10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

☒          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

OR

☐          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition period from to

Commission file number: 000‑56082

LODGING FUND REIT III, INC.

(Exact Name of Registrant as Specified in Its Charter)

Maryland	83‑0556111
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
1635 43rd Street South, Suite 205 Fargo, North Dakota	58103
(Address of Principal Executive Offices)	(Zip Code)

(701) 630‑6500

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:  None

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	N/A	N/A

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ☐ No    ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the common stock held by non-affiliates of the registrant: No established market exists for the registrant’s shares of common stock. On June 1, 2018 the registrant launched its ongoing private offering of its shares of common stock, which shares are being offered at $10.00 per share, with discounts available for certain categories of purchasers. There were 3,288,371 shares of common stock held by non-affiliates as of June 30, 2019, the last business day of the registrant’s most recently completed second fiscal quarter.

As of March 24, 2020, there were 6,962,813 outstanding shares of common stock of the registrant.

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this Annual Report on Form 10-K incorporates certain information by reference to the definitive proxy statement for the registrant’s 2020 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission (the “SEC”) no later than April 29, 2020.

Table of Contents

Part I
Item 1.	Business	1
Item 1A.	Risk Factors	5
Item 1B.	Unresolved Staff Comments	29
Item 2.	Properties	29
Item 3.	Legal Proceedings	30
Item 4.	Mine Safety Disclosures	30
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	30
Item 6.	Selected Financial Data	35
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 8.	Financial Statements and Supplementary Data	45
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	45
Item 9A.	Controls and Procedures	45
Item 9B.	Other Information	46
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	47
Item 11.	Executive Compensation	47
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	47
Item 13.	Certain Relationships and Related Transactions, and Director Independence	47
Item 14.	Principal Accountant Fees and Services	47
Part IV
Item 15.	Exhibits and Financial Statement Schedules	47
Item 16.	Form 10‑K Summary	56
Signatures
Index to Consolidated Financial Statements		F-1
Report of Independent Registered Public Accounting Firm		F-2

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FORWARD-LOOKING STATEMENTS

Certain statements included in this Annual Report on Form 10‑K are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of the Company and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “should,” “expect,” “could,” “intend,” “anticipate,” “plan,” “estimate,” “believe,” “potential,” “continue,” “seek” or similar expressions. These statements include our plans and objectives for future operations, including plans and objectives relating to future growth and availability of funds, and are based on current expectations that involve numerous risks and uncertainties. Assumptions relating to these statements involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to accurately predict and many of which are beyond our control. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.

The accompanying information in this Annual Report on Form 10-K, including, without limitation, the information set forth under the section entitled “Risk Factors” in Item 1A, identifies additional factors that could materially adversely affect actual results and performance.  All forward-looking statements should be read in light of the risks identified in Part I, Item 1A of this Annual Report on Form 10-K. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.

PART I

Item 1. Business.

Overview

Lodging Fund REIT III, Inc. was formed on April 9, 2018, as a Maryland corporation for the principal purpose of acquiring a diversified portfolio of limited-service, select-service and extended-stay hotel properties located primarily in “America’s Heartland,” which the Company defines as the geographic area from North Dakota to Texas and the Appalachian Mountains to the Rocky Mountains. We have elected to be taxed as a real estate investment trust, or REIT, beginning with the taxable year ended December 31, 2018, and we intend to continue to operate in such a manner. Where applicable in this Form 10‑K, “we,” “our,” “us,” and “the Company” refers to Lodging Fund REIT III, Inc., Lodging Fund REIT III OP, LP, a Delaware limited partnership and our operating partnership (the “Operating Partnership”), and their subsidiaries except where the context otherwise requires.

We conduct substantially all of our business and own substantially all real estate investments through the Operating Partnership. We are the sole general partner (the “General Partner”) of the Operating Partnership. We and the Operating Partnership are advised by Legendary Capital REIT III, LLC, a Delaware limited liability company (the “Advisor”) pursuant to an advisory agreement, as amended, under which the Advisor performs advisory services regarding acquisition, financing and disposition of the hotel properties, and is responsible for managing, operating and maintaining the hotel properties and day-to-day management of the Company. The Advisor may, in its sole discretion, perform these duties through one or more affiliates.

Our Advisor is wholly-owned by Corey Maple and Norman Leslie. To facilitate our REIT structure, the Operating Partnership formed Lodging Fund REIT III TRS, Inc., a Delaware corporation (“Master TRS”), to act as the “master” taxable REIT subsidiary (“TRS”) entity. When we acquire a hotel property, the Master TRS forms a separate wholly-owned TRS to act as lessee of the hotel property (a “TRS Lessee”). That TRS Lessee will enter into a lease agreement with a wholly-owned subsidiary of the Operating Partnership to operate the hotel property. We have engaged NHS to manage a number of the hotel properties acquired as of December 31, 2019; however, we can engage third party property management companies, and did so in January 2020. NHS is wholly-owned by Norman Leslie, a director and executive officer of the Company and a principal and co-owner of the Advisor. The Advisor has no direct employees. The employees of Legendary Capital, LLC (the “Sponsor”), an affiliate of the Advisor, provide services to the Company

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related to the negotiations of property acquisitions and financing, asset management, accounting, investor relations, and all other administrative services.

On June 1, 2018, we commenced an offering (the “Offering”) of up to $100,000,000 in shares of our common stock under a private placement to qualified purchasers who meet the definition of “accredited investors,” as provided in Regulation D of the Securities Act of 1933, as amended (the “Securities Act”). The Offering will continue until the earlier of (i) the date when the maximum offering amount is sold, (ii) June 1, 2020, which may be extended by our board of directors in its sole discretion, or (iii) a decision by the Company to terminate the Offering. As of December 31, 2019, the Company had issued 6,005,743 shares of common stock resulting in gross offering proceeds of approximately $59.0 million, including 89,333 shares issued under our dividend reinvestment plan. The net offering proceeds have been used principally to fund property acquisitions and pay distributions and debt service obligations. No public market exists for the shares of our common stock and none is expected to develop.

Our principal executive offices are located at 1635 43rd Street South, Suite 205, Fargo, North Dakota 58103. Our telephone number is (701) 630‑6500.

Our Investment Objectives and Operations

We have invested and intend to continue to invest primarily in 80 to 200 room limited-service, select-service and extended stay hotel properties with strong mid-market brands in America’s Heartland. Our overall strategy is to purchase a diverse portfolio of hotels that presents a strong opportunity for both cash flow generation and capital appreciation. We will attempt to diversify our investment portfolio by geography, brand and asset opportunity type. Our target markets are metropolitan statistical areas in America’s Heartland with populations exceeding 250,000 that exhibit well-diversified business and leisure demand generators. We intend to focus mainly on well-known and established hotel brands, such as Marriott Hotels®, Hilton®, IHG and Hyatt® and their affiliated “flags”, however, we may acquire lesser-known hotel brands where strategically appropriate. We will attempt to further diversify our investments based on three asset opportunity classes: “Stabilized” opportunities (steady historical performers), “Refresh” opportunities (needing capital expenditure or management upgrades) and “Value” opportunities (requiring significant upgrades and stabilization). We do not intend to add Value opportunities unless circumstances arise that would make it advantageous.

Our investment objectives are:

· to preserve, protect and return investor capital contributions;

· to pay regular cash distributions; and

· to realize appreciation in the value of our investments upon the ultimate sale of such investments.

There is no assurance that we will attain these objectives or that there will be any return of capital to investors. Investment results may vary substantially over time and from period to period. Our board of directors may, from time to time, change our investment objectives if it determines it is advisable and in the best interest of our stockholders.

Our Investment Strategy

Real Estate Portfolio

We acquired our first real estate property on November 30, 2018. As of December 31, 2019, our real estate portfolio consisted of five properties located in the following cities: Cedar Rapids, Iowa; Pineville, North Carolina; Eagan, Minnesota; Prattville, Alabama, and Lubbock, Texas referred to in this Form 10‑K as the “Cedar Rapids Property,” the “Pineville Property,” the “Eagan Property,” the “Prattville Property,” and the “Lubbock Home2 Property” respectively. See Part I, Item 2, “Properties” for a more detailed description of our real estate portfolio.

