# EDGAR Filing Document

**Accession Number:** 0001544190
**File Stem:** 0001493152-26-018076
**Filing Date:** 2026-4
**Character Count:** 530849
**Document Hash:** 82f6173f6af10123fecde07ed41bd006
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001493152-26-018076.hdr.sgml**: 20260420

**ACCESSION NUMBER**: 0001493152-26-018076

**CONFORMED SUBMISSION TYPE**: S-1/A

**PUBLIC DOCUMENT COUNT**: 10

**FILED AS OF DATE**: 20260420

**DATE AS OF CHANGE**: 20260420

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Shepherd's Finance, LLC
- **CENTRAL INDEX KEY:** 0001544190
- **STANDARD INDUSTRIAL CLASSIFICATION:** SHORT-TERM BUSINESS CREDIT INSTITUTIONS [6153]
- **ORGANIZATION NAME:** 02 Finance
- **EIN:** 364608739
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** S-1/A
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-290256
- **FILM NUMBER:** 26874790

**BUSINESS ADDRESS:**
- **STREET 1:** 12276 SAN JOSE BLVD, SUITE 108
- **CITY:** JACKSONVILLE
- **STATE:** FL
- **ZIP:** 32223
- **BUSINESS PHONE:** 9045033989

**MAIL ADDRESS:**
- **STREET 1:** 12276 SAN JOSE BLVD, SUITE 108
- **CITY:** JACKSONVILLE
- **STATE:** FL
- **ZIP:** 32223

**As filed with the Securities and Exchange Commission on April 20, 2026** 

**Registration No. 333-290256** 

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 **Amendment No. 1**

 **to**

**FORM S-1**

**REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933**

**Shepherd's Finance, LLC**

(Exact name of registrant as specified in its charter)

---

| | | |
|:---|:---|:---|
| **Delaware** | **6153** | **36-4608739** |
| (State or other jurisdiction<br> of incorporation or organization) | (Primary Standard Industrial<br> Classification Code Number) | (I.R.S. Employer<br> Identification No.) |

---

**13241 Bartram Park Blvd., Suite 2401**

**Jacksonville, Florida 32258**

**(302) 752-2688**

(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

**Daniel M. Wallach**

**Chief Executive Officer**

**13241 Bartram Park Blvd., Suite 2401**

**Jacksonville, Florida 32258**

**(302) 752-2688**

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies of all communications, including copies of all communications sent to agent for service, should be sent to:

**Michael K. Rafter, Esq.**

**Nelson Mullins Riley & Scarborough LLP**

**Atlantic Station**

**201 17th Street NW**

**Suite 1700** 

**Atlanta, Georgia 30363**

**Telephone: (404) 322-6000**

**Facsimile: (404) 322-6050**

Approximate date of commencement of proposed sale to the public:

**As soon as practicable following the effectiveness of this Registration Statement.**

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 (the "Securities Act") check the following box. ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Securities Exchange Act of 1934.

Large accelerated filer ☐ Accelerated filer ☐ <br> Non-accelerated filer ☒ Smaller reporting company ☒ <br> Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☒

**The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant files a further amendment which specifically states that this Registration Statement will thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement becomes effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.**

The information in this preliminary prospectus is not complete and may be changed. We may not sell any of the securities described in this preliminary prospectus until the registration statement that we have filed with the U.S. Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell the securities, and it is not soliciting an offer to buy these securities, in any state where an offer or sale of the securities is not permitted.

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED APRIL 20, 2026

![](forms-1_001.jpg)

**$70,000,000 in Fixed Rate Subordinated Notes**

Shepherd's Finance, LLC is offering up to $70,000,000 in aggregate principal amount of our Fixed Rate Subordinated Notes ("Notes") on a continuous basis. The initial minimum investment amount required is $500. From time to time, we may, however, change the minimum investment amount that is required. The maximum investment amount per investor is $1,000,000 aggregate principal amount, or $1,000,000 per Note, but a higher maximum investment amount may be approved on a case-by-case basis. As of April 13, 2026, we have issued Notes in our previous public offerings with an aggregate principal amount of approximately $107,547,000. The term "Notes," as used throughout this prospectus, can mean both the Notes offered in this offering and Notes offered in prior or future offerings of the Company.

We issue the Notes in varying purchase amounts and maturities that we establish from time to time. The Notes will initially be offered with maturities ranging from 12 months to 48 months from the date of issuance. For each maturity, we also establish an interest rate. The interest rates will vary within the predetermined interest rate ranges, as described in this prospectus, but annual interest rates as of the date of this prospectus are as follows: 6.00% for 12-month Notes; 7.00% for 24-month Notes; 6.50% for 36-month Notes; and 8.00% for 48-month Notes. See "Prospectus Summary - The Offering - Interest Rate." Interest will be calculated based on the actual number of days your Note is outstanding. Interest is calculated and compounded monthly based on a 365/366 day year. When you make an investment, your rate will be fixed throughout the duration of your investment.

We may market our Notes in many ways, including but not limited to, publishing the then current features (e.g., the maturities and interest rates currently offered by us) of the Notes in advertising on the internet, newspapers, and through direct mail campaigns. At any time, you also may obtain the then applicable features of the Notes from our website at <u>www.shepherdsfinance.com</u> or by calling (302) 752-2688 (30-ASK-ABOUT). However, the information on our website is not a part of this prospectus. Any substantive change to the features of the Notes that does not constitute a fundamental change will be included in a Rule 424(b)(3) prospectus supplement.

We are offering the Notes directly, without an underwriter or placement agent, and on a continuous basis. We do not have to sell any minimum amount of Notes to accept and use the proceeds of this offering. Therefore, once you purchase a Note, we may immediately use the proceeds of your investment and your investment will be returned only if we repay your Note. We cannot assure you that all or any portion of the Notes we are offering will be sold. We have not made any arrangement to place any of the proceeds from this offering in an escrow, trust, or similar account. The Notes are not listed on any securities exchange and there will not be any public trading market for the Notes. We have the right to reject any investment, in whole or in part, for any reason.

We may redeem any Note, in whole or in part, at any time prior to maturity, upon 30 to 60 days' written notice, for a redemption price equal to the principal amount plus any earned but unpaid interest thereon to the date of redemption. Subject to certain restrictions, a holder of a Note with a 36-month maturity may require the Company to redeem all or a portion of such Note. Additionally, you may request early redemption of a Note purchased by you at any time on or after 180 calendar days after issuance of a Note, but we reserve the right to decline your request for any reason. If we grant your redemption request, we will mail you a payment equal to the principal amount plus any earned but unpaid interest to the date of redemption, minus a 180-day interest penalty. Furthermore, unless the subordination provisions in the indenture restrict our ability to make the redemption, a holder of a Note may also require us to redeem all or a portion of their Note, regardless of amount, for a redemption price equal to the principal amount plus an amount equal to the unpaid interest thereon for such Note at the stated rate to the redemption date, upon one business day's advance notice to us, but only if the holder immediately upon redemption invests the entirety of the proceeds from such redemption in another Note or another security then-offered by us, if any; provided, however, (i) a holder may only reinvest in another Note with a maturity that is equal to or greater than the period remaining until the maturity date for the Note to be redeemed and (ii) a holder may only reinvest in a Note with a 36-month maturity if the holder is seeking to redeem a Note with a 36-month maturity. In the foregoing circumstances, the holder will not be subject to a holding period requirement or an interest penalty.

The Notes mature between one and four years from the date of issuance. Between 30 to 60 days prior to the maturity date, we will mail to you a letter notifying you of the upcoming maturity date. Upon maturity, principal and any earned but unpaid interest will be paid to you.

You should read this prospectus and any applicable prospectus supplement carefully before you invest in the Notes. The Notes are our general unsecured obligations and are subordinated in right of payment to all of our present and future senior debt. As of December 31, 2025, we had approximately $53,334,000 in debt outstanding that ranks equal or senior to the Notes, including approximately $22,164,000 in Notes issued pursuant to our prior offerings of Notes. We expect to incur additional debt in the future, including, without limitation, the Notes offered pursuant to this prospectus and senior debt.

**The Notes are not certificates of deposit or similar obligations guaranteed by any depository institution and are not insured by the Federal Deposit Insurance Corporation (FDIC) or any governmental or private insurance fund, or any other entity. We do not contribute funds to a separate account such as a sinking fund to repay the Notes upon maturity.**

**We are an "emerging growth company" and "smaller reporting company" under the federal securities laws and are subject to reduced public company reporting requirements. See "Risk Factors" beginning on page 12 for significant factors you should consider before buying the Notes. The most significant risks include the following:**

● Our Notes are not insured or guaranteed by the FDIC or any third party, so repayment of your Note depends upon our equity (which may be limited at times), our experience, the collateral securing our loans, and our ability to manage our business and generate adequate cash flows.

● The Notes are risky speculative investments. Therefore, you should not invest in the Notes unless you are able to afford the loss of your entire investment.

● There will not be any market for the Notes, so you should only purchase them if you do not have any need for your money prior to the maturity of the Note.

● You will not have the benefit of an independent review of the terms of the Notes, the prospectus, or our Company as is customarily performed in underwritten offerings.

● We have the right to pay your investment back to you before the stated maturity of your investment. If we do, you may not be able to reinvest the proceeds at comparable rates and you will stop earning interest on your investment.

● Our business is not industry-diversified. Deterioration in the homebuilding industry or economic conditions could decrease demand and pricing for new homes and residential home lots. A decline in housing values similar to the national downturn in the real estate market that began in 2007 would have a negative impact on our business. Smaller value declines will also have a negative impact on our business. These factors may decrease the likelihood we will be able to generate enough cash to repay the Notes.

● Currently, we are reliant on a single developer and homebuilder, the Hoskins Group, who is concentrated in the Pittsburgh, Pennsylvania market, for a significant portion of our revenues. Our second largest customer is in the Central and Southwest Florida market and is also a significant portion of our portfolio.

● Most of our assets are commercial construction loans to homebuilders and/or developers which are a higher than average credit risk, and therefore could expose us to higher rates of loan defaults, which could impact our ability to repay amounts owed to you.

● We have entered into loan purchase and sale agreements with third parties to sell them portions of some of our loans. This increases our leverage. While the agreements are intended to increase our profitability, large loan losses and/or idle cash could actually reduce our profitability, which could impair our ability to pay principal and/or interest on the Notes.

● We depend on the availability of significant sources of credit to meet our liquidity needs and our failure to maintain these sources of credit could materially and adversely affect our liquidity in the future.

● We have unfunded commitments to builders as of December 31, 2025. If every builder borrowed every amount allowed (which would mean all their homes were complete) and no builders paid us back, we would need to fund that amount. While some of that amount would automatically come from our loan purchase and sale agreements, the rest would have to come from our Notes Program and/or our lines of credit. Therefore, we may not have the ability to fund our commitments to builders.

● We have a significant amount of debt and expect to incur a significant amount of additional debt in the future, including issuance of the Notes, which will subject us to increased risk of loss. Our present and future senior debt may make it difficult to repay the Notes.

● Our operations are not subject to the stringent banking regulatory requirements designed to protect investors, so repayment of your investment is completely dependent upon our successful operation of our business.

● Our Chief Executive Officer (who is also on our board of managers) will face conflicts of interest as a result of the secured lines of credit made available to us, which could result in actions that are not in the best interests of our Note holders.

● The indenture and terms of our Notes do not restrict our use of leverage. A relatively small loss can cause over leveraged companies to suffer a material adverse change in their financial position. If this happened to us, it may make it difficult to repay the Notes.

**These securities have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission, and neither the Securities and Exchange Commission nor any state securities commission has passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.**

---

| | | | |
|:---|:---|:---|:---|
|  | **Price to Public** | **Underwriting Discount and Commission <sup>(1)</sup>** | **Proceeds to**<br> **Company <sup>(2)</sup>** |
| Per Note | 100% |  | 100% |
| Total | $70000000 |  | $70000000 |

---

<sup>(1)</sup> The Notes are not being offered or sold pursuant to any underwriting or similar agreement, and no commissions or other remuneration will be paid in connection with their sale. The Notes will be sold at face value.

<sup>(2)</sup> We will receive all of the net proceeds from the sale of the Notes, which, if we sell all of the Notes covered by this prospectus, we estimate will total approximately $69,270,000 after expenses.

The date of this prospectus is [__], 2026.

**SUITABILITY STANDARDS**

An investment in our Notes involves significant risks and is only suitable for persons who have adequate financial means, desire a relatively long-term investment and will not need liquidity from their investment. This investment is not suitable for persons who seek liquidity or guaranteed income.

We have not established general suitability standards for investors in our Notes; however, certain states in which we intend to sell the Notes have established special suitability standards. Notes will be sold only to investors in these states who meet the special suitability standards set forth below:

● **For Alabama Residents -** Notes will only be sold to residents of the State of Alabama representing that they have (i) an annual gross income of $70,000 and a liquid net worth of $70,000, or (ii) a net worth of $250,000. Further, investors in the State of Alabama may not invest more than 10% of their liquid net worth in us or our affiliates.

● **For Alaska Residents -** Notes will only be sold to residents of the State of Alaska representing that they have (i) a minimum annual gross income of $70,000 and a minimum net worth of $70,000, or (ii) a minimum net worth of $250,000. In each case, net worth is to be calculated exclusive of an individual's principal automobile, principal residence, and home furnishings.

● **For Arizona Residents** - Notes will only be sold to residents of the State of Arizona representing that they have (i) a minimum annual gross income of $70,000 and a minimum net worth of $70,000, or (ii) a minimum net worth of $250,000. In each case, net worth is to be calculated exclusive of an individual's principal automobile, principal residence, and home furnishings.

● **For California Residents -** Notes will only be sold to residents of the State of California representing that they have (i) a gross income of $65,000 and net worth of $250,000, or (ii) a net worth of $500,000.

● **For Idaho and Kentucky Residents -** Notes will only be sold to residents of the States of Idaho and Kentucky representing that they have (i) a liquid net worth of $85,000 and annual gross income of $85,000, or (ii) a liquid net worth of $300,000. Additionally, the investor's total investment in the Notes shall not exceed 10% of his or her liquid net worth. Liquid net worth is that portion of net worth consisting of cash, cash equivalents and readily marketable securities.

● **For Indiana Residents -** Notes will only be sold to residents of the State of Indiana representing that they have (i) an annual gross income of $70,000 and a liquid net worth of $70,000, or (ii) a net worth of $250,000. In each case, net worth is to be calculated exclusive of an individual's principal automobile, principal residence, and home furnishings.

● **For Iowa Residents -** Notes will only be sold to residents of the State of Iowa representing that they have (i) a liquid net worth of $85,000 and annual gross income of $85,000, or (ii) a liquid net worth of $300,000. Additionally, the investor's total investment in the Notes shall not exceed 10% of his or her liquid net worth. Liquid net worth is that portion of net worth consisting of cash, cash equivalents and readily marketable securities.

● **For Kansas Residents -** It is recommended by the Office of the Kansas Securities Commissioner that Kansas investors limit their aggregate investment in the securities of the Issuer and other similar programs to not more than 10% of their liquid net worth. For these purposes, liquid net worth shall be defined as that portion of total net worth (total assets minus liabilities) that is comprised of cash, cash equivalents and readily marketable securities, as determined in conformity with U.S. Generally Accepted Accounting Principles.

● **For Maine Residents -** The Maine Office of Securities recommends that an investor's aggregate investment in this offering and similar offerings not exceed 10% of the investor's liquid net worth. For this purpose, "liquid net worth" is defined as that portion of net worth that consists of cash, cash equivalents and readily marketable securities.

● **For Massachusetts Residents -** It is required by the Securities Division of Massachusetts that Massachusetts investors limit their aggregate investment in our Notes and other similar programs to not more than 10% of their liquid net worth. For these purposes, liquid net worth shall be defined as that portion of total net worth (total assets minus liabilities) that is comprised of cash, cash equivalents and readily marketable securities, as determined in conformity with U.S. Generally Accepted Accounting Principles. It is further required by the Securities Division of Massachusetts that Massachusetts investors have (i) a net income of at least $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year, or (ii) an individual net worth, or joint net worth with that person's spouse, in excess of $1,000,000, excluding the value of the person's primary residence.

● **For Mississippi Residents** - Notes will only be sold to residents of the State of Mississippi representing that they have (i) an annual gross income of $70,000 and a liquid net worth of $70,000, or (ii) a net worth of $250,000.

● **For Missouri Residents -** No more than 10% of any one Missouri investor's liquid net worth shall be invested in the Notes.

● **For New Mexico Residents** - A New Mexico investor may not invest, and we may not accept from a New Mexico investor more than ten percent (10%) of that investor's liquid net worth in our Notes, securities of our affiliates, and in other similar programs. For these purposes, liquid net worth is defined as that portion of net worth which consists of cash, cash equivalents, and readily marketable securities. This requirement shall not apply to any New Mexico investor that is an accredited investor as defined by Rule 501(a) of Regulation D.

● **For North Dakota Residents -** Notes will only be sold to residents of the State of North Dakota representing that they have (i) an annual gross income of $70,000 and a liquid net worth of $70,000, or (ii) a net worth of $250,000. Further, investors in the State of North Dakota may not invest more than 10% of their liquid net worth in the offering.

● **For Oregon Residents** - Notes will only be sold to non-accredited residents of the State of Oregon representing that they have (i) an annual gross income of $70,000 and a liquid net worth of $70,000, or (ii) a net worth of $250,000. Further, non-accredited investors in the State of Oregon may not invest more than 10% of their liquid net worth in the offering. For these purposes, "liquid net worth" is defined as that portion of an investor's net worth consisting of cash, cash equivalents, and readily marketable securities and is to be calculated exclusive of an individual's principal residence, home furnishings, and automobiles. Investors in the State of Oregon who meet the definition of "accredited investor" as defined in Regulation D under the Securities Act of 1933, as amended, are not subject to the limitations described in this paragraph.

● **For Tennessee Residents -** An investment by a Tennessee resident must not exceed ten percent (10%) of their liquid net worth.

● **For Vermont Residents -** Accredited investors in Vermont, as defined in 17 C.F.R. § 230.501, may invest freely in this offering. In addition to the suitability standards described above, non-accredited Vermont investors may not purchase an amount in this offering that exceeds 10% of the investor's liquid net worth. For these purposes, "liquid net worth" is defined as an investor's total assets (not including home, home furnishings, or automobiles) minus total liabilities.

i

**SHEPHERD'S FINANCE, LLC**

**TABLE OF CONTENTS**

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| | |
|:---|:---|
| [SUITABILITY STANDARDS](#ap_001) | i |
| [QUESTIONS AND ANSWERS](#ap_002) | 1 |
| [PROSPECTUS SUMMARY](#ap_003) | 7 |
| &nbsp;&nbsp;&nbsp;[Our Company and Our Business](#ap_004) | 7 |
| &nbsp;&nbsp;&nbsp;[The Offering](#ap_005) | 8 |
| [SUMMARY OF PRINCIPAL RISK FACTORS](#ap_006) | 10 |
| [RISK FACTORS](#ap_007) | 12 |
| &nbsp;&nbsp;&nbsp;[Risks Related to Our Offering and Business](#ap_008) | 12 |
| &nbsp;&nbsp;&nbsp;[Risks Related to Conflicts of Interest](#ap_009) | 22 |
| &nbsp;&nbsp;&nbsp;[Risks Related to Liquidity](#ap_010) | 23 |
| [FORWARD-LOOKING STATEMENTS](#ap_011) | 28 |
| [USE OF PROCEEDS](#ap_012) | 29 |
| [BUSINESS](#ap_013) | 30 |
| &nbsp;&nbsp;&nbsp;[Overview](#ap_014) | 30 |
| &nbsp;&nbsp;&nbsp;[Investment Objectives and Opportunity](#ap_015) | 32 |
| &nbsp;&nbsp;&nbsp;[Loan Portfolio](#ap_016) | 37 |
| &nbsp;&nbsp;&nbsp;[Credit Quality Information](#ap_017) | 40 |
| &nbsp;&nbsp;&nbsp;[Debt Summary and Sources of Liquidity](#ap_018) | 45 |
| &nbsp;&nbsp;&nbsp;[Competition](#ap_019) | 48 |
| &nbsp;&nbsp;&nbsp;[Human Capital Resources](#ap_020) | 49 |
| &nbsp;&nbsp;&nbsp;[Regulatory Matters](#ap_021) | 49 |
| &nbsp;&nbsp;&nbsp;[Legal Proceedings](#ap_022) | 49 |
| &nbsp;&nbsp;&nbsp;[Reports to Security Holders](#ap_023) | 49 |
| [MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#ap_024) | 50 |
| [MATERIAL FEDERAL INCOME TAX CONSEQUENCES](#ap_025) | 50 |
| &nbsp;&nbsp;&nbsp;[Interest Income on the Notes](#ap_026) | 50 |
| &nbsp;&nbsp;&nbsp;[Treatment of Dispositions of Notes](#ap_027) | 50 |
| &nbsp;&nbsp;&nbsp;[Non-U.S. Holders](#ap_028) | 51 |
| &nbsp;&nbsp;&nbsp;[Reporting and Backup Withholding](#ap_029) | 51 |
| &nbsp;&nbsp;&nbsp;[Foreign Account Tax Compliance Withholding](#ap_030) | 51 |
| [CERTAIN EMPLOYEE BENEFIT PLAN CONSIDERATIONS](#ap_031) | 52 |
| &nbsp;&nbsp;&nbsp;[General Fiduciary Matters](#ap_032) | 52 |
| &nbsp;&nbsp;&nbsp;[Prohibited Transaction Issues](#ap_033) | 52 |
| &nbsp;&nbsp;&nbsp;[Representation](#ap_034) | 52 |
| [MANAGEMENT](#ap_035) | 53 |
| &nbsp;&nbsp;&nbsp;[Executive Officers and Board of Managers](#ap_036) | 53 |
| &nbsp;&nbsp;&nbsp;[Committees of the Board of Managers](#ap_037) | 55 |
| &nbsp;&nbsp;&nbsp;[Limited Liability and Indemnification of Directors, Officers, Employees, and Other Agents](#ap_038) | 56 |
| [EXECUTIVE COMPENSATION](#ap_039) | 57 |
| &nbsp;&nbsp;&nbsp;[Executive Officer Compensation](#ap_040) | 57 |
| &nbsp;&nbsp;&nbsp;[Board of Managers Compensation](#ap_041) | 59 |
| [PRINCIPAL SECURITY HOLDERS](#ap_042) | 60 |
| [CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS](#ap_043) | 61 |
| &nbsp;&nbsp;&nbsp;[Transactions with Affiliates](#ap_044) | 61 |
| &nbsp;&nbsp;&nbsp;[Affiliate Transaction Policy](#ap_045) | 64 |
| &nbsp;&nbsp;&nbsp;[Board of Managers Independence](#ap_046) | 64 |
| [DESCRIPTION OF NOTES](#ap_047) | 65 |
| &nbsp;&nbsp;&nbsp;[General](#ap_048) | 65 |
| &nbsp;&nbsp;&nbsp;[Established Features of the Notes](#ap_049) | 65 |
| &nbsp;&nbsp;&nbsp;[Subordination](#ap_050) | 66 |
| &nbsp;&nbsp;&nbsp;[Redemption by Us Prior to Maturity](#ap_051) | 67 |
| &nbsp;&nbsp;&nbsp;[Redemption at the Request of the Holder Prior to Maturity](#ap_052) | 67 |
| &nbsp;&nbsp;&nbsp;[Redemption upon Your Death](#ap_053) | 67 |
| &nbsp;&nbsp;&nbsp;[Additional Redemption Options for Notes with a 36-Month Maturity](#ap_054) | 67 |
| &nbsp;&nbsp;&nbsp;[No Restrictions on Additional Debt or Business](#ap_055) | 68 |
| &nbsp;&nbsp;&nbsp;[Modification of Indenture](#ap_056) | 68 |
| &nbsp;&nbsp;&nbsp;[Place, Method, and Time of Payment](#ap_057) | 68 |
| &nbsp;&nbsp;&nbsp;[Events of Default](#ap_058) | 68 |
| &nbsp;&nbsp;&nbsp;[Satisfaction and Discharge of Indenture](#ap_059) | 69 |
| &nbsp;&nbsp;&nbsp;[Reports](#ap_060) | 69 |
| &nbsp;&nbsp;&nbsp;[Service Charges](#ap_061) | 69 |
| &nbsp;&nbsp;&nbsp;[Book Entry Record of Your Ownership](#ap_062) | 69 |
| &nbsp;&nbsp;&nbsp;[Transfer](#ap_063) | 69 |
| &nbsp;&nbsp;&nbsp;[Concerning the Trustee](#ap_064) | 69 |
| [PLAN OF DISTRIBUTION](#ap_065) | 70 |
| [CHARITABLE MATCH PROGRAM](#ap_066) | 71 |
| [LEGAL MATTERS](#ap_067) | 71 |
| [EXPERTS](#ap_068) | 71 |
| [INCORPORATION OF INFORMATION BY REFERENCE](#ap_070) | 71 |
| [WHERE YOU CAN FIND MORE INFORMATION](#ap_069) | 72 |

---

ii

**You should rely only upon the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. We are offering to sell the Notes only in jurisdictions where offers and sales are permitted.**

**QUESTIONS AND ANSWERS**

Below we have provided some of the more frequently asked questions and answers relating to the offering of the Notes. Please see the "Prospectus Summary" and the remainder of the prospectus for more information about the offering of the Notes.

---

| | |
|:---|:---|
| **Q:** | **Who is Shepherd's Finance, LLC?** |
| A: | Shepherd's Finance, LLC, along with our consolidated subsidiary, ("Shepherd's Finance," "we," "our," "us," or the "Company") is a finance company organized as a limited liability company in the State of Delaware. Our business is focused on commercial lending to participants in the residential construction and development industry. Our Chief Executive Officer ("CEO"), who is also on our board of managers, is Daniel M. Wallach. Mr. Wallach is responsible for overseeing our day-to-day operations. Our office is located in Jacksonville, Florida. As of December 31, 2025, we have 57 customers in 21 states. As of December 31, 2025, Mr. Wallach and his wife, directly or indirectly, own 91.8% of our outstanding common membership interests, which constitute our voting membership interests. Therefore, Mr. Wallach is able to exercise significant control over our business, including with respect to the composition of our board of managers. A manager may be removed by a vote of holders of 80% of our outstanding voting membership interests. |
| **Q:** | **What are your primary business activities?** |
| A: | We extend and service commercial loans to small-to-medium sized homebuilders for the purchase of lots and/or the construction of homes thereon. In some circumstances, the lot is purchased with an older home on the lot which is then either removed or rehabilitated. If the home is rehabilitated, the loan is referred to as a "rehab" loan. As we continue to grow our business, we are focusing some of our efforts on our rehab loan program, which we believe in the long run will face less bank competition and have more stable demand than our new construction program. We also extend and service loans for the purchase of lots and undeveloped land and the development of that land into residential building lots. Most of the loans are for "spec homes" or "spec lots," meaning they are built or developed speculatively (with no specific end-user homeowner in mind). The loans are generally secured, and the collateral is the land, lots, and constructed items thereon, as well as additional collateral, as we deem appropriate. As of December 31, 2025, we had 151 construction loans in 21 states with 53 borrowers and 13 development loans in nine states with 12 borrowers. We intend to continue expanding our lending activity and further diversifying our loan portfolio. |
| **Q:** | **What is your experience in this type of lending?** |
| A: | Since 2011, we have extended and serviced commercial loans to small-to-medium sized homebuilders for the purchase of lots and/or the construction of homes thereon. We have also extended rehab loans to homebuilders in instances when the lot has an existing home which is either removed or rehabilitated. We also extend and service loans for the purchase of lots and undeveloped land and the development of that land into residential building lots. We have originated approximately $517,752,000 of loans from December 2011 through December 2025. As of December 31, 2025, we had 151 construction loans in 21 states with 53 borrowers and 13 development loans in nine states with 12 borrowers.<br>Our CEO, Daniel M. Wallach, has been in the housing industry since 1985. For 11 years, he was the Chief Financial Officer of 84 Lumber Company ("84 Lumber"), a multi-billion-dollar supplier of building materials to home builders. He also was responsible for 84 Lumber's lending business for 20 years. During those years, he was responsible for the creation and implementation of many secured lending programs to builders, some of which were performed fully by 84 Lumber, and some of which were performed in partnership with banks. In general, both the creation of all loans and the resolution of defaulted loans were Mr. Wallach's responsibility, whether the loans were company loans or loans in partnership with banks. Through these programs, he was responsible for the creation of approximately $2,000,000,000 in loans which generated interest spread of $50,000,000 after deducting for loan losses. Through the years, Mr. Wallach managed the development of systems for reducing and managing the risks and losses on defaulted loans. Mr. Wallach also was responsible for 84 Lumber's unsecured debt to builders, which reached over $300,000,000 at its peak. He also gained experience in securing defaulted unsecured debt. |

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| **Q:** | **Why will your potential customers want to borrow from you?** |
| A: | During 2026, we anticipate that the housing market in most of the areas in which we do business will likely improve, as we believe that the long term interest rates that our borrowers' customers use are likely to fall. There is a risk if mortgage rates drop that many homeowners in existing low-rate mortgages will decide to "move up" and sell their low mortgage rate home, flooding the market with homes. Offsetting that risk is the fact that they will also increase demand for homes as they will need one to live in. Rents may become less affordable vs. owning a home, which helps our customer. While we don't anticipate the market flooding to negatively impact us, there is little history to go by and this might cause housing prices to drop steeply, which will hurt our existing loans. Many small-to-medium sized home builders can build homes for customers who have their own financing, but are unable to obtain or supply any or enough of their own financing to build speculative or model homes. The ability to have available either a speculative home or a model home can greatly increase the total number of homes a builder can sell per year, so despite the high cost of providing financing to builders today, we believe that there is a significant demand. Banks, which historically have been the most popular provider of financing for builders, are mostly not in that business today, or are in the business at a reduced level. We believe that this void in supply gives us the opportunity to profit in this niche business of providing financing to small-to-medium sized home builders. |

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| **Q:** | **What is the role of the Board of Managers?** |
| A: | While our CEO and other executive officers are responsible for our day-to-day operations, our board of managers is responsible for governance over our business. Our board of managers is comprised of Daniel M. Wallach, who is also our CEO, and three independent managers, Eric A. Rauscher, Kenneth R. Summers, and Gregory L. Sheldon. |

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| **Q:** | **What kind of offering is this and how many Notes are outstanding?** |
| A: | We are offering up to $70,000,000 in Notes. As of December 31, 2025, we have approximately $22,164,000 of Notes outstanding, consisting of Notes issued pursuant to our prior offerings. We previously engaged in four public offerings of Notes, the most recent of which terminated on March 15, 2026. Notes issued in our prior offerings rank equally to the Notes offered in this offering. |

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| **Q:** | **How are the Notes sold?** |
| A: | The Notes are offered directly by us without an underwriter or placement agent. We may market the Notes by advertisements on the internet, advertisements in local and/or national newspapers, roadway sign advertisements, or through direct mail campaigns and other miscellaneous media in states in which we have properly registered the offering or qualified for an exemption from registration. |

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| **Q:** | **What are the proposed terms of the Notes you are offering?** |
| A: | The Notes will initially be offered with maturities ranging from 12 months to 48 months from the date of issuance. The interest rates will vary within the predetermined interest rate ranges, as described in this prospectus, but annual interest rates as of the date of this prospectus are as follows: 6% for 12-month Notes; 7% for 24-month Notes; 6.5% for 36-month Notes; and 8% for 48-month Notes. Interest will be calculated based on the actual number of days your Note is outstanding. Interest is calculated and compounded monthly based on a 365/366 day year. When you make an investment, your rate will be fixed throughout the duration of your investment. |

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| **Q:** | **How is the interest rate determined?** |
| A: | From time to time, we will establish the interest rate(s) we are offering for various maturities. By referring to the features (e.g., the maturities and interest rates) which are in effect at the time, you will see the interest rate(s) and maturities we are currently offering. The interest rate offered on the Notes depends on which maturity you select and is subject to a range, as follows: |

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| **Note Maturity** | **Minimum <br> Rate** | **Ceiling** |
| 12-Month | 5% | 10% |
| 24-Month | 6% | 10% |
| 36-Month | 5% | 10% |
| 48-Month | 7% | 11% |

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The interest rate on a Note purchased by you is fixed and will not change over the term of the Note.

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| **Q:** | **What will you do with the proceeds raised from this offering?** |
| A: | If all of the Notes offered by this prospectus are sold, we expect to receive approximately $69,270,000 in net proceeds (after deducting all costs and expenses associated with this offering). We intend to use substantially all of the net proceeds from this offering as follows and in the following order of priority: |

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● to make payments on other borrowings, including loans from affiliates;

● to pay Notes on their scheduled due date and Notes that we are required to redeem early;

● to make interest payments on the Notes; and

● to the extent we have remaining net proceeds and adequate liquidity, to fund any one or more of the following activities:

○ to extend commercial construction loans to homebuilders to build single or multi-family homes, develop lots, or rehabilitate an older home on an existing lot;

○ to make distributions to equity owners, including distributions on our preferred equity;

○ for working capital and other corporate purposes provided, however, no more than 20% of the proceeds will be used for such purposes;

○ to purchase defaulted secured debt from financial institutions at a discount;

○ to purchase defaulted unsecured debt from suppliers to homebuilders at a discount and then secure it with real estate or other collateral;

○ to purchase real estate, in which we will operate our business (one such purchase occurred in February 2017); and

○ to redeem Notes which we have decided to redeem prior to maturity.

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| **Q:** | **What is a Note?** |
| A: | A Note is our promise to pay you a specified rate of interest for a specific period of time and to repay your principal investment upon maturity. The Notes are our general unsecured obligations and are subordinate in right of payment to all present and future senior debt. "Subordinated" means that if we are unable to pay our debts as they come due, all of the senior debt would be paid in full first. After the senior debt is paid in full, any remaining money would be used to repay the Notes and other subordinated debt that are equal to the Notes in priority. As of December 31, 2025, we had $20,269,000 in senior debt and approximately $34,191,000 in subordinated debt. We expect to incur debt in the future, including, but not limited to, more senior debt and the Notes offered pursuant to this offering. |

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| **Q:** | **What is an indenture?** |
| A: | As required by United States federal law, the Notes will be governed by a document called an "indenture." An indenture is a contract between us and a trustee. The main role of the trustee is to enforce your rights against us if we are in default of our obligations under the Notes. Defaults are described in this prospectus under "Description of Notes - Events of Default." There are some limitations on the extent to which the trustee acts on your behalf. These limitations are described in this prospectus under "Description of Notes - Events of Default." |
|  | The Notes are issued under an indenture dated April [ ], 2026, between us and U.S. Bank Trust Company, National Association, as trustee. The indenture does not limit the principal amount of debt securities that we may issue under it. The indenture is governed by Delaware law and is qualified under the Trust Indenture Act of 1939. |

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| **Q:** | **Is my investment in the Notes insured or guaranteed?** |
| A: | No, the Notes are: |

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● **NOT certificates of deposit with an insured financial institution;** 

● **NOT guaranteed by any depository institution; and** 

● **NOT insured by the FDIC or any governmental or private insurance fund, or any other person or entity.** 

The Notes are backed only by the faith and credit of our Company and our operations. You are dependent upon our ability to effectively manage our business to generate sufficient cash flow, including cash flow from our commercial lending activities, for the repayment of principal at maturity and the ongoing payment of interest on the Notes.

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| **Q:** | **How is interest calculated and paid to me?** |
| A: | Interest will be calculated based on the actual number of days your Note is outstanding. Interest is calculated and compounded monthly based on a 365-day year (366-day in case of a leap year). Interest will be earned daily, and we will pay interest to you monthly or at maturity as you request. If you choose to be paid interest at maturity rather than monthly, the interest will be compounded monthly. If any day on which a payment is due with respect to a Note is not a business day, then you will not be entitled to payment of the amount due until the following business day, and no additional interest will be due as a result of such delay. If you elect to be paid interest monthly, interest on your Note will be paid on the first business day of every month. Your first interest payment date will be the month following the month in which the Note is issued, except that if a new Note is issued within the last 10 days preceding an interest payment date, the first interest payment will be made on the next succeeding interest payment date (i.e., approximately 35-40 days after issuance). No payments under $50 will be made, with any interest payment being accrued to your benefit and earning interest on a monthly compounding basis until the payment due to you is at least $50 on an interest payment date. |

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| **Q:** | **If I elect to have interest on the Note paid in one lump sum at maturity, can I change my election later?** |
| A: | Yes, we will allow you to change your election so that you receive monthly payments of earned and unpaid interest instead. You should contact us at (302) 752-2688 (30-ASK-ABOUT) or use our website, <u>www.shepherdsfinance.com</u>, to learn the steps you should take to change your election. |

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| **Q:** | **When do the Notes mature?** |
| A: | The Notes will generally mature based on the maturity date you select at the time of purchase, unless the Company chooses to redeem your Note prior to its stated maturity or, in certain circumstances, you require us to redeem your Note prior to its stated maturity. |

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| **Q:** | **May I redeem a Note prior to maturity?** |
| A: | Beginning 180 calendar days after the issuance date, you may request, in writing, that we redeem the Note. Your request, however, is subject to our consent and we may decline your request at our choosing. If we agree to your redemption request, a 180-day interest penalty will be imposed. This means that you will not receive the last 180 days' worth of interest and, if the accrued and unpaid interest is not sufficient to cover the amount of the penalty, then any remaining amount of the penalty shall be deducted from the principal amount of the Note (i.e., we will subtract the remaining interest penalty from your original investment).<br>Holders of a Note with a 36-month maturity may require us to redeem all or a portion of such Note for a redemption price equal to the principal amount plus an amount equal to the unpaid interest thereon for such Note at the stated rate to the redemption date, subject to certain restrictions primarily related to how much advance notice is provided to us. Furthermore, unless the subordination provisions in the indenture restrict our ability to make the redemption, a holder of a Note may also require us to redeem all or a portion of their Note, regardless of amount and without any interest penalty, for a redemption price equal to the principal amount plus an amount equal to the unpaid interest thereon for such Note at the stated rate to the redemption date, upon one business day's advance notice to us, but only if the holder immediately upon redemption invests the entirety of the proceeds from such redemption in another Note or another security then-offered by us, if any; provided, however, (i) a holder may only reinvest in another Note with a maturity that is equal to or greater than the period remaining until the maturity date for the Note to be redeemed and (ii) a holder may only reinvest in a Note with a 36-month maturity if the holder is seeking to redeem a Note with a 36-month maturity. The restriction requiring you to wait until 180 days have passed from the issuance of your Note to request a redemption does not apply to the redemptions described in this paragraph. See the "Description of Notes - Additional Redemption Options for Notes with a 36-Month Maturity" section of this prospectus for additional information. |

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| **Q:** | **What happens if I die prior to the maturity date?** |
| A. | At the written request of the executor or administrator of your estate (or if your Note is held jointly with another investor, the joint owner of your Note), we will redeem any Note at any time after death. The redemption price will be equal to the principal amount plus earned but unpaid interest payable on the Note, without any interest penalty. We will seek to honor any such request as soon as reasonably possible based on our cash position at the time and our then current cash needs, but generally within two weeks of the request. It is possible that the subordination provisions in the indenture may restrict our ability to honor your request. |

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| **Q:** | **Can you force me to redeem my Note?** |
| A: | Yes. At any time, we may call all or a portion of your Note for redemption. We will give you 30 to 60 days' notice of the mandatory redemption and repay your Note for a price equal to the principal amount plus earned but unpaid interest to the day we repay your Note. |

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| **Q:** | **Are there any JOBS Act considerations?** |
| A. | We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, and are eligible to take advantage of certain exemptions from, or reduced disclosure obligations relating to, various reporting requirements that are normally applicable to public companies. Such exemptions include, among other things, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations relating to executive compensation in proxy statements and periodic reports, and exemptions from the requirement to hold a non-binding advisory vote on executive compensation and obtain shareholder approval of any golden parachute payments not previously approved.<br>Additionally, under Section 107 of the JOBS Act, an "emerging growth company" may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 for complying with new or revised accounting standards. This means an "emerging growth company" can delay adopting certain accounting standards until such standards are otherwise applicable to private companies. However, we have elected to "opt out" of such extended transition periods, and will therefore comply with new or revised accounting standards on the applicable dates on which the adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of such extended transition periods for compliance with new or revised accounting standards is irrevocable.<br>We will remain an "emerging growth company" until the earliest of (i) the last day of the first fiscal year in which we have total annual gross revenues of $1.235 billion or more, (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement, (iii) the date on which we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act (which would occur if the market value of our common equity held by non-affiliates exceeds $700 million, measured as of the last business day of our most recently completed second fiscal quarter), or (iv) the date on which we have, during the preceding three year period, issued more than $1 billion in non-convertible debt. |

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| **Q:** | **What are some of the significant risks of my investment in the Notes?** |
| A: | You should carefully read and consider all risk factors beginning on page 12 of this prospectus prior to investing. A summary of the principal risk factors we face is also contained in the "Summary of Principal Risk Factors" section of this prospectus. |

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| **Q:** | **How do I purchase a Note?** |
| A. | You may purchase a Note from us by visiting our website at <u>www.shepherdsfinance.com</u> and following the instructions under the heading "Investors" and then "Our Investment Process" or by calling (302) 752-2688 (30-ASK-ABOUT) to request a copy of the prospectus along with an investment application. Upon receipt of your application and investment check and the acceptance and posting of your investment, we will send you a confirmation, which describes, among other things, the term, interest rate, and principal amount of your Note. |
|  | We reserve the right to reject any investment. Among other reasons, we may reject an investment if the information in your investment application is incorrect or incomplete, or if the interest rate or maturity you have selected has not been offered by us in the past seven calendar days for your desired investment amount at the time we receive your investment documents. |

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| **Q:** | **Whom may I contact for more information?** |
| A: | You can obtain additional copies of this prospectus and review the established features of the Notes at <u>www.shepherdsfinance.com</u> or by calling (302) 752-2688 (30-ASK-ABOUT). However, the information contained on our website is not part of this prospectus. If you have questions about the suitability of an investment in the Notes for you, you should contact your own investment, tax, and other financial advisors. |

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**PROSPECTUS SUMMARY**

This summary highlights selected information, most of which was not otherwise addressed in the "Questions and Answers" section of this prospectus. For more information about us, you should carefully read the entire prospectus, including the section entitled "Risk Factors," the consolidated financial statements and other consolidated financial data, any related prospectus supplement, and the documents we have referred you to in the "Where You Can Find More Information" section. There will be no trading market for the Notes, so you will not be able to use the money you invest until the maturity or other repayment of the Note. Your right to be repaid prior to maturity is at our sole discretion, except upon your death and except for holders of certain 36-month Notes.

**Our Company and Our Business**

Our business is focused on commercial lending to participants in the residential construction and development industry. We believe this market is underserved because of the lack of traditional lenders currently participating in the market. We are located in Jacksonville, Florida. We are organized as a Delaware limited liability company and our operations are governed pursuant to our limited liability company agreement.

The commercial loans we extend are secured by mortgages on the underlying real estate. We extend and service commercial loans to small-to-medium sized homebuilders for the purchase of lots and/or the construction of homes thereon. In some circumstances, the lot is purchased with an older home on the lot which is then either removed or rehabilitated. If the home is rehabilitated, the loan is referred to as a "rehab" loan. As we continue to grow our business, we are focusing some of our efforts on our rehab loan program, which we believe in the long run will face less bank competition and have more stable demand than our new construction program. We also extend and service loans for the purchase of lots and undeveloped land and the development of that land into residential building lots. In addition, we may, depending on our cash position and the opportunities available to us, do none, any or all of the following: purchase defaulted unsecured debt from suppliers to homebuilders at a discount (and then secure that debt with real estate or other collateral), purchase defaulted secured debt from financial institutions at a discount, purchase real estate in which we will operate our business, and conduct other business related to or in coordination with extending loans to homebuilders and developers. Our investment policies may be amended or changed at any time by our board of managers.

We had $59,223,000 and $49,254,000 in loan assets as of December 31, 2025 and December 31, 2024, respectively. As of December 31, 2025, we had 151 construction loans in 20 states with 53 borrowers and 13 development loans in nine states with 12 borrowers. As of December 31, 2025, two of the development loans are with a borrower in Pittsburgh, Pennsylvania. We have various sources of capital, detailed below:

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| **(All dollar [$] amounts shown in table in thousands.)** | **December 31, 2025** | **December 31, 2024** |
| Capital Source |  |  |
| &nbsp;&nbsp;&nbsp;Purchase and sale agreements and other secured borrowings | $18431 | $20359 |
| &nbsp;&nbsp;&nbsp;Secured line of credit from affiliates | 26 | 743 |
| &nbsp;&nbsp;&nbsp;Unsecured line of credit (senior) |  | 750 |
| &nbsp;&nbsp;&nbsp;Unsecured Notes through our Notes Program, gross | 22164 | 19968 |
| &nbsp;&nbsp;&nbsp;Other unsecured debt | 13839 | 14645 |
| &nbsp;&nbsp;&nbsp;Preferred equity, Series C units | 7042 | 6430 |
| &nbsp;&nbsp;&nbsp;Common equity | 1169 | 2143 |
| Total | $62671 | $65038 |

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***Economic and Industry Dynamics***

We found a niche in the home construction financing industry, to become the lender of choice or secondary lender to residential homebuilders during the absence of sufficient lending at the homebuilder's local financial institution or community bank. Our customers increase their sales and profits by borrowing from us and, in return we generate positive returns on secured loans we make to them.

***Risk and Mitigation***

We believe that while creating speculative construction loans is a high-risk venture, the reduction in competition, the differences in our lending versus typical small bank lending, and our loss mitigation techniques will all help this type of lending to continue to be a profitable business.

We engage in various activities to try to mitigate the risks inherent in this type of lending by:

● Keeping the loan-to-value ratio, or LTV, between 60% and 75% on a portfolio basis, however, individual loans may, from time to time, have a greater LTV;

● Generally using deposits from the builder on home construction loans to ensure the completion of the home. Lending losses on defaulted loans are usually a higher percentage when the home is not built, or is only partially built;

● Having a higher yield than other forms of secured real estate lending;

● Using interest escrows from our loans;

● Aggressively working with builders who are in default on their loan before and during foreclosure. This technique generally yields a reduced realized loss; and

● Market grading. We review all lending markets, analyzing their historic housing start cycles. Then, the current position of housing starts is examined in each market. Markets are classified into volatile, average, or stable, and then graded based on that classification and our opinion of where the market is in its housing cycle. This grading is then used to determine the builder deposit amount, LTV, and how much of the lot purchase the builder is required to fund.

