Document:

lfr_Current_Folio_10K_Ex10562

		
			Exhibit 10.56.2
		

		
			 
		

		
			PROMISSORY NOTE
		

		
			 
		

		
			 
		

			
					
						 

					
						 

					
					
						 

					
						 

					
					
						 

					
						 

					
					
						 

					
						 

					
					
						 

					
						 

					
					
						 

					
					
						 

					
						 

					
					
						 

				
	
					
						Principal

					
						$5,858,134.26

					
					
						Loan Date

					
						03-05-2019

					
					
						Maturity

					
						03-01-2024

					
					
						Loan No

					
						 

					
					
						Call / Coll

					
						8100

					
					
						Account

					
					
						Officer

					
						403

					
					
						Initials

				
	
					
						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 617 755 13th Ave E

				
	
					
						Fargo, ND 58103

					
					
						 

					
					
						West Fargo, ND  58078

				

		
			 
		

		
			 
		

		
			 
		

		
			 
		

			
					
						Principal Amount: $5,858,134.26

					
					
						Date of Note: March 5, 2019

				

		
			PROMISE TO PAY. LF3 Cedar Rapids, LLC; and LF3 Cedar Rapids TRS, LLC ("Borrower") jointly and severally promise to pay to Western State Bank ("Lender"), or order, in lawful money of the United States of America, the principal amount of Five Million Eight Hundred Fifty-eight Thousand One Hundred Thirty-four & 26/100 Dollars ($5,858,134.26) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance. Interest shall be calculated from the date of each advance until repayment of each advance.
		

		
			PAYMENT. Borrower will pay this loan in accordance with the following payment schedule, which calculates interest on the unpaid principal balances as described in the "INTEREST CALCULATION METHOD" paragraph using the interest rates described in this paragraph:  12 monthly consecutive interest payments, beginning April 1, 2019, with interest calculated on the unpaid principal balances using an interest rate of 5.330% per annum based on a year of 360 days; 47 monthly consecutive principal and interest payments of $34,350.00 each, beginning April 1, 2020, with interest calculated on the unpaid principal balances using an interest rate of 5.330% per annum based on a year of 360 days; and one principal and interest payment of $5,467,647.10 on March 1, 2024, with interest calculated on the unpaid principal balances using an interest rate of 5.330% per annum based on a year of 360 days. This estimated final payment is based on the assumption that all payments will be made exactly as scheduled; the actual final payment will be for all principal and accrued interest not yet paid, together with any other unpaid amounts under this Note. 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.
		

		
			ESCROW PROVISION. LF3 Cedar Rapids, LLC and LF3 Cedar Rapids TRS, LLC will be required to escrow for real estate taxes at the Bank for all properties securing this promissory note.  The initial monthly escrow amount will be as follows: (subject to change annually)
		

		
			 
		

		
			1230 Collins Road NE, Cedar Rapids, IA 52402; $9,665.00
		

		
			LF3 Cedar Rapids, LLC and LF3 Cedar Rapids TRS, LLC will be responsible to ensure the real estate taxes of the subject property or properties are paid in full by the County Treasurer deadline, whether the Bank pays the real estate taxes directly on LF3 Cedar Rapids, LLC and LF3 Cedar Rapids TRS, LLC’s behalf or not. The Bank will not be liable if the real estate tax escrow has insufficient funds to pay for the property taxes.  If the escrow balance is less than the amount due to the County Treasurer on the due date, LF3 Cedar Rapids, LLC and LF3 Cedar Rapids TRS, LLC will be responsible to immediately deposit additional funds to cover the full amount of real estate taxes due. Bank will not cover escrow shortfalls. Any excess escrow funds may be refunded to LF3 Cedar Rapids, LLC and LF3 Cedar Rapids TRS, LLC upon the their request contingent upon the Bank’s analysis of the next real estate tax payment due, the current balance of the escrow account, and future escrow payments.
		

		
			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 PENALTY. Upon prepayment of this Note, Lender is entitled to the following prepayment penalty: The Borrowers will incur a prepayment penalty equal to 2% of the principal balance of this loan that is paid within the first 12 months of the loan.
		

