Document:

Parcel
Identification Number: 

 

2037120011

 

RECORDATION
REQUESTED BY:

Shepherd’s
Finance, LLC

12627 San Jose Blvd, Ste. 203

Jacksonville, FL 32223

 

WHEN
RECORDED MAIL TO:

 

	SEND
    TAX NOTICES TO:	 
	Lex
    Partners II, LLC	 
	444
    Gulf of Mexico Dr. #101 	 
	Longboat
    Key, FL 34228	
	 	FOR
    RECORDER’S USE ONLY

 

This
Mortgage prepared by: Barbara Harshman, Shepherd’s Finance, LLC, 12627 San Jose Blvd, Ste. 203, Jacksonville, FL 32223

 

 

MORTGAGE
AND SECURITY AGREEMENT

 

MAXIMUM
LIEN. The total amount of indebtedness secured by this Mortgage may decrease or increase from time to time, but the maximum
amount of principal indebtedness which may be outstanding at any one time shall not exceed Three Million Six Hundred Thousand
and 00/100 dollars ($3,600,000.00), plus interest, and amounts expended or advanced by Lender for the payment of taxes,
levies or insurance on the Property, and interest on such amounts.

 

THIS
MORTGAGE dated February 19, 2016, is made and executed between Lex Partners II, LLC, a Florida Limited Liability Company, whose
address is 444 Gulf of Mexico Dr. #101, Longboat Key, FL 34228 (referred to below as “Grantor”) and Shepherd’s
Finance, LLC, whose address is 12627 San Jose Blvd, Ste. 203, Jacksonville, FL 32223 (referred to below as “Lender”).

 

GRANT
OF MORTGAGE. For valuable consideration, Grantor grants, bargains, sells, conveys, assigns, transfers, releases, confirms
and mortgages to Lender all of Grantor’s right, title, and interest in and to the following described real property, together
with all existing or subsequently erected or affixed buildings, improvements and fixtures; all streets, lanes, alleys, passages,
and ways; all easements, rights of way, all liberties, privileges, tenements, hereditaments, and appurtenances thereunto belonging
or anywise made appurtenant hereafter, and the reversions and remainders with respect thereto; all water, water rights, watercourses
and ditch rights (including stock in utilities with ditch or irrigation rights); and all other rights, royalties, and profits
relating to the real property, including without limitation all minerals, oil, gas, geothermal and similar matters, (the “Real
Property”) located in Sarasota County, State of Florida:

 

See
“Exhibit A” attached to this document and made a part of this document as if fully set forth herein.

 

The
Real Property or its address is commonly known as 1333 Vista Dr., Sarasota, FL 34239. The Real Property parcel identification
number is 2037120011.

 

CROSS-COLLATERALIZATION.
In addition to the Note, this Mortgage secures all obligations, debts and liabilities, plus interest thereon, of Grantor to
Lender, or any one or more of them, as well as all claims by Lender against Grantor or any one or more of them, whether now existing
or hereafter arising, whether related or unrelated to the purpose of the Note, whether voluntary or otherwise, whether due or
not due, direct or indirect, determined or undetermined, absolute or contingent, liquidated or unliquidated, whether Grantor may
be liable individually or jointly with others, whether obligated as guarantor, surety, accommodation party or otherwise, and whether
recovery upon such amounts may be or hereafter may become barred by any statute of limitations, and whether the obligation to
repay such amounts may be or hereafter may become otherwise unenforceable.

 

    	 

    	 

    

 

Grantor
presently assigns to Lender all of Grantor’s right, title, and interest in and to all present and future leases of the Property
and all Rents from the Property. In addition, Grantor grants to Lender a Uniform Commercial Code security interest in the Personal
Property and Rents.

 

THIS
MORTGAGE, INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST IN THE RENTS AND PERSONAL PROPERTY, IS GIVEN TO SECURE (A)
PAYMENT OF THE INDEBTEDNESS AND (B) PERFORMANCE OF ANY AND ALL OBLIGATIONS UNDER THE NOTE IN THE ORIGINAL PRINCIPAL AMOUNT OF
$3,600,000.00, THE RELATED DOCUMENTS, AND THIS MORTGAGE. THIS MORTGAGE, INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST
IN THE RENTS AND PERSONAL PROPERTY, IS ALSO GIVEN TO SECURE ANY AND ALL OF GRANTOR’S OBLIGATIONS UNDER THAT CERTAIN CONSTRUCTION
LOAN AGREEMENT BETWEEN GRANTOR AND LENDER OF EVEN DATE HEREWITH. DEFAULT UNDER THE CONSTRUCTION LOAN AGREEMENT, OR ANY OF THE
RELATED DOCUMENTS REFERRED TO THEREIN IS ALSO DEFAULT UNDER THIS MORTGAGE. THIS MORTGAGE IS GIVEN AND ACCEPTED ON THE FOLLOWING
TERMS:

 

GRANTOR’S
WAIVERS. Grantor waives all rights or defenses arising by reason of any “one action” or “anti-deficiency”
law, or any other law which may prevent Lender from bringing any action against Grantor, including a claim for deficiency to the
extent Lender is otherwise entitled to a claim for deficiency, before or after Lender’s commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale.

 

GRANTOR’S
REPRESENTATIONS AND WARRANTIES. Grantor warrants that: (a) this Mortgage is executed at Borrower’s request and not at
the request of Lender; (b) Grantor has the full power, right, and authority to enter into this Mortgage and to hypothecate the
Property; (c) the provisions of this Mortgage do not conflict with, or result in a default under any agreement or other instrument
binding upon Grantor and do not result in a violation of any law, regulation, court decree or order applicable to Grantor; (d)
Grantor has established adequate means of obtaining from Borrower on a continuing basis information about Borrower’s financial
condition; and (e) Lender has made no representation to Grantor about Borrower (including without limitation the creditworthiness
of Borrower).