**The Offering**

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| **Securities Offered** | We are offering up to $70,000,000 in aggregate principal amount of our Notes in this public offering (the "Notes Program"). The Notes will be governed by an indenture between us and U.S. Bank Trust Company, National Association, as trustee. The Notes will not have the benefit of a sinking fund and will not be guaranteed by the FDIC or any governmental or private insurance fund, or any other person or entity. |
| **Minimum Investment (in whole dollars)** | A minimum investment of $500 is required. |
| **Maximum Investment (in whole dollars)** | The maximum investment is $1,000,000 per Note, or $1,000,000 in the aggregate per investor, but a higher maximum investment amount may be approved by us on a case-by-case basis. |
| **Interest Rate** | Various rates will be offered by us from time to time, which will be impacted by the maturity selected by you (see "Maturity," below), and will be subject to a range, as follows: |

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| **Note Maturity** | **Minimum Rate** | **Ceiling** |
| 12-Month | 5% | 10% |
| 24-Month | 6% | 10% |
| 36-Month | 5% | 10% |
| 48-Month | 7% | 11% |

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|  | The Notes will initially be offered with maturities ranging from 12 months to 48 months from the date of issuance. The interest rates will vary within the predetermined interest rate ranges, but annual interest rates as of the date of this prospectus are as follows: 6.00% for 12-month Notes; 7.00% for 24-month Notes; 6.50% for 36-month Notes; and 8.00% for 48-month Notes. Interest will be calculated based on the actual number of days your Note is outstanding. Interest is calculated and compounded monthly based on a 365/366 day year. When you make an investment your interest rate will be fixed throughout the duration of your investment. |
| **Payment of Interest** | Interest will be calculated based on the actual number of days your Note is outstanding. Interest is calculated and compounded monthly based on a 365/366 day year. Interest will be earned daily, and we will pay interest to you monthly or at maturity as you request. If you choose to be paid interest at maturity rather than monthly, the interest will be compounded monthly. If any day on which a payment is due with respect to a Note is not a business day, then you will not be entitled to payment of the amount due until the following business day, and no additional interest will be due as a result of such delay. If you elect to be paid interest monthly, interest on your Note will be paid on the first business day of every month. Your first interest payment date will be the month following the month in which the Note is issued, except that if a new Note is issued within the last 10 days preceding an interest payment date, the first interest payment will be made on the next succeeding interest payment date (i.e., approximately 35-40 days after issuance). No payments under $50 will be made, with any interest payment being accrued to your benefit and earning interest on a monthly compounding basis until the payment due to you is at least $50 on an interest payment date. |
| **Maturity** | Ranging from 12 months to 48 months from the date of issuance. |
| **Redemption by You** | Subject to our agreement in our sole discretion, you may request that we redeem a Note purchased by you at any time beginning 180 calendar days after the issuance date, with a 180-day interest penalty. This means that you will not receive the last 180 days' worth of interest and, if the accrued and unpaid interest is not sufficient to cover the amount of the penalty, then any remaining amount of the interest penalty shall be deducted from the principal amount of the Note (i.e., we will subtract the remaining interest penalty from your original investment). |

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Holders of a Note with a 36-month maturity may require us to redeem all or a portion of such Note for a redemption price equal to the principal amount plus an amount equal to the unpaid interest thereon for such Note at the stated rate to the redemption date, subject to certain restrictions primarily related to how much advance notice is provided to us. Furthermore, unless the subordination provisions in the indenture restrict our ability to make the redemption, a holder of a Note may also require us to redeem all or a portion of their Note, regardless of amount and without any interest penalty, for a redemption price equal to the principal amount plus an amount equal to the unpaid interest thereon for such Note at the stated rate to the redemption date, upon one business day's advance notice to us, but only if the holder immediately upon redemption invests the entirety of the proceeds from such redemption in another Note or another security then-offered by us, if any; provided, however, (i) a holder may only reinvest in another Note with a maturity that is equal to or greater than the period remaining until the maturity date for the Note to be redeemed and (ii) a holder may only reinvest in a Note with a 36-month maturity if the holder is seeking to redeem a Note with a 36-month maturity. The restriction requiring you to wait until 180 days have passed from the issuance of your Note to request a redemption does not apply to the redemptions described in this paragraph. See the "Description of Notes - Additional Redemption Options for Notes with a 36-Month Maturity" section of this prospectus for additional information.

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| **Redemption in the Event of Death** | Unless the subordination provisions in the indenture restrict our ability to make the redemption, at the written request of the executor or administrator of your estate (or if your Note is jointly held with another investor, at the written request of your joint investor), we will redeem the Note at any time after death for a redemption price equal to the principal amount plus earned but unpaid interest payable on the Note, without any interest penalty. We will seek to honor any such redemption request as soon as reasonably possible, based on our then current cash position and needs, but generally within two weeks of the request. |
| **Redemption by Us** | At any time we may call your Note for redemption upon 30 to 60 days' notice. The redemption price will be equal to the principal amount plus accrued and unpaid interest to the date of the redemption. |
| **Subordination** | The Notes are subordinated, in all rights to payment and in all other respects, to all of our senior debt. Senior debt includes, without limitation, all of our bank debt, our secured lines of credit from affiliates, our unsecured line of credit, senior subordinated debt, and any debt we obtain in the future. This means that if we are unable to pay our debts when due, all of the senior debt would be paid first, before any payment would be made on the Notes. |
| **Events of Default** | Under the indenture, an event of default is generally defined as (1) a default in the payment of principal or interest on the Notes that is not cured for 30 days, (2) bankruptcy or insolvency, or (3) our failure to comply with provisions of the Notes or the indenture if such failure is not cured or waived within 60 days after the receipt of a specific notice. |
| **Transfer Restrictions** | Transfer of a Note is effective only upon the receipt of valid transfer instructions from the Note holder of record. |
| **Trustee** | U.S. Bank Trust Company, National Association |
| **Plan of Distribution** | This offering is being conducted directly by us, without any underwriter or placement agent. |
| **Charitable Match Program** | We offer a charitable match program for interest payments that you elect to give to a qualifying charity. If you choose to participate in the program and donate all or a portion of your interest payments to charity, when we calculate your interest, we will deduct the percentage of interest you selected and keep track of that amount separate from your information. After interest is calculated for all Note holders at the beginning of December of each year, all of the money for each charity will be totaled up and sent in one check to each charity. Each check will have the name and address of each contributor, and the amount each contributed. Our matching portion will be included in the total check. We will match your interest payment donation up to 10% of your interest. |
| **Risk Factors** | See "Risk Factors" beginning on page 12 and other information included in this prospectus and any prospectus supplement for a discussion of factors you should carefully consider before investing in the Notes. |

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**SUMMARY OF PRINCIPAL RISK FACTORS**

Below is a summary of the principal risk factors we face. Please read it carefully and refer to the more detailed descriptions of the risk factors in the "Risk Factors" section of this prospectus.

● Our Notes are not insured or guaranteed by the FDIC or any third party, so repayment of your Note depends upon our equity (which may be limited at times), our experience, the collateral securing our loans, and our ability to manage our business and generate adequate cash flows.

● The Notes are risky speculative investments. Therefore, you should not invest in the Notes unless you are able to afford the loss of your entire investment.

● There will not be any market for the Notes, so you should only purchase them if you do not have any need for your money prior to the maturity of the Note.

● You will not have the benefit of an independent review of the terms of the Notes, the prospectus, or our Company as is customarily performed in underwritten offerings.

● We have the right to pay your investment back to you before the stated maturity of your investment. If we do, you may not be able to reinvest the proceeds at comparable rates and you will stop earning interest on your investment.

● Our business is not industry-diversified. Deterioration in the homebuilding industry or economic conditions could decrease demand and pricing for new homes and residential home lots. A decline in housing values similar to the national downturn in the real estate market that began in 2007 would have a negative impact on our business. Smaller value declines will also have a negative impact on our business. These factors may decrease the likelihood we will be able to generate enough cash to repay the Notes.

● Currently, we are reliant on a single developer and homebuilder, the Hoskins Group, who is concentrated in the Pittsburgh, Pennsylvania market, for a significant portion of our revenues. Our second largest customer is in the Central and Southwest Florida market and is also a significant portion of our portfolio.

● Most of our assets are commercial construction loans to homebuilders and/or developers which are a higher than average credit risk, and therefore could expose us to higher rates of loan defaults, which could impact our ability to repay amounts owed to you.

● If we lose or are unable to hire or retain key personnel, we may be delayed or unable to implement our business plan, which would adversely affect our ability to repay the Notes.

● We have entered into loan purchase and sale agreements with third parties to sell them portions of some of our loans. This increases our leverage. While the agreements are intended to increase our profitability, large loan losses and/or idle cash could actually reduce our profitability, which could impair our ability to pay principal and/or interest on the Notes.

● Management has broad discretion over the use of proceeds from this offering, and it is possible that the funds will not be used effectively to generate enough cash for payment of principal and interest on the Notes.

● If a large number of our current and prospective borrowers are unable to repay their loans within a normal average number of months, we will experience a significant reduction in our income and liquidity, and may not be able to repay the Notes as they become due.

● We depend on the availability of significant sources of credit to meet our liquidity needs and our failure to maintain these sources of credit could materially and adversely affect our liquidity in the future.

● We have unfunded commitments to builders as of December 31, 2025. If every builder borrowed every amount allowed (which would mean all of their homes were complete) and no builders paid us back, we would need to fund that amount. While some of that amount would automatically come from our loan purchase and sale agreements, the rest would have to come from our Notes Program and/or our lines of credit. Therefore, we may not have the ability to fund our commitments to builders.

● We have a significant amount of debt and expect to incur a significant amount of additional debt in the future, including issuance of the Notes, which will subject us to increased risk of loss. Our present and future senior debt may make it difficult to repay the Notes.

● Payment on the Notes is subordinate to the payment of our outstanding present and future senior debt, if any. Since there is no limit to the amount of senior debt we may incur, our present and future senior debt may make it difficult to repay the Notes.

● Our operations are not subject to the stringent banking regulatory requirements designed to protect investors, so repayment of your investment is completely dependent upon our successful operation of our business.

● Our CEO (who is also on our board of managers) will face conflicts of interest as a result of the secured lines of credit made available to us, which could result in actions that are not in the best interests of our Note holders.

● The indenture and terms of our Notes do not restrict our use of leverage. A relatively small loss can cause over leveraged companies to suffer a material adverse change in their financial position. If this happened to us, it may make it difficult to repay the Notes.

**RISK FACTORS**

Our operations and your investment in the Notes are subject to a number of risks. You should carefully read and consider these risks, together with all other information in this prospectus, before you decide to buy the Notes. If any of these risks occur in the future, our business, consolidated financial condition, operating results, and cash flows and our ability to repay the Notes could be materially adversely affected.

**<u>Risks Related to Our Offering and Business</u>**

***Our Notes are not insured or guaranteed by the FDIC or any third party, so repayment of your Note depends upon our equity (which may be limited at times), our experience, the collateral securing our loans, and our ability to manage our business and generate adequate cash flows.***

Our Notes are not certificates of deposit or similar obligations or guaranteed by any depository institution and are not insured by the FDIC or any governmental or private insurance fund, or any other entity. Therefore, you are dependent upon our ability to manage our business and generate adequate cash flows. If we are unable to generate sufficient cash flow to repay our debts, you could lose your entire investment.

***The Notes are risky speculative investments. Therefore, you should not invest in the Notes unless you are able to afford the loss of your entire investment.***

The Notes may not be a suitable investment for you, and we advise you to consult with your investment, tax, and other professional financial advisors prior to deciding whether to invest in the Notes. The characteristics of the Notes, including the maturity and interest rate, may not satisfy your investment objectives. The Notes may not be a suitable investment for you based on your ability to withstand a loss of interest or principal or other aspects of your financial situation, including your income, net worth, financial needs, investment risk profile, return objectives, investment experience, and other factors. Before deciding whether to purchase Notes, you should consider your investment allocation with respect to the amount of your contemplated investment in the Notes in relation to your other investments and the diversity of those holdings. **If you cannot afford to lose all of your investment, you should not invest in these Notes.**

***There will not be any market for the Notes, so you should only purchase them if you do not have any need for your money prior to the maturity of the Note.***

The Notes are not listed on a national securities exchange or authorized for quotation on the Nasdaq stock market, or any securities exchange. The Notes do not have a CUSIP identification number. There is no trading market for the Notes. It is unlikely that the Notes will be able to be used as collateral for a loan. Except as described elsewhere in this prospectus, you have no right to require redemption of the Notes. You should only purchase these Notes if you do not have the need for your money prior to the maturity of the Note.

***You will not have the benefit of an independent review of the terms of the Notes, the prospectus, or our Company as is customarily performed in underwritten offerings.***

The Notes are being offered by our CEO without an underwriter or placement agent. Therefore, you will not have the benefit of an independent review of the terms of the Notes, the prospectus, or our Company. Accordingly, you should consult your investment, tax, and other professional financial advisors prior to deciding whether to invest in the Notes.

***Our business is not industry-diversified. Deterioration in the homebuilding industry or economic conditions, including as a result of pandemics or wars, could decrease demand and pricing for new homes and residential home lots. A decline in housing values similar to the national downturn in the real estate market that began in 2006 would have a negative impact on our business. Smaller value declines will also have a negative impact on our business. These factors may decrease the likelihood we will be able to generate enough cash to repay the Notes.***

Developers and homebuilders to whom we may make loans use the proceeds of our loans to develop raw land into residential home lots and construct homes. The developers obtain the money to repay our development loans by selling the residential home lots to homebuilders or individuals who will build single-family residences on the lots, or by obtaining replacement financing from other lenders. A developer's ability to repay our loans is based primarily on the amount of money generated by the developer's sale of its inventory of single-family residential lots. Homebuilders obtain the money to repay our loans by selling the homes they construct or by obtaining replacement financing from other lenders, and thus, the homebuilders' ability to repay our loans is based primarily on the amount of money generated by the sale of such homes.

The homebuilding industry is cyclical and is significantly affected by changes in industry conditions, as well as in general and local economic conditions, such as:

● employment level and job growth;

● demographic trends, including population increases and decreases and household formation;

● availability of financing for homebuyers;

● interest rates;

● affordability of homes;

● consumer confidence;

● levels of new and existing homes for sale, including foreclosed homes and homes held by investors and speculators; and

● housing demand generally.

These conditions may occur on a national scale or may affect some of the regions or markets in which we operate more than others.

We generally lend a percentage of the values of the homes and lots. These values are determined shortly prior to the lending. If the values of homes and lots in markets in which we lend drop fast enough to cause the builders losses that are greater than their equity in the property, we will be forced to liquidate the loan in a fashion which will cause us to lose money. If these losses when combined and added to our other expenses are greater than our revenue from interest charged to our customers, we will lose money overall, which will hurt our ability to pay interest and principal on the Notes. Values are typically affected by demand for homes, which can change due to many factors, including but not limited to, demographics, interest rates, the overall economy, which can be impacted by outbreaks of communicable illnesses, cost of building materials and labor, availability of financing for end-users, inventory of homes available, wars, and governmental action or inaction. If there is a tightening of the credit markets, it would be more difficult for potential homeowners to obtain financing to purchase homes. If housing prices decline or sales in the housing market decline, our customers may have a hard time selling their homes at a profit. This could cause the amount of defaulted loans that we will have to increase. An increase in defaulted loans would reduce our revenue and could lead to losses on our loans. A decline in housing prices will further increase our losses on defaulted loans. If the amount of defaulted loans or the loss per defaulted loan is large enough, we will operate at a loss, which will decrease our equity. This could cause us to become insolvent, and we will not be able to pay back Note holders' principal and interest on the Notes.

***The homebuilding industry could experience adverse conditions, and the industry's implementation of strategies in response to such conditions may not be successful.***

The United States homebuilding industry experienced a significant downturn beginning in 2007. During the downturn, many homebuilders focused on generating positive operating cash flow, resizing and reshaping their product for a more price-conscious consumer and adjusting finished new home inventories to meet demand, and did so in many cases by significantly reducing the new home prices and increasing the level of sales incentives. Notwithstanding these strategies, homebuilders continued to experience an elevated rate of sales contract cancelations, as many of the factors that affect new sales and cancelation rates are beyond the control of the homebuilding industry. Although the homebuilding industry has experienced positive gains over the last decade, there can be no assurance that these gains will continue, or if there is a negative impact on the homebuilding industry's expectations for future home sales. The homebuilding industry could suffer similar, or worse, adverse conditions in the future. Decreases in new home sales would increase the likelihood of defaults on our loans and, consequently, reduce our ability to repay Note holders' principal and interest on the Notes.

***We have $59,223,000 of loan assets, net as of December 31, 2025. A 35% reduction in total collateral value would reduce our earnings and net worth by $6,468,000. Larger reductions would result in lower earnings and lower net worth.***

As of December 31, 2025, we had $59,223,000 of loan assets, net on our books. These assets are recorded on our balance sheet at the lower of the loan amount or the value of the collateral after deduction for expected selling expenses. A reduction in the value of the underlying collateral could result in significant losses. A 35% reduction, for instance, would result in a $6,468,000 loss. Accordingly, our business is subject to the risk of a loss of a portion of our Note holders' investments if such a reduction were to occur.

***We have $17,168,000 of development loan assets as of December 31, 2025, which unlike our construction loans, are long term loans. This longer duration as well as the nature of collateral (raw ground and lots) creates more risk for that portion of our portfolio.***

We have $17,168,000 development loan assets as of December 31, 2025. Development loans are riskier than construction loans for two reasons: the duration of the loan and the nature of the collateral. The duration (being three to five years as compared to generally less than one year on construction loans) allows for a greater period of time during which the collateral value could decrease. Also, the collateral value of development loans is more likely to change in greater percentages than that of built homes. For example, during a 70% reduction in housing starts, newly completed homes still have value, but lots may be worthless. This added risk to this portion of our portfolio adds risk to our investors as our net worth would be significantly impacted by losses.

***We have $169,000 of real estate investments as of December 31, 2025. A 35% reduction in our real estate investments would reduce our earnings and net worth by $59,000. Larger reductions would result in lower earnings and lower net worth.***

As of December 31, 2025, we had $169,000 of real estate investments on our books. These assets are recorded on our balance sheet at cost. A reduction in the value could result in significant losses. A 35% reduction, for instance, would result in a $59,000 loss. Accordingly, our business is subject to the risk of a loss of a portion of our Note holders' investments if such a reduction were to occur.

***Currently, we are reliant on a single developer and homebuilder, the Hoskins Group, who is concentrated in the Pittsburgh, Pennsylvania market, for a significant portion of our revenues and a portion of our capital. Our second largest customer is in the Central and Southwest Florida market and is also a significant portion of our portfolio.***

As of December 31, 2025, 36% of our outstanding loan commitments consisted of loans made to Benjamin Marcus Homes, LLC and 339 Justabout Land Co, LLC, both of which are owned by Mark Hoskins and family (collectively both parties are referred to herein as the "Hoskins Group"). We refer to the loans to the Hoskins Group as the "Pennsylvania Loans." The Hoskins Group is concentrated in the Pittsburgh, Pennsylvania market.

Currently, we are reliant upon a single developer and homebuilder who is concentrated in a single city, for a significant portion of our revenues and a portion of our capital. Any event of bankruptcy, insolvency, or general downturn in the business of this developer and homebuilder or in the Pittsburgh housing market generally will have a substantial adverse financial impact on our business and our ability to pay back Note holders' investments in the Notes in the long term. Adverse conditions affecting the local housing market could include, but are not limited to, declines in new housing starts, declines in new home prices, declines in new home sales, increases in the supply of available building lots or built homes available for sale, increases in unemployment, and unfavorable demographic changes. One of our independent managers, Gregory L. Sheldon, also lends money to the Hoskins Group and, consequently, Mr. Sheldon may face conflicts of interest in the advice that he provides to us, including if any such adverse condition were to materialize.

In addition, as of December 31, 2025, 7% of our outstanding loan commitments consisted of loans made to our second largest customer, in Central and Southwest Florida.

***We have $499,000 of foreclosed assets as of December 31, 2025, which unlike our loans, are recorded on our balance sheet at the value of the collateral, net of estimated selling expenses.***

We have foreclosed assets of $499,000 as of December 31, 2025. A reduction in the value of the underlying collateral of our foreclosed assets could result in significant losses. For example, a 35% reduction in the value of the underlying collateral (net of estimated selling expenses) would result in a $175,000 loss. Our business is subject to an increased risk of not being able to repay our Note Holders' investments in a timely manner if such a reduction were to occur.

***Changes in mortgage interest rates, reductions in mortgage availability, or increases in other costs of home ownership could prevent potential customers from buying new homes and adversely affect our business and financial results.***

An increase in mortgage rates could reduce the value of the homes that our customers sell. A decrease in mortgage rates could also reduce the value of the homes that our customers sell, as it could cause a flood of resale homes to hit the market. Other changes could also make it more difficult for our customers to sell homes, including but not limited to reduced mortgage availability, increases in taxes, and increases in other cost of home ownership. These factors increase the likelihood of defaults on our loans, which would adversely affect our business and consolidated financial results.

***Most of our assets are commercial construction loans to homebuilders and/or developers which are a higher-than-average credit risk, and therefore could expose us to higher rates of loan defaults, which could impact our ability to repay amounts owed to Note holders.***

Our primary business is extending commercial construction loans to homebuilders, along with some loans for land development. These loans are considered higher risk because the ability to repay depends on the homebuilder's ability to sell a newly built home. These homes typically are not sold by the homebuilder prior to commencement of construction. Therefore, we may have a higher risk of loan default among our customers than other commercial lending companies. If we suffer increased loan defaults in any given period, our operations could be materially adversely affected, and we may have difficulty making our principal and interest payments on the Notes.

***Our underwriting standards and procedures are more lenient than conventional lenders.***

We invest in loans with borrowers who will not be required to meet the credit standards of conventional mortgage lenders, which is riskier than investing in loans made to borrowers who are required to meet those higher credit standards. Because we generally approve loans more quickly than some other lenders or providers of capital, there may be a risk that the due diligence we perform as part of our underwriting procedures will not reveal the need for additional precautions. If so, the interest rate that we charge and the collateral that we require may not adequately protect us or generate adequate returns for the risk undertaken.

***If we lose or are unable to hire or retain key personnel, we may be delayed or unable to implement our business plan, which would adversely affect our ability to repay the Notes.***

We do not have an employment agreement with any of our employees and cannot guarantee that they will remain affiliated with us. Although we have purchased key person life insurance on our CEO, we do not have key person insurance on any of our other employees. If any of our key employees were to cease their affiliation with us, our consolidated operating results could suffer. We believe that our future success depends, in part, upon our ability to hire and retain additional personnel. We cannot assure our investors that we will be successful in attracting and retaining such personnel, which could hinder our ability to implement our business plan.

***Employee misconduct could harm us by subjecting us to monetary loss, significant legal liability, regulatory scrutiny, and reputational harm.***

Our reputation is critical to maintaining and developing relationships with our existing and potential customers and third parties with whom we do business. There is a risk that our employees could engage in misconduct that adversely affects our business. For example, if an employee were to engage - or be accused of engaging - in illegal or suspicious activities including fraud or theft, we could suffer direct losses from the activity, and in addition we could be subject to regulatory sanctions and suffer serious harm to our reputation, financial condition, customer relationships, and ability to attract future customers or employees. Employee misconduct could prompt regulators to allege or to determine based upon such misconduct that we have not established adequate supervisory systems and procedures to inform employees of applicable rules or to detect and deter violations of such rules. It is not always possible to deter employee misconduct, and the precautions we take to detect and prevent misconduct may not be effective in all cases. Misconduct by our employees, or even unsubstantiated allegations of misconduct, could result in a material adverse effect on our reputation and our business.

***A failure in, or breach of, our operational or security systems or infrastructure, or those of our third-party vendors, including because of cyber-attacks, could disrupt our business, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs, and cause losses.***

We rely heavily on communications and information systems to conduct our business. Information security risks for our business have generally increased in recent years in part because of the proliferation of new technologies; the use of the Internet and telecommunications technologies to process, transmit, and store electronic information, including the management and support of a variety of business processes, including financial transactions and records, personally identifiable information, and customer and investor data; and the increased sophistication and activities of organized crime, hackers, terrorists, activists, and other external parties. As customer, public, and regulatory expectations regarding operational and information security have increased, our operating systems and infrastructure must continue to be safeguarded and monitored for potential failures, disruptions, and breakdowns. Certain of our software and technology systems have been developed internally and may be vulnerable to unauthorized access or disclosure. Our business, financial, accounting, and data processing systems, or other operating systems and facilities, may stop operating properly or become disabled or damaged as a result of a number of factors, including events that are wholly or partially beyond our control. For example, there could be electrical or telecommunication outages; natural disasters such as earthquakes, tornadoes, and hurricanes; disease pandemics; events arising from local or larger scale political or social matters, including terrorist acts; and, as described below, cyber-attacks.

Our business relies on its digital technologies, computer and email systems, software, and networks to conduct its operations. Although we have information security procedures and controls in place, our technologies, systems, and networks and, because the nature of our business involves the receipt and retention of personal information about our customers, our customers' personal accounts may become the target of cyber-attacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss, or destruction of our customers', or other third parties' confidential information. Third parties with whom we do business or who facilitate our business activities, including intermediaries or vendors that provide service or security solutions for our operations, and other third parties, could also be sources of operational and information security risk to us, including breakdowns or failures of their own systems or capacity constraints. In addition, hardware, software, or applications we develop or procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information security.

While we have disaster recovery and other policies and procedures designed to prevent or limit the effect of the failure, interruption, or security breach of our information systems, there can be no assurance that any such failures, interruptions, or security breaches will not occur or, if they do occur, that they will be adequately addressed. Our risk and exposure to these matters remain heightened because of the evolving nature of these threats. As a result, cyber security and the continued development and enhancement of our controls, processes, and practices designed to protect our systems, computers, software, data, and networks from attack, damage, or unauthorized access remain a focus for us. As threats continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate information security vulnerabilities. Disruptions or failures in the physical infrastructure or operating systems that support our business and customers, or cyber-attacks or security breaches of the networks or systems, could result in regulatory fines, penalties or intervention, reputation damage, reimbursement or other compensation costs, and/or additional compliance costs, any of which could have a material effect on our results of operations or financial condition. Furthermore, if such attacks are not detected immediately, their effect could be compounded.

***We are susceptible to customer fraud which includes among other things wires and ACHs and could cause us to suffer losses on our loan portfolio.***

Because most of our customers do not publicly report on their financial condition and therefore typically are not required to be audited on a regular basis, we are susceptible to a customer's fraud, which could cause us to suffer losses on our loan portfolio. The failure of a customer to accurately report its financial position, compliance with loan covenants, or eligibility for additional borrowings could result in our providing loans that do not meet our underwriting criteria, defaults in loan payments, and the loss of some or all of the principal of a particular loan or loans. Customer fraud can come in other forms, including but not limited to fraudulent invoices for work done, appraisal fraud, and fraud related to inspections done by third parties.

***We have entered into loan purchase and sale agreements with third parties to sell them portions of some of our loans. This increases our leverage. While the agreements are intended to increase our profitability, large credit losses and/or idle cash could actually reduce our profitability, which could impair our ability to pay principal and/or interest on the Notes.***

The loan purchase and sale agreements we entered have allowed us to increase our loan assets and debt. If loans that we create have significant losses, the benefit of larger balances can be outweighed by the additional credit losses. Also, while these transactions are booked as secured financing, they are not lines of credit. Accordingly, we will have increased our loan balances without increasing our lines of credit, which can cause a decrease in liquidity. One solution to this liquidity problem is having idle cash for liquidity, which then could reduce our profitability. If either of these problems is persistent and/or significant, our ability to pay interest and principal on our Notes may be impaired.

***Management has broad discretion over the use of proceeds from this offering, and it is possible that the funds will not be used effectively to generate enough cash for payment of principal and interest on the Notes.***

We expect to use the proceeds from this offering for purposes detailed in the "Questions and Answers" and "Use of Proceeds" sections. Because no specific allocation of the proceeds is required in the indenture, our management will have broad discretion in determining how the proceeds of the offering will be used.

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***Additional competition may decrease our profitability, which would adversely affect our ability to repay the Notes.***

We may experience increased competition for business from other companies and financial institutions that are willing to extend the same types of loans that we extend at lower interest rates and/or fees. These competitors also may have substantially greater resources, lower cost of funds, and a better-established market presence. If these companies increase their marketing efforts to our market niche of borrowers, or if additional competitors enter our markets, we may be forced to reduce our interest rates and fees in order to maintain or expand our market share. Any reduction in our interest rates, interest income, or fees could have an adverse impact on our profitability and our ability to repay the Notes.

***Customers not paying interest causes reduced profitability or losses. An increase in the dollar amount of loans not paying interest may adversely affect our ability to repay the Notes.***

We typically have some balance of loans not paying interest. Some of those loans, when they are resolved, never end up collecting unpaid interest. Typically, the amount of nonpaying loans is around 10% of our outstanding balance. If this percentage goes up significantly, as it did at the start of the COVID-19 pandemic, this causes us to lose money because we are paying interest without receiving interest. If these losses are significant, it can inhibit our ability to pay principal and interest on the Notes.

***Our real estate loans are illiquid, which could restrict our ability to respond rapidly to changes in economic conditions.***

The real estate loans we currently hold and intend to extend are illiquid. As a result, our ability to sell under-performing loans in our portfolio or respond to changes in economic, financial, investment, and other conditions may be very limited. We cannot predict whether we will be able to sell any real estate loan for the price or on the terms set by us, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of a loan. The relative illiquidity of our loan assets may impair our ability to generate sufficient cash to make required interest and principal payments on the Notes.

***Our systems and procedures might be inadequate to handle our potential growth. Failure to successfully improve our systems and procedures would adversely affect our ability to repay the Notes.***

We may experience growth that could place a significant strain upon our operational systems and procedures. Initially, all of our computer systems used electronic spreadsheets, and we utilized other methods that a small company would use. Over time we added accounting, loan and production documentation, administration, servicing, and investing systems which many banks use to produce closing documents for loans. If any of these systems fail, they could have a material adverse effect on our business, financial condition, results of operations, and, ultimately, our ability to repay principal and interest on the Notes.

***If we do not meet the requirements to maintain effective internal controls over financial reporting, our ability to raise new capital will be harmed.***

If we do not maintain effective internal controls over our financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, then it could result in delaying future SEC filings or future offerings. If future SEC filings or future offerings are delayed, it could have an extreme negative impact on our cash flow causing us to default on our obligations, including on the Notes.

***We are required to devote resources to comply with various provisions of the Sarbanes-Oxley Act, including Section 404 relating to internal controls testing, and this may reduce the resources we have available to focus on our core business.***

Pursuant to Section 404 of the Sarbanes-Oxley Act and the related rules adopted by the SEC and the Public Company Accounting Oversight Board, or PCAOB, our management is required to report on the effectiveness of our internal controls over financial reporting. We may encounter problems or delays in completing any changes necessary to our internal controls over financial reporting. Among other things, we may not be able to conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404. Any failure to comply with the various requirements of the Sarbanes-Oxley Act may require significant management time and expenses and divert attention or resources away from our core business. In addition, we may encounter problems or delays in completing the implementation of any requested improvements provided by our independent registered public accounting firm.

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***We are subject to the risk of significant losses on our loans because we do not require our borrowers to insure the title of their collateral for our loans.***

It is customary for lenders who extend loans secured by real estate to require the borrower to provide title insurance with minimum coverage amounts set by the lender. We do not require most of our homebuilders to provide title insurance on their collateral for our loans to them. This represents an additional risk to us as the lender. The homebuilder may have a title problem which normally would be covered by insurance, but may result in a loss on the loan because insurance proceeds are not available.

***The collateral securing our real estate loans may not be sufficient to pay back the principal amount in the event of a default by the borrowers.***

In the event of default, our real estate loan investments are generally dependent entirely on the loan collateral to recover our investment. Our loan collateral consists primarily of a mortgage on the underlying property. In the event of a default, we may not be able to recover the premises promptly and the proceeds we receive upon sale of the property may be adversely affected by risks generally related to interests in real property, including changes in general or local economic conditions and/or specific industry segments, declines in real estate values, increases in interest rates, real estate tax rates and other operating expenses including energy costs, changes in governmental rules, regulations and fiscal policies (including environmental legislation), wars, acts of God, and other factors which are beyond our or our borrowers' control. Current market conditions may reduce the proceeds we are able to receive in the event of a foreclosure on our collateral. Our remedies with respect to the loan collateral may not provide us with a recovery adequate to recover our investment.

***If a large number of our current and prospective borrowers are unable to repay their loans within a normal average number of months, we will experience a significant reduction in our income and liquidity and may not be able to repay the Notes as they become due.***

Construction loans that we extend are expected to be repaid in a normal average number of months, typically nine months, depending on the size of the loan. Development loans are expected to last for many years. We have interest paid on a monthly basis, but also charge a fee which will be earned over the life of the loan. If these loans are repaid over a longer period of time, the amount of income that we receive on these loans expressed as a percentage of the outstanding loan amount will be reduced, and fewer loans with new fees will be able to be made, since the cash will not be available. This will reduce our income as a percentage of the Notes, and if this percentage is significantly reduced it could impair our ability to pay principal and interest on the Notes.

***Our cost of funds is substantially higher than that of banks.***

Because we do not offer FDIC insurance, and because we want to grow our Notes Program faster than most banks want to grow their CD base, our Notes offer significantly higher rates than bank CDs. Our cost of funds is higher than banks' cost of funds due to, among other factors, the higher rate that we pay on our Notes and other sources of financing. This may make it more difficult for us to compete against banks when they re-join our niche lending market in large numbers. This could result in losses which could impair or eliminate our ability to pay interest and principal on our outstanding Notes.

***We are subject to the general market risks associated with real estate construction and development.***

Our financial performance depends on the successful construction and/or development and sale of the homes and real estate parcels that serve as security for the loans we make to homebuilders and developers. As a result, we are subject to the general market risks of real estate construction and development, including weather conditions, the price and availability of materials used in construction of homes and development of lots, environmental liabilities and zoning laws, and numerous other factors that may materially and adversely affect the success of the projects.

***Our operations are not subject to the stringent banking regulatory requirements designed to protect investors, so repayment of Note holders' investments is completely dependent upon our successful operation of our business.***

Our operations are not subject to the stringent regulatory requirements imposed upon the operations of commercial banks, savings banks, and thrift institutions, and are not subject to periodic compliance examinations by federal or state banking regulators. For example, we will not be well diversified in our product risk, and we cannot benefit from government programs designed to protect regulated financial institutions. Therefore, an investment in our Notes does not have the regulatory protections that the holder of a demand account or a certificate of deposit at a bank does. The return on any Notes purchased by a Note holder is completely dependent upon our successful operations of our business. To the extent that we do not successfully operate our business, our ability to pay interest and principal on the Notes will be impaired.

***We have the right to pay your investment back to you before the stated maturity of your investment. If we do, you may not be able to reinvest the proceeds at comparable rates and you will stop earning interest on your investment.***

At any time, we may redeem all or a portion of the outstanding Notes purchased by you prior to their maturity. In the event we redeem any part or all of your Notes early, you would have the risk of reinvesting the proceeds at the then-current market rates, which may be higher or lower.

***We are an "emerging growth company" under the federal securities laws and are subject to reduced public company reporting requirements.***

We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, and are eligible to take advantage of certain exemptions from, or reduced disclosure obligations relating to, various reporting requirements that are normally applicable to public companies.

We will remain an "emerging growth company" until the earliest of (1) the last day of the first fiscal year in which we have total annual gross revenues of $1.235 billion or more, (2) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement, (3) the date on which we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act (which would occur if the market value of our common equity held by non-affiliates exceeds $700 million, measured as of the last business day of our most recently completed second fiscal quarter, and we have been publicly reporting for at least 12 months), or (4) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period. Under the JOBS Act, emerging growth companies are not required to (1) provide an auditor's attestation report on management's assessment of the effectiveness of internal control over financial reporting, pursuant to Section 404 of the Sarbanes-Oxley Act, (2) comply with new requirements adopted by the PCAOB which require mandatory audit firm rotation or a supplement to the auditor's report in which the auditor must provide additional information about the audit and the issuer's financial statements, (3) comply with new audit rules adopted by the PCAOB after April 5, 2012 (unless the SEC determines otherwise), (4) provide certain disclosures relating to executive compensation generally required for larger public companies, or (5) hold shareholder advisory votes on executive compensation.

Additionally, the JOBS Act provides that an "emerging growth company" may take advantage of an extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies. This means an "emerging growth company" can delay adopting certain accounting standards until such standards are otherwise applicable to private companies. However, we have elected to "opt out" of such extended transition period, and will therefore comply with new or revised accounting standards on the applicable dates on which the adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of such extended transition period for compliance with new or revised accounting standards is irrevocable.

***We are exposed to the risk of environmental liabilities with respect to properties of which we take title. Any resulting environmental remediation expense may reduce our ability to repay the Notes.***

In the course of our business, we foreclose and take title to real estate that could be subject to environmental liabilities. We also have invested in several real estate projects. We may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination or may be required to investigate or clean up hazardous or toxic substances or chemical release at any property. The costs associated with investigation or remediation activities could be substantial. In addition, as the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. If we ever become subject to significant environmental liabilities, our business, financial condition, liquidity, and results of operations could be materially and adversely affected.

***We are exposed to risks associated with residential real estate development and construction which may reduce our ability to repay the Notes.***

Real estate development and construction, including homebuilding activities, entail risks that may adversely impact our results of operations, cash flows and financial condition, including:

● general market conditions;

● construction delays or cost overruns, which may increase project development costs;

● labor costs and shortages of skilled labor, particularly as a result of the recent low unemployment rate;

● supply chain disruptions and material shortages;

● current or potentially new and rapidly evolving tariffs or quotas;

● claims for construction defects after property has been developed, including claims by purchasers and property owners' associations, and claims for construction defects arising from third-party contractors;

● the discovery of hazardous or toxic substances, or other environmental, culturally-sensitive, or related issues;

● weather-related and geological interference, including hurricanes, landslides, earthquakes, floods, drought, wildfires and other events, which may result in delays or increased costs;

● an inability to obtain required governmental permits and authorizations;

● compliance with building codes and other local regulations;

● unavailability of raw materials when needed, which may result in project delays, stoppages or interruptions, which may make the project less profitable; and

● insufficient infrastructure capacity or availability (e.g., water, sewer and roads) to serve the needs of our projects;

***Persons investing the assets of employee benefit plans, qualified retirement plans, IRAs, and other tax-favored benefit accounts should consider the Employee Retirement Income Security Act of 1974, as amended ("ERISA") and related risks of investing in the Notes.***

ERISA Section 406 and Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), prohibit certain transactions that involve (i) a pension, 401(k), or other qualified retirement plan or employee benefit plan subject to ERISA ("plan"), or a tax-favored benefit account such as an individual retirement account or annuity, Archer MSA, health savings account, or Coverdell education savings account ("account"), and (ii) any person who is a "party-in-interest" or "disqualified person" with respect to such a plan or account. Consequently, the fiduciary of a plan or owner of an account contemplating an investment in the Notes should consider whether we, any other person associated with the issuance of the Notes, or any of our or their affiliates, is or might become a "party-in-interest" or "disqualified person" with respect to the plan or account and, if so, whether an exemption from such prohibited transaction rules is applicable.

In addition, if you are investing the assets of an individual retirement account or annuity ("IRA") or a qualified or nonqualified pension or retirement plan, you should satisfy yourself that your investment (i) is consistent with your fiduciary obligations under ERISA and other applicable law, (ii) is made in accordance with the documents and instruments governing your plan or IRA, including your plan's investment policy, and (iii) satisfies any prudence and diversification requirements that may apply under ERISA or other applicable law. You should also determine that your investment will not impair the liquidity of the plan's trust or the IRA and will not produce UBTI for the plan's trust or the IRA; or, if it does produce UBTI, that the purchase and holding of the Notes is still consistent with your fiduciary obligations. You should also satisfy yourself that you will be able to value the assets of the plan annually or as otherwise required by ERISA or other applicable law.

For further discussion of issues and risks associated with an investment in the Notes by plans, IRAs and other accounts, see the "Certain Employee Benefit Plan Considerations" section of this prospectus.

***We may become subject to greater liability due to changing regulations and laws regarding cybersecurity, which could materially adversely affect our business, operations, results of operations and profitability***

Regulators have been imposing new data privacy and security requirements, including new and greater monetary fines for privacy violations. These laws and regulations may be broad in scope and subject to evolving interpretations and increasing enforcement, and we may incur costs to monitor compliance and alter our practices. Moreover, certain new and existing data privacy laws and regulations could diverge and conflict with each other in certain respects, which makes compliance increasingly difficult. Complying with new regulatory requirements could require us to incur substantial expenses or require us to change our business practices, either of which could harm our business. As regulators have become increasingly focused on information security, data collection and use and privacy, we may be required to devote significant additional resources to modify and enhance our information security controls and to identify and remediate vulnerabilities, which could adversely impact our results of operations and profitability. Any compromise or breach of our systems could result in adverse publicity, harm our reputation, lead to claims against us and affect our relationships with our service providers or other third parties, any of which could have a material adverse effect on our business, operations, results of operations and profitability.

**<u>Risks Related to Conflicts of Interest</u>**

***Our CEO (who is also on our board of managers) will face conflicts of interest as a result of the secured lines of credit made to us, which could result in actions that are not in the best interests of our Note holders.***

We have two lines of credit from Daniel M. Wallach (our CEO and chairman of the board of managers) and his affiliates. The first line of credit has a maximum principal borrowing amount of $1,250,000 and is payable to Mr. Wallach and his wife, Joyce S. Wallach, as tenants by the entirety (the "Wallach LOC"). The second line of credit has a maximum principal borrowing amount of $250,000 and is payable to the 2007 Daniel M. Wallach Legacy Trust (the "Wallach Trust LOC," and together with the Wallach LOC, the "Wallach Affiliate LOCs").

As of December 31, 2025, there was $0 outstanding pursuant to the Wallach Trust LOC, with availability on that line of credit of $250,000, and there was $26,000 outstanding pursuant to the Wallach LOC, with remaining availability on that line of credit of $1,224,000. The interest rates on the Wallach Affiliate LOCs generally equal the prime rate plus 3% and were 9.75% as of December 31, 2025.

The Wallach Affiliate LOCs are collateralized by a lien against all of our assets. The Notes are subordinated in right of payment to all secured debt, including these Wallach Affiliate LOCs. Pursuant to the promissory note for each Wallach Affiliate LOCs, the lenders have the option of funding any amount up to the face amount of the note, in the lender's sole and absolute discretion. Therefore, Mr. Wallach will face conflicts of interest in deciding whether and when to exercise any rights pursuant to the Wallach Affiliate LOCs. If Mr. Wallach exercises his rights to collect on their collateral upon a default by us, we could lose some or all of our assets, which could have a negative effect on our ability to repay the Notes.

***As a result of his large equity ownership in the Company, our CEO will face a conflict of interest in deciding the number of distributions to equity owners, which could result in actions that are not in the best interests of Note holders. In addition, each independent manager owns 1.17% of our common equity, and one member owns 15.94% of our Series C equity.***

As of December 31, 2025, our CEO (who is also on the board of managers) beneficially owned 91.8% of the common equity of the Company. He and his wife's parents also own 17.8% and 3.3% of our Series C cumulative preferred units outstanding as of December 31, 2025. Each of our three independent managers owns 1.17% of our common equity, and one owns 15.94% of our Series C cumulative preferred units at that date. Since the Company is taxed as a partnership for federal income tax purposes, all profits and losses flow through to the equity owners. Therefore, Mr. Wallach and his affiliated equity owners of the Company will be motivated to distribute profits to the equity owners on an annual basis, rather than retain earnings in the Company for Company purposes. There is currently no limit in the indenture or otherwise on the amount of funds that may be distributed by the Company to its equity owners. If substantial funds are distributed to the equity owners, the liquidity and capital resources of the Company will be reduced and our ability to repay the Notes may be negatively impacted.

***Some of our employees and managers may face conflicts of interest as a result of their and their relatives' investment in the Notes, which could result in actions that are not in the best interests of our Note holders.***

Employees, managers, members, and relatives of managers and members have invested in the Notes, in the aggregate amount of $10,673,000 as of December 31, 2025. While investment in the Notes by our affiliates may align their interests with those of other Note holders, it could also create conflicts of interest by influencing those employees' or managers' actions during times of financial difficulties. For example, the fact that certain of our managers hold Notes, and the value of Notes they hold, could influence their decision to redeem Notes at a time or times when it would be prudent to use our cash resources to build capital, pay down other outstanding obligations, or grow our business. There may be other situations not presently foreseeable in which the ownership of Notes by related persons may create conflicts of interest. These conflicts of interest could result in action or inaction by management that is adverse to other holders of the Notes.

***We have three lines of credit from affiliates which allow us to incur a significant amount of secured debt. These lines are collateralized by a lien against all of our assets. Our purchase and sale agreements function as secured debt as well. We expect to incur a significant amount of additional debt in the future, including issuance of the Notes, which will subject us to increased risk of loss.***

As of December 31, 2025, we had $26,000 secured debt outstanding on our senior debt lines of credit from the Wallach Affiliate LOCs of $1,500,000 and the capacity to sell portions of many loans under the terms of our loan purchase and sale agreements. The Wallach Affiliate LOCs are collateralized by a lien against all of our assets. The loan purchase and sale agreements and other secured debt are with third parties and are collateralized by loans. In addition, we expect to incur a significant amount of additional debt in the future, including issuance of the Notes, borrowing under credit facilities and other arrangements. The Notes will be subordinated in the right of payment to all secured debt, including the affiliate loans. Therefore, in the event of a default on the secured debt, affiliates of our Company, including Mr. Wallach, have the right to receive payment ahead of Note holders, as do other secured debt holders, such as the loan purchasers under the purchase and sale agreements. Accordingly, our business is subject to an increased risk of a total loss of our Note holders' investments if we are unable to repay all of our secured debt.

In June 2018, we entered into a line of credit from our former Partner, William Myrick (the "Myrick LOC"). The Myrick LOC is collateralized by a lien against all of our assets. The Myrick LOC has a maximum principal borrowing amount of $1,000,000 and is payable to Mr. Myrick. As of December 31, 2025, there were no amounts borrowed against the Myrick LOC, and we have no intention of borrowing any amounts under the Myrick LOC following Mr. Myrick's termination in March 2025. The Myrick LOC is evidenced by a promissory note, is payable upon demand of the lender and generally bears an interest rate equal to the prime rate plus 3%.

**<u>Risks Related to Liquidity</u>**

***We depend on the availability of significant sources of credit to meet our liquidity needs and our failure to maintain these sources of credit could materially and adversely affect our liquidity in the future.***

We plan to maintain our loan purchase and sale agreements and our lines of credit from affiliates so that we may draw funds when necessary to meet our obligation to redeem maturing Notes, pay interest on the Notes, meet our commitments to lend money to our customers, and for other general corporate purposes. Certain features of the loan purchase and sale agreements with third parties have added liquidity and flexibility, which have lessened the need for the lines of credit from affiliates. If we fail to maintain liquidity through our loan purchase and sale agreements and lines of credit for any reason, including a potential negative impact to the credit markets as a result of an outbreak of a communicable illness such as COVID-19, we will be more dependent on the proceeds from the Notes for our continued liquidity. If the sale of the Notes is significantly reduced or delayed for any reason and we fail to obtain or renew a line of credit, or we default on any of our lines of credit, then our ability to meet our obligations, including our Note obligations, could be materially adversely affected, and we may not have enough cash to pay back Note holders' investments.

In addition, the borrowing capacity on some of our lines of credit is based on the amount outstanding on the underlying collateral loans. If we are unable to find suitable investment opportunities, we may not be able to replace the underlying collateral loans with new loans and, in such a situation, the borrowing capacity on those lines of credit would be reduced. Also, the failure to maintain an active line of credit (and therefore using cash for liquidity instead of a borrowing line) will reduce our earnings, because we will be paying interest on the Notes, while we are holding cash instead of reducing our borrowings.

***We have unfunded commitments to builders as of December 31, 2025. If every builder borrowed every amount allowed (which would mean all their homes were complete) and no builders paid us back, we would need to fund that amount. While some of that amount would automatically come from our loan purchase and sale agreements, the rest would have to come from our Notes Program and/or our lines of credit. Therefore, we may not have the ability to fund our commitments to builders.***

As of December 31, 2025, we have $23,557,000 unfunded commitments to builders. If every builder borrowed every amount allowed and no builders repaid us, then we would need to fund that amount. Lines of credit, loan purchase and sale agreements, payoffs from builders, and immediate investments in our Notes may not be enough to fund our commitments to builders as they become payable. If we default on these obligations, then we may face any one or more of the following: a higher default rate, lawsuits brought by customers, an eventual lack of business from borrowers, missed principal and interest payments to Note holders and holders of other debt, and a lack of desire for investors to invest in our Notes Program. Therefore, we could default on our repayment obligations to our Note Holders.

 ***We have several secured lines of credit which allow the lender to give notice and then they eventually expire, and with those expirations, any unsecured portion related to the lines of credit also expire. Any notice of nonrenewal or expiration could strain our ability to pay other obligations.***

We have various secured lines of credit, most of which allow the lender to give us notice of expiration, and then a time period to resolve the outstanding balances. As of December 31, 2025 we had ten lines of credit with $10,498,000 outstanding total. If a large dollar amount of balance is due on lines that require us to repay them in a limited amount of time, then we may default on one or more of those lines of credit. Therefore, we could default on repayment obligations to some of our debt holders, including our Note holders.

***We have a significant amount of debt and expect to incur a significant amount of additional debt in the future, including the issuance of the Notes, which will subject us to an increased risk of loss. Our present and future senior debt may make it difficult to repay the Notes.***

We have a significant amount of debt and expect to incur a significant amount of additional debt in the future. As of December 31, 2025, we have approximately $54,219,000 of debt, net of deferred financing costs. Our primary sources of debt include our lines of credit, loan purchase and sale agreements, and the Notes. As of December 31, 2025, we have a total outstanding balance of $10,498,000 on our lines of credit and approximately $7,959,000 on our loan purchase and sale agreements.

