EXHIBIT 10.56.4

MORTGAGE

 

RECORDATION REQUESTED BY:

Western State Bank

West Fargo

P.O. Box 617 755 13th Ave E

West Fargo, ND  58078

 

WHEN RECORDED MAIL TO:

Western State Bank West Fargo

P.O. Box 617

West Fargo, ND  58078

 

SEND TAX NOTICES TO:

LF3 Eagan, LLC

1635 43rd Street South, Suite 205

Fargo, ND  58103

 

 

MAXIMUM LIEN. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THE MAXIMUM
INDEBTEDNESS SECURED BY THIS MORTGAGE IS $9,444,500.00.

THIS MORTGAGE dated June 19, 2019, is made and executed between LF3 Eagan, LLC,
a Delaware Limited Liability Company, whose address is 1635 43rd Street South,
Suite 205, Fargo, ND 58103 (referred to below as "Grantor") and Western State
Bank, whose address is P.O. Box 617, 755 13th Ave E, West Fargo, ND 58078
(referred to below as "Lender").

GRANT OF MORTGAGE. For valuable consideration, Grantor mortgages and conveys to
Lender, with power of sale, all of Grantor's right, title, and interest in and
to the following described real property, together with all existing or
subsequently erected or affixed buildings,
improvements  and  fixtures;  all  easements,  rights  of  way,  and  appurtenances;
all  water,  water  rights,  watercourses  and  ditch  rights

(including stock in utilities with ditch or irrigation rights); and all other
rights, royalties, and profits relating to the real property, including without
limitation all minerals, oil, gas, geothermal and similar matters, (the "Real
Property") located in Dakota County, State of Minnesota:

Parcel 1:

Lot One (1), Block One (1), Eagandale LeMay Lake 4th Addition, according to the
recorded plat thereof, Dakota County, Minnesota. Registered Property Certificate
of Title No. 99814

Parcel 2:

Non-exclusive easement for driveway purposes over part of Lot 1, Block 1,
Eagandale Lemay Lake 3rd Addition contained in the Easement Agreement dated
August 10, 1988, recorded August 16, 1988 as Document No. 206184.

Parcel 3:

Non-exclusive easement for pedestrian ingress and egress over parts of Lot 2,
Block 1, Eagandale LeMay Lake 4th Addition contained in the Reciprocal Easement
Agreement dated April 11, 1994, recorded July 8, 1994 as Document No. 306717.

The Real Property or its address is commonly known as 3000 Eagandale Place,
Eagan, MN 55121.

In addition, Grantor grants to Lender a Uniform Commercial Code security
interest in the Personal Property.

FUTURE ADVANCES. In addition to the Note, this Mortgage secures all future
advances made by Lender to Borrower whether or not the advances are made
pursuant to a commitment.  Specifically, without limitation, this Mortgage
secures, in addition to the amounts specified

 

in the Note, all future amounts Lender in its discretion may loan to Borrower,
together with all interest thereon.

THIS MORTGAGE, INCLUDING THE SECURITY INTEREST IN PERSONAL PROPERTY, IS GIVEN TO
SECURE (A) PAYMENT OF THE INDEBTEDNESS AND (B) PERFORMANCE OF ANY AND ALL
OBLIGATIONS UNDER THIS MORTGAGE. THIS MORTGAGE IS GIVEN AND ACCEPTED ON THE
FOLLOWING TERMS:

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

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

PAYMENT AND PERFORMANCE. Except as otherwise provided in this Mortgage, Borrower
shall pay to Lender all Indebtedness secured by this Mortgage as it becomes due,
and Borrower and Grantor shall strictly perform all Borrower's and Grantor's
obligations under this Mortgage.

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

Possession and Use.  Until the occurrence of an Event of Default, Grantor
may  (1)  remain in possession and control of the Property;

(2)  use, operate or manage the Property; and  (3)  collect the Rents from the
Property.

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

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

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

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

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

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

Duty to Protect.  Grantor agrees neither to abandon or leave unattended the
Property.  Grantor shall do all other acts, in addition to

 

those acts set forth above in this section, which from the character and use of
the Property are reasonably necessary to protect and preserve the Property.