		
			At the one-year anniversary, the Borrowers will incur a declining prepayment penalty of 3%, 2%, 1% and 1% of the principal balance of this loan that is paid within the following 4-year period from any proceeds. The prepayment penalty will be 3% of the principal balance if paid within year two, 2% in year three and 1% in any of the remaining two years. The Borrower is not permitted to pre-pay the principal on this loan more than 5% per year. Anything in excess of this amount would require prior written Bank approval.  The Bank would waive the prepayment penalty if the property were to be sold in an arms-length transaction to an independent third party or refinanced onto the secondary market. Except for the foregoing, Borrower may pay 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 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 adding an additional 3.000 percentage point margin ("Default Rate Margin"). The Default Rate Margin shall also apply to each succeeding interest rate change that would have applied had there been no default.  After maturity, or after this Note would have matured had there been no default, the Default Rate Margin will continue to apply to the final interest rate described in this Note. 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 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 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.
		

		
			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 Cass County, State of North Dakota.
		

		
			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 indebtedness 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.  Borrower acknowledges this Note is secured by the following collateral described in the security instruments listed herein:
		

		
			(A)a Mortgage dated March 5, 2019, to Lender on real property located in Linn County, State of Iowa.
		

		
			(B)an Assignment of All Rents to Lender on real property located in Linn County, State of Iowa.
		

		
			(C)a Commercial Security Agreement dated March 5, 2019 made and executed between LF3 Cedar Rapids, LLC and LF3 Cedar Rapids TRS, LLC and Lender on collateral described as:
		

		
			All Fixtures at 1230 Collins Road NE, Cedar Rapids, IA 52402
		

		
			(D)a Commercial Security Agreement dated March 5, 2019 made and executed between LF3 Cedar Rapids TRS, LLC and Lender on collateral described as:
		

		
			Assignment of License Agreement dated November 30, 2018 between HOLIDAY HOSPITALITY FRANCHISING, LLC, a Delaware Limited Liability Company and LF3 Cedar Rapids TRS, LLC, a Delaware Limited Liability Company. This License constitutes a license to operate a hotel as Holiday Inn Express brand hotel located at 1230 Collins Road NE, Cedar Rapids, IA 52402
		

		
			(E)a Commercial Security Agreement dated March 5, 2019 made and executed between LF3 Cedar Rapids, LLC and LF3 Cedar Rapids TRS, LLC and Lender on collateral described as:
		

		
			All inventory, equipment, accounts (including but not limited to all health-care-insurance receivables),  chattel  paper,  instruments (including but not limited to all promissory notes), letter-of-credit rights, letters of credit, documents, deposit accounts, investment property, money, other rights to payment and performance, and general intangibles (including but not limited to all software and all payment intangibles); all oil, gas and other minerals before extraction; all oil, gas, other minerals and  accounts  constituting as-extracted collateral; all fixtures; all timber to be cut; all attachments, accessions, accessories, fittings, increases,  tools,  parts, repairs, supplies, and commingled goods relating to the foregoing property, and all additions, replacements of and substitutions for all or any part of the foregoing property; all insurance refunds relating to the foregoing property; all good will relating to the foregoing property; all records and data and embedded software relating to the foregoing property, and all equipment, inventory and software to
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			PROMISSORY NOTE
		

		
			(Continued)
		

		
			 
		

		
			 
		

		
			 
		

		
			utilize, create, maintain and process any such records and data on electronic media; and all supporting obligations relating to the foregoing property; all whether now existing or  hereafter arising, whether now owned or hereafter acquired or whether now or hereafter subject to any rights in the foregoing property; and all products and proceeds (including but not limited to all insurance payments) of or relating to the foregoing property.
		

		
			LINE OF CREDIT.  This Note evidences a straight line of credit.  Once the total amount of principal has been advanced, Borrower is not entitled to further loan advances. Advances under this Note may be requested only in writing by Borrower or as provided in this paragraph. All communications, instructions, or directions by telephone or otherwise to Lender are to be directed to Lender's office shown above. Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person or (B) credited to any of Borrower's accounts with Lender.  The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender's internal records, including daily computer print-outs.
		