 

PAYMENT
AND PERFORMANCE. Except as otherwise provided in this Mortgage, Grantor shall pay to Lender all amounts secured by this Mortgage
as they become due and shall strictly perform all of Grantor’s obligations under this Mortgage.

 

POSSESSION
AND MAINTENANCE OF THE PROPERTY. Grantor agrees that Grantor’s possession and use of the Property shall be governed
by the following provisions:

 

Possession
and Use. Until Default, Grantor may (1) remain in possession and control of the Property; (2) use, operate or manage the Property;
and (3) collect the Rents from the Property.

 

Duty
to Maintain. Grantor shall maintain the Property in tenantable condition and promptly perform all repairs, replacements, and
maintenance necessary to preserve its value.

 

Compliance
With Environmental Laws. Grantor represents and warrants to Lender that: (1) During the period of Grantor’s ownership
of the Property, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of
any Hazardous Substance by any person on, under, about or from the Property; (2) Grantor has no knowledge of, or reason to believe
that there has been, except as previously disclosed to and acknowledged by Lender in writing, (a) any breach or violation of any
Environmental Laws, (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous
Substance on, under, about or from the Property by any prior owners or occupants of the Property, or (c) any actual or threatened
litigation or claims of any kind by any person relating to such matters; and (3) Except as previously disclosed to and acknowledged
by Lender in writing, (a) neither Grantor nor any tenant, contractor, agent or other authorized user of the Property shall use,
generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from the Property; and
(b) any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations and ordinances,
including without limitation all Environmental Laws. Grantor authorizes Lender and its agents to enter upon the Property to make
such inspections and tests, at Grantor’s expense, as Lender may deem appropriate to determine compliance of the Property
with this section of the Mortgage. Any inspections or tests made by Lender shall be for Lender’s purposes only and shall
not be construed to create any responsibility or liability on the part of Lender to Grantor or to any other person. The representations
and warranties contained herein are based on Grantor’s due diligence in investigating the Property for Hazardous Substances.
Grantor hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Grantor becomes
liable for cleanup or other costs under any such laws; and (2) agrees to indemnify, defend, and hold harmless Lender against any
and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer
resulting from a breach of this section of the Mortgage or as a consequence of any use, generation, manufacture, storage, disposal,
release or threatened release occurring prior to Grantor’s ownership or interest in the Property, whether or not the same
was or should have been known to Grantor. The provisions of this section of the Mortgage, including the obligation to indemnify
and defend, shall survive the payment of the Indebtedness and the satisfaction and reconveyance of the lien of this Mortgage and
shall not be affected by Lender’s acquisition of any interest in the Property, whether by foreclosure or otherwise.

 

Without
otherwise limiting Grantor’s covenants as provided herein, Grantor shall not without Lender’s prior written consent,
remove or permit the removal of sand, gravel or topsoil, or engage in borrow pit operations, or use or permit the use of the Property
as a land fill or dump, or store, burn or bury or permit the storage, burning or burying of any material or product which may
result in contamination of the Property or the groundwater or which may require the issuance of a permit by the Environmental
Protection Agency or any state or local government agency governing the issuance of hazardous or toxic waste permits, or request
or permit a change in zoning or land use classification, or cut or remove or suffer the cutting or removal of any trees or timber
from the Property.

 

    	2

    	 

    

 

At
its sole cost and expense, Grantor shall comply with and shall cause all occupants of the Property to comply with all Environmental
Laws with respect to the disposal of industrial refuse or waste, and/or the discharge, processing, manufacture, generation, treatment,
removal, transportation, storage and handling of Hazardous Substances, and pay immediately when due the cost of removal of any
such wastes or substances from, and keep the Property free of any lien imposed pursuant to such laws, rules, regulations and orders.

 

Grantor
shall not install or permit to be installed in or on the Property, friable asbestos or any substance containing asbestos and deemed
hazardous by federal, state or local laws, rules, regulations or orders respecting such material. Grantor shall further not install
or permit the installation of any machinery, equipment or fixtures containing polychlorinated biphemyls (PCBs) on or in the Property.
With respect to any such material or materials currently present in or on the Property, Grantor shall promptly comply with all
applicable Environmental Laws regarding the safe removal thereof, at Grantor’s expense.

 

Grantor
shall indemnify and defend Lender and hold Lender harmless from and against all loss, cost, damage and expense (including, without
limitation, attorneys’ fees and costs incurred in the investigation, defense and settlement of claims) that Lender may incur
as a result of or in connection with the assertion against Lender of any claim relating to the presence or removal of any Hazardous
Substance, or compliance with any Environmental Law. No notice from any governmental body has ever been served upon Grantor or,
to Grantor’s knowledge after due inquiry, upon any prior owner of the Property, claiming a violation of or under any Environmental
Law or concerning the environmental state, condition or quality of the Property, or the use thereof, or requiring or calling attention
to the need for any work, repairs, construction, removal, cleanup, alterations, demolition, renovation or installation on, or
in connection with, the Property in order to comply with any Environmental Law; and upon receipt of any such notice, Grantor shall
take any and all steps, and shall perform any and all actions necessary or appropriate to comply with the same, at Grantor’s
expense. In the event Grantor fails to do so, Lender may declare this Mortgage to be in default.

 

Nuisance,
Waste. Grantor shall not cause, conduct or permit any nuisance nor commit, permit, or suffer any stripping of or waste on
or to the Property or any portion of the Property. Without limiting the generality of the foregoing, Grantor will not remove,
or grant to any other party the right to remove, any timber, minerals (including oil and gas), coal, clay, scoria, soil, gravel
or rock products without Lender’s prior written consent.

 

Removal
of Improvements. Grantor shall not demolish or remove any Improvements from the Real Property without Lender’s prior
written consent. As a condition to the removal of any Improvements, Lender may require Grantor to make arrangements satisfactory
to Lender to replace such Improvements with Improvements of at least equal value.

 

Lender’s
Right to Enter. Lender and Lender’s agents and representatives may enter upon the Real Property at all reasonable times
to attend to Lender’s interests and to inspect the Real Property for purposes of Grantor’s compliance with the terms
and conditions of this Mortgage.