We also have the capacity to sell portions of many loans under the terms of our loan purchase and sale agreements. The loan purchase and sale agreements and other secured debt are with third parties and all but one of the lines of credit are collateralized by loans that we have issued to builders. The Notes are subordinate and junior in priority to all of our senior debt and senior subordinated debt, and equal to any and all non-senior debt, including other Notes. There are no restrictions in the indenture regarding the amount of senior debt or other indebtedness that we may incur.

As of December 31, 2025, we had approximately $2,383,000 in Notes coming due by December 2026, and we cannot be certain whether we will be able to fund those Notes upon maturity. Upon the maturity of our senior debt, by lapses of time, acceleration or otherwise, the holders of our senior debt have first right to receive payment, in full, prior to any payments being made to a Note holder or to other non-senior debt. Therefore, upon such maturity of our senior debt Note holders would only be repaid in full if the senior debt is satisfied first and, following satisfaction of the senior debt, if there is an amount sufficient to fully satisfy all amounts owed under the Notes and any other non-senior debt.

In addition, we expect to incur a significant amount of additional debt in the future, including issuance of the Notes, borrowing under credit facilities, and other arrangements. The Notes will be subordinated in right of payment to all secured debt, including the Wallach Affiliate LOCs, loan purchase and sale agreements, the senior subordinated note discussed in the prior paragraph, and the line of credit discussed in the prior paragraph. Therefore, in the event of a default on the secured debt, affiliates of our Company, including Mr. Wallach, have the right to receive payment ahead of Note holders, as do other secured debt holders, such as the loan purchasers under the loan purchase and sale agreements. Accordingly, our business is subject to increased risk of a total loss of a Noteholder's investment if we are unable to repay all of our secured debt.

***If the proceeds from the issuance of the Notes exceed the cash flow needed to fund the desirable business opportunities that are identified, we may not be able to invest all of the funds in a manner that generates sufficient income to pay the interest and principal on the Notes.***

Our ability to pay interest on our debt, including the Notes, pay our expenses, and cover credit losses is dependent upon the interest and fee income we receive from loans extended to our customers. If we are not able to lend to a sufficient number of customers at high enough interest rates, we may not have enough interest and fee income to meet our obligations, which could impair our ability to pay interest and principal on the Notes. If money brought in from new Notes and from repayments of loans from our customers exceeds our short-term obligations such as expenses, Notes interest and redemptions, and line of credit principal and interest, then it is likely to be held as cash, which will have a lower return than the interest rate we are paying on the Notes. This will lower earnings and may cause losses which could impair our ability to repay the principal and interest on the Notes.

***Increases in interest rates would increase the amount of debt payments under the Wallach Affiliate LOCs which could impair our ability to repay the principal and interest on the Notes.***

The interest rate under the Wallach Affiliate LOCs is generally equal to the prime rate plus three percent. Increases in interest rates will increase the applicable prime rate and therefore, the interest rate under the Wallach Affiliate LOCs will increase. An increase in the interest rate would increase the amount of debt payments under the Wallach Affiliate LOCs which would reduce our cash flows and may impair our ability to repay the principal and interest on the Notes.

***We incurred indebtedness secured by our office property, which may result in foreclosure.***

The debt incurred by us in connection with our office property is secured by a mortgage. If we default on our secured indebtedness, the lender may foreclose and the entire investment in the office property could be lost, which could adversely affect our ability to repay the principal and interest on the Notes.

***The indenture does not contain the type of covenants restricting our actions, such as restrictions on creating senior debt, paying distributions to our owners, merging, recapitalizing, and/or entering into highly leveraged transactions. The indenture does not contain provisions requiring early payment of Notes in the event we suffer a material adverse change in our business or fail to meet certain financial standards. Therefore, the indenture provides very little protection of Note holders' investments.***

The Notes do not have the benefit of extensive covenants. The covenants in the indenture are not designed to protect Note holders' investments if there is a material adverse change in our consolidated financial condition, results of operations, or cash flows. For example, the indenture does not contain any restrictions on our ability to create or incur senior debt or other debt to pay distributions to our equity holders, including our CEO. It also does not contain any financial covenants (such as a fixed charge coverage or a minimum amount of equity) to help ensure our ability to pay interest and principal on the Notes. The indenture does not contain provisions that permit Note holders to require that we redeem the Notes if there is a takeover, recapitalization or similar restructuring. In addition, the indenture does not contain covenants specifically designed to protect Note holders if we engage in a highly leveraged transaction. Therefore, the indenture provides very little protection of Note holders' investments.

***Payment on the Notes is subordinate to the payment of our outstanding present and future senior debt, if any. Since there is no limit to the amount of senior debt we may incur, our present and future senior debt may make it difficult to repay the Notes.***

Our loan purchase and sale agreements and secured lines of credit with third-parties also function as senior debt. The balance on those loan purchase and sale agreements and other secured debt, net of deferred financing costs was $18,445,000 on December 31, 2025, and is expected to grow in the future. In addition, we have $750,000 in senior unsecured lines of credits which were not drawn as of December 31, 2025. We also have senior subordinated notes which are senior to the Notes of $1,812,000 as of December 31, 2025. The Notes are subordinate and junior in priority to any and all of our senior debt and senior subordinated debt, and equal to any and all non-senior debt, including other Notes. The Notes are senior to junior subordinated notes. There are no restrictions in the indenture regarding the amount of senior debt or other indebtedness that we may incur. Upon the maturity of our senior debt, by lapse of time, acceleration or otherwise, the holders of our senior debt have first right to receive payment, in full, prior to any payments being made to a Note holder or to other non-senior debt. Therefore, upon such maturity of our senior debt Note holders would only be repaid in full if the senior debt is satisfied first and, following satisfaction of the senior debt, if there is an amount sufficient to fully satisfy all amounts owed under the Notes and any other non-senior debt.

***Additional competition for investment dollars may decrease our liquidity, which would adversely affect our ability to repay the Notes.***

We could experience increased competition for investment dollars from other companies and financial institutions that are willing to offer higher interest rates. We may be forced to increase our interest rates in order to maintain or increase the issuance of Notes. Any increase in our interest rates could have an adverse impact on our liquidity and our ability to meet a debt covenant under any future lines of credit obtained and/or to repay the Notes.

***If we are unable to meet our Note maturity and redemption obligations, and we are unable to obtain additional financing or other sources of capital, we may be forced to sell off our operating assets or we might be forced to cease our operations and Note holders could lose some or all of their investment.***

Our Notes have maturities ranging from one year to four years. In addition, holders of our Notes may request redemption upon death and we would be obligated to fulfil such redemption request. Holders of a 36-month Note may request redemption at any time and, subject to certain limitations, we would be obligated to fulfil such redemption request. We intend to pay our Note maturity and redemption obligations using our normal cash sources, such as collections on our loans to customers, as well as proceeds from the Notes Program. We may experience periods in which our Note maturity and redemption obligations are high. Since our loans are generally repaid when our borrower sells a real estate asset, our operations and other sources of funds may not provide sufficient available cash flow to meet our continued Note maturity and redemption obligations. While we have secured lines of credit from affiliates of up to $2,500,000 with $26,000 borrowed as of December 31, 2025, our affiliates are not obligated to fund our borrowing requests. For all of these reasons we may be substantially reliant upon the net offering proceeds we receive from the Notes Program to pay these obligations. If we are unable to repay or redeem the principal amount of the Notes when due, and we are unable to obtain additional financing or other sources of capital, we may be forced to sell off our operating assets or we might be forced to cease our operations and Note holders could lose some or all of their investment.

***There is no "early warning" on the Notes if we perform poorly. Only interest and principal payment defaults on the Notes can trigger a default on the Notes prior to bankruptcy.***

There are a limited number of performance covenants to be maintained under the Notes and/or the indenture. Therefore, no "early warning" of a possible default by us exists. Under the indenture, only (i) the non-payment of interest and/or principal on the Notes by us when payments are due, (ii) our bankruptcy or insolvency, or (iii) a failure to comply with provisions of the Notes or the indenture (if such failure is not cured or waived within 60 days after receipt of a specific notice) could cause a default to occur.

***Note holders do not have the opportunity to evaluate our investments before they are made.***

We intend to use the net offering proceeds in accordance with the "Use of Proceeds" section of our prospectus, including investment in secured real estate loans for the acquisition and development of parcels of real property as single-family residential lots and/or the construction of single-family homes. Since we have not identified any investments that we will make with the net proceeds of this offering, we are generally unable to provide Note holders with information to evaluate the potential investments we may make with the net offering proceeds before purchasing the Notes. Note holders must rely on our management to evaluate our investment opportunities, and we are subject to the risk that our management may not be able to achieve our objectives, may make unwise decisions, or may make decisions that are not in our best interest.

***Because we require a substantial amount of cash to service our debt, we may not be able to pay our obligations under the Notes.***

To service our total indebtedness, we require a significant amount of cash. Our ability to generate cash depends on many factors, including our successful financial and operating performance. We cannot assure Note holders that our business plans will succeed or that we will achieve our anticipated financial results, which may prevent us from being able to pay our obligations under the Notes .

***The indenture and terms of our Notes do not restrict our use of leverage. A relatively small loss can cause overleveraged companies to suffer a material adverse change in their financial position. If this happened to us, it may make it difficult to repay the Notes.***

Financial institutions which are federally insured typically have 8-12% of their total assets in equity. A reduction in their loan assets due to losses of 2% reduces their equity by roughly 20%. We had 14% and 17% of our loan assets, net in equity as of December 31, 2025 and December 31, 2024, respectively. If we allow our assets to increase without increasing our equity, we could have a much lower equity as a percentage of assets than we have today, which would increase our risk of non-payment on the Notes. Note holders have no structural mechanism to protect them from this action and rely solely on us to keep equity at a satisfactory ratio.

***We expect to be substantially reliant upon the net offering proceeds we receive from the sale of our Notes to meet principal and interest obligations on previously issued Notes.***

We intend to use the net offering proceeds from the sale of Notes to, among other things, make payments on other borrowings, fund redemption obligations, make interest payments on the Notes, and to run our business to the extent that other sources of liquidity from our operations (e.g., repayment of loans we have previously extended to our customers) and our credit lines are inadequate. However, these other sources of liquidity are subject to risks. Our operations alone may not produce a sufficient return on investment to repay interest and principal on our outstanding Notes. We may not be able to obtain an additional line of credit when needed or retain one or more of our existing lines of credit. We may not be able to attract new investors, have sufficient loan repayments, or have sufficient borrowing capacity when we need additional funds to repay principal and interest on our outstanding Notes or redeem our outstanding Notes. If any of these things occur, our liquidity and capital needs may be severely affected, and we may be forced to sell off our loan receivables and other operating assets, or we may be forced to cease our operations.

***If we default in our Note payment obligations, the indenture agreements provide that the trustee could accelerate all payments due under the Notes, which would further negatively affect our consolidated financial position and cash flows.***

Our obligations with respect to the Notes are governed by the terms of indenture agreements with U.S. Bank Trust Company, National Association as trustee. Under the indentures, in addition to other possible events of default, if we fail to make a payment of principal or interest under any Note and this failure is not cured within 30 days, then we will be deemed in default. Upon such a default, the trustee or holders of 25% in principal of the outstanding Notes could declare all principal and accrued interest immediately due and payable. If our total assets do not cover these payment obligations, then we would most likely be unable to make all payments under the Notes when due, and we might be forced to cease our operations.

***There is no sinking fund to ensure repayment of the Notes at maturity, so Note holders are totally reliant upon our ability to generate adequate cash flows.***

We do not contribute funds to a separate account, commonly known as a sinking fund, to repay the Notes upon maturity. Because funds are not set aside periodically for the repayment of the Notes over their respective terms, Note holders must rely on our consolidated cash flows from operations, investing and financing activities and other sources of financing for repayment, such as funds from sale of the Notes, loan repayments, and other borrowings. To the extent cash flows from operations and other sources are not sufficient to repay the Notes, the Note holders may lose all or part of your investment.

***If we have a large number of repayments on the Notes, whether because of maturity or redemption, we may be unable to make such repayments.***

We are obligated to redeem a Note without any interest penalty (i) upon the death of an investor, if requested by the executor or administrator of the investor's estate (or if the Note is held jointly, by the surviving joint investor), and (ii) subject to certain limitations, upon request by an investor holding a 36-month Note. Such redemption requests are not subject to our consent but are subject to restrictions in the indenture. We may be faced with a large number of such redemption requests at one time. We are also required to repay all of the Notes upon their maturity. If the amounts of those repayments are too high, and we cannot offset them with loan repayments, secure new financing, or issue additional Notes, we may not have the liquidity to repay the investments.

**FORWARD-LOOKING STATEMENTS**

This prospectus contains forward-looking statements within the meaning of the federal securities laws. Words such as "may," "will," "expect," "anticipate," "believe," "estimate," "continue," "predict," or other similar words identify forward-looking statements. Forward-looking statements appear in a number of places in this prospectus, including without limitation, "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," and include statements regarding our intent, belief or current expectation about, among other things, trends affecting the markets in which we operate, our business, financial condition and growth strategies. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Important factors that could cause our actual results to differ materially from the expectations reflected in these forward-looking statements include those set forth below, as well as general economic, business and market conditions (including without limitation changes in the political and economic climate, economic conditions and fiscal imbalances in the United States, and other major developments, including wars, natural disasters, epidemics and pandemics, including the outbreak of novel coronavirus, military actions, and terrorist attacks), changes in federal and local laws and regulations, and increased competitive pressures. In addition, actual results may differ materially from those predicted in the forward-looking statements as a result of various factors, including but not limited to those set forth in the "Risk Factors" section of this prospectus.

If any of the events described in "Risk Factors" occur, they could have an adverse effect on our business, financial condition, and results of operations. When considering forward-looking statements, you should keep these risk factors, as well as the other cautionary statements in this prospectus in mind. You should not place undue reliance on any forward-looking statement. We are not obligated to update forward-looking statements.

**USE OF PROCEEDS**

**(All dollar [$] amounts shown in thousands.)**

The net proceeds we receive from this offering will be equal to the amount of the Notes we sell, less our offering expenses. If we sell the maximum offering amount of the Notes, which is $70,000, we estimate that we will incur approximately $730 in initial expenses and our net proceeds will be approximately $69,270.

We receive cash proceeds in varying amounts from time to time as the Notes are sold. A number of factors prevent us from precisely calculating the allocation of proceeds. The amount and timing from inflows depend on the sale of Notes, our customer loan repayments, and our borrowing capacity. Further, the Notes have varying maturities and dates of issuance, which make it impossible to predict with any accuracy how much of the proceeds will be used to redeem the Notes in any given year. We also cannot predict how many Notes will be sold or the amount of interest expense that will be incurred. For these reasons, we cannot provide any specific allocation of proceeds we will use for any particular purpose. However, we intend to use substantially all of the net offering proceeds as follows, in the following order of priority:

● to make payments on other borrowings, including loans from affiliates;

● to pay Notes on their scheduled due date and Notes that we are required to redeem early;

● to make interest payments on the Notes; and

● to the extent we have remaining net proceeds and adequate liquidity, to fund any one or more of the following activities:

○ to extend commercial construction loans to homebuilders to build single or multi-family homes, develop lots, or rehabilitate an older home on an existing lot;

○ to make distributions to equity owners, including distributions on our preferred equity;

○ for working capital and other corporate purposes provided, however, no more than 20% of the proceeds will be used for such purposes;

○ to purchase defaulted secured debt from financial institutions at a discount;

○ to purchase defaulted unsecured debt from suppliers to homebuilders at a discount and then secure it with real estate or other collateral;

○ to purchase real estate, which we will operate our business in (one such purchase occurred in February 2017); and

○ to redeem Notes which we have decided to redeem prior to maturity.

There is no minimum number or amount of the Notes that we must sell to receive and use the proceeds from the sale of the Notes, and we cannot assure you that all or any portion of the Notes will be sold. In the event that we do not raise sufficient proceeds from our offerings of Notes, we could curtail the amount of funds we loan to our customers, or we could wrap up operations and pay back our debt, including the Notes. This might result in the Notes being paid back early. Please see "Risk Factors - Risks Related to Liquidity - We expect to be substantially reliant upon the net offering proceeds we receive from the sale of our Notes to meet principal and interest obligations on previously issued Notes," "Risk Factors - Risks Related to Liquidity - There is no sinking fund to ensure repayment of the Notes at maturity, so Note holders are totally reliant upon our ability to generate adequate cash flows," and "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources."

**BUSINESS**

**Overview**

Our business is focused on commercial lending to participants in the residential construction and development industry. We believe this market is underserved because of the lack of traditional lenders currently fully participating in the market. We were originally formed as a Pennsylvania limited liability company on May 10, 2007. To meet our business objectives, we changed our name to Shepherd's Finance, LLC on December 2, 2011. We converted to a Delaware limited liability company on March 29, 2012. We are located in Jacksonville, Florida. Our operations are governed pursuant to our limited liability company agreement. We have an internet website at www.shepherdsfinance.com. We are not incorporating by reference into this report any material from our website. The reference to our website is an inactive textual reference to the uniform resource locator (URL) and is for reference only.

Through August 6, 2025, we were the sole member of two consolidating subsidiaries, 339 Justabout Land Company ("339") and Builder's Assistance, LLC ("Builder's Assistance"). On August 6, 2025, we sold 339. The Company operates pursuant to its Second Amended and Restated Limited Liability Company Agreement effective as of March 16, 2017, and as subsequently amended.

We began commercial lending to residential homebuilders in late 2011. Our current loan portfolio is described more fully in this section under the subheading "Commercial Construction and Development Loans." Our board of managers is comprised of Daniel M. Wallach and three independent managers - Eric A. Rauscher, Kenneth R. Summers, and Gregory L. Sheldon. Our officers are responsible for our day-to-day operations, while the board of managers is responsible for overseeing our business.

The commercial loans we extend are secured by mortgages on the underlying real estate. We extend and service commercial loans to small-to-medium sized homebuilders for the purchase of lots and/or the construction of homes thereon. In some circumstances, the lot is purchased with an older home on the lot which is then either removed or rehabilitated. If the home is rehabilitated, the loan is referred to as a "rehab" loan. We also extend and service loans for the purchase of lots and undeveloped land and the development of that land into residential building lots. In addition, we may, depending on our cash position and the opportunities available to us, do neither or either of the following: purchase defaulted unsecured debt from suppliers to homebuilders at a discount (and then secure that debt with real estate or other collateral), and purchase defaulted secured debt from financial institutions at a discount.

Our CEO, Mr. Wallach, has been in the housing industry since 1985. He was the Chief Financial Officer of a multi-billion-dollar supplier of building materials to home builders for 13 years. He also was responsible for that company's lending business for over 20 years. During those years, he was responsible for the creation and implementation of many secured lending programs to builders. Some of these were performed fully by that company, and some were performed in partnership with banks. In general, the creation of all loans, and the resolution of defaulted loans, was his responsibility, whether the loans were company loans or loans in partnership with banks. Through these programs, he was responsible for the creation of approximately $2,000,000,000 in loans which generated interest spread of $50,000,000, after deducting for credit losses. Through the years, he managed the development of systems for reducing and managing the risks and losses on defaulted loans. Mr. Wallach also was responsible for that company's unsecured debt to builders, which reached over $300,000,000 at its peak. He also gained experience in securing defaulted unsecured debt.

In addition, our Executive Vice President of Operations, Barbara L. Harshman, has 19 years of experience in this type of lending. Our Executive Vice President of Sales, Mark Reynolds, was appointed in April 2021 and has over 22 years of experience in the construction finance industry.

We had $59,223,000 and $49,254,000 in loan assets as of December 31, 2025 and December 31, 2024, respectively. As of December 31, 2025 and December 31, 2024, respectively, we had 151 and 177 construction loans in 20 and 20 states with 53 and 59 borrowers. As of December 31, 2025 and December 31, 2024, respectively, we had 13 and six development loans in nine and five states with 12 and six borrowers. We have various sources of capital, detailed below:

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| | | |
|:---|:---|:---|
| **(All dollar [$] amounts shown in table in thousands.)** | **December 31, 2025** | **December 31, 2024** |
| Capital Source |  |  |
| &nbsp;&nbsp;&nbsp;Purchase and sale agreements and other secured borrowings | $18431 | $20359 |
| &nbsp;&nbsp;&nbsp;Secured lines of credit from affiliates | 26 | 743 |
| &nbsp;&nbsp;&nbsp;Unsecured line of credit (senior) |  | 750 |
| &nbsp;&nbsp;&nbsp;Unsecured Notes through our Notes Program, gross | 22164 | 19968 |
| &nbsp;&nbsp;&nbsp;Other unsecured debt | 13839 | 14645 |
| &nbsp;&nbsp;&nbsp;Preferred equity, Series C units | 7042 | 6430 |
| &nbsp;&nbsp;&nbsp;Common equity | 1169 | 2143 |
| Total | $62671 | $65038 |

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For additional information related to the loan purchase and sale agreements and the lines of credit, please see "- Debt Summary and Sources of Liquidity" below.

**Investment Objectives and Opportunity**

***Background and Strategy***

Finance markets are highly fragmented, with numerous large, mid-size, and small lenders and investment companies, such as banks, savings and loan associations, credit unions, insurance companies, and institutional lenders, all competing for investment opportunities. Many of these market participants experienced losses, as a result of the housing market (which started to decline in 2006, reached its bottom in 2008, improved through late 2019, and since has been relatively stable nationally (within 20% of the December 2019 level)), and their participation in lending in it. As a result of credit losses and restrictive government oversight, financial institutions are not participating in this market to the extent they had before the 2008 credit crisis. Nonregulated builder focused lenders (of which we are one) have increased their presence since 2008. Our goal is not to be the customer's only source of commercial lending, but an extra, more user and capital-friendly piece of their financing. We help builders grow their businesses by requiring less money down than typical lenders, and the tradeoff for that is a higher cost for the builder (but typically a higher return percentage wise on their lower investment).

Our loans are marketed by lending representatives who work for us and are driven to maintain long-term customer relationships. Compensation for loan originators is focused on the profitability of loans originated, not simply the volume of loans originated.

Our efforts are designed to create a loan portfolio that includes some or all of the following investment characteristics: (i) provides current income; (ii) is well-secured by residential real estate; (iii) is short term in nature; and (iv) provides high interest spreads.

Our investment policies may be amended or changed at any time by our board of managers. In the years ahead, we plan on maintaining or growing our current level of lending, increasing our geographic diversity, growing our rehab lending program, increasing our accounting services for builders' revenue, and improving our financial performance. We may be adding systems and people to accomplish these goals.

As we continue to grow our business, we are focusing some of our efforts on our rehab program, which we believe in the long run will face less bank competition and have more stable demand than our new construction program.

***Risk and Mitigation***

We believe that, while creating speculative construction loans is a high-risk venture, the opportunity for margin, the differences in our lending versus typical small bank lending, and our loss mitigation techniques will all help this type of lending to continue to be a profitable business.

We engage in various activities to try to mitigate the risks inherent in this type of lending by:

● Keeping the loan-to-value ratio ("LTV") between 60% and 75% on a portfolio basis, however, individual loans may, from time to time, have a greater LTV;

● Generally using deposits from the builder on home construction loans to ensure the completion of the home. Lending losses on defaulted loans are usually a higher percentage when the home is not built, or is only partially built;

● Having a higher yield than other forms of secured real estate lending;

● Using interest escrows for some of our loans;

● Aggressively working with builders who are in default on their loan before and during foreclosure. This technique generally yields a reduced realized loss; and

● Market grading. We review all lending markets, analyzing their historic housing start cycles. Then, the current position of housing starts is examined in each market. Markets are classified into volatile, average, or stable, and then graded based on that classification and our opinion of where the market is in its housing cycle. This grading is then used to determine the builder deposit amount, LTV, and how much of the lot purchase the builder is required to fund. Typically, builders who enter a market at one grade maintain that grade if they perform well in that market, even as the market changes its grade.

The following table contains items that we believe differentiate us from our competitors:

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| | | |
|:---|:---|:---|
| **Item** | **Our Methods** | **Comments** |
| Lending Regulation | We follow various state and federal laws but are not regulated and controlled by bank examiners from the government. We follow the best practices we have learned through our experience, some of which are required by banks. | For instance, banks are not required to buy title insurance by law, but typically banks do purchase title insurance for the properties on which they lend. We generally do not, as it is very difficult to collect on title policies. Instead, we use title searches to protect our interests. |
| FDIC Insurance | We do not offer FDIC insurance to our unsecured Notes investors. | Our yield to our customers, and our cost of funds, is typically higher than that of most banks. We charge our borrowers higher interest rates than most banks do. We also save money by not paying for FDIC insurance. |
| Capital Structure | Typically, our unsecured Notes offered through our Notes Program are due in one to four years, or when the Note matures. | This results in liquidity risk (i.e., funding borrowing requests or maturities of debt). Our assets typically turnover much quicker (about 4 times faster) than our average unsecured debt does, and our unsecured debt is mostly prepayable. These items help keep liquidity stable. Our development and lot loans typically have durations well beyond the construction loan timeframe. |
| Community Reinvestment Act (CRA)<sup>(1)</sup> | We do not participate in the CRA. | Our sole purpose in making each individual loan is to maximize our returns while maintaining proper risk management. |
| Leverage | We try to maintain a 15% ratio of equity (including preferred equity) to loan assets. | Our equity to loan assets, net ratio was 13.9% as of December 31, 2025. The higher the percentage, the more potential losses the company can absorb without impacting debt holders. |
| Product Diversification | We generally make loans for builders to purchase lots and/or to construct or rehab homes. | We have extensive experience in our field. |
| Geographic Diversity | We provide lending services in 21 states as of December 31, 2025. | We believe that this geographic diversity helps in down markets, as not all housing markets decrease at the same rate and time. |
| Governmental Bailouts | Most likely not eligible. | We are not likely to be eligible for bank bailouts, which have happened periodically. We maintain a better leverage ratio to counter this. |
| Underwriting | We focus on items that, in our experience, tend to predict risk. | These items include using collateral, controlling LTVs, controlling the number of loans in one subdivision, underwriting appraisals, conducting property inspections, and maintaining certain files and documents similar to those that a bank might maintain. |

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<sup>(1)</sup> The CRA subjects a bank who receives FDIC insurance to regulatory assessment to determine if the bank meets the credit needs of its entire community, and to consider that determination in its evaluation of any application made by the bank for, among other things, approval of the acquisition or establishment of a bank branch.

***Lines of Business***

Our efforts are designed to create a loan portfolio that includes some or all of the following investment characteristics: (i) provides current income; (ii) is well-secured by residential real estate; (iii) is short term in nature; and (iv) provides high interest spreads. While we primarily provide commercial construction loans to homebuilders (for residential real estate), we may also purchase defaulted unsecured debt from suppliers to homebuilders at a discount (and then secure that debt with real estate or other collateral), purchase defaulted secured debt from financial institutions at a discount, and purchase real estate in which we will operate our business.

Our investment policies may be amended or changed at any time by our board of managers.

*Construction Loans for Homebuilders*

We extend and service commercial loans to small-to-medium sized homebuilders for the purchase of lots and/or the construction of homes thereon. Our customers generally benefit from doing business with us not just because they are able to sell additional homes (which we finance), but because, as they build additional homes, they are able to increase sales of homes that are built as contracted homes, where the eventual home owner obtains the loan. Builders generally have more success selling homes when a model or spec home is available for customers to see. We also extend and service loans for the purchase of undeveloped land and the development of that land into residential building lots. In addition, we lend money to purchase and rehabilitate older existing homes. Most of the loans are for "spec homes" or "spec lots," meaning they are built or developed speculatively (with no specific end-user home owner in mind).

In a typical home construction transaction, a homebuilder obtains a loan to purchase a lot and build a home on that lot. In some cases, the builder has a contract with a customer to purchase the home upon its completion. In other cases, the home is built as a spec home, but the homebuilder believes it will sell before or shortly after completion, and therefore, building the home before it is under contract will increase the homebuilder's sales and profitability. The builder may also believe that the construction of a spec home will increase the number of contract sales the homebuilder will have in a given year, as it may be easier to sell contract homes when the customer can see the builder's work in the spec home. In some cases, these speculatively built homes are constructed with the intention of keeping them as a model for a period of time, to increase contract sales, and then be sold. These are called model homes. While we may lend to a homebuilder for any of these types of new construction homes, during the year ended December 31, 2025, approximately 84% of our construction loans were created as spec homes and 16% were contracts.

In a typical rehab transaction, we fund all of the purchase price, and then all or a portion of the cost to complete the project. In some circumstances, we are unable to see the inside of the home prior to closing, so we assume that anything from drywall to completion needs to be redone, as well as what we can see from the outside.

We fund the loans that we originate using available cash resources that are generated primarily from borrowings, our loan purchase and sale agreements, proceeds from the fixed rate subordinated notes ("Notes") offered pursuant to our public offering ("Notes Program"), equity, and net operating cash flow. We intend to continue funding loans we originate using the same sources.

There is a seasonal aspect to home construction, and this affects our monthly cash flow. In general, since the home construction loans, we made will last less than a year on average and we are geographically diverse, the seasonality impact is somewhat mitigated.

Generally, our real estate loans are secured by one or more of the following:

● the homes being constructed;

● the parcels of land to be developed;

● finished lots;

● new or rehabbed single-family homes; and/or

● in most cases, personal guarantees of the principals of the borrower entity.

Most of our lending is based on the following general policies:

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| | |
|:---|:---|
| **Customer Type** | Small-to-Medium Size Homebuilders |
| **Loan Type** | Commercial |
| **Loan Purpose** | Construction/Rehabilitation of Homes or Development of Lots |
| **Security** | Homes, Lots, and/or Land |
| **Priority** | Generally, our loans are secured by a first priority mortgage lien; however, we may make loans secured by a second or other lower priority mortgage lien. |
| **Loan-to-Value Averages** | 60-75% |
| **Loan Amounts** | Our average home construction loan was $445,000 as of December 31, 2025. Development loans vary greatly. |
| **Term** | Demand, however most home construction loans typically payoff in under one year, and development loans are typically three to five-year projects. |
| **Rate** | Cost of Funds ("COF") plus 2.5%, minimum rate of 7.75% |
| **Origination Fee** | 5% for home construction loans, development loans on a case-by-case basis |
| **Title Insurance** | Only on high-risk loans and rehabs |
| **Hazard Insurance** | Always |
| **General Liability Insurance** | Always |
| **Credit** | Builder should have significant building experience in the market, be building in the market currently, be able to make payments of interest, be able to make the required deposit, have acceptable personal credit, and have open lines of credit (unsecured) with suppliers reasonably within terms. Required deposits may be avoided if we do not fund the purchase of land. We generally do not advertise to find customers, but use our loan representatives and our builder website, www.constructionspecloans.com. |
| **Third Party Guarantor** | None, however, the loans are generally guaranteed by the owners of the borrower. |

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We may change these policies at any time based on then-existing market conditions or otherwise, at the discretion of our CEO and the Board of Managers.

*Development of Land Parcels*

On February 15, 2024, the Company completed its acquisition of 339 Justabout Land Co. LLC ("339"), in a transaction valued at $9,122,000. The Company paid cash consideration of $3,000,000 plus the amount of our intercompany debt. The property was then subdivided into two parcels. One parcel was being developed into lots for home construction ("Phase 1 Lots") and the other parcel was being developed into a second phase of lots ("Phase 2 Lots").

During our ownership of 339, we earned fees and had sales and cost of goods sold related to lot sales. We also invested money in developing Phase 1 Lots and permitting Phase 2 Lots within the development.

On August 6, 2025, the Company completed the sale of all assets held by 339, a business segment, to the principal owners of the Company's largest customer, Benjamin Marcus Homes ("BMH" or "Buyer"), for a sales price of $9,876,000.

The Company, as the lender, previously entered into a certain Amended, Restated and Consolidated Credit Agreement (the "A&R Credit Agreement") with Benjamin Marcus Homes. L.L.C., Investor's Mark Acquisitions, LLC, and 339 Justabout Land Co., LLC (each a "Borrower" and collectively, the "Borrowers") dated January 27, 2022, as amended by the First Amendment dated April 12, 2022, and the Second Amendment dated March 3, 2023, pursuant to which the maximum principal loan amount is $8,500,000 and the exiting commitment was $1,950,000 immediately prior to the Disposition. All of these Borrowers are under common ownership by one or both of the Buyers of 339 and collectively represents the Company's largest customer. In connection with the Purchase Agreement, the Company has entered into the Third Amendment to the A&R Credit Agreement ("Third Amendment"), as the lender, to the Borrowers, to increase the loan commitment to $13,450,000 to facilitate the repurchase of 339, to fund future development, and to establish an interest escrow account. Pursuant to the Third Amendment, the unpaid principal balance attributable to advances made prior to the date of the Third Amendment bears interest rate of Cost of Funds plus 7.0% per annum, while all new advances made on or after the date of the Third Amendment bears interest rate of Cost of Funds plus 5.5% per annum.

*Other investments*

We own other investments in the housing space with objectives similar to lending. As of December 31, 2025, we own a lot near Orlando, Florida with a book value of $169,000. We also have an investment in a fund in common management with one of our borrowers which buys lots and build homes. We lend money to that fund as well.

In addition, we may, depending on our cash position and the opportunities available to us, do neither or either of the following: purchase defaulted unsecured debt from suppliers to homebuilders at a discount (and then secure that debt with real estate or other collateral), and purchase defaulted secured debt from financial institutions at a discount. We currently have a secured loan on our books which was purchased from a lender at a discount. The loan was booked at the discounted purchase price, and interest is being recognized monthly and paid in conjunction with principal payments. The asset purchased at a discount is treated as a loan receivable on the Company's balance sheet.

*Builder's Assistance*

At Builder's Assistance, we help builders grow their net profit and production capacity. Currently most of that activity centers around offering accounting services. These services do not include tax services. We provide a variety of services which include but are not limited to, data entry, journal entries, cash balancing, purchase order issuing, budget control, and financial statements. We also offer customers consultations to help them improve their business, ranging from gross profit analysis to cash management.

**Loan Portfolio**

***Commercial Loans - Construction Loan Portfolio Summary***

The following is a summary of our loan portfolio to builders for home construction loans as of December 31, 2025:

**(All dollar [$] amounts shown in table and footnotes in thousands.)**

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **State** | **Number of** <br> **Borrowers**  | **Number of** <br> **Loans**  | **Value of** <br> **Collateral**  | **Commitment** <br> **Amount**  | **Gross** <br> **Amount** <br> **Outstanding**  | **Loan to Value** <br> **Ratio<sup>(1)</sup>**  | **Loan Fee** |
| Arizona | 2 | 4 | $1719 | $1126 | $1126 | 66% | 5% |
| California | 1 | 1 | 1285 | 1750 | 1439 | 137% | 5% |
| Connecticut | 1 | 3 | 1730 | 1162 | 890 | 67% | 5% |
| Florida | 11 | 50 | 23854 | 16637 | 10984 | 70% | 5% |
| Georgia | 7 | 10 | 6448 | 4228 | 3068 | 66% | 5% |
| Idaho | 1 | 1 | 2770 | 1500 | 874 | 54% | 5% |
| Illinois | 1 | 1 | 1500 | 815 | 606 | 54% | 5% |
| Louisiana | 2 | 3 | 825 | 623 | 594 | 76% | 5% |
| Michigan | 1 | 1 | 970 | 582 | 171 | 60% | 5% |
| Mississippi | 1 | 1 | 335 | 258 | 258 | 77% | 5% |
| Montana | 2 | 2 | 975 | 683 | 578 | 70% | 5% |
| New Jersey | 1 | 4 | 1798 | 1531 | 1471 | 85% | 5% |
| New York | 1 | 5 | 2248 | 1345 | 488 | 60% | 5% |
| North Carolina | 8 | 14 | 6530 | 4135 | 1861 | 63% | 5% |
| Oklahoma | 1 | 1 | 167 | 117 | 77 | 70% | 5% |
| Pennsylvania | 2 | 18 | 20748 | 16368 | 13055 | 79% | 5% |
| South Carolina | 7 | 26 | 10739 | 8394 | 4808 | 78% | 5% |
| Tennessee | 2 | 3 | 1061 | 743 | 718 | 70% | 5% |
| Utah | 1 | 1 | 4880 | 3538 | 1213 | 73% | 5% |
| Virginia | 1 | 2 | 592 | 362 | 236 | 61% | 5% |
| **Total** | 54 <sup>(3)</sup> | 151 | $91174 | $65897 | $44515 | 72 %<sup>(2)</sup> | 5% |

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<sup>(1)</sup> The loan to value ratio is calculated by taking the commitment amount and dividing by the appraised value.

<sup>(2)</sup> Represents the weighted average loan to value ratio of the loans.

<sup>(3)</sup> Total number of borrowers is 53. One borrower has construction loans in North Carolina and South Carolina which is reflected in the Number of Borrowers column of the table above.

The following is a summary of our loan portfolio to builders for home construction loans as of December 31, 2024:

**(All dollar [$] amounts shown in table and footnotes in thousands.)**

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **State** | **Number of** <br> **Borrowers**  | **Number of** <br> **Loans**  | **Value of** <br> **Collateral**  | **Commitment** <br> **Amount**  | **Gross** <br> **Amount** <br> **Outstanding**  | **Loan to Value** <br> **Ratio<sup>(1)</sup>**  | **Loan Fee** |
| Arizona | 1 | 2 | $890 | $634 | $633 | 71% | 5% |
| California | 1 | 1 | 3210 | 1750 | 1346 | 55% | 5% |
| Connecticut | 1 | 2 | 1040 | 728 | 389 | 70% | 5% |
| Florida | 9 | 42 | 16089 | 11081 | 6874 | 69% | 5% |
| Georgia | 3 | 6 | 3301 | 2037 | 878 | 62% | 5% |
| Idaho | 1 | 4 | 1462 | 1060 | 661 | 73% | 5% |
| Illinois | 1 | 1 | 1727 | 992 | 1781 | 57% | 5% |
| Louisiana | 4 | 6 | 1613 | 1169 | 1031 | 72% | 5% |
| Michigan | 1 | 1 | 890 | 481 | 27 | 54% | 5% |
| Mississippi | 1 | 1 | 369 | 258 | 258 | 70% | 5% |
| New Jersey | 2 | 4 | 1585 | 1362 | 1122 | 86% | 5% |
| New York | 1 | 1 | 650 | 455 | 105 | 70% | 5% |
| North Carolina | 9 | 18 | 10737 | 6642 | 4786 | 62% | 5% |
| Ohio | 3 | 3 | 1275 | 857 | 1074 | 67% | 5% |
| Pennsylvania | 2 | 22 | 24449 | 18065 | 15192 | 74% | 5% |
| South Carolina | 10 | 49 | 22057 | 14309 | 7438 | 65% | 5% |
| Tennessee | 3 | 4 | 1334 | 893 | 748 | 67% | 5% |
| Texas | 2 | 3 | 2320 | 1844 | 1567 | 79% | 5% |
| Utah | 1 | 3 | 2918 | 1792 | 1422 | 61% | 5% |
| Virginia | 3 | 4 | 1546 | 982 | 672 | 64% | 5% |
| **Total** | 59 | 177 | $99462 | $67391 | $48004 | 68 %<sup>(2)</sup> | 5% |

---

<sup>(1)</sup> The loan to value ratio is calculated by taking the commitment amount and dividing by the appraised value.

<sup>(2)</sup> Represents the weighted average loan to value ratio of the loans.

***Commercial Loans - Real Estate Development Loan Portfolio Summary***

In a typical development transaction, a homebuilder/developer purchases a specific parcel or parcels of land. Developers must secure financing to pay the purchase price for the land as well as to pay expenses incurred while developing the lots. This is the financing we provide. Once financing has been secured, the lot developers create individual lots. Developers secure permits allowing the property to be developed and then design and build roads and utility systems for water, sewer, gas, and electricity to service the property. The individual lots are then sold before a home is built on them; paid off, built on and then sold; or built on, then sold and paid off (in these cases, we may subordinate our loan to the home construction loan).

The following is a summary of our loan portfolio to builders for land development as of December 31, 2025:

**(All dollar [$] amounts shown in table and footnotes in thousands.)**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **States** | **Number of Borrowers** | **Number of** <br> **Loans**  | **Value of Collateral** | **Commitment Amount** | **Gross** <br> **Amount** <br> **Outstanding**  | **Loan to** <br> **Value Ratio<sup>(1)</sup>**  | **Interest** <br> **Spread<sup>(3)</sup>**  |
| Florida | 2 | 2 | 550 | 630 | 350 | 115% | 7% |
| Georgia | 1 | 1 | 560 | 100 | 99 | 18% | 7% |
| Louisiana | 1 | 1 | 150 | 88 | 88 | 59% | 7% |
| New Jersey | 1 | 1 | 88 | 56 | 56 | 64% | 7% |
| North Carolina | 2 | 2 | 3037 | 681 | 680 | 22% | 7% |
| Pennsylvania | 1 | 2 | 15337 | 14066 | 12854 | 92% | varies |
| South Carolina | 1 | 1 | 1500 | 487 | 539 | 32% | 7% |
| Utah | 2 | 2 | 3146 | 1600 | 868 | 51% | 7% |
| Wyoming | 1 | 1 | 2750 | 1635 | 1634 | 59% | 7% |
| **Total** | 12 | 13 | $27118 | $19343 | $17168 | 71 %<sup>(2)</sup> | 7% |

---

<sup>(1)</sup> The loan to value ratio is calculated by taking the outstanding amount and dividing by the appraised value calculated as described above.

<sup>(2)</sup> Represents the weighted average loan to value ratio of the loans.

<sup>(3)</sup> The interest spread varies for the state of Pennsylvania and is 7% across other states.

The following is a summary of our loan portfolio to builders for land development as of December 31, 2024:

**(All dollar [$] amounts shown in table and footnotes in thousands.)**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **States** | **Number of Borrowers** | **Number of**<br> **Loans** | **Value of Collateral** | **Commitment Amount** | **Gross** <br> **Amount**<br> **Outstanding** | **Loan to**<br> **Value Ratio<sup>(1)</sup>**  | **Interest**<br> **Spread<sup>(3)</sup>**  |
| Florida | 2 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2 | 2469 | 1500 | 268 | 11% | 7% |
| Georgia | 1 | 1 | 346 | 275 | 159 | 46% | 7% |
| New York | 1 | 1 | 300 | 300 | 300 | 100% | 7% |
| Pennsylvania | 1 | 1 | 2484 | 3700 | 1919 | 77% | varies |
| South Carolina | 1 | 1 | 1860 | 487 | 488 | 26% | 7% |
| **Total** | 6 | 6 | $7459 | $6262 | $3134 | 42%<sup>(2)</sup> | 7% |

---

<sup>(1)</sup> The loan to value ratio is calculated by taking the outstanding amount and dividing by the appraised value calculated as described above.

<sup>(2)</sup> Represents the weighted average loan to value ratio of the loans.

<sup>(3)</sup> The interest spread varies for the state of Pennsylvania and is 7% across other states.

The following is a roll forward of our loan receivables, net:

**(All dollar [$] amounts shown in table in thousands.)** 

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2025** | **December 31,<br> 2024** |
| Beginning balance | $49254 | $59186 |
| &nbsp;&nbsp;&nbsp;Originations and modifications | 59571 | 40729 |
| &nbsp;&nbsp;&nbsp;Principal collections | (48205) | (48578) |
| &nbsp;&nbsp;&nbsp;Transferred from loans receivables, net | (909) | (2306) |
| &nbsp;&nbsp;&nbsp;Change in allowance for credit losses | (245) | (173) |
| &nbsp;&nbsp;&nbsp;Change in loan fees, net | (243) | 396 |
| Ending balance | $59223 | $49254 |

---

**Credit Quality Information**

The Company determines its allowance for credit losses in accordance with ASC 326, *Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.* Based on the Company's size, complexity and historical data the aggregate method or loss-rate method was selected to estimate expected credit losses. An expected loss ratio is applied based on internal historical losses and originations. The aggregate method relies upon the performance of an entire segment of the loan portfolio to best represent the behavior of these specific segments over time. In addition, modified open pool approach was used which utilizes our borrowers credit rankings for both construction and development loans. Internal risk-rating grades are assigned by the Company's management based on an analysis of financial and collateral strength and other credit attributes underlying each loan. Loan grades are A, B and C and Unsecured for both construction and development loans where A and C define the highest and lowest scores, respectively. Unsecured loans in our portfolio do not hold underlying collateral.

Each loan pool is adjusted for qualitative factors not inherently considered in the quantitative analysis. The qualitative adjustments either increase or decrease the quantitative model estimation. We consider factors that are relevant within the qualitative framework which include the following: lending policy, changes in nature and volume of loans, staff experience, changes in volume and trends of non-performing loans, trends in underlying collateral values, quality of our loan review system and other economic conditions, including inflation.

Our construction loans are collateralized by lots, partially built homes, and built homes, while our development loans are collateralized by land and lots. Secured nonaccrual loans individually evaluated are also collateralized by land and real estate.

The following table presents the Company's gross loans receivable, commitment value and ACL for each respective credit rank loan pool category as of December 31, 2025:

**(All dollar [$] amounts shown in table in thousands.)**

---

| | | | |
|:---|:---|:---|:---|
|  | **Loans** <br> **Receivable** <br> **Gross**  | **Commitment** <br> **Value**  | **ACL** |
| **Construction Loans Collectively Evaluated:** |  |  |  |
| A Credit Risk | $23490 | $37488 | $122 |
| B Credit Risk | 13799 | 18830 | 151 |
| C Credit Risk | 828 | 1099 | 12 |
| Individually Evaluated | 6399 | 8480 | 745 |
| **Development Loans Collectively Evaluated:** |  |  |  |
| A Credit Risk | $3457 | $4390 | $2 |
| B Credit Risk | 13072 | 14366 | 79 |
| C Credit Risk | 99 | 100 | 2 |
| Individually Evaluated | 539 | 487 |  |
| Total | $61683 | $85240 | $1113 |

---

The following table presents the Company's gross loans receivable, commitment value and ACL for each respective credit rank loan pool category as of December 31, 2024.

**(All dollar [$] amounts shown in table in thousands.)**

---

| | | | |
|:---|:---|:---|:---|
|  | **Loans** <br> **Receivable** <br> **Gross**  | **Commitment** <br> **Value**  | **ACL** |
| **Construction Loans Collectively Evaluated:** |  |  |  |
| A Credit Risk | $39277 | $55872 | $140 |
| B Credit Risk | 2817 | 3883 | 40 |
| C Credit Risk | 939 | 1851 | 10 |
| Individually Evaluated | 4971 | 5785 | 658 |
| **Development Loans Collectively Evaluated:** |  |  |  |
| A Credit Risk | $2485 | $5500 | $2 |
| B Credit Risk | 160 | 275 |  |
| C Credit Risk | 489 | 487 | 18 |
| Individually Evaluated | – | – | – |
| Total | $51138 | $73653 | $868 |

---

The following table presents the amortized cost basis of loans individually evaluated and loans past due over 90 days nonaccruing as of December 31, 2025:

---

| | | | |
|:---|:---|:---|:---|
|  | **Individually Evaluated Loans without ACL** | **Individually Evaluated Loans with ACL** | **Accrual Loans Past Due Over 90 Days** |
| **Construction Loans:** |  |  |  |
| Individually Evaluated | $3239 | $3160 | $– |
| **Development Loans:** |  |  |  |
| Individually Evaluated | $539 | $– | $– |
| Total | $3778 | $3160 | $– |

---

The following table presents the amortized cost basis of loans individually evaluated and loans past due over 90 days nonaccruing as of December 31, 2024:

---

| | | | |
|:---|:---|:---|:---|
|  | **Individually Evaluated without ACL** | **Individually Evaluated with ACL** | **Accrual Loans Past Due Over 90 Days** |
| **Construction Loans:** |  |  |  |
| Individually Evaluated | $1427 | $3544 | $– |
| **Development Loans:** |  |  |  |
| Individually Evaluated | $– | $– | $– |
| Total | $1427 | $3544 | $– |

---

For loans greater than 12 months in age that are individually evaluated, appraisals are ordered and prepared if the current appraisal is greater than 13 months old and construction is greater than 90% complete. If construction is completed by less than 90% the Company uses the latest appraisal on file. At certain times the Company may choose to use a broker's opinions of value ("BOV") as a replacement for an appraisal if deemed more efficient by management. Appraised values are adjusted down for estimated costs associated with asset disposal. Broker's opinion of selling price, use currently valid sales contracts on the subject property, or representative recent actual closings by the builder on similar properties may be used in place of a BOV.