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

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

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

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

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

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

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

Maintenance of Insurance. Grantor shall procure and maintain policies of fire
insurance with standard extended coverage endorsements on a replacement basis
for the full insurable value covering all Improvements on the Real Property in
an amount sufficient to avoid application of any coinsurance clause, and with a
standard mortgagee clause in favor of Lender. Grantor shall also procure and
maintain comprehensive general liability insurance in such coverage amounts as
Lender may request with Lender being named as additional insureds in such
liability insurance policies. Additionally, Grantor shall maintain such other
insurance, including but not limited to hazard, business interruption and boiler
insurance as Lender may require. Policies shall be written by such insurance
companies and in such form as may be reasonably acceptable to Lender. Grantor
shall deliver to Lender certificates of coverage from each insurer containing a
stipulation that coverage will not be cancelled or diminished without a minimum
of thirty (30) days' prior written notice to Lender and not containing any
disclaimer of the insurer's liability for failure to give such notice. Each
insurance policy also shall include an endorsement providing that coverage in
favor of Lender will not be impaired in any way by any act, omission or default
of Grantor or any other person. Should the Real Property be located in an area
designated by the Administrator of the Federal Emergency Management Agency as a
special flood hazard area, Grantor agrees to obtain and maintain flood
insurance, if available, for the full unpaid principal balance of the loan and
any prior liens on the property securing the loan, up to the maximum policy
limits set under the National Flood Insurance Program, or as otherwise required
by Lender, and to maintain such insurance for the term of the loan. Flood
insurance may be purchased under the National Flood Insurance Program, from
private insurers providing "private flood insurance" as defined by applicable
federal flood insurance statutes and regulations, or from another flood
insurance provider that is both acceptable to Lender in its sole discretion and
permitted by applicable federal flood insurance statutes and regulations.

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

Grantor's Report on Insurance. Upon request of Lender, however not more than
once a year, Grantor shall furnish to Lender a report on each existing policy of
insurance showing: (1)  the name of the insurer;  (2)  the risks
insured;  (3)  the amount of the policy;  (4) the property insured, the then
current replacement value of such property, and the manner of determining that
value; and   (5)   the

expiration date of the policy. Grantor shall, upon request of Lender, have an
independent appraiser satisfactory to Lender determine the cash value
replacement cost of the Property.

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

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

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

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

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

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

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

Proceedings. If any proceeding in condemnation is filed, Grantor shall promptly
notify Lender in writing, and Grantor shall promptly take such steps as may be
necessary to defend the action and obtain the award. Grantor may be the nominal
party in such proceeding, but Lender shall be entitled to participate in the
proceeding and to be represented in the proceeding by counsel of its own choice,
and Grantor will deliver or cause to be delivered to Lender such instruments and
documentation as may be requested by Lender from time to time to permit such
participation.

Application of Net Proceeds. If all or any part of the Property is condemned by
eminent domain proceedings or by any proceeding or purchase in lieu of
condemnation, Lender may at its election require that all or any portion of the
net proceeds of the award be applied to the Indebtedness or the repair or
restoration of the Property.  The net proceeds of the award shall mean the award
after payment of all reasonable costs, expenses, and attorneys' fees incurred by
Lender in connection with the condemnation.

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

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

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

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

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

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

Security Interest. Upon request by Lender, Grantor shall take whatever action is
requested by Lender to perfect and continue Lender's security interest in the
Rents and Personal Property.  In addition to recording this Mortgage in the real
property records, Lender may, at any time and without further authorization from
Grantor, file executed counterparts, copies or reproductions of this Mortgage as
a financing statement.  Grantor shall reimburse Lender for all expenses incurred
in perfecting or continuing this security interest.  Upon

default, Grantor shall not remove, sever or detach the Personal Property from
the Property. Upon default, Grantor shall assemble any Personal Property not
affixed to the Property in a manner and at a place reasonably convenient to
Grantor and Lender and make it available to Lender within three (3) days after
receipt of written demand from Lender to the extent permitted by applicable law.

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

FURTHER ASSURANCES; ATTORNEY-IN-FACT. The following provisions relating to
further assurances and attorney-in-fact are a part of this Mortgage:

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

Attorney-in-Fact.  If Grantor fails to do any of the things referred to in the
preceding paragraph, Lender may do so for and in the name of Grantor and at
Grantor's expense. For such purposes, Grantor hereby irrevocably appoints Lender
as Grantor's attorney-in-fact for the purpose of making, executing, delivering,
filing, recording, and doing all other things as may be necessary or desirable,
in Lender's sole opinion, to accomplish the matters referred to in the preceding
paragraph.

