Document:

lfr_Ex10_12

		
			Exhibit 10.12
		

		
			 
		

		
			PROMISSORY NOTE
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Principal

					
					
						Loan Date

					
					
						Maturity

					
					
						Loan No

					
					
						Call / Coll

					
					
						Account

					
					
						Officer

					
					
						Initials

				
	
					
						$148,300.00

					
					
						04-17-2020

					
					
						04-17-2022

					
					
						 

					
					
						 

					
					
						 

					
					
						403

					
					
						 

				
	
					
						References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item.

				
	
					
						Any item above containing "***" has been omitted due to text length limitations.

				

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Borrower:

					
					
						LF3 Prattville TRS, LLC

					
					
						Lender:

					
					
						Western State Bank

				
	
					
						 

					
					
						2505 Legends Dr

					
					
						 

					
					
						West Fargo

				
	
					
						 

					
					
						Prattville, AL  36066

					
					
						 

					
					
						P.O. Box 617 755 13th Ave E

				
	
					
						 

					
					
						 

					
					
						 

					
					
						West Fargo, ND  58078

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				

		
			 
		

			
					
						Principal Amount:    $148,300.00

					
					
						Date of Note:  April 17, 2020

				

		
			 
		

		
			PROMISE TO PAY. LF3 Prattville TRS, LLC ("Borrower") promises to pay to Western State Bank ("Lender"), or order, in lawful money of the United States of America, the principal amount of One Hundred Forty-eight Thousand Three Hundred & 00/100 Dollars ($148,300.00), together with interest on the unpaid principal balance from April 17, 2020, calculated as described in the "INTEREST CALCULATION METHOD" paragraph using an interest rate of 1.000% per annum based on a year of 360 days, until paid in full. The interest rate may change under the terms and conditions of the "INTEREST AFTER DEFAULT" section.
		

		
			PAYMENT. Borrower will pay this loan in 18 payments of $8,347.37 each payment. Borrower's first payment is due November 17, 2020, and all subsequent payments are due on the same day of each month after that. Borrower's final payment will be due on April 17, 2022, and will be for all principal and all accrued interest not yet paid. Payments include principal and interest. Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any late charges; then to any escrow or reserve account payments as required under any mortgage, deed of trust, or other security instrument or security agreement securing this Note; and then to any unpaid collection costs. Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing. All payments must be made in U.S. dollars and must be received by Lender consistent with any written payment instructions provided by Lender. If a payment is made consistent with Lender's payment instructions but received after West Fargo/Fargo: 7:00 PM Central Standard Time; Devils Lake: 6:00 PM Central Standard Time, Lender will credit Borrower's payment on the next business day.
		

		
			INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method.
		

		
			PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments under the payment schedule. Rather, early payments will reduce the principal balance due and may result in Borrower's making fewer payments. Borrower agrees not to send Lender payments marked "paid in full", "without recourse", or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Western State Bank, West Fargo, P.O. Box 617, 755 13th Ave E, West Fargo, ND 58078.
		

		
			LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment or $25.00, whichever is greater.
		

		
			INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by 3.000 percentage points. However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.
		

		
			DEFAULT. Each of the following shall constitute an event of default ("Event of Default") under this Note: 
		

		
			Payment Default. Borrower fails to make any payment when due under this Note.
		

		
			Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note 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.
		

		
			Default in Favor of Third Parties. Borrower or any Grantor defaults 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 property or Borrower's ability to repay this Note or perform Borrower's obligations under this Note or any of the related documents.
		

		
			False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note 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.
		

		
			Death or Insolvency. The dissolution of Borrower (regardless of whether election to continue is made), any member withdraws from Borrower, or any other termination of Borrower's existence as a going business or the death of any member, the insolvency of Borrower, the appointment of a receiver for any part of Borrower'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.
		

		
			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 by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower 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.
		

		
			Events Affecting Guarantor.  Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.
		

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

		
			Insecurity. Lender in good faith believes itself insecure.
		

		

		 

	
					
						

					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						PROMISSORY NOTE

					
					
						 

				
	
					
						 

					
					
						(Continued)

					
					
						Page 2

				
	
					
						 

					
					
						 

					
					
						 

				

		
			 
		

		
			LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount.
		

