Document:

Exhibit

Exhibit 10.31

INVESTMENT AGREEMENT 
This INVESTMENT AGREEMENT (this “Agreement”) is entered into as of the 11th day of April, 2017 by and among JPMorgan Chase Funding Inc., a Delaware corporation (“JPM”), JCP Realty Partners, LLC, a Delaware limited liability company (“JCP”), Juniper NVM, LLC, a Delaware limited liability company (“Juniper” and together with JPM and JCP, “Investors”), and IMH Financial Corporation, a Delaware corporation (the “Company” and, together with Investors, the “Parties”).
WHEREAS, concurrently with the execution of this Agreement, the Company, JPM and SRE Monarch, LLC, a Delaware limited liability company (“Seller”) are entering into that certain Preferred Stock Purchase Agreement dated as the date hereof (the “Purchase Agreement”), pursuant to which JPM is purchasing from Seller all of the outstanding shares (the “Purchased Shares”) of the Company’s Series B-2 Cumulative Convertible Preferred Stock, $0.01 par value per share (the “Series B-2 Stock”), on the terms and conditions set forth in the Purchase Agreement; 
WHEREAS, in connection with the transactions contemplated by the Purchase Agreement, the Certificate of Designation of the Company’s Series B Cumulative Preferred Stock (the “Existing Certificate”) will be amended and restated in the form attached as Exhibit A hereto (the “Restated Certificate”) concurrently with the closing of the transactions contemplated by the Purchase Agreement; 
WHEREAS, pursuant to the Existing Certificate, the approval of JCP and Juniper, in their respective capacity as a holder of shares of the Company’s Series B-1 Cumulative Convertible Preferred Stock, $0.01 par value per share (the “Series B-1 Stock”), is required for the transactions contemplated by the Purchase Agreement and the amendment and restatement of the Existing Certificate; and 
WHEREAS, in order to induce JPM, and as a condition to JPM’s willingness, to enter into the Purchase Agreement and purchase the Purchased Shares, and in order to induce JCP and Juniper to approve the transactions contemplated by the Purchase Agreement and this Agreement, the Company and Investors are entering into this Agreement in order to set forth their rights and obligations with respect to certain matters related to the Company, the Purchased Shares and Investors’ ownership of Series B-1 Stock and Series B-2 Stock, as applicable.
NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter set forth, the Parties hereby agree as follows:
Article 1
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Investors that:
Section 1.1    Representations in the Purchase Agreement.  Each of the representations and warranties of the Company set forth in Article 3 of the Purchase Agreement is true and correct.  

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Section 1.2    Authority; Execution; Enforceability.  The Company has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement, the performance of its obligations hereunder, and the consummation of the transactions contemplated hereby, including the filing of the Restated Certificate with the Secretary of State of the State of Delaware, by the Company have been duly authorized by all requisite action on the part of the Company and its stockholders and no other action on the part of the Company or its stockholders is necessary to authorize the execution, delivery and performance of this Agreement by the Company or the consummation of the transactions contemplated hereby.  Assuming due execution and delivery of this Agreement by Investors, this Agreement constitutes the valid and legally binding obligation of the Company, enforceable against it in accordance with its terms and conditions, subject to (a) bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and (b) general principles of equity. 
Section 1.3    No Conflicts.  Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement will conflict with or constitute on the part of the Company a breach of or default (or an event which, with notice or lapse of time or both, would constitute a default) or give rise to any right of termination, amendment, cancellation or acceleration under (a) its certificate of incorporation, as amended, including the certificates of designation of any preferred stock of the Company; (b) its by-laws, as amended; (c) any loan or credit agreement, note, bond, mortgage, indenture, lease, permit, concession, franchise, license, contract, agreement or other instrument, arrangement, understanding or obligation to which the Company or any of its subsidiaries is a party or by which any of them or any of their properties or assets may be bound; or (d) the Delaware General Corporation Law (the “DGCL”), or any other federal, state or local law, statute, ordinance, rule, regulation or any decree, writ, injunction, judgment or order from any court or governmental or regulatory authority of the United States, any State or locality thereof or any foreign jurisdiction (each, a “Governmental Authority”) or any arbitration award which is either applicable to, binding upon or enforceable against the Company.  Notwithstanding the generality of the foregoing, the Company’s grant to Investors of the rights set forth in Article 4 do not, and when and if exercised by Investors in accordance with their terms will not, conflict with or constitute a default or breach under any of the items described in clauses (a), (b), (c) or (d) that are applicable to the Company, including the Restated Certificate (it being understood that the Company is not representing that the exercise of the rights set forth in Article 4 would not result, directly or indirectly, in a Noncompliance Event (as defined in the Restated Certificate) under the Restated Certificate). 
Section 1.4    Consents and Approvals.  Other than the filing of a Current Report on Form 8-K with the Securities and Exchange Commission (“SEC”), no notices, reports, registrations or other filings are required to be made by the Company with, nor are any consents, approvals or authorizations required to be obtained by the Company from any Governmental Authority or any other person under any contract, agreement or other obligation to which the Company is party or by which its assets are bound, in connection with the valid execution, delivery or performance of this Agreement and all other agreements and instruments contemplated hereby by the Company or the consummation by the Company of the transactions contemplated by this Agreement and all other agreements and instruments contemplated hereby that has not already been obtained in each 

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case except for such notices, reports, registrations and other filings or consents, approvals or authorizations the failure of which to make or obtain, individually or in the aggregate, are not material to the Company’s ability to perform its obligations hereunder and would not reasonably be expected to have a material adverse effect on the Company, its assets, properties, liabilities or condition (financial or otherwise). Notwithstanding the generality of the foregoing, the Company’s grant to Investors of the rights set forth in Article 4 do not, and, if exercised by Investors in accordance with their terms immediately following the date hereof (assuming such rights were then exercisable) would not, require any such notices, filings or consents with or from any Governmental Authority (other than the filing of a Current Report on Form 8-K with the SEC), the Company’s Board of Directors, any stockholder of the Company or any other person, or under the Restated Certificate (it being understood that the Company is not representing that the exercise of the rights set forth in Article 4 would not result, directly or indirectly, in a Noncompliance Event (as defined in the Restated Certificate) under the Restated Certificate).      
Section 1.5    Litigation; Compliance with Laws.  Except as set forth in Schedule 1.5 (a) attached hereto and incorporated herein, there is no action, claim, dispute, arbitration, audit, hearing, inquiry, investigation, administrative enforcement proceeding, litigation or suit (whether civil, criminal, administrative or investigative) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Authority or arbitration tribunal pending or, to the knowledge of the Company, threatened against the Company, and there is no judgment, decree or order against the Company, in each case, that would be reasonably likely to adversely affect the Company’s ability to perform its obligations under this Agreement or to have a material adverse effect on the Company, its assets, properties, liabilities or condition (financial or otherwise).  The Company is in compliance in all material respects with all laws applicable to the Company’s business as presently conducted, except where the failure to be in compliance would not be reasonably likely to adversely affect the Company’s ability to perform its obligations under this Agreement or to have a material adverse effect on the Company, its assets, properties, liabilities or condition (financial or otherwise). Except as set forth in Schedule 1.5(b) attached hereto and incorporated herein, neither the Company nor any of its subsidiaries has received written notice that it is in default in any material respect with respect to any judgment, order, writ, injunction, decree, rule or regulation of any arbitrator or Governmental Authority. 
Section 1.6    Net Operating Losses.  As of the end of its 2016 taxable year, the Company had a net operating loss carryover for federal income tax purposes of at least $300,000,000.  The net operating loss carryover of the Company is not subject to any annual use limitation pursuant to Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), or any use limitation pursuant to the separate return limitation year provisions of Treasury Regulation Section 1.1502-21(c).
Section 1.7    Real Estate Holdings.  At least twenty-five (25) percent of the Company’s consolidated gross revenues for the 12 months ended March 31, 2017 were, and at least twenty-five (25) percent of the Company’s consolidated total assets as of the date hereof (measured on a fair value basis as determined by the Company’s management) are, derived from the Company’s and its subsidiaries’ direct ownership of real property or ownership of interests in limited liability companies, limited partnerships and other business entities that directly own real property.