Real Estate Investments

We believe there is a significant inventory of properties in our target markets that are of quality construction, in good locations with well-known brands and historical track records that meet our diversified portfolio parameters. We

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plan to target markets that have been historically strong from a demand and growth perspective. We also plan to focus on properties that we anticipate will require relatively modest necessary capital improvements in the short term. Our intention is to build a diversified portfolio of hotel properties, complete certain property improvements and operate the individual hotel properties with a final goal of selling the entire portfolio in a single transaction.

We expect that the majority of the hotel properties will be mid-market hotels that do not provide full-service facilities to guests including the following types of franchised hotel properties:

· Limited-Service Hotels. Limited-service hotels offer limited facilities and amenities, typically without a full-service restaurant.

· Select-Service Hotels. Select-service hotels offer the fundamentals of limited-service properties together with a selection of services and amenities characteristic of full-service hotels. Generally, the additional amenities are restaurants and banquet facilities but on a less elaborate scale than one would find at full-service hotels.

· Extended Stay Hotels. Extended stay hotels typically focus on attracting guests for extended periods. These properties quote weekly rates and blend transient and long-term bookings.

By concentrating on top-quality institutional franchisors like Marriott Hotels®, Hilton®, IHG and Hyatt® and their affiliated “flags”, we believe we can (i) command a Revenue Per Available Room, or “RevPAR”, premium over sub-market competitive sets, (ii) take advantage of the brands’ strong loyalty programs, (iii) utilize brand channels to deliver guests, (iv) enjoy the benefits of premier system standards, where the brands drive consistent quality, high service standards, innovative design and modern amenities across each respective flag, (v) benefit from effective brand segmentation where, through a wide range of hospitality choices within each brand family, each brand appeals to a broad range of travelers with differing levels of amenities and rates and (vi) utilize the brands’ institutional character to drive faster and stronger resale, financing flexibility and investor confidence. We will attempt to enter into minimum ten-year franchise agreements for each of our franchised hotel properties.

We generally will acquire a fee interest in hotel properties directly through special purpose entities which are generally wholly owned subsidiaries of our Operating Partnership. We may also make investments in certain hotel properties through joint ventures with third-party institutions, developers, operators, investors and other third parties as well as with affiliates of the Advisor. Such joint ventures may be leveraged with debt financing or unleveraged. We anticipate that we will purchase the hotel properties pursuant to purchase and sale agreements with the sellers, but we may also enter into contribution agreements whereby the owner of the property desires to exchange its property for limited partnership interests in the Operating Partnership.

We have financed and plan to continue to finance the purchase of hotel properties with proceeds from the Offering and loans obtained from third-party lenders. We expect to use moderate leverage to enhance the total cash flow to our stockholders. We anticipate that the aggregate loan-to-value ratio for the Company will be between 35% and 65%. We will target a loan-to-value ratio for the hotel properties of between 35% and 70%, based on the purchase price of the hotel properties; however, we may obtain financing that is less than or higher than such loan-to-value ratio for an individual hotel property at the discretion of our board of directors. We will seek to obtain financing on the most favorable terms available. Loans are expected to be nonrecourse and will be secured by the applicable hotel property. In some cases, however, we have been, and in the future may be, required to enter into guarantees for the loans for certain non-recourse carve-outs.

We have obtained and may in the future obtain lines of credit or other financings secured by one or more of the hotel properties in order to bridge the acquisition of, or acquire additional hotel properties, to fund property improvements and other capital expenditures, to make distributions, and for other purposes. In addition, we may borrow as necessary or advisable to ensure that we maintain our qualification as a REIT for federal income tax purposes. As of December 31, 2019, we had a $3.0 million line of credit with Midwest Bank to provide immediate capital to fund acquisitions of the hotel properties. As of December 31, 2019, we had no outstanding balance on the line of credit. As of December 31, 2019, we had $41.7 million in outstanding mortgage debt secured by five properties, with maturity dates ranging from March 2024 to October 2026, with fixed interest rates ranging from 4.13% to 5.33%, and a weighted-average interest rate of 4.72%.

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Our Disposition Strategy

We plan on holding and managing the hotel properties and our other investments for approximately five years following the termination of the Offering, although our board of directors has discretion to extend this holding period indefinitely. Our intention, however, is to dispose of our entire portfolio as soon as practicable when market conditions are favorable. Circumstances may arise, however, that make it more beneficial to sell one or more hotel properties on an individual basis. The Advisor will continually evaluate each hotel property’s performance based on economic and market conditions and our overall objectives to determine an appropriate time to sell the hotel properties in an effort to maximize total returns to our stockholders. The determination of when a particular hotel property should be sold or otherwise disposed of will be made by our board of directors, upon recommendation by our Advisor.

Our Employees

Lodging Fund REIT III, Inc. has no direct employees. The employees of the Sponsor, as an affiliate of the Advisor, perform substantially all of the services related to our asset management, accounting, investor relations, and other administrative activities.

Competition

As we purchase properties to build our portfolio, we are in competition with other potential buyers for the same properties, which may result in an increase in the amount we must pay to acquire a property or may require us to locate another property that meets our investment criteria. Such other potential buyers may include other listed and non-listed REITs or private investors. These potential buyers may have substantially greater financial resources and experience than we do. At the time we elect to dispose of our properties, we may be in competition with sellers of similar properties to locate suitable purchasers.

Economic Dependency

We depend on the Advisor and its affiliates, including the Sponsor, to provide certain services essential to the Company, including asset management services, supervision of the management of the hotel properties, asset acquisition and disposition services, as well as other administrative responsibilities for the Company, including accounting services, investor communications and investor relations. As a result of these relationships, we are dependent upon our Advisor and its affiliates.

Environmental

As an owner of real estate, we are subject to various environmental laws of federal, state, and local governments. Compliance with existing laws has not had a material adverse effect on our financial condition or results of operations, and management does not believe it will have such an impact in the future. However, we cannot predict the impact of unforeseen environmental contingencies or new or changed laws or regulations on properties we currently own, or on properties that may be acquired in the future.

Industry Segments

Our current business consists of acquiring, managing, investing in and disposing of real estate assets. We internally evaluate all of our real estate assets as one industry segment and, accordingly, we do not report segment information.

Seasonality

Depending on a hotel’s location and market, operations for the hotel may be seasonal in nature. This seasonality can be expected to cause fluctuations in our quarterly operating performance. For hotels located in non-resort markets, demand is generally lower in the winter months due to decreased travel and higher in the spring and summer months during the peak travel season. Accordingly, we expect that we will have lower revenue, operating income and cash flow in the first and fourth quarters and higher revenue, operating income and cash flow in the second and third quarters.

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Item 1A. Risk Factors.

In addition to the other information in this Annual Report on Form 10-K, the following risk factors should be considered carefully in evaluating our company and our business.

Risks Related to Owning Shares of Our Common Stock

The offering price for our shares of common stock in the Offering has been determined by us and has no relationship to established criteria such as book value or earnings per share.

The offering price for our shares of common stock in the Offering has been determined primarily by our board of directors and bears no relationship to any established criteria of value such as book value or earnings per share, or any combination thereof.  Further, the price of our shares of common stock is not based on our past earnings, nor does that price necessarily reflect current market value for our assets.  We may, but will have no obligation to, determine the Share NAV of our assets prior to the termination of the Offering.  The ordinary course of our business does not entail the valuation of businesses or securities, and therefore cannot guarantee that our estimation of the Share NAV will be an accurate estimation of our enterprise value.

Our shares of common stock have no public market, no public market is expected to develop, and consequently, it may be difficult for you to sell your shares.

There is no public trading market for our shares of common stock and we do not expect one to develop in the foreseeable future.  The absence of a public market for our shares of common stock could impair your ability to sell your shares at a fair price or at all.  In addition, the transfer of shares will be subject to additional limitations.  Although our board of directors has adopted a share repurchase plan, there is no guarantee that such program will remain in place in its current form, and our board of directors may suspend, modify or terminate the share repurchase plan at any time.  Consequently, you may have to hold your shares for an indefinite period of time because it may be difficult for you to sell your shares.

There are restrictions on transferring our shares of common stock, which may make your shares unattractive to prospective purchasers and may prevent you from selling them when you desire.