In addition, our loan portfolio includes performing, forbearance and non-accrual loans. The Company's policies with respect to placing loans on non-accrual and individually evaluated if they are past due greater than 90 days unless management deems the loan an exception. A fair market value analysis is performed and an allowance for credit loss is established based on the results of the analysis.

The following is an aging of our gross loan portfolio as of December 31, 2025:

**(All dollar [$] amounts shown in table in thousands.)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Gross Loan**<br> **Value** | **Current**<br> **0 - 89** | **Past Due**<br> **90 - 179** | **Past Due**<br> **180 - 269** | **Past Due**<br> **>270** |
| **Construction Loans:** |  |  |  |  |  |
| A Credit Risk | $23490 | $23490 | $– | $– | $– |
| B Credit Risk | 13799 | 13799 |  |  |  |
| C Credit Risk | 828 | 828 |  |  |  |
| Individually Evaluated | 6399 | 5201 | 618 | 446 | 134 |
| **Development Loans:** |  |  |  |  |  |
| A Credit Risk | 3457 | 3457 |  |  |  |
| B Credit Risk | 13072 | 13072 |  |  |  |
| C Credit Risk | 99 | 99 |  |  |  |
| Individually Evaluated | 539 | – | 539 | – | – |
| Total | $61683 | $59946 | $1157 | $446 | $134 |

---

The following is an aging of our gross loan portfolio as of December 31, 2024:

**(All dollar [$] amounts shown in table in thousands.)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Gross Loan**<br> **Value** | **Current**<br> **0 - 89** | **Past Due**<br> **90 - 179** | **Past Due**<br> **180 - 269** | **Past Due**<br> **>270** |
| **Construction Loans:** |  |  |  |  |  |
| A Credit Risk | $39277 | $39277 | $– | $– | $– |
| B Credit Risk | 2817 | 2817 |  |  |  |
| C Credit Risk | 939 | 939 |  |  |  |
| Individually Evaluated | 4971 |  | 1057 |  | 3914 |
| **Development Loans:** |  |  |  |  |  |
| A Credit Risk | 2485 | 2485 |  |  |  |
| B Credit Risk | 160 | 160 |  |  |  |
| C Credit Risk | 489 | 489 |  |  |  |
| Individually Evaluated | – | – | – | – | – |
| Total | $51138 | $46167 | $1057 | $– | $3914 |

---

Below is an aging schedule of loans receivable as of December 31, 2025, on a recency basis:

**(All dollar [$] amounts shown in table in thousands.)**

---

| | | | |
|:---|:---|:---|:---|
|  | **No.** <br> **Loans**  | **Unpaid** <br> **Balances**  | **%** |
| Contractual terms (All current Direct Loans and Sales Finance Contracts with installments past due less than 60 days from due date.) | 155 | $58507 | 94.9% |
| 60-89 days | 1 | 1439 | 2.3% |
| 90-179 days | 5 | 1157 | 1.8% |
| 180-269 days | 2 | 446 | 0.7% |
| >270 days | 1 | 134 | 0.3% |
| Subtotal | 164 | $61683 | 100.0% |
| Interest only accounts (Accounts on which interest, deferment, extension and/or default charges were received in the last 60 days) | – | $– | – % |
| Partial payment accounts (Accounts on which the total received in the last 60 days was less than 50% of the original contractual monthly payment. "Total received" to include interest on simple interest accounts, as well as late charges on deferment charges on pre-computed accounts.) | – | $– | – % |
| Total | 164 | $61683 | 100.0% |

---

Below is an aging schedule of loans receivable as of December 31, 2024, on a recency basis:

**(All dollar [$] amounts shown in table in thousands.)**

---

| | | | |
|:---|:---|:---|:---|
|  | **No.** <br> **Loans**  | **Unpaid** <br> **Balances**  | **%** |
| Contractual terms (All current Direct Loans and Sales Finance Contracts with installments past due less than 60 days from due date.) | 162 | $46168 | 90.2% |
| 60-89 days |  |  | –% |
| 90-179 days | 5 | 1057 | 2.1% |
| 180-269 days |  |  | –% |
| >270 days | 16 | 3913 | 7.7% |
| Subtotal | 183 | $51138 | 100.0% |
| Interest only accounts (Accounts on which interest, deferment, extension and/or default charges were received in the last 60 days) | – | $– | – % |
| Partial payment accounts (Accounts on which the total received in the last 60 days was less than 50% of the original contractual monthly payment. "Total received" to include interest on simple interest accounts, as well as late charges on deferment charges on pre-computed accounts.) | – | $– | – % |
| Total | 183 | $51138 | 100.0% |

---

Below is an aging schedule of loans receivable as of December 31, 2025, on a contractual basis:

**(All dollar [$] amounts shown in table in thousands.)**

---

| | | | |
|:---|:---|:---|:---|
|  | **No.** <br> **Loans**  | **Unpaid** <br> **Balances**  | **%** |
| Contractual terms (All current Direct Loans and Sales Finance Contracts with installments past due less than 60 days from due date.) | 155 | $58507 | 94.9% |
| 60-89 days | 1 | 1439 | 2.3% |
| 90-179 days | 5 | 1157 | 1.8% |
| 180-269 days | 2 | 446 | 0.7% |
| >270 days | 1 | 134 | 0.3% |
|  | 155 | $58507 | 94.9 |
| Subtotal | 164 | $61683 | 100.0% |
| Interest only accounts (Accounts on which interest, deferment, extension and/or default charges were received in the last 60 days) | – | $– | – % |
| Partial payment accounts (Accounts on which the total received in the last 60 days was less than 50% of the original contractual monthly payment. "Total received" to include interest on simple interest accounts, as well as late charges on deferment charges on pre-computed accounts.) | – | $– | – % |
| Total | 164 | $61683 | 100.0% |

---

Below is an aging schedule of loans receivable as of December 31, 2024, on a contractual basis:

**(All dollar [$] amounts shown in table in thousands.)**

---

| | | | |
|:---|:---|:---|:---|
|  | **No.** <br> **Loans**  | **Unpaid** <br> **Balances**  | **%** |
| Contractual terms (All current Direct Loans and Sales Finance Contracts with installments past due less than 60 days from due date.) | 162 | $46168 | 90.2% |
| 60-89 days |  |  | –% |
| 90-179 days | 5 | 1057 | 2.1% |
| 180-269 days |  |  | –% |
| >270 days | 16 | 3913 | 7.7% |
| Subtotal | 183 | $51138 | 100.0% |
| Interest only accounts (Accounts on which interest, deferment, extension and/or default charges were received in the last 60 days) | – | $– | – % |
| Partial payment accounts (Accounts on which the total received in the last 60 days was less than 50% of the original contractual monthly payment. "Total received" to include interest on simple interest accounts, as well as late charges on deferment charges on pre-computed accounts.) | – | $– | – % |
| Total | 183 | $51138 | 100.0% |

---

***2026***  ***Outlook***

During 2026, we anticipate that the housing market in most of the areas in which we do business will likely improve, as we believe that the long-term interest rates that our borrowers' customers use are likely to fall. There is a risk if mortgage rates drop that many homeowners in existing low-rate mortgages will decide to "move up" and sell their low mortgage rate home, flooding the market with homes. Offsetting that risk is the fact that they will also increase demand for homes as they will need one to live in. Rents may become less affordable vs. owning a home, which helps our customer. While we don't anticipate the market flooding to negatively impact us, there is little history to go by and this might cause housing prices to drop steeply, which will hurt our existing loans. Of course, rates may not fall, or they may instead go up, or the actual impact of falling rates may not result in an enhanced housing market. While we are anticipating growth in housing and loan balances, we are prepared for a declining market as well.

In 2026, we don't anticipate increasing our investments that are not loans or foreclosed assets.

**Debt Summary and Sources of Liquidity**

Below is a summary of some of our debt and sources of liquidity. The discussion below does not discuss all of our debt. Please see the "Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as our financial statements and the notes to those financial statements contained elsewhere in this prospectus for additional information about debt and sources of liquidity.

***Loan Purchase and Sale Agreements***

We have two loan purchase and sale agreements where we are the seller of portions of loans we create. One loan purchase and sale agreement is with Builder Finance, Inc. ("Builder Finance"), and the second loan purchase and sale agreement is with S.K. Funding, LLC ("S.K. Funding"). These agreements are described below.

*Loan Purchase and Sale Agreement with Builder Finance*

We entered into a loan purchase and sale agreement (the "Builder Finance LPSA") with Builder Finance in January 2017. Pursuant to the Builder Finance LPSA, Builder Finance has the right, from time to time, to purchase from us senior priority interests in certain loans made to fund the vertical construction of one to four family residential dwellings ("Eligible Loans"). Each Eligible Loan is evidenced by notes secured by, among other things, mortgages or deeds of trust encumbering the respective construction properties. The Builder Finance LPSA has been amended eight times as of December 31, 2025, to allow for, among other things, the purchaser to retain their portion of the loan past the 12 month period described below. As of December 31, 2025, the book value of loans which serve as collateral under the Builder Finance LPSA is approximately $1.8 million and the amount due from us to Builder Finance under the Builder Finance LPSA is approximately $1.5 million.

Pursuant to the procedures set forth in Sections 5.5 through 5.7 of the Builder Finance LPSA, we, upon written notice to Builder Finance, have the right at any time (the "Call Option") to repurchase from Builder Finance the transferred rights to any senior loan. The Call Option purchase price for each senior loan will be an amount equal to the then outstanding principal amount of the senior loan held by Builder Finance plus accrued interest, provided that if the aggregate interest paid to Builder Finance in respect of such senior loan as of the repurchase date will be less than 4% of the total commitment amount of Builder Finance in respect of such senior loan, then the purchase price shall be increased by an amount equal to such shortfall. Similarly, Builder Finance, upon written notice to the us, has the right at any time (the "Put Option"), to elect to require us to repurchase the transferred rights pertaining to any senior loan, or any portion of a senior loan held by Builder Finance. The Put Option purchase price will be an amount equal to the outstanding principal amount of the senior loan held by Builder Finance plus accrued interest, provided that the aggregate put prices payable in respect of all senior loans put to us during any trailing 12 month period ending on the date of the put notice shall never exceed the Put Option Limit, which is an amount equal to 10% of all fundings made by Builder Finance to us under the senior loans during such 12 month period.

We agreed that until the prior payment of all amounts due to Builder Finance in respect of the senior loan and the transferred rights: (a) all payments by us or Builder Finance from or on behalf of borrowers under or pursuant to the relevant loan documents will be applied *first*, to the payment of any amounts due to Builder Finance in respect of the senior loan and the transferred rights, and *second*, to the payment of any amounts due to us in respect of the subordinated loan; (b) all payments received by us or Builder Finance in connection with the foreclosure upon or other realization on any loan collateral will be applied *first*, to the payment of any amounts due to Builder Finance in respect of the senior loan and the transferred rights, and *second*, to the payment of any amounts due to us in respect of the subordinated loan; and (c) our rights in and to the loan collateral or any security interests granted under Loan Documents will be subordinated to any and all rights of Builder Finance in and to such collateral and interests.

We are generally the servicer of the senior priority interests in the loans sold under the Builder Finance LPSA. Unless otherwise agreed to in writing by the parties, the Builder Finance LPSA will terminate: (a) when the entire indebtedness due under the relevant loan documents for all senior loans held by Builder Finance shall have been paid, and we have paid to Builder Finance all amounts due under the Builder Finance LPSA, and no new amounts become due thereunder within 30 days thereafter; or (b) when all senior loans and subordinate loans and the rights under the Builder Finance LPSA relating thereto are owned and held by one person, firm or corporation for its own account for a period exceeding 30 days .

*Loan Purchase and Sale Agreement with S.K. Funding*

We also entered into a loan purchase and sale agreement (the "S.K. Funding LPSA") with Seven Kings Holdings, Inc. ("7Kings") in April 2015. However, on or about May 7, 2015, 7Kings assigned its right and interest in the S.K. Funding LPSA to S.K. Funding, which is an affiliate of 7Kings. The S.K. Funding LPSA has been amended 13 times as of December 31, 2025, to allow for, among other things, S.K. Funding to purchase numerous loans in amounts greater than that permitted by the original S.K. Funding LPSA. As of December 31, 2025, the book value of loans which serve as collateral under the S.K. Funding LPSA is approximately $9,000,000 and the amount due from us to S.K. Funding under the S.K. Funding LPSA is approximately $6,500,000.

As of December 31, 2025, the weighted average interest rate of loans purchased by S.K. Funding under the S.K. Funding LPSA is approximately 10.0% per annum. We service all of the loans. There is an unlimited right for us to call any loan sold.

***Lines of Credit***

We have nine lines of credit, two of which are from the CEO and chairman of the board, and a business loan agreement. As of December 31, 2025, we have a total balance of approximately $10,498,000 across the lines of credit with remaining availability of approximately $6,072,000.

*Lines of Credit Extended by Mr. Wallach and His Affiliates*

We have two lines of credit from Daniel M. Wallach (our CEO and chairman of the board of managers) and his affiliates. The first line of credit has a maximum principal borrowing amount of $1,250,000 and is payable to Mr. Wallach and his wife, Joyce S. Wallach, as tenants by the entirety (the "Wallach LOC"). The second line of credit has a maximum principal borrowing amount of $250,000 and is payable to the 2007 Daniel M. Wallach Legacy Trust (the "Wallach Trust LOC," and together with the Wallach LOC, the "Wallach Affiliate LOCs"). The Notes are subordinated in right of payment to all secured debt, including these Wallach Affiliate LOCs. Pursuant to the promissory note for each Wallach Affiliate LOC, the lenders have the option of funding any amount up to the face amount of the note, in the lender's sole and absolute discretion. The Wallach Affiliate LOCs are due and payable upon demand by the lender. As of December 31, 2025, there was $26,000 outstanding pursuant to the Wallach LOC, with remaining availability on that line of credit of $1,224,000, and there were no amounts borrowed against the Wallach Trust LOC, with remaining availability on that line of credit of $250,000.

The Wallach Affiliate LOCs are collateralized by a lien against all of our assets. The Notes are subordinated in right of payment to all secured debt, including the Wallach Affiliate LOCs. The interest rate on the Wallach Affiliate LOCs generally equals the prime rate plus 3%. The interest rate on the Wallach Affiliate LOCs may not, however, exceed the maximum rate allowed by applicable law. As of December 31, 2025 and December 31, 2024, the interest rate was 9.75% and 10.50%, respectively, for both the Wallach LOC and the Wallach Trust LOC. We may, at our option, choose to prepay the principal, interest, or other amounts due from us under the Wallach Affiliate LOCs in whole or in part at any time.

The Wallach Affiliate LOCs were approved by Mr. Wallach in his capacity as sole manager prior to the time we had independent managers. The independent managers ratified and approved these transactions subsequent to the formation of the board of managers. In June 2018, we entered into a First Amendment to the Wallach LOC and a First Amendment to the Wallach Trust LOC which modified the interest rates under the Wallach Affiliate LOCs to generally equal the prime rate plus 3%. These amendments were approved by a majority of our independent managers. See "Risk Factors - Risks Related to Conflicts of Interest - Our CEO (who is also on our board of managers) will face conflicts of interest as a result of the secured lines of credit made available to us, which could result in actions that are not in your best interest."

*Line of Credit Extended by William Myrick*

In June 2018, we entered into a line of credit from our former Partner, William Myrick. The Myrick LOC is collateralized by a lien against all of our assets. The Myrick LOC has a maximum principal borrowing amount of $1,000,000 and is payable to Mr. Myrick. As of December 31, 2025, there were no amounts borrowed against the Myrick LOC, and we have no intention of borrowing any amounts under the Myrick LOC following Mr. Myrick's termination in March 2025. The Myrick LOC is evidenced by a promissory note, is payable upon demand of the lender and generally bears an interest rate equal to the prime rate plus 3%.

*Line of Credit Extended by Builder Finance*

 

In connection with the loan purchase and sale agreement with Builder Finance as previously described, in January 2017, we also entered into a line of credit agreement (the "Builder Finance LOC") with Builder Finance. The Builder Finance LOC provides the Company with a maximum principal borrowing amount of $750,000. The Builder Finance LOC is senior in right of payment and contains certain financial covenants. The outstanding balance on the Builder Finance LOC was $0 and $750,000 as of December 31, 2025, and December 31, 2024, respectively. As of December 31, 2025, the Builder Finance LOC has a termination date in January 2027. The Builder Finance LOC bears interest at a fixed annual rate of 10% and requires monthly payments of interest with the principal balance due upon termination.

*Line of Credit Extended by Swanson*

In October 2017, we entered into a line of credit agreement (as amended, the "Swanson LOC Agreement") with Paul Swanson, which was subsequently assigned to Judith Swanson, as trustee of a trust. Pursuant to the Swanson LOC Agreement, the lender provides us with a revolving line of credit (the "Swanson LOC") not to exceed $7,000,000, a portion of which is unsecured (the "Unsecured Swanson LOC"). The Swanson LOC are due March 2027, of which $4,000,000 is due July 2027 and the remaining balance of $2,407,000 is due November 2026. As of December 31, 2025, the Swanson LOC are due March 2026, of which $4,000,000 is due July 2026 and the remaining balance is due November 2026. As of December 31, 2025, the outstanding principal balance of the secured portion was approximately $6,407,000 and the outstanding principal balance of the unsecured portion was approximately $592,000.

The Swanson LOC requires monthly payments of interest only during the term of the Swanson LOC, with the principal balance due upon termination. The unpaid principal amounts advanced on the Swanson LOC bear interest for each day until due at a fixed rate per annum (computed on the basis of a year of 360 days for actual days elapsed) for each day at 9%. We may, at our option, choose to prepay the principal, interest, or other amounts due from us under the Swanson LOC in whole or in part at any time.

We are pledging, and will continue to pledge in the future, certain of our commercial loans as collateral for a portion of the Swanson LOC (the "Swanson Collateral Loans") pursuant to the Collateral Assignment of Notes and Documents dated as of October 23, 2017. The amount outstanding under the Swanson LOC may not exceed 67% of the aggregate amount outstanding on the Swanson Collateral Loans then pledged to secure the Swanson LOC. Our obligation to repay the Swanson LOC is evidenced by a promissory note from us dated October 23, 2017.

The lender may demand the unpaid principal amount under the Swanson LOC, along with interest accrued thereon and all other amounts owing under the Swanson LOC upon an "event of default," as defined in the Swanson LOC Agreement. An "event of default" includes our failing to pay payments within 10 days of when such payment is due, our failing to service the Swanson Collateral Loans in a commercially reasonable manner, or our filing of a petition for bankruptcy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;R. Scott Summers, P.L.L.C., a West Virginia professional limited liability company (the "Swanson LOC Custodian") serves as the custodian to hold the Swanson Collateral Loans for the benefit of the Swanson lender pursuant to the Custodial Agreement dated as of October 23, 2017 between us, the Swanson lender, and the Swanson LOC Custodian. The Swanson LOC Custodian is owned by R. Scott Summers, an investor in our Notes Program, a lender under one of the New LOC Agreements (described below), and the son of Kenneth R. Summers, one of our independent managers. The Swanson LOC Custodian is responsible for certifying to the Swanson lender that it has received the relevant Swanson Collateral Loan assignment documentation from us. We are responsible for paying the Swanson LOC Custodian's monthly fee, which is equal to 1% interest on the amount of the Swanson Collateral Loans outstanding in the Swanson LOC Custodian's custody.

 

*Line of Credit Extended by Shuman*

In July 2017, we entered into a line of credit agreement (the "Shuman LOC Agreement") with a group of lenders, and the Shuman LOC Agreement is now held by Cindy K. Shuman as widow and devisee of Mr. Shuman (collectively, "Shuman"). Pursuant to the Shuman LOC, Shuman provides us with a revolving line of credit (the "Shuman LOC") not to exceed $1,325,000. The Shuman LOC is secured with assignments of certain notes and mortgages and carries a total annual cost of funds to us of 10%. The Shuman line of credit is currently due in July 2026, and will auto-renew each year in July unless notice of termination is provided by either party. As of December 31, 2025, the Shuman LOC had an outstanding principal balance of $125,000.

The Shuman LOC requires monthly payments of interest only during the term of the Shuman LOC, with the principal balance due upon termination. The unpaid principal amounts advanced on the Shuman LOC bear interest for each day until due at a fixed rate per annum (computed on the basis of a year of 360 days for actual days elapsed) for each day at 10%. We may, at our option, choose to prepay the principal, interest, or other amounts due from us under the Shuman LOC in whole or in part at any time.

We are pledging, and will continue to pledge in the future, certain of our commercial loans as collateral for the Shuman LOC (the "Shuman Collateral Loans") pursuant to the Collateral Assignment of Notes and Documents dated as of July 11, 2017. The amount outstanding under the Shuman LOC may not exceed 67% of the aggregate amount outstanding on the Shuman Collateral Loans then pledged to secure the Shuman LOC. Our obligation to repay the Shuman LOC is evidenced by a promissory note from us dated July 11, 2017.

Shuman may demand the unpaid principal amount under the Shuman LOC, along with interest accrued thereon and all other amounts owing under the Shuman LOC upon an "event of default," as defined in the Shuman LOC Agreement. An "event of default" includes our failing to pay payments within 10 days of when such payment is due, our failing to service the Shuman Collateral Loans in a commercially reasonable manner, or our filing of a petition for bankruptcy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;R. Scott Summers, P.L.L.C., a West Virginia professional limited liability company (the "Shuman LOC Custodian") serves as the custodian to hold the Shuman Collateral Loans for the benefit of Shuman pursuant to the Custodial Agreement dated as of July 11, 2017 between us, Shuman, and the Shuman LOC Custodian. The Shuman LOC Custodian is owned by R. Scott Summers, an investor in our Notes Program, a lender under one of the New LOC Agreements (described below), and the son of Kenneth R. Summers, one of our independent managers. The Shuman LOC Custodian is responsible for certifying to Shuman that it has received the relevant Shuman Collateral Loan assignment documentation from us. We are responsible for paying the Shuman LOC Custodian's monthly fee, which is equal to 1% interest on the amount of the Shuman Collateral Loans outstanding in the Shuman LOC Custodian's custody.

*Line of Credit Extended by Jeffrey Eppinger*

In April 2019, we entered into a line of credit agreement (as amended, the "Eppinger LOC") with Jeffrey Eppinger ("Lender"). Pursuant to the Eppinger LOC, as amended, the Lender provides the Company with a revolving line of credit not to exceed $1,500,000. The Eppinger LOC is secured by a security interest in the Company's notes and mortgages and carries a total annual cost of funds to us of 10%. The Eppinger LOC auto-renews each month unless notice of termination is provided by the Company or the Lender. As of December 31, 2025, the outstanding principal balance on the Eppinger LOC was $200,000.

*Line of Credit Extended by R. Scott Summers*

 

In September 2019, we entered into a line of credit with R. Scott Summers (the "Summers LOC"). The Summers LOC provides the Company with a maximum principal borrowing amount of $2,000,000. The Summers LOC is secured with assignments of certain notes and mortgages. As of both December 31, 2025 and December 31, 2024, we had an outstanding balance of $903,000 on the Summers LOC, with availability on that line of credit of $1,097,000. The Summers LOC is evidenced by a promissory note and bears a fixed annual interest rate of 9%. The Summers LOC requires monthly payments of interest only during the term of the Summers LOC, with the principal balance due upon termination.

 

*Line of Credit Extended by Solomon*

 

In October 2020, we entered into a line of credit with the Trustee of the John C Solomon II 2011 Irrevocable Trust (the "Solomon LOC"). The Solomon LOC provides the Company with a maximum principal borrowing amount of $562,500. The Solomon LOC is secured with assignments of certain notes and mortgages. As of both December 31, 2025 and December 31, 2024, we had an outstanding balance of $562,500 on the Solomon LOC, with no additional availability on that line of credit. The Solomon LOC can be terminated upon notice of not less than 30 days. The Solomon LOC is evidenced by a promissory note and bears a fixed annual interest rate of 9.5%.

*United Lines of Credit*

In January 2025, we entered into a revolving line of credit with United Bank for $2,275,000, maturing in January 2027. The interest rate on this line of credit is 5.5%. As of December 31, 2025, the amount due on this line of credit was $2,275,000. The line of credit is collateralized by an investment in certificates of deposit totaling $2,275,000 as of December 31, 2025.

In January 2025, we entered into a revolving line of credit with United Bank for $725,000, with an expiration date of January 2040. The interest rate on this line of credit is 7.5%. There were no amounts outstanding pursuant to this revolving line of credit as of December 31, 2025. The Company's office in Jacksonville, FL, is used as collateral for this line of credit.

*Liberty Savings Bank Line of Credit*

 

In December 2025, we entered into a revolving line of credit with Liberty Savings Bank for $5,000,000 and can be terminated on 90 days written notice. The interest rate on this line of credit varies and is indexed to the current Prime rate plus 0.5%. As of December 31, 2025, there were no amounts borrowed under this line of credit. The line of credit will be secured with assignments of certain notes and mortgages when drawn upon.

**Competition**

Historically, our industry has been highly competitive. We compete for opportunities with numerous public and private investment vehicles, including financial institutions, specialty finance companies, mortgage banks, pension funds, opportunity funds, hedge funds, REITs, and other institutional investors, as well as individuals. Many competitors are significantly larger than us, have well-established operating histories and may have greater access to capital, resources and other advantages over us. These competitors may be willing to accept lower returns on their investments or to modify underwriting standards and, as a result, our origination volume and profit margins could be adversely affected.

We believe that this is a good time to extend commercial loans to builders in the residential real estate market because this market appears underserved. We expect our loans to be different than other lenders in the markets in which we are active. Typically, the differences are:

● our loans may have a higher fee;

● our loans typically require a small deposit which is refundable, versus a large upfront payment for the lot which is not refundable; and

● some of our loans may have lower costs as a result of not requiring title insurance.

**Human Capital Resources**

As of December 31, 2025, we have retained 25 employees (four of which are lending representatives) including our CEO. In his previous experience, our CEO had a nationwide staff of 20 lenders in the field. The development, attraction, and retention of employees is a strong focus for the Company, as it is fostering and maintaining a strong, healthy corporate culture. Additionally, as described in more detail the "Executive Compensation - Executive Officer Compensation" section of this prospectus, we have an executive compensation program designed to attract, retain, and motivate highly talented executives and to align each executive's incentives with our short-term and long-term objectives, while maintaining a healthy and stable financial position.

**Regulatory Matters**

***Financial Regulation***

Our operations are not subject to the stringent regulatory requirements imposed upon the operations of commercial banks, savings banks, and thrift institutions. We are not subject to periodic compliance examinations by federal or state banking regulators. Further, our Notes are not certificates of deposit or similar obligations or guaranteed by any depository institution and are not insured by the FDIC or any governmental or private insurance fund, or any other entity.

***The Investment Company Act of 1940***

An investment company is defined under the Investment Company Act of 1940, as amended (the "Investment Company Act"), to include any issuer engaged primarily in the business of investing, reinvesting, or trading in securities. Absent an exemption, investment companies are required to register as such with the SEC and to comply with various governance and operational requirements. If we were considered an "investment company" within the meaning of the Investment Company Act, we would be subject to numerous requirements and restrictions relating to our structure and operation. If we were required to register as an investment company under the Investment Company Act and to comply with these requirements and restrictions, we may have to make significant changes in our structure and operations to comply with exemption from registration, which could adversely affect our business. Such changes may include, for example, limiting the range of assets in which we may invest. We intend to conduct our operations so as to fit within an exemption from registration under the Investment Company Act for purchasing or otherwise acquiring mortgages and other liens on and interest in real estate. In order to satisfy the requirements of such exemption, we may need to restrict the scope of our operations.

***Environmental Compliance***

We do not believe that compliance with federal, state, or local laws relating to the protection of the environment will have a material effect on our business in the foreseeable future. However, loans we extend or purchase are secured by real property. In the course of our business, we may own or foreclose and take title to real estate that could be subject to environmental liabilities with respect to these properties. We (or our loan customers) may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation, and clean-up costs incurred by these parties in connection with environmental contamination or may be required to investigate or clean up hazardous or toxic substances or chemical release at a property. The costs associated with the investigation or remediation activities could be substantial. In addition, if we become the owner of or discover that we were formerly the owner of a contaminated site, we may be subject to common law claims by third-parties based on damages and costs resulting from environmental contamination emanating from the property. To date, we have not incurred any significant costs related to environmental compliance and we do not anticipate incurring any significant costs for environmental compliance in the future. Generally, when we are lending on property which is being developed into single family building lots, an environmental assessment is done by the builder for the various governmental agencies. When we lend for new construction on newly developed lots, the lots have generally been reviewed while they were being developed. We also perform our own physical inspection of the lot, which includes assessing potential environmental issues. Before we take possession of a property through foreclosure, we again assess the property for possible environmental concerns, which, if deemed to be a significant risk compared to the value of the property, could cause us to forego foreclosure on the property and to seek other avenues for collection.

**Legal Proceedings**

As of the date of this prospectus, we are not aware that we or our members are a party to any pending or threatened legal proceeding or proceeding by a governmental authority that would have a material adverse effect on our business.

**Reports to Security Holders**

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which require us to file annual, quarterly, and special reports and other information with the SEC. All of these filings with the SEC are available to the public over the Internet at the SEC's website at <u>www.sec.gov</u>. The annual reports we file with the SEC will contain consolidated financial information that has been examined and reported upon, with an opinion expressed by an independent registered public accounting firm. You may access this information online, at our website, at <u>www.shepherdsfinance.com</u>, or by calling us at (302) 752-2688 (30-ASK-ABOUT) or writing us at Shepherd's Finance, LLC, 13241 Bartram Park Blvd., Suite 2401, Jacksonville, Florida 32258 to have copies mailed to you at no cost. However, information contained on our website does not constitute part of this prospectus, and you should rely only on the information contained in or specifically incorporated by reference into this prospectus in deciding whether to invest in the Notes. We do not intend to deliver reports to security holders if such reports are not required pursuant to Section 15(d) of the Exchange Act.

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

Our "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on April 6, 2026, is incorporated herein by reference. This discussion and analysis should be read in conjunction with our financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2025, which are incorporated herein by reference.

**MATERIAL FEDERAL INCOME TAX CONSEQUENCES**

The following discussion summarizes the material federal income tax consequences relating to the ownership and disposition of the Notes. The discussion is based upon the current provisions of the Code, regulations issued under the Code and judicial or ruling authority, all of which are subject to change that may be applied retroactively. The discussion assumes that the Notes are held as capital assets and does not discuss the federal income tax consequences applicable to all categories of investors, some of which may be subject to special rules such as banks, tax-exempt organizations, insurance companies, dealers in securities or currencies, persons that will hold a Note as a position in hedging, straddle, or conversion transactions, or persons that have a functional currency other than the U.S. dollar. If a partnership holds a Note, the tax treatment of a partner will generally depend on the status of the partner and on the activities of the partnership. In addition, this discussion does not address holders other than original purchasers. Certain individuals, trusts, and estates are subject to a Medicare tax of 3.8% on the lesser of (i) "net investment income", or (ii) the excess of modified adjusted gross income over a threshold amount. Net investment income generally includes interest income and net gains from the disposition of Notes, unless such interest payments or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). In addition to the federal income tax consequences described above, you should also consider the state income tax consequences of the acquisition, ownership, and disposition of the Notes. State income tax law may differ substantially from the corresponding federal law, and this discussion does not purport to describe any aspect of the income tax laws of any state. You are urged to consult your own tax advisor to determine the specific federal, state, local, and any other tax consequences applicable to you relating to your ownership and disposition of the Notes.

**Interest Income on the Notes**

Subject to the discussion below applicable to "non-U.S. holders," unless the original issue discount or "OID" rules otherwise require, interest paid on the Notes will generally be taxable to you as ordinary income in the year the interest is paid or accrued in accordance with your method of accounting for tax purposes.

OID is a form of interest that generally exists when a debt instrument's stated redemption price at maturity exceeds its issue price. However, we do not believe that the Notes will give rise to OID since they are generally issued at a price equal to their redemption amount. If OID were to exist, under the OID rules, the excess of total payments on a Note, including interest that is not unconditionally payable at least annually throughout the term of the Note, will be currently deductible by the issuer and currently includible in income by the holder, under the constant yield method. Under the constant yield method, you generally would be required to include in income increasingly greater amounts of OID in successive accrual periods. You should consult with your tax or other professionals regarding the existence and impact, if any, of OID on your investment and taxes. A cash method holder of a Note may be taxed differently than an accrual method holder of a Note.

**Treatment of Dispositions of Notes**

Upon the sale, exchange, redemption, retirement, or other taxable disposition of a Note, you will recognize gain or loss in an amount equal to the difference between the amount realized on the disposition and your adjusted tax basis in the Note. Your adjusted tax basis in a Note generally will equal your original cost for the Note, increased by any accrued but unpaid interest, including OID, you previously included in income with respect to the Note and reduced by any payments you previously received, other than interest that is unconditionally payable at least annually throughout the term of the Note, with respect to the Note. Any gain or loss will be capital gain or loss, except for gain representing accrued interest not previously included in your income. This capital gain or loss will be short-term or long-term capital gain or loss, depending on whether the Note had been held for more than 12 months or for 12 months or less.

**Non-U.S. Holders**

Generally, if you are a nonresident alien individual or a non-U.S. corporation and do not hold the Note in connection with a United States trade or business, interest paid and OID accrued on the Notes will be treated as "portfolio interest" and therefore will be exempt from a 30% United States withholding tax. In that case, you will be entitled to receive interest payments on the Notes free of United States federal income tax provided that you periodically provide a statement on applicable Internal Revenue Service ("IRS") forms certifying under penalty of perjury that you are not a United States person and provide your name and address. In addition, in that case you will not be subject to United States federal income tax and filing requirements on gain from the disposition of a Note unless you are an individual who is present in the United States for 183 days or more during the taxable year in which the disposition takes place and certain other requirements are met. Interest paid and accrued OID paid to a non-U.S. person are not subject to withholding if they are effectively connected with a United States trade or business conducted by that person and we are provided a properly executed IRS Form W-8ECI. They will, however, generally be subject to the regular United States income tax. If you are a non-U.S. corporation, that portion of your earnings and profits that is effectively connected with your U.S. trade or business also may be subject to a "branch profits tax" at a 30% rate, although an applicable income tax treaty may provide for lower rate.

**Reporting and Backup Withholding**

We will report annually to the IRS and to holders of record that are not excepted from the reporting requirements any information that may be required with respect to interest on the Notes.

Under certain circumstances, as a holder of a Note, you may be subject to "backup withholding." Backup withholding may apply to you if you are a United States person and, among other circumstances, you fail to furnish on IRS Form W-9 or a substitute Form W-9 your Social Security number or other taxpayer identification number to us. Backup withholding may apply, under certain circumstances, if you are a non-U.S. person and fail to provide us with the statement necessary to establish an exemption from federal income and withholding tax on interest on the Note. Backup withholding, however, does not apply to payments on a Note made to certain exempt recipients, such as corporations and tax-exempt organizations, and to certain non-U.S. persons. Backup withholding is not an additional tax and may be refunded or credited against your United States federal income tax liability, provided that you furnish certain required information.

This federal tax discussion is included for general information only and may not be applicable depending upon your particular situation. You are urged to consult your own tax advisor with respect to the specific tax consequences to you of the ownership and disposition of the Notes, including the tax consequences under state, local, foreign, and other tax laws and the possible effects of changes in federal or other tax laws.

**Foreign Account Tax Compliance Withholding**

Sections 1471 through 1474 of the Code, commonly known as the Foreign Account Tax Compliance Act ("FATCA"), impose a U.S. withholding tax of a 30% on payments of interest on the Notes and, on or after January 1, 2017, the gross proceeds from a sale or other disposition of the Notes paid to (i) a foreign financial institution (as the beneficial owner or as an intermediary for the beneficial owner), unless such institution enters into an agreement with the U.S. government to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which would include certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners), and (ii) a foreign entity that is not a financial institution (as the beneficial owner or as an intermediary for the beneficial owner), unless such entity provides the withholding agent with a certification identifying the substantial U.S. owners of the entity, which generally includes any U.S. person who directly or indirectly owns more than 10% of the entity. An intergovernmental agreement between the U.S. and the applicable foreign country may modify these requirements. Prospective investors should consult their own tax advisors regarding the implications of FATCA with respect to their purchase, ownership, and disposition of the Notes.

**CERTAIN EMPLOYEE BENEFIT PLAN CONSIDERATIONS**

The following is a summary of certain considerations relating to the ownership, holding, and disposition of the Notes by employee benefit plans, IRAs, or other tax-favored benefit accounts that are subject to ERISA, Section 4975 of the Code, or any other federal, state, local, non-U.S., or other laws, rules, or regulations that are similar to ERISA or such provisions of the Code (collectively, "Similar Laws"), and entities whose underlying assets are considered to include "plan assets" (within the meaning of ERISA) of any such plan or account (each, a "Plan").

**General Fiduciary Matters**

ERISA and the Code impose certain duties on persons who are fiduciaries of a Plan subject to Title I of ERISA or Section 4975 of the Code (an "ERISA Plan") and prohibit certain transactions involving the assets of an ERISA Plan and its fiduciaries or other interested parties. Under ERISA and the Code, any person who exercises any discretionary authority or control over the administration of such an ERISA Plan or the management or disposition of the assets of such an ERISA Plan, or who renders investment advice for a fee or other compensation to such an ERISA Plan, is generally considered to be a fiduciary of the ERISA Plan.

In considering an investment in the Notes by any Plan, a fiduciary should determine whether the investment is in accordance with the documents and instruments governing the Plan and the applicable provisions of ERISA, the Code, or any Similar Law relating to a fiduciary's duties to the Plan including, without limitation, the prudence, diversification, delegation of control, and prohibited transaction provisions of ERISA, the Code, and any other applicable Similar Laws.

**Prohibited Transaction Issues**

Section 406 of ERISA and Section 4975 of the Code prohibit ERISA Plans from engaging in specified transactions involving "plan assets" with persons or entities who are "parties in interest," within the meaning of ERISA, or "disqualified persons," within the meaning of Section 4975 of the Code, unless an exemption is available. A party in interest or disqualified person who engaged in a non-exempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and/or the Code. In addition, the fiduciary of the ERISA Plan that engaged in such a non-exempt prohibited transaction may be subject to penalties and liabilities under ERISA and the Code. The acquisition and/or holding of Notes by an ERISA Plan with respect to which we are considered a party in interest or disqualified person may constitute or result in a direct or indirect prohibited transaction under Section 406 of ERISA and/or Section 4975 of the Code, unless the investment is acquired and is held in accordance with an applicable statutory, class, or individual prohibited transaction exemption. In addition, Section 408(17) of ERISA and Section 4975(d)(20) of the Code provide relief from the prohibited transaction provisions of ERISA and Section 4975 of the Code for certain transactions if neither we nor any of our affiliates (directly or indirectly) have or exercise any discretionary authority or control or render any investment advice for a fee with respect to the assets of any ERISA Plan involved in the acquisition or holding of the Notes and provided further that the ERISA Plan pays no more than adequate consideration in connection with the acquisition and holding of the Notes. There can be no assurance that all of the conditions of any such exemptions will be satisfied.

Because of the foregoing, the Notes should not be purchased or held by any person investing "plan assets" of any Plan, unless such purchase and holding will not constitute a non-exempt prohibited transaction under ERISA and the Code or similar violation of any applicable Similar Laws.

**Representation**

Accordingly, by acceptance of a Note, each purchaser and subsequent transferee will be deemed to have represented and warranted that either (i) no portion of the assets used by such purchaser or transferee to acquire or hold the Notes constitutes assets of any Plan or (ii) the purchase and holding of the Notes by such purchaser or transferee will not constitute a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or any similar violation under any applicable Similar Laws.

The foregoing discussion is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries or other persons considering purchasing the Notes (and holding or disposing the Notes) on behalf of any Plan or otherwise with "plan assets," consult with their counsel regarding the potential applicability of ERISA, Section 4975 of the Code, and any Similar Laws to such transactions and whether an exemption would be applicable to the purchase, holding, and disposition of the Notes.

**MANAGEMENT**

**Executive Officers and Board of Managers**

Included below is certain information about our managers and executive officers. Pursuant to our limited liability company agreement, as amended, our managers are initially appointed to terms of one year, two years, or three years. Following the expiration of these initial terms, our managers are elected to staggered terms. Mr. Wallach was initially elected to a three-year term that expired in March 2016 and his current three-year term expires in March 2028, Mr. Summers was initially elected to a two-year term that expired in March 2014 and his current three-year term expires in March 2026, Mr. Rauscher was initially elected to a three-year term that expired in March 2018 and his current three-year term expires in March 2027, and Mr. Sheldon was initially elected to a one-year term that expired in March 2020 and his current three-year term expires in March 2028.

**Daniel M. Wallach**, age 58, is our CEO and a manager. He has been our CEO since our Company was founded and, prior to the addition of two independent managers in March 2012, he was our sole manager. Mr. Wallach has over 30 years of experience in finance and real estate. Prior to his time with us, most recently, from May 2011 to July 2011, Mr. Wallach was an Executive Vice President for ProBuild Holdings, a building material supplier to homebuilders. Before that, from 1985 to 1989, and 1990 to April 2011, Mr. Wallach held various positions with 84 Lumber Company and affiliates, including Chief Financial Officer and Director. 84 Lumber is a building material supplier to homebuilders and was, at that time, one of our affiliates. At 84 Lumber, Mr. Wallach oversaw the company's financial and accounting function, including all aspects related to financial reporting, debt financing, customer financing, customer credit and management information systems. Mr. Wallach was also intimately involved with the creation of 84 FINANCIAL, L.P., a finance company affiliated with and owned by 84 Lumber, which had investment objectives similar to ours. Mr. Wallach has also held operational and finance positions with a mortgage brokerage firm and a building contractor. He graduated from Washington and Jefferson College in Washington, Pennsylvania with a B.A. in Business Administration.

**Barbara L. Harshman**, age 50, is our Executive Vice President of Operations, a position to which she was appointed in July 2015. She was hired in August 2012 as Vice President of Operations. Prior to joining the Company, from 2005 to 2012, Ms. Harshman worked in various positions in 84 Lumber Company's lending operations, including Vice President of Lending. Ms. Harshman also worked as a credit manager for 84 Lumber during 2004 and 2005, where she managed a portfolio of $35,000,000 of unsecured debt owed by builders. Ms. Harshman graduated from Baylor University with a B.A. in Anthropology.

**Mark Reynolds,** age 51, was appointed Executive Vice President of Sales in April 2021. Mr. Reynolds has over 20 years of experience in the construction finance industry. He was previously our Regional Sales Manager from May 2016 until April 2021 and was also the National Real Estate Owned ("REO") Manager from January 2020 until April 2021. Previously, Mr. Reynolds held various positions with 84 Lumber Company, including REO Specialist, where he worked with counsel to negotiate liens, finish building houses, and relieve as much debt as possible while controlling losses (from 2008 through 2014), National Finance Manager, in residential financing (from 2006 through 2008), and Regional Finance Manager, in commercial financing, where he helped finance projects such as hotels, apartments, restaurants, and casinos (from 2000 through 2004). Mr. Reynolds attended Indiana University at South Bend, where he studied Business Management.

**Catherine Leslie**, age 47, is our Chief Financial Officer, to which she was first appointed in January 2018. Ms. Leslie was most recently re-appointed Chief Financial Officer as of March 2026. Previously, Ms. Leslie served as Chief Financial Officer from April 2021 to June 2025, as Acting Chief Financial Officer from July 2019 to April 2021 and as Chief Financial Officer from January 2018 to May 2019 and continued to serve as our employee since May 2019. Ms. Leslie previously served as our Controller from November 2017 until her initial appointment as Chief Financial Officer. Prior to joining the Company, Ms. Leslie was the Corporate Controller for Lucas Group from November 2017 to June 2018, Division Controller for Pulte Group from July 2014 through November 2017 and Director of Financial Reporting for DS Services Holdings, Inc. from November 2013 to April 2014. Ms. Leslie spent a majority of her career with Simmons Bedding Company as Manager of Financial Reporting from 2006 to 2013. Ms. Leslie started her accounting career with Pricewaterhouse Coopers with an internship in 1999 and an associate in 2001. Ms. Leslie received her Bachelor of Business of Administration from the Terry College of Business School at the University of Georgia in 2000, and her Master of Accounting from Kennesaw State University's Cole's College of Business in 2001.

**Kenneth R. Summers**, age 80, is one of our independent managers, a position to which he was elected in March 2012. Mr. Summers retired from United Bank, Inc. of Morgantown, West Virginia in December 2019. Prior to retirement, he had been an Executive Vice President for United Bank since 2001. In that role he was responsible for the expansion and recognition of the bank's franchise in north central West Virginia. Mr. Summers has over 30 years of experience as a community bank executive. He graduated from the University of Charleston with a B.S. in Accounting and Management.

**Eric A. Rauscher**, age 60, is one of our independent managers, a position to which he was elected in March 2015. Mr. Rauscher is a licensed insurance sales person and has worked in that industry since 1999. Prior to that, he spent over ten years as a field sales engineer. He graduated from Case Western Reserve University with a B.S. in Electrical Engineering and Applied Physics, with a minor in Economics.

**Gregory L. Sheldon**, age 67, is one of our independent managers since March 2019. Mr. Sheldon brings 45 years of business experience building global corporations and integrating acquisitions across finance, supply chain, manufacturing, and the corporate functions. His previous roles include the Interim CIO for TherapeuticsMD, an innovative pharmaceutical company exclusively committed to advancing women's health, from March 2021 to May 2022, Global Chief Information Officer for Mylan, Inc., from October 2008 to March 2013, the CIO for Duquesne Light Company from August 2013 to March 2015, and, from October 2018 until December 2019, as the Interim CIO for MiMedx Group, Inc. Since July 2014, Mr. Sheldon has been an owner of two companies which invest in land acquisition, development, and the construction of residential homes: White Column Investments, LLC, where he is the President and Managing Member, and Sheldon Investments, LLC. Since 2017, he has served as a non-compensated advisor to Mark Hoskins, who owns Benjamin Marcus Homes, LLC and Investor's Mark Acquisitions, LLC, which are companies that design, develop, and build single family homes, and which are also two of our customers. Mr. Sheldon has been the owner of Greg Sheldon and Associates, LLC, a consultant, and strategic advisor to clients in the life sciences, consumer products, technology, and manufacturing industries since April 2015. Mr. Sheldon has held multiple leadership positions with leading, global companies including Kraft General Foods, Georgia-Pacific, and Pfizer Inc., and the start-up of The Georgia Lottery. He graduated from Georgia State University with a Master of Science in Management and from Georgia Institute of Technology with a Bachelor of Science in Industrial Management.

**Committees of the Board of Managers**

The board of managers has formed the six committees described below. Each of the committees, with the exception of the loan policy committee , operates pursuant to a written charter adopted by the committee or our board of managers. Each charter sets forth the committee's specific functions and responsibilities.

***Audit Committee***

Our board of managers has established an audit committee, which consists of Messrs. Summers, Rauscher, and Sheldon, our independent managers. Mr. Summers is the Chairman of the audit committee. The purpose of the audit committee is to assist the board of managers in fulfilling its oversight responsibilities relating to:

● the integrity of our financial statements and other financial information to be provided to the members of the Company and others;

● the Company's compliance with legal and regulatory requirements;

● the system of internal controls which management of the Company has established;

● the qualifications and independence of the Company's independent auditor;

● the performance of the Company's internal audit function and independent auditors; and

● the Company's audit and financial reporting processes.

***Nominating and Corporate Governance Committee***

Our board of managers has established a nominating and corporate governance committee, which consists of Messrs. Rauscher, Summers, and Sheldon, our independent managers. Mr. Sheldon is the Chairman of the nominating and corporate governance committee. The primary responsibilities of the nominating and corporate governance committee include:

● identifying individuals qualified to serve on the board of managers, consistent with criteria approved by the board in accordance with the Company's limited liability company agreement;

● developing and recommending to the board of managers a set of corporate governance policies and principles to be applicable to the Company;

● overseeing an annual evaluation of the board of managers and each of its committees; and

● considering and acting upon any conflicts of interest-related matter as required by the Company's limited liability company agreement or otherwise permitted by the Delaware Limited Liability Company Act where the exercise of independent judgment by any of the Company's managers (who is not an independent manager) could reasonably be compromised, including approval of any transaction involving the Company's affiliates.