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Section 1.8    Investment Company Act.  The Company is not an “investment company” as defined in Section 3(a)(1) of the Investment Company Act of 1940, as amended (the “1940 Act”), and it is not relying on an exclusion from the definition of “investment company” in Section 3(b) or Section 3(c) of the 1940 Act or an exclusion in any rule promulgated under the 1940 Act.  
Section 1.9    Ability to Perform.  The Company does not believe, and to the knowledge of the Company it does not have any reason or cause to believe, that it cannot perform each and every covenant of the Company contained in this Agreement, the Purchase Agreement or any of the documents and agreements delivered pursuant hereto or thereto to which it is a party.
Section 1.10    Taxes.  The Company has timely filed or caused to be filed all required federal and other material tax returns and has paid all U.S. federal and other material taxes imposed on it and any of its assets by any Governmental Authority except for any such taxes as are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been provided in accordance with United States Generally Accepted Accounting Principles (“GAAP”).   No tax liens have been filed against any of the Company’s assets and no claims are being asserted in writing with respect to any such taxes (except for (i) liens and with respect to taxes not yet due and payable or liens or claims with respect to taxes that are being contested in good faith and for which adequate reserves have been established in accordance with GAAP and (ii) any such liens and claims that in the aggregate are not in excess of $1,000,000).
Section 1.11    Adequate Capital.  To the knowledge of the Company, the Company has adequate capital for the normal obligations foreseeable in a business of its size and character and in light of its contemplated business operations.  The Company is generally able to pay, and as of the date hereof is paying, its debts as they come due.  The Company has not become, or is not presently, financially insolvent within the meaning of the bankruptcy laws or the insolvency laws of any jurisdiction.
Section 1.12    Financial Information.  Complete and accurate copies of the Company’s audited financial statements consisting of the balance sheet of the Company as at December 31 in each of the years 2016 (in draft form), 2015 and 2014 and the related statements of income and retained earnings, stockholders’ equity and cash flow for the years then ended (the “Financial Statements”) have been delivered to Buyer. The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved. The Financial Statements are based on the books and records of the Company, and fairly present in all material respects the financial condition of the Company as of the respective dates they were prepared and the results of the operations of the Company for the periods indicated. The Company maintains a standard system of accounting established and administered in accordance with GAAP.  Other than such adjustments that are proposed by the Company’s independent accountants that are both, individually and in the aggregate, immaterial to the Financial Statements, taken as a whole, neither the Company nor any subsidiary has received any advice or notification from its independent accountants that it has used any improper accounting practice that would have the effect of not reflecting or incorrectly reflecting in the books and records of any of the Company’s or its subsidiaries’ properties, assets, liabilities, revenues, expenses, equity accounts or other accounts.

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Section 1.13    No Other Representations or Warranties.  Except for the representations and warranties contained in this Article 1 (including the related portions of the Schedules incorporated therein), neither the Company nor any other person or entity has made or makes any other express or implied representation or warranty, either written or oral, on behalf of the Company, including any representation or warranty as to the accuracy or completeness of any information regarding the Purchased Shares or the Company, its assets, properties, liabilities, condition (financial or otherwise) or future prospects, furnished or made available to Investors and its directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents (including, without limitation, any information, documents or material delivered or made available to Investors in expectation of the transactions contemplated hereby) or as to the future revenue, profitability or success of the Company’s operations, or any representation or warranty arising from statute or otherwise in law. 
Section 1.14    Knowledge of the Company.    As used in this Article 1 or elsewhere in this Agreement, the phrases “to the knowledge of the Company”, “the Company’s knowledge” or similar language, shall mean the knowledge as of the date of this Agreement of any member of the Company’s management team (which shall include any individual who is as of the date hereof a Vice President or a more senior employee of the Company and the Company’s associate general counsel), including knowledge any such person would reasonably be expected to obtain in the ordinary course of their position and supervision of their direct reports.  
Article 2
REPRESENTATIONS AND WARRANTIES OF INVESTORS
Each Investor, severally and not jointly, represents and warrants to the Company that (except, however, that neither JCP nor Juniper will be deemed to make the representation and warranty contained in Section 2.1 or 2.4): 
Section 2.1    Representations in the Purchase Agreement.  Each of the representations and warranties of JPM set forth in Article 4 of the Purchase Agreement is true and correct.
Section 2.2    Authority; Execution; Enforceability.  Such Investor has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement, the performance of its obligations hereunder, and the consummation of the transactions contemplated hereby, by such Investor have been duly authorized by all requisite action on the part of such Investor and no other action on the part of such Investor is necessary to authorize the execution, delivery and performance of this Agreement by such Investor or the consummation of the transactions contemplated hereby.  Assuming due execution and delivery of this Agreement by the Company and the other Investors, this Agreement constitutes the valid and legally binding obligation of such Investor, enforceable against it in accordance with its terms and conditions, subject to (a) bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and (b) general principles of equity.
Section 2.3    Consents and Approvals.  No notices, reports, registrations or other filings are required to be made by such Investor with, nor are any consents, approvals or authorizations required to be obtained by Investor from, any Governmental Authority or any other person under 

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any contract, agreement or other obligation to which such Investor is party or by which its assets are bound, in connection with the valid execution, delivery or performance of this Agreement and all other agreements and instruments contemplated hereby by such Investor or the consummation by such Investor of the transactions contemplated by this Agreement and all other agreements and instruments contemplated hereby, in each case except for such notices, reports, registrations and other filings the failure of which to make or obtain, individually or in the aggregate, are not material to such Investor’s ability to perform its obligations hereunder.
Section 2.4    Independent Investigation.  JPM has conducted its own independent investigation, review and analysis of the Company and the Purchased Shares, and acknowledges that it has been provided with such access to the personnel, properties, assets, premises, books and records, and other documents and data of the Company that it has requested for such purpose. JPM acknowledges and agrees that: (a) in making its decision to enter into the Purchase Agreement and this Agreement and to consummate the transactions contemplated hereby, JPM has relied solely upon its own investigation and the express representations and warranties of the Company set forth in Article 1 of this Agreement (including related portions of the Schedules incorporated therein) and in the Purchase Agreement; and (b) neither the Company nor any other person or entity has made any representation or warranty as to the Purchased Shares or the Company, its assets, properties, liabilities, condition (financial or otherwise) or future prospects or this Agreement, except as expressly set forth in the Purchase Agreement or in Article 1 of this Agreement (including the related portions of the Schedules incorporated therein) and JPM expressly disclaims reliance on any representation or warranty of the Company not contained in Article 1 of this Agreement or in the Purchase Agreement.
Section 2.5    No Other Representations or Warranties.  No Investor (nor any other person or entity on behalf of an Investor) has made or makes to any other Investor, any representation or warranty, express or implied, written or oral, with respect to any matter pertaining to the Company, the Purchased Shares, this Agreement, the Purchase Agreement, the Existing Certificate, the Restated Certificate, or any transactions contemplated by, or any matter pertaining to, any of the foregoing agreements or instruments.   
Article 3
COVENANTS OF THE COMPANY 
Section 3.1    Compliance and Reporting Obligations of the Company.
(a)    Until such time as it becomes eligible for the Designated Exclusion, the Company covenants and agrees that it shall not be an “investment company” as defined in Section 3(a)(1) of the 1940 Act without relying on an exclusion from the definition of “investment company” in Section 3(b) or Section 3(c) of the 1940 Act or an exclusion in any rule promulgated under the 1940 Act.
(b)    The Company shall proceed in good faith and take all commercially reasonable actions as are reasonably necessary for the Company to be eligible to rely on the exclusion from the definition of “investment company” set forth in Section 3(c)(5)(C) of the 1940 Act (the 