Transfer of your shares is restricted by applicable federal and state securities laws as well as the charter.  The shares have not been registered under federal securities laws or the securities laws of any other state.  Each investor who purchases shares must represent that it is acquiring our shares of common stock for investment and not with a view to distribution or resale and that it understands our shares of common stock are not freely transferable.  You may not sell, offer for sale, or transfer your shares in the absence of either an effective registration statement under the Securities Act and under applicable state securities laws, or an opinion of counsel satisfactory to our legal counsel that such transaction is exempt from registration under the Securities Act and under applicable state securities laws.  These restrictions may make your shares unattractive to prospective purchasers and may reduce the price prospective investors are willing to pay for your shares, even if transfer of these shares is allowed by state and federal securities laws.    Consequently, an investment in our shares of common stock should be considered only as a long-term investment for persons of adequate financial means who do not need liquidity.

There is no specified or guaranteed liquidation date for our shares of common stock.

There is no specified or guaranteed liquidity event or liquidation date for our shares of common stock.  Accordingly, shares must be considered solely as long-term investments.

The actual value of shares that we repurchase under our share repurchase plan may be substantially less than what we pay.

Under our share repurchase plan, shares currently may be repurchased at varying prices depending on the number of years our shares of common stock have been held and whether the repurchases are sought upon a stockholder’s death.  The current maximum price that may be paid under our program is $10.00 per share, which is the current Offering price of our shares of common stock in the Offering (ignoring purchase price discounts for certain

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purchasers).  This repurchase price is likely to differ from the price at which a stockholder could resell its shares.  Thus, when we repurchase shares at $10.00 per share, the actual value of our shares of common stock that we repurchase will be less, and the repurchase will be dilutive to our remaining stockholders.  Even at lower repurchase prices, the actual value of our shares of common stock may be substantially less than what we pay and the repurchase may be dilutive to our remaining stockholders.

Our stockholders have limited redemption rights.

Our share repurchase plan includes numerous restrictions that severely limit our stockholders’ ability to redeem their shares for cash should they require liquidity.  See “Part II. Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Share Repurchase Plan” for more information about the plan.

Our shares of common stock are being offered in reliance upon a private offering exemption under the Securities Act.  If we should fail to comply with the requirements of such exemption, our stockholders would have the right to rescind their purchase of shares.

Our shares of common stock are being offered and will be sold to investors in reliance upon a private offering exemption from registration provided in the Securities Act.  If we should fail to comply with the requirements of such exemption, our stockholders would have the right to rescind their purchase of their shares if they so desired.  It is possible that one or more stockholders seeking rescission would succeed.  This might also occur under applicable state securities laws and regulations in states where our shares of common stock will be offered without registration or qualification pursuant to a private offering or other exemption.  If a number of stockholders were successful in seeking rescission, we would face severe financial demands that would adversely affect us as a whole and, consequently, the investment in our shares of common stock by the remaining stockholders.

Our board of directors may create additional classes of our securities.

Our board of directors has the authority under the charter to create and issue additional classes of securities and to designate the rights, preferences and privileges thereof.  Our board of directors may in the future create one or more additional classes of securities having rights, preferences and privileges that are superior to and dilutive of our shares of common stock, including additional shares of common stock, preferred stock, warrants and options.  This could reduce the amount of cash available for distribution from our operations and liquidation to our stockholders and increases the risk that our stockholders will not profit from their acquisition of shares or will lose their investment entirely.  Our stockholders do not have any preemptive rights with respect to any equity which the Company may issue in the future.  Preferred stock could also have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price to holders of our shares of common stock.

Risks Related to Our Business

We have limited operating history and may not be successful at operating a REIT, which may adversely affect our ability to make distributions to our stockholders.

We were formed in 2018 and have limited operating history. Our management team has limited experience managing REITs. We cannot assure you that our management team’s experience will be sufficient to successfully operate the Company as a REIT. The failure to do so could adversely affect our ability to make distributions to our stockholders.

We depend on the efforts and expertise of the Advisor and its officers and principals, whose continued service is not guaranteed.

We depend on the efforts and expertise of our officers and the Advisor, in particular Norman H. Leslie and Corey R. Maple, to execute our business strategy.  The loss of their services, and our inability to find suitable replacements, could have an adverse effect on our business and, in turn, any return to our stockholders.

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Our Advisor, its executive officers and other key personnel, the Sponsor’s employees and certain of our officers and directors will not devote their time and energies exclusively to us.

Our Advisor, its executive officers and other key personnel, the employees of the Sponsor, an affiliate of the Advisor, as well as certain of our officers and directors, whose services are essential to the Company, are, and will continue to be, involved in other business ventures, and will devote only such portion of their time to our affairs as they believe is appropriate to manage our affairs effectively.  They will face a conflict in allocating their time and other resources between us and the other activities in which they are or may become involved. Failure of the Advisor, its executive officers and key personnel, the employees of the Sponsor, and our officers and directors to devote sufficient time or resources to our operations could result in reduced returns to our stockholders.

There is no assurance that we will satisfy our business objectives, which could limit our ability to make distributions and decrease the value of your investment.

There is no assurance that we will satisfy our business objectives.  No assurance can be given that our stockholders will realize a substantial return, if any, on their purchase or that we will be able to make distributions to our stockholders.  We may not be able to achieve our investment objectives, may make unwise decisions or may make decisions that are not in an investor’s best interests because of conflicts of interest. No assurance can be given that the Company will be able to acquire suitable investments or that the Company’s objectives will be achieved.

We own only hotel properties, which will limit the diversification of our investments.

We currently own a portfolio of seven hotel properties. We have no plans to acquire assets other than hotel properties, which limits the diversification of the type of properties we own. If we do not raise substantial funds in our Offering, we will be limited in the number and type of investments we and the Operating Partnership may make, which will result in a less diversified portfolio.  We may not be able to acquire a large portfolio of assets, which may cause the value of an investment in us to experience more volatility due to the performance of certain investments and cause our general and administrative expenses to constitute a greater percentage of our revenue. In such event, the likelihood of our profitability being affected by the poor performance of any single investment will increase, which may limit our ability to pay distributions to our stockholders. A limited number of hotel properties may place a substantial portion of the funds invested in the same geographical location with the same property-related risks.  In that case, the decline in a particular real estate market could substantially and adversely impact us. In the event of an economic recession affecting the economies of the areas in which the hotel properties are located, a decline in real estate values in general or the occurrence of any one of many other adverse circumstances, our financial performance could be materially and adversely affected.

Our business strategy depends significantly on achieving revenue and net income growth from anticipated increases in demand for hotel rooms, which will be adversely affected by weak economic conditions and travel-related concerns.

Our business strategy depends significantly on achieving revenue and net income growth from anticipated improvement in demand for hotel rooms. We cannot, however, provide any assurances that demand for hotel rooms will increase from current levels, or the time or extent of any demand growth that we do experience. If demand does not increase in the near future, or if demand weakens, our operating results and growth prospects could be adversely affected. The lodging industry has historically been closely linked to the performance of the general economy and thus, is sensitive to business and personal discretionary spending levels. Declines in consumer demand due to adverse general economic conditions can result from various events that are beyond our control, including terrorist attacks, travel-related health concerns, travel-related accidents, and unusual weather patterns and natural disasters such as tornados, hurricanes, or earthquakes.

We cannot predict the extent to which the recent outbreak of the COVID-19 virus will have on our business and the demand for our products and services.

The recent outbreak of the COVID-19 virus that has rapidly spread to a growing number of countries, including the United States, has created considerable instability and disruption in the U.S. and world economies.  The extent to which our results of operations or our overall value will be affected by the COVID-19 virus will largely depend on

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future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity of the COVID-19 virus and the actions required to be undertaken to contain the COVID-19 virus or treat its impact.  As a result of mandatory and voluntary shutdowns, self-quarantines or actual viral health issues, we have experienced a substantial number of cancellations and reduction in bookings for hotel rooms which could materially and adversely affect the financial performance of our hotels.  Market fluctuations may affect our ability to obtain necessary funds for the operation of our hotels from current lenders or new borrowings.  In addition, we may be unable to obtain financing for the acquisition of new hotels on satisfactory terms, or at all.  Third-party reports relating to market studies or demographics we obtained prior to the COVID-19 virus outbreak for hotels we acquired or have identified for acquisition may no longer be accurate or complete.  The occurrence of any of the foregoing events or any other related matters could materially and adversely affect our financial performance and our overall value, and stockholder may lose all or a substantial portion of their investment in us.

Our investment policies are subject to revision from time to time at our board of directors’ discretion, which could diminish stockholder returns below expectations.

Our investment policies may be amended or revised from time to time at the discretion of our board of directors, without a vote of our stockholders. Such changes could result in investments that may not yield returns consistent with our stockholders’ expectations.