***Compensation Committee***

Our board of managers has established a compensation committee, which consists of Messrs. Rauscher, Summers, and Sheldon, our independent managers. Mr. Rauscher is the Chairman of the compensation committee. The compensation committee reviews and approves annually the corporate goals and objectives applicable to the compensation of our officer, evaluates at least annually the officer's performance in light of those goals and objectives, and determines and approves the officer's compensation level based on these evaluations, subject to the approval of our members holding at least 60% of the votes eligible to be cast by the then-outstanding voting units.

***Loan Policy Committee***

Our board of managers has established a loan policy committee, which consists of Messrs. Wallach and Summers. Mr. Wallach is the Chairman of the loan policy committee. The loan policy committee sets standards and procedures for the review and approval of loans made by the Company, and approves significant loans and loans which differ from the standards and procedures it has established.

***Technology Committee***

Our board of managers has established a technology committee, which consists of Messrs. Sheldon, Wallach, and Rauscher. Mr. Sheldon is the Chairman of the technology committee. The primary purpose of the technology committee is to assist the board of managers in evaluating and overseeing technology matters for the Company.

***Strategic Planning Committee***

Our board of managers has established a strategic planning, which consists of Messrs. Sheldon, Wallach, and Summers. Mr. Sheldon is the Chairman of the technology committee. The primary purpose of the technology committee is to assist the board of managers in evaluating and establishing the long-term goals and the analysis of future business development opportunities for the Company.

**Limited Liability and Indemnification of Directors, Officers, Employees, and Other Agents**

No manager or officer shall be liable to us or any other manager or officer for any loss, damage or claim incurred by reason of any action taken or omitted to be taken by such person in good faith and with the belief that such action or omission is in, or not opposed to, our best interest, so long as such action or omission does not constitute fraud, gross negligence or willful misconduct by such person.

To the fullest extent permitted by Delaware law, the Company shall indemnify, hold harmless, defend, pay and reimburse each of its managers and its officers against any and all losses, claims, damages, judgments, fines or liabilities, including reasonable legal fees or other expenses incurred in investigating or defending against such losses, claims, damages, judgments, fines or liabilities, and any amounts expended in settlement of any claims to which such person may become subject by reason of:

● Any act or omission or alleged act or omission performed or omitted to be performed on our behalf, or on behalf of any of our members or any direct or indirect subsidiary of the foregoing in connection with our business; or

● The fact that such person is or was acting in connection with our business as our partner, member, stockholder, controlling affiliate, manager, director, officer, employee or agent, any our members, or any of our and any of our members' respective controlling affiliates, or that such person is or was serving at our request as a partner, member, manager, director, officer, employee or agent of any person including us or any subsidiary of us;

provided, that (x) such person acted in good faith and in a manner believed by such person to be in, or not opposed to, our best interests and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful, and (y) such person's conduct did not constitute fraud, gross negligence or willful misconduct, in either case as determined by a final, nonappealable order of a court of competent jurisdiction. In connection with the foregoing, the termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith or, with respect to any criminal proceeding, had reasonable cause to believe that such person's conduct was unlawful, or that the person's conduct constituted fraud, gross negligence or willful misconduct.

We shall promptly reimburse (and/or advance to the extent reasonably required) each of the managers and officers for reasonable legal or other expenses (as incurred) of such person in connection with investigating, preparing to defend or defending any claim, lawsuit or other proceeding relating to any losses for which such person may be indemnified; provided, that if it is finally judicially determined that such person is not entitled to the indemnification, then such person shall promptly reimburse us for any reimbursed or advanced expenses.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the "Securities Act"), may be permitted pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

We maintain liability insurance, which insures against liabilities that the managers or our officer may incur in such capacities.

**EXECUTIVE COMPENSATION**

**Executive Officer Compensation**

We currently compensate our executive officers for services rendered to us. This discussion describes our compensation philosophy and policies.

***Objectives of Executive Officer Compensation Program***

The objectives of our executive compensation program are to attract, retain, and motivate highly talented executives and to align each executive's incentives with our short-term and long-term objectives, while maintaining a healthy and stable financial position. Specifically, our executive compensation program is designed to accomplish the following goals and objectives:

● maintain a compensation program that is equitable in our marketplace;

● provide opportunities that integrate pay with the short-term and long-term performance goals;

● encourage and reward achievement of strategic objectives, while properly balancing a controlled risk-taking behavior; and

● maintain an appropriate balance between base salary and short-term and long-term incentive opportunity.

***Determining Executive Officer Compensation***

The compensation committee of our board of managers is responsible for determining all aspects of our executive compensation program. The determination and assessment of executive compensation are primarily driven by the following three factors: (1) market data based on the compensation levels, programs and practices of other comparable companies for comparable positions, (2) our financial performance, and (3) executive officer performance. We believe these three factors provide a reasonably measurable assessment of executive performance in light of building value and creating a healthy financial position for us. We rely upon the judgment of the members of the compensation committee and not on rigid formulas or short-term changes in business performance in determining the amount and mix of compensation elements and whether each element provides the appropriate incentive and reward for performance that sustains and enhances our long-term growth.

***Executive Officer Compensation Components***

*Base Salary*

We provide each of our paid executive officers with a base salary to compensate such officer for services rendered throughout the year. Salaries are established annually based on the individual's position, experience, performance, past and potential contribution to us, and level of responsibility, as well as our overall financial performance. No specific weighting is applied to any one factor considered, and the independent managers use their judgment and expertise in determining appropriate salaries within the parameters of the compensation philosophy.

*Bonus*

We pay each of our executive officers, with the exception of our VP of Sales, a team bonus mostly based on our overall profitability, which rewarded each of them $1,200 in both 2025 and 2024. In addition, we rewarded an annual bonus of $1,800 for both 2025 and 2024, which is extended to compensate vacation expenses. Finally, each executive officer is eligible for a portion of net income earned, or profit share.

We pay our EVP of Sales a monthly bonus based on a percentage of all new sales and construction loan payoffs.

*Membership Interests*

As the beneficial owner of 91.8% (as of December 31, 2025) of our outstanding common membership interests, Mr. Wallach's interests are closely aligned with our success. Our EVP of Operations owned 2.4% and both our EVP of Sales and CFO owned 1.2% of our outstanding common membership interests as of December 31, 2025.

On October 1, 2023, we entered into restricted unit agreements with Mark Reynolds, our EVP of Sales, and Catherine Leslie, our CFO, pursuant to which we issued 200 restricted common units to each of Mark Reynolds and Catherine Leslie. Vesting of the restricted common units commences from the grant date and occurs thereafter on the first day of each subsequent calendar month subject to our satisfying monthly earnings goals, measured two months in arrears in accordance with the vesting schedule.

As we hire additional executive officers, we may use membership interests in some fashion as part of their compensation.

*Summary Compensation Table*

The following table provides a summary of the compensation received by our named executive officers for the last two completed fiscal years:

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name and Position** | **Year** | **Salary** | **Bonus<sup>(1)</sup>** | **Stock Awards** | **Option Awards** | **Non-Equity Incentive Plan Compensation** | **Non-Qualified Deferred Compensation Earnings** | **All Other Compensation<sup>(2)</sup>** | **Total** |
| Mr. Wallach | 2025 | $77940 | $1200 |  | – |  | – | 12298 | $99150 |
|  | 2024 | $77940 | 2100 |  | – |  | – | 20010 | $100050 |
| Ms. Leslie | 2025 | $129145 | 28587 | 4020 | – |  | – | 22903 | $191994 |
| Mr. Myrick | 2024 | $157782 | 2100 |  | – |  | – | 39971 | $199853 |
| Mr. Reynolds | 2025 | $98600 | 72331 | 4020 | – |  | – | 24954 | $213105 |
|  | 2024 | $98496 | 64471 | 10350 | – |  | – | 38154 | $211471 |

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<sup>(1)</sup> Amounts in the Bonus column represent amounts earned in the period.

<sup>(2)</sup> Qualified Retirement Plan Contributions are shown here when funds are earned.

*Salary for 2026* 

Mr. Wallach will receive a base salary of $77,940, Ms. Leslie will receive a base salary of $185,000, and Mr. Reynolds will receive a base salary of $90,500. In addition, Mr. Reynolds will receive a monthly bonus based on a percentage of sales and construction loan payoffs.

**Board of Managers Compensation**

The following table provides a summary of the compensation received by our managers for the year ended December 31, 2025:

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name** | **Fees Earned or Paid in Cash** | **Stock Awards** | **Option** <br> **Awards**  | **Non-Equity Incentive Plan Compensation** | **Change in Pension Value and Nonqualified Deferred Compensation** | **All Other Compensation** | **Total** |
| Daniel M. Wallach | $– | $– $|  | $– $|  | $– $|  |
| Kenneth R. Summers | 36000 | – |  | – |  | – | 36000 |
| Eric A. Rauscher | 36000 | – |  | – |  | – | 36000 |
| Gregory L. Sheldon | 36000 | – |  | – |  | – | 36000 |

---

We paid each of the independent managers a retainer of $28,000 during both 2025 and 2024. Our independent managers also receive fees of $3,000 for the first day and $1,200 for each additional day for meetings of the board of managers and committees attended in person, all or a portion of which may be allocated as reimbursement of expenses incurred in connection with attendance at meetings.

The independent managers do not receive separate reimbursement of out-of-pocket expenses incurred in connection with attendance at meetings. Mr. Wallach receives no compensation for his services as a manager.

**Policies and Practices For Granting Certain Equity Awards**

We do not schedule equity award grants in anticipation of the release of material nonpublic information, nor do we time the release of material nonpublic information based on equity grant dates.

**PRINCIPAL SECURITY HOLDERS**

The following table sets forth the ownership of certain of our outstanding membership interests as of December 31, 2025:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Title of Class** | **Name and Address of Owner<sup>(1)</sup>** | **Number of Units** | **Percent of Class** | **Dollar Value** | **Percentage of Total Equity** |
| Class A Common Units | Daniel M. Wallach and Joyce S. Wallach | 161.80 | 0.95% | $13498.98 | 0.16% |
| Class A Common Units | 2007 Daniel M. Wallach Legacy Trust | 15469.20 | 90.85% | 1290564.11 | 15.72% |
| Class A Common Units | Barbara Harshman | 400.00 | 2.35% | 33371.19 | 0.41% |
| Class A Common Units | Kenneth R. Summers | 200.00 | 1.17% | 16685.58 | 0.20% |
| Class A Common Units | Eric A. Rauscher | 200.00 | 1.17% | 16685.58 | 0.20% |
| Class A Common Units | Gregory Sheldon | 200.00 | 1.17% | 16685.58 | 0.20% |
| Class A Common Units | Catherine Leslie | 200.00 | 1.17% | 15682.81 | 0.19% |
| Class A Common Units | Mark Reynolds | 200.00 | 1.17% | 15682.81 | 0.19% |
| Repurchase of Class A Common Units |  |  |  | (143713.85) | (1.75)% |
| State Taxes Class A Common Units |  | – | – | (105819.73) | (1.28)% |
| Subtotal of Common Voting Equity |  | 17031.00 | 100.00% | $1169323.06 | 14.24% |
| Series C Preferred Units | Daniel M. Wallach and Joyce S. Wallach | 1255.27 | 17.83% | 1255269.32 | 15.29% |
| Series C Preferred Units | Gregory L. Sheldon and Madeline M. Sheldon | 1122.12 | 15.94% | 1122124.94 | 13.67% |
| Series C Preferred Units | Other Holders of Series C Preferred Units | 4664.24 | 66.23% | $4664235.76 | 56.80% |
| Subtotal of Series C Preferred Units |  | 7041.63 | 100.00% | $7041630.02 | 85.76% |
| Total Members' Capital and Preferred Equity |  | 24072.63 |  | $8210953.08 | 100.00% |

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<sup>(1)</sup> The addresses of each Class A Common Unit owners named above are:

● Daniel and Joyce Wallach, the 2007 Daniel M. Wallach Legacy Trust, Barbara Harshman, Catherine Leslie and Mark Reynolds are 13241 Bartram Park Blvd., Suite 2401, Jacksonville, FL 32258;

● Kenneth R. Summers is PO Box 995, Morgantown, WV 26507;

● Eric A. Rauscher is 2706 South Park Rd, Bethel Park, PA 15102; and

● Gregory L. Sheldon is 104 Windsor Ct, Venetia, PA 15367.

The addresses of each Series C Preferred Unit owners named above are:

● Daniel and Joyce Wallach, and the 2007 Daniel M. Wallach Legacy is 13241 Bartram Park Blvd, Suite 2401, Jacksonville, FL 32258; and

● Gregory L. Sheldon and Madeline M. Sheldon is 104 Windsor Ct, Venetia, PA 15367.

On March 31, 2025, the Company terminated its relationship with a partner who owned 2,969 units of Class A common equity. Effective April 1, 2025, the Company executed a unit exchange agreement with the respective partner where all 2,969 units of common equity with a carrying value of $287,000 were exchanged for 2,329.533 units of Series C preferred equity with a fixed value of $2,329,533. The difference between the carrying value of the Class A common units and the fixed value of the Series C preferred units of $2,042,443 is reflected as a discount on preferred equity.

On May 30, 2025, the Company redeemed 251.10821 of the Series C preferred equity beneficially owned by the Company's CEO and his wife, at a redemption price of $251,108.

**CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**

**Transactions with Affiliates**

***Lines of Credit Extended by Mr. Wallach and His Affiliates***

As previously described, on December 30, 2011, we obtained two demand loans from Daniel M. Wallach (our CEO who is also on our board of managers) and affiliates of Mr. Wallach to finance our operations. These demand loans are collateralized by a lien against all of our assets and are senior in right of payment to the Notes. As of December 31, 2025, Mr. Wallach is also the beneficial owner of 91.8% of our outstanding common membership interests.

The first loan has a maximum principal borrowing amount of $1,250,000 and is payable to Daniel M. Wallach (our CEO and chairman of the board of managers) and Joyce S. Wallach (Mr. Wallach's wife), as tenants by the entirety (the "Wallach LOC"). The second loan has a maximum principal borrowing amount of $250,000 and is payable to the 2007 Daniel M. Wallach Legacy Trust (the "Wallach Trust LOC," and together with the Wallach LOC, the "Wallach Affiliate LOCs").

The interest rate on the Wallach Affiliate LOCs generally equals the prime rate plus 3% and were 9.75% as of December 31, 2025. As of December 31, 2025 and December 31, 2024, there were no amounts borrowed against the Wallach Trust LOC. As of December 31, 2025 and December 31, 2024, the amount outstanding pursuant to the Wallach LOC was $26,000 and $743,000, respectively. Each of the Wallach Affiliate LOCs is evidenced by a promissory note, is payable upon demand of the lender and generally bears an interest rate equal to the prime rate plus three percent. Pursuant to each promissory note, the lender has the option of funding any amount up to the face amount of the note, in the lender's sole and absolute discretion.

The original entries into the Wallach Affiliate LOCs were approved by Mr. Wallach in his capacity as sole manager prior to the time we had independent managers. The independent managers ratified and approved these transactions subsequent to the formation of the board of managers. In June 2018, we entered into a First Amendment to the Wallach LOC and a First Amendment to the Trust LOC (the "Wallach Affiliate LOCs First Amendments") which modified the interest rates under the Wallach Affiliate LOCs to generally equal the prime rate plus three percent. The Wallach Affiliate LOCs First Amendments were approved by a majority of our independent managers. See "Risk Factors - Risks Related to Conflicts of Interest - Our CEO (who is also on our board of managers) will face conflicts of interest as a result of the secured lines of credit made available to us, which could result in actions that are not in your best interest."

***Line of Credit Extended by Mr. Myrick***

In June 2018, we obtained into a line of credit from our former Partner, William Myrick, to finance our operations (the "Myrick LOC"). The Myrick LOC is collateralized by a lien against all of our assets.

The Myrick LOC has a maximum principal borrowing amount of $1,000,000 and is payable to Mr. Myrick. As of December 31, 2025, there were no amounts borrowed against the Myrick LOC, and we have no intention of borrowing any amounts under the Myrick LOC following Mr. Myrick's termination in March 2025. The Myrick LOC is evidenced by a promissory note, is payable upon demand of the lender and generally bears an interest rate equal to the prime rate (defined in the promissory note as the daily rate equal to the "Prime Rate" of interest published in The Wall Street Journal from time to time) plus three percent. Pursuant to the promissory note, Mr. Myrick has the option of funding any amount up to the face amount of the note, in Mr. Myrick's sole and absolute discretion.

The Myrick LOC was approved by a majority of our independent managers as they determined the terms of the Myrick LOC to be in the best interests of the Company and that the transaction is on terms no less favorable to us than could be obtained from an independent third party.

***Line of Credit Extended by Shuman***

As previously described, in July 2017, we entered into a line of credit agreement (the "Shuman LOC Agreement") with Steven K. Shuman, which is now held by Cindy K. Shuman. A son of one of our Managers' is a minor participant in the Shuman LOC.

Pursuant to the Shuman LOC Agreement, Shuman provides us with a revolving line of credit (the "Shuman LOC") with a maximum principal borrowing amount of $1,325,000. As of December 31, 2025 and December 31, 2024, the outstanding amount pursuant to the Shuman LOC was $125,000 and $125,000. Interest expense was $13,000 for each of the year ended December 31, 2025 and the year ended December 31, 2024.

***Line of Credit Extended by R. Scott Summers***

As previously described, in September 2019, we obtained into a line of credit (the "Summers LOC") from R. Scott Summers. R. Scott Summers is an investor in our Notes Program and is the son of Kenneth R. Summers, one of our independent managers. The Summers LOC is secured with assignments of certain notes and mortgages.

The Summers LOC has a maximum principal borrowing amount of $2,000,000 and is payable to R. Scott Summers. As of both December 31, 2025 and December 31, 2024, we had an outstanding balance of $903,000 on the Summers LOC, with availability on that line of credit of $1,097,000. The Summers LOC is evidenced by a promissory note and bears a fixed annual interest rate of 9%. The Summers LOC requires monthly payments of interest only during the term of the Summers LOC, with the principal balance due upon termination.

The Summers LOC was approved by a majority of our independent managers not interested in the transaction as they determined the terms of the Summers LOC to be in the best interests of the Company and that the transaction is on terms no less favorable to us than could be obtained from an independent third party.

***Line of Credit Extended by Solomon***

 ****

As previously described, in October 2020, we entered into a line of credit agreement (the "Solomon LOC") with the Trustee of the John C Solomon II 2011 Irrevocable Trust (the "Solomon Trust"). The trustee of the Solomon Trust is Kenneth R. Summers, one of our independent managers. The Solomon LOC is secured with assignments of certain notes and mortgages. Kenneth R. Summers ceased to serve as the trustee of the Solomon Trust effective as of February 2023.

 ****

The Solomon LOC provides the Company with a maximum principal borrowing amount of $562,500. As of both December 31, 2025 and December 31, 2024, we had an outstanding balance of $562,500 on the Solomon LOC, with no additional availability on that line of credit. The Solomon LOC can be terminated upon notice of not less than 30 days. The Solomon LOC is evidenced by a promissory note and bears a fixed annual interest rate of 9.5%.

***Investments Pursuant to Public Notes Offerings***

The Company has accepted new investments under the Notes Program from employees, managers, members, and relatives of managers and members, with $10,673,000 outstanding on December 31, 2025. For the year ended December 31, 2025 and the year ended December 31, 2024, our investments from affiliates, which exceed $120,000 through our Notes Program and other unsecured debt are detailed below:

**(All dollar [$] amounts shown in table in thousands.)**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | | **Amount invested as of** | **Amount invested as of** | | **Interest** <br> **earned during** <br> **the year ended**  | **Interest** <br> **earned during** <br> **the year ended**  |
| | **Relationship to** <br> **Shepherd's** | **December 31,** | **December 31,** | **Weighted** <br> **average** <br> **interest rate** <br> **as of** <br> **December 31,** | **December 31,** | **December 31,** |
| <br>**Investor** | **Finance** | **2025** | **2024** | **2025** | **2025** | **2024** |
| Eric A. Rauscher | Independent Manager | $477 | $477 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.00% | $48 | $48 |
| Joseph Rauscher | Parent of Independent Manager | 126 | 126 | 10.00% | 13 | 13 |
| Daniel and Joyce Wallach | Member | 244 | 304 | 9.93% | 24 | 29 |
| Gregory L. Sheldon | Independent Manager | 1366 | 1035 | 9.35% | 98 | 98 |
| Lamar Sheldon | Parent of Independent Manager |  | 210 | 0.00% | 21 | 21 |
| Kenneth Summers | Independent Manager | 260 | 235 | 8.50% | 22 | 16 |
| Schultz Family Revocable Living Trust | Trustee is Mother-in-Law of Member | 230 | 208 | 9.39% | 22 | 19 |
| Barbara Harshman | Member | 140 | 129 | 9.04% | 12 | 12 |
| Kimberly Bedford | Manager | 314 | 314 | 10.00% | 31 | 31 |
| Thomas Spatola | Former EVP of Lending Operations | 595 | 595 | 10.00% | 58 | 59 |
| Scott and Leah Summers | Son of Independent Manager | 650 | 250 | 8.50% | 55 | 15 |
| Jeffrey Eppinger | 5% Member | 2939 | 2939 | 8.28% | 243 | 309 |
| Bruce and Jean Eppinger | 5% Member | 2852 | 2914 | 9.89% | 282 | 291 |
| Paula Eppinger | Parent of 5% Member | 150 | 150 | 10.00% | 15 | 15 |

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***Common Equity Owned by Independent Managers and Our Executive Officers***

As of December 31, 2025, each of our independent managers owned 1.2% of our Class A common units. Our Executive Vice President of Operations, Barbara L. Harshman, owned 2.4% of our Class A common units as of December 31, 2025. Catherine Leslie, our CFO, and Mark Reynolds, our EVP of Sales, each owned 1.2% of our Class A common units as of December 31, 2025. Our CEO, Mr. Wallach, and his wife and the 2007 Daniel M. Wallach Legacy Trust owned 0.95% and 90.83% of our Class A common units, respectively, as of December 31, 2025.

***Series C Preferred Equity***

On October 13, 2019 and November 11, 2021, we issued one and two Series C Preferred Units, respectively, to Mr. Sheldon for the total purchase price of $100,000 and $200,000, respectively.

Investors in the Series C cumulative preferred units ("Series C Preferred Units") may elect to reinvest their distributions in additional Series C Preferred Units (the "Series C Reinvestment Program"). Pursuant to the Series C Reinvestment Program, during the year ended December 31, 2025, we issued approximately 36.917 Series C Preferred Units to Daniel M. Wallach, our CEO, for distribution proceeds of approximately $36,917 and we issued approximately 33.001 Series C Preferred Units to Gregory L. Sheldon for distribution proceeds of approximately $33,001.

The Series C Preferred Units have a fixed value which is their purchase price and preferred liquidation and distribution rights. Yearly distributions of 12% of the Series C Preferred Units' value (provided profits are available) will be made on a quarterly basis. This rate can increase if any interest rate on our public Notes offering rises above 12%. Dividends can be reinvested monthly into additional Series C Preferred Units. The Series C Preferred Units have the same preferential rights as the Series B Preferred Units as more fully described above.

During March 2023, the Company redeemed 11.78109 of the Series C Preferred Units, held by our CEO and his wife, at a redemption price of $1,178,000, all of which was reinvested in Common Units.

During May 2025, the Company redeemed 251.10821 of the Series C Preferred Units beneficially owned by our CEO and his wife, at a redemption price of $251,108.21.

***Sale of Commercial Loans***

During 2021, William Myrick, the Company's former Partner, purchased two loans from the Company for approximately $141,000 and both loans were serviced by the company as of December 31, 2021. One loan paid off during 2022 and the second loan paid off in 2023.

During 2021, one of our managers purchased one loan from the Company for $405,000. The loan paid off during 2022 and the proceeds were used to purchase another loan for $417,000. The loan was serviced by the company and paid off in 2023.

**Affiliate Transaction Policy**

Our limited liability company agreement provides that any future transaction involving the Company, and an affiliate must be approved by a majority vote of independent managers not otherwise interested in the transaction upon a determination of such independent managers that the transaction is on terms no less favorable to the Company than could be obtained from an independent third party. An approval pursuant to this policy shall be set forth in the minutes of the Company and shall include a description of the transaction approved. The responsibility for reviewing and approving affiliate transactions has been delegated to the nominating and corporate governance committee of our board of managers, which is comprised entirely of independent managers.

Pursuant to our limited liability company agreement, we must provide the independent managers with access, at our expense, to our legal counsel or independent legal counsel, as needed.

**Board of Managers Independence**

We have no securities listed for trading on a national securities exchange or in an automated inter-dealer quotation system of a national securities association, which has requirements that a majority of our board of managers be independent. For the purpose of complying with the disclosure requirements of the Securities and Exchange Commission, we have adopted the definition of independence used by the New York Stock Exchange (NYSE). Under the NYSE's definition of independence, Messrs. Summers, Rauscher, and Sheldon each meet the definition of "independent."

**DESCRIPTION OF NOTES**

**General**

The Notes are issued under an indenture dated as of April [__], 2026 between us and U.S. Bank Trust Company, National Association, as trustee. The indenture will be filed as an exhibit to our registration statement. You can also obtain a copy of the indenture from us. We have summarized material aspects of the indenture below. The summary is not complete, and you should read the indenture for provisions that may be important to you. The capitalized terms used in the summary have the meanings specified in the indenture.

The Notes are our direct obligations but are not secured. The Notes are registered and issued without coupons. We may change the interest rates and the maturities of the Notes as they are offered, provided that no such change shall affect any Note issued prior to the date of change. We may, at our discretion, limit the maximum amount any investor or related investors may maintain in outstanding Notes.

The total aggregate maximum principal amount of the Notes offered under this prospectus is $70,000,000. The maximum investment amount per Note is $1,000,000 or $1,000,000 in the aggregate per investor, but a higher maximum investment amount may be approved by us on a case-by-case basis. The minimum investment amount is $500; however, from time to time, we may change the minimum investment amount that is required.

**Established Features of the Notes**

Interest is calculated based on the actual number of days your Note is outstanding. Interest is calculated and compounded monthly based on a 365-day year (366-day in case of a leap year). Interest is earned daily, and we will pay interest to you monthly or at maturity as you request. If you choose to be paid interest at maturity rather than monthly, the interest will be compounded monthly. If any day on which a payment is due with respect to a Note is not a business day, then you will not be entitled to payment of the amount due until the following business day, and no additional interest will be due as a result of such delay. If you elect to be paid interest monthly, interest on your Note will be paid on the first business day of every month. Your first interest payment date will be the month following the month in which the Note is issued, except that if a new Note is issued within the last 10 days preceding an interest payment date, the first interest payment will be made on the next succeeding interest payment date (i.e., approximately 35-40 days after issuance). No payments under $50 will be made, with any interest payment being accrued to your benefit and earning interest on a monthly compounding basis until the payment due to you is at least $50 on an interest payment date.

Any change to your original request may be made to us by contacting us at (302) 752-2688 (30-ASK-ABOUT) or by using our website <u>www.shepherdsfinance.com</u> to find out what you need to do to change your election. The Notes mature one to four years from the date of issuance, as offered by us and selected by you. Principal and unpaid interest will be paid to you upon maturity.

From time to time, we will establish varying interest rates and maturities for the Notes. The interest rates offered may vary depending on the maturity of the Notes. Upon purchase of a Note, the then-applicable interest rate for the maturity purchased will be fixed for the term of such Note. The Notes will initially be offered with maturities ranging from 12 months to 48 months from the date of issuance. For each maturity, we also establish an interest rate, subject to a range, as follows:

---

| | | |
|:---|:---|:---|
| **Note Maturity** | **Minimum Rate** | **Ceiling** |
| 12-Month | 5% | 10% |
| 24-Month | 6% | 10% |
| 36-Month | 5% | 10% |
| 48-Month | 7% | 11% |

---

The interest rates will vary within the ranges but annual interest rates as of the date of this prospectus are as follows: 6.00% for 12-month Notes; 7.00% for 24-month Notes; 6.50% for 36-month Notes; and 8.00% for 48-month Notes.

Investments by check will be credited and interest will begin to accrue on the first business day after our bank receives a check in proper form if the check is received prior to 9:00 a.m. Eastern time, and on the second business day following receipt if the check is received after 9:00 a.m. Eastern time. Checks are accepted subject to collection at full face value in U.S. funds.

Investments by ACH debit transfer and Wire will be credited and interest will begin to accrue on the first business day after our bank receives funds.

Notes with the current established features are available until they are superseded by new established features. The current established features are applicable to all Notes sold by us during the period the current established features are in effect. We intend to publish this information on our website at <u>www.shepherdsfinance.com</u> or it may be obtained by calling (302) 752-2688 (30-ASK-ABOUT). We will also file with the SEC a Rule 424(b)(3) prospectus supplement setting forth the established features upon any change in the established features.

**Subordination**

Our obligation to repay the principal of and make interest payments on the Notes is subordinate in right of payment to all senior debt. This means that if we are unable to pay our debts when due, all of the senior debt would be paid first, before any payment of principal or interest would be made on the Notes and related party debt which is equal in priority to the Notes.

The term "senior debt" means all of our debt created, incurred, assumed, or guaranteed by us, except debt that by its terms expressly provides that such debt is not senior in right of payment to the Notes. Debt is any indebtedness, contingent or otherwise, in respect of borrowed money, or evidenced by bonds, notes, Notes, or similar instruments or letters of credit and shall include any guarantee of any such indebtedness. Senior debt includes, without limitation, the demand loans from our members and any line of credit we may incur in the future. The Notes are subordinate to all of our senior debt. We may at any time borrow money on a secured or unsecured basis that would have priority over the Notes. The Notes are not senior debt. As of December 31, 2025, the outstanding debt to which the Notes were subordinated was approximately $20,269,000.

**Redemption by Us Prior to Maturity**

We may redeem any Note, in whole or in part, at any time following the first 180 calendar days after the date of issuance of the Note for a redemption price equal to the principal amount plus any unpaid interest thereon to the date of redemption. We will notify Note holders whose Notes are to be redeemed by mail 30 to 60 days prior to the date of redemption. Residents of the Commonwealth of Pennsylvania will be notified by registered mail 30 to 60 days prior to the date of redemption.

**Redemption at the Request of the Holder Prior to Maturity**

At your written request but subject to the subordination provisions and our consent (which may be withheld in our sole discretion), we will redeem any Note at any time following the first 180 calendar days after the date of issuance of the Note for a redemption price equal to the principal amount plus unpaid interest equal to the stated rate of interest minus a penalty in an amount equal to the interest earned over the last 180 days immediately prior to the redemption date. The penalty will be taken first from any interest accrued but not yet paid on the Note, and to the extent such accrued and unpaid interest does not cover the entire penalty amount, the remainder of the penalty amount shall be reduced from the principal amount of the Note.

Additionally, unless the subordination provisions in the indenture restrict our ability to make the redemption, Note holders may require us to redeem all or a portion of their Note, regardless of amount, for a redemption price equal to the principal amount plus an amount equal to the unpaid interest thereon for such Note at the stated rate to the redemption date, upon one business day's advance notice to us, but only if the holder immediately upon redemption invests the entirety of the proceeds from such redemption in another Note or another security then-offered by us, if any; provided, however, (i) a holder may only reinvest in another Note with a maturity that is equal to or greater than the period remaining until the maturity date for the Note to be redeemed and (ii) a holder may only reinvest in a Note with a 36-month maturity if the holder is seeking to redeem a Note with a 36-month maturity. In the foregoing circumstances, the Note holder will not be subject to a holding period requirement or an interest penalty.

**Redemption upon Your Death**

At the written request of the executor of your estate or, if your Note is held jointly with another investor, the surviving joint holder, but subject to the subordination provisions, we will redeem any Note at any time after death for a redemption price equal to the principal amount plus unpaid interest equal to the stated rate of interest, without any penalty. We will seek to honor any such redemption request as soon as reasonably possible based on our cash situation at the time, but generally within two weeks of the request. In order for a Note to be redeemed upon your death, the Note to be redeemed must have been registered in your name since the date of issuance.

**Additional Redemption Options for Notes with a 36-Month Maturity**

Unless the subordination provisions in the indenture restrict our ability to make the redemption, for Notes with a 36-month maturity, the holder of such a Note may require us to redeem all or a portion of such Note for a redemption price equal to the principal amount plus an amount equal to the unpaid interest thereon for such Note at the stated rate to the redemption date, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Upon
 seven days' advance notice to us, the holder may require redemption of up to $10,000 of such Note;

(2) Upon
 30 days' advance notice to us, the holder may require redemption of up to an additional $90,000 of such Note;

(3) Upon
 90 days' advance notice to us, the holder may require redemption of any remaining amount of such Note requested to be redeemed;
 and

(4) Upon
 one business day's advance notice to the Company, the holder may require redemption of all or a portion of the Note, regardless
 of amount, but only if the Holder immediately upon redemption invests the entirety of the proceeds from such redemption in another
 security then-offered by us, including in a Note issued in this offering; provided, however, a holder may only reinvest in another
 Note with a maturity that is equal to or greater than the period remaining until the maturity date for the Note to be redeemed.

For purposes of determining the length of time within which we must redeem all or a portion of a Note as described above, the dollar amount of a given redemption request will be added to any amount or amounts of such Note previously requested to be redeemed that were redeemed by us. The restriction requiring you to wait until 180 days have passed from the issuance of your Note to request a redemption do not apply to redemptions of 36-month Notes as described in this section.

These redemption options are in addition to the redemption options described elsewhere in this prospectus.

**No Restrictions on Additional Debt or Business**

The indenture does not restrict us from issuing additional securities or incurring additional debt (including senior debt or other secured or unsecured obligations) or the manner in which we conduct our business.

**Modification of Indenture**

We, together with the trustee, may modify the indenture at any time with the consent of the holders of not less than a majority in principal amount of the Notes that are then outstanding. However, we and the trustee may not modify the indenture without the consent of each holder affected if the modification:

● reduces the principal or rate of interest, changes the fixed maturity date or time for payment of interest, or waives any payment of interest on any Note;

● reduces the percentage of Note holders whose consent to a waiver or modification is required;

● affects the subordination provisions of the indenture in a manner that adversely affects the rights of any holder; or

● waives any event of default in the payment of principal of, or interest on, any Note.

Without action by you, we and the trustee may amend the indenture or enter into supplemental indentures to clarify any ambiguity, defect, or inconsistency in the indenture, to provide for the assumption of the Notes by any successor to us, to make any change to the indenture that does not adversely affect the legal rights of any Note holders, or to comply with the requirements of the Trust Indenture Act of 1939. We will give written notice to you of any amendment to the indenture.

**Place, Method, and Time of Payment**

We will pay principal and interest on the Notes at our principal executive offices or at such other place as we may designate for that purpose; provided, however, that if we make payments by check, they will be mailed to you at your address appearing in our Note register. Any payment of principal and interest that is due on a non-business day will be payable by us on the next business day immediately following that non-business day.

**Events of Default**

An event of default is defined in the indenture as follows:

● a default in payment of principal or interest on the Notes when due or payable if such default has not been cured for 30 days;

● our becoming subject to events of bankruptcy or insolvency; or

● our failure to comply with any agreements or covenants in or provisions of the Notes or the indenture if such failure is not cured or waived within 60 days after we have received notice of such failure from the trustee or from the holders of at least 25% in principal amount of the outstanding Notes.

If an event of default occurs and is continuing, the trustee or the holders of at least 25% in principal amount of the then-outstanding Notes may declare the principal of and the accrued interest on all outstanding Notes due and payable. If such a declaration is made, we are required to pay the principal of and interest on all outstanding Notes immediately, so long as the senior debt has not matured by lapse of time, acceleration or otherwise. We are required to file annually with the trustee an officers' certificate that certifies the absence of defaults under the terms of the indenture.

The indenture provides that the holders of a majority of the aggregate principal amount of the Notes at the time outstanding may, on behalf of all holders, waive any existing event of default or compliance with any provision of the indenture or the Notes, except a default in payment of principal or interest on the Notes. In addition, the trustee may waive an existing event of default or compliance with any provision of the indenture or Notes, except in payments of principal or interest on the Notes, if the trustee in good faith determines that a waiver or consent is in the best interests of the holders of the Notes.

If an event of default occurs and is continuing, the trustee is required to exercise the rights and duties vested in it by, and subject to, the indenture and to use the same degree of care and skill as a prudent person would exercise under the circumstances in the conduct of his or her affairs. The trustee, however, is under no obligation to perform any duty or exercise any right under the indenture at the request, order, or direction of Note holders unless the trustee receives indemnity satisfactory to it against any loss, liability, or expense. Subject to such provisions for the indemnification of the trustee, the holders of a majority in principal amount of the Notes at the time outstanding have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the trustee. The indenture effectively limits the right of an individual Note holder to institute legal proceedings in the event of our default.

**Satisfaction and Discharge of Indenture**

The indenture may be discharged upon the payment of all Notes outstanding thereunder or upon deposit in trust of funds sufficient for such payment and compliance with the formal procedures set forth in the indenture.

**Reports**

We file annual reports containing audited consolidated financial statements and quarterly reports containing unaudited consolidated financial information for the first three fiscal quarters of each fiscal year with the SEC while the registration statement containing this prospectus is effective and as long thereafter as we are required to do so. Copies of such reports will be sent to any Note holder upon written request.

**Service Charges**

We reserve the right to assess service charges and fees to issue a replacement interest payment check, and, in the event we permit transfer or assignment in our discretion, to transfer or assign a Note.

**Book Entry Record of Your Ownership**

The Notes will be issued in uncertificated form. If you purchase a Note, an account showing the principal amount of your Note will be established in your name on our books. Interest accrued on your Note will also be credited to your account. The interest rate on your Note will be determined on the date that your account is established. In determining your interest rate, we will use the rate in effect at the time you: (1) submitted your subscription agreement online; (2) printed the subscription agreement from our website, provided that the rate was offered by us with that maturity in the seven days prior to our receipt of your subscription agreement; or (3) signed and mailed a subscription agreement, which we mailed to you, provided that the rate was offered by us with that maturity in the seven days prior to our receipt of your subscription agreement. You will not receive any certificate or other instrument evidencing our indebtedness to you. Upon purchase of your Note, we will send you a confirmation, which describes, among other things, the term, interest rate, and principal amount.

**Transfer**

You may not transfer any Note until we (as registrar) have received, among other things, appropriate endorsements and transfer documents and any taxes and fees required by law or permitted by the indenture. We are not required to transfer any Note for a period beginning 15 days before the date notice is mailed of the redemption or the maturity of such Note and ending on the date of redemption of such Note.

**Concerning the Trustee**

The indenture contains limitations on the trustee's right, should it become one of our creditors, to obtain payment of claims in certain cases, or to realize on property with respect to any such claim as security or otherwise. The trustee will be permitted to engage in other transactions; however, if it acquires conflicting interests and if any of the indenture securities are in default, it must eliminate such conflict or resign.

**PLAN OF DISTRIBUTION**

We are offering up to $70,000,000 in aggregate principal amount of the Notes. We offer the Notes directly to the public, without an underwriter or placement agent, and on a continuous basis.

We may market our Notes in many ways, including but not limited to, publishing the established features in a newspaper or through direct mail in states in which we have properly registered the offering or qualified for an exemption from registration. Viewers of print advertising are referred to our website at <u>www.shepherdsfinance.com</u>. The established features are available to investors on our website at <u>www.shepherdsfinance.com</u> or by calling (302) 752-2688 (30-ASK-ABOUT). If, upon review of our website, a potential investor becomes interested in purchasing the Notes, a prospectus will be sent upon request. We may also make oral solicitations in limited circumstances and use other methods of marketing the offering, all in compliance with applicable laws and regulations, including securities laws. Our employees and independent managers have been instructed not to solicit offers to purchase Notes or provide advice regarding the purchase of the Notes.

Our CEO, Daniel M. Wallach , markets the Notes in reliance on Rule 3a4-1 under the Exchange Act, which permits officers, directors, and employees to participate in the sale of the Notes without registering as a broker-dealer under certain circumstances. Mr. Wallach is not subject to a statutory disqualification as such term is defined in Section 3(a)(39) of the Exchange Act. Mr. Wallach serves as an executive officer and primarily performs substantial duties for or on our behalf otherwise than in connection with transactions in securities and will continue to do so at the end of the offering. He is familiar with the selling practices permitted to officers relying on Rule 3a4-1. Mr. Wallach has not been a broker or dealer, or an associated person of a broker or dealer, within the preceding 12 months, and has not nor will not participate in the sale of securities for any issuer more than once every 12 months, other than on behalf of us in reliance on Rule 3a4-1. Mr. Wallach is not compensated in connection with any participation in the offering by the payment of commissions or other remuneration based either directly or indirectly on the transactions in the Notes. Mr. Wallach has been instructed in the limitations of the selling practices allowed under Rule 3a4-1.

The information contained on our website is not part of this prospectus. If you have questions about the suitability of an investment in the Notes for you, you should consult with your own investment, tax, or other professional financial advisor. Prospective investors will be required to complete an application prior to investing in the Notes. We reserve the right to reject any investment.

You will not know at the time of investment whether we will be successful in completing the sale of all of the Notes. We reserve the right to withdraw or cancel the offering at any time. In the event of a withdrawal or cancellation, investments received prior to such withdrawal or cancellation will be irrevocable and will be repaid in accordance with the terms of the Notes.

The Notes are not listed on any securities exchange, and there is no established trading market for the Notes. We do not expect any trading market to develop for the Notes.

**CHARITABLE MATCH PROGRAM**

We offer a charitable match program for interest payments that you elect to give to a qualifying charity. If you choose to participate in the program and donate all or a portion of your interest payments to charity, when we calculate your interest we will deduct the percentage of interest you selected and keep track of that amount separate from your information. After interest is calculated for all Note holders at the beginning of December of each year, all of the money for each charity will be totaled up and sent in one check to each charity. Each check will have the name and address of each contributor, and the amount each contributed. Our matching portion will be included in the total check. We will match your interest payment donation up to 10% of your interest.

The charity must be an Internal Revenue Code Section 501(c)(3) qualifying organization. We reserve the right to either not match your contribution, or not make payments on your behalf to certain charities with missions contrary to our corporate philosophy. Upon your initial subscription, if you select one of these charities, and we notify you that we will not match your donation to such an organization or will not make a contribution on your behalf, you have the option of refund of your investment, donating without our matching contribution (assuming we are just not willing to match your donation to that charity), or investing and not donating to the organization.

**LEGAL MATTERS**

The validity of the Notes being offered by this prospectus has been passed upon for us by Nelson Mullins Riley & Scarborough LLP, Atlanta, Georgia.

**EXPERTS**

The consolidated financial statements of Shepherd's Finance, LLC as of December 31, 2025 and 2024 and for each of the years then ended, incorporated by reference in this Prospectus and in the Registration Statement, have been so incorporated in reliance on the report of BDO USA, P.C. (formerly HORNE LLP), an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

**INCORPORATION OF INFORMATION BY REFERENCE**

The SEC permits us to "incorporate by reference" the information contained in documents we have filed with the SEC, which means that we can disclose important information to you by referring you to those documents rather than by including the information that they contain in this prospectus. Information that is incorporated by reference is considered to be part of this prospectus and you should read it with the same care that you read this prospectus. Any statement contained in a document incorporated by reference herein shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.

This prospectus incorporates by reference the documents listed below except for information "furnished" to the SEC which is not deemed filed and not incorporated in this prospectus, unless expressly stated otherwise as set forth below:

● our
 Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (SEC File No. 333-224557) filed with the SEC on [April 6, 2026](https://www.sec.gov/Archives/edgar/data/1544190/000149315226015327/form10-k.htm) .

Upon written or oral request, we will provide, without charge, to each person, including any beneficial owner, to whom a copy of this prospectus is delivered a copy of any or all of the reports or documents that have been incorporated by reference in this prospectus, excluding exhibits to those documents, unless the exhibits are specifically incorporated by reference into those documents. You may request a copy of any or all of the documents incorporated by reference but not delivered with this prospectus, at no cost, by writing or telephoning us at the following address and number:

Shepherd's Finance, LLC

13241 Bartram Park Blvd., Suite 2401

Jacksonville, Florida 32258

Telephone: (302) 752-2688

**WHERE YOU CAN FIND MORE INFORMATION**

We have filed a registration statement on Form S-1 with the SEC with respect to the Notes offered by this prospectus. This prospectus is a part of that registration statement, as amended, and does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. Certain items are omitted in accordance with the rules and regulations of the SEC. For further information about us and the Notes sold in this offering, refer to the registration statement and the exhibits and schedules filed therewith. Statements contained in this prospectus about the contents of any contract or other document referred to are not necessarily complete and, in each instance, if such contract or document is filed as an exhibit, reference is made to the copy of such contract or other documents filed as an exhibit to the registration statement.

We file annual, quarterly and special reports and other information with the SEC. The registration statement is, and all of these filings with the SEC are, available to the public over the Internet at the SEC's website at <u>www.sec.gov</u>. You can also access documents that will be incorporated by reference into this prospectus at the website we maintain at <u>www.shepherdsfinance.com</u>. There is additional information about us at our website, but unless specifically incorporated by reference herein, the contents of that site are not incorporated by reference in or otherwise a part of this prospectus.

**INDEX TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENT**

---

| | |
|:---|:---|
|  | **Page** |
|  [Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2025](#Ja_001) | F-2 |
|  [Notes to Unaudited Pro Forma Consolidated Financial Statement](#Ja_002) | F-3 |

---

**Shepherd's Finance, LLC**

**Interim Consolidated Pro Forma Statement of Operations - Unaudited**

**For the Year Ended December 31, 2025**

---

| | | | |
|:---|:---|:---|:---|
| *(in thousands of dollars)* | **Shepherd's <br> Finance, LLC** | **Less: <br> Disposition <br> of 339 Justabout<br> Land Co, LLC**  | **Pro Forma** |
| **Net Interest Income** |  |  |  |
| &nbsp;&nbsp;&nbsp; Interest and fee income on loans | $10804 | $1259 (a) | $12063 |
| &nbsp;&nbsp;&nbsp; Interest expense: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest related to secure borrowings | 1473 | 580 (b) | 2053 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest related to unsecured borrowings | 3599 | **–** | 3599 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | 5072 | 580 | 5652 |
| &nbsp;&nbsp;&nbsp; Net interest and fee income | 5732 | 679 | 6411 |
| &nbsp;&nbsp;&nbsp; Less: Provision for credit losses | 1066 | **–** | 1066 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net interest income after provision for credit losses | 4666 | 679 | 5345 |
| **Non-Interest Income** |  |  |  |
| &nbsp;&nbsp;&nbsp; Gain on sale of real estate investments | 276 | (193)(c) | 83 |
| &nbsp;&nbsp;&nbsp; Revenue from the sale of land parcels | 2805 | (2805)(c) | **–** |
| &nbsp;&nbsp;&nbsp; Option fee income | 314 | (314)(c) | **–** |
| &nbsp;&nbsp;&nbsp; Other income | 249 | **–** | 249 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total non-interest income | 3644 | (3312) | 332 |
| &nbsp;&nbsp;&nbsp; Income before non-interest expense | 8310 | (2633) | 5677 |
| **Non-Interest Expense** |  |  |  |
| &nbsp;&nbsp;&nbsp; Selling, general and administrative | 3824 | **–** | 3824 |
| &nbsp;&nbsp;&nbsp; Depreciation and amortization | 63 | **–** | 63 |
| &nbsp;&nbsp;&nbsp; Loss on foreclosed assets | 205 | **–** | 205 |
| &nbsp;&nbsp;&nbsp; Cost of land parcels sold | 2805 | (2805)(c) | **–** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total non-interest expense | 6897 | (2805) | 4092 |
| **Net income** | $1413 | $172 | $1585 |

---

The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.

**Shepherd's Finance, LLC**

**Notes to Unaudited Consolidated Pro Forma Financial Information**

**Note 1 - Introduction**

On August 6, 2025, Shepherd's Finance, LLC (the "Company") entered into a Membership Interest Purchase Agreement (the "Purchase Agreement") with Mark L. Hoskins and Barrett Hoskins ("Buyers"), pursuant to which the Buyers agreed to purchase from the Company and the Company agreed to sell to the Buyers 100% of the membership interests (the "Disposition") in 339 Justabout Land Co., LLC ("339"), a land development company, for a purchase price of $9,122,000 (the "Purchase Price"). 339 was formed by the Buyers in 2022, and purchased a large tract of land in Peters Township, Washington County, Pennsylvania, a suburb of Pittsburgh. The property has since been subdivided into two parcels and 67 lots under development for new home construction. 339 was purchased by the Company on February 15, 2024.