FULL PERFORMANCE. If Borrower and Grantor pay all the Indebtedness, including
without limitation all future advances, when due, and Grantor otherwise performs
all the obligations imposed upon Grantor under this Mortgage, Lender shall
execute and deliver to Grantor a suitable satisfaction of this Mortgage and
suitable statements of termination of any financing statement on file evidencing
Lender's security interest in the Rents and the Personal Property. Grantor will
pay, if permitted by applicable law, any reasonable termination fee as
determined by Lender from time to time.

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

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

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

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

Default in Favor of Third Parties. Should Borrower or any Grantor default under
any loan, extension of credit, security agreement, purchase or sales agreement,
or any other agreement, in favor of any other creditor or person that may
materially affect any of Borrower's or any Grantor's property or Borrower's
ability to repay the Indebtedness or Borrower's or Grantor's ability to perform
their respective obligations under this Mortgage or any of the Related
Documents.

False Statements.  Any warranty, representation or statement made or furnished
to Lender by Borrower or Grantor or on Borrower's or Grantor's behalf under this
Mortgage or the Related Documents is false or misleading in any material
respect, either now or at the time made or furnished or becomes false or
misleading at any time thereafter.

Defective Collateralization. This Mortgage or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
document to create a valid and perfected security interest or lien) at any time
and for any reason.

Death or Insolvency. The dissolution of Grantor's (regardless of whether
election to continue is made), any member withdraws from the limited liability
company, or any other termination of Borrower's or Grantor's existence as a
going business or the death of any member, the insolvency of Borrower or
Grantor, the appointment of a receiver for any part of Borrower's or Grantor's
property, any assignment for the benefit of creditors, any type of creditor
workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Borrower or Grantor.

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or Grantor or by any governmental
agency against any property securing the Indebtedness. This includes a
garnishment of any of Borrower's or Grantor's accounts, including deposit
accounts, with Lender. However, this Event of Default shall not apply if there
is a good faith dispute by Borrower or Grantor as to the validity or
reasonableness of the claim which is the basis of the creditor or forfeiture
proceeding and if Borrower or Grantor gives Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies or a surety
bond for the  creditor  or  forfeiture proceeding, in an amount determined by
Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.

Breach of Other Agreement. Any breach by Borrower or Grantor under the terms of
any other agreement between Borrower or Grantor and Lender that is not remedied
within any grace period provided therein, including
without  limitation  any  agreement concerning any indebtedness or other
obligation of Borrower or Grantor to Lender, whether existing now or later.

Events Affecting Guarantor. Any of the preceding events occurs with respect to
any Guarantor of any of the Indebtedness or any Guarantor dies or becomes
incompetent, or revokes or disputes the validity of, or liability under, any
Guaranty of the Indebtedness.

Adverse Change. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.

Insecurity. Lender in good faith believes itself insecure.

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

Accelerate Indebtedness. Lender shall have the right at its option without
notice to Borrower or Grantor to declare the entire Indebtedness immediately due
and payable, including any prepayment penalty that Borrower would be required to
pay.

UCC Remedies. With respect to all or any part of the Personal Property, Lender
shall have all the rights and remedies of a secured party under the Uniform
Commercial Code.  If notice to Grantor of the intended disposition of the
Personal Property is required by law in a particular instance, such notice shall
be deemed commercially reasonable if given to Grantor at least ten (10) calendar
days prior to the date of intended disposition. Grantor shall pay on demand all
costs and expenses, including but not limited to reasonable attorneys' fees and
legal expenses, incurred by Lender in exercising these rights and remedies.