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“Designated Exclusion”) and use its best efforts to remain eligible for the Designated Exclusion at all times thereafter.  Promptly (and in any event no more than five (5) days) after the Company has become eligible for the Designated Exclusion, the Company shall deliver a 1940 Act Compliance Statement (defined below) to each Investor evidencing the Company’s eligibility for the Designated Exclusion. Without the prior written consent of each Investor, which consent may be withheld for any or no reason, the Company will not take any action the result of which would reasonably be expected to cause the Company to become ineligible for the Designated Exclusion (whether or not the Company is then eligible for any other exclusion from the definition of “investment company” in Section 3(b) or Section 3(c) of the 1940 Act or in any rule promulgated thereunder).  
(c)    Within five (5) days after the earlier of (i) the date the Company files with the SEC its quarterly report on Form 10-Q, or annual report on From 10-K, with respect to the fiscal quarter, or year, then ended (beginning with the quarter ending June 30, 2017) and (ii) the last date on which the Company could timely file the report in respect of the applicable fiscal quarter, or year, referenced in clause (i) in accordance with applicable law, the Company shall deliver to each Investor a written statement in the form attached as Exhibit B attached hereto (a “1940 Act Compliance Statement”) setting forth in reasonable detail the information and calculations contemplated thereby and otherwise reasonably necessary for such Investor to determine whether the Company is then in compliance with the Designated Exclusion, based on fair value accounting and all guidance issued by the Staff of the SEC with respect to calculations under Section 3(c)(5)(C) asset composition requirements under the 1940 Act.  If, at any time after the Company relies on the Designated Exclusion, the Company becomes aware of any fact or circumstance, or any action is taken or not taken (including any agreement to act or not act) by or on behalf of the Company or any of its subsidiaries, the result of which would be that the Company is then not in compliance, or would be reasonably likely to be out of compliance, with the Designated Exclusion, the Company will provide prompt (in any event within 2 calendar days) written notice to each Investor describing the circumstances thereof, and including a 1940 Act Compliance Statement illustrating such non-compliance or expected non-compliance.  The Company shall provide each Investor with access to records of the Company as are reasonably requested by such Investor in connection with its review of any 1940 Act Compliance Statement.
Section 3.2    Compliance Breach.  Notwithstanding anything to the contrary in this Agreement, each Investor hereby agrees that JPM shall have the sole and exclusive power under this Agreement to determine, in its sole discretion, on behalf of the Investors (i) whether the Company has failed, in whole or in part, to perform or comply with any of the covenants and agreements set forth in Section 3.1, (ii) whether or not any failure by the Company shall be excused modified or waived by the Investors, and (iii) whether or not to pursue any one or more of the remedies contemplated by this Agreement with respect to such failure, including, without limitation, whether the Investors shall have the right to exercise the Put Right as a result of such failure.  

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Article 4
INVESTOR PUT RIGHT
Section 4.1    Grant.  Subject to Section 4.2, the Company hereby grants to each Investor an irrevocable, perpetual, right to require the Company to purchase (the “Put Right”), and upon exercise of the Put Right in accordance with this Article 4, the Company shall have the unconditional obligation to purchase from such Investor up to all of the shares of Series B-1 Stock or Series B-2 Stock then held by such Investor (or any affiliate of such Investor then holding any such shares) for a price per share equal to the Required Redemption Price (as defined in the Restated Certificate) (the “Put Price”).
Section 4.2    Exercise Mechanics.  Subject in all cases to Section 3.2, if (a) the Company breaches any covenant set forth in Article 3 or (b) at any time after becoming eligible for the Designated Exclusion, the Company is not eligible for the Designated Exclusion, and such breach or ineligibility is not cured within sixty (60) calendar days of the occurrence of such breach or ineligibility (provided that the cure period for failure to deliver a 1940 Act Compliance Statement within the time periods required therefor shall be five (5) calendar days) (the end of such cure period, the “Put Activation Date”), JPM may in its discretion exercise the Put Right by providing written notice of such exercise to the Company and the other Investors, and if and only if JPM exercises the Put Right, each other Investor may in its discretion exercise the Put Right by providing written notice of such exercise to the Company, in any case, specifying the number of shares of Series B-1 Stock or Series B-2 Stock, as the case may be, for which the Put Right is being exercised, and the aggregate Put Price therefor (an “Exercise Notice”), at any time (i) in the case of JPM, after the Put Activation Date and (ii) in the case of the other Investors, after receipt of JPM’s Exercise Notice, unless such breach or ineligibility is cured (and the Company has delivered written notice setting forth in reasonable detail how such breach or ineligibility has been cured and evidence thereof) prior to the delivery of an Exercise Notice; provided that unless such Investor otherwise informs the Company in writing prior to the Put Closing Date, in the event JPM (or any of its affiliates) provides the Company with an Exercise Notice, each Investor (other than JPM) and its affiliates (if any) shall be deemed to have provided the Company with an Exercise Notice with respect to all (or a proportionate portion thereof in the event the Exercise Notices of JPM and its affiliates are for less than all of the Series B Preferred Stock held by them) of the Series B Preferred Stock of such Investor (or affiliate).  As between JPM and the other Investors, any determination as to whether any breach or ineligibility by the Company giving rise to the right to exercise the Put Right has been cured will be made by JPM in its sole discretion.
Section 4.3    Closing of Put Right Purchase.  If the Company receives an Exercise Notice from JPM, then the Company shall promptly, but no later than three calendar days after its receipt of such Exercise Notice, notify the other Investors in writing of such Exercise Notice and provide such other Investors with a copy of such Exercise Notice.  On the thirtieth (30th) day after receipt of JPM’s Exercise Notice (the “Put Closing Date”), the Company shall purchase from JPM (and its affiliates, as applicable) and from all other Investors who provide (including for the avoidance of doubt, those Investors and their affiliates who are deemed to have provided) an Exercise Notice to the Company prior to the Put Closing Date, the number of shares of Series B-1 Stock or Series 

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B-2 Stock, as applicable, set forth in such Exercise Notices (the “Subject Shares”).  To the extent that the Company fails to purchase any of the Subject Shares as required by the preceding sentence (such Subject Shares not purchased, the “Remaining Shares”), dividends shall continue to accrue on the Remaining Shares as provided in the Restated Certificate, whether or not declared, until all such Remaining Shares are purchased and all rights of such shares shall remain in full force and effect until purchased by the Company. If the Company does not have sufficient funds available to purchase all of the Subject Shares, the Company shall purchase from all such Investors, on a pro rata basis in proportion to their ownership of the Subject Shares, as many of such shares as it is able out of any available funds, and shall purchase the Remaining Shares from all such Investors, on a pro rata basis in proportion to their ownership of the Remaining Shares, that are not transferred as provided in Section 4.4 with all available funds of the Company thereafter until all of such Remaining Shares have been purchased and the Put Price therefor (and the interest thereon, if any, as set forth in Section 4.4) has been paid in full.   
Section 4.4    Put Closing Default. In addition to the provisions of Section 4.3, if the Company fails to consummate the purchase of all of the Subject Shares set forth in any Exercise Notices delivered in accordance with this Article 4 on or prior to the applicable Put Closing Date (a “Put Closing Default”), any portion of the applicable Put Price not then paid shall bear interest at a rate of thirteen percent (13%) per annum compounding monthly until the Remaining Shares that are not transferred as provided in the following sentence are purchased and the applicable Put Price is paid in full.  In addition and notwithstanding anything to the contrary herein, from and after a Put Closing Default, each Investor to whom such Put Closing Default relates may, in its discretion, Transfer (as defined in the Restated Certificate) any Remaining Shares to any third party (to the extent of any Remaining Shares not purchased by the Company prior to such Transfer as required by Section 4.3) without obtaining any consent of the Board or the holders of the Series B Preferred Stock.
Article 5
SURVIVAL; INDEMNIFICATION

Section 5.1    Survival.  All representations and warranties contained in this Agreement shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby until the date that is one year from the date of this Agreement; provided, that the representations and warranties in Section 1.10 shall survive until 30 days after the expiration of the applicable statute of limitations, and Sections 1.1, 1.2, 1.3, 1.6, 1.7, 1.12, 1.13 and Sections 2.1, 2.2, 2.3 and 2.4 shall survive indefinitely.  All covenants and agreements of the parties contained herein shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby indefinitely or for the period explicitly specified therein. 
Section 5.2    Indemnification by Company.  
(a)    The Company (the “Company Indemnifying Party”) shall indemnify and hold harmless each Investor, its affiliates and stockholders, directors and officers (collectively, the “Company Indemnified Parties”) from and against any and all liabilities, obligations, deficiencies, 

