights are referred to as “Guarantor’s Conditional Rights”), including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, or indemnification, any right to participate in any claim or remedy of Lender against Borrower or any security or Collateral that Lender now has or hereafter acquires, whether or not such claim, remedy or right arises in equity or under contract, statute (including the Bankruptcy Code or any successor or similar statute) or common law, by any payment made hereunder or otherwise, including without limitation, the right to take or receive from Borrower, directly or indirectly, in cash or other property or by setoff or in any other manner, payment or security on account of such claim or other rights.  If, notwithstanding the foregoing provisions, any amount shall be paid to Guarantor on account of Guarantor’s Conditional Rights and either (i) such amount is paid to Guarantor at any time when the Guaranteed Obligations shall not have been paid or performed in full, or (ii) regardless of when such amount is paid to Guarantor, any payment made by Borrower to Lender is subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid by Lender or paid over to a trustee, receiver or any other entity, whether under any bankruptcy act or otherwise, then such amount paid to Guarantor shall be held in trust for the benefit of Lender and shall forthwith be paid to Lender to be credited and applied upon the Guaranteed Obligations, whether matured or unmatured, in such order as Lender, in its sole and absolute discretion, shall determine.  The foregoing waivers shall be effective until the Guaranteed Obligations have been indefeasibly paid and performed in full.
12.    Impairment of Subrogation Rights; Waivers of Rights Under the Anti-Deficiency Rules.
(a)    Guarantor agrees that upon an Event of Default under the Transaction Documents, Lender may elect to foreclose either nonjudicially or judicially against any real or personal property Collateral or security (including, without limitation, the Mortgaged Property) it holds for the Indebtedness and Obligations evidenced by the Note or any Guaranteed Obligations, or any part thereof, or accept an assignment of any such Collateral or security in lieu of foreclosure, or compromise or adjust any part of such Obligations, or make any other accommodation with Borrower or Guarantor, or exercise any other remedy against Borrower or any Collateral or security.  No such action by Lender will release or limit the liability of Guarantor to Lender, and Guarantor shall remain liable under this Guaranty after the action, even if the effect of that action is to deprive Guarantor of the right to collect reimbursement from Borrower or any other person for any sums paid to Lender or Guarantor’s rights of subrogation, contribution, or indemnity against Borrower or any other person.  Without limiting the foregoing, it is understood and agreed that on any foreclosure or assignment in lieu of foreclosure of any Collateral or security held by Lender, such Collateral or security will no longer exist and that any right that Guarantor might otherwise have, on full payment of the Guaranteed Obligations by Guarantor to Lender, to participate in any such 

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Collateral or security or to be subrogated to any rights of Lender with respect to any such Collateral or security will be nonexistent; nor shall Guarantor be deemed to have any right, title, interest or claim under any circumstances in or to any real or personal property held by Lender or any third party following any foreclosure or assignment in lieu of foreclosure of any such Collateral or security.
(b)    Guarantor understands and acknowledges that if Lender forecloses judicially or nonjudicially against any real property Collateral or security for Borrower’s Indebtedness or Obligations, such foreclosure could impair or destroy any right or ability that Guarantor may have to seek reimbursement, contribution, or indemnification for any amounts paid by Guarantor under this Guaranty.
(c)    Without limiting the foregoing, Guarantor waives all rights and defenses arising out of an election of remedies by Lender, even though that election of remedies, such as nonjudicial foreclosure with respect to security for a Guaranteed Obligation, has destroyed Guarantor’s rights of subrogation and reimbursement.
(d)    Guarantor intentionally, freely, irrevocably and unconditionally waives and relinquishes all rights that may be available to it under any provision of applicable law to limit the amount of any deficiency judgment or other judgment that may be obtained against Guarantor under this Guaranty to not more than the amount by which the unpaid Guaranteed Obligations plus all other Indebtedness due from Borrower under the Transaction Documents exceeds the fair market value or fair value of any real or personal property securing said obligations and any other Indebtedness due from Borrower under the Transaction Documents, including, without limitation, all rights to an appraisement of, judicial or other hearing on, or other determination of the value of said property.  Guarantor acknowledges and agrees that, as a result of the foregoing waiver, Lender may be entitled to recover from Guarantor an amount that, when combined with the value of any real or personal property foreclosed upon by Lender (or the proceeds of the sale of which have been received by Lender) and any sums collected by Lender from Borrower or other Persons, might exceed the amount of the Guaranteed Obligations plus all other Indebtedness due from Borrower under the Transaction Documents.
(e)    Guarantor understands and agrees that Lender may have the ability to pursue Guarantor for a judgment on the Guaranteed Obligations without having first foreclosed on the real property Collateral or security for such Guaranteed Obligations, that Lender may have the ability to sue Guarantor for a deficiency judgment on the Guaranteed Obligations after a non-judicial foreclosure sale or, regardless of any election of remedies by Lender, if the Guaranteed Obligations or any of the other Indebtedness of Borrower to Lender under the Transaction Documents is considered to have been provided by a vendor to a buyer and to evidence part of the purchase price for the real property Collateral or security, and that Lender may be able to recover from Borrower an amount that, when combined with the fair market value of the property acquired by Lender in a foreclosure sale or the proceeds of the foreclosure sale received by Lender, might exceed the amount of the Guaranteed Obligations due and owing by Guarantor and the amounts payable under the Transaction Documents.
(f)    Without limiting any of the other waivers and provisions set forth in this Guaranty: Guarantor waives all rights and defenses that Guarantor may have because Borrower’s Obligations are secured by real property; this means, among other things:  (a) Lender may collect 

