2nd
AMENDMENT TO LOAN PURCHASE AND SALE AGREEMENT


 


This
2nd AMENDMENT TO LOAN PURCHASE AND SALE AGREEMENT (this “Amendment”) dated as of the 19th day of
February, 2016, by and between SHEPHERD’S FINANCE, LLC, a Delaware limited liability company (“Seller”)
having an address at 12627 San Jose Boulevard, Suite 203, Jacksonville, Florida 32223, and S.K. FUNDING, LLC, , a Florida
limited liability company (“Buyer”) having an address at 630 Maplewood Drive, Suite 100, Jupiter FL, 33458.


 


RECITALS


 


A.On
April 29, 2015, Seller and Seven Kings Holdings, Inc., entered into that certain Loan Purchase and Sale Agreement for the purpose
of Seven Kings participating in certain loans issues by Seller, as more specifically described therein (“Agreement”);


 


B.On
or about May 7, 2015, Seven Kings assigned its rights and interest in the Agreement to Buyer;


 


C.On
or about November 19, 2015, Seller and Buyer entered into that certain 1st Amendment setting forth certain terms, conditions
and understandings therein; and


 


D.Seller
and Buyer wish to amend the Agreement, as previously amended, only and specifically for the loans listed on Exhibit “A”
of this Amendment, which is attached hereto and made a part hereof (the “2nd Amendment Loans”).


 


ARTICLE
1


 


INCORPORATION
OF RECITALS; DEFINITIONS


 


1.1Incorporation
of Recitals. The above recitals are incorporated herein by this reference as if they were set forth herein in their entirety.


 


1.2Definitions.
Unless otherwise stated in this Amendment, defined terms used in this Amendment have their meanings as defined in the Agreement.


 


ARTICLE
2


 


MODIFICATIONS


 


2.1The
following modifications shall be applicable to the 2nd Amendment Loans, but shall have no applicability or affect on
other loans participated in by the parties pursuant to the Agreement. Except as provided for herein, the Agreement shall apply
to the 2nd Amendment Loans. The following modifications to the Agreement shall apply to the 2nd Amendment
Loans: 


 


(a)The
Buyer’s Investment Amount, as defined in Section 1.2 of the Agreement, will not be impacted by the 2nd Amendment
Loans.


 


(b)The
Buyer Loan Amount, as defined in Section 1.2 of the Agreement, shall be the amount listed next to each loan on Exhibit “A.”


 


(c)The
Buyer Loan Percentage, as defined in Section 1.2 of the Agreement, shall not be applicable to the 2nd Amendment Loans.


 




    			 



    	 	 	 



    





 


(d)The
Interest Rate, as defined in Section 1.2 of the Agreement, shall be 9.5% calculated on a 365/366 day basis.


 


(e)For
the Lex Partners Loan (as described on Exhibit “A”), in addition to all other provisions set forth herein, Seller
shall pay Buyer simulatanously with Buyer’s funding of said loan an amount equal to two (2) points on the loan amount funded.


 


(f)The
Purchase Limit, as defined in Section 1.2 of the Agreement, shall not apply and this Amendment shall not affect the Purchase Limit
as applied to other loans participated in by the parties pursuant to the terms of the Agreement.


 


(g)Section
2.1(a) of the Agreement is modified, to the extent necessary, to provide that Buyer agrees to purchase from Seller the 2nd
Amendment Loans in the amount set forth on Exhibit “A.”


 


(h)Section
2.2(a) of the Agreement is modified to provide that the Purchase Price shall be the amount listed on Exhibit “A.”


 


(i)Section
2.4 of the Agreement shall not apply to the 2nd Amendment Loans and there will be no Buyer Loan Funding on these loans
after the initial Purchase Price is funded.


 


(j)Section
2.5 of the Agreement is modified to provide that Buyer will not make Protective Advances.