In connection with the Agreement, the Company has entered into an Amended and Restated Revolving Demand Note ("Credit Agreement"), as the lender, for the principal sum of $13,450,000, to Benjamin Marcus Homes, LLC, Investor's Mark Acquisitions, LLC, and 339 Justabout Land Co., LLC (collectively, the "Borrowers"). All of these Borrowers are under common ownership by one or both of the Buyers of 339.

**Basis of Presentation**

The unaudited pro forma consolidated financial information has been prepared in accordance with Article 11 of Regulation S-X and has been compiled from the historical consolidated financial statements of Shepherd's Finance, LLC, prepared in accordance with accounting principles generally accepted in the United States of America, and should be read in conjunction with the Form 10-K for the year ended December 31, 2024 and the Form 10-Q for the six months ended June 30, 2025 for Shepherd's Finance, LLC . The unaudited pro forma consolidated financial statements have been compiled using the significant accounting policies presented in the audited consolidated financial statements of the Company as of and for the year ended December 31, 2024.

This unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of what the Company's results of operations actually would have been had the disposition of 339 Justabout Land Co, LLC ("339") been completed as of June 30, 2025 or December 31, 2024. In addition, this pro forma financial information does not purport to project the future operating results of the combined company.

Management believes that the assumptions used provide a reasonable basis for presenting the significant effects of the Disposition, and that the pro forma adjustments in the unaudited pro forma consolidated financial information give appropriate effect to those assumptions.

Pro forma information is intended to reflect the impact of the Disposition of 339 on the Company's historical financial position and results of operations through adjustments that are directly attributable to the transaction, that are factually supportable and, with respect to the pro forma consolidated statements of operations that are expected to have a continuing impact. The information in the accompanying footnotes provides a description of the pro forma adjustments from each line item in the pro forma consolidated financial statements together with information explaining how the adjustments were derived or calculated.

**Note 2. Pro Forma Adjustments**

The unaudited pro forma consolidated statements of operations for the year ended December 31, 2025, reflect the following adjustments related to the Disposition:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Interest
 and fee income, as determined by the rates and terms within the Third Amendment, are recognized based on the loan balances that would
 have existed throughout the pro forma period.

(b) Interest
 costs that were capitalized related to 339 developments are expensed.

(c) Remove
 gain on sale, revenue, fee income and cost of sales attributable to 339 operations.

![](forms-1_002.jpg)

**$70,000,000 in Fixed Rate Subordinated Notes**

**PROSPECTUS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **, 2026** 

**PART II**

**INFORMATION NOT REQUIRED IN PROSPECTUS**

**Item 13. Other Expenses of Issuance and Distribution.**

The following table sets forth all expenses to be paid by the Registrant, other than estimated underwriting discounts and commissions, in connection with this offering. All amounts shown are estimates except for the SEC registration fee.

---

| | |
|:---|:---|
|  | **Amount to be Paid** |
| SEC Registration Fee | $6124 |
| Legal Fees and Expenses | 550000 |
| Accounting Fees and Expenses | 20000 |
| Printing and Engraving Expenses | 12000 |
| Blue Sky Fees and Expenses | 90000 |
| Trustee Fees | 51500 |
| Total\* | $729624 |

---

\* Assumes the maximum offering amount is raised.

**Item 14. Indemnification of Directors and Officers.**

None of the Registrant's managers nor its officers shall be liable to the Registrant or any other manager or officer for any loss, damage or claim incurred by reason of any action taken or omitted to be taken by such person in good faith and with the belief that such action or omission is in, or not opposed to, the best interest of the Registrant, so long as such action or omission does not constitute fraud, gross negligence or willful misconduct by such person.

To the fullest extent permitted by Delaware law, the Registrant shall indemnify, hold harmless, defend, pay and reimburse each of its managers and its officers against any and all losses, claims, damages, judgments, fines or liabilities, including reasonable legal fees or other expenses incurred in investigating or defending against such losses, claims, damages, judgments, fines or liabilities, and any amounts expended in settlement of any claims to which such person may become subject by reason of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Any act or omission or alleged act or omission performed or omitted to be performed on behalf of the Registrant, any of its members or any direct or indirect subsidiary of the foregoing in connection with the business of the Registrant; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The fact that such person is or was acting in connection with the business of the Registrant as a partner, member, stockholder, controlling affiliate, manager, director, officer, employee or agent of the Registrant, any of its members, or any of their respective controlling affiliates, or that such person is or was serving at the request of the Registrant as a partner, member, manager, director, officer, employee or agent of any person including the Registrant or any subsidiary of the Registrant;

provided, that (x) such person acted in good faith and in a manner believed by such person to be in, or not opposed to, the best interests of the Registrant and, with respect to any criminal proceeding, had no reasonable cause to believe his conduct was unlawful, and (y) such person's conduct did not constitute fraud, gross negligence or willful misconduct, in either case as determined by a final, nonappealable order of a court of competent jurisdiction. In connection with the foregoing, the termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith or, with respect to any criminal proceeding, had reasonable cause to believe that such person's conduct was unlawful, or that the person's conduct constituted fraud, gross negligence or willful misconduct.

The Registrant shall promptly reimburse (and/or advance to the extent reasonably required) each of its managers and its officers for reasonable legal or other expenses (as incurred) of such person in connection with investigating, preparing to defend or defending any claim, lawsuit or other proceeding relating to any losses for which such person may be indemnified; provided, that if it is finally judicially determined that such person is not entitled to the indemnification, then such person shall promptly reimburse the Registrant for any reimbursed or advanced expenses.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the "Securities Act"), may be permitted pursuant to the foregoing provisions, the Registrant has been informed that in the opinion of the Securities and Exchange Commission (the "SEC") such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

The Registrant may maintain liability insurance, which insures against liabilities that its managers or its officers may incur in such capacities.

**Item 15. Recent Sales of Unregistered Securities.**

***Issuance of Class A Common Units***

On October 1, 2023, the Company entered into restricted unit agreements with Mark Reynolds, the Executive Vice President of Sales, and Catherine Leslie, the then-current Chief Financial Officer, pursuant to which the Company issued 200 restricted common units to each of Mark Reynolds and Catherine Leslie. Vesting of the restricted common units commences from the grant date and occur thereafter on the first day of each subsequent calendar month subject to the Company satisfying monthly earnings goals, measured two months in arrears in accordance with the vesting schedule.

On May 30, 2025, the Company redeemed 2,969 Class A Common Units held by the Company's former Partner, William Myrick. These units were redeemed in an exchange for 2,329.533 Series C Preferred Units. The effective date of this exchange was April 1, 2025.

***Issuances of Series C Cumulative Preferred Units***

On March 27, 2024, the Registrant issued 12 of its Series C Preferred Units (1,200 Series C Preferred Units post Unit Split) to one investor, for the total purchase price of $1,200,000.

On April 19, 2024, the Registrant entered into the Amendment No. 4 to the Second Amended and Restated Limited Liability Company Agreement with an effective date of March 31, 2024, to effect a 100 for 1 unit split of the Series C cumulative preferred units (the "Unit Split").

On May 30, 2025, pursuant to a unit exchange agreement by and among the Registrant and William Myrick, the Registrant issued 2329.533 of its Series C Preferred Units to Mr. Myrick in exchange for 2,969.00 of its Class A common units held by Mr. Myrick, with an effective date of April 1, 2025.

On May 30, 2025, the Company redeemed 251.10821 Series C Preferred Units beneficially owned by the Company's CEO and his wife, at a redemption price of $251,000.

Investors in the Series C Preferred Units may elect to reinvest their distributions in additional Series C Preferred Units (the "Series C Reinvestment Program"). Pursuant to the Series C Reinvestment Program, the Registrant has issued approximately 1,337.25 Series C Preferred Units for distribution proceeds of approximately $1,337,252 during the preceding three years.

The proceeds received from the sale of the Series C Preferred Units in these transactions were used for the funding of construction loans. The transactions in Series C Preferred Units described above were effected in private transactions exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities Act. The transactions described above did not involve any public offering, were made without general solicitation or advertising, and the buyer represented to the Registrant that the buyer is an "accredited investor" within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment in the Series C Preferred Units.

***Subordinated Promissory Notes***

Between May 2023 and March 2026, the Company issued a number of subordinated promissory notes in a series of private transactions exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities Act. The issuance date, total principal amount, and interest rate of each subordinated promissory note are presented in the table below:

---

| | | |
|:---|:---|:---|
| **Issuance Date** | **Total Principal Amount** | **Interest Rate\*** |
| May 17, 2023 | $97000 | 10.0% per annum |
| September 17, 2023 | $107953 | 10.0% per annum |
| November 16, 2023 | $119500 | 10.0% per annum |
| December 11, 2023 | $20000 | 10.0% per annum |
| February 1, 2024 | $200000 | 9.0% per annum |
| February 14, 2024 | $1000000 | 10.0% per annum |
| March 2, 2024 | $500000 | 10.0% per annum |
| April 2, 2024 | $2000000 | 11.0% per annum |
| April 21, 2024 | $148978 | 10.0% per annum |
| September 20, 2024 | $1006972 | 11.0% per annum |
| October 6, 2024 | $1072112 | 1.0% per annum |
| October 6, 2024 | $666482 | 20.0% per annum |
| October 22, 2024 | $1042847 | 10.0% per annum |
| October 30, 2024 | $200000 | 8.5% per annum |
| December 8, 2024 | $148978 | 10.0% per annum |
| January 14, 2025 | $15000 | 9.0% per annum |
| February 26, 2025 | $600000 | 9.0% per annum |
| March 18, 2025 | $1000000 | 9.5% per annum |
| April 9, 2025 | $301000 | 9.0% per annum |
| June 15, 2025 | $1142000 | 10.0% per annum |
| July 22, 2025 | $100000 | 8.5% per annum |
| October 28, 2025 | $100000 | 8.5% per annum |
| December 27, 2025 | $248079 | 8.0% per annum |
| January 27, 2026 | $15000 | 8.0% per annum |
| February 13, 2026 | $400000 | 11.0% per annum |
| February 18, 2026 | $300000 | 11.0% per annum |
| February 20, 2026 | $365000 | 11.0% per annum |
| February 25, 2026 | $300000 | 11.0% per annum |
| February 25, 2026 | $400000 | 11.0% per annum |
| March 1, 2026 | $500000 | 11.0% per annum |
| March 3, 2026 | $500000 | 9.75% per annum |
| March 11, 2026 | $152828 | 6.5% per annum |
| March 12, 2026 | $500000 | 11.0% per annum |

---

\* All interest rates are based upon actual days outstanding and a 365/366 day year.

The proceeds received from each of the subordinated promissory notes were used for the funding of construction loans. The transactions described above did not involve any public offering, were made without general solicitation or advertising, and each purchaser represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.

**Item 16. Exhibits and Financial Statement Schedules.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Exhibits*:

---

| | |
|:---|:---|
| **Exhibit No.** | **Name of Exhibit** |
| 3.1 | [Certificate of Conversion, incorporated by reference to Exhibit 3.1 to the Registrant's Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360](https://www.sec.gov/Archives/edgar/data/1544190/000119312512228466/d315903dex31.htm) |
| 3.2 | [Certificate of Formation, incorporated by reference to Exhibit 3.2 to the Registrant's Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360](https://www.sec.gov/Archives/edgar/data/1544190/000119312512228466/d315903dex32.htm) |
| 3.3 | [Second Amended and Restated Limited Liability Company Agreement, incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on November 13, 2017, Commission File No. 333-203707](https://www.sec.gov/Archives/edgar/data/1544190/000149315217012920/ex3-1.htm) |
| 3.4 | [Amendment No. 1 to Second Amended and Restated Limited Liability Company Agreement of the Registrant, incorporated by reference to Exhibit 3.4 to the Registrant's Quarterly Report on Form 10-Q, filed on May 9, 2019, Commission File No. 333-203707](https://www.sec.gov/Archives/edgar/data/1544190/000149315219006650/ex3-4.htm) |
| 3.5 | [Amendment No. 2 to Second Amended and Restated Limited Liability Company Agreement of the Registrant, incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on March 31, 2020, Commission File No. 333-224557](https://www.sec.gov/Archives/edgar/data/1544190/000149315220005511/ex3-1.htm) |
| 3.6 | [Amendment No. 3 to Second Amended and Restated Limited Liability Company Agreement of the Registrant, incorporated by reference to Exhibit 3.6 to the Registrant's Annual Report on Form 10-K for the Year Ended December 31, 2023, filed on March 15, 2024, Commission File No. 333-224557.](https://www.sec.gov/Archives/edgar/data/1544190/000149315224010136/ex3-6.htm) |
| 3.7 | [Amendment No. 4 to Second Amended and Restated Limited Liability Company Agreement of the Registrant, incorporated by reference to Exhibit 3.1 to Registrant's Current Report on Form 8-K, filed on April 22, 2024, Commission File No. 333-224557](https://www.sec.gov/Archives/edgar/data/1544190/000149315224015576/ex3-1.htm) |
| 4.1\* | [Form of Indenture Agreement (including Form of Note)](ex4-1.htm) |
| 5.1\* | [Opinion of Nelson Mullins Riley & Scarborough LLP as to the legality of securities](ex5-1.htm) |
| 10.1 | [Amended, Restated and Consolidated Credit Agreement dated January 27, 2022 by and between Shepherd's Finance, LLC, Benjamin Marcus Homes, L.L.C., Investor's Mark Acquisitions, LLC and Mark L. Hoskins, incorporated by reference to Exhibit 10.1 to the Registrant's Annual Report on Form 10-K for the Year Ended December 31, 2021, filed on March 10, 2022, Commission File No. 333-224557](https://www.sec.gov/Archives/edgar/data/1544190/000149315222006495/ex10-1.htm) |
| 10.2 | [Open-End Mortgage dated December 30, 2011 between Benjamin Marcus Homes, L.L.C. and Shepherd's Finance, LLC, related to the Hamlets of Springdale, incorporated by reference to Exhibit 10.4 to the Registrant's Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360](https://www.sec.gov/Archives/edgar/data/1544190/000119312512228466/d315903dex104.htm) |
| 10.3 | [Open-End Mortgage dated December 30, 2011 between Investor's Mark Acquisitions, LLC and Shepherd's Finance, LLC, related to the Tuscany Subdivision, incorporated by reference to Exhibit 10.5 to the Registrant's Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360](https://www.sec.gov/Archives/edgar/data/1544190/000119312512228466/d315903dex105.htm) |
| 10.4 | [Commercial Guaranty dated December 30, 2011 by Mark L. Hoskins, Investor's Mark Acquisitions, LLC, and Benjamin Marcus Homes, L.L.C. in favor of Shepherd's Finance, LLC, incorporated by reference to Exhibit 10.6 to the Registrant's Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360](https://www.sec.gov/Archives/edgar/data/1544190/000119312512228466/d315903dex106.htm) |
| 10.5 | [Amended and Restated Commercial Pledge Agreement dated December 30, 2011 by Investor's Mark Acquisitions, LLC and Benjamin Marcus Homes, L.L.C. in favor of Shepherd's Finance, LLC, incorporated by reference to Exhibit 10.7 to the Registrant's Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360](https://www.sec.gov/Archives/edgar/data/1544190/000119312512228466/d315903dex107.htm) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.6 [Assignment, Assumption, Amendment, and Restatement of Mortgage dated December 30, 2011 between 84 Financial, L.P., Shepherd's Finance, LLC, and Investor's Mark Acquisitions, LLC, incorporated by reference to Exhibit 10.8 to the Registrant's Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360](https://www.sec.gov/Archives/edgar/data/1544190/000119312512228466/d315903dex108.htm)

10.7 [Promissory Note dated December 30, 2011 from Shepherd's Finance, LLC to 2007 Daniel M. Wallach Legacy Trust, incorporated by reference to Exhibit 10.10 to the Registrant's Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360](https://www.sec.gov/Archives/edgar/data/1544190/000119312512228466/d315903dex1010.htm)

10.8 [Promissory Note dated December 30, 2011 from Shepherd's Finance, LLC to Daniel M. Wallach and Joyce S. Wallach, incorporated by reference to Exhibit 10.11 to the Registrant's Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360](https://www.sec.gov/Archives/edgar/data/1544190/000119312512228466/d315903dex1011.htm)

10.9 [Commercial Pledge Agreement dated December 30, 2011 by Shepherd's Finance, LLC in favor of 2007 Daniel M. Wallach Legacy Trust and Daniel M. Wallach and Joyce S. Wallach, incorporated by reference to Exhibit 10.12 to the Registrant's Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360](https://www.sec.gov/Archives/edgar/data/1544190/000119312512228466/d315903dex1012.htm)

10.10 [Subordination of Mortgage dated September 27, 2013 between Benjamin Marcus Homes, LLC, Shepherd's Finance, LLC, and United Bank, Inc., incorporated by reference to Exhibit 10.16 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2013, filed on February 26, 2014, Commission File No. 333-181360](https://www.sec.gov/Archives/edgar/data/1544190/000101968714000628/shepherds_10k-ex1016.htm)

10.11 [Loan Purchase and Sale Agreement dated as of April 28, 2015 between Shepherd's Finance, LLC and Seven Kings Holdings, Inc., incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on May 5, 2015, Commission File No. 333-181360](https://www.sec.gov/Archives/edgar/data/1544190/000101968715001763/shepherd_ex1001.htm)

10.12 [First Amendment to the Loan Purchase and Sale Agreement by and between Shepherd's Finance, LLC and S.K. Funding, Inc., dated November 19, 2015, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on November 24, 2015, Commission File No. 333-203707](https://www.sec.gov/Archives/edgar/data/1544190/000157587215000197/ex10-1.htm)

10.13 [Second Amendment to the Loan Purchase and Sale Agreement by and between Shepherd's Finance, LLC and S.K. Funding, LLC, dated as of February 19, 2016, incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K, filed on February 25, 2016, Commission File No. 333-203707](https://www.sec.gov/Archives/edgar/data/1544190/000149315216007637/ex10-4.htm)

10.14 [Assignment of Mortgage from Shepherd's Finance, LLC to S.K. Funding, LLC, dated June 30, 2016, incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K, filed on July 7, 2016, Commission File No. 333-203707](https://www.sec.gov/Archives/edgar/data/1544190/000149315216011394/ex10-3.htm)

10.15 [Loan Purchase and Sale Agreement between Shepherd's Finance, LLC and Builder Finance, Inc., dated as of February 6, 2017, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on February 10, 2017, Commission File No. 333-203707](https://www.sec.gov/Archives/edgar/data/1544190/000149315217001308/ex10-1.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.16 [Confirmation Agreement between Shepherd's Finance, LLC, 1st Financial Bank USA, and Builder Finance, Inc., dated as of February 6, 2017, incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed on February 10, 2017, Commission File No. 333-203707](https://www.sec.gov/Archives/edgar/data/1544190/000149315217001308/ex10-2.htm)

10.17 [Sixth Amendment to the Loan Purchase and Sale Agreement between Shepherd's Finance, LLC and S.K. Funding, LLC, dated as of July 24, 2017, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on July 27, 2017, Commission File No. 333-203707](https://www.sec.gov/Archives/edgar/data/1544190/000149315217008220/ex10-1.htm)

10.18 [Line of Credit Agreement between Shepherd's Finance, LLC and Paul Swanson, dated as of October 23, 2017, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on October 27, 2017, Commission File No. 333-203707](https://www.sec.gov/Archives/edgar/data/1544190/000149315217012118/ex10-1.htm)

10.19 [Collateral Assignment of Notes and Documents from Shepherd's Finance, LLC to Paul Swanson, dated as of October 23, 2017, incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K, filed on October 27, 2017, Commission File No. 333-203707](https://www.sec.gov/Archives/edgar/data/1544190/000149315217012118/ex10-4.htm)

10.20 [Master Loan Modification Agreement between Shepherd's Finance, LLC and Paul Swanson effective as of April 11, 2018, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on April 18, 2018, Commission File No. 333-203707](https://www.sec.gov/Archives/edgar/data/1544190/000149315218005399/ex10-1.htm)

10.21 [Secured Promissory Note from Shepherd's Finance, LLC to Paul Swanson dated as of October 23, 2017 and April 12, 2018, incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K, filed on April 18, 2018, Commission File No. 333-203707](https://www.sec.gov/Archives/edgar/data/1544190/000149315218005399/ex10-3.htm)

10.22 [First Amendment to Promissory Note by and among Shepherd's Finance, LLC and Daniel M. Wallach and Joyce S. Wallach, dated June 14, 2018, incorporated by reference to Exhibit 10.7 to the Registrant's Quarterly Report on Form 10-Q for the Quarterly Period Ended June 30, 2018, filed on August 9, 2018, Commission File No. 333-203707](https://www.sec.gov/Archives/edgar/data/1544190/000149315218011247/ex10-7.htm)

10.23 [First Amendment to Promissory Note by and among Shepherd's Finance, LLC and 2007 Daniel M. Wallach Legacy Trust, dated June 14, 2018, incorporated by reference to Exhibit 10.8 to the Registrant's Quarterly Report on Form 10-Q for the Quarterly Period Ended June 30, 2018, filed on August 9, 2018, Commission File No. 333-203707](https://www.sec.gov/Archives/edgar/data/1544190/000149315218011247/ex10-8.htm)

10.24 [Loan Modification Agreement by and between Shepherd's Finance, LLC and Paul Swanson, dated as of December 27, 2018, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on January 2, 2019, Commission File No. 333-203707](https://www.sec.gov/Archives/edgar/data/1544190/000149315219000053/ex10-1.htm)

10.25 [Loan Agreement by and between Shepherd's Finance, LLC and LCA Bank Corporation, dated May 5, 2020, incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the Quarterly Period Ended March 31, 2020, filed on May 11, 2020, Commission File No. 333-224557](https://www.sec.gov/Archives/edgar/data/1544190/000149315220008282/ex10-1.htm)

10.26 [Note from Shepherd's Finance, LLC in favor of LCA Bank Corporation, dated May 5, 2020, incorporated by reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the Quarterly Period Ended March 31, 2020, filed on May 11, 2020, Commission File No. 333-224557](https://www.sec.gov/Archives/edgar/data/1544190/000149315220008282/ex10-2.htm)

10.27 [Loan Agreement dated February 5, 2021 by and between the Registrant and LCA Bank Corporation, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on February 11, 2021, Commission File No. 333-224557](https://www.sec.gov/Archives/edgar/data/1544190/000149315221003326/ex10-1.htm)

---

| | |
|:---|:---|
| 10.28 | [Promissory Note dated February 5, 2021 from the Company in favor of LCA Bank Corporation, incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed on February 11, 2021, Commission File No. 333-224557](https://www.sec.gov/Archives/edgar/data/1544190/000149315221003326/ex10-2.htm) |
| 10.29 | [Membership Interest Purchase Agreement, dated February 15, 2024, by and among Shepherd's Finance, LLC, and Mark L. Hoskins and Barrett Hoskins, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on February 21, 2024, Commission File No. 333-224557.](https://www.sec.gov/Archives/edgar/data/1544190/000149315224007354/ex10-1.htm) |
| 10.30 | [Option Agreement, dated February 15, 2024, by and among 339 Justabout Land Co., LLC and Benjamin Marcus Homes. L.L.C., incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed on February 21, 2024, Commission File No. 333-224557](https://www.sec.gov/Archives/edgar/data/1544190/000149315224007354/ex10-2.htm). |
| 10.31 | [Management Services Agreement, dated February 15, 2024, by and among 339 Justabout Land Co., LLC and Benjamin Marcus Homes. L.L.C., incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K, filed on February 21, 2024, Commission File No. 333-224557.](https://www.sec.gov/Archives/edgar/data/1544190/000149315224007354/ex10-3.htm) |
| 10.32 | [Unit Exchange Agreement, dated May 30, 2025, by and between Shepherd's Finance, LLC and William Myrick, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on June 5, 2025, Commission File No. 333-224557.](https://www.sec.gov/Archives/edgar/data/1544190/000164117225013841/ex10-1.htm) |
| 10.33 | [Membership Interest Purchase Agreement, dated August 6, 2025, by and among Shepherd's Finance, LLC, as seller, and Mark L. Hoskins and Barrett Hoskins, as buyers, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on August 12, 2025, Commission File No. 333-224557.](https://www.sec.gov/Archives/edgar/data/1544190/000164117225023247/ex10-1.htm) |
| 10.34 | [Third Amendment to Amended, Restated, and Consolidated Credit Agreement, dated August 6, 2025, by and among Benjamin Marcus Homes. L.L.C., Investor's Mark Acquisitions, LLC and 339 Justabout Land Co., LLC, as borrowers, and Shepherd's Finance, LLC, as lender, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on August 12, 2025, Commission File No. 333-224557.](https://www.sec.gov/Archives/edgar/data/1544190/000164117225023247/ex10-2.htm) |
| 21.1 | [Subsidiaries of Shepherd's Finance, LLC, incorporated by reference to Exhibit 21.1 to the Registrant's Annual Report on Form 10-K, filed on April 6, 2026, Commission File No. 333-224557.](https://www.sec.gov/Archives/edgar/data/1544190/000149315226015327/ex21-1.htm) |
| 23.1\* | [Consent of BDO USA, P.C.](ex23-1.htm) |
| 23.2\* | [Consent of Nelson Mullins Riley & Scarborough LLP (included in Exhibit 5.1)](ex5-1.htm) |
| 24.1 | [Power of Attorney from Kenneth R. Summers, Eric A. Rauscher, and Greg Sheldon to Daniel M. Wallach, dated September 10, 2025, incorporated by reference to Exhibit 24.1 to the Registrant's Registration Statement on Form S-1, filed on September 15, 2025, Commission File No. 333-290256](https://www.sec.gov/Archives/edgar/data/1544190/000149315225013446/ex24-1.htm) |
| 25.1\* | [Statement of Eligibility of Trustee](ex25-1.htm) |
| 101.INS\*\* | XBRL Instance Document |
| 101.SCH\*\* | XBRL Taxonomy Extension Schema Document |
| 101.CAL\*\* | XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF\*\* | XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB\*\* | XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE\*\* | XBRL Taxonomy Extension Presentation Linkbase Document |
| 104\*\* | XBRL Cover Page Interactive Data File |
| 107 | [Filing Fee Exhibit, incorporated by reference to Exhibit 107 to the Registrant's Registration Statement on Form S-1, filed on September 15, 2025, Commission File No. 333-290256](https://www.sec.gov/Archives/edgar/data/1544190/000149315225013446/ex107.htm) |

---

\* Filed herewith.

\*\* Pursuant to Regulation 406T of Regulation S-T, these Interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, and are otherwise not subject to liability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Financial Statements:* The following audited consolidated financial statements are incorporated into this registration statement by reference to our Annual Report on Form 10-K for the Year Ended December 31, 2025, filed with the U.S. Securities and Exchange Commission on April 6, 2026:

***Audited Consolidated Financial Statements***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Report of Independent Registered Public Accounting Firm on Financial Statements (PCAOB: 171)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Consolidated Balance Sheets as of December 31, 2025 and 2024

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Consolidated Statements of Operations for the Years Ended December 31, 2025 and 2024

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Consolidated Statements of Changes in Members' Capital for the Years Ended December 31, 2025 and 2024

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Notes to Consolidated Financial Statements

The following unaudited pro forma financial information is included in the prospectus filed herewith:

 **

***Pro Forma Financial Information***

 **

(1) Consolidated Pro Forma Statement of Operations for the Year Ended December 31, 2025 (Unaudited)

(2) Notes to Unaudited Pro Forma Financial Information

**Item 17. Undertakings.**

The undersigned Registrant hereby undertakes:

(1) To
 file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) To
 include any prospectus required by section 10(a)(3) of the Securities Act;

(ii) To
 reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
 post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
 forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
 the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end
 of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if,
 in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth
 in the "Calculation of Registration Fee" table in the effective registration statement;

(iii) To
 include any material information with respect to the plan of distribution not previously disclosed in the registration statement
 or any material change to such information in the registration statement.

(2) That,
 for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a
 new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be
 deemed to be the initial bona fide offering thereof.

(3) To
 remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
 termination of the offering.

(4) That,
 for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b)
 as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than
 prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date
 it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is
 part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement
 or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first
 use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration
 statement or made in any such document immediately prior to such date of first use.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) For
 the purpose of determining liability of the Registrant under the Securities Act to any purchaser in the initial distribution of the
 securities, the undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant
 to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities
 are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller
 to the purchaser and will be considered to offer or sell such securities to such purchaser:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Any
 preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule
 424;

(ii) Any
 free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by
 the undersigned Registrant;

(iii) The
 portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant
 or its securities provided by or on behalf of the undersigned Registrant; and

(iv) Any
 other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to managers, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a manager, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such manager, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act of 1939, as amended, in accordance with the rules and regulations prescribed by the SEC under Section 305(b)(2) thereof.

**SIGNATURES**

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Jacksonville, State of Florida, on April 20, 2026.

---

| | |
|:---|:---|
| **SHEPHERD'S FINANCE, LLC** | **SHEPHERD'S FINANCE, LLC** |
| By: | */s/ Daniel M. Wallach* |
|  | Daniel M. Wallach |
|  | Chief Executive Officer and Manager |

---

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-1 has been signed by the following persons in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| */s/ Daniel M. Wallach* | Chief Executive Officer and Manager | April 20, 2026 |
| Daniel M. Wallach | (Principal Executive Officer) |  |
| */s/ Catherine Leslie* | Chief Financial Officer | April 20, 2026 |
| Catherine Leslie | (Principal Financial Officer and Principal Accounting Officer) |  |
| */s/ Kenneth R. Summers\** | Manager | April 20, 2026 |
| Kenneth R. Summers |  |  |
| */s/ Eric A. Rauscher\** | Manager | April 20, 2026 |
| Eric A. Rauscher |  |  |
| */s/ Gregory L. Sheldon\** | Manager | April 20, 2026 |
| Gregory L. Sheldon |  |  |

---

---

| | |
|:---|:---|
| \*By: | */s/ Daniel M. Wallach* |
|  | Daniel M. Wallach |
|  | Attorney-in-Fact, pursuant to Power of Attorney dated September 10, 2025. |

---

## Exhibit 4.1

**Exhibit 4.1**

**SHEPHERD'S FINANCE, LLC**

**FIXED RATE SUBORDINATED NOTES**

**INDENTURE**

**DATED AS OF [__], 2026**

**U.S. Bank Trust Company, National Association**

**AS**

**TRUSTEE**

**CROSS-REFERENCE TABLE**

---

| | | |
|:---|:---|:---|
| **Trust Indenture** | **Trust Indenture** | **Indenture** |
| **<u>Act Section</u>** | **<u>Act Section</u>** | **<u>Section</u>** |
| 310 | (a)(1) | 7.10 |
|  | (a)(2). | 7.10 |
|  | (a)(3) | N.A. |
|  | (a)(4) | N.A. |
|  | (b) | 7.8; 7.10; 11.2 |
|  | (c) | N.A. |
| 311 | (a) | 7.11 |
|  | (b) | 7.11 |
|  | (c) | N.A. |
| 312 | (a) | 2.6 |
|  | (b) | 11.3 |
|  | (c) | 11.3 |
| 313 | (a) | 7.6 |
|  | (b)(1) | N.A. |
|  | (b)(2) | 7.6 |
|  | (c) | 11.2 |
|  | (d) | 7.6 |
| 314 | (a) | 4.2; 11.2 |
|  | (b) | N.A. |
|  | (c)(1) | 11.4 |
|  | (c)(2) | 11.4 |
|  | (c)(3) | N.A. |
|  | (d) | N.A. |
|  | (e) | 11.5 |
|  | (f) | 4.3 |
| 315 | (a) | 7.1(b) |
|  | (b) | 7.5; 11.2 |
|  | (c) | 7.1(a) |
|  | (d) | 7.1(c) |
|  | (e) | 6.11 |
| 316 | (a)(last sentence) | 2.10 |
|  | (a)(1)(A) | 6.5 |
|  | (a)(1)(B) | 6.4 |
|  | (a)(2) | N.A. |
|  | (b) | 6.7 |
| 317 | (a)(1) | 6.8 |
|  | (a)(2) | 6.9 |
|  | (b) | 2.5 |
| 318 | (a) | 11.1 |

---

**N.A. means not applicable.**

<sup>\*</sup> This Cross-Reference Table is not part of the Indenture.

i

**<u>**TABLE OF CONTENTS**</u>**

---

| | |
|:---|:---|
| **ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE** | **1** |
| **Section 1.1. Definitions.** | **1** |
| **Section 1.2. Other Definitions.** | **2** |
| **Section 1.3. Incorporation by Reference of TIA.** | **3** |
| **Section 1.4. Rules of Construction.** | **3** |
| **ARTICLE 2 THE NOTES** | **4** |
| **Section 2.1. Form and Dating.** | **4** |
| **Section 2.2. Terms.** | **4** |
| **Section 2.3. Execution.** | **4** |
| **Section 2.4. Registrar and Paying Agent.** | **5** |
| **Section 2.5. Paying Agent to Hold Money in Trust.** | **5** |
| **Section 2.6. Certificateholder Lists.** | **5** |
| **Section 2.7. Transfer and Exchange.** | **5** |
| **Section 2.8. Replacement Notes.** | **6** |
| **Section 2.9. Outstanding Notes.** | **6** |
| **Section 2.10. Treasury Notes.** | **6** |
| **Section 2.11. Cancellation.** | **7** |
| **ARTICLE 3 REDEMPTION** | **7** |
| **Section 3.1. Applicability of Article.** | **7** |
| **Section 3.2. Notices to Trustee.** | **7** |
| **Section 3.3. Selection of Notes to be Redeemed.** | **7** |
| **Section 3.4. Notice of Redemption.** | **7** |
| **Section 3.5. Effect of Notice of Redemption.** | **8** |

---

ii

---

| | |
|:---|:---|
| **Section 3.6. Deposit of Redemption Price.** | **8** |
| **Section 3.7. Notes Redeemed in Part.** | **8** |
| **Section 3.8. Redemption Option Upon Death of Holder.** | **8** |
| **Section 3.9. Redemption Option at Request of Holder.** | **9** |
| **ARTICLE 4 COVENANTS** | **10** |
| **Section 4.1. Payment of Notes.** | **10** |
| **Section 4.2. SEC Reports.** | **10** |
| **Section 4.3. Compliance Certificate.** | **11** |
| **Section 4.4. Usury Laws.** | **11** |
| **Section 4.5. Money for Note Payments to be Held in Trust.** | **11** |
| **Section 4.6. Continued Existence.** | **12** |
| **ARTICLE 5 SUCCESSORS** | **12** |
| **ARTICLE 6 DEFAULTS AND REMEDIES** | **13** |
| **Section 6.1. Events of Default.** | **13** |
| **Section 6.2. Acceleration.** | **14** |
| **Section 6.3. Other Remedies.** | **14** |
| **Section 6.4. Waiver of Past Defaults.** | **14** |
| **Section 6.5. Control by Majority.** | **15** |
| **Section 6.6. Limitation on Suits.** | **15** |
| **Section 6.7. Rights of Holders to Receive Payment.** | **15** |
| **Section 6.8. Collection Suit by Trustee.** | **15** |
| **Section 6.9. Trustee May File Proofs of Claim.** | **16** |
| **Section 6.10. Priorities.** | **16** |
| **Section 6.11. Undertaking for Costs.** | **17** |

---

iii

---

| | |
|:---|:---|
| **ARTICLE 7 TRUSTEE** | **17** |
| **Section 7.1. Duties of Trustee.** | **17** |
| **Section 7.2. Rights of Trustee.** | **18** |
| **Section 7.3. Individual Rights of Trustee.** | **19** |
| **Section 7.4. Trustee's Disclaimer.** | **19** |
| **Section 7.5. Notice of Defaults.** | **19** |
| **Section 7.6. Reports by Trustee to Holders.** | **19** |
| **Section 7.7. Compensation and Indemnity.** | **20** |
| **Section 7.8. Replacement of Trustee.** | **20** |
| **Section 7.9. Successor Trustee by Merger, Etc.** | **21** |
| **Section 7.10. Eligibility; Disqualification.** | **22** |
| **Section 7.11. Preferential Collection of Claims Against Company.** | **22** |
| **ARTICLE 8 DISCHARGE OF INDENTURE; DEFEASANCE** | **22** |
| **Section 8.1. Termination of Company's Obligations.** | **22** |
| **Section 8.2. Legal Defeasance and Covenant Defeasance.** | **23** |
| **Section 8.3. Conditions to Legal Defeasance or Covenant Defeasance.** | **24** |
| **Section 8.4. Application of Trust Money.** | **25** |
| **Section 8.5. Repayment to the Company.** | **25** |
| **ARTICLE 9 AMENDMENTS** | **25** |
| **Section 9.1. Without Consent of Holders.** | **25** |
| **Section 9.2. With Consent of Holders.** | **26** |
| **Section 9.3. Compliance with Trust Indenture Act.** | **27** |
| **Section 9.4. Revocation and Effect of Consents.** | **27** |
| **Section 9.5. Notation on or Exchange of Notes.** | **27** |
| **Section 9.6. Trustee Protected.** | **27** |

---

iv

---

| | |
|:---|:---|
| **ARTICLE 10 SUBORDINATION** | **27** |
| **Section 10.1. Agreement to Subordinate.** | **27** |
| **Section 10.2. Certain Definitions.** | **27** |
| **Section 10.3. Liquidation; Dissolution; Bankruptcy.** | **28** |
| **Section 10.4. Default on Senior Debt.** | **28** |
| **Section 10.5. Acceleration of Notes.** | **29** |
| **Section 10.6. When Distribution Must Be Paid Over.** | **29** |
| **Section 10.7. Notice by Company.** | **30** |
| **Section 10.8. Subrogation.** | **30** |
| **Section 10.9. Relative Rights.** | **30** |
| **Section 10.10. Subordination may not be Impaired by Company.** | **30** |
| **Section 10.11. Distribution or Notice to Representative.** | **30** |
| **Section 10.12. Rights of Trustee and Paying Agent.** | **31** |
| **Section 10.13. Trust Moneys Not Subordinated.** | **31** |
| **Section 10.14. Trustee Not Fiduciary for Holders of Senior Debt.** | **31** |
| **ARTICLE 11 MISCELLANEOUS** | **31** |
| **Section 11.1. TIA Controls.** | **31** |
| **Section 11.2. Notices.** | **31** |
| **Section 11.3. Communication by Holders With Other Holders.** | **32** |
| **Section 11.4. Certificate and Opinion as to Conditions Precedent.** | **32** |
| **Section 11.5. Statements Required in Certificate or Opinion.** | **32** |
| **Section 11.6. Rules by Trustee and Agents.** | **33** |
| **Section 11.7. Legal Holidays.** | **33** |
| **Section 11.8. No Recourse Against Others.** | **33** |
| **Section 11.9. Duplicate Originals.** | **33** |

---

---

| | |
|:---|:---|
| **Section 11.10. Variable Provisions.** | **33** |
| **Section 11.11. Governing Law.** | **34** |
| **Section 11.12. No Adverse Interpretation of Other Agreements.** | **34** |
| **Section 11.13. Successors.** | **34** |
| **Section 11.14. Severability.** | **34** |

---

V

INDENTURE dated as of [__], 2026, between Shepherd's Finance, LLC, a Delaware limited liability company ("Company"), and U.S. Bank Trust Company, National Association, a national banking association ("Trustee").

Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Company's Fixed Rate Subordinated Notes:

**ARTICLE 1**

**DEFINITIONS AND INCORPORATION BY REFERENCE**

Section 1.1. <u>Definitions</u>.

"**Affiliate**" means any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company.

"**Agent**" means any Registrar, Paying Agent, or co-registrar.

"**Board of Managers**" means the Board of Managers of the Company or any authorized committee of the Board of Managers.

"**Company**" means the party named as such above until a successor replaces it and thereafter means the successor or any other obligor with respect to the Notes.

"**Company Order**" means an order signed in the name of the Company by its Chief Executive Officer, President, a Vice President, its Treasurer, or Secretary, and delivered to the Trustee.

"**Corporate Trust Office**" shall be at the address of the Trustee specified in Section 11.10 or such other address as to which the Trustee may give notice to the Company.

"**Date of Issue**" means the date that the Company receives proper documentation and the funds for the purchase of a Note if such funds are received prior to 3:00 p.m. on a business day or the next business day if the Company receives such funds on a non-business day or on or after 3:00 p.m. on a business day. For this purpose, the Company's business days will be deemed to be Monday through Friday, except on Florida legal holidays.

"**Default**" means any event which is, or after notice or passage of time would be, an Event of Default.

"**Holder**" or "**Certificateholder**" means a Person in whose name a Note is registered on the Registrar's books.

"**Indenture**" means this Indenture as amended or supplemented from time to time.

"**Material Subsidiary**" means any majority-owned subsidiary of the Company that is material to the business of the Company, taken as a whole.

"**Notes**" means the Fixed Rate Subordinated Notes described herein issued under this Indenture.

"**Officer**" means the principal executive officer, principal financial officer or principal accounting officer of the Company.

"**Officer's Certificate**" means a certificate signed by an Officer.

"**Opinion of Counsel**" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee.

"**Person**" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof.

"**Principal**" of a debt security means the principal of the security plus the premium, if any, on the security.

"**Responsible Officer**" means, with respect to the Trustee, any officer of the Trustee assigned to the Global Corporate Trust department (or any successor division or unit) of the Trustee located at the Corporate Trust Office of the Trustee, who shall have direct responsibility for the administration of this Indenture, and for the purposes of Section 7.1 and Section 7.5 shall also include any other officer of the Trustee's to whom any corporate trust matter is referred because of such officer's knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.

"**SEC**" means the United States Securities and Exchange Commission.

"**Stated Maturity**" means, when used with respect to a Note, the date specified in such Note as the fixed date on which the principal of such Note and any accrued but unpaid interest is due and payable.

"**Subsidiary**" means any person of which at least a majority of capital stock having ordinary voting power for the election of directors or other governing body of such person is owned by the Company directly or through one or more subsidiaries.

"**TIA**" means the Trust Indenture Act of 1939 (15 U.S. Code 77aaa-77bbbb), as the same may be amended from time to time.

"**Trustee**" means the party named as such above until a successor replaces it and thereafter means the successor.

Section 1.2. <u>Other Definitions</u>.

---

| | |
|:---|:---|
| **Term** | **Defined in**<br> **Section** |
| "**Bankruptcy Law**" | 6.1 |
| "**Covenant Defeasance**"<br> "**Custodian**" | 8.2(c)<br> 6.1 |
| "**Debt**" | 10.2 |
| "**Event of Default**" | 6.1 |
| "**Interest Payment Date**"<br> "**Legal Defeasance**"<br> "**Legal Holiday**" | 2.2(b)<br> 8.2(b)<br> 11.7 |
| "**Officer**" | 11.10 |
| "**Paying Agent**"<br> "**Registrar**"<br> "**Representative**" | 2.4<br> 2.4<br> 10.2 |
| "**Senior Debt**" | 10.2 |
| "**U.S. Government Obligations**" | 8.1 |

---

Section 1.3. <u>Incorporation by Reference of TIA</u>.

Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.

The following TIA terms used in this Indenture have the following meanings:

"**Indenture Securities**" means the Notes;

"**Indenture Security Holder**" means a Certificateholder;

"**Indenture to be Qualified**" means this Indenture;

"**Indenture Trustee**" or "**Institutional Trustee**" means the Trustee; and

"**Obligor**" on the Notes means the Company.

All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute, or defined by SEC rule under the TIA have the meanings assigned to them.

Section 1.4. <u>Rules of Construction</u>.

Unless the context otherwise requires:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a
 term has the meaning assigned to it;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) an
 accounting term not otherwise defined has the meaning assigned to it in accordance with United
 States generally accepted accounting principles in effect on the date of execution of this
 Indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) "*or* "
 is not exclusive;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) words
 in the singular include the plural, and in the plural include the singular; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) provisions
 apply to successive events and transactions.

**ARTICLE 2**

**THE NOTES**

Section 2.1. <u>Form and Dating</u>.

The Notes shall be substantially in the form of <u>EXHIBIT A</u>, with such appropriate insertions, omissions, substitutions, and other variations required or permitted by this Indenture. The Notes may have notations, legends, or endorsements required by law, stock exchange rule, or usage, and may be issued in uncertificated or certificated form. If issued in uncertificated form, the Company shall deliver a written or electronic confirmation of the terms of a Note to the Certificateholder thereof.

Section 2.2. <u>Terms</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) **Amount Unlimited; Terms.** The aggregate principal amount of Notes which may be delivered under this Indenture is unlimited. Notes may be issued in one or more series. The initial aggregate principal amount of the Notes to be delivered under this Indenture shall be $70,000,000. The aggregate principal amount may be increased, without the need for approval of any Holders or the Trustee by means of Company Order, as set forth in Section 9.1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) **Interest.** Interest will be calculated based on the actual number of days the Note is outstanding based on a 365/366 day year. Interest will be earned daily and payable monthly or at maturity at the Holder's request. If the Holder elects to receive interest at maturity rather than monthly, interest will be compounded monthly. If any payment of the Note is due on a Legal Holiday, then the Holder will not be entitled to payment of the amount due until the following day that is not a Legal Holiday, and no interest will be due as a result of such delay. If the Holder elects to receive interest monthly, interest will be paid on the first business day (not a Legal Holiday) of every month (each an "**Interest Payment Date**"). The first Interest Payment Date will be the month following the month of the Date of Issue, except that if a Note is issued within the last 10 days preceding an Interest Payment Date, the first interest payment will be made on the next succeeding Interest Payment Date. No payments of interest under fifty dollars will be made, with any interest payment under fifty dollars accruing and earning interest on a monthly compounding basis until the payment due is at least fifty dollars on an Interest Payment Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) **Subordination.** The Notes shall be subordinated and junior in right of payment to all Senior Debt of the Company as provided in Article 10.

Section 2.3. <u>Execution</u>.

If the Company, pursuant to Section 9.1, provides for certificated Notes, one Officer shall sign the Notes for the Company by manual or facsimile signature.

If an Officer whose signature is on a Note no longer holds that office at the time the Note is delivered, the Note shall nevertheless be valid.

Section 2.4. <u>Registrar and Paying Agent</u>.

The Company shall maintain an office or agency where Certificateholders may request registration of transfer or exchange of Notes ("**Registrar**") and an office or agency where Certificateholders may demand payment of Notes ("**Paying Agent**"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The Company may change any Paying Agent, Registrar, or co-registrar without notice to any Certificateholder. The term "**Paying Agent**" includes any additional paying agent. The Company shall notify the Trustee of the name and address of any agent not a party to this Indenture. The Company or any of its Subsidiaries may act as Paying Agent or Registrar. The Company initially appoints itself as Paying Agent and Registrar.

Section 2.5. <u>Paying Agent to Hold Money in Trust</u>.

The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Certificateholders or the Trustee all money held by the Paying Agent for the payment of principal or interest on the Notes, and will notify the Trustee of any failure by the Company in making any such payment. While any such failure continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent shall have no further liability for the money. If the Company acts as Paying Agent, it shall segregate and hold in a separate bank account in trust for the benefit of the Certificateholders all money held by it as Paying Agent and will notify the Trustee of any failure by the Company in making any payment of principal of interest on the Notes. The Paying Agent may charge for its expenses in issuing a replacement interest check.

Section 2.6. <u>Certificateholder Lists</u>.

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Certificateholders. If the Trustee is not the Registrar, then the Company shall timely furnish to the Trustee the changes in this list and will furnish an updated list of the names and addresses of Certificateholders in such form and as of such date and at such other times as the Trustee may request in writing.

Section 2.7. <u>Transfer and Exchange</u>.

Upon a request to the Registrar or a co-registrar to register, transfer or to exchange Notes for an equal principal amount of Notes, the Registrar shall register the transfer or make the exchange if its requirements for such transactions are met. To permit registrations of transfer and exchanges, the Company shall issue Notes at the Registrar's request. The Company may charge for its expenses in transferring or exchanging a Note.

The Company shall not be required (i) to issue, transfer, or exchange any Note during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Notes selected for redemption pursuant to Section 3.3 and ending at the close of business on the date of such redemption, or (ii) to transfer or exchange any Note selected for redemption in whole or in part.

Each Holder of a Note agrees to indemnify the Company and the Trustee against any liability that may result from the transfer, exchange, or assignment of such Holder's Note in violation of any provision of this Indenture and/or applicable United States Federal or state securities law.

