Document:

DEED
IN LIEU OF FORECLOSURE AGREEMENT

 

THIS
DEED IN LIEU OF FORECLOSURE AGREEMENT is made as of the 30th day of June, 2016 (the “Agreement”) by and between
Eclipse Partners II, LLC, a Florida limited liability company, with a mailing address of ________________________________ (“Borrower”)
and Shepherd’s Finance, LLC, a Delaware limited liability company registered to do business in the state of Florida, with
a mailing address of 12627 San Jose Blvd. Suite 203, Jacksonville FL 32223 (“Lender”).

 

WITNESSETH:

 

	A.
    	Borrower
    owns fee simple title to the real estate and the improvements described as: 171Whittier Drive, Sarasota FL 34236, and legally
    described on Exhibit “A” attached hereto.
	 	 
	B.
    	Lender
    made a loan to Borrower in the amount of Two Million Six Hundred Forty Thousand Dollars ($2,640,000.00) (the “Loan”).
    The Loan is evidenced by a certain Promissory Note dated December 9, 2015 made by Borrower, as maker, in favor of Lender (the
    “Note”). The Loan is secured by, among other things, a certain Mortgage dated December 9, 2015 made by Borrower,
    as mortgagor, in favor of Lender, as mortgagee, recorded in the Public Records of Sarasota County, Florida as Instrument 2015154148
    (the “Mortgage”). (The Note and the Mortgage are sometimes herein collectively referred to as the “Loan
    Documents”). 
	 	 
	C.
    	As
    of this date, the total outstanding principal balance due on the Loan is One Million Seven Hundred and Two Thousand Eight
    Hundred Twenty Two Dollars and Forty Eight Cents ($1,702,822.48), plus accrued and unpaid interest through June 24, 2016,
    equal to One Hundred Sixteen Thousand Seven Hundred Fifty Seven Dollars and Eighty Five Cents ($116,757.85), with a per diem
    thereafter equal to Seven Hundred Thirty Seven Dollars and Forty Two Cents per day ($737.42), plus late fees equal to Eight
    Thousand Seven Hundred Eighty Seven Dollars and Fifty Cents ($8,787.50). 
	 	 
	D.
    	Borrower
    is in default under the Loan Documents (“Borrower’s Default”). The Loan has been accelerated and the entire
    principal amount of the Loan together with all accrued interest and late fees thereon are now due and owing.

 

    	 	1	 

     

    

 

	E.
    	In
    order to avoid the financial hardship and damage to reputation that would result from the Borrower’s Default, Borrower
    has requested that the parties resolve Borrower’s Default by Borrower’s conveyance of the real estate legally
    described on Exhibit “A” and other property to Lender, or to a person or other entity designated by Lender (“Designee”),
    in lieu of foreclosure in consideration of the premises and other consideration.
	 	 
	F.
    	The
    fair market value of the “Property” (as hereinafter defined) does not exceed the total outstanding unpaid principal,
    interest and late fees, plus any other sums that are due and owing under the Loan Documents, that have accrued and are unpaid
    under the Loan Documents.
	 	 
	G.
    	Lender
    wishes to accept the conveyance of the Property pursuant to this Agreement to avoid the necessity of litigation, foreclosure,
    and the delays associated therewith.

 

NOW
THEREFORE, for and in consideration of the foregoing premises and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender do hereby agree as follows:

 

ARTICLE
I

Incorporation
and Transfer

 

1.01
Incorporation. The recitals to this Agreement are fully incorporated herein by this reference thereto with the same force
and effect as though restated herein.

