MODSIFIED
PROMISSORY NOTE


(Revolving
Line of Credit)


 


	$7,000,000.00	Jacksonville,
    Florida
	 	October
    23, 2017 and
	 	April
    12, 2018


 


FOR
VALUE RECEIVED, the undersigned, SHEPHERD’S FINANCE, LLC, a Delaware limited liability company, having an address
at 12627 San Jose Blvd., Suite 203, Jacksonville, FL 32223 (the “Borrower”), does hereby promise to pay to the order
of PAUL SWANSON (the “Lender”), at Lender’s address of 128 Sota Drive, Jupiter, Florida 33458, the principal
sum of SEVEN MILLION AND 00/100 DOLLARS ($7,000,000.00) (the “Loan”), or such lesser amount as may be advanced
by the Lender pursuant to that certain line of credit agreement dated October _____, 2017, by and between the Borrower and the
Lender (the “Loan Agreement”), together with interest on the unpaid principal balances outstanding from time to time
computed on the basis of a year of 360 days, payable for the actual number of days in the payment period. The Lender’s commitment
to make Loan Advances on this Note shall expire 30 days prior to the Expiration Date (as defined in the Loan Agreement),
unless renewed and extended as set forth in the Loan Agreement. Capitalized terms used herein and not defined shall have the definitions
set forth in the Loan Agreement.


 


1.
Payments. 


 


(a)
Interest will be due in arrears on a monthly basis, based upon the amount of principal outstanding under the Loan, commencing
on the 1st day of the month following the first Loan Advance. 


 






    	 	 	 



    	 



    




 


(b)
Loan Advances secured by a Collateral Loan (as defined in the Loan Agreement) shall be repaid unless Borrower supplies a Borrowing
Base Certificate showing that no payment is required to remain in compliance: (i) in full within 5 business days of a Collateral
Property Disposition (as defined in the Loan Agreement), (ii) within 5 business days of receiving a principal reduction payment
on a Collateral Loan securing the Loan in the amount equal to 67% of the amount of such principal reduction payment, or (iii)
in full within one year after the Collateral Loan is made by the Borrower.


 


(c)
If not sooner paid, the principal outstanding, all unpaid accrued interest and all other sums and costs incurred by the Lender
pursuant to this Note and the Loan Agreement, shall be due and payable as provided for in Section 2.01 (b) of the Loan Agreement,
without notice, presentment or demand.


 


2.
Prepayment. Borrower may prepay this Note in full or in part at any time without premium or penalty. Prepayments of the
Loan may be reborrowed.


 


3.
Interest Rate. The principal amounts outstanding on the Loan will bear interest at a fixed annual rate equal to NINE PERCENT
(9%).


 


4.
Evidence and Collateral. This Note evidences the Loan Advances made in accordance with the terms and conditions of this
Note and the Loan Agreement, and payment of this Note is secured by the Collateral Assignment of Notes and Documents. This Note
and the other instruments, documents and agreements securing, evidencing or otherwise pertaining to the Loan are herein collectively
referred to as the “Loan Documents”.


 






    	 	 	 



    	 



    




 


5.
Remedies. In the event default shall be made in the payment of any installment of principal or interest as and when due
on this Note, or any part thereof, and such default shall continue unremedied for a period of 10 days, or if an Event of Default
as defined in the Loan Agreement or Loan Documents shall have occurred and is continuing or there shall be a breach of or a default
in the performance of any of the terms, conditions, warranties, covenants and agreements of any of the other Loan Documents, then,
upon the expiration of any applicable grace period, the entire unpaid principal balance hereof, together with all accrued interest
hereon, shall, at the option of the holder hereof, without notice, immediately become due and payable for all purposes, and the
holder may exercise the rights and remedies provided for in the Loan Documents and under applicable law.


 





6.
Applicable Law. This Note shall be governed and the rights and obligations of the parties thereto shall be construed under
the laws of the State of Florida.


 


7.
Waivers. Each party to this Note, whether as principal, endorser, guarantor, surety or otherwise, jointly and severally,
waives presentment, demand, protest and notice of dishonor and agrees that extension or extensions of time of payment of this
Note or any installment thereof may be made before, at or after maturity by agreement with any one or more of the parties hereto
without notice to and without releasing the liability of any other party.


 


	 	BORROWER:
	 	 	 
	 	SHEPHERD’S
    FINANCE, LLC
	 	 	 
	 	By:
    	/s/
    Daniel M. Wallach
	 	 	Daniel
    M. Wallach
	 	Its:	Chief
    Executive Officer