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from Guarantor without first foreclosing on any real or personal property Collateral pledged by Borrower; (b) the amount of the Guaranteed Obligations may be reduced only by the price for which that Collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price; (c) Lender may collect from Guarantor even if Lender, by foreclosing on the real property Collateral, has destroyed any right Guarantor may have to collect from Borrower.  This is an unconditional and irrevocable waiver of any rights and defenses Guarantor may have because the Indebtedness evidenced by the Note is secured by real property.  Guarantor waives all rights and defenses arising out of an election of remedies by Lender, even though that election of remedies by Lender, such as a nonjudicial foreclosure with respect to security for the Guaranteed Obligation, has destroyed Guarantor’s rights of subrogation and reimbursement against the principal.
Notwithstanding the foregoing or any provisions of Section 3(c) hereof, nothing contained in this Guaranty shall in any way be deemed to imply that any other state’s law other than the law of the State of Illinois shall govern this Guaranty or any of the Transaction Documents in any respect, except as expressly set forth therein, including with respect to the exercise of Lender’s remedies under the Transaction Documents.
Notwithstanding any other provision herein to the contrary, upon the indefeasible payment in full of the Note, Guarantor shall have all rights of subrogation available at law or in equity.
13.    Successors and Assigns.  This Guaranty is for the benefit of Lender, its successors and assigns, and in the event of an assignment by Lender, its successors and assigns, of the obligations evidenced by the Note, or any part or parts thereof, the rights and benefits hereunder, to the extent applicable to the obligations so assigned, may be transferred with such obligations.  This Guaranty is binding upon the Guarantor and its successors and assigns.
14.    No Release if Preference, Refund, Etc.  In the event any payment by Borrower to Lender is determined to be a preferential payment under any applicable bankruptcy or insolvency laws, or if for any reason Lender is required to refund part or all of any payment or pay the amount thereof to any other party, such repayment by Lender to Borrower shall not constitute a release of Guarantor from any liability hereunder, and Guarantor agrees to pay such amount to Lender upon demand to the extent such amount constitutes a Guaranteed Obligation.
15.    Right of Set-Off.  In addition to any other rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon Guarantor’s failure to pay the Guaranteed Obligations, after demand by Lender, Lender is hereby authorized at any time and from time to time, without notice to Guarantor or to any other person, to set off and to appropriate and to apply any and all deposits (general or special) and any other Indebtedness at any time held or owing by Lender to or for the credit or the account of Guarantor against or on account of the obligations evidenced by the Note.
16.    GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
17.    Notices.  Unless otherwise specifically provided herein, any notice or other communication required or permitted to be given shall be in writing addressed to the respective 

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party as set forth below and may be personally served, telecopied (with request for confirmation) or sent by overnight courier service or United States registered mail return receipt requested, postage prepaid.  Any notice so given shall be deemed effective upon delivery or on refusal or failure of delivery during normal business hours.  Notices shall be addressed to the parties at the following addresses or to such other address as the party addressed shall have previously designated by written notice to the serving party, given in accordance with this Section 17.  
		
	If to Guarantor:
	IMH Financial Corporation

7001 North Scottsdale Road, Suite 2050
Scottsdale, Arizona  85253
Attention: Lawrence D. Bain, CEO
E-Mail: ldb@imhfc.com

		
	With a copy to:
	IMH Financial Corporation

7001 North Scottsdale Road, Suite 2050
Scottsdale, Arizona  85253
Attention:  Legal Department
E-Mail: legal@imhfc.com

		
	If to Lender:
	SRE Monarch Lending, LLC

c/o Singerman Real Estate, LLC
980 North Michigan Avenue, Suite 1660
Chicago, Illinois  60611
Attention:  Charlie Kellogg
E-Mail:  ckellogg@singerman.com
Fax:  (312) 475-9304
		
	With a copy to:
	Katten Muchin Rosenman LLP 
525 West Monroe Street 
Chicago, Illinois 60661-3693  
Attn:  Kenneth M. Jacobson

Email: kenneth.jacobson@kattenlaw.com 
Telephone: 312-902-5445 
Facsimile: 312-902-1061

18.    CONSENT OF JURISDICTION/SERVICE OF PROCESS.  GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS AND IRREVOCABLY AGREES THAT, SUBJECT TO LENDER’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY SHALL BE LITIGATED IN SUCH COURTS.  GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS GUARANTY, THE NOTE, SUCH OTHER TRANSACTION DOCUMENTS OR SUCH OBLIGATION.  GUARANTOR ACKNOWLEDGES AND AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION, 