 

1.02
Transfer of Property. Subject to the terms, provisions, conditions, covenants, and agreements herein contained and subject
to the matters set forth on Exhibit “B” hereto (“Permitted Exceptions”) Borrower agrees to sell,
grant, transfer, assign, and convey to Lender (or Designee) and Lender agrees to acquire, or cause Designee to acquire, from Borrower
absolutely and free of any right of redemption or other right or interest of Borrower or anyone claiming by, through, or under
Borrower, the following real and personal property (collectively, the: (a) good, valid, indefeasible, and marketable fee simple
title to the property described on Exhibit “A” attached hereto (“Real Estate”); (b) all of Borrower’s
right, title, and interest as lessor or lessee in all leases, licenses, and other agreements to occupy all or any part of the
Real Estate (together ALeases@) together with all rents and other sums due, accrued or to become due under each such lease, license,
and agreement, all rents that are received and allocable to periods following the “Closing Date” (as hereinafter defined)
and (c) all other tangible and intangible personal property, equipment, and supplies located at or used in connection with the
Real Estate ( the “Personal Property”). The Real Estate and Leases are sometimes referred to hereinafter as the AProperty.@

 

    	 	2	 

     

    

 

ARTICLE
II

Consideration

 

2.01
Release of Personal Liability. In consideration for the transfer by Borrower of the Property to Lender (or, at Lender’s
option, Designee), and subject to the terms, provisions, and conditions herein contained, at the “Closing” (as hereinafter
defined), Lender shall in the deed in lieu agree to release Borrower from any personal liability for payment of the Loan.

 

ARTICLE
III

Title

 

3.01
Owners Title Policy. As a condition to Lender’s obligation to close, Lender must, at Closing, receive from Old Republic
Title insurance Company or some other title company at Lender’s discretion (hereafter the “Title Company”) an
ALTA Form Owner’s Title Insurance Policy acceptable to Lender (the “Title Policy”), dated as of the Closing
Date naming Lender as the insured, which Title Policy shall show fee simple title to the Real Estate vested in Buyer subject only
to the Permitted Exceptions. The Title Policy must (a) insure as separate parcels any easements appurtenant to the Real Property,
(b) be in the amount of the indebtedness evidenced by the Note which is outstanding on the Closing Date (or such lesser amount
as Lender shall accept), (c) delete the standard ALTA exceptions, (d) delete any so-called “creditors” rights exclusion
or exceptions. Lender may waive this requirement, but in so doing shall not release Borrower from all promises, covenants, terms,
conditions, obligations and warranties, including warranties of title, contained herein or in the Deed.

 

ARTICLE
IV

Closing

 

4.01
Closing. Provided all terms, provisions, and conditions contained in this Agreement to be satisfied on or before Closing
have been timely satisfied, Borrower’s warranties and representations are true and correct, so as to provide for the closing
of the transaction contemplated hereby, including without limitation, the vesting in Lender of good, valid, indefeasible, and
marketable fee simple title to the Real Property, subject only to the Permitted Exceptions, closing of the transaction contemplated
hereby (“Closing”), shall take place at the office of Gibson, Kohl, Wolff & Hric, PL, 1800 Second Street, Suite
901, Sarasota FL 34236, at _______ A.M./P.M. on June _____, 2016, or such other date or such other place as may be mutually agreed
upon in writing by Borrower and Lender.

 

4.02
Closing Deliveries, etc. The following deliveries and/or actions shall constitute the Closing. Such deliveries, showings,
and actions shall be deemed to be taken simultaneously and no one of which shall be deemed completed until all of such deliveries,
showings, and actions have been completed.

 

A.
Title Documents. The following title, transfer, and original documentation and other matters shall be duly authorized, properly
executed, acknowledged (if applicable) and/or delivered:

 

(a)
The Title Policy. The Title Policy (or a “marked-up” title commitment to issue the Title Policy). or such other title
search relied on by Lender in its sole and absolute discretion.

 

    	 	3	 

     

    

 

(b)
Lien and Possession Affidavit. Borrower shall deliver to Lender a Lien and Possession Affidavit for the Real Property executed
and sworn to by him/her in a form attached hereto and made a part hereof as Exhibit “C” in order for the elimination
of the issuance of a title policy as to (a) the rights of parties in possessions, and (b) mechanics’ liens.