If we are unable to successfully manage our growth, our operating results and financial condition could be adversely affected.

Our ability to grow our business depends upon our agreements with the Operating Partnership and the Advisor, and the business acumen of the individuals managing each of these entities.  If these agreements are terminated, we may not be able to hire and train sufficient personnel or develop management, information and operating systems suitable for our expected growth.  If we are unable to manage any future growth effectively, our operating results and financial condition could be adversely affected.

Our future growth and success depends on obtaining financing, and if we cannot secure financing on acceptable terms or at all, our growth may be limited.

The success of our growth strategy depends on access to capital through the use of excess cash flow, borrowings or subsequent issuances of our common stock or other securities.  We will require significant capital to acquire, renovate, rehabilitate, operate, and make periodic capital improvements at the hotel properties.  We may not be able to fund acquisitions, renovations or capital improvements solely from cash provided from our operating activities.  To the extent required funds are not available from operations, we will need to obtain new or additional borrowings on satisfactory terms, which will depend on capital markets conditions.  There is no assurance that we will be able to obtain the required financing for our hotel properties on favorable terms, or at all.

We may be unable to invest the proceeds of the Offering in a timely manner or on acceptable terms.

We may be unable to invest the Offering proceeds on acceptable terms, or at all, which could delay stockholders from receiving an appropriate return on their investment and reduce the amount available for distribution to our stockholders.  We cannot assure you that we will be able to identify properties that meet our investment criteria, that we will successfully consummate any investment opportunities we identify or that investments we may make will generate income or cash flow.  Our failure to find suitable hotel properties to acquire in a timely manner or on acceptable terms could result in returns that are substantially below expectations or result in losses.

We must rely on management companies that are eligible independent contractors to operate the hotel properties in order to qualify as a REIT and, as a result, we have less control than if we were operating the hotel properties directly.

In order for us to qualify as a REIT, management companies that are eligible independent contractors must operate the hotel properties.  Each of the hotel properties will be owned by a direct subsidiary of the Operating Partnership, which will lease the hotel properties to the TRS Lessees.  The TRS Lessees, in turn, will enter into management agreements with a management company to operate the hotel properties.  While we expect to have some input into operating decisions for the hotel properties leased by our TRS Lessees and operated under such management

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agreements, we have less control than if we were managing the hotels ourselves.  Even if we believe that our hotels are not being operated efficiently, we may not be able to require an operator to change the way it operates our hotels.  If this is the case, we may decide to terminate the management agreement and potentially incur costs associated with the termination.  Additionally, NHS, which manages most of our existing hotel properties, is an affiliate of a principal of the Advisor.  As a result, the Advisor may have an incentive to not terminate the management agreement with NHS, even if the Advisor believes other operators may provide superior or more cost-effective services.

Our management agreements could adversely affect the sale or financing of the hotel properties and, as a result, our operating results and ability to make distributions to our stockholders could suffer.

We may enter into, or acquire hotels subject to, management agreements that contain restrictive covenants.  For example, the terms of some management agreements may restrict our ability to sell a hotel property unless, among other conditions, the purchaser is not a competitor of the operator and assumes the related management agreement.  Also, the provisions of a long-term management agreement encumbering a hotel property may reduce the value of such hotel property.  If we enter into or acquire hotel properties subject to any such management agreements, we may be precluded from taking actions that would otherwise be in our best interest or could cause us to incur substantial expense, which could adversely affect our operating results and our ability to make distributions to stockholders.

Our franchisors could cause us to expend additional funds on upgraded operating standards, which may reduce cash available for distribution to stockholders.

Our existing hotel properties are, and we expect future hotel properties will be, subject to franchise agreements, and we may become subject to the risks that result from concentrating the hotel properties in one or several hotel franchise brands.  Our hotel operators will need to comply with operating standards and terms and conditions imposed by the franchisors of the hotel brands under which the hotel properties will operate.  Pursuant to certain franchise agreements, certain upgrades are required every few years, and franchisors may also impose upgraded or new brand standards, which can add substantial expense for the affected hotel properties.  The franchisors also may require us to make certain capital improvements to maintain the hotel properties in accordance with system standards, the cost of which can be substantial and may reduce cash available for distribution to our stockholders.

Our franchisors may cancel or fail to renew our existing franchise licenses, which could adversely affect our operating results and our ability to make distributions to stockholders.

Franchisors periodically inspect hotels to confirm adherence to their operating standards.  We will rely on our operators to conform to the franchisors’ operating standards.  The failure of a hotel property to maintain standards could result in the loss or cancellation of a franchise license.  In addition, when the term of a franchise expires, the franchisor has no obligation to issue a new franchise.  The loss of a franchise could have a material adverse effect on the operations or the underlying value of the affected hotel property because of the loss of associated name recognition, marketing support and centralized reservation systems provided by the franchisor.  The loss of a franchise or adverse developments with respect to a franchise brand under which our hotels operate could also have a material adverse effect on our financial condition, results of operations and cash available for distribution to our stockholders.

Fluctuations in our financial performance, capital expenditure requirements and excess cash flow could adversely affect our ability to make and maintain distributions to our stockholders.

As a REIT, we are required to distribute at least 90% of our REIT taxable income each year to our stockholders (determined before the deduction for dividends paid and excluding any net capital gains).  In the event of downturns in our operating results and financial performance or unanticipated capital improvements to the hotel properties (including capital improvements that may be required by franchisors), we may be unable to declare or pay distributions to our stockholders.  The timing and amount of distributions are at the sole discretion of our board of directors, which considers, among other factors, our financial performance, debt service obligations, applicable debt covenants (if any), and capital expenditure requirements.  Among the factors which could adversely affect our results of operations and distributions to stockholders are reductions in hotel revenues, increases in operating expenses at the hotels leased to our TRS Lessees and capital expenditures at the hotels, including capital expenditures required by the franchisors.  We cannot assure you we will generate sufficient cash in order to continue to fund distributions.

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We have not paid, and may not in the future pay, distributions solely from our cash flow from operations. To the extent we pay distributions from sources other than our cash flow from operations, the overall return to our stockholders may be reduced and subsequent investors will experience dilution.

We may not be able to pay distributions solely from our cash flow from operations, in which case distributions may be paid in whole or in part from other sources, including debt financing and proceeds from our Offering.  There is no limit on the amount of distributions we may fund from sources other than from cash flow from operations.  Distributions we paid through December 31, 2019 have been paid from proceeds from our Offering, and we expect that future distributions we pay will not be made solely from our cash flow from operations. To the extent we fund distributions from sources other than our cash flow from operations, we will have less funds available for investment and the overall return to our stockholders may be reduced and subsequent investors will experience dilution.

We may from time to time make distributions to our stockholders in the form of our common stock, which could result in stockholders incurring tax liability without receiving sufficient cash to pay such tax.

Although we have no current intention to do so, we may in the future distribute taxable dividends that are payable in cash or common stock at the election of each stockholder.  Taxable stockholders receiving such dividends will be required to include the full amount of the dividend as ordinary income to the extent of our current and accumulated earnings and profits for federal income tax purposes.  As a result, stockholders may be required to pay income taxes with respect to such dividends in excess of the cash dividends received.  Furthermore, with respect to certain non-U.S. stockholders, we may be required to withhold federal income tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in common stock.

We may be subject to various conflicts of interest due to the relationships among the Advisor, the Operating Partnership, NHS and their respective affiliates.

We will pay certain prescribed fees and expenses to the Advisor and its affiliates regardless of the quality of services provided.  These fees were not negotiated at arm’s length and therefore, may be higher than fees payable to unaffiliated third parties. The Advisory Agreement may result in a conflict of interest between the Advisor and our stockholders due to the Advisor’s receipt of certain incentive and management fees related to operating the Company.  For example, the Advisor may earn increased management fees if a hotel property is retained, but it may be advantageous for our stockholders for such hotel property to be sold and the proceeds distributed.  In addition, certain incentive fees are payable to the Advisor upon the sale or acquisition of a hotel property.  This could incentivize the Advisor to acquire or dispose of hotel properties in instances where such acquisitions or dispositions are not in the best interests of our stockholders.  Furthermore, NHS, the management company expected to operate many of the hotel properties, is an affiliate of Norman H. Leslie who is an officer of the Company and the Advisor.  These relationships may be determined to cause conflicts of interest among the affected parties.

The hotel properties will include certain amenities for hotel guests that could increase the potential liabilities at the hotel properties.