		
			REPLACEMENT RESERVE. LF3 Cedar Rapids, LLC and LF3 Cedar Rapids TRS, LLC will be required to maintain a Replacement Reserve account at the Bank, beginning 12-months following loan closing. A hold will be placed on all funds maintained in this account.  Required deposits into the reserve account will be equal to 1% of gross revenues for the first 12-months following loan closing, 2% of gross revenue for the next 12-months, and 3% of gross revenues for the remaining term.  Borrower will be required to provide the Bank with a written request of at least
		

		
			$50,000 for any withdrawals from this account with all withdrawals subject to Bank approval.
		

		
			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.
		

		
			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.  Each Borrower understands and agrees that, with or without notice to Borrower, Lender may with respect to any other Borrower (a) make one or more additional secured or unsecured loans or otherwise extend additional credit;  (b) alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of any indebtedness, including increases and decreases of the rate of interest on the indebtedness;  (c) exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any security, with or without the substitution of new collateral; (d) apply such security and direct the order or manner of sale thereof, including without limitation, any non-judicial sale permitted by the terms of the controlling security agreements, as Lender in its discretion may determine; (e) release, substitute, agree not to sue, or deal with any one or more of Borrower's sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; and (f) determine how, when and what application of payments and credits shall be made on any other indebtedness owing by such other Borrower. 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, EACH BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE. EACH BORROWER AGREES TO THE TERMS OF THE NOTE.
		

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

		
			 
		

		
			LF3 CEDAR RAPIDS, LLC
		

		
			 
		

		
			LODGING FUND REIT III 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/ Corey R. Maple
		

		
			Corey   R.   Maple,   Chief   Executive   Officer   and Secretary of Lodging Fund REIT III, Inc.
		

		
			 
		

		
			LF3 CEDAR RAPIDS TRS, LLC
		

		
			 
		

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

		
			By: /s/ Corey R. Maple
		

		
			Corey   R.   Maple,   Chief   Executive   Officer   and Secretary of Lodging Fund REIT III TRS, Inc.
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			LENDER:
		

		
			 
		

		
			WESTERN STATE BANK
		

		
			 
		

		
			By: /s/ Ryan Rued Ryan Rued, VP/Business Banking Officer
		

		
			 
		

		
			 
		

		
			LaserPro, Ver. 19.4.10.036  Copr. Finastra USA Corporation 1997, 2020.   All Rights Reserved.   - ND  C:\LASERPRO\CFI\LPL\D20.FC  TR-3523  PR-8
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			PROMISSORY NOTE
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
						 

					
					
						 

					
						 

					
					
						 

					
						 

					
					
						 

					
						 

					
					
						 

					
						 

					
					
						 

					
						 

					
					
						 

				
	
					
						Principal

					
						$9,444,500.00

					
					
						Loan Date

					
						06-19-2019

					
					
						Maturity

					
						07-01-2024

					
					
						Loan No

					
						 

					
					
						Call / Coll

					
						8100

					
					
						Account

					
						 

					
					
						Officer

					
						403

					
					
						Initials

				
	
					
						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 Eagan, LLC

					
					
						Lender:

					
					
						Western State Bank

				
	
					
						LF3 Eagan TRS, LLC

					
					
						 

					
					
						West Fargo

				
	
					
						1635 43rd Street South, Suite 205

					
					
						 

					
					
						P.O. Box 617 755 13th Ave E

				
	
					
						Fargo, ND  58103

					
					
						 

					
					
						West Fargo, ND  58078

				

		
			 
		

		
			 
		

		
			 
		

			
					
						Principal Amount: $9,444,500.00

					
					
						Date of Note: June 19, 2019

				

		
			PROMISE TO PAY. LF3 Eagan, LLC; and LF3 Eagan TRS, LLC ("Borrower") jointly and severally promise to pay to Western State Bank ("Lender"), or order, in lawful money of the United States of America, the principal amount of Nine Million Four Hundred Forty-four Thousand Five Hundred & 00/100 Dollars ($9,444,500.00), together with interest on the unpaid principal balance from June 19, 2019, calculated as described in the "INTEREST CALCULATION METHOD" paragraph using an interest rate of 4.600% 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  59  regular  payments  of  $53,484.01  each  and  one  irregular  last  payment  estimated  at
		

		
			$8,387,843.24. Borrower's first payment is due August 1, 2019, and all subsequent payments are due on the same day of each month after that. Borrower's final payment will be due on July 1, 2024, 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.
		