 

Subsequent
Liens. Grantor shall not allow any subsequent liens or mortgages on all or any portion of the property without the prior written
consent of Lender.

 

Compliance
with Governmental Requirements. Grantor shall promptly comply with all laws, ordinances, and regulations, now or hereafter
in effect, of all governmental authorities applicable to the use or occupancy of the Property, including without limitation, the
Americans With Disabilities Act. Grantor may contest in good faith any such law, ordinance, or regulation and withhold compliance
during any proceeding, including appropriate appeals, so long as Grantor has notified Lender in writing prior to doing so and
so long as, in Lender’s sole opinion, Lender’s interests in the Property are not jeopardized. Lender may require Grantor
to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender’s interest.

 

Duty
to Protect. Grantor agrees neither to abandon or leave unattended the Property. Grantor shall do all other acts, in addition
to those acts set forth above in this section, which from the character and use of the Property are reasonably necessary to protect
and preserve the Property.

 

CONSTRUCTION
LOAN. If some or all of the proceeds of the loan creating the Indebtedness are to be used to construct or complete construction
of any Improvements on the Property, the Improvements shall be completed no later than the maturity date of the Note (or such
earlier date as Lender may reasonably establish) and Grantor shall pay in full all costs and expenses in connection with the work.
Lender will disburse loan proceeds under such terms and conditions as Lender may deem reasonably necessary to insure that the
interest created by this Mortgage shall have priority over all possible liens, including those of material suppliers and workmen.
Lender may require, among other things, that disbursement requests be supported by receipted bills, expense affidavits, waivers
of liens, construction progress reports, and such other documentation as Lender may reasonably request.

 

DUE
ON SALE - CONSENT BY LENDER. Lender may, at Lender’s option, declare immediately due and payable all sums secured by
this Mortgage upon the sale or transfer, without Lender’s prior written consent, of all or any part of the Real Property,
or any interest in the Real Property. A “sale or transfer” means the conveyance of Real Property or any right, title
or interest in the Real Property; whether legal, beneficial or equitable; whether voluntary or involuntary; whether by outright
sale, deed, installment sale contract, land contract, contract for deed, leasehold interest with a term greater than three (3)
years, lease-option contract, or by sale, assignment, or transfer of any beneficial interest in or to any land trust holding title
to the Real Property, or by any other method of conveyance of an interest in the Real Property. If any Grantor is a corporation,
partnership or limited liability company, transfer also includes any change in ownership of more than twenty-five percent (25%)
of the voting stock, partnership interests or limited liability company interests, as the case may be, of such Grantor. However,
this option shall not be exercised by Lender if such exercise is prohibited by federal law or by Florida law.

 

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TAXES
AND LIENS. The following provisions relating to the taxes and liens on the Property are part of this Mortgage:

 

Payment.
Grantor shall pay when due (and in all events prior to delinquency) all taxes, payroll taxes, special taxes, assessments,
water charges and sewer service charges levied against or on account of the Property, and shall pay when due all claims for work
done on or for services rendered or material furnished to the Property. Grantor shall maintain the Property free of any liens
having priority over or equal to the interest of Lender under this Mortgage, except for those liens specifically agreed to in
writing by Lender, and except for the lien of taxes and assessments not due as further specified in the Right to Contest paragraph.

 

Right
to Contest. Grantor may withhold payment of any tax, assessment, or claim in connection with a good faith dispute over the
obligation to pay, so long as Lender’s interest in the Property is not jeopardized. If a lien arises or is filed as a result
of nonpayment, Grantor shall within fifteen (15) days after the lien arises or, if a lien is filed, within fifteen (15) days after
Grantor has notice of the filing, secure the discharge of the lien, or if requested by Lender, deposit with Lender cash or a sufficient
corporate surety bond or other security satisfactory to Lender in an amount sufficient to discharge the lien plus any costs and
reasonable attorneys’ fees, or other charges that could accrue as a result of a foreclosure or sale under the lien. In any
contest, Grantor shall defend itself and Lender and shall satisfy any adverse judgment before enforcement against the Property.
Grantor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings.

 

Evidence
of Payment. Grantor shall upon demand furnish to Lender satisfactory evidence of payment of the taxes or assessments and shall
authorize the appropriate governmental official to deliver to Lender at any time a written statement of the taxes and assessments
against the Property.

 

Notice
of Construction. Grantor shall notify Lender at least fifteen (15) days before any work is commenced, any services are furnished,
or any materials are supplied to the Property, if any mechanic’s lien, materialmen’s lien, or other lien could be
asserted on account of the work, services, or materials. Grantor will upon request of Lender furnish to Lender advance assurances
satisfactory to Lender that Grantor can and will pay the cost of such improvements.

 

PROPERTY
DAMAGE INSURANCE. The following provisions relating to insuring the Property are a part of this Mortgage:

 

Maintenance
of Insurance. Grantor shall procure and maintain policies of fire insurance with standard extended coverage endorsements on
a replacement basis for the full insurable value covering all Improvements on the Real Property in an amount sufficient to avoid
application of any coinsurance clause, and with a standard mortgagee clause in favor of Lender. Grantor shall also procure and
maintain comprehensive general liability insurance in such coverage amounts as Lender may request with Lender being named as additional
insureds in such liability insurance policies. Additionally, Grantor shall maintain such other insurance, including but not limited
to hazard, business interruption and boiler insurance as Lender may require. Policies shall be written by such insurance companies
and in such form as may be reasonably acceptable to Lender. Grantor shall deliver to Lender certificates of coverage from each
insurer containing a stipulation that coverage will not be cancelled or diminished without a minimum of ten (10) days’ prior
written notice to Lender and not containing any disclaimer of the insurer’s liability for failure to give such notice. Each
insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way
by any act, omission or default of Grantor or any other person. Should the Real Property be located in an area designated by the
Director of the Federal Emergency Management Agency as a special flood hazard area, Grantor agrees to obtain and maintain Federal
Flood Insurance, if available, for the full unpaid principal balance of the loan and any prior liens on the property securing
the loan, up to the maximum policy limits set under the National Flood Insurance Program, or as otherwise required by Lender,
and to maintain such insurance for the term of the loan.