 

(c)
Estoppel Affidavit. Borrower shall deliver an Estoppel Affidavit regarding the Deed in Lieu of Foreclosure in a form which is
attached hereto and made a part hereof as Exhibit “D”.

 

B.
Transfer Documents. The following Property transfer documentation shall be duly authorized, properly executed, acknowledged
(if applicable), and delivered to Lender:

 

(a)
Deed. Borrower’s duly executed, acknowledged, and stamped recordable deed in form and substance as set forth on Exhibit
“E” attached hereto.

 

(b)
Bill of Sale. Borrower’s duly executed bill of sale in form and substance as set forth on Exhibit “F”
attached hereto.

 

(c)
Release of Lender by Borrower, et al. Borrower shall deliver to Lender, a release of Lender and its respective affiliates, successors
and assigns and other parties reasonably designated by Lender, in the form of Exhibit “G” attached hereto.

 

(d)
Possession. Borrower shall deliver possession of the Real Property and the other Personal Property to Lender.

 

(e)
Keys to Premises. Borrower shall deliver to Lender or Lender’s designee, a key code inventory and all keys to the Real Estate
or, with Lender’s permission, a letter executed by Borrower and the Borrower’s managing agents addressed to the person(s)
or entities possessing the keys directing such persons or entities to deliver the keys to Lender or Lender’s designated
representative.

 

(f)
Payments to Lender. Borrower shall pay to Lender an amount equal to $____________, representing documentary stamps on the deed
and one month’s rent.

 

(g)
Resolution. Borrower shall duly executed Resolution – Managing Member’s Certificate in form and substance as set forth
on Exhibit “H” attached hereto.

 

(i)
Settlement Statement. Borrower, Lender and Designee shall jointly execute and deliver a settlement statement to each other.

 

4.04
Expenses of Closing. At Closing, Lender shall pay the Title Policy or title search, as the case may be, its own legal
fees and recording fees. Borrower shall pay any and all documentary stamps and intangible tax required on the deed.

 

    	 	4	 

     

    

 

ARTICLE
V

Representations,
Warranties and Indemnity

 

5.01
Representations and Warranties of Borrower. Borrower represents and warrants to Lender as follows:

 

(a)
Bankruptcy. Borrower has not filed a petition in any case, action, or proceeding under the Bankruptcy Code or any similar
state law; no petition in any case, action, or proceeding under the Bankruptcy Code or any similar state law has been filed against
Borrower that has not been dismissed or vacated; and Borrower has not filed an answer or otherwise admitted in writing insolvency
or inability to pay their debts or made an assignment for the benefit of creditors or consented to an appointment of a receiver
or trustee of all or a material part of their property. The transaction contemplated herein is not a preference, voidable transfer,
fraudulent conveyance, or otherwise in violation of the Bankruptcy Code or any other similar state or federal law.

 

(b)
Absence of Litigation. Borrower has not received any written notice of any, nor is there any, pending or, to the best of Borrower’s
knowledge any threatened, litigation or administrative proceeding involving in any manner the Real Property or the ownership thereof.

 

(c)
Arm’s-Length Transaction. Borrower has requested conveyance of title to the Property in lieu of the exercise of Lender’s
remedies pursuant to the Loan Documents and throughout the negotiation, preparation, and execution of this Agreement has been,
and will through the Closing be represented by competent legal counsel of their own choosing. This Agreement was entered into
out of the free will of Borrower and pursuant to arm’s-length negotiations and Borrower believes this Agreement is fair.
Lender has not taken advantage of Borrower by threats, intimidation, overreaching, unconscionable conduct, or otherwise and Borrower
is proceeding in this transaction as a volunteer in what they perceive to be their own best interest.