		
			EXPENSES. If Lender institutes any suit or action to enforce any of the terms of this Note, 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 loan 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), and appeals, to the extent permitted by applicable law. Borrower also will pay any court costs, in addition to all other sums provided by law.
		

		
			JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other.
		

		
			GOVERNING LAW. This Note 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. This Note has been accepted by Lender in the State of North Dakota.
		

		
			CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of the State of Alabama, in the county in which Borrower's following address is located:  2505 Legends Dr, Prattville, AL  36066.
		

		
			RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the debt against any and all such accounts, and, at Lender's option, to administratively freeze all such accounts to allow Lender to protect Lender's charge and setoff rights provided in this paragraph.
		

		
			COLLATERAL. This loan is unsecured.
		

		
			SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.
		

		
			NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES.  Borrower may notify Lender if Lender
		

		
			reports any inaccurate information about Borrower's account(s) to a consumer reporting agency. Borrower's written notice describing the specific inaccuracy(ies) should be sent to Lender at the following address: Western State Bank 110 4th St SE Devils Lake, ND 58301.
		

		
			SBA PAYCHECK PROTECTION PROGRAM:. SBA PAYCHECK PROTECTION PROGRAM. Lender is making this loan pursuant to the Paycheck Protection Program (the "PPP") created by the Section 1102 of the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"), which loan is governed by the following (collectively, the "Governing Rules"): (i) the CARES Act, (ii) section 7(a)(36) of the Small Business Act,
		

		
			(iii) any rules or guidance that has been issued by the Small Business Administration implementing the PPP, and/or (iv) any other applicable loan or related document. In addition to the Governing Rules, this loan is subject to the Program Requirements, as defined in 13 CFR § 120.10, as amended from time to time (collectively "PPP Loan Program Requirements"). Notwithstanding anything to the contrary herein, the Borrower (a) agrees that the Note shall be interpreted and construed to be consistent with the Governing Rules and the PPP Loan Program Requirements and
		

		
			(b) authorizes the Lender to unilaterally amend any provision of the Note or any other document related to or arising from this loan, to the extent required to comply with the Governing Rules or the PPP Loan Program Requirements.
		

		
			When SBA is the holder, this Note and loan will be interpreted and enforced under Federal law, including, without limitation, the Governing Rules, PPP Loan Program Requirements, and all applicable SBA regulations. Lender or SBA may use state or local procedures for filing papers and instruments, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive any Federal immunity from state or local control, penalty, tax, or liability. As to this Note, Borrower may not claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt Federal law.
		

		
			GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several.
		

		
			PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE.
		

		
			BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE. BORROWER:
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						/s/ Katie Cox

					
					
						 

				
	
					
						Katie Cox, Chief Financial Officer of Lodging Fund

					
					
						 

				
	
					
						REIT Ill, Inc. of LF3 Prattville TRS, LLC

					
					
						 

				

		
			 
		

		
			
		

		

		 

	
					
						

					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						PROMISSORY NOTE

					
					
						 

				
	
					
						 

					
					
						(Continued)

					
					
						Page 3

				
	
					
						 

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						LENDER:

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						WESTERN STATE BANK

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						X

					
					
						/s/ Ryan Rued

					
					
						 

				
	
					
						 

					
					
						Ryan Rued, VP/Business Banking Officerlfr_Ex10_13_1

		
			Exhibit10.13.1
		

		
			CHANGE IN TERMS AGREEMENT
		

		
			 
		

			
					
						I

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Principal

					
					
						I  Loan Date

					
					
						I  Maturity

					
					
						I  Loan No

					
					
						Call / Coll

					
					
						Account

					
					
						Officer I Initials

				
	
					
						$5,858.134.26

					
					
						03-05-2019

					
					
						03-01-2024

					
					
						 

					
					
						I  8100

					
					
						 

					
					
						403 

				
	
					
						References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item.

				
	
					
						Any item above containing " * * * " has been omitted due to text length limitations.