 

Application
of Proceeds. Grantor shall promptly notify Lender of any loss or damage to the Property. Lender may make proof of loss if
Grantor fails to do so within fifteen (15) days of the casualty. Whether or not Lender’s security is impaired, Lender may,
at Lender’s election, receive and retain the proceeds of any insurance and apply the proceeds to the reduction of the Indebtedness,
payment of any lien affecting the Property, or the restoration and repair of the Property. If Lender elects to apply the proceeds
to restoration and repair, Grantor shall repair or replace the damaged or destroyed Improvements in a manner satisfactory to Lender.
Lender shall, upon satisfactory proof of such expenditure, pay or reimburse Grantor from the proceeds for the reasonable cost
of repair or restoration if Grantor is not in default under this Mortgage. Any proceeds which have not been disbursed within 180
days after their receipt and which Lender has not committed to the repair or restoration of the Property shall be used first to
pay any amount owing to Lender under this Mortgage, then to pay accrued interest, and the remainder, if any, shall be applied
to the principal balance of the Indebtedness. If Lender holds any proceeds after payment in full of the Indebtedness, such proceeds
shall be paid to Grantor as Grantor’s interests may appear.

 

Unexpired
Insurance at Sale. Any unexpired insurance shall inure to the benefit of, and pass to, the purchaser of the Property covered
by this Mortgage at any trustee’s sale or other sale held under the provisions of this Mortgage, or at any foreclosure sale
of such Property.

 

Grantor’s
Report on Insurance. Upon request of Lender, however not more than once a year, Grantor shall furnish to Lender a report on
each existing policy of insurance showing: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4)
the property insured, the then current replacement value of such property, and the manner of determining that value; and (5) the
expiration date of the policy. Grantor shall, upon request of Lender, have an independent appraiser satisfactory to Lender determine
the cash value replacement cost of the Property.

 

LENDER’S
EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender’s interest in the Property
or if Grantor fails to comply with any provision of this Mortgage or any Related Documents, including but not limited to Grantor’s
failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Mortgage or any Related Documents,
Lender on Grantor’s behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including
but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied
or placed on the Property and paying all costs for insuring, maintaining and preserving the Property. All such expenditures incurred
or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid
by Lender to the date of repayment by Grantor. All such expenses will become a part of the Indebtedness and, at Lender’s
option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any
installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of
the Note; or (C) be treated as a balloon payment which will be due and payable at the Note’s maturity. The Mortgage also
will secure payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be
entitled upon Default. Grantor’s obligation to Lender for all such expenses shall survive the entry of any mortgage foreclosure
judgment.

 

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WARRANTY;
DEFENSE OF TITLE. The following provisions relating to ownership of the Property are a part of this Mortgage:

 

Title.
Grantor warrants that: (a) Grantor holds good and marketable title of record to the Property in fee simple, free and clear
of all liens and encumbrances other than those set forth in the Real Property description or in any title insurance policy, title
report, or final title opinion issued in favor of, and accepted by, Lender in connection with this Mortgage, and (b) Grantor has
the full right, power, and authority to execute and deliver this Mortgage to Lender.

 

Defense
of Title. Subject to the exception in the paragraph above, Grantor warrants and will forever defend the title to the Property
against the lawful claims of all persons. In the event any action or proceeding is commenced that questions Grantor’s title
or the interest of Lender under this Mortgage, Grantor shall defend the action at Grantor’s expense. Grantor may be the
nominal party in such proceeding, but Lender shall be entitled to participate in the proceeding and to be represented in the proceeding
by counsel of Lender’s own choice, and Grantor will deliver, or cause to be delivered, to Lender such instruments as Lender
may request from time to time to permit such participation.

 

Compliance
With Laws. Grantor warrants that the Property and Grantor’s use of the Property complies with all existing applicable
laws, ordinances, and regulations of governmental authorities.

 

Survival
of Representations and Warranties. All representations, warranties, and agreements made by Grantor in this Mortgage shall
survive the execution and delivery of this Mortgage, shall be continuing in nature, and shall remain in full force and effect
until such time as Grantor’s Indebtedness shall be paid in full.

 

CONDEMNATION.
The following provisions relating to condemnation proceedings are a part of this Mortgage:

 

Notice
of Proceedings. Grantor shall immediately notify Lender in writing should all or any part of the Property become subject to
any condemnation or expropriation proceedings or other similar proceedings, including without limitation, any condemnation, confiscation,
eminent domain, inverse condemnation or temporary requisition or taking of the mortgaged Property, or any part or parts of the
Property. Grantor further agrees to promptly take such steps as may be necessary and proper within Lender’s sole judgment
and at Grantor’s expense, to defend any such condemnation or expropriation proceedings and obtain the proceeds derived from
such proceedings. Grantor shall not agree to any settlement or compromise or any condemnation or expropriation claim without Lender’s
prior written consent.

 

Lender’s
Participation. Lender may, at Lender’s sole option, elect to participate in any such condemnation or expropriation proceedings
and be represented by counsel of Lender’s choice. Grantor agrees to provide Lender with such documentation as Lender may
request to permit Lender to so participate and to reimburse Lender for Lender’s costs associated with Lender’s participation,
including Lender’s reasonable attorneys’ fees.

 

Conduct
of Proceedings. If Grantor fails to defend any such condemnation or expropriation proceedings to Lender’s satisfaction,
Lender may undertake the defense of such a proceeding for and on behalf of Grantor. To this end, Grantor irrevocably authorizes
Lender, such authorization being coupled with an interest, to bring, defend, adjudicate, settle, or otherwise compromise such
condemnation or expropriation claims; it being understood, however, that, unless Default then exists under this Mortgage, Lender
will not agree to any final settlement or compromise of any such condemnation or expropriation claim without Grantor’s prior
approval, which approval shall not be unreasonably withheld.