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SUIT OR PROCEEDING WILL BE DEEMED EFFECTIVE.  SERVICE OF PROCESS ON GUARANTOR IF PERSONALLY SERVED OR SERVED IN ACCORDANCE WITH SECTION 17 ABOVE OR AT SUCH OTHER ADDRESS AS SUCH GUARANTOR MAY HAVE FURNISHED AS TO ITSELF TO THE SERVING PARTY BY LIKE NOTICE, OR TO THE LAST KNOWN ADDRESS OF SUCH GUARANTOR PROVIDED THEREUNDER WILL BE DEEMED EFFECTIVE.
19.    WAIVER OF JURY TRIAL.  GUARANTOR AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY, ANY OF THE TRANSACTION DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION AND THE RELATIONSHIP THAT IS BEING ESTABLISHED.  GUARANTOR AND LENDER ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND THAT MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF GUARANTOR OR LENDER.  THE SCOPE OF THIS WAIVER 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 WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  GUARANTOR AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS GUARANTY AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.  GUARANTOR AND LENDER FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY, THE TRANSACTION DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOAN.  IN THE EVENT OF LITIGATION, THIS GUARANTY MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
20.    Expenses.  Guarantor agrees to fully and punctually pay all costs and expenses, including, without limitation, reasonable attorneys’ fees, court costs and costs of appeal, which Lender may incur in enforcing and collecting the Guaranteed Obligations (collectively, “Enforcement Costs”).
[Remainder of Page Intentionally Left Blank;
Signature Page Follows]

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IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the day and year first above written.

GUARANTOR:
IMH FINANCIAL CORPORATION, 
a Delaware corporation

By: ____________________________
Name:     Lawrence D. Bain
Its:     Chairman and CEO
 

-12-Exhibit

ENVIRONMENTAL INDEMNITY AGREEMENT
THIS ENVIRONMENTAL INDEMNITY AGREEMENT (this “Agreement”) is made as of the 23rd day of March, 2016, by BUENA YUMA, LLC, an Arizona limited liability company (the “Borrower”), IMH FINANCIAL CORPORATION, a Delaware corporation (“Guarantor”) (Borrower and Guarantor are hereinafter referred to herein individually as an “Indemnitor” and collectively as the “Indemnitors”), each of such parties, having joint and several liability hereunder), in favor of SRE MONARCH LENDING, LLC, a Delaware limited liability company (together with its successors and assigns, the “Lender”).
RECITALS
A.    Borrower is the owner of the Mortgaged Property.  Guarantor is the owner, directly or indirectly, of all ownership interests in the Borrower.
B.    Lender is prepared to make a loan (the “Loan”) to Borrower in the aggregate principal amount of FOUR MILLION AND 00/100 DOLLARS ($4,000,000.00) pursuant to that certain Loan Agreement of even date herewith between Borrower and Lender (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan Agreement”).  The Loan shall be evidenced by the Note.  The Note shall be secured by, among other things, the Deed of Trust and the other Transaction Documents.  Terms used but not otherwise defined herein (including, without limitation, in Section 6 of this Agreement) shall have the meanings ascribed to such terms in the Loan Agreement.
C.    Lender is unwilling to make the Loan unless Indemnitors agree to provide the indemnifications, representations, warranties, covenants and other matters described in this Agreement for the benefit of the Indemnified Parties (as defined in Section 6 of this Agreement).
D.    Indemnitors will derive financial and other benefits from the Loan.
E.    Indemnitors are entering into this Agreement to induce Lender to make the Loan.
AGREEMENT
NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Indemnitors hereby represent, warrant, covenant and agree for the benefit of the Indemnified Parties as follows:
1.    Representations And Warranties.
(a)    There are no claims, liabilities, investigations, litigation, administrative proceedings, whether pending or, to Indemnitor’s knowledge threatened in writing, or judgments or orders relating to any Hazardous Materials (collectively called “Environmental Claims”) asserted or threatened in writing against Borrower or any past or present tenant, operator or owner of all or any part of the Land (the Land is sometimes collectively referred to as the “Real Estate”).  

To Indemnitors’ knowledge, neither Indemnitors nor any other Person has caused or permitted any Release of any Hazardous Materials to be at, from, onto or on the Real Estate in a manner which could form the basis for an Environmental Claim.
(b)    To Indemnitors’ knowledge, (i) there has been no presence or Release of Hazardous Materials (other than Hazardous Materials used in the usual and customary course of constructing, operating and maintaining the Real Estate or any other real property covered by this paragraph in compliance with all applicable Environmental Laws) at, from, onto or on the Real Estate in violation of Environmental Laws or in any manner that could have a Material Adverse Effect, (ii) to the knowledge of Indemnitors, there has been no presence or Release of Hazardous Substances on parcels of land adjacent to the Real Estate, and (iii) no part of the Real Estate or, to the knowledge of Indemnitors, no part of parcels adjacent to the Real Estate, including the groundwater located thereon, is presently contaminated by Hazardous Materials in violation of applicable Environmental Laws or in any manner that could have a Material Adverse Effect.  To the knowledge of Indemnitors, no underground or above ground storage tanks or surface impoundments are, or were located, on, under or at the Real Estate.
(c)    To Indemnitors’ knowledge, Borrower and the Mortgaged Property has been and is currently in compliance with all applicable Environmental Laws, including obtaining and maintaining in effect all permits, licenses or other authorizations required by Environmental Laws.
(d)    Neither the Borrower nor the Real Estate is the subject of any pending or proposed or threatened site Remediation.
2.    Environmental Covenants.
(a)    Indemnitors shall at all times comply, and cause the Mortgaged Property to comply, with all applicable Environmental Laws.  Indemnitors shall not install or permit to be installed any asbestos containing material or above-ground or below-ground storage tanks at, on, above or under the Real Estate.
(b)    Indemnitors shall promptly take any and all necessary remedial actions upon obtaining knowledge of the presence or Release of any Hazardous Materials on, under or about the Real Estate in violation of any Environmental Laws or in any manner that could have a Material Adverse Effect.  In the event any such Person undertakes any remedial action with respect to any such Hazardous Materials, such Person shall conduct and complete such remedial action in compliance with all applicable Environmental Laws and in accordance with the applicable policies, orders and directives of all Governmental Authorities.
(c)    If an Event of Default exists or Lender at any time has a reasonable basis to believe that there may be a violation of any Environmental Laws by, or any liability arising thereunder of, an Indemnitor or any other Person relating to the Real Estate, then Indemnitors shall, upon request from Lender, provide Lender with such reports, certificates, engineering studies or other written material or data as Lender may require so as to satisfy Lender that the Borrower and the Mortgaged Property are in compliance with all applicable Environmental Laws.