				

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Borrower:

					
					
						LF3 Cedar Rapids, LLC

					
					
						Lender:

					
					
						Western State Bank

				
	
					
						 

					
					
						LF3 Cedar Rapids TRS, LLC

					
					
						 

					
					
						West Fargo

				
	
					
						 

					
					
						1635 43rd Street South, Suite 205

					
					
						 

					
					
						P.O. Box 617 

				
	
					
						 

					
					
						Fargo, ND 58103

					
					
						 

					
					
						755 13th Ave E

				
	
					
						 

					
					
						 

					
					
						 

					
					
						West Fargo, ND 58078

				

		
			 
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						Principal Amount: $5,858.134.26

					
					
						Date of Agreement: April 17. 2020

				

		
			 
		

		
			DESCRIPTION OF EXISTING INDEBTEDNESS. Promissory Note number 4011782 dated March 5, 2019 in the original amount of $5,858, 134.26 (Draw Down Line of Credit) with a current principal balance of $5,768,546.63.
		

		
			DESCRIPTION OF CHANGE IN TERMS.
		

			
	
			
				 1.
			

			
	
			
			CHANGE OF MATURITY DATE. Extend the maturity date of the above listed Promissory Note from March 1, 2024 to September 1, 2024 at which time all outstanding principal plus all accrued unpaid interest will be due.

			
	
			
				 2.
			

			
	
			
			PAYMENT SCHEDULE. Borrower's payment schedule will be changed to the following: 47 monthly payments of principal and interest in the amount of $34,350.00 plus $10,328. 75 real estate escrow, beginning October 1, 2020, and continuing on the same day of each month thereafter; 1 final payment of all outstanding principal plus all accrued unpaid interest will be due at maturity.

			
	
			
				 3.
			

			
	
			
			REPLACEMENT RESERVE. Effective the date of this agreement, the 2020 replacement reserve requirement will be waived. Next replacement reserve funding will occur in 2021 based on 2% of the trailing 12 months of revenues, 3/1/20-2/28/21.

			
	
			
				 4.
			

			
	
			
			PAYMENT DEFERRAL DISCLOSURE: Given the unique and unprecedented environment surrounding the COVID-19 pandemic and related economic circumstances, the Lender has agreed to enter into this Payment Deferral and modify the loan terms as set forth herein. Each Borrower hereby acknowledges and agrees that the Lender's decision to accommodate the Borrower's requested Loan Modification is a one-time decision by the Lender and should COVID-19 continue to negatively impact the Borrower after the date hereof, the Lender has no obligation to enter into any further loan modification. Furthermore, each Borrower agrees not to assert, and each Borrower hereby forever waives any right to assert, that Lender is obligated in any way after the date hereof to enter into a further loan modification and the Lender expects that all Loan Documents will be strictly complied with by the Borrower after the date hereof. By deferring the payments, Borrower acknowledges that interest will continue to accrue during this deferment period. Borrower also understands that the final payment of all outstanding principal and interest that will be due at maturity may be larger than the final payment disclosed in the original or subsequently modified Promissory Note. During this deferment, collection of escrow for real estate taxes will also be deferred and an escrow shortage is likely. That shortage will be collected through the next escrow analysis which will provide Borrower with an option to pay the shortage in a lump sum or increase the monthly escrow payment. Nothing herein shall be deemed to waive or forgive any principal or interest under the original or subsequently modified Promissory Note.

		
			Given the unique and unprecedented environment surrounding the COVID-19 pandemic and related economic circumstances, Borrower hereby represents and agrees not to disclose to any person or entity except for (a) the signatories hereto, (b) any attorneys and/or agents of the signatories hereto, and (c) any of its officers, partners or investors, any information related to this Change in Terms Agreement without the prior written consent of Lender. Notwithstanding the foregoing, it shall not be considered a breach of this provision for Lender to disclose the terms hereof to local, state and federal authorities, or to make disclosures to any other persons or entities when legally compelled or required to do so. In the event that Borrower is legally compelled to disclose any of the terms hereof, Borrower shall, as soon as possible, but prior to such disclosure, provide written notice to Lender regarding the proposed disclosure, including a copy of the proposed disclosure, if applicable, and also shall provide an explanation of the circumstances compelling such disclosure; to the extent such disclosure must be made, Borrower shall limit the scope of such disclosure to that which is necessary to accomplish the purpose for which the disclosure is made. Borrower further acknowledges that a breach of this provision shall entitle Lender to seek damages or other remedies for such breach at law or in equity. The terms of this section shall survive and continue in full force and effect notwithstanding the termination or expiration of this Change in Terms Agreement.
		