 

Application
of Net Proceeds. Lender shall have the right to receive all proceeds derived or to be derived from the condemnation, expropriation,
confiscation, eminent domain, inverse condemnation, or any permanent or temporary requisition or taking of the Property, or any
part or parts of the Property (“condemnation proceeds”). In the event that Grantor should receive any such condemnation
proceeds, Grantor agrees to immediately turn over and to pay such proceeds to Lender. All condemnation proceeds, which are received
by, or which are payable to either Grantor or Lender, shall be applied, at Lender’s sole option and discretion, and in such
manner as Lender may determine (after payment of all reasonable costs, expenses and attorneys’ fees necessarily paid or
incurred by Grantor and/or Lender), for the purpose of: (a) replacing or restoring the condemned, expropriated, confiscated, or
taken Property; or (b) reducing the then outstanding balance of the Indebtedness, together with interest thereon, with such payments
being applied in the manner provided in this Mortgage. Lender’s receipt of such condemnation proceeds and the application
of such proceeds as provided in this Mortgage shall not affect the lien of this Mortgage.

 

IMPOSITION
OF TAXES, FEES AND CHARGES BY GOVERNMENTAL AUTHORITIES. The following provisions relating to governmental taxes, fees and
charges are a part of this Mortgage:

 

Current
Taxes, Fees and Charges. Upon request by Lender, Grantor shall execute such documents in addition to this Mortgage and take
whatever other action is requested by Lender to perfect and continue Lender’s lien on the Real Property. Grantor shall reimburse
Lender for all taxes, as described below, together with all expenses incurred in recording, perfecting or continuing this Mortgage,
including without limitation all taxes, fees, documentary stamps, and other charges for recording or registering this Mortgage.

 

Taxes.
The following shall constitute taxes to which this section applies: (1) a specific tax upon this type of Mortgage or upon
all or any part of the Indebtedness secured by this Mortgage; (2) a specific tax on Grantor which Grantor is authorized or required
to deduct from payments on the Indebtedness secured by this type of Mortgage; (3) a tax on this type of Mortgage chargeable against
the Lender or the holder of the Note; and (4) a specific tax on all or any portion of the Indebtedness or on payments of principal
and interest made by Grantor.

 

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Subsequent
Taxes. If any tax to which this section applies is enacted subsequent to the date of this Mortgage, this event shall have
the same effect as Default, and Lender may exercise any or all of its available remedies for Default as provided below unless
Grantor either (1) pays the tax before it becomes delinquent, or (2) contests the tax as provided above in the Taxes and Liens
section and deposits with Lender cash or a sufficient corporate surety bond or other security satisfactory to Lender.

 

SECURITY
AGREEMENT; FINANCING STATEMENTS. The following provisions relating to this Mortgage as a security agreement are a part of
this Mortgage:

 

Security
Agreement. This instrument shall constitute a Security Agreement to the extent any of the Property constitutes fixtures, and
Lender shall have all of the rights of a secured party under the Uniform Commercial Code as amended from time to time.

 

Security
Interest. Upon request by Lender, Grantor shall take whatever action is requested by Lender to perfect and continue Lender’s
security interest in the Rents and Personal Property. In addition to recording this Mortgage in the real property records, Lender
may, at any time and without further authorization from Grantor, file executed counterparts, copies or reproductions of this Mortgage
as a financing statement. Grantor shall reimburse Lender for all expenses incurred in perfecting or continuing this security interest.
Upon default, Grantor shall not remove, sever or detach the Personal Property from the Property. Upon default, Grantor shall assemble
any Personal Property not affixed to the Property in a manner and at a place reasonably convenient to Grantor and Lender and make
it available to Lender within three (3) days after receipt of written demand from Lender to the extent permitted by applicable
law.

 

Addresses.
The mailing addresses of Grantor (debtor) and Lender (secured party) from which information concerning the security interest
granted by this Mortgage may be obtained (each as required by the Uniform Commercial Code) are as stated on the first page of
this Mortgage.

 

FURTHER
ASSURANCES; ADDITIONAL AUTHORIZATIONS. The following provisions relating to further assurances and additional authorizations
are a part of this Mortgage:

 

Further
Assurances. At any time, and from time to time, upon request of Lender, Grantor will make, execute and deliver, or will cause
to be made, executed or delivered, to Lender or to Lender’s designee, and when requested by Lender, cause to be filed, recorded,
refiled, or rerecorded, as the case may be, at such times and in such offices and places as Lender may deem appropriate, any and
all such mortgages, deeds of trust, security deeds, security agreements, financing statements, continuation statements, instruments
of further assurance, certificates, and other documents as may, in the sole opinion of Lender, be necessary or desirable in order
to effectuate, complete, perfect, continue, or preserve (1) Grantor’s obligations under the Note, this Mortgage, and the
Related Documents, and (2) the liens and security interests created by this Mortgage as first and prior liens on the Property,
whether now owned or hereafter acquired by Grantor. Unless prohibited by law or Lender agrees to the contrary in writing, Grantor
shall reimburse Lender for all costs and expenses incurred in connection with the matters referred to in this paragraph.

 

Additional
Authorizations. If Grantor fails to do any of the things referred to in the preceding paragraph, Lender may do so for and
in the name of Grantor and at Grantor’s expense. For such purposes, Grantor hereby irrevocably authorizes Lender to make,
execute, deliver, file, record and do all other things as may be necessary or desirable, in Lender’s sole opinion, to accomplish
the matters referred to in the preceding paragraph. It is understood that nothing set forth herein shall require Lender to take
any such actions.

 

FULL
PERFORMANCE. If Grantor pays all the Indebtedness when due, and otherwise performs all the obligations imposed upon Grantor
under this Mortgage, Lender shall execute and deliver to Grantor a suitable satisfaction of this Mortgage and suitable statements
of termination of any financing statement on file evidencing Lender’s security interest in the Rents and the Personal Property.
Grantor will pay, if permitted by applicable law, any reasonable termination fee as determined by Lender from time to time.