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(d)    In the event that the Real Estate (or any portion thereof) becomes the subject of any Remediation, Indemnitors shall commence such Remediation no later than the earlier of (a) thirty (30) days after written demand by Lender for performance thereof, or (b) such shorter period of time as may be required under applicable law or direction of any Governmental Authorities and thereafter shall diligently prosecute the same to completion in accordance with applicable law or direction of any Governmental Authorities.  All Remediation shall be performed by contractors approved in advance by Lender, and under the supervision of a consulting engineer approved by Lender.  All costs and expenses of such Remediation shall be paid by Indemnitors, including, without limitation, Lender’s reasonable attorneys’ fees and costs incurred in connection with monitoring or review of such Remediation.  In the event Indemnitors shall fail to timely commence, or cause to be commenced, or fail to diligently prosecute to completion, such Remediation, Lender may, but shall not be required to, cause such Remediation to be performed, and all costs and expenses thereof, or incurred in connection therewith, shall become part of the Loan.
3.    Indemnified Rights/Cooperation and Access. Indemnitors shall permit Lender, any authorized representative of Lender and any consultant or other Person retained by Lender to enter upon, examine, test and inspect the Real Estate during normal business hours upon reasonable advance notice, unless in the case of an emergency with regard to compliance with Environmental Laws, the presence of Hazardous Materials and the environmental condition of the Real Estate and properties adjacent to the Land.  Such entry, examination, testing and inspecting and any reporting with respect to such entry, examination, testing or inspecting shall be at the expense of Indemnitors if (a) an Event of Default has occurred, (b) Lender reasonably suspects that a Release has occurred or (c) Lender has reasonably determined that there may be a violation of Environmental Laws or any liability arising under Environmental Laws, which expense shall be paid by Indemnitors to Lender upon demand.
4.    Indemnification.  Indemnitors shall indemnify, pay, defend, and hold harmless Lender and all other Indemnified Parties from and against any and all liability, obligation, Losses, damages, (including consequential damages, diminution in value and lost profits), actions, penalties, causes of action, costs, disbursements or expenses whatsoever (including attorneys' fees and costs and costs of appeal) and any and all claims, suits, judicial, administrative, arbitration or other proceedings and judgments which Lender or any other Indemnified Party may suffer, as a result of or with respect to (collectively, “Indemnified Losses”):  (a) any Environmental Claim relating to or arising from the Real Estate; (b) the violation of any Environmental Laws in connection with the Mortgaged Property; (c) any presence or Release of any Hazardous Materials affecting the Mortgaged Property; (d) the presence at, in, on or under, or the Release, at or from, the Real Estate of any Hazardous Materials, whether or not such condition was known or unknown to Indemnitors; and (e) any Remediation.  If any such claim, action or proceeding shall be brought against Lender, upon notice from Indemnitors to Lender (given reasonably promptly following Lender's notice to Indemnitors of such action or proceeding), Indemnitors shall be entitled to assume the defense thereof, at Indemnitors’ expense, with counsel reasonably acceptable to Lender; provided, however, Lender may, at its own expense, retain separate counsel to participate in such defense, but such participation shall not be deemed to give Lender a right to control such defense, which right Indemnitors expressly retain.  Notwithstanding the foregoing, each Lender shall, following notice to and consultation with Indemnitor, have the right to employ separate counsel at Indemnitors’ 