 

5.03
Indemnity. Borrower agrees to defend, indemnify, and hold Lender, and it’s designee ___________________________ and
their respective partners, successors, assigns, members, officers, participants, shareholders, directors, and personal representatives
(collectively, the “Lender-Connected Parties”) harmless from and against any losses, damages, costs (including, without
limitation, attorneys’ fees, court costs, and costs of appeal), expenses, judgments, liens, decrees, fines, penalties, liabilities,
claims, actions, suits, and causes of action arising, directly or indirectly, from (a) any breach by Borrower of warranty or representation
contained in this Agreement or in the documents executed and delivered by Borrower pursuant to this Agreement (with this Agreement,
sometimes collectively referred to as the “Borrower Documents”); (b) any breach, default, or violation by Borrower
of any covenant, agreement, or provision of the Borrower Documents; and (c) any claims or liabilities pertaining to the Property
arising prior to the Closing (d) any federal or state income or other tax liability of Borrower regarding the transactions contemplated
by this Agreement, including but not limited to tax liabilities arising our of or in any manner related to withholding requirements
under Section 1445 of the Internal Revenue Code of 1986, and any and all obligations of Borrower for discharge of indebtedness
income. The indemnifications set forth in this section 5.03 survive the closing of this transaction and do not merge in the deed
or any other document executed in connection herewith.

 

    	 	5	 

     

    

 

5.04
Property Condition. Seller warrants that all major appliances and heating, cooling, mechanical, electrical, security, and
pluming systems are and will be maintained in working condition until closing and the structure does not leak.

 

ARTICLE
VI

No
Obligation of Lender to Third Parties

 

6.01
No Third-Party Beneficiary. Borrower acknowledges and agrees that the transfer to Lender of title to the Real Property pursuant
to the terms of this Agreement shall not create any obligations on the part of Lender to third parties that have claims of any
kind whatsoever against Borrower with respect to the Property, and Lender does not assume or agree to discharge any liabilities
pertaining to the Property except as otherwise expressly provided in this Agreement.

 

ARTICLE
VII

Absolute
Conveyance/No Merger

 

7.01
Conveyance/No merger. The conveyance of the Property to Lender according to the terms of this Agreement is an absolute conveyance
of all of its right, title, and interest in and to the Property in fact as well as form and was not and is not now intended as
a mortgage, trust conveyance, deed of trust, or security instrument of any kind, and that the consideration for such conveyance
is exactly as recited herein and Borrower has no further interest (including rights of redemption) or claims in and to the Property
or to the rents, proceeds, and profits that may be derived thereof, of any kind whatsoever. Notwithstanding Lender’s acquisition
of the Property, the indebtedness evidenced by the Note shall not be cancelled, shall survive the Closing and delivery of any
deeds and/or releases and all of the Loan Documents shall remain in full force and effect after the transaction contemplated by
this Agreement has been consummated. The parties further agree that the interest of Lender in the Property after Buyer’s
acquisition of the Property shall not merge with the interest of Lender in the Property under the Loan Documents. It is the express
intention of each of the parties hereto (and all of the conveyances provided for in this Agreement shall so recite) that such
interests of Lender and Buyer in the Property shall not merge, but be and remain at all times separate and distinct, notwithstanding
any union of said interest in Lender at any time by purchase, termination, or otherwise and that the lien of the Mortgage in the
Property shall be and remains at all times a valid and continuous lien on the Property until and unless released of record by
Lender or its successors and assigns.

 

    	 	6	 

     

    

 

ARTICLE
IX

Notices

 

9.01
Notice. Any notice pursuant to this Agreement shall be given in writing by (a) personal delivery, or (b) reputable overnight
delivery service with proof of delivery, or (c) United States Mail, postage prepaid, registered or certified mail, return receipt
requested, or (d) legible facsimile transmission sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have designated by written notice sent in accordance herewith,
and shall be deemed to have been given either at the time of personal delivery, or, in the case of expedited delivery service
or mail, as of the date of first attempted delivery at the address and in the manner provided herein, or, in the case of facsimile
transmission, as of the date of the facsimile transmission provided that an original of such facsimile is also sent to the intended
addressee by means described in clauses (a), (b), or (c) above. Unless changed in accordance with the preceding sentence, the
addresses for notices given pursuant to this Agreement shall be as follows:

 

To
Borrower: 

 

Eclipse
Partners II, LLC

1401
8th Avenue West

Bradenton, FL 34205

 

And
a copy to:

 

Najmy
Thompson, P.L.