 

DEFAULT.
Each of the following, at Lender’s option, shall constitute an Event of Default under this Mortgage:

 

Payment
Default. Borrower fails to make any payment when due under the Indebtedness.

 

Default
on Other Payments. Failure of Grantor within the time required by this Mortgage to make any payment for taxes or insurance,
or any other payment necessary to prevent filing of or to effect discharge of any lien.

 

Other
Defaults. Borrower or Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained
in this Mortgage or in any other of the Related Documents or to comply with or to perform any term, obligation, covenant or condition
contained in any other agreement between Lender and Borrower or Grantor.

 

RIGHTS
AND REMEDIES ON DEFAULT. Upon Default and at any time thereafter, Lender, at Lender’s option, may exercise any one or
more of the following rights and remedies, in addition to any other rights or remedies provided by law:

 

Accelerate
Indebtedness. Lender shall have the right at its option, after giving such notices as required by applicable law, to declare
the entire Indebtedness immediately due and payable.

 

UCC
Remedies. With respect to all or any part of the Personal Property, Lender shall have all the rights and remedies of a secured
party under the Uniform Commercial Code.

 

Collect
Rents. Lender shall have the right, without notice to Grantor, to take possession of the Property and collect the Rents, including
amounts past due and unpaid, and apply the net proceeds, over and above Lender’s costs, against the Indebtedness. In furtherance
of this right, Lender may require any tenant or other user of the Property to make payments of rent or use fees directly to Lender.
If the Rents are collected by Lender, then Grantor irrevocably authorizes Lender to endorse instruments received in payment thereof
in the name of Grantor and to negotiate the same and collect the proceeds. Payments by tenants or other users to Lender in response
to Lender’s demand shall satisfy the obligations for which the payments are made, whether or not any proper grounds for
the demand existed. Lender may exercise its rights under this subparagraph either in person, by agent, or through a receiver.

 

    	6

    	 

    

 

Appoint
Receiver. Lender shall have the right to have a receiver appointed to take possession of all or any part of the Property,
with the power to protect and preserve the Property, to operate the Property preceding foreclosure or sale, and to collect the
Rents from the Property and apply the proceeds, over and above the cost of the receivership, against the Indebtedness. The receiver
may serve without bond if permitted by law. Lender’s right to the appointment of a receiver shall exist whether or not the
apparent value of the Property exceeds the Indebtedness by a substantial amount. Employment by Lender shall not disqualify a person
from serving as a receiver.

 

Judicial
Foreclosure. Lender may obtain a judicial decree foreclosing Grantor’s interest in all or any part of the Property.

 

Possession
of the Property. For the purpose of procuring possession of the Property, Grantor hereby authorizes and empowers any attorney
of any court of record in the State of Florida or elsewhere, as attorney for Lender and all persons claiming under or through
Lender, to sign an agreement for entering in any competent court an amicable action in ejectment for possession of the Property
and to appear for and confess judgment against Grantor, and against all persons claiming under or through Grantor, for the recovery
by Lender of possession of the Property, without any stay of execution, for which this Mortgage, or a copy of this Mortgage verified
by affidavit, shall be a sufficient warrant; and thereupon a writ of possession may be issued forthwith, without any prior writ
or proceeding whatsoever.

 

Nonjudicial
Sale. If permitted by applicable law, Lender may foreclose Grantor’s interest in all or in any part of the Personal
Property or the Real Property by non-judicial sale.

 

Deficiency
Judgment. Lender may obtain a judgment for any deficiency remaining in the Indebtedness due to Lender after application of
all amounts received from the exercise of the rights provided in this section.

 

Tenancy
at Sufferance. If Grantor remains in possession of the Property after the Property is sold as provided above or Lender otherwise
becomes entitled to possession of the Property upon default of Grantor, Grantor shall become a tenant at sufferance of Lender
or the purchaser of the Property and shall, at Lender’s option, either (1) pay a reasonable rental for the use of the Property,
or (2) vacate the Property immediately upon the demand of Lender.

 

Other
Remedies. Lender shall have all other rights and remedies provided in this Mortgage or the Note or available at law or in
equity.

 

Sale
of the Property. To the extent permitted by applicable law, Grantor hereby waives any and all right to have the Property marshalled.
In exercising its rights and remedies, Lender shall be free to sell all or any part of the Property together or separately, in
one sale or by separate sales. Lender shall be entitled to bid at any public sale on all or any portion of the Property.

 

Notice
of Sale. Lender shall give Grantor reasonable notice of the time and place of any public sale of the Personal Property or
of the time after which any private sale or other intended disposition of the Personal Property is to be made. Unless otherwise
required by applicable law, reasonable notice shall mean notice given at least ten (10) days before the time of the sale or disposition.
Any sale of the Personal Property may be made in conjunction with any sale of the Real Property.

 

Election
of Remedies. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of Grantor under this Mortgage, after Grantor’s failure to perform,
shall not affect Lender’s right to declare a default and exercise its remedies. Nothing under this Mortgage or otherwise
shall be construed so as to limit or restrict the rights and remedies available to Lender following Default, or in any way to
limit or restrict the rights and ability of Lender to proceed directly against Grantor and/or against any other co-maker, guarantor,
surety or endorser and/or to proceed against any other collateral directly or indirectly securing the Indebtedness.