Appoint Receiver. Lender, to the maximum extent permitted by law, shall be
entitled, as a matter of right, to the appointment of a receiver of the
Property, without notice or demand, and without regard to the adequacy of the
security for the Indebtedness or the solvency of the Grantor, by an action
separate from any foreclosure of this Mortgage pursuant to Minnesota Statutes
Chapter 580 or pursuant to Minnesota Statutes Chapter 581, or as a part of the
foreclosure action under said Chapter 581 (it being agreed that the existence of
a foreclosure pursuant to said Chapter 580 or a foreclosure action pursuant to
said Chapter 581 is not a prerequisite to any action for a receiver hereunder).
The receiver, who shall be an experienced property manager, shall collect (until
the Indebtedness is fully paid and satisfied and, in the case of a foreclosure
sale, during the entire redemption period) the Rents, and shall manage the
Property, execute leases within or beyond the period of the receivership if
approved by the court and apply all rents, profits and other income collected by
him in the order specified below. Notwithstanding the appointment of any
receiver, Lender shall be entitled as pledgee to the possession and control of
any cash, deposits or instruments at the time held by or payable or deliverable
under the terms of any Related Documents to Lender. Lender shall have the right,
at any time and without limitation, as provided in Minnesota Statutes, Section
582.03, to advance money to the receiver to pay any part or all of the items
which the receiver should otherwise pay if cash were available from the Property
and sums so advanced, with interest at the highest default rate set forth in the
Note, shall be secured hereby, or if advanced during the period of redemption
shall be part of the sum required to be paid to redeem from the sale. Any Rents
received by the receiver hereunder shall be applied in the order prescribed by
Minn. Stat. Section 576.25, Subd. 2, as amended, including but not limited to
expenses for the Property's normal maintenance and reasonable receivership fees,
and then against the Indebtedness if received prior to the commencement of a
foreclosure, to be in such order as Lender may elect, and if received after the
commencement of a foreclosure, to be applied to the amount required to be paid
to effect a reinstatement prior to foreclosure sale, or, after a foreclosure
sale to any deficiency and thereafter to the amount required to be paid to
effect a redemption, all pursuant to Minnesota Statutes, Sections 580.30, 580.23
and 581.10, with any excess to be paid to Grantor. Provided, that if this
Mortgage is not reinstated nor the Property redeemed as provided by said
Sections 580.30, 580.23 or 581.10, the entire amount paid to Lender pursuant
hereto shall be the property of Lender together with all or any part of the
Property acquired through foreclosure.

Foreclosure and Sale. Lender may, and is hereby authorized and empowered to,
foreclose this Mortgage by action or advertisement pursuant to the statutes of
the State of Minnesota providing for such foreclosure. Power is expressly
granted to Lender  (1)  to sell the Property at public auction and to convey the
Property, in fee simple, to the purchasers at such sale, and (2) to pay, out of
the proceeds of the sale, all of the Indebtedness secured by this Mortgage, with
interest, and all legal costs and charges of the foreclosure including the
maximum attorneys' fees permitted by law and Grantor agrees to pay all such
costs, and charges and fees.

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

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

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

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

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

NOTICES. Any notice required to be given under this Mortgage, including without
limitation any notice of default and any notice of sale shall be given in
writing, and shall be effective when actually delivered, when actually received
by telefacsimile (unless otherwise required by law), when deposited with a
nationally recognized overnight courier, or, if mailed, when deposited in the
United States mail, as first class, certified or registered mail postage
prepaid, directed to the addresses shown near the beginning of this Mortgage.
All copies of notices of foreclosure from the holder of any lien which has
priority over this Mortgage shall be sent to Lender's address, as shown near the
beginning of this Mortgage.  Any party may change its address for notices under
this Mortgage by giving formal written notice to the

 

other parties, specifying that the purpose of the notice is to change the
party's address. For notice purposes, Grantor agrees to keep Lender informed at
all times of Grantor's current address. Unless otherwise provided or required by
law, if there is more than one Grantor, any notice given by Lender to any
Grantor is deemed to be notice given to all Grantors. Grantor understands that
if Lender elects to foreclose by advertisement, no personal notice is required
to be served  upon Grantor. Grantor further understands that under the
Constitution of the United States and the Constitution of the State of Minnesota
it may have the right to notice and hearing before the Property may be sold and
that the procedure for foreclosure by advertisement described above does not
ensure that notice will be given to Grantor and neither said procedure for
foreclosure by advertisement nor the Code requires any hearing or other judicial
proceeding. GRANTOR HEREBY RELINQUISHES, WAIVES AND GIVES UP ANY CONSTITUTIONAL
RIGHTS GRANTOR MAY HAVE TO NOTICE AND HEARING BEFORE SALE OF THE PROPERTY AND
EXPRESSLY CONSENTS AND AGREES THAT THE PROPERTY MAY BE FORECLOSED BY
ADVERTISEMENT AND THAT THE PROPERTY MAY BE DISPOSED OF PURSUANT TO THE CODE, ALL
AS DESCRIBED ABOVE. GRANTOR ACKNOWLEDGES THAT GRANTOR IS REPRESENTED BY LEGAL
COUNSEL; THAT BEFORE SIGNING THIS DOCUMENT, THIS SECTION AND  GRANTOR'S
CONSTITUTIONAL RIGHTS WERE FULLY EXPLAINED BY SUCH COUNSEL AND THAT  GRANTOR
UNDERSTANDS THE NATURE AND EXTENT OF THE RIGHTS WAIVED HEREBY AND THE EFFECT OF
SUCH WAIVER.