To the extent that the Trustee elects to or somehow is deemed to be acting as the Registrar or Paying Agent, the Trustee shall have no obligation or duty to monitor, determine, or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

Neither the Trustee nor any agent of the Trustee shall have any responsibility for any actions taken or not taken by the Registrar.

Section 2.8. <u>Replacement Notes</u>.

If the Company, pursuant to Section 9.1, provides for certificated Notes, and if the Holder of a Note claims that the Note has been lost, destroyed, or wrongfully taken, then the Company shall issue a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Company, an indemnity bond must be sufficient in the judgment of both the Company and the Trustee to protect the Company, the Trustee, or any Agent from any loss which any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note.

Every replacement Note is an additional obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.

Section 2.9. <u>Outstanding Notes</u>.

The Notes outstanding at any time are all of the Notes delivered by the Company pursuant to this Indenture except for those canceled by it, those delivered to it for cancellation, and those described in this Section as not outstanding.

If a Note is replaced pursuant to Section 2.8, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser.

If Notes are considered paid under Section 4.1, they cease to be outstanding and interest on them ceases to accrue.

Section 2.10. <u>Treasury Notes</u>.

In determining whether the Holders of the required principal amount of the Notes have concurred in any direction, waiver, or consent, Notes owned by the Company or an Affiliate shall be disregarded, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver, or consent, only Notes which a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded.

Section 2.11. <u>Cancellation</u>.

The Company at any time may request that the Registrar cancel any Note. The Registrar shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement, or cancellation and shall destroy canceled Notes (subject to any applicable record retention requirements). The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Registrar for cancellation.

**ARTICLE 3**

**REDEMPTION**

Section 3.1. <u>Applicability of Article</u>.

Redemption of Notes at the election of the Company, as permitted or required by any provision of this Indenture or the Notes, shall be made in accordance with such provision and this Article.

Section 3.2. <u>Notices to Trustee</u>.

If the Company wants to redeem the Notes pursuant to paragraph 2 of the Notes, it shall notify the Trustee by Officer's Certificate of the redemption date and the principal amount of Notes to be redeemed. The Company shall give each notice provided for in this Section at least fifty (50) days before the redemption date (unless a shorter notice period shall be satisfactory to the Trustee).

Section 3.3. <u>Selection of Notes to be Redeemed</u>.

If fewer than all the Notes are to be redeemed, the Company shall select the Notes to be redeemed, and so inform the Trustee by Officer's Certificate, subject to the remainder of this Section. If less than all of a grouping of Notes, as specified by Officer's Certificate, are to be redeemed, the portion thereof selected for redemption shall be determined ratably or by lot. If fewer than all of such grouping of Notes as specified by Officer's Certificate are to be redeemed, the Trustee shall then make the selection not more than fifty (50) days before the redemption date from Notes outstanding not previously called for redemption. Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.

Section 3.4. <u>Notice of Redemption</u>.

At least thirty (30) days but not more than sixty (60) days before a redemption date, the Company shall mail a notice of redemption by first-class mail to each Holder of Notes whose Notes are to be redeemed.

The notice shall identify the Notes to be redeemed and shall state:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the
 redemption date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the
 redemption price, which shall be equal to 100% of the principal amount of the Note, plus
 accrued interest on a daily basis to the redemption date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the
 name and address of the Paying Agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) that
 certificated Notes called for redemption must be surrendered to the Paying Agent to collect
 the redemption price; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) that
 interest on Notes called for redemption ceases to accrue on and after the redemption date.

At the Company's request, the Trustee, if it is then the Registrar, shall give the notice of redemption in the Company's name and at its expense; provided, however, that the Company shall have provided to the Trustee, at least 45 days prior to the Redemption Date (unless a shorter notice period shall be satisfactory to the Trustee), the information required by clauses (a) through (e) above.

Section 3.5. <u>Effect of Notice of Redemption</u>.

Once notice of redemption is mailed, Notes called for redemption become due and payable on the redemption date at the redemption price.

Section 3.6. <u>Deposit of Redemption Price</u>.

On or before the redemption date, the Company shall deposit with the Paying Agent, or if the Company is acting as Paying Agent it shall deposit into a separate bank account pursuant to Section 2.5 hereof, money sufficient to pay the redemption price of and accrued interest on all Notes to be redeemed on that date.

Section 3.7. <u>Notes Redeemed in Part</u>.

Upon redemption of a certificated Note in part, the Company shall issue for the Holder a new Note equal in principal amount to the unredeemed portion of the partially-redeemed Note.

Section 3.8. <u>Redemption Option Upon Death of Holder</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to the provisions of Article 10 and this Article 3, upon the death of any Holder of one or more Notes, the Company shall be required to redeem Notes held by a Holder of such Notes at the date of such Holder's death, as requested in the manner, and subject to the limitations, set forth below. The redemption price shall be equal to 100% of the principal amount of the Note plus accrued interest on a daily basis to the redemption date. Redemption of such Notes shall be made as soon as reasonably possible, based on the Company's then current cash position and needs, but generally within two weeks following the receipt by the Company or the Trustee of all of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) a
 written request for redemption of the Notes signed by a duly authorized representative of
 the Holder, which request shall set forth the name of the Holder, the date of death of the
 Holder and the principal amount of the Notes to be redeemed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the
 Notes to be redeemed (if certificated); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) evidence
 satisfactory to the Company of the death of such Holder and the authority of the representative
 to such extent as may be required by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Notes held by the Holder shall not be entitled to redemption pursuant to this Section unless the Notes to be redeemed have been registered in the Holder's name since their Date of Issue.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Authorized representatives of a Holder shall include the following: executors, administrators, or other legal representatives of an estate; trustees of a trust; joint owners of Notes owned in joint tenancy or tenancy by the entirety; attorneys-in-fact; and other persons generally recognized as having legal authority to act on behalf of another.

Section 3.9. <u>Redemption Option at Request of Holder.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Beginning 180 days after the issuance date, at the written request of the Holder delivered to the Company at any time, the Company may, at its option and subject to the restrictions in Article 10 below, but shall not be required to, redeem the Note for a redemption price equal to the principal amount plus an amount equal to the unpaid interest thereon for the Note, as adjusted, at the stated rate to the redemption date minus an amount equal to the interest that would be payable thereon at the rate stated above over the last 180 days immediately prior to the redemption date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding the foregoing Section 3.9(a), subject to the restrictions in Article 10 below, at the written request of a Holder of a Note that on the Date of Issue had a duration of 36 months, such Holder may require the Company to redeem all or a portion of such Note for a redemption price equal to the principal amount plus an amount equal to the unpaid interest thereon for such Note, at the stated rate to the redemption date, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The
 Company shall redeem up to $10,000 of such Note within 7 days of the redemption request;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The
 Company shall redeem up to an additional $90,000 of such Note within 30 days of the redemption
 request;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) The
 Company shall redeem any remaining amount of such Note requested to be redeemed within 90
 days of the redemption request; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) The
 Company shall redeem all or a portion of such Note if requested by the Holder, regardless
 of amount, within 1 business day but only if the Holder immediately upon redemption invests
 the entirety of the proceeds from such redemption in another security then-offered by the
 Company; provided, however, a Holder may only reinvest in another Note with a duration that
 is equal to or greater than the period remaining until the maturity date of the Note to be
 redeemed.

For purposes of determining the length of time within which the Company must redeem all or a portion of a Note under this Section 3.9(b), the dollar amount of a given redemption request will be added to any amount or amounts of such Note previously requested to be redeemed that were redeemed by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding the foregoing Section 3.9(a), subject to the restrictions in Article 10 below, at the written request of a Holder of a Note, such Holder may require the Company to redeem all or a portion of such Note for a redemption price equal to the principal amount plus an amount equal to the unpaid interest thereon for such Note, at the stated rate to the redemption date within 1 business day, but only if the Holder immediately upon redemption invests the entirety of the proceeds from such redemption in another Note or another security then-offered by the Company, if any; provided, however, (1) a Holder may only reinvest in another Note with a duration that is equal to or greater than the period remaining until the maturity date of the Note to be redeemed and (2) a Holder may only reinvest in a Note with a duration of 36 months if the Note to be redeemed had a duration of 36 months on the Date of Issue.

**ARTICLE 4**

**COVENANTS**

Section 4.1. <u>Payment of Notes</u>.

The Company shall pay or cause to be paid the principal of and interest on the Notes on the dates and in the manner provided in the Notes. Principal and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal and interest then due.

Section 4.2. <u>SEC Reports</u>.

The Company shall file with the Trustee within fifteen (15) days after it files them with the SEC copies of the annual reports and quarterly reports and of the information, documents, and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) for the Notes which the Company may be required to file with the SEC pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the "**Exchange Act**"). The Company also shall comply with the other provisions of TIA Section 314(a).

Whether or not the Company is subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act, to the extent not prohibited by the Exchange Act, the Company will make available to the Holders of the Notes without cost to any Holder, the information, documents, and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) that are specified in Sections 13 and 15(d) of the Exchange Act within the time periods specified therein.

The Company shall be deemed to have furnished such reports to the Holders of the Notes if it has filed such reports with the SEC using the EDGAR filing system or placed such reports on the Company's website and made them publicly available.

Section 4.3. <u>Compliance Certificate</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company shall deliver to the Trustee, within one hundred twenty (120) days after the end of each fiscal year of the Company, an Officer's Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officer with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes are prohibited.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The foregoing notwithstanding, the Company shall, so long as any of the Notes are outstanding, promptly, and in any event within 30 days, deliver to the Trustee, forthwith upon any Officer becoming aware of any Default or Event of Default, an Officer's Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto.

Section 4.4. <u>Usury Laws</u>.

The Company will not voluntarily claim and will actively resist any attempts to claim the benefit of any usury laws against the Holders of the Notes.

Section 4.5. <u>Money for Note Payments to be Held in Trust</u>.

Whenever the Company shall have one or more Paying Agents, it will, on or prior to each date for the payment of the principal of or interest on the Notes, deposit with a Paying Agent a sum sufficient to pay the principal and interest so becoming due, such sum to be held in trust for the benefit of the persons entitled to such payments; and, unless such Paying Agent is the Trustee, the Company will promptly notify the Trustee of its action or failure so to act.

The Company will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) hold
 all sums held by it for the payment of the principal of and interest on the Notes in trust
 for the benefit of the persons entitled thereto until such sums shall be paid to such persons
 or otherwise disposed of as herein provided;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) give
 the Trustee notice of any default by the Company (or any other obligor upon the Notes) in
 the making of any payment of principal and interest; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) at
 any time during the continuance of any such default, upon the written request of the Trustee,
 forthwith pay to the Trustee all sums so held in trust by such Paying Agent.

Subject to Article 8, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, the Company may at any time pay, or direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same terms as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by the Company or any Paying Agent to the Trustee, the Company or such Paying Agent, as the case may be, shall be released from all further liability with respect to such money.

Section 4.6. <u>Continued Existence</u>.

Subject to Article 5, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its existence as a limited liability company, and the corporate, partnership, or other existence of each of its Material Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Material Subsidiary and (ii) the rights (charter and statutory), licenses, and franchises of the Company and its Material Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license, or franchise, or the corporate, partnership, or other existence of any of its Material Subsidiaries, if the Board of Managers of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Material Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders.

**ARTICLE 5**

**SUCCESSORS**

The Company shall not consolidate or merge with or into, or transfer or lease all or substantially all of its assets to, any Person unless the entity formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale or conveyance shall have been made, assumes by supplemental indenture all the obligations of the Company under the Notes then outstanding and this Indenture.

The Company shall deliver to the Trustee prior to the proposed transaction an Officer's Certificate to the foregoing effect and an Opinion of Counsel stating that the proposed transaction and such supplemental indenture comply with this Indenture.

The surviving entity shall be the successor Company, but the predecessor Company in the case of a transfer or lease shall not be released from the obligation to pay the principal of and interest on the Notes.

**ARTICLE 6**

**DEFAULTS AND REMEDIES**

Section 6.1. <u>Events of Default</u>.

An "**Event Of Default**" occurs if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the
 Company defaults in the payment of interest of any Note when the same becomes due and payable
 and the Default continues for a period of thirty (30) days;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the
 Company defaults in the payment of the principal on any Note when the same becomes due and
 payable at maturity, upon redemption or otherwise, and the Default continues for a period
 of thirty (30) days;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the
 Company fails to comply with any of its other agreements or covenants in, or provisions of,
 the Notes or this Indenture and the Default continues for the period and after the notice
 specified below;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the
 Company or any material subsidiary pursuant to or within the meaning of any Bankruptcy Law
 now or hereafter in effect:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) commences
 a voluntary proceeding under any such Bankruptcy Law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) consents
 to the entry of an order for relief against it in an involuntary Bankruptcy proceeding;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) consents
 to the appointment of a Custodian of it or for all or substantially all of its property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) makes
 a general assignment for the benefit of its creditors; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) generally
 is unable to pay its debts as the same become due;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) a
 court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) is
 for relief against the Company or any material subsidiary in an involuntary Bankruptcy proceeding;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) appoints
 a Custodian of the Company or any material subsidiary or for all or substantially all of
 its property; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) orders
 the winding up or liquidation of the Company or any material subsidiary, and the order or
 decree remains unstayed and in effect for 60 days.

The term "**Bankruptcy Law**" means Title 11 of the United States Code or any similar Federal or State Law for the relief of debtors. The term "**Custodian**" means any receiver, trustee, assignee, liquidator, sequestrator, or similar official under any Bankruptcy Law.

A Default under clause (c) is not an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes notify the Company of the Default and the Company does not cure the Default within sixty (60) days after receipt of the notice. The notice must specify the Default, demand that it be remedied and state that the notice is a "**Notice of Default**."

Section 6.2. <u>Acceleration</u>.

If an Event of Default occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount of the then outstanding Notes, by notice to the Company and the Trustee, may declare the principal of and accrued interest on all the Notes to be due and payable. Upon such declaration the principal and interest owing on the then outstanding Notes shall be due and payable immediately. The Holders of a majority in principal amount of the then outstanding Notes, by notice to the Trustee, may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived, except nonpayment of principal or interest that has become due solely because of the acceleration.

Section 6.3. <u>Other Remedies</u>.

If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of Notes in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law.

Section 6.4. <u>Waiver of Past Defaults</u>.

The Holders of a majority in principal amount of the then outstanding Notes, by notice to the Trustee, may waive an existing Default or Event of Default and its consequences except a continuing Default or Event of Default in the payment of the principal of and interest on the Notes.

Section 6.5. <u>Control by Majority</u>.

The Holders of not less than a majority in principal amount of the then outstanding Notes may direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, is unduly prejudicial to the rights of other Holders of the Notes, or would involve the Trustee in personal liability.

Section 6.6. <u>Limitation on Suits</u>.

The Holder of Notes may pursue a remedy with respect to this Indenture or the Notes only if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the
 Holder gives to the Trustee notice of a continuing Event of Default;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the
 Holders of at least 25% in principal amount of the then outstanding Notes make a request
 to the Trustee to pursue the remedy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) such
 Holder or Holders offer to the Trustee indemnity satisfactory to the Trustee against any
 loss, liability, or expense;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the
 Trustee does not comply with the request within sixty (60) days after receipt of the request
 and the offer of indemnity; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) during
 such sixty (60)-day period the Holders of a majority of principal amount of the then outstanding
 Notes do not give the Trustee a direction inconsistent with the request.

No Holder will have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb, or prejudice the rights of any other of such Holders (it being understood that the Trustee does not have an affirmative duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders).

Section 6.7. <u>Rights of Holders to Receive Payment</u>.

Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal and interest on the Note, on or after the date demand is made for payment therefor, or to bring suit for the enforcement of any such payment on or after such demand date, shall not be impaired or affected without the consent of the Holder.

Section 6.8. <u>Collection Suit by Trustee</u>.

If an Event of Default specified in Section 6.1(a) or Section 6.1(b) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal and interest and fees remaining unpaid on the Notes with respect to which the Event of Default occurred in each case at the rate per annum borne by the Notes and such amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements, and advances of the Trustee, its agents, and counsel.

Section 6.9. <u>Trustee May File Proofs of Claim</u>.

The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements, and advances of the Trustee, its agents, and counsel) and the Holders allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive, and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent in writing to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements, and advances of the Trustee, its agents, and counsel, and any other amounts due the Trustee under Section 7.7 hereof. To the extent that the payment of any such compensation, expenses, disbursements, and advances of the Trustee, its agents, and counsel, and any other amounts due the Trustee under Section 7.7 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, money, securities, and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment, or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

Section 6.10. <u>Priorities</u>.

If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order:

---

| | |
|:---|:---|
| First: | to the Trustee, its agents, and attorneys for amounts due under Section 7.7; |

---

Second: to holders of Senior Debt to the extent required by Article 10;

---

| | |
|:---|:---|
| Third: | to Holders of Notes for amounts due and unpaid on the Notes for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal and interest, respectively; and |

---

Fourth: to the Company or to such party as a court of competent jurisdiction shall direct.

The Trustee may fix a record date and payment date for any payment to the Certificateholders pursuant to this Section 6.10, and such record date shall be no later than the 15th day of the month preceding the payment date.

Section 6.11. <u>Undertaking for Costs</u>.

In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant; provided, however that no provision contained herein shall be construed as the Trustee's agreement to pay such fees. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes.

**ARTICLE 7**

**TRUSTEE**

Section 7.1. <u>Duties of Trustee</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and power vested in it by this Indenture, and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Except during the continuance of an Event of Default:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The
 Trustee need perform only those duties that are specifically set forth in this Indenture
 and no duties, covenants, responsibilities, or obligations shall be implied in this Indenture
 against the Trustee; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) In
 the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth
 of the statements and the correctness of the opinions expressed therein, upon certificates
 or opinions furnished to the Trustee and conforming to the requirements of this Indenture.
 However, the Trustee shall examine the certificates and opinions to determine whether or
 not they conform on their face to the requirements of this Indenture.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) This
 paragraph does not limit the effect of paragraph (b) of this Section;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The
 Trustee shall not be liable for any error of judgment made in good faith by a Responsible
 Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent
 facts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) The
 Trustee shall not be liable with respect to any action it takes or omits to take in good
 faith in accordance with a direction received by it pursuant to Section 6.5; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) The
 Trustee shall not be required to expend or risk its own funds or otherwise incur financial
 liability in the performance of any of its duties under this Indenture or in the exercise
 of any of its rights or powers, if it has reasonable grounds to believe repayment of the
 funds or adequate indemnity against the risk or liability is not reasonably assured to it.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Every provision of this Indenture that in any way relates to the Trustee is subject to this Article and to the provisions of the TIA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against any loss, liability, or expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may expressly agree with the Company. Money held in trust by the Trustee need not be segregated from the other funds except to the extent required by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in principal amount of the Notes at the time outstanding given pursuant to Section 6.5 of this Indenture, relating to the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Trustee shall not be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising out of or caused, directly or indirectly, by circumstances beyond its control, including without limitation, any act or provision of any present or future law or regulation or governmental authority; acts of God; earthquakes; fires; floods; wars; terrorism; civil or military disturbance; sabotage; epidemics; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications service; accidents; labor disputes; acts of civil or military authority or governmental actions; or the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Trustee has no obligation to review or analyze any reports or other documents delivered to the Trustee pursuant to this Indenture, and the Trustee's receipt of such information shall not constitute constructive or actual notice of any information contained therein or determinable from information contained therein; provided, however, in the case of any such reports or other documents which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements thereof (but need not confirm or investigate the accuracy of mathematical calculations or other facts or opinions stated therein).

Section 7.2. <u>Rights of Trustee</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Trustee may conclusively rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Before the Trustee acts or refrains from acting, it may require an Officer's Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance of the Officer's Certificate or Opinion of Counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) In no event shall the Trustee be responsible or liable for special, indirect, punitive, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Trustee may request that the Company deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Trustee will not be required to investigate any facts or matters stated in any document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. If the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records, and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, each officer, director, attorney, employee, agent, custodian and other Person employed to act hereunder.

Section 7.3. <u>Individual Rights of Trustee</u>.

Subject to Section 7.1:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The
 Trustee in its individual or any other capacity may become the owner or pledgee of Notes
 and may otherwise deal with the Company or an Affiliate with the same rights it would have
 if it were not Trustee. Any Agent may do the same with like rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The
 Company shall notify the Trustee if the Notes become listed on any securities exchange or
 of any delisting thereof and the Trustee shall comply with Section 313(d) of the TIA.

Section 7.4. <u>Trustee's Disclaimer</u>.

The Trustee makes no representation at to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes, and it shall not be responsible for any statement in the Notes.

Section 7.5. <u>Notice of Defaults</u>.

If a Default or Event of Default occurs and is continuing and if it is known to the Trustee as described in Section 7.2(f), the Trustee shall mail to Holders of the Notes a notice of the Default or Event of Default within ninety (90) days after it occurs. Except in the case of a Default or Event of Default in payment on a Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of Holders of the Notes.

Section 7.6. <u>Reports by Trustee to Holders</u>.

Within 60 days after the relevant reporting date stated in Section 11.10, the Trustee shall mail to Certificateholders a brief report dated as of such reporting date that complies with Section 313(a) of the TIA. The Trustee also shall comply with Section 313(b)(2) of the TIA.

A copy of each report at the time of its mailing to Certificateholders shall be filed with the SEC and each stock exchange on which the Notes are listed. The Company shall notify the Trustee when the Notes are listed on any stock exchange.

Section 7.7. <u>Compensation and Indemnity</u>.

The Company shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred by it. Such expenses shall include the reasonable compensation and out-of-pocket expenses of the Trustee's agents and counsel.

The Company shall indemnify the Trustee or any predecessor Trustee and each of their respective officers, agents (including, for purposes of illustration and not of limitation, any custodian and other Person employed to act hereunder by the Trustee), directors, and employees for, and hold them harmless against any and all loss, damage, claims, liability, or expense incurred by it or them arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself or themselves against any claim (whether asserted by the Company, or any Holder or any other Person) or liability in connection with the exercise or performance of any of its or their powers or duties hereunder, or in connection with enforcing the provisions of this Section, except as set forth in the next two paragraphs. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity; provided, however, that failure by an indemnifiable Person to give any such notice shall not relieve the Company of its obligation hereunder to indemnify such indemnifiable Person except to the extent actually prejudiced by the delay. The Company shall defend the claim and the Trustee shall cooperate in the defense.

The Trustee may have separate counsel, and the Company shall pay the reasonable fees and expenses of such counsel. The Company shall not be required to pay for any settlement made without its consent, which consent shall not be unreasonably withheld, conditioned or delayed.

The Company shall not be required to reimburse any expense or indemnify against any loss or liability incurred by the Trustee through gross negligence, willful misconduct, or bad faith.

To secure the Company's payment of obligations in this Section, the Trustee shall have a lien prior to the Notes on all money or property held or collected by the Trustee, including that held in trust to pay principal and interest on the Notes.

When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.1(d) or (e) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law.

Section 7.8. <u>Replacement of Trustee</u>.

A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section.

The Trustee may resign by so notifying the Company. The Trustee may be removed with respect to the Notes by the Holders of a majority in principal amount of the then outstanding Notes by so notifying the Trustee and the Company. The Company may remove the Trustee if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the
 Trustee fails to comply with Section 7.10;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the
 Trustee is adjudged a bankrupt or an insolvent or any order for relief is entered with respect
 to the Trustee under any Bankruptcy Law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) a
 Custodian or public officer takes charge of the Trustee or its property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the
 Trustee becomes incapable of action; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) in
 the judgment of the Company, comparable services are available from another entity qualifying
 under Section 7.10 at a materially lower cost to the Company.

If the Trustee resigns or is removed or if a vacancy exists in the office of the Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, a successor Trustee may be appointed by act of the Holders of a majority in principal amount of the then outstanding Notes to replace the successor Trustee appointed by the Company.

If a successor Trustee does not take office within sixty (60) days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 7.10, any Holder of the Notes may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers, and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to the Holders of Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.7.

Section 7.9. <u>Successor Trustee by Merger, Etc.</u>

If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to another entity, the successor entity without any further act shall be the successor Trustee.

Section 7.10. <u>Eligibility; Disqualification</u>.

This Indenture shall always have a Trustee who satisfies the requirements of Sections 310(a)(1), 310(a)(2), and 310(a)(5) of the TIA. The Trustee shall always have a combined capital and surplus as stated in the TIA. The Trustee is subject to Section 310(b) of the TIA. Section 11.10 lists any excluded indenture or trust agreement.

Section 7.11. <u>Preferential Collection of Claims Against Company</u>.

The Trustee is subject to Section 311(a) of the TIA, excluding any creditor relationship described in Section 311(b) of the TIA. A Trustee who has resigned or been removed shall be subject to Section 311(a) of the TIA to the extent indicated therein.

**ARTICLE 8**

**DISCHARGE OF INDENTURE; DEFEASANCE**

Section 8.1. <u>Termination of Company's Obligations</u>.

This Indenture shall cease to be of further effect (except that the Company's obligations under Sections 7.7 and 8.5 shall survive) when all outstanding Notes theretofore issued have been identified to the Trustee for cancellation. In addition, the Company may terminate its obligations under this Indenture if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the
 Notes then outstanding are to be called for redemption within one year under arrangements
 satisfactory to the Trustee for giving the notice of redemption; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the
 Company irrevocably deposits with the Trustee, in trust, for the benefit of the Holders,
 money or U.S. Government Obligations, or a combination thereof, in such amounts as will be
 sufficient (without reinvestment) to pay the principal and interest on the Notes on the stated
 date for payment or on the redemption date. The Company may make the deposit only during
 the one-year period and only if Article 11 permits it.

However, the Company's obligations in Sections 2.4, 2.5, 2.6, 2.7, 2.8, 4.1, 6.7, and 6.8, and in Article 10, shall survive until no Notes are outstanding. Thereafter, only the Company's obligations in Sections 7.7 and 8.5 shall survive.

If a deposit is made pursuant to this Section 8.1, the Trustee, upon request, shall acknowledge in writing the discharge of the Company's obligations under this Indenture, except for those surviving obligations specified above.

In order to have money available on a payment date to pay principal and interest on the Notes, the U.S. Government Obligations shall be payable as to principal and interest on or before such payment date in such amounts as will provide the necessary money. U.S. Government Obligations shall not be callable at the issuer's option.

"**U.S. Government Obligations**" means direct obligations of the United States of America for the payment of which the full faith and credit of the United States of America is pledged.

Section 8.2. <u>Legal Defeasance and Covenant Defeasance.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company may, at its option and at any time, elect to have either paragraph (b) or (c) below be applied to all outstanding Notes upon compliance with the conditions set forth in Section 8.3.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Upon the Company's exercise under Section 8.2(a) hereof of the option applicable to this Section 8.2(b), the Company shall, subject to the satisfaction of the conditions set forth in Section 8.3, be deemed to have been discharged from their obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "**Legal Defeasance**"). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Debt represented by the outstanding Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.4 hereof and the other Sections of this Indenture referred to in (1) and (2) below, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the
 rights of Holders of outstanding Notes to receive, solely from the trust fund described in
 Section 8.4 hereof, and as more fully set forth in such Section 8.4, payments in respect
 of the principal of and interest on such Notes when such payments are due;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the
 Company's obligations with respect to such Notes under Article 2 and Section 4.1 hereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) the
 rights, powers, trusts, duties, and immunities of the Trustee hereunder and the Company's
 obligations in connection therewith; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) the
 provisions of this Article 8 applicable to Legal Defeasance.

Subject to compliance with this Article 8, the Company may exercise its option under this Section 8.2(b) notwithstanding the prior exercise of its option under Section 8.2(c) hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Upon the Company's exercise under paragraph (a) hereof of the option applicable to this paragraph (c), the Company shall, subject to the satisfaction of the conditions set forth in Section 8.3 hereof, be released from their respective obligations under the covenants contained in Sections 4.2 and 4.4 hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.3 are satisfied (hereinafter, "**Covenant Defeasance**"), and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent, or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition, or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute an Event of Default under Section 6.1 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Company's exercise under paragraph (a) hereof of the option applicable to this paragraph (c), subject to the satisfaction of the conditions set forth in Section 8.3 hereof, clause (c) of Section 6.1 hereof shall not constitute an Event of Default.

Section 8.3. <u>Conditions to Legal Defeasance or Covenant Defeasance.</u>

The following shall be the conditions to the application of either Section 8.2(b) or 8.2(c) hereof to the outstanding Notes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the
 Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders,
 money or U.S. Government Obligations, or a combination thereof, in such amounts as will be
 sufficient (without reinvestment), in the opinion of a nationally recognized firm of independent
 public accountants selected by the Company, to pay the principal and interest on the Notes
 on the stated date for payment or on the redemption date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) in
 the case of Legal Defeasance, the Company shall have delivered to the Trustee an Opinion
 of Counsel in the United States confirming that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the
 Company has received from, or there has been published by the Internal Revenue Service, a
 ruling, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) since
 the date of this Indenture, there has been a change in the applicable U.S. federal income
 tax law,

in either case to the effect that, and based thereon, the Holders will not recognize income, gain, or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) in
 the case of Covenant Defeasance, the Company shall have delivered to the Trustee an Opinion
 of Counsel in the United States reasonably acceptable to the Trustee confirming that the
 Holders will not recognize income, gain, or loss for U.S. federal income tax purposes as
 a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the
 same amounts, in the same manner and at the same times as would have been the case if such
 Covenant Defeasance had not occurred;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) no
 Default shall have occurred and be continuing on the date of such deposit;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) the
 Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or
 constitute a Default under, this Indenture or a default under any other material agreement
 or instrument to which the Company or any of its Subsidiaries is a party or by which the
 Company or any of its Subsidiaries is bound;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) the
 Company shall have delivered to the Trustee an Officer's Certificate stating that the
 deposit was not made by it with the intent of preferring the Holders over any other creditors
 of the Company or with the intent of defeating, hindering, delaying, or defrauding any other
 of its creditors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) the
 Company shall have delivered to the Trustee an Officer's Certificate and an Opinion
 of Counsel, each stating that the conditions provided for in clauses (a) through (f) of this
 Section 8.3 (in the case of the Officer's Certificate), as applicable, and clauses
 (b), if applicable, and/or (c) and (e) of this Section 8.3 (in the case of the Opinion of
 Counsel) have been complied with.

Section 8.4. <u>Application of Trust Money</u>.

The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to Section 8.1. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal and interest on the Notes. Money and Notes so held in trust are not subject to Article 10.

Section 8.5. <u>Repayment to the Company</u>.

The Trustee and the Paying Agent shall promptly pay to the Company upon request any money or Notes held by them at any time in excess of amounts required to be so held hereunder.

The Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal and interest that remains unclaimed for two years. After payment to the Company, Certificateholders entitled to the money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person.

**ARTICLE 9**

**AMENDMENTS**

Section 9.1. <u>Without Consent of Holders</u>.

The Company and the Trustee may amend this Indenture or the Notes without the consent of the Holders of the Notes by Company Order:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) to
 cure any ambiguity, defect, or inconsistency;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) to
 comply with Article 5;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) to
 provide for certificated Notes in addition to uncertificated Notes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) to
 increase the aggregate principal amount of Notes which may be delivered under this Indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) to
 make any change that does not adversely affect the legal rights hereunder of the Holders
 of the Notes; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) to
 comply with requirements of the SEC in order to effect or maintain the qualification of this
 Indenture with the TIA.

After an amendment under this Section becomes effective, the Company shall mail to the Holders of the Notes affected by such amendment a notice briefly describing the amendment.

Section 9.2. <u>With Consent of Holders</u>.

The Company and the Trustee may amend this Indenture or the Notes with the written consent of the Holders of at least a majority in principal amount of the then outstanding Notes. However, without the consent of each Certificateholder affected, an amendment under this Section may not:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) reduce
 the amount of Notes whose Holders must consent to an amendment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) reduce
 the principal of or change the demand payment nature of any Note;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) make
 any Note payable in money other than that stated in such Note;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) make
 any change in Section 6.4, Section 6.7, or Section 9.2; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) make
 any change in Article 10 that adversely affects the rights of any Certificateholder.

An amendment under this Section may not make any change that adversely affects the rights under Article 10 of any holder of an issue of Senior Debt unless the holders of the issue pursuant to its terms consent to the change or the change is otherwise permissible.

The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Persons entitled to consent to any indenture supplemental hereto. If a record date is fixed, the Holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to consent to such supplemental indenture, whether or not such Holders remain Holders after such record date; provided, that unless such consent shall have become effective by virtue of the requisite percentage having been obtained prior to the date which is 90 days after such record date, any such consent previously given shall automatically and without further action by any Holder be cancelled and of no further effect.

After an amendment under this Section becomes effective, the Company shall mail to the Holders of the Notes affected by such amendment a notice briefly describing the amendment.

Section 9.3. <u>Compliance with Trust Indenture Act</u>.

Every amendment to this Indenture or the Notes shall be set forth in a supplemental indenture that complies with the TIA as then in effect.

Section 9.4. <u>Revocation and Effect of Consents</u>.

Until an amendment or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notification of the consent is not made on any Note. However, any such Holder or subsequent Holder may revoke the consent as to his or her Note or portion of a Note if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective. An amendment or waiver becomes effective in accordance with its terms and thereafter binds every Holder of the Notes.

Section 9.5. <u>Notation on or Exchange of Notes</u>.

The Company may place an appropriate notation about an amendment or waiver on any Note (or confirmation thereof) thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall authenticate, if the Trustee is acting as Registrar, new Notes that reflect the amendment or waiver.

Section 9.6. <u>Trustee Protected</u>.

The Trustee shall sign all supplemental indentures and shall be fully protected in doing so, except that the Trustee need not sign any supplemental indenture that adversely affects its rights. The Trustee shall receive, and shall be fully protected in relying on, an Opinion of Counsel and an Officer's Certificate, as further described in Section 11.4, which shall be provided at the expense of the Company.

**ARTICLE 10**

**SUBORDINATION**

Section 10.1. <u>Agreement to Subordinate</u>.

The Company agrees, and each Certificateholder by accepting a Note agrees, that the indebtedness evidenced by the Note is subordinated in right of payment, to the extent and in the manner provided in this Article, to the prior payment in full of all Senior Debt, and that the subordination is for the benefit of the holders of Senior Debt.

Section 10.2. <u>Certain Definitions</u>.

"**Debt**" means any indebtedness, contingent or otherwise, in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of the Company or only to a portion thereof), or evidenced by bonds, notes, debentures, or similar instruments or letters of credit, or representing the balance deferred and unpaid on the purchase price of any property or interest therein, except any such balance that constitutes a trade payable, and shall include any guarantee of any indebtedness described above.

"**Representative**" means the indenture trustee or other trustee, agent, or representative for an issue of Senior Debt.

"**Senior Debt**" means all Debt (present or future) created, incurred, assumed, or guaranteed by the Company (and all renewals, extensions, or refundings thereof), except such Debt that by its terms expressly provides that such Debt is not senior or superior in right of payment to the Notes. Senior Debt shall include without limitation (i) the guarantee by the Company of any Debt of any other person (including, without limitation, subordinated Debt of another person), unless such Debt is expressly subordinated to any other Debt of the Company, (ii) all Debt of the Company maintained with banks and finance companies and any line of credit to be obtained by the Company in the future and (iii) all Debt of the Company obtained from Affiliates. Notwithstanding anything herein to the contrary, Senior Debt shall not include Debt of the Company to any of its subsidiaries or under the Notes.

Section 10.3. <u>Liquidation; Dissolution; Bankruptcy</u>.

Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership, or similar proceeding relating to the Company or its property:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) holders
 of Senior Debt shall be entitled to receive payment in full in cash of the principal and
 interest (including interest accruing after the commencement of any such proceeding) to the
 date of payment, on the Senior Debt before Certificateholders shall be entitled to receive
 any payment of principal and interest on Notes; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) until
 the Senior Debt is paid in full in cash, any distribution to which Certificateholders would
 be entitled but for this Article shall be made to holders of Senior Debt as their interest
 may appear, except that Holders of Notes may receive Notes that are subordinated to Senior
 Debt to at least the same extent as such Notes.

Section 10.4. <u>Default on Senior Debt</u>.

Upon the maturity of any Senior Debt by lapse of time, acceleration, or otherwise, all such Senior Debt shall first be paid in full, or such payment duly provided for in cash or in a manner satisfactory to the holders of such Senior Debt, before any payment is made by the Company or any person acting on behalf of the Company on account of the principal and interest on the Notes.

The Company may not pay principal and interest on the Notes and may not acquire Notes for cash or property other than capital stock of the Company if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a
 default on Senior Debt occurs and is continuing that permits holders of such Senior Debt
 to accelerate its maturity, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the
 default is the subject of judicial proceedings or the Company receives a notice of the default
 from a person who may give it pursuant to Section 10.12. If the Company receives any such
 notice, a similar notice received within nine (9) months thereafter relating to the same
 default on the same issue of Senior Debt shall not be effective for purposes of this Section.

The Company may resume payments on the Notes and may acquire them when:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the
 default is cured or waived, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) one
 hundred twenty (120) days pass after the notice is given if the default is not the subject
 of judicial proceedings, if this Article otherwise permits the payment or acquisition at
 that time.

Section 10.5. <u>Acceleration of Notes</u>.

If payment of the Notes is accelerated because of an Event of Default, the Company shall promptly notify holders of Senior Debt of the acceleration. The Company may pay Holders of the Notes when one hundred twenty (120) days pass after the acceleration occurs if this Article permits the payment at that time.

Section 10.6. <u>When Distribution Must Be Paid Over</u>.

In the event that, notwithstanding the provisions of Section 10.4, the Company shall make any payment to the Trustee on account of the principal and interest on the Notes, two (2) business days after the happening of a default in payment of the principal or interest on Senior Debt, or two (2) business days after receipt by the Company and the Trustee of written notice as provided in Sections 10.4 and 10.12 of an Event of Default or an event which, with the passage of time or the giving of notice or both, would constitute an Event of Default with respect to any Senior Debt, then, unless and until such Default or Event of Default shall have been cured or waived or shall have ceased to exist, such payment shall be held by the Trustee, in trust for the benefit of, and shall be paid forthwith over and delivered to, the holders of Senior Debt (pro rata as to each of such holders on the basis of the respective amounts of Senior Debt held by them) or their representative or the trustee under the indenture or other agreement (if any) pursuant to which Senior Debt may have been issued, as their respective interests may appear, for application to the payment of all Senior Debt remaining unpaid to the extent necessary to pay all Senior Debt in full in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Debt.

If a distribution is made to the Holders of Notes that because of this Article should not have been made to them, the Holders who receive the distribution shall hold it in trust for holders of Senior Debt and pay it over to them as their interests may appear.

Section 10.7. <u>Notice by Company</u>.

The Company shall promptly notify the Trustee and the Paying Agent of any facts known to the Company that would cause a payment of principal and interest on the Notes to violate this Article, but failure to give such notice shall not affect the subordination of the Notes to the Senior Debt provided in this Article. Nothing in this Article 10 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.7.

Section 10.8. <u>Subrogation</u>.

After all Senior Debt is paid in full and until the Notes are paid in full, Holders of the then outstanding Notes shall be subrogated to the rights of holders of Senior Debt to receive distributions applicable to Senior Debt to the extent distributions otherwise payable to such Holders have been applied to the payment of Senior Debt. A distribution made under this Article to holders of Senior Debt which otherwise would have been made to Certificateholders is not, as between the Company and Certificateholders, a payment by the Company on Senior Debt.

Section 10.9. <u>Relative Rights</u>.

This Article defines the relative rights of Certificateholders and holders of Senior Debt. Nothing said in this indenture shall:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) impair,
 as between the Company and Certificateholders, the obligation of the Company, which is absolute
 and unconditional, to pay principal of and interest on the Notes in accordance with their
 terms;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) affect
 the relative rights of Certificateholders and creditors of the Company other than holders
 of Senior Debt; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) prevent
 the Trustee or any Certificateholder from exercising its available remedies upon a Default
 or Event of Default, subject to the rights of holders of Senior Debt to receive distributions
 otherwise payable to Certificateholders.

If the Company fails because of this Article to pay principal and interest on a Note on the due date, the failure is still a Default or Event of Default.

Section 10.10. <u>Subordination may not be Impaired by Company</u>.

No right of any holder of Senior Debt to enforce the subordination of the indebtedness evidenced by the Notes shall be impaired by any act or failure to act by the Company or by its failure to comply with this Indenture.

Section 10.11. <u>Distribution or Notice to Representative</u>.

Whenever a distribution is to be made or a notice given to holders of Senior Debt, the distribution may be made and the notice given to their Representative.

Section 10.12. <u>Rights of Trustee and Paying Agent</u>.

The Trustee or Paying Agent may continue to make payments on the Notes until it receives notice of facts that would cause a payment of principal and interest on the Notes to violate this Article. Only the Company, a Representative, or a holder of an issue of Senior Debt that has no Representative may give the notice.

The Trustee in its individual or any other capacity may hold Senior Debt with same rights it would have if it were not Trustee. Any Agent may do the same with like rights.

Section 10.13. <u>Trust Moneys Not Subordinated</u>.

Notwithstanding anything contained herein to the contrary, payments from money or the proceeds of U.S. Government Obligations held in trust under Article 8 by the Trustee for the payment of principal of and interest on the Notes shall not be subordinated to the prior payment of any Senior Debt or subject to the restrictions set forth in this Article 10, and none of the Holders of the Notes shall be obligated to pay over any such amount to the Company or any holder of Senior Debt of the Company or any other creditor of the Company.

Section 10.14. <u>Trustee Not Fiduciary for Holders of Senior Debt</u>.

The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be liable to any such holders if it shall mistakenly pay over or distribute to Holders of the Notes or the Company or any other person, money or assets to which any holders of Senior Debt of the Company shall be entitled by virtue of this Article 10 or otherwise.

**ARTICLE 11**

**MISCELLANEOUS**

Section 11.1. <u>TIA Controls</u>.

If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control.

Section 11.2. <u>Notices</u>.

Any notice by the Company or the Trustee to the other is duly given if in writing and delivered in person or mailed by first-class mail to the other's address stated in Section 11.10. The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

Any notice to a Certificateholder shall be mailed by first-class mail to the address shown on the register kept by the Registrar or such other name and addresses as provided to the Trustee pursuant to Sections 313(c)(2) and (3) of the TIA. Failure to mail a notice or communication to a Certificateholder or any defect in it shall not affect its sufficiency with respect to other Certificateholders.

If a notice is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.

If the Company mails a notice to Certificateholders, it shall mail a copy to the Trustee and each Agent at the same time.

All notices shall be in writing.

Section 11.3. <u>Communication by Holders With Other Holders</u>.

Certificateholders may communicate pursuant to Section 312(b) of the TIA with other Certificateholders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar, and anyone else shall have the protection of Section 312(c) of the TIA.

Section 11.4. <u>Certificate and Opinion as to Conditions Precedent</u>.

Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) an
 Officer's Certificate stating that, in the opinion of the signers, all conditions precedent,
 if any, provided for in this Indenture relating to the proposed action and the other items
 detailed in Section 11.5 have been complied with; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) an
 Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent
 and the other items detailed in Section 11.5 have been complied with.

Section 11.5. <u>Statements Required in Certificate or Opinion</u>.

Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a
 statement that the person making such certificate or opinion has read such covenant or condition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a
 brief statement as to the nature and scope of the examination or investigation upon which
 the statements or opinions contained in such certificate or opinion are based;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) a
 statement that, in the opinion of such person, he or she has made such examination or investigation
 as is necessary to enable him or her to express an informed opinion as to whether or not
 such covenant or condition has been complied with; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) a
 statement as to whether or not, in the opinion of such person, such condition or covenant
 has been complied with.

Section 11.6. <u>Rules by Trustee and Agents</u>.

The Trustee may make reasonable rules for action by or a meeting of Certificateholders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.

Section 11.7. <u>Legal Holidays</u>.

A "**Legal Holiday**" is a Saturday, a Sunday, or a day on which banking institutions are not required to be open. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period.

Section 11.8. <u>No Recourse Against Others</u>.

All liability described in the Notes of any member, manager, director, officer, employee, or stockholder, as such, of the Company and the Trustee is waived and released. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

Section 11.9. <u>Duplicate Originals</u>.

The parties may sign any number of copies of this Indenture. One signed copy is enough to prove this Indenture.

Section 11.10. <u>Variable Provisions</u>.

The Company initially appoints itself as Paying Agent and Registrar.

The first Officer's Certificate pursuant to Section 4.3 shall be for the fiscal year ending on December 31, 2026.

The reporting date for Section 7.6 is May 15 of each year. The first reporting date is May 15, 2027.

The Company's address is:

13241 Bartram Park Blvd.

Suite 2401

Jacksonville, Florida 32258

Attention: Dan Wallach

The Trustee's address is:

U.S. Bank Trust Company, National Association

Global Corporate Trust

2 Concourse Parkway, Suite 800

Atlanta, Georgia 30328

Attention: Account Manager - Shepherd's Finance, LLC

Section 11.11. <u>Governing Law</u>.

The internal laws of the State of Delaware shall govern this Indenture and the Notes.

Section 11.12. <u>No Adverse Interpretation of Other Agreements</u>.

This Indenture may not be used to interpret another indenture, loan, or debt agreement of the Company or a Subsidiary. Any such indenture, loan, or debt agreement may not be used to interpret this Indenture.

Section 11.13. <u>Successors</u>.

All agreements of the Company in this Indenture and the Notes shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor.

Section 11.14. <u>Severability</u>.

In case any provision in this Indenture or the Notes shall be invalid, illegal, or unenforceable, then the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

IN WITNESS WHEREOF, the parties hereto hereby execute this Indenture as of the date first written.

---

| | |
|:---|:---|
| **COMPANY:** | **COMPANY:** |
| SHEPHERD'S FINANCE, LLC | SHEPHERD'S FINANCE, LLC |
| By: |  |
|  | Daniel M. Wallach, Chief Executive Officer |
| **TRUSTEE:** | **TRUSTEE:** |
| U.S. Bank Trust Company, <br> National Association  | U.S. Bank Trust Company, <br> National Association  |
| By: |  |
|  | April Bright, Vice President |

---

**<u>Exhibit A</u>**

**FORM OF FIXED RATE SUBORDINATED NOTE**

**OF**

**SHEPHERD'S FINANCE, LLC**

**Fixed Rate Subordinated Note**

___________ __, 20__

---

| | |
|:---|:---|
| **No. ____** | **Jacksonville, Florida** |

---

Subject to the restrictions in Section 6 below, ___________________________________from the date hereof, Shepherd's Finance, LLC (the "Company") promises to pay ___________________________ DOLLARS at the main office of the Company, 13241 Bartram Park Blvd., Suite 2401, Jacksonville, Florida 32258 and to pay interest thereon at the rate of ____% (percent) per annum, in accordance with Section 1 below.