 

Attorneys’
Fees; Expenses. If Lender institutes any suit or action to enforce any of the terms of this Mortgage, Lender shall be entitled
to recover such sum as the court may adjudge reasonable as attorneys’ fees at trial and upon any appeal. Whether or not
any court action is involved, and to the extent not prohibited by law, all reasonable expenses Lender incurs that in Lender’s
opinion are necessary at any time for the protection of its interest or the enforcement of its rights shall become a part of the
Indebtedness payable on demand and shall bear interest at the Note rate from the date of the expenditure until repaid. Expenses
covered by this paragraph include, without limitation, however subject to any limits under applicable law, Lender’s reasonable
attorneys’ fees and Lender’s legal expenses, whether or not there is a lawsuit, including reasonable attorneys’
fees and expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals,
and any anticipated post-judgment collection services, the cost of searching records, obtaining title reports (including foreclosure
reports), surveyors’ reports, and appraisal fees and title insurance, to the extent permitted by applicable law. Lender
may also recover from Grantor all court, alternative dispute resolution or other collection costs (including, without limitation,
fees and charges of collection agencies) actually incurred by Lender.

 

NOTICES.
Unless otherwise provided by applicable law, any notice required to be given under this Mortgage shall be given in writing,
and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when
deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class,
certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Mortgage. Any party may
change its address for notices under this Mortgage by giving formal written notice to the other parties, specifying that the purpose
of the notice is to change the party’s address. For notice purposes, Grantor agrees to keep Lender informed at all times
of Grantor’s current address. Unless otherwise provided by applicable law, if there is more than one Grantor, any notice
given by Lender to any Grantor is deemed to be notice given to all Grantors.

 

    	7

    	 

    

 

FUTURE
ADVANCES. In addition to the note, this Mortgage secures all future advances made by Lender to Borrower whether or not the
advances are made pursuant to a commitment. Specifically, without limitation, this Mortgage secures, in addition to the Note,
all future amounts Lender in its discretion may loan to Borrower within twenty (20) years of the date of this Mortgage, together
with all interest thereon.

 

MISCELLANEOUS
PROVISIONS. The following miscellaneous provisions are a part of this Mortgage:

 

Amendments.
This Mortgage, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Mortgage. No alteration of or amendment to this Mortgage shall be effective unless given in writing
and signed by the party or parties sought to be charged or bound by the alteration or amendment.

 

Annual
Reports. If the Property is used for purposes other than Grantor’s residence, Grantor shall furnish to Lender, upon
request, a certified statement of net operating income received from the Property during Grantor’s previous fiscal year
in such form and detail as Lender shall require. “Net operating income” shall mean all cash receipts from the Property
less all cash expenditures made in connection with the operation of the Property.

 

Caption
Headings. Caption headings in this Mortgage are for convenience purposes only and are not to be used to interpret or define
the provisions of this Mortgage.

 

Governing
Law. With respect to procedural matters related to the perfection and enforcement of Lender’s rights against the Property,
this Mortgage will be governed by federal law applicable to Lender and to the extent not preempted by federal law, the laws of
the State of Florida. In all other respects, this Mortgage will be governed by federal law applicable to Lender and, to the extent
not preempted by federal law, the laws of the State of Delaware without regard to its conflicts of law provisions. However, if
there ever is a question about whether any provision of this Mortgage is valid or enforceable, the provision that is questioned
will be governed by whichever state or federal law would find the provision to be valid and enforceable. The loan transaction
that is evidenced by the Note and this Mortgage has been applied for, considered, approved and made, and all necessary loan documents
have been accepted by Lender in the State of Florida.

 

Choice
of Venue. If there is a lawsuit, Grantor agrees upon Lender’s request to submit to the jurisdiction of the courts of
Sarasota County, State of Florida.

 

No
Waiver by Lender. Lender shall not be deemed to have waived any rights under this Mortgage unless such waiver is given in
writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of
such right or any other right. A waiver by Lender of a provision of this Mortgage shall not prejudice or constitute a waiver of
Lender’s right otherwise to demand strict compliance with that provision or any other provision of this Mortgage. No prior
waiver by Lender, nor any course of dealing between Lender and Grantor, shall constitute a waiver of any of Lender’s rights
or of any of Grantor’s obligations as to any future transactions. Whenever the consent of Lender is required under this
Mortgage, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances
where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.

 

Severability.
If a court of competent jurisdiction finds any provision of this Mortgage to be illegal, invalid, or unenforceable as to any
circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance.
If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending
provision cannot be so modified, it shall be considered deleted from this Mortgage. Unless otherwise required by law, the illegality,
invalidity, or unenforceability of any provision of this Mortgage shall not affect the legality, validity or enforceability of
any other provision of this Mortgage.

 

Non-Liability
of Lender. The relationship between Grantor and Lender created by this Mortgage is strictly a debtor and creditor relationship
and not fiduciary in nature, nor is the relationship to be construed as creating any partnership or joint venture between Lender
and Grantor. Grantor is exercising Grantor’s own judgment with respect to Grantor’s business. All information supplied
to Lender is for Lender’s protection only and no other party is entitled to rely on such information. There is no duty for
Lender to review, inspect, supervise or inform Grantor of any matter with respect to Grantor’s business. Lender and Grantor
intend that Lender may reasonably rely on all information supplied by Grantor to Lender, together with all representations and
warranties given by Grantor to Lender, without investigation or confirmation by Lender and that any investigation or failure to
investigate will not diminish Lender’s right to so rely.

 

Merger.
There shall be no merger of the interest or estate created by this Mortgage with any other interest or estate in the Property
at any time held by or for the benefit of Lender in any capacity, without the written consent of Lender.

 

Sole
Discretion of Lender. Whenever Lender’s consent or approval is required under this Mortgage, the decision as to whether
or not to consent or approve shall be in the sole and exclusive discretion of Lender and Lender’s decision shall be final
and conclusive.

 

Successors
and Assigns. Subject to any limitations stated in this Mortgage on transfer of Grantor’s interest, this Mortgage shall
be binding upon and inure to the benefit of the parties, their successors and assigns. If ownership of the Property becomes vested
in a person other than Grantor, Lender, without notice to Grantor, may deal with Grantor’s successors with reference to
this Mortgage and the Indebtedness by way of forbearance or extension without releasing Grantor from the obligations of this Mortgage
or liability under the Indebtedness.

 

Time
is of the Essence. Time is of the essence in the performance of this Mortgage.