		
			ESCROW PROVISION. LF3 Eagan, LLC and LF3 Eagan TRS, LLC will be required to escrow for real estate taxes at the Bank for all properties securing this promissory note.  The initial monthly escrow amount will be as follows: (subject to change annually)
		

		
			 
		

		
			3000 Eagandale Place, Eagan, MN 55121; $14,670.00
		

		
			LF3 Eagan, LLC and LF3 Eagan TRS, LLC will be responsible to ensure the real estate taxes of the subject property or properties are paid in full by the County Treasurer deadline, whether the Bank pays the real estate taxes directly on LF3 Eagan, LLC and LF3 Eagan TRS, LLC’s behalf or not. The Bank will not be liable if the real estate tax escrow has insufficient funds to pay for the property taxes. If the escrow balance is less than the amount due to the County Treasurer on the due date, LF3 Eagan, LLC and LF3 Eagan TRS, LLC will be responsible to immediately deposit additional funds to cover the full amount of real estate taxes due.  Bank will not cover escrow shortfalls.  Any excess escrow funds may be refunded to LF3 Eagan, LLC and LF3 Eagan TRS, LLC upon the their request contingent upon the Bank’s analysis of the next real estate tax payment due, the current balance of the escrow account, and future escrow payments.
		

		
			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.
		

		
			DRAW DOWN LINE OF CREDIT. This Note evidences a straight line of credit. Once the total amount of principal has been advanced, Borrower is not entitled to further loan advances. Advances under this Note may be requested only in writing by the Borrower or as provided in this paragraph. All communications, instructions, or directions by telephone or otherwise to Lender are to be directed to Lender's office shown above. Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person or (B) credited to any of the Borrower's accounts with the Lender. The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender's internal records, including daily computer print-outs. Lender will have no obligation to advance funds under this Note if: (A) Borrower or any guarantor is in default under the terms of this Note or any agreement that Borrower or any guarantor has with Lender, including any agreement made in connection with the signing of this Note; (B) Borrower or any guarantor cases doing business or is insolvent; (C) any guarantor seeks, claims or otherwise attempts to limit modify or revoke such guarantor's guarantee of this Note or any other loan with Lender; (D) Borrower has applied funds provided pursuant to this Note for purposes other than those authorized by Lender; or (E) Lender in good faith believes itself insecure.
		

		
			PREPAYMENT PENALTY. Upon prepayment of this Note, Lender is entitled to the following prepayment penalty: The Borrower will incur a declining prepayment penalty of 3%, 2%, 1%, 1% and 1% of the principal balance of this loan that is paid prior to the five year maturity from any proceeds. The prepayment penalty will be 3% of the principal balance if paid within the first year, 2% in the second year and 1% in any of the remaining three years. The Borrower is not permitted to pre-pay the principal on this loan more than 5% per year. Anything in excess of this amount would require prior written Bank approval. The Bank would waive the prepayment penalty if the property were to be sold in an arms-length transaction to an independent third party or refinanced onto the secondary market. Except for the foregoing, Borrower may pay 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 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 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 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.
		

		
			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 Cass County, State of North Dakota.
		

		
			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 indebtedness 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.  Borrower acknowledges this Note is secured by the following collateral described in the security instruments listed herein:
		

		
			(A)a Mortgage dated June 19, 2019, to Lender on real property located in Dakota County, State of Minnesota.
		

		
			(B)an Assignment of All Rents to Lender on real property located in Dakota County, State of Minnesota.
		