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demands, claims, suits, actions, causes of action, assessments, losses, costs and expenses (including reasonable attorneys’ fees) (collectively, “Claims”), sustained or incurred by any such Company Indemnified Party, resulting from (i) any breach of a representation or warranty made by the Company Indemnifying Party in this Agreement, and (ii) any breach of a covenant made by the Company Indemnifying Party in this Agreement.  The provisions of this Section 5.2 are intended to be for the benefit of, and shall be enforceable by, each Company Indemnified Party.  In no event shall any Company Indemnifying Party be liable to any Company Indemnified Party for any punitive, incidental, consequential, special or indirect damages, including loss of future revenue or income, loss of business reputation or opportunity relating to the breach or alleged breach of this Agreement, or diminution of value or any damages based on any type of multiple, except to the extent paid by a Company Indemnified Party to a third party in respect of the claim for which such Company Indemnified Party is entitled to indemnification hereunder.  For the avoidance of doubt, the Company shall not be in breach of its representations and warranties in Section 1.6 unless and until there is a “determination,” as such term is defined in Section 1313(a) of the Code, that results in any such representation or warranty not being true and correct as of the date such representation or warranty was made.
(b)    Without limiting the foregoing, in the event one or more Company Indemnified Parties receive one or more payments from the Company (“Indemnity Proceeds”) in respect of any Claim for a breach of a representation or warranty of the Company in Article 1 (including, as a result of Section 1.1, any breach of a representation or warranty of the Company in Article 3 of the Purchase Agreement) or a covenant made by the Company in this Agreement or any other Claim ancillary or related to any such breach (a “Specified Breach”), such Indemnity Proceeds (net of the costs of obtaining such Indemnity Proceeds, including attorneys’ fees and expenses, which costs shall be reimbursed from the Indemnity Proceeds to the applicable Investor Indemnified Party(ies) incurring such costs, the “Net Indemnity Proceeds”) shall be allocated among, and disbursed to, all of the Investors in respect of such Specified Breach, on a pro rata basis in proportion to the number of the Company’s Series B Preferred Stock they own at the time the Company pays the Indemnity Proceeds (which for this purpose shall include any shares of the Company’s Common Stock they acquire upon conversion of any of the Series B Preferred Stock).  Each Investor agrees to cooperate in the determination of any required allocation of Net Indemnity Proceeds pursuant to this Section 5.2(b), and agrees, if applicable, to pay to the other Investors such portion of the Net Indemnity Proceeds received by such Investor as is required hereunder.  For the avoidance of doubt: (i) in the event JPM asserts Claims against the Company that are not with respect to a Specified Breach but that are based upon facts that would support a Claim for a Specified Breach, then for purposes of this Section 5.2(b), all of the recoveries by JPM from the Company in respect of such Claims shall be deemed to have arisen from a Specified Breach and shall be allocated among, and disbursed to, all of the Investors pursuant to and in accordance with this Section 5.2(b), regardless of whether the other Investors have asserted or are able to assert such Claims; and (ii) the provisions of this Section 5.2(b) shall not apply to any Claims asserted against the Company by JPM or any of its affiliates or direct or indirect subsidiaries with respect to any agreement (including, without limitation, any loan made to the Company by JPM or any of its affiliates or direct or indirect subsidiaries) other than this Agreement.

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Section 5.3    Indemnification by Investors.  Each Investor (the “Investor Indemnifying Party”) shall indemnify and hold harmless, individually and not jointly and severally, the Company, its affiliates and stockholders, directors and officers (collectively, the “Investor Indemnified Parties”) from and against any and all Claims sustained or incurred by any such Investor Indemnified Party, resulting from (i) any breach of a representation or warranty made by the Investor Indemnifying Party in this Agreement, and (ii) any breach of a covenant made by the Investor Indemnifying Party in this Agreement.  The provisions of this Section 5.3 are intended to be for the benefit of, and shall be enforceable by, each Investor Indemnified Party.  In no event shall any Investor Indemnifying Party be liable to any Investor Indemnified Party for any punitive, incidental, consequential, special or indirect damages, including loss of future revenue or income, loss of business reputation or opportunity relating to the breach or alleged breach of this Agreement, or diminution of value or any damages based on any type of multiple, except to the extent paid by an Investor Indemnified Party to a third party in respect of the claim for which such Investor Indemnified Party is entitled to indemnification hereunder.
Section 5.4    Parity of Investors.  Notwithstanding anything to the contrary in any of this Agreement, the Purchase Agreement or the Restated Certificate, and except to the extent (i) provided in Section 3.2 of this Agreement and (ii) provided in Section 11 of the Restated Certificate and Section 1.1.5 of Schedule I to the Restated Certificate as relates to a Pre‐Authorized Transfer to a JPM Permitted Transferee (each as defined in the Restated Certificate), each Party acknowledges that it is the intent and desire of the Parties, and each Party agrees, that, the terms of the Purchase Agreement, the Restated Certificate and this Agreement shall not modify or otherwise alter the parity between the Series B-1 Stock and the Series B-2 Stock that existed pursuant to the terms of the Existing Certificate immediately prior to the date hereof.  In the event of any such modification or alteration of such parity in a manner that is adverse to an Investor, then: (a) the other Parties shall reasonably cooperate with such Investor to attempt to restore or otherwise accomplish such parity; and (b) if, after reasonably cooperating, the Parties are unable to restore or otherwise accomplish such parity, then the Company shall indemnify such Investor for the damages and other losses (including diminution in value) suffered by such Investor from such absence of parity, and such indemnification shall be such Investor’s sole remedy with respect to such inability to restore or otherwise accomplish parity unless the Company is unable to restore or otherwise accomplish such parity in full.   Each Investor hereby agrees that the maximum amount it shall, and shall be entitled to, claim and recover as damages and other losses pursuant to this Section 5.4 from another Investor (the “Advantaged Investor”) is: (x) one hundred fifty percent (150%) of the sum of (A) the Original Price (as defined in the Restated Certificate) per share of all the Series B Preferred Stock held by such Investor plus (B) the Dividends (as defined in the Restated Certificate) accrued and unpaid thereon, whether or not declared, through the date such Investor brings its claim against the Advantaged Investor; minus (y) any amounts such Investor (or its affiliates) recover from the Advantaged Investor with respect to its (or their) claim pursuant to Section 5.2(b).  For the avoidance of doubt, the immediately preceding sentence does not limit any Investor’s ability to claim and recover against the Company pursuant to this Section 5.4.

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Article 6
GENERAL PROVISIONS
Section 6.1    Notices. All notices, requests and other communications to any Party shall be in writing and shall be delivered in person, by electronic mail, mailed by certified or registered mail, return receipt requested, or sent by facsimile transmission.
If to JPM, to:
JPMorgan Chase Funding Inc.
270 Park Avenue
New York, New York 10017
Attention: Chad Parson
Email: chad.s.parson@jpmorgan.com
Fax: 212-834-6671
	
			
	 
	 
	 

With a copy which shall not constitute notice, to:

Fried, Frank, Harris, Shriver & Jacobsen LLP
One New York Plaza
New York, New York 10004
Attention: 
Email: 
Fax: (212) 859-4000

If to JCP or Juniper, to:

11150 Santa Monica Blvd., Suite 1400
Los Angeles, California 90025
Attention: Jay Wolf
Email: jay@junipercptl.com
Fax: (213) 633-2323
With a copy which shall not constitute notice, to:

Munger, Tolles & Olson LLP
350 South Grand Avenue, 50th Floor
Los Angeles, California 90071
Attention:  C. David Lee
Email: david.lee@mto.com
Fax: (213) 593-2885

If to the Company, to: 

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IMH Financial Corporation
7001 N. Scottsdale Rd, Suite 2050
Scottsdale, Arizona 85253
Attention: Lawrence D. Bain, CEO
Email: ldb@imhfc.com
Fax: (480) 840-8401