Attn:
Louis J. Najmy, Esquire

1401
8th Avenue West

Bradenton, FL 34205

 

To
Lender: 

 

Shepherd’s
Finance, LLC

c/o
Dan Wallach, Chief Executive Officer

12627
San Jose Blvd. Suite 203

Jacksonville
FL 32223

 

And
a copy to:

James D. Gibson, Esquire

Gibson,
Kohl, Wolff & Hric, P.L.

400
Burns Court

Sarasota
FL 34236

 

All
notices shall be deemed effectively given on the date that such notice is received or refused.

 

    	 	7	 

     

    

 

ARTICLE
X

Miscellaneous

 

10.01
Miscellaneous. This Agreement, and the exhibits attached hereto, and all other instruments and documents executed and
delivered at Closing by either party hereto, embody the entire agreement between the parties in connection with the transaction
contemplated hereby and there are no oral or parol agreements, representations, or inducements existing between the parties relating
to the transaction contemplated hereby that are not expressly set forth herein and covered hereby. This Agreement may not be modified
except in writing signed by all of the parties hereto. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto, Buyer and the respective heirs, administrators, executors, personal representatives, successors, and assigns
of the parties hereto. No written waiver by any party at any time of any breach of any provision of this Agreement shall be deemed
a waiver of a breach of any other provision herein or consent to any subsequent breach of the same or any other provision. If
any action by any party shall require the consent or approval of another party, such consent or approval of such action on any
one occasion shall not be deemed a consent to or approval of such action on any subsequent occasion or a consent to or approval
of any other action on the same or any subsequent occasion. The captions, section numbers, and article numbers appearing in this
Agreement are inserted only as a matter of convenience and do not define, limit, construe, or describe the scope or intent of
such paragraphs or articles of this Agreement nor in any way affect this Agreement.

 

10.02
Time is of Essence; Counterparts; Governing Law. All parties hereto agree that time is of the essence in this transaction
and that this Agreement may be executed in counterparts and shall be governed by and interpreted in accordance with the laws of
the State of Florida.

 

10.03
Brokers. Lender and Borrower represent and warrant to the other that it has had no direct dealings with any real estate brokers,
salesmen, agents, finders, or consultants in connection with the conveyance of the Property to Lender.

 

10.04
Lender’s Liability. In no event shall Lender be personally or individually liable for any obligationset forth in this
Agreement. Except to the extent expressly provided in the Borrower Documents, Lender is not assuming any obligations or liabilities
of Borrower.

 

10.05
Value. Borrower hereby confirms to Lender that this value of the Property does not exceed the indebtedness owing to Lender
pursuant to the Loan Documents.

 

10.06
Survival. The terms and provisions of this Agreement shall survive the Closing and delivery of the deed and other documents
to be delivered to Lender pursuant to this Agreement.

 

    	 	8	 

     

    

 

IN
WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have executed this Agreement as of the day and
year first above written.

 

	BORROWER:	 
	 	 	 
	Eclipse
    Partners, II, LLC	 
	 	 	 
	By:
    	/s/
    Steven Hanson	 
	Print
    Name: 	Steven
    Hanson	 
	 	Manager	 
	 	 	 
	LENDER:	 
	 	 	 
	Shepherd’s
    Finance, LLC	 
	 	 	 
	By:
    	/s/
    Daniel Wallach	 
	Print
    Name: 	Daniel
    Wallach	 
	 	Manager	 

 

    	 	9	 

     

    

 

EXHIBIT
A

LEGAL
DESCRIPTION

 

EXHIBIT
B

PERMITTED
EXCEPTIONS

 

EXHIBIT
C

LIEN
AND POSSESSION AFFIDAVIT

 