 


(k)Section
5.6(c) of the Agreement is deleted in its entirey for the purposes of this Amendment and replaced with the following provision:
“From all collections of principal payments under the Loan, Buyer will receive all proceeds until the Buyer Loan Amount
has been repaid, after which all proceeds will be paid to Seller.”


 


(l)Section
5.7 of the Agreement is hereby deleted in its entirety for the purposes of this Amendment and replaced with the following provision:
“Buyer Loan shall have priority over Seller Loan.”


 


(m)In
the event any of the 2nd Amendment Loans are not paid in full within fourteen (14) months from Buyer funding of the
Buyer Loan Amount, within ten (10) days of the end of such fourteen (14) month period, and within the same period each month thereafter
any of the loans remain outstanding, Seller shall provide Buyer with a written update on the status and performance of such outstanding
loans together with a recommendation on how to proceed with said loans. In the event any of the 2nd Amendment Loans
are not paid in full within sixteen (16) months from Buyer funding of the Buyer Loan Amount, at any time thereafter, and from
time to time as any such loans remain outstanding, in the event Buyer disagrees with Seller’s recommendation not to call
the loan or otherwise take no action, as applicable, Buyer may request a third party (which the parties agree shall be Kenneth
Summers unless he is unable or unwilling to undertake such request in which case the parties shall mutually agree on said third
party) conduct an independent review of such outstanding loans and direct the parties how to proceed with said loans, which decision
shall be binding on the parties.


 




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(n)In
the event any or both of the 2nd Amendment Loans are not funded by December 31, 2016, Buyer shall have the right, in
its sole discretion, to not fund such remaining loan or loans under this Amendment and upon such decision by Buyer this Amendment
shall have no further force and effect except to the extent of any such 2nd Amendment Loan already funded hereunder
and outstanding.


 


ARTICLE
3


 


GENERAL


 


3.1Except
as specifically amended by this Amendment, all other terms and conditions of the Agreement shall continue in full force and effect.
Except for the 2nd Amendment Loans, no term or provision of this Amendment shall apply to any other loan participated
in by the parties under the Agreement. No variation, modification or amendment to this Amendment shall be deemed valid or effective
unless and until it is signed by the parties hereto. This Amendment may be executed in counterparts, each of which once so executed
shall be deemed to be original and all of which taken together shall constitute one and the same agreement. For purposes of this
Agreement, use of a facsimile, e-mail, or other electronic medium shall have the same force and effect as an original signature.


 


IN
WITNESS WHEREOF, the parties have executed this Amendment as of the day and year first above written.


 


	 	SELLER:	 
	 	 	 
	 	SHEPHERD’S FINANCE, LLC, 
	 	a Delaware limited liability company 
	 	 	 
	 	By:	/s/
    Daniel M. Wallach
	 	Name:	Daniel
    M. Wallach
	 	Title:	CEO
	 	 	 
	 	BUYER:
	 	 	 
	 	S . K. FUNDING, LLC, a Florida limited liability company
	 	 	 
	 	By:	/s/
    Raymond E. Graziotto
	 	Name:	Raymond
    E. Graziotto
	 	Title:	Managing
    Member / Authorized Representative





 




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EXHIBIT
A


 


2nd
Amendment Loans


 


	Borrower	 	Lot	 	Buyer
    Loan Amount/Purchase Price
	 	 	 	 	 
	Benjamin
    Marcus Homes, LLC	 	Lot
    10, Tuscany,	 	$425,000
		 	Peters
    Township 	 	 
	 	 	 	 	 
	Benjamin
    Marcus Homes, LLC	 	Upper
    St. Clair	 	$575,000
		 	Hastings
    Mill Road 	 	 
	 	 	 	 	 
	Lex
    Partners II, LLC	 	Lot
    136 Harbor Acres	 	$1,000,000
	(“Lex
    Partners Loan”)	 	Section
    2	 	 
	 	 	1333
    Vista Drive	 	 
	 	 	Sarasota,
    FL 34239