Most of the hotel properties will be improved with various amenities, such as swimming pools, exercise rooms, laundry facilities, business centers and rentable event rooms.  Certain claims could arise in the event that a personal injury, death or injury to property should occur in, on, or around any of these improvements.  There can be no assurance that particular risks pertaining to these improvements that are insured will continue to be insurable on an economical basis or that current levels of coverage will continue to be available.  If a loss occurs that is partially or completely uninsured, we may lose all or part of our investment in the affected hotel property.  We may also be liable for uninsured

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or underinsured personal injury, death or property damage claims.  Liability in such cases may be unlimited but stockholders will not be personally liable.

Risks Related to the Lodging Industry

The lodging industry has experienced significant declines in the past and failure of the lodging industry to exhibit improvement may adversely affect our ability to execute our business strategy.

The performance of the lodging industry has historically been closely linked to the performance of the general economy and, specifically, growth in U.S. GDP.  It is also sensitive to business and personal discretionary spending levels.  Declines in corporate budgets and consumer demand due to adverse general economic conditions, risks affecting or reducing travel patterns, lower consumer confidence or adverse political conditions can lower the revenues and profitability of the hotel properties and therefore, the net operating profits of our TRS Lessees.  A substantial part of our business strategy is based on the anticipation that the lodging markets will continue to experience improving economic fundamentals in the future.  We cannot predict the extent to which the lodging industry will improve.  In the event conditions in the industry do not improve, or if they deteriorate, our ability to execute our business strategy would be adversely affected, which could adversely affect our financial condition, results of operations and our ability to make distributions to our stockholders.

Competition for acquisitions may reduce the number of properties we can acquire.

We compete for hotel investment opportunities with competitors that may have a different tolerance for risk or have substantially greater financial resources than are available to us.  This competition may generally limit the number of hotel properties that we are able to acquire and may also increase the bargaining power of hotel owners seeking to sell, making it more difficult for us to acquire hotel properties on attractive terms, or at all.

Competition for guests may lower our hotels’ revenues and profitability.

The limited-service, select-service and extended stay segments of the hotel business are competitive.  Our hotels compete on the basis of location, room rates and quality, service levels, reputation and reservation systems, among many other factors.  Many competitors have substantially greater marketing and financial resources than our operators or us.  New hotels create new competitors, in some cases without corresponding increases in demand for hotel rooms.  The result in some cases may be lower revenue, which would result in lower cash available for distribution to stockholders.

The seasonality of the hotel industry may cause fluctuations in our quarterly revenues which may require us to borrow money to fund distributions to stockholders.

Some hotel properties have business that is seasonal in nature.  This seasonality can be expected to cause quarterly fluctuations in revenues.  Quarterly earnings may be adversely affected by factors outside our control, including weather conditions and poor economic factors.  As a result, we may have to enter into short-term borrowings in order to offset these fluctuations in revenue and to make distributions to our stockholders.

The cyclical nature of the lodging industry may cause the return on our investments to be substantially less than we expect.

The lodging industry is cyclical in nature.  Fluctuations in lodging demand and therefore, operating performance, are caused largely by general economic and local market conditions, which subsequently affects levels of business and leisure travel.  In addition to general economic conditions, new hotel room supply can significantly affect the lodging industry’s performance and overbuilding has the potential to further exacerbate the negative impact.  Room rates and occupancy tend to increase when demand growth exceeds supply growth.  Decline in lodging demand, or a continued growth in lodging supply, could result in returns that are substantially below expectations or result in losses, which could have a material adverse effect on our business, financial condition, results of operations and our ability to make distributions to our stockholders.

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The ongoing need for capital expenditures at our hotel properties may adversely affect our financial condition and limit our ability to make distributions to our stockholders.

Hotel properties have an ongoing need for renovations and other capital improvements, including replacements, from time to time, of furniture, fixtures and equipment.  The franchisors of our hotels also require periodic capital improvements as a condition of keeping the franchise licenses.  These capital improvements may give rise to the following risks:

· Possible environmental problems;

· Construction cost overruns and delays;

· Revenues may be reduced temporarily while rooms are out of service during construction;

· Possible shortage of available cash to fund capital improvements;

· Capital improvement financing may not be available on attractive terms;

· Market demand uncertainties or a loss of market demand after capital improvements have begun; and

· Disputes with franchisors/managers regarding compliance with relevant management/franchise agreements.

We intend to establish capital reserves in amounts we believe are necessary for the hotel properties.  If we have insufficient capital reserves, we will be required to obtain financing from other sources to fund our capital expenditure requirements.  There can be no assurance that sufficient financing will be available or, if available, will be available on economically feasible terms or on terms acceptable to us.  Additional borrowing for capital needs and capital improvements will also increase our interest expense.  The costs and expenses of all these capital improvements could adversely affect our financial condition and amounts available for distribution to our stockholders.

The increasing use of Internet travel intermediaries by consumers may adversely affect our profitability.

Some of our hotel rooms are booked through Internet travel intermediaries, including, but not limited to, Travelocity.com, Expedia.com and Priceline.com.  As Internet bookings increase, these intermediaries may be able to obtain higher commissions, reduced room rates or other significant contract concessions from us and our management companies.  Moreover, some of these Internet travel intermediaries are attempting to offer hotel rooms as a commodity, by increasing the importance of price and general indicators of quality (such as “three-star downtown hotel”) at the expense of brand identification.  These intermediaries hope that consumers will eventually develop brand loyalties to their reservations system rather than to the hotel brands under which our properties are franchised.  Although most of the business for our hotels is expected to be derived from traditional channels, if the amount of sales made through Internet intermediaries increases significantly, room revenues may flatten or decrease and our profitability may be adversely affected.

We and our hotel managers rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business.

We and our hotel managers will rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, personal identifying information, reservations, billing and operating data.  We plan to rely on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential customer information, such as personally identifiable information, including information relating to financial accounts.  Although we plan to take steps to protect the security of our information systems and the data maintained in those systems, it is possible that our safety and security measures will not be able to prevent the systems’ improper functioning or damage, or the improper access or disclosure of personally identifiable information such as in the event of cyber-attacks.  Security breaches, including physical or electronic break-ins, computer viruses, attacks by hackers and similar breaches, can create system disruptions, shutdowns or unauthorized disclosure of confidential information.  Any failure to maintain proper function, security and availability of our information systems

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could interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties and could have a material adverse effect on our business, financial condition and results of operations.

Future terrorist attacks or changes in terror alert levels could adversely affect travel and hotel demand.

Recent world events including increased terrorist activities and the political and military responses of the targeted countries have created an air of uncertainty concerning security and the stability of the United States economy.  Previous terrorist attacks and subsequent terrorist alerts have adversely affected the U.S. travel and hospitality industries over the past several years, often disproportionately to the effect on the overall economy.  The impact that terrorist attacks in the U.S. or elsewhere could have on domestic and international travel and our business in particular cannot be determined but any such attacks or the threat of such attacks could have a material adverse effect on our business, our ability to finance our business, our ability to insure our properties and our results of operations and financial condition.

General Risks Related to Real Estate Industry

The hotel properties will be subject to various risks associated with an investment in real estate.

The economic success of an investment in the Company will depend upon the results of the operations of the hotel properties, which will be subject to those risks typically associated with an investment in real estate.  Fluctuations in land values, occupancy levels, revenue and operating expenses can adversely affect operating results or render the sale or refinancing of the hotel properties difficult or unattractive.  No assurance can be given that certain assumptions as to the future levels of occupancy of the hotel properties or future costs of operating the hotel properties will be accurate because such matters will depend on events and factors beyond our control.  Such factors include, among others, occupancy levels, revenue and sales levels in the local areas where the hotel properties are located, adverse changes in local population trends, market conditions, neighborhood values, local economic and social conditions, supply and demand for property such as the hotel properties, competition from similar projects, interest rates, real estate tax rates, governmental rules, regulations and fiscal policies, including the effects of inflation and enactment of unfavorable real estate, environmental or zoning laws, hazardous material laws, uninsured losses and other risks.

Illiquidity of real estate investments could significantly impede our ability to liquidate our portfolio on advantageous terms.