EXHIBIT
D

ESTOPPEL
AFFIDAVIT

 

EXHIBIT
E

FORM
OF DEED

 

EXHIBIT
F

FORM
OF BILL OF SALE

 

EXHIBIT
G

RELEASE

 

EXHIBIT
H

RESOLUTION
– MANAGING MEMBER’S CERTIFICATE

 

    	 	10OPTION
TO PURCHASE

 

THIS
OPTION TO PURCHASE (“Option”) is made and entered into this 30th day of June, 2016, by and between Shepherd’s
Finance, LLC, a Delaware limited liability company registered to do business in the state of Florida (“Owner”), and
Eclipse Partners II, LLC, a Florida limited liability company (“Buyer”).

 

Owner
agrees to grant to Buyer an option to purchase the property described on Exhibit A attached hereto, together with all improvements
thereon and all privileges and appurtenances thereunto belonging (collectively, the “Property”), subject to the following
terms and conditions:

 

1.
Term of Option. The term of the Option (“Option Term”) begins on June ___, 2016, and expires and terminates
on December 16, 2016 at 11:50 p.m., or on the earlier termination thereof , as may be provided for herein.

 

2.
Purchase Price and Manner of Payment if the Option is exercised by Buyer If Buyer exercise the Option as provided for below
the Purchase Price for the Property shall be $1,813,090.91, effective as of June 10, 2016, plus an additional $558.00 per day
thereafter. The Purchase Price shall be calculated as of the closing date. The Purchase Price must be paid to Owner by cleared
funds at closing.

 

3.
Manner of Exercising Option. Buyer may only exercise this option to purchase the Property by giving written notice to Owner
at least 30 days prior to the expiration of the Option Term, and by simultaneously executing and delivering to Owner the “As-Is”
form Contract attached hereto, which will govern the transaction in all respects. TIME OF EXERCISE OF THE OPTION BY BUYER IS OF
THE ESSENCE. Upon receipt of the notice from Buyer and the Contract executed by Buyer, Owner will execute the Contract and deliver
a copy of same to Buyer.

 

4. Miscellaneous.
Section headings relating to the contents of the particular section have been inserted for the convenience of reference only and
shall not be construed as part of the particular sections to which they refer. This Option shall be governed by and construed
in accordance with the laws of the State of Florida. This Option constitutes the entire agreement between Owner and Buyer, and
it supersedes any and all prior understandings or commitments concerning the subject matter of this agreement. This agreement
shall not be modified or amended, except by a written instrument executed by the parties hereto. If any litigation occurs between
the parties to enforce the terms of this agreement, the prevailing party shall be entitled to recover reasonable attorney and
paralegal fees incurred, and all court costs for both original and appellate proceedings. Any court action arising under this
agreement must be brought only in the appropriate court in Sarasota County, Florida.

 

5. Brokers.
Each party represents and warrants to the other party that it has incurred no claims for brokerage commissions or finder’s
fees in connection with this agreement or the Contract attached, and agrees to indemnify the other party against and to hold the
other party harmless from all liabilities arising from any such claims.

 

    	1 

    	 

    

 

IN
WITNESS WHEREOF, the parties have hereunto set their hands and seals, the day and year first written above.

 

	 	 	Owner:	 
	 	 	 	 
	 	 	SHEPHERD’S
    FINANCE, LLC, A Delaware limited liability company registered to do business in the state of Florida
	 	 	 	 
	Witnesses:	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	By	/s/
    Daniel Wallach
	 	 	Print
    Name:	Daniel
    Wallach
	 	 	 	Manager
	 	 	 	 
	 	 	Buyer:	 
	 	 	 	 
	 	 	ECLIPSE
    PARTNERS II, LLC, a Florida limited liability company
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	By	/s/
    Steven Hanson
	 	 	Print
    Name:	Steven
    Hanson
	 	 	 	Manager

 

    	2 

    	 

    

 

EXHIBIT
A

 

(Legal
Description)

 

    	3

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