This is one of a duly authorized issue of Fixed Rate Subordinated Notes of the Company (the "Notes") issued under and subject in all respects to the terms of an Indenture dated as of [__], 2026 (the "Indenture"), between the Company and U.S. Bank Trust Company, National Association, as trustee (the "Trustee"). Reference is hereby made to the Indenture and all supplemental indentures for a statement of the respective rights of the Company, the Trustee, the agents of the Company, and the Trustee and the holders of the Notes. All capitalized terms used, but not defined, in this Note have the meanings assigned to them in the Indenture. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note in the manner herein prescribed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Interest</u>. Interest will be calculated based on the actual number of days the Note is outstanding based on a 365/366 day year. Interest will be earned daily and payable monthly or at maturity at the holder's request. If the holder elects to receive interest at maturity rather than monthly, interest will be compounded monthly. If any payment of the Note is due on a Legal Holiday, then the holder will not be entitled to payment of the amount due until the following day that is not a Legal Holiday, and no interest will be due as a result of such delay. If the holder elects to receive interest monthly, interest will be paid on the first business day (not a Legal Holiday) of every month (each an "Interest Payment Date"). The first Interest Payment Date will be the month following the month of the Date of Issue, except that if a Note is issued within the last 10 days preceding an Interest Payment Date, the first interest payment will be made on the next succeeding Interest Payment Date. No payments of interest under fifty dollars will be made, with any interest payment under fifty dollars accruing and earning interest on a monthly compounding basis until the payment due is at least fifty dollars on an Interest Payment Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Redemption by Company</u>. Subject to the restrictions of Section 6 below and in accordance with the procedures set forth in Article 3 of the Indenture, this Note may be redeemed by the Company prior to maturity for a redemption price equal to the principal amount, plus any unpaid interest thereon to the date of redemption. Notice of redemption shall be given by mail to the holder of this Note (the "Noteholder") at the holder's last address as it appears on the records of the Company not less than 30 nor more than 60 days prior to the date fixed for redemption. Once notice of redemption is mailed, Notes called for redemption become due and payable on the date of redemption set forth in the notice of redemption at the redemption price. On or before the redemption date, the Company shall set aside money sufficient to pay the redemption price of all Notes to be redeemed on that date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Redemption at Request of Noteholder</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) BEGINNING 180 DAYS AFTER THE ISSUANCE DATE, AT THE WRITTEN REQUEST OF THE NOTEHOLDER DELIVERED TO THE COMPANY, THE COMPANY MAY, AT ITS OPTION AND SUBJECT TO THE RESTRICTIONS OF SECTION 6 BELOW, BUT SHALL NOT BE REQUIRED TO, REDEEM THIS NOTE for a redemption price equal to the principal amount plus an amount equal to the unpaid interest thereon for this Note, as adjusted, at the stated rate to the redemption date minus an amount equal to the interest that would be payable thereon at the rate stated above for a 180-day period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) NOTWITHSTANDING THE FOREGOING SECTION 3(a), IF THIS NOTE (i) ON THE DATE OF ISSUE HAD A DURATION OF 36 MONTHS, THEN, AT THE WRITTEN REQUEST DELIVERED TO THE COMPANY BY THE NOTEHOLDER, THE COMPANY SHALL, SUBJECT TO THE RESTRICTIONS OF SECTION 6 BELOW, REDEEM ALL OR A PORTION OF THIS NOTE (AS REQUESTED BY THE NOTEHOLDER) for a redemption price equal to the principal amount plus an amount equal to the unpaid interest thereon for this Note at the stated rate to the redemption date, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Company shall redeem up to $10,000 of this Note within 7 days of the redemption request;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The Company shall redeem up to an additional $90,000 of this Note within 30 days of the redemption request;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) The Company shall redeem any remaining amount of this Note requested to be redeemed within 90 days of the redemption request; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) The Company shall redeem all or a portion of this Note if requested by the Noteholder, regardless of amount, within 1 business day but only if the Noteholder immediately upon redemption invests the entirety of the proceeds from such redemption in another security then-offered by the Company; provided, however, the Noteholder may only reinvest in another Note with a duration that is equal to or greater than the period remaining until the maturity date of the Note to be redeemed.

For purposes of determining the length of time within which the Company must redeem all or a portion of this Note under this Section 3(b), the dollar amount of a given redemption request will be added to any amount or amounts of this Note previously requested to be redeemed that were redeemed by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) NOTWITHSTANDING THE FOREGOING SECTION 3(a), AT THE WRITTEN REQUEST DELIVERED TO THE COMPANY BY THE NOTEHOLDER, THE COMPANY SHALL, SUBJECT TO THE RESTRICTIONS OF SECTION 6 BELOW, REDEEM ALL OR A PORTION OF THIS NOTE (AS REQUESTED BY THE NOTEHOLDER) for a redemption price equal to the principal amount plus an amount equal to the unpaid interest thereon for this Note at the stated rate to the redemption date within 1 business day, but only if the Noteholder immediately upon redemption invests the entirety of the proceeds from such redemption in another Note or another security then-offered by the Company, if any; provided, however, (i) a Noteholder may only reinvest in another Note with a duration that is equal to or greater than the period remaining until the maturity date of the Note to be redeemed and (ii) a Noteholder may only reinvest in a Note with a duration of 36 months if the Note to be redeemed had a duration of 36 months on the Date of Issue.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Redemption Upon Death of Noteholder</u>. Upon the death of the Noteholder, the Company shall be required to redeem this Note at the date of the Noteholder's death, as requested in the manner, and subject to the limitations, set forth below. The redemption price shall be equal to 100% of the principal amount of the Note plus accrued interest on a daily basis to the redemption date. Redemption of this Note shall be made as soon as reasonably possible, based on the Company's then current case position and needs, but generally within two weeks following the receipt by the Company or the Trustee of all of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a written request for redemption signed by a duly authorized representative of the Noteholder, which request shall set forth the name of the Noteholder, the date of death of the Noteholder and the principal amount of this Note;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) evidence satisfactory to the Trustee and the Company of the death of the Noteholder and the authority of the representative to such extent as may be required by the Trustee or Company.

This Note shall not be entitled to redemption pursuant to this Section 4 unless the Note has been registered in the Noteholder's name since its Date of Issue.

Authorized representatives of the Noteholder shall include the following: executors, administrators, or other legal representatives of an estate; trustees of a trust; joint owner of the Note owned in joint tenancy or tenancy by the entirety; attorneys-in-fact; and other persons generally recognized as having legal authority to act on behalf of another.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Reinvestment Option at Maturity</u>. Between 30 and 60 days prior to the maturity date of this Note, the Company will deliver a notice of the maturity date to the Noteholder and, if the Company is offering any reinvestment options and has an effective offering available, a form containing options to reinvest the proceeds of this Note upon maturity in a new Note that is being offered in such offering. The reinvestment form will contain the terms of Notes being offered at that time and the Noteholder may select one of the reinvestment options offered. If the Noteholder properly completes, executes, and returns the reinvestment form at least 5 business days prior to the maturity date, the proceeds of this Note will be deemed reinvested under the reinvestment terms selected and a new Note will be issued by the Company within 5 business days after the maturity date of this Note. If the Noteholder does not return a properly completed reinvestment form within the time period prescribed herein or there are no reinvestment options offered by the Company, then the Company will pay the principal amount plus any unpaid interest to the Noteholder at maturity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Subordination</u>. This Note is subordinated, in all rights to payment and in all other respects, to Senior Debt. Senior Debt means all Debt (present or future) created, incurred, assumed, or guaranteed by the Company (and all renewals, extensions, or refundings thereof), except such Debt that by its terms expressly provides that such Debt is not senior or superior in right of payment to the Notes. Senior Debt shall include without limitation (i) the guarantee by the Company of any Debt of any other person (including, without limitation, subordinated Debt of another person), unless such Debt is expressly subordinated to any other Debt of the Company, (ii) all Debt of the Company maintained with banks and finance companies and any line of credit to be obtained by the Company in the future and (iii) all Debt of the Company obtained from Affiliates. Notwithstanding anything herein to the contrary, Senior Debt shall not include Debt of the Company to any of its subsidiaries or under the Notes. Any other Fixed Rate Subordinated Notes issued by the Company pursuant to a public or private offering thereof shall be pari passu with this Note and shall not constitute Senior Debt. Debt means any indebtedness, contingent or otherwise, in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of the Company or only to a portion thereof), or evidenced by bonds, notes, debentures, or similar instruments or letters of credit, or representing the balance deferred and unpaid on the purchase price of any property or interest therein, except any such balance that constitutes a trade payable, and shall include any guarantee of any indebtedness described above. The Company agrees, and the Noteholder by accepting this Note agrees, to the subordination provisions set forth in Article 10 of the Indenture.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Amendments and Waivers</u>. As permitted in the Indenture, the Indenture, other than the subordination provisions, may be amended and the rights and obligations of the Company and the rights of the holders of the Notes under the Indenture modified at any time by the Company with the consent of the Trustee and holders of a majority in principal amount of the then outstanding Notes. The Company and the Trustee may not modify the Indenture without the consent of each holder affected if the modification (i) affects the terms of payment of, the principal of, or any interest on, any Note; (ii) changes the percentage of Noteholders who consent to a waiver or modification as required; (iii) affects the subordination provisions of the Indenture in a manner that adversely affects the right of any holder; or (iv) waives any Event of Default in the payment of principal of, or interest on, any Note. As permitted by the Indenture, the Trustee and holders of a majority in principal amount of the then outstanding Notes, on behalf of the holders of all Notes, may waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences, except an Event of Default in the payment of principal or of interest on the Notes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Defaults and Remedies</u>. If an Event of Default, as defined in the Indenture, occurs and is continuing, the principal of and accrued interest on all Notes may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture generally provides that an Event of Default occurs if: (i) the Company fails to pay any installment of interest on a Note when the same becomes due and payable and the failure to pay continues for a period of thirty (30) days; (ii) the Company fails to pay the principal of any Note when the same becomes due and payable at maturity, upon redemption or otherwise, and the failure to pay continues for a period of thirty (30) days; (iii) the Company fails to comply with any of its other agreements in, or the provisions of, the Note or the Indenture and such failure is not cured or waived within sixty (60) days after receipt by the Company of a specific written notice from the Trustee or the holders of at least 25% in principal amount of the then outstanding Notes; and (iv) the Company becomes subject to certain events of bankruptcy or insolvency.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>Transfer</u>. As provided in the Indenture, this Note is transferable only on the Note register maintained by the Registrar, upon surrender of this Note for transfer at the office of the Registrar, duly endorsed by, or accompanied by a written instrument of transfer in a form satisfactory to the Company and the Registrar duly executed by, the registered holder hereof or such holder's attorney duly authorized in writing, a copy of which authorization must be delivered with any such instrument of transfer, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. A service fee may be charged to replace a lost or stolen Note, to transfer this Note, or to issue a replacement payment check. The Company, the Trustee, and any agent of the Company or the Trustee may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, and neither the Company, the Trustee, nor any such agent shall be affected by notice to the contrary. The Company currently serves as the Registrar and Paying Agent for the Notes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. <u>Owners</u>. The registered Noteholder shall be treated as the owner of the Note for all purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. <u>No Recourse</u>. A member, manager, director, officer, employee, or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under this Note or for any claim based on, or in respect of such obligations or their creation. The Noteholder by accepting this Note waives and releases all such liability. The waiver and release are part of the consideration for the issue of this Note.

THIS NOTE IS NOT A BANK DEPOSIT NOR A BANK OBLIGATION AND IS NOT INSURED BY THE FDIC.

IN WITNESS WHEREOF, the Company has caused this Note to be signed in its company name by an Officer at Jacksonville, Florida, on the date first written above.

---

| |
|:---|
| **SHEPHERD'S FINANCE, LLC** |
| **By:** |
| Name: |
| Title: |

---

## Exhibit 5.1

**Exhibit 5.1**

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| | |
|:---|:---|
| ![](ex5-1_001.jpg) | **NELSON MULLINS RILEY & SCARBOROUGH LLP**<br> **ATTORNEYS AND COUNSELORS AT LAW** |
|  | **Atlantic Station** |
|  | **201 17th Street, NW \| Suite 1700** |
| **Michael K. Rafter** | **Atlanta, GA 30363** |
| **T 404.322.6627** | **T 404.322.6000 F 404.322.6050** |
| **mike.rafter@nelsonmullins.com** | **nelsonmullins.com** |

---

April 20, 2026

Shepherd's Finance, LLC

13241 Bartram Park Blvd., Suite 2401

Jacksonville, Florida 32258

---

| | |
|:---|:---|
| Re: | Registration Statement on Form S-1 of $70,000,000 in Principal Amount of Fixed Rate Subordinated Notes |

---

Ladies and Gentlemen:

We have acted as counsel to Shepherd's Finance, LLC, a Delaware limited liability company (the "Company"), in connection with a Registration Statement on Form S-1 (the "Registration Statement") that the Company filed with the Securities and Exchange Commission (the "Commission") on or about September 15, 2025 under the Securities Act of 1933, as amended (the "Securities Act"), and all amendments thereto. The Registration Statement relates to the offering and sale from time to time of up to $70,000,000 of the Company's Fixed Rate Subordinated Notes (the "Notes"). All capitalized terms that are defined in the Registration Statement shall have the same meanings when used herein, unless otherwise specified.

The Notes are to be issued under an indenture between the Company and U.S. Bank Trust Company, National Association, as trustee (the "Trustee"), the form of which is filed as Exhibit 4.1 to the Registration Statement (as supplemented, from time to time, the "Indenture"). We have assumed that (a) the execution and delivery of, and the performance of all obligations under, the Indenture will have been duly authorized by the Trustee, and (b) the Indenture will be duly executed and delivered by, and, when executed, will constitute a valid and binding agreement of, the Trustee, enforceable against the Trustee in accordance with its terms. Further, we have assumed that the Trustee is duly organized and validly existing and has the power and authority (corporate or other) to execute, deliver, and perform its obligations under the Indenture.

In connection herewith, we have examined: (a) the Registration Statement and the related form of prospectus in the form in which it was transmitted to the Commission under the Securities Act, including the exhibits thereto (collectively, the "Registration Documents"); (b) the Company's Certificate of Conversion and Certificate of Formation issued by the State of Delaware dated March 29, 2012 certified as of a recent date by the Secretary of State of the State of Delaware; (c) a resolution of the Company's Board of Managers approving the filing of the Registration Statement covering the Notes, approving the issuance and sale of the Notes, and authorizing the executive officer of the Company to take any required actions in connection with the Notes; (d) a certificate of good standing from the State of Delaware dated as of a recent date; and (e) a certificate executed by an officer of the Company, dated as of the date hereof.

**California \| Colorado \| District of Columbia \| Florida \| Georgia \| Illinois \| Maryland \| Massachusetts \| Minnesota**

**New York \| North Carolina \| Ohio \| Pennsylvania \| South Carolina \| Tennessee \| Texas \| Virginia \| West Virginia**

Shepherd's Finance, LLC

April 20, 2026

We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such other corporate records, agreements, and instruments of the Company, certificates of public officials and officers of the Company, and such other documents, records, and instruments, and we have made such legal and factual inquiries, as we have deemed necessary or appropriate as a basis for us to render the opinions hereinafter expressed. In our examination of the Registration Documents and the foregoing, we have assumed the genuineness of all signatures, the legal competence and capacity of natural persons, the authenticity of documents submitted to us as originals, and the conformity with authentic original documents of all documents submitted to us as copies. We have also assumed that the Registration Statement, as it may be amended, has become effective under the Securities Act, that any applicable state securities or "blue sky" laws have been complied with, and that the Indenture has been qualified pursuant to the Trust Indenture Act. When relevant facts were not independently established, we have relied without independent investigation as to matters of fact upon statements of governmental officials and upon representations made in or pursuant to the Registration Documents and certificates and statements of appropriate representatives of the Company.

Based on the foregoing and in reliance thereon, and subject to the assumptions, comments, qualifications, limitations, and exceptions set forth herein, we are of the opinion that the Notes to be issued pursuant to the Registration Documents have been duly authorized for issuance, and upon the issuance and delivery of the Notes and the receipt by the Company of all consideration therefor in accordance with the terms of the Registration Documents, the Notes will be legal, valid, and binding obligations of the Company in accordance with their terms.

In addition to the assumptions, comments, qualifications, limitations, and exceptions set forth above, the opinions set forth herein are further limited by, subject to, and based upon the following assumptions, comments, qualifications, limitations, and exceptions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Our opinions herein reflect only the application of applicable laws of the State of Delaware. We express no opinion as to the laws of any other jurisdiction. None of the opinions contained in this opinion letter considers or covers any federal securities laws or regulations, state securities (or "blue sky") laws or regulations or foreign securities laws or regulations. We express no opinion concerning the contents of the Registration Statement or any related prospectus. The opinions set forth herein are made as of the date hereof and are subject to, and may be limited by, future changes in factual matters, and we undertake no duty to advise you of the same. The opinions expressed herein are based upon the law in effect (and published or otherwise generally available) on the date hereof, and we assume no obligation to revise or supplement these opinions should such law be changed by legislative action, judicial decision, or otherwise after the date hereof or if we become aware of any fact that might change the opinions expressed herein after the date hereof. In rendering our opinions, we have not considered, and hereby disclaim any opinion as to, the application or impact of any laws, cases, decisions, rules, or regulations of any other jurisdiction, court, or administrative agency.

Shepherd's Finance, LLC

April 20, 2026

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Our opinions contained herein may be limited by (i) applicable bankruptcy, insolvency, reorganization, receivership, moratorium, or similar laws affecting or relating to the rights and remedies of creditors generally, including without limitation laws relating to fraudulent transfers or conveyances, preferences and equitable subordination, (ii) general principles of equity (regardless of whether considered in a proceeding in equity or at law), and (iii) an implied covenant of good faith and fair dealing.

We do not render any opinions except as set forth above.

This opinion letter is being delivered by us in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the caption "Legal Matters" in the prospectus contained in the Registration Statement. In giving such consent, we do not thereby admit that we are "experts" within the meaning of Section 11 of the Securities Act or that we are included in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission promulgated thereunder.

---

| |
|:---|
| Very truly yours, |
| /s/ Nelson Mullins Riley & Scarborough LLP |
| Nelson Mullins Riley & Scarborough LLP |

---

## Exhibit 23.1

**Exhibit 23.1**

<u>Consent of Independent Registered Public Accounting Firm</u>

We hereby consent to the incorporation by reference in the Prospectus constituting a part of this Registration Statement of our report dated April 6, 2026, relating to the consolidated financial statements of Shepherd's Finance, LLC, appearing in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

We also consent to the reference to us under the caption "Experts" in the Prospectus.

/s/ BDO USA, P.C.

(formerly HORNE LLP)

Brentwood, Tennessee

April 20, 2026

## Exhibit 25.1

**Exhibit 25.1**

**securities and exchange commission**

**Washington, D.C. 20549**

**FORM T-1**

**Statement of Eligibility Under**

**The Trust Indenture Act of 1939 of a**

**Corporation Designated to Act as Trustee**

Check if an Application to Determine Eligibility of

a Trustee Pursuant to Section 305(b)(2) ☐

**U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION**

(Exact name of Trustee as specified in its charter)

**91-1821036**

I.R.S. Employer Identification No.

<u>800 Nicollet Mall Minneapolis, Minnesota</u> <u>55402</u> <br> (Address of principal executive offices) (Zip Code)

April Bright

U.S. Bank Trust Company, National Association

2 Concourse Parkway

Suite 800

Atlanta, GA 30328-5588

(404) 898-8829

(Name, address and telephone number of agent for service)

**Shepherd's Finance, LLC**

(Issuer with respect to the Securities)

<u>Delaware</u> <u>36-4608739</u> <br> (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

<u>13241 Bartram Park Blvd. Suite 2401 Jacksonville, Florida</u> <u>32258</u> <br> (Address of Principal Executive Offices) (Zip Code)

**Fixed Rate Subordinated Notes**

**(Title of the Indenture Securities)**

**<u>FORM T-1</u>**

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| | |
|:---|:---|
| **Item** | **1. GENERAL INFORMATION*.*** Furnish the following information as to the Trustee. |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) *Name and address of each examining or supervising authority to which it is subject.* 

Comptroller of the Currency

Washington, D.C.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) *Whether it is authorized to exercise corporate trust powers.* 

Yes

---

| | |
|:---|:---|
| **Item** | **2. AFFILIATIONS WITH THE OBLIGOR.** *If the obligor is an affiliate of the Trustee, describe each such affiliation.* |

---

 

None

---

| | |
|:---|:---|
| **Items 3-15** | *Items 3-15 are not applicable because to the best of the Trustee's knowledge, the obligor is not in default under any Indenture for which the Trustee acts as Trustee.* |

---

**Item 16.** LIST OF EXHIBITS: *List below all exhibits filed as a part of this statement of eligibility and qualification.*

 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. A copy of the Articles of
 Association of the Trustee, attached as Exhibit 1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. A copy of the certificate
 of authority of the Trustee to commence business, attached as Exhibit 2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. A copy of the authorization
 of the Trustee to exercise corporate trust powers, included as Exhibit 2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. A
 copy of the existing bylaws of the Trustee, attached as Exhibit 4.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. A
 copy of each Indenture referred to in Item 4. Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. The
 consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939, attached
 as Exhibit 6.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. Report
 of Condition of the Trustee as of June 30, 2025, published pursuant to law or the requirements
 of its supervising or examining authority, attached as Exhibit 7.

**SIGNATURE**

Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the Trustee, U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Atlanta, State of Georgia on the 20th of April, 2026.

---

| | |
|:---|:---|
| By: | /s/ April Bright  |
|  | April Bright, Vice President |

---

**<u>Exhibit 1</u>**

**ARTICLES OF ASSOCIATION OF**

**U. S. BANK TRUST COMPANY, NATIONAL ASSOCIATION**

For the purpose of organizing an association (the "Association") to perform any lawful activities of national banks, the undersigned enter into the following Articles of Association:

**FIRST.** The title of this Association shall be U. S. Bank Trust Company, National Association.

**SECOND.** The main office of the Association shall be in the city of Portland, county of Multnomah, state of Oregon. The business of the Association will be limited to fiduciary powers and the support of activities incidental to the exercise of those powers. The Association may not expand or alter its business beyond that stated in this article without the prior approval of the Comptroller of the Currency.

**THIRD.** The board of directors of the Association shall consist of not less than five nor more than twenty-five persons, the exact number to be fixed and determined from time to time by resolution of a majority of the full board of directors or by resolution of a majority of the shareholders at any annual or special meeting thereof. Each director shall own common or preferred stock of the Association or of a holding company owning the Association, with an aggregate par, fair market, or equity value of not less than $1,000, as of either (i) the date of purchase, (ii) the date the person became a director, or (iii) the date of that person's most recent election to the board of directors, whichever is more recent. Any combination of common or preferred stock of the Association or holding company may be used.

Any vacancy in the board of directors may be filled by action of a majority of the remaining directors between meetings of shareholders. The board of directors may increase the number of directors up to the maximum permitted by law. Terms of directors, including directors selected to fill vacancies, shall expire at the next regular meeting of shareholders at which directors are elected, unless the directors resign or are removed from office. Despite the expiration of a director's term, the director shall continue to serve until his or her successor is elected and qualified or until there is a decrease in the number of directors and his or her position is eliminated.

Honorary or advisory members of the board of directors, without voting power or power of final decision in matters concerning the business of the Association, may be appointed by resolution of a majority of the full board of directors, or by resolution of shareholders at any annual or special meeting. Honorary or advisory directors shall not be counted to determined the number of directors of the Association or the presence of a quorum in connection with any board action, and shall not be required to own qualifying shares.

**FOURTH.** There shall be an annual meeting of the shareholders to elect directors and transact whatever other business may be brought before the meeting. It shall be held at the main office or any other convenient place the board of directors may designate, on the day of each year specified therefor in the Bylaws, or if that day falls on a legal holiday in the state in which the Association is located, on the next following banking day. If no election is held on the day fixed or in the event of a legal holiday on the following banking day, an election may be held on any subsequent day within 60 days of the day fixed, to be designated by the board of directors, or, if the directors fail to fix the day, by shareholders representing two-thirds of the shares issued and outstanding. In all cases, at least 10 days' advance notice of the meeting shall be given to the shareholders by first-class mail.

In all elections of directors, the number of votes each common shareholder may cast will be determined by multiplying the number of shares he or she owns by the number of directors to be elected. Those votes may be cumulated and cast for a single candidate or may be distributed among two or more candidates in the manner selected by the shareholder. On all other questions, each common shareholder shall be entitled to one vote for each share of stock held by him or her.

A director may resign at any time by delivering written notice to the board of directors, its chairperson, or to the Association, which resignation shall be effective when the notice is delivered unless the notice specifies a later effective date.

A director may be removed by the shareholders at a meeting called to remove him or her, when notice of the meeting stating that the purpose or one of the purposes is to remove him or her is provided, if there is a failure to fulfill one of the affirmative requirements for qualification, or for cause; provided, however, that a director may not be removed if the number of votes sufficient to elect him or her under cumulative voting is voted against his or her removal.

**FIFTH.** The authorized amount of capital stock of the Association shall be 1,000,000 shares of common stock of the par value of ten dollars ($10) each; but said capital stock may be increased or decreased from time to time, according to the provisions of the laws of the United States. The Association shall have only one class of capital stock.

No holder of shares of the capital stock of any class of the Association shall have any preemptive or preferential right of subscription to any shares of any class of stock of the Association, whether now or hereafter authorized, or to any obligations convertible into stock of the Association, issued, or sold, nor any right of subscription to any thereof other than such, if any, as the board of directors, in its discretion, may from time to time determine and at such price as the board of directors may from time to time fix.

Transfers of the Association's stock are subject to the prior written approval of a federal depository institution regulatory agency. If no other agency approval is required, the approval of the Comptroller of the Currency must be obtained prior to any such transfers.

Unless otherwise specified in the Articles of Association or required by law, (1) all matters requiring shareholder action, including amendments to the Articles of Association must be approved by shareholders owning a majority voting interest in the outstanding voting stock, and (2) each shareholder shall be entitled to one vote per share.

Unless otherwise specified in the Articles of Association or required by law, all shares of voting stock shall be voted together as a class, on any matters requiring shareholder approval.

Unless otherwise provided in the Bylaws, the record date for determining shareholders entitled to notice of and to vote at any meeting is the close of business on the day before the first notice is mailed or otherwise sent to the shareholders, provided that in no event may a record date be more than 70 days before the meeting.

The Association, at any time and from time to time, may authorize and issue debt obligations, whether subordinated, without the approval of the shareholders. Obligations classified as debt, whether subordinated, which may be issued by the Association without the approval of shareholders, do not carry voting rights on any issue, including an increase or decrease in the aggregate number of the securities, or the exchange or reclassification of all or part of securities into securities of another class or series.

**SIXTH.** The board of directors shall appoint one of its members president of this Association and one of its members chairperson of the board and shall have the power to appoint one or more vice presidents, a secretary who shall keep minutes of the directors' and shareholders' meetings and be responsible for authenticating the records of the Association, and such other officers and employees as may be required to transact the business of this Association. A duly appointed officer may appoint one or more officers or assistant officers if authorized by the board of directors in accordance with the Bylaws.

The board of directors shall have the power to:

(1) Define
 the duties of the officers, employees, and agents of the Association.

(2) Delegate
 the performance of its duties, but not the responsibility for its duties, to the officers,
 employees, and agents of the Association.

(3) Fix
 the compensation and enter employment contracts with its officers and employees upon reasonable
 terms and conditions consistent with applicable law.

(4) Dismiss
 officers and employees.

(5) Require
 bonds from officers and employees and to fix the penalty thereof.

(6) Ratify
 written policies authorized by the Association's management or committees of the board.

(7) Regulate
 the manner any increase or decrease of the capital of the Association shall be made; provided
 that nothing herein shall restrict the power of shareholders to increase or decrease the
 capital of the Association in accordance with law, and nothing shall raise or lower from
 two-thirds the percentage required for shareholder approval to increase or reduce the capital.

(8) Manage
 and administer the business and affairs of the Association.

(9) Adopt
 initial Bylaws, not inconsistent with law or the Articles of Association, for managing the
 business and regulating the affairs of the Association.

(10) Amend
 or repeal Bylaws, except to the extent that the Articles of Association reserve this power
 in whole or in part to the shareholders.

(11) Make
 contracts.

(12) Generally
 perform all acts that are legal for a board of directors to perform.

**SEVENTH.** The board of directors shall have the power to change the location of the main office to any authorized branch within the limits of the city of Portland, Oregon, without the approval of the shareholders, or with a vote of shareholders owning two-thirds of the stock of the Association for a location outside such limits and upon receipt of a certificate of approval from the Comptroller of the Currency, to any other location within or outside the limits of the city of Portland, Oregon, but not more than thirty miles beyond such limits. The board of directors shall have the power to establish or change the location of any office or offices of the Association to any other location permitted under applicable law, without approval of shareholders, subject to approval by the Comptroller of the Currency.

**EIGHTH.** The corporate existence of this Association shall continue until termination according to the laws of the United States.

**NINTH.** The board of directors of the Association, or any shareholder owning, in the aggregate, not less than 25 percent of the stock of the Association, may call a special meeting of shareholders at any time. Unless otherwise provided by the Bylaws or the laws of the United States, or waived by shareholders, a notice of the time, place, and purpose of every annual and special meeting of the shareholders shall be given by first-class mail, postage prepaid, mailed at least 10, and no more than 60, days prior to the date of the meeting to each shareholder of record at his/her address as shown upon the books of the Association. Unless otherwise provided by the Bylaws, any action requiring approval of shareholders must be effected at a duly called annual or special meeting.

**TENTH.** These Articles of Association may be amended at any regular or special meeting of the shareholders by the affirmative vote of the holders of a majority of the stock of the Association, unless the vote of the holders of a greater amount of stock is required by law, and in that case by the vote of the holders of such greater amount; provided, that the scope of the Association's activities and services may not be expanded without the prior written approval of the Comptroller of the Currency. The Association's board of directors may propose one or more amendments to the Articles of Association for submission to the shareholders.

In witness whereof, we have hereunto set our hands this <u>11<sup>th</sup></u> of June, 1997.

![](ex25-1_001.jpg)

**<u>Exhibit 2</u>**

![](ex25-1_002.jpg)

**<u>Exhibit 4</u>**

**U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION**

**<u>AMENDED AND RESTATED BYLAWS</u>**

<u>ARTICLE I</u>

<u>Meetings of Shareholders</u>

Section 1.1. <u>Annual Meeting</u>. The annual meeting of the shareholders, for the election of directors and the transaction of any other proper business, shall be held at a time and place as the Chairman or President may designate. Notice of such meeting shall be given not less than ten (10) days or more than sixty (60) days prior to the date thereof, to each shareholder of the Association, unless the Office of the Comptroller of the Currency (the "OCC") determines that an emergency circumstance exists. In accordance with applicable law, the sole shareholder of the Association is permitted to waive notice of the meeting. If, for any reason, an election of directors is not made on the designated day, the election shall be held on some subsequent day, as soon thereafter as practicable, with prior notice thereof. Failure to hold an annual meeting as required by these Bylaws shall not affect the validity of any corporate action or work a forfeiture or dissolution of the Association.

Section 1.2. <u>Special Meetings</u>. Except as otherwise specially provided by law, special meetings of the shareholders may be called for any purpose, at any time by a majority of the board of directors (the "Board"), or by any shareholder or group of shareholders owning at least ten percent of the outstanding stock.

Every such special meeting, unless otherwise provided by law, shall be called upon not less than ten (10) days nor more than sixty (60) days prior notice stating the purpose of the meeting.

Section 1.3. <u>Nominations for Directors</u>. Nominations for election to the Board may be made by the Board or by any shareholder.

Section 1.4. <u>Proxies</u>. Shareholders may vote at any meeting of the shareholders by proxies duly authorized in writing. Proxies shall be valid only for one meeting and any adjournments of such meeting and shall be filed with the records of the meeting.

Section 1.5. <u>Record Date</u>. The record date for determining shareholders entitled to notice and to vote at any meeting will be thirty days before the date of such meeting, unless otherwise determined by the Board.

Section 1.6. <u>Quorum and Voting</u>. A majority of the outstanding capital stock, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders, unless otherwise provided by law, but less than a quorum may adjourn any meeting, from time to time, and the meeting may be held as adjourned without further notice. A majority of the votes cast shall decide every question or matter submitted to the shareholders at any meeting, unless otherwise provided by law or by the Articles of Association.

Section 1.7. <u>Inspectors</u>. The Board may, and in the event of its failure so to do, the Chairman of the Board may appoint Inspectors of Election who shall determine the presence of quorum, the validity of proxies, and the results of all elections and all other matters voted upon by shareholders at all annual and special meetings of shareholders.

Section 1.8. <u>Waiver and Consent</u>. The shareholders may act without notice or a meeting by a unanimous written consent by all shareholders.

Section 1.9. <u>Remote Meetings</u>. The Board shall have the right to determine that a shareholder meeting not be held at a place, but instead be held solely by means of remote communication in the manner and to the extent permitted by the General Corporation Law of the State of Delaware.

<u>ARTICLE II</u>

<u>Directors</u>

Section 2.1. <u>Board of Directors</u>. The Board shall have the power to manage and administer the business and affairs of the Association. Except as expressly limited by law, all corporate powers of the Association shall be vested in and may be exercised by the Board.

Section 2.2. <u>Term of Office</u>. The directors of this Association shall hold office for one year and until their successors are duly elected and qualified, or until their earlier resignation or removal.

Section 2.3. <u>Powers</u>. In addition to the foregoing, the Board shall have and may exercise all of the powers granted to or conferred upon it by the Articles of Association, the Bylaws and by law.

Section 2.4. <u>Number</u>. As provided in the Articles of Association, the Board of this Association shall consist of no less than five nor more than twenty-five members, unless the OCC has exempted the Association from the twenty-five- member limit. The Board shall consist of a number of members to be fixed and determined from time to time by resolution of the Board or the shareholders at any meeting thereof, in accordance with the Articles of Association. Between meetings of the shareholders held for the purpose of electing directors, the Board by a majority vote of the full Board may increase the size of the Board but not to more than a total of twenty-five directors, and fill any vacancy so created in the Board; provided that the Board may increase the number of directors only by up to two directors, when the number of directors last elected by shareholders was fifteen or fewer, and by up to four directors, when the number of directors last elected by shareholders was sixteen or more. Each director shall own a qualifying equity interest in the Association or a company that has control of the Association in each case as required by applicable law. Each director shall own such qualifying equity interest in his or her own right and meet any minimum threshold ownership required by applicable law.

Section 2.5. <u>Organization Meeting</u>. The newly elected Board shall meet for the purpose of organizing the new Board and electing and appointing such officers of the Association as may be appropriate. Such meeting shall be held on the day of the election or as soon thereafter as practicable, and, in any event, within thirty days thereafter, at such time and place as the Chairman or President may designate. If, at the time fixed for such meeting, there shall not be a quorum present, the directors present may adjourn the meeting until a quorum is obtained.

Section 2.6. <u>Regular Meetings</u>. The regular meetings of the Board shall be held, without notice, as the Chairman or President may designate and deem suitable.

Section 2.7. <u>Special Meetings</u>. Special meetings of the Board may be called at any time, at any place and for any purpose by the Chairman of the Board or the President of the Association, or upon the request of a majority of the entire Board. Notice of every special meeting of the Board shall be given to the directors at their usual places of business, or at such other addresses as shall have been furnished by them for the purpose. Such notice shall be given at least twelve hours (three hours if meeting is to be conducted by conference telephone) before the meeting by telephone or by being personally delivered, mailed, or electronically delivered. Such notice need not include a statement of the business to be transacted at, or the purpose of, any such meeting.

Section 2.8. <u>Quorum and Necessary Vote</u>. A majority of the directors shall constitute a quorum at any meeting of the Board, except when otherwise provided by law; but less than a quorum may adjourn any meeting, from time to time, and the meeting may be held as adjourned without further notice. Unless otherwise provided by law or the Articles or Bylaws of this Association, once a quorum is established, any act by a majority of those directors present and voting shall be the act of the Board.

Section 2.9. <u>Written Consent</u>. Except as otherwise required by applicable laws and regulations, the Board may act without a meeting by a unanimous written consent by all directors, to be filed with the Secretary of the Association as part of the corporate records.

Section 2.10. <u>Remote Meetings</u>. Members of the Board, or of any committee thereof, may participate in a meeting of such Board or committee by means of conference telephone, video or similar communications equipment by means of which all persons participating in the meeting can hear each other and such participation shall constitute presence in person at such meeting.

Section 2.11. <u>Vacancies</u>. When any vacancy occurs among the directors, the remaining members of the Board may appoint a director to fill such vacancy at any regular meeting of the Board, or at a special meeting called for that purpose.

<u>ARTICLE III</u>

<u>Committees</u>

Section 3.1. <u>Advisory Board of Directors</u>. The Board may appoint persons, who need not be directors, to serve as advisory directors on an advisory board of directors established with respect to the business affairs of either this Association alone or the business affairs of a group of affiliated organizations of which this Association is one. Advisory directors shall have such powers and duties as may be determined by the Board, provided, that the Board's responsibility for the business and affairs of this Association shall in no respect be delegated or diminished.

Section 3.2. <u>Trust Audit Committee</u>. At least once during each calendar year, the Association shall arrange for a suitable audit (by internal or external auditors) of all significant fiduciary activities under the direction of its trust audit committee, a function that will be fulfilled by the Audit Committee of the financial holding company that is the ultimate parent of this Association. The Association shall note the results of the audit (including significant actions taken as a result of the audit) in the minutes of the Board. In lieu of annual audits, the Association may adopt a continuous audit system in accordance with 12 C.F.R. § 9.9(b).

The Audit Committee of the financial holding company that is the ultimate parent of this Association, fulfilling the function of the trust audit committee:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Must not include any officers of the Association or an affiliate who participate significantly in the administration of the Association's fiduciary activities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Must consist of a majority of members who are not also members of any committee to which the Board has delegated power to manage and control the fiduciary activities of the Association.

Section 3.3. <u>Executive Committee</u>. The Board may appoint an Executive Committee which shall consist of at least three directors and which shall have, and may exercise, to the extent permitted by applicable law, all the powers of the Board between meetings of the Board or otherwise when the Board is not meeting.

Section 3.4. <u>Trust Management Committee</u>. The Board of this Association shall appoint a Trust Management Committee to provide oversight of the fiduciary activities of the Association. The Trust Management Committee shall determine policies governing fiduciary activities. The Trust Management Committee or such sub-committees, officers or others as may be duly designated by the Trust Management Committee shall oversee the processes related to fiduciary activities to assure conformity with fiduciary policies it establishes, including ratifying the acceptance and the closing out or relinquishment of all trusts. The Trust Management Committee will provide regular reports of its activities to the Board.

Section 3.5. <u>Other Committees</u>. The Board may appoint, from time to time, committees of one or more persons who need not be directors, for such purposes and with such powers as the Board may determine; however, the Board will not delegate to any committee any powers or responsibilities that it is prohibited from delegating under any law or regulation. In addition, either the Chairman or the President may appoint, from time to time, committees of one or more officers, employees, agents or other persons, for such purposes and with such powers as either the Chairman or the President deems appropriate and proper. Whether appointed by the Board, the Chairman, or the President, any such committee shall at all times be subject to the direction and control of the Board.

Section 3.6. <u>Meetings, Minutes and Rules</u>. An advisory board of directors and/or committee shall meet as necessary in consideration of the purpose of the advisory board of directors or committee, and shall maintain minutes in sufficient detail to indicate actions taken or recommendations made; unless required by the members, discussions, votes or other specific details need not be reported. An advisory board of directors or a committee may, in consideration of its purpose, adopt its own rules for the exercise of any of its functions or authority.

<u>ARTICLE IV</u>

<u>Officers</u>

Section 4.1. <u>Chairman of the Board</u>. The Board may appoint one of its members to be Chairman of the Board to serve at the pleasure of the Board. The Chairman shall supervise the carrying out of the policies adopted or approved by the Board; shall have general executive powers, as well as the specific powers conferred by these Bylaws; and shall also have and may exercise such powers and duties as from time to time may be conferred upon or assigned by the Board.

Section 4.2. <u>President</u>. The Board may appoint one of its members to be President of the Association. In the absence of the Chairman, the President shall preside at any meeting of the Board. The President shall have general executive powers, and shall have and may exercise any and all other powers and duties pertaining by law, regulation or practice, to the office of President, or imposed by these Bylaws. The President shall also have and may exercise such powers and duties as from time to time may be conferred or assigned by the Board.

Section 4.3. <u>Vice President</u>. The Board may appoint one or more Vice Presidents who shall have such powers and duties as may be assigned by the Board and to perform the duties of the President on those occasions when the President is absent, including presiding at any meeting of the Board in the absence of both the Chairman and President.

Section 4.4. <u>Secretary</u>. The Board shall appoint a Secretary, or other designated officer who shall be Secretary of the Board and of the Association, and shall keep accurate minutes of all meetings. The Secretary shall attend to the giving of all notices required by these Bylaws to be given; shall be custodian of the corporate seal, records, documents and papers of the Association; shall provide for the keeping of proper records of all transactions of the Association; shall, upon request, authenticate any records of the Association; shall have and may exercise any and all other powers and duties pertaining by law, regulation or practice, to the Secretary, or imposed by these Bylaws; and shall also perform such other duties as may be assigned from time to time by the Board. The Board may appoint one or more Assistant Secretaries with such powers and duties as the Board, the President or the Secretary shall from time to time determine.

Section 4.5. <u>Other Officers</u>. The Board may appoint, and may authorize the Chairman, the President or any other officer to appoint, any officer as from time to time may appear to the Board, the Chairman, the President or such other officer to be required or desirable to transact the business of the Association. Such officers shall exercise such powers and perform such duties as pertain to their several offices, or as may be conferred upon or assigned to them by these Bylaws, the Board, the Chairman, the President or such other authorized officer. Any person may hold two offices.

Section 4.6. <u>Tenure of Office</u>. The Chairman or the President and all other officers shall hold office until their respective successors are elected and qualified or until their earlier death, resignation, retirement, disqualification or removal from office, subject to the right of the Board or authorized officer to discharge any officer at any time.

<u>ARTICLE V</u>

<u>Stock</u>

Section 5.1. The Board may authorize the issuance of stock either in certificated or in uncertificated form. Certificates for shares of stock shall be in such form as the Board may from time to time prescribe. If the Board issues certificated stock, the certificate shall be signed by the President, Secretary or any other such officer as the Board so determines. Shares of stock shall be transferable on the books of the Association, and a transfer book shall be kept in which all transfers of stock shall be recorded. Every person becoming a shareholder by such transfer shall, in proportion to such person's shares, succeed to all rights of the prior holder of such shares. Each certificate of stock shall recite on its face that the stock represented thereby is transferable only upon the books of the Association properly endorsed. The Board may impose conditions upon the transfer of the stock reasonably calculated to simplify the work of the Association for stock transfers, voting at shareholder meetings, and related matters, and to protect it against fraudulent transfers.

<u>ARTICLE VI</u>

<u>Corporate Seal</u>

Section 6.1. The Association shall have no corporate seal; provided, however, that if the use of a seal is required by, or is otherwise convenient or advisable pursuant to, the laws or regulations of any jurisdiction, the following seal may be used, and the Chairman, the President, the Secretary and any Assistant Secretary shall have the authority to affix such seal:

<u>ARTICLE VII</u>

<u>Miscellaneous Provisions</u>

Section 7.1. <u>Execution of Instruments</u>. All agreements, checks, drafts, orders, indentures, notes, mortgages, deeds, conveyances, transfers, endorsements, assignments, certificates, declarations, receipts, discharges, releases, satisfactions, settlements, petitions, schedules, accounts, affidavits, bonds, undertakings, guarantees, proxies and other instruments or documents may be signed, countersigned, executed, acknowledged, endorsed, verified, delivered or accepted on behalf of the Association, whether in a fiduciary capacity or otherwise, by any officer of the Association, or such employee or agent as may be designated from time to time by the Board by resolution, or by the Chairman or the President by written instrument, which resolution or instrument shall be certified as in effect by the Secretary or an Assistant Secretary of the Association. The provisions of this section are supplementary to any other provision of the Articles of Association or Bylaws.

Section 7.2. <u>Records</u>. The Articles of Association, the Bylaws as revised or amended from time to time and the proceedings of all meetings of the shareholders, the Board, and standing committees of the Board, shall be recorded in appropriate minute books provided for the purpose. The minutes of each meeting shall be signed by the Secretary, or other officer appointed to act as Secretary of the meeting.

Section 7.3. <u>Trust Files</u>. There shall be maintained in the Association files all fiduciary records necessary to assure that its fiduciary responsibilities have been properly undertaken and discharged.

Section 7.4. <u>Trust Investments</u>. Funds held in a fiduciary capacity shall be invested according to the instrument establishing the fiduciary relationship and according to law. Where such instrument does not specify the character and class of investments to be made and does not vest in the Association a discretion in the matter, funds held pursuant to such instrument shall be invested in investments in which corporate fiduciaries may invest under law.

Section 7.5. <u>Notice</u>. Whenever notice is required by the Articles of Association, the Bylaws or law, such notice shall be by mail, postage prepaid, e- mail, in person, or by any other means by which such notice can reasonably be expected to be received, using the address of the person to receive such notice, or such other personal data, as may appear on the records of the Association. Except where specified otherwise in these Bylaws, prior notice shall be proper if given not more than 30 days nor less than 10 days prior to the event for which notice is given.

<u>ARTICLE VIII</u>

<u>Indemnification</u>

Section 8.1. The Association shall indemnify such persons for such liabilities in such manner under such circumstances and to such extent as permitted by Section 145 of the Delaware General Corporation Law, as now enacted or hereafter amended. The Board may authorize the purchase and maintenance of insurance and/or the execution of individual agreements for the purpose of such indemnification, and the Association shall advance all reasonable costs and expenses (including attorneys' fees) incurred in defending any action, suit or proceeding to all persons entitled to indemnification under this Section 8.1. Such insurance shall be consistent with the requirements of 12 C.F.R. § 7.2014 and shall exclude coverage of liability for a formal order assessing civil money penalties against an institution-affiliated party, as defined at 12 U.S.C. § 1813(u).

Section 8.2. Notwithstanding Section 8.1, however, (a) any indemnification payments to an institution-affiliated party, as defined at 12 U.S.C. § 1813(u), for an administrative proceeding or civil action initiated by a federal banking agency, shall be reasonable and consistent with the requirements of 12 U.S.C. § 1828(k) and the implementing regulations thereunder; and (b) any indemnification payments and advancement of costs and expenses to an institution-affiliated party, as defined at 12 U.S.C. § 1813(u), in cases involving an administrative proceeding or civil action not initiated by a federal banking agency, shall be in accordance with Delaware General Corporation Law and consistent with safe and sound banking practices.

<u>ARTICLE IX</u>

<u>Bylaws: Interpretation and Amendment</u>

Section 9.1. These Bylaws shall be interpreted in accordance with and subject to appropriate provisions of law, and may be added to, altered, amended, or repealed, at any regular or special meeting of the Board.

Section 9.2. A copy of the Bylaws and all amendments shall at all times be kept in a convenient place at the principal office of the Association, and shall be open for inspection to all shareholders during Association hours.

<u>ARTICLE X</u>

<u>Miscellaneous Provisions</u>

Section 10.1. <u>Fiscal Year</u>. The fiscal year of the Association shall begin on the first day of January in each year and shall end on the thirty-first day of December following.

Section 10.2. <u>Governing Law</u>. This Association designates the Delaware General Corporation Law, as amended from time to time, as the governing law for its corporate governance procedures, to the extent not inconsistent with Federal banking statutes and regulations or bank safety and soundness.

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(February 8, 2021)

**<u>Exhibit 6</u>**

**CONSENT**

In accordance with Section 321(b) of the Trust Indenture Act of 1939, the undersigned, U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION hereby consents that reports of examination of the undersigned by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor.

Dated: April 20, 2026

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| | |
|:---|:---|
| By: | /s/ April Bright  |
|  | April Bright, Vice President |

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**<u>Exhibit 7</u>**

**U.S. Bank Trust Company, National Association**

**Statement of Financial Condition**

**as of 9/30/2025**

**($000's)**

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| | |
|:---|:---|
|  | **9/30/2025** |
| **Assets** |  |
| &nbsp;&nbsp;&nbsp;Cash and Balances Due From | $1949886 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depository Institutions |  |
| &nbsp;&nbsp;&nbsp;Securities | 4656 |
| &nbsp;&nbsp;&nbsp;Federal Funds | 0 |
| &nbsp;&nbsp;&nbsp;Loans & Lease Financing Receivables | 0 |
| &nbsp;&nbsp;&nbsp;Fixed Assets | 713 |
| &nbsp;&nbsp;&nbsp;Intangible Assets | 574611 |
| &nbsp;&nbsp;&nbsp;Other Assets | 162279 |
| &nbsp;&nbsp;&nbsp;**Total Assets** | $**2692145** |
| **Liabilities** |  |
| &nbsp;&nbsp;&nbsp;Deposits | $0 |
| &nbsp;&nbsp;&nbsp;Fed Funds | 0 |
| &nbsp;&nbsp;&nbsp;Treasury Demand Notes | 0 |
| &nbsp;&nbsp;&nbsp;Trading Liabilities | 0 |
| &nbsp;&nbsp;&nbsp;Other Borrowed Money | 0 |
| &nbsp;&nbsp;&nbsp;Acceptances | 0 |
| &nbsp;&nbsp;&nbsp;Subordinated Notes and Debentures | 0 |
| &nbsp;&nbsp;&nbsp;Other Liabilities | 222254 |
| &nbsp;&nbsp;&nbsp;**Total Liabilities** | $**222254** |
| **Equity** |  |
| &nbsp;&nbsp;&nbsp;Common and Preferred Stock | 200 |
| &nbsp;&nbsp;&nbsp;Surplus | 1171635 |
| &nbsp;&nbsp;&nbsp;Undivided Profits | 1298056 |
| &nbsp;&nbsp;&nbsp;Minority Interest in Subsidiaries | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Equity Capital** | $**2469891** |
| **Total Liabilities and Equity Capital** | $**2692145** |

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