		
			(C)a Commercial Security Agreement dated June 19, 2019 made and executed between LF3 Eagan, LLC and LF3 Eagan TRS, LLC and Lender on collateral described as:
		

		
			All Fixtures at 3000 Eagandale Place, Eagan, MN  55121
		

		
			(D)a Commercial Security Agreement dated June 19, 2019 made and executed between LF3 Eagan TRS, LLC and Lender on collateral described as:
		

		
			Assignment of Franchise Agreement dated June 19, 2019 between Hilton Franchise Holding  LLC,  a  Delaware  Limited  Liability Company and LF3 Eagan TRS, LLC, a Delaware Limited Liability Company. This Franchise Agreement constitutes a license to operate a hotel as Hampton Inn by Hilton brand hotel located at 3000 Eagandale Place, Eagan, MN  55121.
		

		
			(E)a Commercial Security Agreement dated June 19, 2019 made and executed between LF3 Eagan, LLC and LF3 Eagan TRS, LLC and Lender on collateral described as:
		

		
			All inventory, equipment, accounts (including but not limited to all health-care-insurance receivables),  chattel  paper,  instruments (including but not limited to all promissory notes), letter-of-credit rights, letters of credit, documents, deposit accounts, investment property, money, other rights to payment and performance, and general intangibles (including but not limited to all software and all payment intangibles); all oil, gas and other minerals before extraction; all oil, gas, other minerals and  accounts  constituting as-extracted collateral; all fixtures; all timber to be cut; all attachments, accessions, accessories, fittings, increases,  tools,  parts, repairs, supplies, and commingled goods relating to the foregoing property, and all additions, replacements of and substitutions for all
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			PROMISSORY NOTE
		

		
			(Continued)
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			or any part of the foregoing property; all insurance refunds relating to the foregoing property; all good will relating to the foregoing property; all records and data and embedded software relating to the foregoing property, and all equipment, inventory and software to utilize, create, maintain and process any such records and data on electronic media; and all supporting obligations relating to the foregoing property; all whether now existing or  hereafter arising, whether now owned or hereafter acquired or whether now or hereafter subject to any rights in the foregoing property; and all products and proceeds (including but not limited to all insurance payments) of or relating to the foregoing property.
		

		
			REPLACEMENT RESERVE. LF3 Eagan, LLC and LF3 Eagan TRS, LLC will be required to maintain a Replacement Reserve account at the Bank, beginning 12-months following loan closing. A hold will be placed on all funds maintained in this account. Required deposits into the reserve account will be equal to 1% of gross revenues for the first 12-months following loan closing, 2% of gross revenue for the next 12-months, and 3% of gross revenues for the remaining term. Borrower will be required to provide the Bank with a written request of at least $50,000 for any withdrawals from this account with all withdrawals subject to Bank approval.
		

		
			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.
		

		
			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.  Each Borrower understands and agrees that, with or without notice to Borrower, Lender may with respect to any other Borrower (a) make one or more additional secured or unsecured loans or otherwise extend additional credit;  (b) alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of any indebtedness, including increases and decreases of the rate of interest on the indebtedness;  (c) exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any security, with or without the substitution of new collateral; (d) apply such security and direct the order or manner of sale thereof, including without limitation, any non-judicial sale permitted by the terms of the controlling security agreements, as Lender in its discretion may determine; (e) release, substitute, agree not to sue, or deal with any one or more of Borrower's sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; and (f) determine how, when and what application of payments and credits shall be made on any other indebtedness owing by such other Borrower. 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, EACH BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE.  EACH BORROWER AGREES TO THE TERMS OF THE NOTE.
		

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

		
			 
		

		
			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.
		

		
			 
		

		
			LF3 EAGAN TRS, LLC
		

		
			 
		

		
			LODGING FUND REIT III TRS, INC., Sole Member of LF3 Eagan TRS, LLC
		

		
			 
		

		
			By: /s/ Katie Cox Katie  Cox, Chief Financial Officer of Lodging Fund REIT III TRS, Inc.
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			LENDER:
		

		
			 
		

		
			WESTERN STATE BANK
		

		
			 
		

		
			By: /s/ Ryan Rued
		

		
			Ryan Rued, VP/Business Banking Officer
		

		
			 
		

		
			 
		

		
			LaserPro, Ver. 19.4.10.036  Copr. Finastra USA Corporation 1997, 2020.   All Rights Reserved.   - ND  C:\LASERPRO\CFI\LPL\D20.FC  TR-3942  PR-8lfr_Current_Folio_10K_Ex10563