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expense if, in the reasonable opinion of legal counsel, a conflict or potential conflict exists between the Indemnified Parties and Indemnitors that would make such separate representation advisable.  Indemnitors shall have no obligation to indemnify an Indemnified Party to the extent of damage or loss resulting from such Person’s gross negligence or willful misconduct. Indemnitors’ obligations under this Agreement shall not be subject to any limitations on liability provided for in any of the Transaction Documents.  The covenants and agreements of Indemnitors set forth in this Agreement (including the indemnity provided for herein):  (a) are separate and distinct obligations from Indemnitors’ obligations with respect to the Loan and under the Transaction Documents and do not constitute the substantial equivalent of such obligations, (b) shall not be discharged or satisfied by foreclosure of the Deed of Trust or any Lien created by any of the other Transaction Documents, and (c) shall continue in effect after any transfer of the Property, including transfers pursuant to foreclosure proceedings (whether judicial or nonjudicial), or by any deed in lieu of foreclosure.  Indemnitors shall include Lender as an additional insured on Indemnitors’ environmental insurance policies with respect to the Mortgaged Property, and Indemnitors hereby authorize and direct any affected insurance company or other Persons to make payment of environmental insurance proceeds directly to Lender.  To the extent Lender actually receives any insurance proceeds from the Indemnitors’ environmental insurance policies or any indemnity, contribution or other similar payment with respect to Indemnified Losses, Lender agrees that such proceeds or payments actually received by Lender may be utilized by Indemnitors, in Lender’s reasonable discretion, to cure or offset such Indemnified Losses. 
5.    Duty to Defend and Attorneys and Other Fees and Expenses.
(a)    Indemnitors shall immediately upon becoming aware thereof advise Lender in writing and in reasonable detail of:  (1) any Release, disposal, existence or discharge of any Hazardous Materials at the Real Estate required to be reported to any Governmental Authority under all applicable Environmental Laws, (2) any and all written communications sent or received by an Indemnitor with respect to any Environmental Claims or any Release, disposal, existence or discharge of Hazardous Materials required to be reported to any Governmental Authority or otherwise, (3) any remedial action taken by an Indemnitor or any other Person in response to any Hazardous Materials on, under or about the Real Estate (or parcels adjacent to the Real Estate), the existence of which could result in an Environmental Claim; (4) the discovery by an Indemnitor of any occurrence or condition on any real property adjoining or in the vicinity of the Real Estate that could cause such real property or any part thereof to be classified as “border-zone property” or to be otherwise subject to any restrictions on the ownership, occupancy, transferability or use thereof under any Environmental Laws; (5) any request for information from any Governmental Authority that indicates such Governmental Authority is investigating whether an Indemnitor may be potentially responsible for a Release, disposal or discharge of Hazardous Materials; and (6) the Release, existence, disposal or discharge of Hazardous Materials that would reasonably be anticipated to have a Material Adverse Effect.
(b)    Indemnitors shall promptly notify Lender of any proposed action to be taken by either Indemnitor to commence any operations that could reasonably be expected to subject either Indemnitor to additional laws, rules or regulations, including laws, rules and regulations requiring additional or amended environmental permits or licenses.  Indemnitors shall, at their own expense, 

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provide copies of such documents or information as Lender may reasonably request in relation to any matters disclosed pursuant to this Section 5.
6.    Definitions.  Capitalized terms used herein and not specifically defined herein shall have the respective meanings ascribed to such terms in the Loan Agreement.  As used in this Agreement, the following terms shall have the following meanings:
The term “Indemnified Parties” includes Lender and also any Person who is or will have been involved in the origination of the Loan, any Person who is or will have been involved with the servicing of the Loan, any Person in whose name the encumbrance created by the Deed of Trust is or will have been recorded, persons and entities who may hold or acquire or will have held a full or partial interest in the Loan (including, but not limited to, Investors (defined below)), as well as custodians, trustees and other fiduciaries who hold or have held a full or partial interest in the Loan for the benefit of third parties) as well as the respective directors, officers, shareholders, partners, members, managers, employees, agents, servants, representatives, contractors, subcontractors, affiliates, subsidiaries, participants, successors and assigns of any and all of the foregoing (including, but not limited to, any other Person who holds or acquires, or will have held, a participation or other full or partial interest in the Loan or the Property, whether during the term of the Loan or as a part of or following a foreclosure of the Loan and including, but not limited to, any successors by merger, consolidation or acquisition of all or a substantial portion of Lender’s assets and business).
The term “Investors” means collectively, any purchaser, transferee, assignee, servicer, participant or investor of or in the Loan.
The term “Losses” includes any losses, damages, costs, fees, expenses, claims, suits, judgments, awards, liabilities (including but not limited to strict liabilities), obligations, debts, diminutions in value, fines, penalties, charges, costs of remediation (whether or not performed voluntarily), amounts paid in settlement, foreseeable and litigation costs, attorneys’ fees, engineers’ fees, environmental consultants’ fees, and investigation costs (including but not limited to costs for sampling, testing and analysis of soil, water, air, building materials, and other materials and substances whether solid, liquid or gas), of whatever kind or nature, and whether or not incurred in connection with any judicial or administrative proceedings, actions, claims, suits, judgments or awards.
The term “Release” includes any release, deposit, discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing or other movement of Hazardous Substances.
The term “Remediation” includes any investigation, site monitoring, containment, cleanup, removal, restoration, or other activity of any kind which are reasonably necessary or desirable under an applicable Environmental Laws.
7.    UNIMPAIRED LIABILITY.  The liability of Indemnitors under this Agreement shall in no way be limited or impaired by, and each Indemnitor hereby consents to and agrees to be bound by, any amendment or modification of the provisions of the Transaction 