Because real estate investments are relatively illiquid and difficult to sell quickly, we have limited ability to vary our portfolio in response changes in economic and other conditions.  Return of capital and realization of gains, if any, from an investment generally will occur upon disposition or refinance of the underlying hotel property.  We may be unable to realize our investment objectives by sale, other disposition or refinance at attractive prices within any given period of time or may otherwise be unable to complete any exit strategy.  In particular, these risks could arise from weakness in or even the lack of an established market for a hotel property, availability of financing, capitalization rates, changes in the financial condition or prospects of prospective purchasers, changes in national or international economic conditions, and changes in laws, regulations or fiscal policies of jurisdictions in which the hotel property is located.  Further, we may be required to expend funds to correct defects or to make improvements before a hotel property can be sold.  We cannot assure you that we will have funds available to correct those defects or to make those improvements.  In addition, we may agree to lock-out provisions when acquiring a hotel property that materially restrict us from selling that hotel property for a period of time or impose other restrictions.  Our inability to sell the hotel properties at the time and on the terms we desire could reduce our cash flow and limit our ability to make distributions to our stockholders.

Uninsured and underinsured losses could adversely affect our operating results and our ability to make distributions to our stockholders.

We anticipate maintaining comprehensive insurance on each of the hotel properties, including liability, terrorism, fire and extended coverage, of the type and amount customarily obtained for or by hotel property owners.  There can be no assurance that such coverage will continue to be available at reasonable rates, or at all.  Various types of catastrophic losses, like earthquakes and floods and losses from toxic mold, terrorist activities and pandemic outbreaks may not be insurable or may not be insurable on reasonable economic terms.  Lenders may require such insurance and failure to obtain such insurance could constitute a default under the loan agreements.  Depending on our access to

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capital, liquidity and the value of the properties securing the affected loan in relation to the balance of the loan, a default could have a material adverse effect on our results of operations and ability to obtain future financing.

In the event of a substantial loss, insurance coverage may not be sufficient to cover the full current market value or replacement cost of the hotel property.  Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the capital we invested in a hotel property, as well as the anticipated future revenue from that particular hotel property.  In that event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the hotel property.  Inflation, changes in building codes and ordinances, environmental considerations and other factors might also keep us from using insurance proceeds to replace, rehabilitate or renovate a hotel after it has been damaged or destroyed.  Under those circumstances, the insurance proceeds we receive might be inadequate to restore our economic position on the damaged or destroyed hotel property.

Noncompliance with environmental laws and governmental regulations could adversely affect our operating results and our ability to make distributions to stockholders.

Federal, state and local laws impose liability on a landowner for the release or the otherwise improper presence on the premises of hazardous materials or hazardous substances.  This liability is without regard to fault for, or knowledge of, the presence of such materials or substances, subject to certain defenses.  A landowner may be held liable for hazardous materials or substances brought onto the property before it acquired title and for hazardous materials or substances that are not discovered until after it sells the property.  In addition, a landowner may be held liable for hazardous materials or substances that migrate from the property onto or beneath adjacent sites, as well as hazardous materials or substances from unknown or unidentified sources that may migrate from adjacent sites onto or beneath the property.  Similar liability may occur under applicable state law.  If any hazardous materials or substances are found within the real property underlying any of the hotel properties at any time, we could be held liable for cleanup costs, fines, penalties and other costs, and we may have little or no recourse against the sellers of the hotel properties.  Furthermore, various court decisions have established that third parties may recover damages for injury caused by release of hazardous substances and for property contamination. Although we will attempt to obtain current environmental site assessments for the hotel properties prior to acquisition, we may not obtain such information.  If losses arise from hazardous substance contamination that cannot be recovered from responsible parties, the financial viability of the hotel properties may be materially and adversely affected.

Compliance with the Americans with Disabilities Act (“ADA”) and other changes in governmental rules and regulations could substantially increase our cost of doing business and adversely affect our operating results and our ability to make distributions to our stockholders.

Our hotel properties are subject to the ADA.  Under the ADA, public accommodations must meet certain federal requirements related to access and use by disabled persons.  Although we intend to acquire hotel properties that are substantially in compliance with the ADA, we may incur additional costs of complying with the ADA at the time of acquisition and from time-to-time in the future to remain in compliance.  A number of additional federal, state and local laws exist that also may require modifications to the hotel properties or restrict certain renovations with respect to access by disabled persons.  A violation of the ADA could result in the imposition of fines by the federal government or an award of damages to private litigants, and attorneys’ fees may be awarded to a plaintiff claiming ADA violations.  State and federal laws in this area are constantly evolving and could place a greater cost or burden on us.  If we were required to expend unbudgeted funds to comply with the ADA or other applicable rules and regulations, our financial condition, results of operations, the market price of our shares of common stock and our ability to make distributions to our stockholders could be adversely affected.  The obligation to make readily achievable accommodations is an ongoing one, and we will continue to assess our properties and to make alterations as appropriate.

The hotel properties are subject to property taxes that may increase in the future, which could adversely affect our ability to make distributions to our stockholders.

The hotel properties are subject to real and personal property taxes.  These taxes may increase as tax rates change and as the hotel properties are assessed or reassessed by taxing authorities, including upon acquisition.  If property taxes increase, our financial condition, results of operations and our ability to make distributions to our stockholders could be materially and adversely affected.  As the owner of the hotel properties, we are ultimately

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responsible for payment of the taxes to the applicable government authorities.  If we fail to pay any such taxes, the applicable taxing authority may place a lien on the hotel property, and the hotel property could become subject to a tax sale.

The hotel properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem.

Litigation and concern about indoor exposure to certain types of toxic molds have been increasing as the public becomes aware that exposure to mold can cause a variety of health effects and symptoms, including allergic reactions and respiratory problems.  Toxic molds can be found almost anywhere; they can grow on virtually any organic substance, as long as moisture and oxygen are present.  There are molds that can grow on wood, paper, carpet, foods and insulation.  When excessive moisture accumulates in buildings or on building materials, mold growth will often occur, particularly if the moisture problem remains undiscovered or unaddressed.  It is impossible to eliminate all molds and mold spores in the indoor environment.  In warm or humid climates, the likelihood of toxic mold can be exacerbated by the necessity of indoor air conditioning year round.  The difficulty in discovering indoor toxic mold growth could lead to an increased risk of lawsuits by affected persons, and the risk that the cost to remediate toxic mold will exceed the value of the property.  Because of attempts to exclude investigations, abatement and damage costs caused by toxic mold growth from certain liability provisions in insurance policies, there is no guarantee that insurance coverage for toxic mold will be available now or in the future.

Future changes in laws and regulations may adversely affect the resale value of real estate.

Future changes in land use and environmental laws and regulations, whether federal, state or local, may impose new restrictions on the development or use, and therefore the value, of real estate.  The resale of real estate by us may be adversely affected by such regulations.  In addition, cities and other municipalities may have different rules and regulations which may change from time to time, including retrofit ordinances, which may affect the capital needs of the hotel properties.  Any such changes would need to be addressed by us, which would reduce our net income and the amount of cash available for distributions to our stockholders.

The sellers of hotel properties may only make limited or no representations and warranties regarding the condition of the properties.

We may acquire real estate from sellers who make only limited or no representations and warranties regarding the condition of such real estate, the presence of hazardous materials or hazardous substances within such real estate, the status of governmental approvals and entitlements for such real estate or other matters adversely affecting such real estate.  We may not be able to pursue a claim for damages against such sellers except in limited circumstances.  The extent of damages that we may incur as a result of such matters cannot be predicted but potentially could result in a significant adverse effect on the value of such real estate.

We may acquire hotel properties from affiliates of the Advisor.

We may acquire hotel properties from affiliates of the Advisor.  Accordingly, notwithstanding that the purchase price will be based on a third-party appraisal, the purchase agreements for such hotel properties will not be negotiated on a third-party arm’s length basis.  Some of the terms of the purchase agreements with affiliates of the Advisor may not be on market terms.  The stockholders will not have approval rights with respect to the acquisition of hotel properties from affiliates.

We will not obtain audited results of operations for the hotel properties prior to acquiring the hotel properties.

We will not obtain audited operating statements regarding the prior operations of the hotel properties prior to acquiring the hotel properties.  We will rely on unaudited financial information provided by the sellers of the hotel properties.  Thus, it is possible that information we relied on with respect to the acquisition of the hotel properties may not be accurate.

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We may not obtain independent third-party appraisals or valuations of a hotel property before acquiring it and our valuation may not be correct.