		
			This Agreement shall become effective upon, and only upon, the occurrence of each of the following: (i) execution of this Agreement by Borrower and each and every Guarantor and (ii) delivery of this Agreement signed by Borrower and each and every Guarantor to counsel for Lender.
		

		
			CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of the original obligation or obligations, including all agreements evidenced or securing the obligation(s), remain unchanged and in full force and effect. Consent by Lender to this Agreement does not waive Lender's right to strict performance of the obligation(s) as changed, nor obligate Lender to make any future change in terms. Nothing in this Agreement will constitute a satisfaction of the obligation(s) . It is the intention of Lender to retain as liable parties all makers and endorsers of the original obligation(s), including accommodation parties, unless a party is expressly released by Lender in writing. Any maker or endorser, including accommodation makers, will not be released by virtue of this Agreement. If any person who signed the original obligation does not sign this Agreement below, then all persons signing below acknowledge that this Agreement is given conditionally, based on the representation to Lender that the non-signing party consents to the changes and provisions of this Agreement or otherwise will not be released by it. This waiver applies not only to any initial extension, modification or release, but also to all such subsequent actions.
		

		
			 
		

		
			
		

		
			

		 

		

		
			CHANGE IN TERMS AGREEMENT
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						(Continued)

					
					
						Page 2

				

		
			 
		

		
			PRIOR TO SIGNING THIS AGREEMENT, EACH BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT. EACH BORROWER AGREES TO THE TERMS OF THE AGREEMENT.
		

		
			 
		

		
			CHANGE IN TERMS SIGNERS :
		

		
			 
		

		
			LF3 CEDAR RAPIDS, LLC
		

		
			 
		

		
			 
		

		
			LODGING FUND REIT Ill OP, LP, Sole Member of LF3 Cedar Rapids. LLC
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

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

					
					
						 

				
	
					
						 

					
						By:/s/ Katie L Cox                                                                                   

					
						     Katie L Cox, Chief Financial Officer of Lodging Fund

				
	
					
						     REIT Ill, Inc .

				

		
			 
		

		
			 
		

		
			LF3 CEDAR RAPIDS TRS, LLC
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						LODGING FUND REIT III TRS, Inc. Sole Member of LF3 Cedar Rapids TRS, LLC

				
	
					
						 

					
					
						 

				
	
					
						By:

					
					
						/s/ Katie L Cox

					
					
						 

				
	
					
						 

					
					
						Katie L Cox, Chief Financial Officer of Lodging Fund

					
					
						 

				
	
					
						 

					
					
						REIT III TRS, Inc.

					
					
						 

				

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						LODGING FUND REIT Ill TRS, INC

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						By:

					
					
						/s/ Katie L Cox

					
					
						 

				
	
					
						 

					
					
						Katie L Cox, Chief Financial Officer of Lodging Fund

					
					
						 

				
	
					
						 

					
					
						REIT Ill TRS, Inc .

					
					
						 

				

		
			 
		

		
			 
		

		
			LODGING FUND REIT Ill OP, LP
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						LODGING FUND REIT III, INC., Lodging Fund REIT Ill OP, LP

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						By:

					
					
						/s/ Katie L Cox

					
					
						 

				
	
					
						 

					
					
						Katie L Cox, Chief Financial Officer of Lodging Fund

					
					
						 

				
	
					
						 

					
					
						REIT Ill, Inc.

					
					
						 

				

		
			 
		

		
			 
		

		
			 
		

		
			LENDER:
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						WESTERN STATE BANK

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						X:

					
					
						/s/ Ryan Rued

					
					
						 

				
	
					
						 

					
					
						Ryan Rued, VP/Business Banking Officer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00309-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00309-of-00352.parquet"}]]