		

			 

		

		

			 

		

		

			 

		

		

			 

		

		

			EXHIBIT 10.56.3

		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 FOR RECORDER'S USE ONLY
		

		
			Prepared By: Kim Almer, Business Banking Assistant - Team Lead, Western State Bank, P.O. Box 617, West Fargo, ND 58078, (701) 277-5003
		

		
			 
		

		
			ADDRESS TAX STATEMENT:
		

		
			LF3 Cedar Rapids, LLC; 1635 43rd Street South, Suite 205; Fargo, ND  58103
		

		
			 
		

		
			 
		

		
			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
		

		
			 
		

		
			
		

		
			 
		

		
			 
		

		
			MORTGAGE
		

		
			NOTICE: This Mortgage secures credit in the amount of $5,858,134.26. Loans and advances up to this amount, together with interest, are senior to indebtedness to other creditors under subsequently recorded or filed mortgages and liens.
		

		
			The names of all Grantors (sometimes "Grantor") can be found on page 1 of this Mortgage. The names of all Grantees (sometimes "Lender") can be found on page 1 of this Mortgage. The property address can be found on page 2 of this Mortgage. The legal description can be found on page 2 of this Mortgage.  The parcel identification number can be found on page 2 of this Mortgage.
		

		
			 
		

		
			THIS MORTGAGE dated March 5, 2019, is made and executed between LF3 Cedar Rapids, 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 and grants to Lender a security interest in 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; rents and profits; 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 Linn
		

		
			 
		

		
			

		 

		

		
			County, State of Iowa:
		

		
			Lot 9, Milwaukee Industrial Park Ninth Addition to the City of Cedar Rapids, Linn County, Iowa.
		

		
			The Real Property or its address is commonly known as 1230 Collins Road NE, Cedar Rapids, IA 52402.  The Real Property parcel identification number is 140325200500000.
		

		
			Grantor presently assigns to Lender all of Grantor's right, title, and interest in and to all present and future leases of the Property and all Rents from the Property. In addition, Grantor grants to Lender a Uniform Commercial Code security interest in the Personal Property and Rents. The lien on the rents granted in this Mortgage shall be effective from the date of the Mortgage and not just in the event of default.
		

		
			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 ASSIGNMENT OF RENTS AND THE SECURITY INTEREST IN THE RENTS AND PERSONAL PROPERTY, IS GIVEN TO SECURE (A) PAYMENT OF THE INDEBTEDNESS AND (B) PERFORMANCE OF ANY AND ALL OBLIGATIONS UNDER 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:  None of the collateral for the Indebtedness constitutes, and none of the funds represented by the Indebtedness will be used to purchase: (1) Agricultural products or property used for an agricultural purpose as defined in Iowa Code Section 535.13; (2) Agricultural land as defined in Iowa Code Section 9H1 (2) or 175.2 (1); or (3) Property used for an agricultural purpose as defined in Iowa Code Section 570.A.1 (2). Grantor represents and warrants that: (1) There are not now and will not be any wells situated on the Property; (2) There are not now and will not be any solid waste disposal sites on the Property; (3) There are not now and there will not be any hazardous wastes on the Property; (4) There are not now and there will not be any underground storage tanks on the Property.
		

		
			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 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 Iowa 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, (b) Grantor has the full right, power, and authority to execute and deliver this Mortgage to Lender, and (c) the liens granted hereby are not the type of lien referred to in Chapter 575 of the Iowa Code Supplement, as now enacted or hereafter modified, amended or replaced. Grantor, for itself and all persons claiming by, through or under Grantor, agrees that it claims no lien or right to a lien of the type contemplated by Chapter 575 or any other chapter of the Code of Iowa and further waives all notices and rights pursuant to said law with respect to the liens hereby granted, and represents and warrants that it is the sole party entitled to do so and agrees to indemnify, defend, and hold harmless Lender from any loss, damage, and costs, including reasonable attorneys' fees, threatened or suffered by Lender arising either directly or indirectly as a result of any claim of the applicability of said law to the liens hereby granted.
		