We may not obtain independent third-party appraisals or valuations of a hotel property, or other reports with respect to a hotel property, before we invest in such hotel property.  If we do not obtain such third-party appraisals or valuations, there can be no assurance that our valuation of a hotel property will be correct or that a hotel property’s value will exceed its cost to us or that any sale or other disposition of such hotel property will result in a profit for us.  Third-party appraisals and other reports may be prepared for lenders, in which case we typically will try to obtain a copy of such appraisals and reports for review, as well as reliance letters from the third-party preparers to allow us to rely on such appraisals and reports.  To the extent we do not obtain such other reports or reliance letters before investing in a hotel property, the risk of investing in such hotel property may be increased.

The value of real estate is generally based on capitalization rates which trends with interest rates.  If capitalization rates rise, the value of the hotel properties will decrease.

The value of commercial real estate is generally based on capitalization rates.  Capitalization rates generally trend with interest rates.  Consequently, if interest rates go up, so do capitalization rates.  Based on historical interest rates, current interest rates are low, as are current capitalization rates.  However, if interest rates rise in the future, it is likely that capitalization rates will also rise and, as a result, the value of real estate will decrease.  If capitalization rates increase, the hotel properties will likely achieve lower sales prices than anticipated, resulting in reduced returns.

Certain of the hotel properties in our current portfolio are, and future hotel properties may be, located in areas with increased risk of tornados, floods and other natural disasters and we do not intend to obtain insurance to cover these natural disasters unless required by a lender.

Some of the hotel properties in our current portfolio are, and future hotel properties may be, located in areas in the United States that have increased risk of tornados, floods, earthquakes, hurricanes, high winds or wildfires.  A tornado, flood, earthquake, hurricane, high winds or wildfire could cause structural damage to or destroy a hotel property.  We do not intend to obtain wind, flood or earthquake insurance for the hotel properties unless required by a lender.  We have obtained flood insurance for one of our hotels.  It is possible that any such insurance, if obtained, will not be sufficient to pay for damage to any hotel property.

We may not have control of hotel properties we acquire through joint ventures.

We may make some of our investments through joint ventures between the Company and both affiliated and non-affiliated parties.  It is anticipated that, with respect to any such investment, we and the joint venture partner will have joint control over the management and operation of the hotel property.  Thus, we will be dependent on the decisions made by our joint venture partner.  Such joint venture partner may have objectives which are different than those of the Company.

The presence of construction defects in newly or recently constructed hotel properties could adversely affect the financial performance of a hotel property.

Some of the hotel properties may be newly or recently constructed.  Newly constructed properties are sometimes subject to construction defects that only reveal themselves over time.  If any of the hotel properties should become subject to any construction defect issues, we may have remedies under state law as well as under any warranties from the contractors for the construction work, provided that the warranties were assigned to such owner.  If the warranties do not cover all the expenses associated with any construction defects that may arise, we could be liable for the expenses associated with correcting the construction defect.  If work is required to cure any construction defects, reserves may not be sufficient to pay for such work.  Accordingly, the presence of construction defects could adversely affect the financial performance of the hotel properties, we may be required to pay for all or part of the repair of such construction defects, which will reduce the cash flow from the hotel properties, and the return to our stockholders may be reduced.

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Construction and rehabilitation at the hotel properties entails risks that are beyond our and any general contractor’s control, and the costs may exceed the funds available to us.

We have rehabilitated, renovated and made capital improvement at some of the hotel properties in our current portfolio, and expect to do so with future hotel properties.  Hotel properties have an ongoing need for capital improvements and the franchisors of our hotels also require periodic capital improvements as a condition of keeping the franchise licenses.  The construction of commercial real property is cyclical and is significantly affected by changes in national and local economic and other conditions, such as employment levels, availability of financing, interest rates and demand for commercial properties.  Such uncertainties could adversely affect our performance.  In addition, construction entails risks that are beyond our or any general contractor’s control.  Completion of new construction, rehabilitation or redevelopment may be delayed or prevented by factors such as adverse weather, strikes or energy shortages, shortages or increased costs of labor and material for construction, delays in construction schedules, cost overruns, inflation, environmental, zoning, title or other legal matters and unknown contingencies.  Changes in construction plans and specifications, delays due to compliance with governmental requirements, increases in real estate taxes and other local government fees or imposition of fees not yet levied, or other delays could cause construction costs to exceed the amounts available from the Offering proceeds and any loans.  In the event that construction costs exceed funds available, our ability to complete the work to be done on a development hotel property will depend upon our ability to supply additional funds.  There can be no assurance that we will have adequate funds available for that purpose.  Any delays in construction may have an adverse impact on our cash flow and long-term success.

We will be required to obtain the approval of various governmental authorities when rehabilitating and improving the hotel properties, which may result in delays and increased costs.

In rehabilitating and improving the hotel properties, we will be required to obtain the approval of various government authorities regulating such matters as permitted land uses and levels of density and the installation of utility services such as water and waste disposal.  Governmental authorities have imposed impact fees as a means of defraying the cost of providing certain governmental services to developing areas and the amount of these fees has increased significantly during recent years.  Many state laws require the use of specific construction materials which reduce the need for energy consuming heating and cooling systems.  Local governments also, at times, declare moratoriums on the issuance of building permits and impose other restrictions in areas where sewage treatment facilities and other public facilities do not reach minimum standards.  We will also be subject to a variety of federal, state and local statutes, ordinances, rules and regulations concerning protection of health and the environment.  Such governmental regulation may result in delays, cause us to incur substantial compliance and other costs and prohibit or severely restrict development in certain regions or areas, which could have an adverse effect on our business and results of operations.

We may not discover defects in the hotel properties prior to acquisition.

Although we intend to perform due diligence on the hotel properties before we acquire them, there can be no assurance that all defects (including physical defects, title issues and financial issues) will be discovered prior to acquisition.  In the event that a significant issue is not discovered with respect to a particular hotel property, our performance may be negatively impacted.

The hotel properties could become subject to condemnation actions.

The hotel properties or a portion of the hotel properties could become subject to an eminent domain or inverse condemnation action.  Any such action could have a material adverse effect on the marketability of a hotel property or the amount of return on investment for our stockholders.

We may sustain losses resulting from litigation that is not completely covered by insurance.

We anticipate that litigation will occur in the ordinary course of our business.  We intend to maintain adequate general liability insurance to cover such potential litigation which stems from the ordinary course of owning and operating the hotel properties; however, there can be no assurance that all losses will be covered.  If a loss occurs that is partially or completely uninsured, we may lose all or part of our investment.

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Risks Related to Debt Financing

We have obtained, and in the future likely will obtain, mortgage indebtedness and other borrowings, which increases our risk of loss due to potential foreclosures.

We have obtained, and expect in the future to obtain, loans to acquire the hotel properties and thus, the hotel properties will be leveraged.  We may also obtain mortgage debt on hotel properties that we already own in order to obtain funds to acquire additional hotel properties, to fund property improvements and other capital expenditures, to make distributions and for other purposes.  In addition, we may borrow as necessary or advisable to ensure that we maintain our qualification as a REIT for federal income tax purposes, including borrowings to satisfy the REIT requirement that we distribute at least 90% of our annual REIT taxable income (computed without regard to the dividends-paid deduction and excluding net capital gain) to our stockholders.  We anticipate that the aggregate loan-to-value ratio for the Company will be between 35% and 65%.  We will target a loan-to-value ratio for the hotel properties of between 35% and 70%, based on the purchase price of the hotel properties, however, we may obtain financing that is less than or higher than such loan-to-value ratio for an individual hotel property at the discretion of our board of directors.  As of December 31, 2019, our aggregate loan-to-value ratio, based on the aggregate purchase price of the hotel properties, was approximately 62%.  No assurance can be given that future cash flow will be sufficient to make the debt service payments on any loans and to cover all operating expenses.  If the hotel properties’ revenues are insufficient to pay debt service and operating costs, we may be required to seek additional working capital.  There can be no assurance that such additional funds will be available.  In the event additional funds are not available, the lenders may foreclose on the hotel properties and our stockholders could lose their investment.  In addition, the degree to which we are leveraged could have an adverse impact on us, including (i) increased vulnerability to adverse general economic and market conditions, (ii) impaired ability to expand and to respond to increased competition, (iii) impaired ability to obtain additional financing for future working capital, capital expenditures, general corporate or other purposes and (iv) requiring that a significant portion of cash provided by operating activities be used for the payment of debt obligations, thereby reducing funds available for distributions, operations and future business opportunities.