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

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

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

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

Grantor's Copy of Documents. Lender agrees to provide Grantor with a conformed
copy of both the Note and this Mortgage at the time they are executed or within
a reasonable time after recording this Mortgage.

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

Choice of Venue. If there is a lawsuit, Grantor agrees upon Lender's request to
submit to the jurisdiction of the courts of Cass County, State of North Dakota.

Joint and Several Liability. All obligations of Borrower and Grantor under this
Mortgage shall be joint and several, and all references to Grantor shall mean
each and every Grantor, and all references to Borrower shall mean each and every
Borrower. This means that each Grantor signing below is responsible for all
obligations in this Mortgage. Where any one or more of the parties is a
corporation, partnership, limited liability company or similar entity, it is not
necessary for Lender to inquire into the powers of any of the officers,
directors, partners, members, or other agents acting or purporting to act on the
entity's behalf, and any obligations made or created in reliance upon the
professed exercise of such powers shall be guaranteed under this Mortgage.

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

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

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

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

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

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

 

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

Borrower. The word "Borrower" means LF3 Eagan, LLC; and LF3 Eagan TRS, LLC and
includes all co-signers and co-makers signing the Note and all their successors
and assigns.

Environmental Laws. The words "Environmental Laws" mean any and all state,
federal and local statutes, regulations and ordinances relating to the
protection of human health or the environment, including without limitation
the  Comprehensive  Environmental Response, Compensation, and Liability Act of
1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or
other applicable state or federal laws, rules, or regulations adopted pursuant
thereto, or common law, and shall also include pollutants, contaminants,
polychlorinated biphenyls, asbestos, urea formaldehyde, petroleum and petroleum
products, and agricultural chemicals.

Event of Default. The words "Event of Default" mean any of the events of default
set forth in this Mortgage in the events of default section of this Mortgage.

Grantor. The word "Grantor" means LF3 Eagan, LLC.

Guarantor.  The word "Guarantor" means any guarantor, surety, or accommodation
party of any or all of the Indebtedness.

Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender,
including without limitation a guaranty of all or part of the Note.

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

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

Indebtedness.  The word "Indebtedness" means all principal, interest, and other
amounts, costs and expenses payable under the Note or Related Documents,
together with all renewals of, extensions of, modifications of, consolidations
of and substitutions for the Note or Related Documents and any amounts expended
or advanced by Lender to discharge Grantor's obligations or expenses incurred by
Lender to enforce Grantor's obligations under this Mortgage, together with
interest on such amounts as provided in this Mortgage. Specifically, without
limitation, Indebtedness includes the future advances set forth in the Future
Advances provision of this Mortgage, together with all interest thereon.

Lender.  The word "Lender" means Western State Bank, its successors and assigns.

Mortgage.  The word "Mortgage" means this Mortgage between Grantor and Lender.

Note.    
The  word  "Note"  means  the  promissory  note  dated  June  19,  2019, 
in  the  original  principal  amount  of

$9,444,500.00 from Borrower to Lender, together with all renewals of, extensions
of, modifications of, refinancings of, consolidations of, and substitutions for
the promissory note or agreement. The maturity date of the Note is July 1, 2024.

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

Property.  The word "Property" means collectively the Real Property and the
Personal Property.

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

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

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

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

LF3 EAGAN, LLC

 

LODGING FUND REIT III OP, LP, Sole Member of LF3 Eagan, LLC

 

LODGING FUND REIT III, INC., General Partner of Lodging Fund REIT III OP, LP

 

By: /s/ Katie Cox

 

Katie Cox, Chief Financial Officer of Lodging Fund REIT III, Inc.

 

 

 

 

This Mortgage was drafted by:

   

 

 

 

Kim Almer, Business Banking Assistant - Team Lead Western

 

 

State Bank

 

 

P.O. Box 617

 

 

West Fargo, ND 58078

 

 

LIMITED LIABILITY COMPANY ACKNOWLEDGMENT