And to:
IMH Financial Corporation
7001 N. Scottsdale Rd, Suite 2050
Scottsdale, Arizona 85253
Attention: Legal Department
Email: legal@imhfc.com
Fax: (480) 840-8401
With a copy which shall not constitute notice, to:

Ulmer & Berne LLP
1660 West 2nd Street, Suite 1100
Cleveland, Ohio 44113-1448
Attention: Howard M. Groedel, Esq.
Email: hgroedel@ulmer.com  
Fax: (216) 583-7119

Section 6.2    Fees and Expenses.  Each Party shall pay its own costs and expenses incurred in connection with the preparation, negotiation, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby; provided, that the prevailing Party in any litigation, arbitration or other proceeding arising out of this Agreement shall be reimbursed by the non-prevailing Party for all costs and expenses incurred in such proceeding, including reasonable attorneys’ fees and expenses.
Section 6.3    Entire Agreement; Amendments. This Agreement (together with the Restated Certificate, the Purchase Agreement and the Investors’ Rights Agreement (as defined in the Purchase Agreement)) is the entire agreement of the Parties and supersedes all prior agreements and understandings with respect to the subject matter hereof.  No amendment or modification (or termination or cancellation unless pursuant to the express terms) of this Agreement shall be effective unless made in writing by each Party. 
Section 6.4    Severability. Any provision of this Agreement that is invalid, unenforceable or illegal in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such invalidity, unenforceability or illegality without affecting the remaining provisions hereof and without affecting the validity, enforceability or legality of such provision in any other jurisdiction.
Section 6.5     Specific Enforcement; Cumulative Remedies. The Parties acknowledge that money damages may not be an adequate remedy for violations of this Agreement and that any Party, 

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in addition to any other rights and remedies which the Parties may have hereunder or at law or in equity, may, in its sole discretion, apply to a court of competent jurisdiction for specific performance or injunction or such other relief as such court may deem just and proper in order to enforce this Agreement or prevent any violation hereof and, to the extent permitted by applicable law, each party waives any objection to the imposition of such relief. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such rights, powers or remedies by such Party.  In no event shall either Party be liable to the other Party for any punitive, incidental, consequential, special or indirect damages, including loss of future revenue or income, loss of business reputation or opportunity relating to the breach or alleged breach of this Agreement, or diminution of value or any damages based on any type of multiple, except to the extent paid by a Party to a third party in respect of a claim arising from such breach or alleged breach. 
Section 6.6    Amendment; Waiver.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Parties; provided, that any provision hereof may be waived by any waiving Party on its own behalf, without the consent of the other Party.
Section 6.7    Succession and Assignment.  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns, and no other person or entity shall have any rights, interests or claims hereunder or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise except the Company Indemnified Parties and the Investor Indemnified Parties and their respective rights under Article 5.  No Party may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of the other Party; provided that each Investor may assign its rights under this Agreement without the consent of the Company to any such Investor’s affiliate to which shares of Series B-1 Stock or Series B-2 Stock, as applicable, are transferred pursuant to a transfer permitted under the Restated Certificate.  Any purported assignment in violation of this Section shall be void and of no effect. 
Section 6.8    Applicable Law; Jurisdiction; Waiver of Jury Trial.  This Agreement shall be governed in all respects, including but not limited to, validity, interpretation and effect, by the laws of the State of New York regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.  Any litigation against any party to this Agreement arising out of or in any way relating to this Agreement shall be brought solely in any federal or state court located in the State of New York in New York County and each of the Parties submits to the exclusive jurisdiction of such courts for the purpose of any such litigation.  Each party irrevocably and unconditionally agrees not to assert (a) any objection which it may ever have to the laying of venue of any such litigation in any federal or state court located in the State of New York in New York County, (b) any claim that any such litigation brought in any such court has been brought in an inconvenient forum and (c) any claim that such court does not have jurisdiction with respect to such litigation.  Each Party irrevocably and unconditionally waives, to the extent permitted by applicable law, any right to a trial by jury.

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Section 6.9    Interpretation. The section headings contained herein are for reference purposes only and will not in any way affect the interpretation or meaning of this Agreement. 
Section 6.10    Counterparts.  This Agreement may be executed in one or more original or electronic counterparts, each of which shall be deemed an original, but all of which shall constitute the same instrument.
[Remainder of page left intentionally blank.]

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IN WITNESS WHEREOF, the Parties have set their hands to this Investment Agreement to be effective as of the date first written above. 
THE COMPANY: 

	
		
	 
	IMH Financial Corporation

By:   /s/ Lawrence D. Bain               
Name: Lawrence D. Bain
Title: Chairman & CEO

JPM: 

JPMorgan Chase Funding Inc.

By:_/s/ Chad Parson____________
Name: Chad Parson
Title: Managing Director

JCP: 

JCP Realty Partners, LLC

By:_/s/ Jay Wolf_______________
Name: Jay Wolf
Title: Managing Member

JUNIPER: 

Juniper NVM, LLC

By:__/s/ Jay Wolf_____________
Name: Jay Wolf
Title: Managing Member

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Exhibit A

Restated Certificate of Designation

See attached.

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Exhibit 10.31

Exhibit B

1940 Act Compliance Statement

See attached.

    

    

34358671.7     
US\WOLFERI\13443347.3Exhibit

Execution Version

Exhibit 10.32

PREFERRED STOCK PURCHASE AGREEMENT 
This PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”) is entered into as of the 11th day of April, 2017 by and among SRE Monarch, LLC, a Delaware limited liability company (“Seller”), JPMorgan Chase Funding Inc. a Delaware corporation (“Purchaser”) and IMH Financial Corporation, a Delaware corporation (the “Company” and, together with Seller and Purchaser, the “Parties”).
WHEREAS, Seller owns 5,595,148 shares of Series B-2 Cumulative Convertible Preferred Stock of the Company, $0.01 par value per share (the “B-2 Preferred Stock”), issued pursuant to the Cumulative Convertible Preferred Stock Subscription Agreement dated as of July 24, 2014 between Seller and the Company (the “Purchased Shares”); 
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, the Purchased Shares on the terms and conditions set forth in this Agreement (the “Transfer”); 
WHEREAS, the board of directors of the Company (the “Board”) has duly adopted resolutions approving the Transfer in all respects, including the approval contemplated by Section 5.04(b) of the Company’s by-laws and by Section 11 of the Certificate of Designation of the Series B Preferred Stock (the “Certificate of Designation”), a copy of which resolutions is attached as Exhibit A hereto (the “Board Approval”); 
WHEREAS, the holders of the Company’s Series B-1 Cumulative Convertible Preferred Stock, $0.01 par value per share (together with the B-2 Preferred Stock, the “Series B Preferred Stock”), acting together with the holders of the B-2 Preferred Stock, have approved the Transfer in all respects in accordance with Section 1.1.5 of Schedule 1 to the Certificate of Designation by the written consent of holders representing the requisite number of shares of Series B Preferred Stock for approval of the Transfer, a copy of which is attached as Exhibit B (the “Series B Stockholder Approval”); 
WHEREAS, the Board has duly adopted resolutions declaring and authorizing the payment of the regular quarterly dividend on the Series B Preferred Stock, representing all the accrued and unpaid dividends thereon for the period beginning January 1, 2017 and ending March 31, 2017 (the “Series B First Quarter Dividend”), of which, $360,003.01 in the aggregate (the “SRE Dividend Amount”) is payable to Seller in respect of the Purchased Shares which were held by Seller as of March 31, 2017, the record date for the Series B First Quarter Dividend; and
WHEREAS, Seller is a party to that certain Investors’ Rights Agreement, dated July 24, 2014 (the “Investor Rights Agreement”), with the Company and another holder of Series B Preferred Stock with respect to the Purchased Shares and in connection with the purchase and sale of the Purchased Shares, Seller desires to assign all of its right, title and interest in the Investor Rights Agreement to Purchaser.
NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter set forth, the Parties hereby agree as follows:

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Article 1
PURCHASE AND SALE; CLOSING
Section 1.1    Purchase and Sale.  Subject to the terms and conditions of this Agreement, at the Closing, Purchaser shall purchase and acquire from Seller, and Seller shall sell, assign, transfer and deliver to Purchaser, the Purchased Shares, free and clear of any liens, security interests, pledges or other encumbrances (collectively “Liens”) other than restrictions (a) provided for under applicable securities laws and (b) set forth in the Investors’ Rights Agreement by and among the Company, Seller and JCP Realty Partners, LLC, dated July 24, 2014 (the “Investors’ Rights Agreement”), for an aggregate purchase price of Twenty Five Million Two Hundred Seventy Thousand Dollars and No Cents ($25,270,000.00) (the “Purchase Price”).
Section 1.2    Closing.  The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Fried, Frank, Harris, Shriver & Jacobson LLP, One New York Plaza, New York, New York, 10004, at 10:00 A.M. local time on the date of this Agreement (the “Closing Date”).
Section 1.3    Closing Payments; Deliveries.  At the Closing:
(a)    Purchaser shall pay the Purchase Price to Seller, by wire transfer of immediately available federal funds to the account specified in writing by Seller to Purchaser and the Company prior to the date hereof (the “Seller Account”).
(b)    The Company shall pay to Seller, by wire transfer of immediately available federal funds to the Seller Account, (i) the SRE Dividend Amount (to the extent such amount was not paid by the Company prior to the Closing) and (ii) $304,000.00 (the “Expense Reimbursement Amount”).  
(c)    Subject to and conditioned upon payment to the Seller Account of the Purchase Price by Purchaser and the SRE Dividend Amount and the Expense Reimbursement Amount by the Company, Seller shall execute, acknowledge (where appropriate) and deliver, or cause to be delivered (i) to Purchaser (A) the original stock certificate(s) representing the Purchased Shares, duly endorsed for transfer or accompanied by stock powers duly executed in blank; and (B) a “transferor’s certification of non-foreign status” in the form attached hereto as Exhibit C, duly executed by Seller; and (ii) to Purchaser and the Company, a resignation of Seth Singerman from the Board (and any and all committees thereof) in the form attached hereto as Exhibit D.
(d)    Subject to and conditioned upon payment to the Seller Account of the Purchase Price by Purchaser and the SRE Dividend Amount and the Expense Reimbursement Amount by the Company, Seller hereby irrevocably transfers and assigns to Purchaser all of its right, title and interest in, to and under the Investor Rights Agreement, and the Company hereby acknowledges such assignment from Seller to Purchaser, and from and after the date hereof, and as the context requires, any reference to Seller in the Investor Rights Agreement in its capacity as a holder of any of the Purchased Shares shall be deemed and understood to be a reference to Purchaser. 

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Article 2
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to the Company and Purchaser that:
Section 2.1    Organization and Good Standing.  Seller is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization.
Section 2.2    Ownership of the Purchased Shares.  Seller is the record and beneficial owner of the Purchased Shares, and such Purchased Shares are free and clear of any Liens other than restrictions (a) provided for under applicable securities laws and (b) set forth in the Investors’ Rights Agreement.  Other than the Purchased Shares, neither Seller or nor any affiliate of Seller owns, of record or beneficially, any shares of capital stock or other equity securities (or securities exercisable, convertible or exchangeable for equity securities) (collectively, “Equity Securities”) of the Company or any of its subsidiaries.  Seller has not, directly or indirectly, granted any option, warrant or other right to any person to acquire any of the Purchased Shares, and other than the Investors’ Rights Agreement, is not a party to any contract or other agreement relating to the Purchased Shares or any other Equity Securities of the Company or its subsidiaries.  As of the date hereof, Seller has not exercised, or provided notice to the Company of its intent to exercise, its right to convert all or any portion of the B-2 Preferred Stock into shares of common stock of the Company (the “Common Stock”) pursuant to Section 6 of the Certificate of Designation.  As of the date hereof and other than the SRE Dividend Amount to be paid by the Company on the date hereof in respect of the Series B First Quarter Dividend, Seller has received payment in full of all dividends that have accrued to the Series B-2 Preferred Stock since the Series B Original Issue Date (as defined in the Certificate of Designation).
Section 2.3    Authority; Execution; Enforceability.  Seller has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement, the performance of its obligations hereunder, and the consummation of the transactions contemplated hereby, by Seller have been duly authorized by all requisite action on the part of Seller and no other action on the part of Seller is necessary to authorize the execution, delivery and performance of this Agreement by the Company or the consummation of the transactions contemplated hereby.   Assuming due execution and delivery of this Agreement by Purchaser and the Company, this Agreement constitutes the valid and legally binding obligation of Seller, enforceable against it in accordance with its terms and conditions, subject to (x) bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and (y) general principles of equity.
Section 2.4    Consents and Approvals.  No notice, report, registration or other filing is required to be made by Seller with, nor are any consents, approvals or authorizations required to be obtained by Seller from, any governmental or regulatory authority of the United States, any State or locality thereof or any foreign jurisdiction (each, a “Governmental Authority”) or any other person under any contract, agreement or other obligation to which Seller is party or by which its assets are bound, in connection with the valid execution, delivery or performance of this Agreement, the consummation by Seller of the transactions contemplated by this Agreement and all other 

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agreements and instruments contemplated hereby or the sale of the Purchased Shares by Seller in accordance with this Agreement.
Section 2.5    Independent Assessment.  Seth Singerman, an affiliate of Seller, is a member of the Board and through his participation on the Board is aware of and knowledgeable about the Company and its business and prospects.  In formulating its decision to sell the Purchased Shares to Purchaser, Seller has had (a) access to Mr. Singerman’s knowledge and (b) the opportunity to ask questions and receive answers from the Company concerning the Company and its businesses and prospects, and Seller has been permitted access to all information which it has requested to evaluate the merits and risks of the sale of the Purchased Shares hereunder.
Section 2.6    No Conflicts.  The execution, delivery and performance of this Agreement by Seller does not, and the consummation of the transactions contemplated hereby by Seller will not, violate, conflict with or result in a breach of or constitute a default (with or without notice or lapse of time, or both) under: (a) any provision of the charter documents (or similar governing documents) of Seller, (b) any agreement, instrument, permit, franchise, license, judgment or order applicable to Seller or the Purchased Shares, other than such conflicts, breaches or defaults that, individually or in the aggregate, do not affect Seller’s ability to perform its obligations hereunder and do not result in, and would not reasonably be expected to result in, the creation of any Lien on the Purchased Shares or any liability or obligation for which Purchaser or the Company may be responsible, or  (c) any statute, law, ordinance, rule, regulation or order of any Governmental Authority or any judgment, order or decree (U.S. federal, state or local or foreign) applicable to Seller.
Section 2.7    Litigation.  There is no action, claim, dispute, arbitration, audit, hearing, inquiry, investigation, administrative enforcement proceeding, litigation or suit (whether civil, criminal, administrative or investigative) (“Litigation”) commenced, brought, conducted, or heard by or before, or otherwise involving, any governmental or arbitration tribunal pending or, to the knowledge of Seller, threatened against Seller, and there is no judgment, decree or order against Seller, in each case, that would be reasonably likely to adversely affect Seller’s ability to perform its obligations under this Agreement or prohibit or make void the Transfer.
Section 2.8    Fee Agreement.  As of the date hereof, and without limiting any rights with respect to transactions after the date hereof, all amounts required to be paid to Seller by the Company pursuant to the SRE Fee Agreement, dated July 24, 2014, between the Company and Seller, as amended by the First Amendment to Fee Agreement, dated August 24, 2015, between the Company and Seller (as so amended, “Fee Agreement”) have been paid in full and the Fee Agreement has been terminated.
Article 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Seller and Purchaser (other than the representations in Sections 3.6, 3.7 and 3.8, which the Company represents and warrants only to Purchaser) that: 