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Documents.  In addition, the liability of Indemnitors under this Agreement shall in no way be limited or impaired by (i) any extensions of time for performance required by the Transaction Documents, (ii) any sale or transfer of all or part of the Mortgaged Property, (iii) limitations on, or release of liability under, any of the other Transaction Documents, (iv) the accuracy or inaccuracy of the representations and warranties made by an Indemnitor under any of the Transaction Documents or herein, (v) the release of an Indemnitor or any other Person from performance or observance of any of the agreements, covenants, terms or condition contained in any of the other Transaction Documents by operation of law, Lender’s voluntary act or otherwise, (vi) the release or substitution in whole or in part of any Collateral, or (vii) Lender’s failure to record the Deed of Trust or file any UCC financing statements (or Lender’s improper recording or filing of any thereof) or to otherwise perfect, protect, secure or insure any security interest or lien given as security for the Loan; and, in any such case, whether with or without notice to Indemnitors and with or without consideration.
8.    ENFORCEMENT.  Indemnified Parties may enforce the obligations of Indemnitors without first resorting to or exhausting any security or collateral or without first having recourse to any other Transaction Documents or any of the Collateral, through foreclosure proceedings or otherwise, provided, however, that nothing herein shall inhibit or prevent Lender from suing on the Note, foreclosing, or exercising any power of sale or other rights and remedies under the Transaction Documents.  This Agreement is not collateral or security for the Indebtedness of an Indemnitor pursuant to the Loan, unless Lender expressly elects in writing to make this Agreement additional collateral or security for the Indebtedness of an Indemnitor pursuant to the Loan, which Lender is entitled to do in its sole and absolute discretion.  It is not necessary for an Event of Default to have occurred for Indemnified Parties to exercise their rights pursuant to this Agreement.  Notwithstanding any provision of the Loan Agreement, the obligations pursuant to this Agreement are exceptions to any non-recourse or exculpation provision, if any, contained in the Transaction Documents; Indemnitor is fully and personally liable for such obligations, and such liability is not limited to the original or amortized principal balance of the Loan or the value of the Collateral.
9.    SURVIVAL  The obligations and liabilities of Indemnitors under this Agreement shall fully survive indefinitely notwithstanding any termination, satisfaction, assignment, entry of a judgment of foreclosure, exercise of any power of sale, or delivery of a deed in lieu of foreclosure of the Deed of Trust.  Notwithstanding the provisions of this Agreement to the contrary, the liabilities and obligations of Indemnitors hereunder shall not apply to the extent that Indemnitors can prove that such liabilities and obligations arose solely from Hazardous Materials that:  (a) were not present on or a threat to the Real Estate prior to the earlier of (1) a foreclosure under the Deed of Trust, (2) the delivery by Borrower to, and acceptance by, Lender or its designee of, a deed in lieu of foreclosure with respect to the Mortgaged Property or (3) Lender's (or its designee, including any receiver) taking possession and control of the Mortgaged Property after the occurrence of an Event of Default, or (b) were the proximate result of any intentional act or gross negligence of Lender.  Notwithstanding the foregoing, the indemnification obligations of Indemnitors hereunder shall terminate two (2) years after the full and indefeasible payment by Indemnitors of the Obligations (including the Additional Interest), provided that at the time of such payment, Indemnitors furnish to Lender, at Indemnitors’ sole cost and expense, a then current Phase I environmental report with respect to the Mortgaged Property, which report shall be from an 

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environmental consultant reasonably acceptable to Lender, which environmental report discloses, as of the date of such repayment, no actual or threatened (A) non-compliance with or violation of applicable Environmental Laws (or permits issued pursuant to Environmental Laws) in connection with the Mortgaged Property or operations thereon, (B) environmental Liens encumbering the Mortgaged Property, (C) administrative processes or proceedings or judicial proceedings in any way connected with any matter addressed in this Agreement or (D) presence or Release of Hazardous Substances in, on, above, or under the Mortgaged Property that has not been fully remediated in accordance with all applicable Environmental Laws.
10.    INTEREST.  Any amounts payable to any Indemnified Parties under this Agreement shall become immediately due and payable on demand and, if not paid within ten (10) days of such demand therefor, shall bear interest at the lesser of (a) the Interest Rate due and payable following the occurrence of an Event of Default pursuant to the terms of the Loan Agreement or (b) the maximum interest rate which Indemnitor may by law pay or Indemnified Parties may charge and collect, from the date payment was due.
11.    WAIVERS.  (a)  Indemnitors hereby waive and relinquish (i) any right or claim of right to cause a marshaling of Indemnitors’ assets or to cause Lender or other Indemnified Parties to proceed against any of the Collateral before proceeding under this Agreement against an Indemnitor; (ii) all rights and remedies accorded by applicable law to indemnitors or guarantor, except any rights of subrogation which Indemnitor may have, provided that the indemnity provided for hereunder shall neither be contingent upon the existence of any such rights of subrogation nor subject to any claims or defenses whatsoever which may be asserted in connection with the enforcement or attempted enforcement of such subrogation rights including, without limitation, any claim that such subrogation rights were abrogated by any acts of Lender or other Indemnified Parties; (iii) the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against or by Lender or other Indemnified Parties; (iv) notice of acceptance hereof and of any action taken or omitted in reliance hereon; (v) presentment for payment, demand of payment, protest or notice of nonpayment or failure to perform or observe, or other proof, or notice or demand; and (vi) all homestead exemption rights against the obligations hereunder and the benefits of any statutes of limitations or repose.  Notwithstanding anything to the contrary contained herein, Indemnitors hereby agree to postpone the exercise of any rights of subrogation with respect to any Collateral securing the Loan until the Loan shall have been paid in full.
12.    WAIVER OF JURY TRIAL.  INDEMNITORS AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE TRANSACTION DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION AND RELATIONSHIP THAT IS BEING ESTABLISHED.  INDEMNITORS AND LENDER ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF INDEMNITORS OR LENDER.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL‐ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO 