		
			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.
		

		
			Fixture Filing. From the date of its recording, this Mortgage shall be effective as a financing statement filed as a fixture filing with respect to the Personal Property and for this purpose, the name and address of the debtor is the name and address of Grantor as set forth on the first page of this Mortgage and the name and address of the secured party is the name and address of Lender as set forth on the first page of this Mortgage.
		

		
			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 to declare the entire Indebtedness immediately due and payable, including any prepayment penalty that Borrower would be required to pay without notice, except as may be expressly required by applicable law.
		

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

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

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

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

		
			Nonjudicial Foreclosure. Lender may exercise the right to non-judicial foreclosure pursuant to Iowa Code Section 654.18 and Chapter 655A as now enacted or hereafter modified, amended  or replaced.
		

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

		
			Tenancy at Sufferance. If Grantor remains in possession of the Property after the Property is sold as provided above or Lender otherwise becomes entitled to possession of the Property upon default of Borrower or Grantor, Grantor shall become a tenant at sufferance of Lender or the purchaser of the Property and shall, at Lender's option, either (1) pay a reasonable rental for the use of the Property, or (2) vacate the Property immediately upon the demand of Lender. This paragraph is subject to any rights of Grantor, under Iowa law, to remain in possession of the Property during a redemption period.
		

		
			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.
		

		
			Shortened Redemption. Grantor hereby agrees that, in the event of foreclosure of this Mortgage, Lender may, at Lender's sole option, elect to reduce the period of redemption pursuant to Iowa Code Sections 628.26, 628.27, or 628.28, or any other Iowa Code Section, to such time as may be then applicable and provided by law.
		

		
			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.
		

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

		
			Amendments. This Mortgage, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Mortgage.     No
		

		
			 
		

		
			

		 

		

		
			alteration of or amendment to this Mortgage shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.
		

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

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

		
			Governing Law. With respect to procedural matters related to the perfection and enforcement of Lender's rights against the Property, this Mortgage will be governed by federal law applicable to Lender and to the extent not preempted by federal law, the laws of the State of Iowa. 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.
		

		
			Release of Rights of Dower, Homestead and Distributive Share. Each of the undersigned hereby relinquishes all rights of dower, homestead and distributive share in and to the Property and waives all rights of exemption as to any of the Property. If a Grantor is not an owner of the Property, that Grantor executes this Mortgage for the sole purpose of relinquishing and waiving such rights.
		

		
			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 Cedar Rapids, LLC; and LF3 Cedar Rapids 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.
		

		
			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 Cedar Rapids, 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 late fees, 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 March 5, 2019, in the original principal amount of $5,858,134.26 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 this Mortgage is March 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 CEDAR RAPIDS, LLC
		

		
			 
		

		
			LODGING FUND REIT III 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/ Corey R. Maple
		

		
			Corey R. Maple, Chief Executive Officer and Secretary of Lodging Fund REIT III, Inc.
		

		
			 
		

		
			 
		

		
			 
		

		
			
		

		
			LIMITED LIABILITY COMPANY ACKNOWLEDGMENT
		

		
			 
		

		
			 
		

		
			 

		

		
			STATE OF  FL
		

		
			 
		

		
			 
		

		
			COUNTY OF  Sarasota
		

		
			 
		

		
			 
		

		
			 
		

		
			

)
		

		
			) SS
		

		
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			This record was acknowledged before me on       3/5     ,   20 19 by Corey R. Maple, Chief Executive Officer and Secretary of Lodging Fund REIT III, Inc., General Partner of Lodging Fund REIT III OP, LP, Sole Member of LF3 Cedar Rapids, LLC.
		

		
			/s/ John Dooley
		

		
			
		

		
			Notary Public in and for the State of Florida
		

		
			My commission expires  November 12, 2020
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			
		

		
			LaserPro,  Ver.  19.4.10.036    Copr.  Finastra  USA  Corporation  1997,  2020.All Rights Reserved.- IA/ND  C:\LASERPRO\CFI\LPL\G03.FC  TR-3523  PR-8
		

		
			 
		

		
			 
		

		 

		

			 

		

		

			 

		

		

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