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Section 3.1    Organization and Good Standing.  The Company is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization.
Section 3.2    Authority; Execution; Enforceability.  The Company has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement, the performance of its obligations hereunder, and the consummation of the transactions contemplated hereby, by the Company have been duly authorized by all requisite action on the part of the Company and no other action on the part of the Company is necessary to authorize the execution, delivery and performance of this Agreement by the Company or the consummation of the transactions contemplated hereby.  Assuming due execution and delivery of this Agreement by Seller and Purchaser, this Agreement constitutes the valid and legally binding obligation of the Company, enforceable against it in accordance with its terms and conditions, subject to (a) bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and (b) general principles of equity. 
Section 3.3    No Conflicts.  Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement will conflict with or constitute on the part of the Company a breach of or default (or an event which, with notice or lapse of time or both, would constitute a default) or give rise to any right of termination, amendment, cancellation or acceleration under (a) its certificate of incorporation, as amended, including the certificates of designation of any preferred stock of the Company (other than the Series B Stockholder Approval); (b) its by-laws, as amended (other than the Board Approval); (c) any loan or credit agreement, note, bond, mortgage, indenture, lease, permit, concession, franchise, license, contract, agreement or other instrument, arrangement, understanding or obligation to which the Company or any of its subsidiaries is a party or by which any of them or any of their properties or assets may be bound; or (d) the Delaware General Corporation Law (the “DGCL”), or any other federal, state or local law, statute, ordinance, rule, regulation or any decree, writ, injunction, judgment or order of any court or administrative or other governmental body or any arbitration award which is either applicable to, binding upon or enforceable against the Company.
Section 3.4    Consents and Approvals.  Other than the Board Approval and the Series B Stockholder Approval, no notices, reports, registrations or other filings are required to be made by the Company with, nor are any consents, approvals or authorizations required to be obtained by the Company from, any Governmental Authority or any other person under any contract, agreement or other obligation to which the Company is party or by which its assets are bound, in connection with the valid execution, delivery or performance of this Agreement and all other agreements and instruments contemplated hereby by the Company or the consummation by the Company of the transactions contemplated by this Agreement and all other agreements and instruments contemplated hereby.  The Board Approval attached as Exhibit A is a true, correct and complete copy of the resolutions adopted by the Board on [April 2, 2017], authorizing the Transfer and the Company’s execution, delivery and performance of this Agreement, and such resolutions were duly and validly adopted, have not been revoked or modified and are in full force and effect.  The Series B Stockholder Approval attached as Exhibit B is a true, correct and complete copy of the written consent executed by holders of Series B Preferred Stock representing at least the Required Holders (as defined in the Certificate of Designation) and delivered on April 10, 2017, authorizing the Transfer, and such 

10

written consent was duly and validly delivered in accordance with the DGCL, has not been revoked or modified and is in full force and effect.  Other than the Board Approval and the Series B Stockholder Approval, no other approval or consent of the Board or the holders of any Equity Securities of the Company is required to authorize and approve the Transfer.  
Section 3.5    Litigation.  There is no action, claim, dispute, arbitration, audit, hearing, inquiry, investigation, administrative enforcement proceeding, litigation or suit (whether civil, criminal, administrative or investigative) commenced, brought, conducted, or heard by or before, or otherwise involving, any governmental or arbitration tribunal pending or, to the knowledge of the Company, threatened against the Company, and there is no judgment, decree or order against the Company, in each case, that would be reasonably likely to adversely affect the Company’s ability to perform its obligations under this Agreement or prohibit or make void the Transfer.
Section 3.6    Company Securities.  Schedule 3.6 attached hereto sets forth a correct and complete listing of (a) all of the Equity Securities of the Company authorized, the number and type of its Equity Securities issued and outstanding and the current record and beneficial ownership of such Equity Securities, and (b) since the formation of the Company, each issuance or grant of Equity Securities by the Company to any person, each purchase or redemption of Equity Securities of the Company and each transfer of Equity Securities by any holder of Equity Securities, in each case, specifying the date thereof, the type and number of Equity Securities and the persons involved in such transaction.  All of the Equity Securities of the Company are duly authorized, have been validly issued and are fully paid and non-assessable, are owned beneficially and of record by those persons set forth in Schedule 3.6, and were issued in compliance with applicable securities laws or exemptions therefrom.
Section 3.7    Non-Foreign Status.  Seller is not a “foreign person” as defined in Section 1445(f)(3) of the Code.
Section 3.8    No Conversion.  As of the date hereof, (a) the Company has not received any notice from any holder of the Series B Preferred Stock (including Seller, for the avoidance of doubt) of such holder’s intent to exercise its right to convert all or any portion of the B-2 Preferred Stock into shares of the Common Stock pursuant to Section 6 of the Certificate of Designation, and (b) no event that would trigger the Automatic Conversion Time (as defined in the Certificate of Designation) pursuant to Section 7 of the Certificate of Designation has occurred.  
Article 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company and Seller that:
Section 4.1    Authority; Execution; Enforceability.  Purchaser has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement, the performance of its obligations hereunder, and the consummation of the transactions contemplated hereby, by Purchaser have been duly authorized by all requisite action on the part of Purchaser and no other action on the part of Purchaser is necessary to authorize the 

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execution, delivery and performance of this Agreement by Purchaser or the consummation of the transactions contemplated hereby.  Assuming due execution and delivery of this Agreement by Seller and the Company, this Agreement constitutes the valid and legally binding obligation of Purchaser, enforceable against it in accordance with its terms and conditions, subject to (a) bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and (b) general principles of equity.
Section 4.2    Restricted Securities.  Purchaser is acquiring the Purchased Shares for its own account, not as a nominee or agent, and not with a view to their distribution within the meaning of Section 2(11) of the Securities Act of 1933, as amended (the “Securities Act”), in any manner that would be in violation of the Securities Act and with no present intention of distributing or reselling, or granting any participation in, any part thereof.  Purchaser understands that (a) except as provided in the Investors’ Rights Agreement, the Purchased Shares will not be registered under the Securities Act or any state securities laws and (b) the Purchased Shares may not be sold or otherwise disposed of unless such sale or disposition is registered under the Securities Act and applicable state securities laws or such sale or other disposition is exempt from registration thereunder.   Purchaser understands that no public market now exists for the Purchased Shares, and that there can be no assurance that a public market will ever exist for the Purchased Shares.
Section 4.3    Accredited Investor; Non-Reliance.  Purchaser is an “accredited investor” (as defined in Rule 501(a) under the Securities Act).  Purchaser has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Purchased Shares and is capable of bearing the economic risks of such investment for an indefinite period of time. Purchaser acknowledges and agrees that (a) Seller has not made any representations or warranties to Purchaser except for the representations and warranties made by Seller in Article 2 hereof, (b) Seller has not made any representations or warranties to Purchaser with regard to the value of the Purchased Shares or the assets, liabilities, financial condition, prospects or operations of the Company, (c) Purchaser is not relying upon Seller for any tax, investment or other advice, and (d) Purchaser freely accepts the investment risk inherent in the ownership of the Purchased Shares.   
Section 4.4    Consents and Approvals.  No notices, reports, registrations or other filings are required to be made by Purchaser with, nor are any consents, approvals or authorizations required to be obtained by Purchaser from, any Governmental Authority or any other person under any contract, agreement or other obligation to which Purchaser is party or by which its assets are bound, in connection with the valid execution, delivery or performance of this Agreement and all other agreements and instruments contemplated hereby by Purchaser or the consummation by Purchaser of the transactions contemplated by this Agreement and all other agreements and instruments contemplated hereby, in each case except for such notices, reports, registrations and other filings the failure of which to make or obtain, individually or in the aggregate, are not material to Purchaser’s ability to perform its obligations hereunder.
Section 4.5    No Conflicts.  The execution, delivery and performance of this Agreement by Purchaser do not, and the consummation of the transactions contemplated hereby by Purchaser will not, violate, conflict with or result in a breach of or constitute a default (with or without notice 