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THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  INDEMNITORS AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.  INDEMNITORS AND LENDER FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE TRANSACTION DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOAN.  IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
13.    SUBROGATION.  Indemnitors shall take any and all reasonable actions, including institution of legal action against third parties, necessary or appropriate to obtain reimbursement, payment or compensation from such persons responsible for the presence of any Hazardous Materials at, in, on, under or near the Real Estate or otherwise obligated by law to bear the cost.  Indemnified Parties shall be and hereby are subrogated to all of Indemnitors’ rights now or hereafter in such claims.
14.    INDEMNITORS’ REPRESENTATIONS AND WARRANTIES.  Each Indemnitor represents and warrants that:
(a)    it has the full power and authority to execute and deliver this Agreement and to perform its obligations hereunder; the execution, delivery and performance of this Agreement by Indemnitor has been duly and validly authorized; and all requisite action has been taken by Indemnitor to make this Agreement valid and binding upon Indemnitor, enforceable in accordance with its terms;
(b)    its execution of, and compliance with, this Agreement is in the ordinary course of business of Indemnitor and will not result in the breach of any term or provision of the charter, by-laws, partnership or trust agreement, or other governing instrument of Indemnitor or result in the breach of any term or provision of, or conflict with or constitute a default under, or result in the acceleration of any obligation under, any agreement, indenture or loan or credit agreement or other instrument to which Indemnitor or the Property is subject, or result in the violation of any law, rule, regulation, order, judgment or decree to which Indemnitor or the Property is subject;
(c)    it does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in this Agreement;

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(d)    to the best of Indemnitor’s knowledge, no approval, authorization, order, license or consent of, or registration or filing with, any governmental authority or other person, and no approval, authorization or consent of any other party is required in connection with this Agreement; and
(e)    this Agreement constitutes a valid, legal and binding obligation of Indemnitor, enforceable against it in accordance with the terms hereof.
15.    NO WAIVER.  No delay by any Indemnified Party in exercising any right, power or privilege under this Agreement shall operate as a waiver of any such privilege, power or right.
16.    NOTICE OF LEGAL ACTIONS.  Each Indemnitor hereto shall, within five (5) Business Days of receipt thereof, give notice to the Lender of (i) any notice, advice or other communication from any Governmental Authority or any source whatsoever with respect to Hazardous Materials on, from or affecting the Real Estate, and (ii) any legal action brought against such party or related to the Mortgaged Property.  Such notice shall comply with the provisions of Section 19 hereof.
17.    EXAMINATION OF BOOKS AND RECORDS.  In addition to any other rights of Indemnified Parties under the Transaction Documents, the Indemnified Parties and their attorneys, representations and accountants shall have the right to examine the records, books, management and other papers of Indemnitors or at the office regularly maintained by Indemnitors where the books and records are located.  Indemnified Parties and their accountants and other representatives shall have the right to make copies and extracts from the foregoing records and other papers.
18.    TRANSFER OF LOAN.  Lender may, at any time, sell, transfer or assign the Transaction Documents.  Lender may forward to each purchaser, transferee, assignee, servicer or participant (the foregoing entities hereinafter collectively referred to as the “Interested Parties”) and all prospective Interested Parties, their counsel and advisors, all documents and information which Lender now has or may hereafter acquire relating to Indemnitors and the Mortgaged Property, whether furnished by an Indemnitor, any guarantor or otherwise, as Lender determines necessary or desirable.  Indemnitors and any guarantor agree to cooperate with Lender in connection with any transfer made pursuant to this Section, including, without limitation, the delivery of an estoppel certificate and such other documents as may be reasonably requested by Lender.  Indemnitors shall also furnish, and Indemnitors and any guarantor hereby consent to Lender furnishing to such Interested Parties or such prospective Interested Parties, any and all information concerning the financial condition of the Indemnitors and any guarantor and any and all information concerning the Mortgaged Property as may be furnished in connection with any sale or transfer.
19.    NOTICES.  Unless otherwise specifically provided herein, any notice or other communication required or permitted to be given shall be in writing addressed to the respective party as set forth below and may be personally served, telecopied (with request for confirmation) or sent by overnight courier service or United States registered mail return receipt requested, postage prepaid.  Any notice so given shall be deemed effective upon delivery or on refusal or failure of 

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delivery during normal business hours.  Notices shall be addressed to the parties at the following addresses or to such other address as the party addressed shall have previously designated by written notice to the serving party, given in accordance with this Section 19.
		