 

Waive
Jury. All parties to this Mortgage hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought
by any party against any other party.

 

DEFINITIONS.
The following capitalized words and terms shall have the following meanings when used in this Mortgage.

 

    	8

    	 

    

 

Unless
specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States
of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context
may require. Words and terms not otherwise defined in this Mortgage shall have the meanings attributed to such terms in the Uniform
Commercial Code:

 

Borrower.
The word “Borrower” means Lex Partners II, LLC and includes all co-signers and co-makers signing the Note and
all their successors and assigns.

 

Default.
The word “Default” means the Default set forth in this Mortgage in the section titled “Default”.

 

Event
of Default. The word “Event of Default” mean any of the events of default set forth in this Mortgage in the default
section of this Mortgage.

 

Environmental
Laws. The words “Environmental Laws” mean any and all state, federal and local statutes, regulations and ordinances
relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. (“CERCLA”), the Superfund Amendments
and Reauthorization Act of 1986, Pub. L. No. 99-499 (“SARA”), the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state
or federal laws, rules, or regulations adopted pursuant thereto.

 

Grantor.
The word “Grantor” means Lex Partners II, LLC

 

Hazardous
Substances. The words “Hazardous Substances” mean materials that, because of their quantity, concentration or
physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment
when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words “Hazardous
Substances” are used in their very broadest sense and include without limitation any and all hazardous or toxic substances,
materials or waste as defined by or listed under the Environmental Laws. The term “Hazardous Substances” also includes,
without limitation, petroleum and petroleum by- products or any fraction thereof and asbestos.

 

Improvements.
The word “Improvements” means all existing and future improvements, buildings, structures, mobile homes affixed
on the Real Property, facilities, additions, replacements and other construction on the Real Property.

 

Indebtedness.
The word “Indebtedness” means all principal, interest, and other amounts, costs and expenses payable under the
Note or Related Documents, together with all renewals of, extensions of, modifications of, consolidations of and substitutions
for the Note or Related Documents and any amounts expended or advanced by Lender to discharge Grantor’s obligations or expenses
incurred by Lender to enforce Grantor’s obligations under this Mortgage, together with interest on such amounts as provided
in this Mortgage. The liens and security interests created pursuant to this Mortgage covering the Indebtedness which may be created
in the future shall relate back to the date of this Mortgage.

 

Lender.
The word “Lender” means Shepherd’s Finance, LLC, its successors and assigns.

 

Mortgage.
The word “Mortgage” means this Mortgage between Grantor and Lender.

 

Note.
The word “Note” means the promissory note dated February 19, 2016, in the original principal amount of $3,600,000.00
from Grantor to Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of,
and substitutions for the promissory note or agreement. NOTICE TO GRANTOR: THE NOTE CONTAINS A VARIABLE INTEREST RATE.

 

Personal
Property. The words “Personal Property” mean all equipment, fixtures, and other articles of personal property
now or hereafter owned by Grantor, and now or hereafter attached or affixed to the Real Property; together with all accessions,
parts, and additions to, all replacements of, and all substitutions for, any of such property; and together with all proceeds
(including without limitation all insurance proceeds and refunds of premiums) from any sale or other disposition of the Property.

 

Property.
The word “Property” means collectively the Real Property and the Personal Property.

 

Real
Property. The words “Real Property” mean the real property, interests and rights, as further described in this
Mortgage.

 

Related
Documents. The words “Related Documents” mean all promissory notes, credit agreements, loan agreements, construction
loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral
mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with
the Indebtedness.

 

Rents.
The word “Rents” means all present and future rents, revenues, income, issues, royalties, profits, and other benefits
derived from the Property.

 

    	9

    	 

    

 

GRANTOR
ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS MORTGAGE, AND GRANTOR AGREES TO ITS TERMS.

 

THIS
MORTGAGE IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS MORTGAGE IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT
ACCORDING TO LAW.

 

GRANTOR:

 

	Lex
    Partners II, LLC	 
	 	 	 
	 	 	(Seal)
	By:	/s/
    Steven Hanson	 
	Steven
    Hanson, Managing Member of Lex Partners II, LLC	 
	 	 
	WITNESSES:	 

 

	X:
    	/s/
    Stephanie L. Church	 

 

	Print
    Name: 	Stephanie
    L. Church	 

 

	X:
    	/s/
    Gunnar Barcomb	 

 

	Print
    Name: 	Gunnar
    Barcomb	 

 

LIMITED
LIABILITY COMPANY ACKNOWLEDGMENT

 

	STATE
    OF FLORIDA	 	)
	 	 	 	)
    SS
	COUNTY
    OF 	SARASOTA	 	)

 

On
this, the 19
                         
day of February
                              ,
2016           , before me

 

__________________________,
the undersigned Notary Public, personally appeared Steven Hanson, Managing Member of Lex Partners II, LLC, who acknowledged
himself or herself to be the member or designated agent of Lex Partners II, LLC, a Limited Liability Company, and that
he or she as such a member or designated agent, being authorized to do so, executed the foregoing instrument for the purposes
therein contained by signing the name of the Limited Liability Company by himself or herself as a member or designated agent.

 

In
witness whereof, I hereunto set my hand and official seal.

 

	 	/s/
    Stephanie L. Church
	 	(Signature
    of Person Taking Acknowledgement)
	 	 
	 	Stephanie
    L. Church
	 	(Name
    of Acknowledger Typed, Printed or Stamped)
	 	 
	 	 
	 	(Title
    or Rank)
	 	 
	 	 
	 	(Serial
    Number, if any)

 

    	10

    	 

    

 

EXHIBIT
A

 

Lot
136, Harbor Acres, Section 2, according to the map or plat thereof as recorded in Plat Book 4, Page 63, Public Records of Sarasota
County, Florida.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.

 

    	 	-2-	 

    	 	 	 

    

 

(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

 

    	 	-3-	 

    	 	 	 

    

 

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00254-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00254-of-00352.parquet"}]]