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or lapse of time, or both) under any agreement, instrument, permit, franchise, license, judgment or order applicable to Purchaser, other than such conflicts, breaches or defaults that, individually or in the aggregate, are not material to Purchaser’s ability to perform its obligations hereunder. 
Article 5
RELEASE
Section 5.1    In further consideration for each Party’s execution of this Agreement and performance of transactions contemplated herein, effective, and conditioned, upon the payment in full of the Purchase Price by Purchaser and the SRE Dividend Amount and the Expense Reimbursement Amount by the Company, each of Seller and the Company, on behalf of itself and each of its direct and indirect beneficial owners, officers, directors, employees, agents, affiliates and representatives (and each of their respective successors and assigns), unconditionally and irrevocably acquits and forever fully releases and discharges each other Party, and each of their affiliates, partners, subsidiaries, officers, employees, agents, attorneys, principals, directors, and shareholders, and their respective heirs, legal representatives, successors and assigns (collectively, the “Releasees”), from any all claims, demands, causes of action obligations, remedies, suits, damages and liabilities of any nature whatsoever, whether now known or unknown, suspected, unsuspected or claimed, matured or unmatured, direct or derivative, whether arising under common law, in equity, or under statute, which Seller or the Company, as applicable, or its direct and indirect beneficial owners, officers, directors, employees, agents, affiliates and representatives (and each of their respective successors and assigns), has ever had or now has against any of the Releasees, and which may have arisen at any time prior to the Closing, and/or which are in any manner related to, arise from, or are in connection with, directly or indirectly, ownership of the Purchased Shares, the Certificate of Incorporation (including the Certificate of Designation), the Bylaws, the Investor Rights Agreement, the Fee Agreement and/or related documents, instruments or agreements relating to the ownership and operation of the Company prior to the Transfer, or the enforcement of, attempted or threatened enforcement by any parties of any of their respective common rights, remedies, or recourse related thereto (the “Released Claims”); provided, however, that “Released Claims” shall not include any claims, demands, causes of action obligations, remedies, suits, damages and liabilities arising out of (i) this Agreement, (ii) the financing agreements by and between the Company and Seller or any of its affiliates set forth on Schedule 5.1 attached hereto, but only to the extent such claims expressly survive the Company’s repayment of the loans or advances (and accrued interest thereon) made to the Company pursuant to such agreements; or (iii) the service of Seth Singerman as a member of the Board, any governing body of any subsidiary of the Company or any committee of any of the foregoing, whether pursuant to the Company’s or such subsidiary’s certificate of incorporation, bylaws or equivalent organizational or governance documents in effect as of the date hereof, any applicable insurance policies of the Company in effect as of the date hereof, or that certain Indemnification Agreement, dated as of July 24, 2014, by and between the Company and Seth Singerman.  From and after the Closing and the payment in full of the Purchase Price by Purchaser and the SRE Dividend Amount and the Expense Reimbursement Amount by the Company, each of Seller and the Company, as applicable, covenants and agrees not to ever commence, voluntarily aid in any way, prosecute, or cause to be commenced or prosecuted against any of the Releasees, any action or other proceeding based upon any of the Released Claims.

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Section 5.2    Each of the Company and Seller understands, acknowledges and agrees that, once effective, the release set forth above may be asserted as a full and complete defense, and may be used for a basis for an injunction against, any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.
Section 5.3    Each of the Company and Seller agrees that no fact, events, circumstances, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above. 
Article 6
SURVIVAL; INDEMNIFICATION
Section 6.1    Survival.  All representations and warranties contained in this Agreement shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.  
Section 6.2    Indemnification.
(a)    From and after the Closing, each Party (the “Indemnifying Party”) shall indemnify and hold each of the other Parties, its affiliates and their respective stockholders, directors and officers (collectively, the “Indemnified Parties”) harmless from and against any and all liabilities, obligations, deficiencies, demands, claims, suits, actions, causes of action, assessments, losses, costs and expenses (including reasonable attorneys’ fees), sustained or incurred by any such Indemnified Party, resulting from (i) any breach of a representation or warranty made by the Indemnifying Party in this Agreement, and (ii) any breach of a covenant made by the Indemnifying Party in this Agreement.  The provisions of this Section 6.2 are intended to be for the benefit of, and shall be enforceable by, each Indemnified Party.
(b)    Except in the event of fraud and any equitable remedies that may be available to any Party, indemnification under this Section 6.2 shall be the Parties’ sole and exclusive remedy for any breach of this Agreement.
Section 6.3    Tax Treatment.  Any amounts paid under this Article 6 shall, to the extent permitted by law, be treated as an adjustment to the consideration paid to Seller hereunder for federal, state and local tax purposes.
Article 7
GENERAL PROVISIONS
Section 7.1    Further Assurances.  If any further action is necessary or reasonably desirable to carry out the Transfer or this Agreement’s purposes, each Party will take such further action (including but not limited to executing and delivering any further instruments and documents and providing any reasonably requested information) as any other Party may reasonably request.

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Section 7.2    Fees and Expenses.  Except for the obligation of the Company to pay the Expense Reimbursement Amount to Seller at the Closing, each Party shall pay all costs and expenses incurred in connection with the preparation, negotiation, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby; provided, that the prevailing Party(ies) in any litigation, arbitration or other proceeding arising out of this Agreement shall be reimbursed by the non-prevailing Party(ies) for all costs and expenses incurred in such proceeding, including reasonable attorneys’ fees and expenses.
Section 7.3    Entire Agreement; Amendments. This Agreement is the entire agreement of the Parties and supersedes all prior agreements and understanding with respect to the subject matter hereof.  No amendment or modification (or termination or cancellation unless pursuant to the express terms) of this Agreement shall be effective unless made in writing by all Parties. 
Section 7.4    Severability. Any provision of this Agreement that is invalid, unenforceable or illegal in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such invalidity, unenforceability or illegality without affecting the remaining provisions hereof and without affecting the validity, enforceability or legality of such provision in any other jurisdiction.
Section 7.5    Amendment; Waiver.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Parties; provided, that any provision hereof may be waived by any waiving party on such Party’s own behalf, without the consent of any other Party.
Section 7.6    Succession and Assignment.  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns, and no other person or entity shall have any rights, interests or claims hereunder or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.  No Party may assign either this Agreement or any of their rights, interests or obligations hereunder without the prior written approval of the other Parties.
Section 7.7    Applicable Law; Jurisdiction; Waiver of Jury Trial.  This Agreement shall be governed in all respects, including but not limited to, validity, interpretation and effect, by the laws of the State of New York regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.  Any Litigation against any party to this Agreement arising out of or in any way relating to this Agreement shall be brought solely in any federal or state court located in the State of New York in New York County and each of the parties submits to the exclusive jurisdiction of such courts for the purpose of any such Litigation.  Each party irrevocably and unconditionally agrees not to assert (a) any objection which it may ever have to the laying of venue of any such Litigation in any federal or state court located in the State of New York in New York County, (b) any claim that any such Litigation brought in any such court has been brought in an inconvenient forum and (c) any claim that such court does not have jurisdiction with respect to such Litigation.  Each party irrevocably and unconditionally waives any right to a trial by jury.

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Section 7.8    Counterparts.  This Agreement may be executed in one or more original or electronic counterparts, each of which shall be deemed an original, but all of which shall constitute the same instrument.
[Remainder of page left intentionally blank.]

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IN WITNESS WHEREOF, the Parties have set their hands to this Preferred Stock Purchase Agreement to be effective as of the date first written above. 

	
		
	 
	IMH FINANCIAL CORPORATION

By:   /s/ Lawrence D. Bain               
Name: Lawrence D. Bain
Title: Chairman & CEO

SRE MONARCH, LLC

By: _/s/ Seth Singerman______
Seth Singerman, its President

JPMORGAN CHASE FUNDING INC.

By: __/s/ Chad Parson________
Name: Chad Parson
Title: Managing Director

	 
	 

[Signature Page to Preferred Stock Purchase Agreement]

EXHIBIT A
Approval of the Board
(attached)

    
    

EXHIBIT A

EXHIBIT B
Series B Stockholder Approval 
(attached)

EXHIBIT B

EXHIBIT C
Certificate of Non-Foreign Status
(attached)

EXHIBIT C

EXHIBIT D
Board Resignation
(attached)

    

EXHIBIT C

SCHEDULE 3.6
Company Equity Securities 
(attached)

SCHEDULE 3.6

SCHEDULE 5.1
Seller/Company Financing Agreements

SCHEDULE 5.1

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