	If to Indemnitors:
	Buena Yuma, LLC

c/o IMH Financial Corporation
7001 North Scottsdale Road, Suite 2050
Scottsdale, Arizona  85253
Attention:  Lawrence D. Bain, CEO
E-Mail:  ldb@imhfc.com

		
	And:
	IMH Financial Corporation

7001 North Scottsdale Road, Suite 2050
Scottsdale, Arizona  85253
Attention:  Legal Department
E-Mail:  legal@imhfc.com

		
	If to Lender:
	SRE Monarch Lending, LLC

c/o Singerman Real Estate, LLC
980 North Michigan Avenue, Suite 1660
Chicago, Illinois  60611
Attention:  Charlie Kellogg
E-Mail:  ckellogg@singerman.com
Fax:  (312) 475-9304
		
	With a copy to:
	Katten Muchin Rosenman LLP 
525 West Monroe Street 
Chicago, Illinois 60661-3693  
Attn:  Kenneth M. Jacobson

Email: kenneth.jacobson@kattenlaw.com 
Telephone: 312-902-5445 
Facsimile: 312-902-1061

20.    DUPLICATE ORIGINALS; COUNTERPARTS.  This Agreement may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original.  This Agreement may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Agreement.  The failure of any party hereto to execute this Agreement, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.
21.    NO ORAL CHANGE.  This Agreement, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of an Indemnitor or any Indemnified Party, but only by an agreement 

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in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.
22.    HEADINGS, ETC.  The headings and captions of various paragraphs of this Agreement are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.
23.    NUMBER AND GENDER/SUCCESSORS AND ASSIGNS.  All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the person or persons referred to may require.  Without limiting the effect of specific references in any provision of this Agreement, the term “Indemnitor” shall be deemed to refer to each and every Person comprising an Indemnitor from time to time, as the sense of a particular provision may require, and to include the heirs, executors, administrators, legal representatives, successors and assigns of Indemnitors, all of whom shall be bound by the provisions of this Agreement, provided that no obligation of Indemnitors may be assigned except with the written consent of Lender.  Each reference herein to Lender shall be deemed to include its successors and assigns.  This Agreement shall inure to the benefit of Indemnified Parties and their respective successors and assigns forever.
24.    RELEASE OF LIABILITY.  Any one or more parties liable upon or in respect of this Agreement may be released without affecting the liability of any party not so released.
25.    RIGHTS CUMULATIVE.  The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies that Lender has under the other Transaction Documents or would otherwise have at law or in equity.
26.    INAPPLICABLE PROVISIONS.  If any term, condition or covenant of this Agreement shall be held to be invalid, illegal or unenforceable in any respect, this Agreement shall be construed without such provision.
27.    GOVERNING LAW.  INDEMNITORS AGREE THAT THIS AGREEMENT AND ALL RIGHTS, OBLIGATIONS AND LIABILITIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE UNITED STATES OF AMERICA AND THE LAWS OF THE STATE OF ILLINOIS.
28.    CONFLICT.  In the event of any specific conflict between this Agreement and the Loan Agreement, the provisions of the Loan Agreement shall control. In the event such a determination cannot be made, the terms of the Loan Agreement shall control.
29.    JOINT AND SEVERAL.  The Obligations of Indemnitors, and each of them hereunder, are joint and several. 
30.    MISCELLANEOUS.  (a)  Wherever pursuant to this Agreement (i) Lender exercises any right given to it approve or disapprove, (ii) any arrangement or term is to be satisfactory to Lender, or (iii) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove, all decisions that arrangements or terms are satisfactory or not 

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satisfactory and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein.
(b)    Wherever pursuant to this Agreement it is provided that Indemnitors pay any costs and expenses, such costs and expenses shall include, but not be limited to, legal fees and disbursements of Lender, whether retained firms, the reimbursements for the expenses of the in-house staff or otherwise.
31.    Consent of Jurisdiction/Service of Process.  INDEMNITOR HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS AND IRREVOCABLY AGREES THAT, SUBJECT TO LENDER’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS.  INDEMNITOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.  INDEMNITOR ACKNOWLEDGES AND AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION, SUIT OR PROCEEDING WILL BE DEEMED EFFECTIVE.  SERVICE OF PROCESS ON INDEMNITOR IF PERSONALLY SERVED OR SERVED IN ACCORDANCE WITH SECTION 19 ABOVE OR AT SUCH OTHER ADDRESS AS SUCH INDEMNITOR MAY HAVE FURNISHED AS TO ITSELF TO THE SERVING PARTY BY LIKE NOTICE, OR TO THE LAST KNOWN ADDRESS OF SUCH INDEMNITOR PROVIDED THEREUNDER WILL BE DEEMED EFFECTIVE.
 [Signature Page Follows]

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IN WITNESS WHEREOF, this Agreement has been executed by Indemnitors and is effective as of the day and year first above written.
INDEMNITORS:
BUENA YUMA, LLC,
an Arizona limited liability company

By:    IMH Financial Corporation,
a Delaware corporation
Its:    Sole member and manager

By: __________________________
Name:     Lawrence D. Bain
Its:     Chairman and CEO

IMH FINANCIAL CORPORATION, 
a Delaware corporation

By: ____________________________
Name:     Lawrence D. Bain
Its:     Chairman and CEO

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