Restrictions on the availability of real estate financing, high interest rates and the cost of loans may make it difficult for us to finance or refinance the hotel properties.

Market fluctuations in real estate loans may affect the availability and cost of loans needed to acquire or refinance the hotel properties.  There is no assurance that we will be able to obtain the required financing to acquire or refinance the hotel properties.  Restrictions on the availability of real estate financing or high interest rates on real estate loans may also adversely affect our ability to sell the hotel properties.  Based on historical interest rates, current interest rates are low and, as a result, it is likely that the interest rates available for future real estate loans and refinancings will be higher than the current interest rates for such loans, which may have a material and adverse impact on the hotel properties and us.

Some of our financing arrangements involve interest only loans and balloon payment obligations and an inability to prepay until shortly before maturity.  These may, in the future, adversely affect our ability to make distributions.

Debt on some of our existing hotel properties require us to make interest only payments with a lump-sum or “balloon” payment at maturity.  Our ability to make a balloon payment at maturity is uncertain and may depend upon our ability to obtain additional financing or to sell the hotel property.  At the time the balloon payment is due, we may or may not be able to refinance the balloon payment on terms as favorable as the original loan or sell the hotel property at a price sufficient to make the balloon payment.  Several of the loans obtained to acquire our existing hotel properties do not allow for prepayment until shortly before maturity and provide that any prepayment may require the payment of a prepayment fee.  Consequently, we may not be able to take advantage of favorable changes in interest rates. The effect of a refinancing or sale could affect the rate of return to our stockholders and the projected time of disposition of the hotel properties.  In addition, payments of principal and interest made to service our debts may leave us with insufficient cash to pay the distributions that we are required to pay to maintain our qualification as a REIT and/or avoid federal income tax.

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Our lines of credit and loans on the hotel properties may involve variable interest rates, which could increase our interest costs and reduce our cash flows.

Our existing line of credit has a variable interest rate, and it is anticipated that the loans we obtain in the future may have variable interest rates.  Any increase in interest rates would increase our interest costs, which would reduce our cash flows and our ability to make distributions to our stockholders.  In the event that the interest rate on any loan increases significantly, we may not have sufficient funds to pay the required interest payments.  In such event, the continued ownership of the applicable hotel property may be threatened.  In addition, if we need to repay existing debt during periods of rising interest rates, we could be required to liquidate one or more of our investments at times that may not permit realization of the maximum return on such investments.

We may incur recourse debt or be liable for nonrecourse carve-outs and springing recourse events under the loans for the hotel properties, which may permit the lenders to proceed against our assets.

Although we anticipate obtaining loans for the hotel properties that will be nonrecourse as to principal and interest, we may obtain recourse debt to finance our acquisitions.  Further, lenders have required and may in the future require us to be personally liable for certain carve-outs and springing recourse events.  In circumstances where personal liability attaches, the lender could proceed against our assets.  If a lender successfully forecloses upon any of our assets, our ability to pay cash distributions to our stockholders will be reduced and our stockholders may lose part of their investment.

If we violate any restrictions on transfer imposed by lenders, the lender could have the right to declare the entire amount of the loan to be immediately due and payable.

Loans on our existing hotel properties, and we anticipate that loans on future hotel properties will, restrict our ability to sell our interests in the hotel properties.  The lenders may also impose restrictions on the transferability of our shares of common stock.  Upon violation of the restrictions on transfer or encumbrance, a lender will have the right to declare the entire amount of the loan, including principal, interest, prepayment premiums and other charges, to be immediately due and payable.  If the lender declares the loan to be immediately due and payable, we will have the obligation to immediately pay the loan in full, including applicable prepayment charges.  If replacement financing is not found or the loan is not immediately paid in full, the lender may invoke its other remedies under the loan, which may include proceeding with a foreclosure that would cause us to lose our entire interest in the applicable hotel property.

If we default on a loan, it could result in foreclosure of the hotel property, which could result the loss of all or a substantial portion of the investment we made in the hotel property.

Loans on our existing hotel properties include various actions by us that will cause an event of default under such loans, including, among others, the failure to pay required payments under the loan, the failure to pay taxes, the failure to maintain insurance, the assignment by an owner of a hotel property of an interest in such hotel property to a creditor, the bankruptcy of an owner of a hotel property, the filing of an action for partition or the transfer of an interest in a hotel property without lender’s consent.  Additional events of default may be applicable to some or all of the loans.  If we default under a loan for any reason, the lender may declare a default under the applicable loan, which could result in foreclosure by the lender on the applicable hotel property and the loss of all or a substantial portion of the investment we made in such hotel property.

The derivative financial instruments we use to hedge against interest rate fluctuations may not be successful in mitigating our risks associated with interest rates and could reduce the overall returns on our stockholders’ investment.

We are exposed to the effects of interest rate changes as a result of borrowings we use to maintain liquidity and to fund the acquisition, expansion and refinancing of the hotel properties and our operations.  Our profitability and the value of our investment portfolio may be adversely affected during any period as a result of interest rate changes.  Although we currently have no long-term variable rate debt instruments in our portfolio, we may choose to manage interest rate risk by maintaining a ratio of fixed rate, long-term debt such that floating rate exposure is kept at an acceptable level.  We may utilize a variety of derivative financial instruments, including interest rate caps, floors and

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swap agreements, in order to hedge exposures and limit the effects of changes in interest rates on our operations, but no hedging strategy can protect us completely.  When we use these types of derivatives to hedge the risk of interest-earning assets or interest-bearing liabilities, we may be subject to certain risks, including the risk that counterparties may fail to honor their obligations under these arrangements, these arrangements may not be effective in reducing our exposure to interest rate changes, and losses on a hedge position will reduce the funds available for the payment of distributions to our stockholders, and the losses may exceed the amount we invested in the instruments.  These hedging agreements involve risks,.  We cannot assure you that our hedging strategy and the derivatives that we use will adequately offset the risk of interest rate volatility or that its hedging transactions will not result in losses.  In addition, the use of such instruments may reduce the overall return on our investments.  These instruments may also generate income that may not be treated as qualifying REIT income for purposes of the 75% or 95% REIT gross income tests.

Certain of the hotel properties and our other assets are cross-collateralized.

We have obtained a line of credit or other debt financing which require that our assets be cross-collateralized.  No assurance can be given that future cash flow will be sufficient to make the debt service payments on our loans and to cover all operating expenses.

Risks Related to Our Organization and Structure

Our TRS Lessee structure subjects us to the risk of increased hotel operating expenses that could adversely affect our operating results and our ability to make distributions to our stockholders.

Our leases with our TRS Lessees will require our TRS Lessees to pay the owners of the hotel properties (which are wholly-owned subsidiaries of the Operating Partnership) rent based, in part, on revenues from the hotel properties. Our operating risks include decreases in hotel property revenues and increases in operating expenses, which would adversely affect our TRS Lessees’ ability to pay rent due under the leases, including, but not limited to, increases in wage and benefit costs, repair and maintenance expenses, energy costs, property taxes, insurance costs and other operating expenses.  As these rent payments will be a primary source of our revenue, any inability of our TRS Lessees to make such rent payments would likely have a significant adverse impact on our financial condition, results of operations and our ability to make distributions to our stockholders.

Our TRS structure increases our overall tax liability.

Our TRS Lessees will be subject to federal, state and local income tax on their taxable income, which consists of the revenues from the hotel properties, net of the operating expenses for the hotel properties and rent payments to the Operating Partnership.  Accordingly, although ownership of our TRS Lessees allows us to participate in the operating income from the hotel properties in addition to receiving rent, that operating income is fully subject to corporate income tax.  The after-tax net income of our TRS Lessees will be available for distribution to us.

Our ownership of our TRSs is limited and our transactions with our TRSs will cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm’s- length terms.

A REIT may own up to 100% of the stock of one or more TRSs.  A TRS may hold assets and earn income that would not be qualifying assets or income if held or earned directly by a REIT, including gross operating income from hotels that are operated by eligible independent contractors pursuant to management agreements.  Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS.  A corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a TRS.  Overall, no more than 20% of the value of a REIT’s gross assets may consist of stock or securities of one or more TRSs.  In addition, the TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation.  The rules also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis.  Our TRS entities will be subject to federal, state and local income tax on their taxable income, and their after-tax net income will be available for distribution, but is not required to be distributed to us.  There can be no assurance that we will be able to comply with the 20% limitation or to avoid application of the 100% excise tax.

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If our leases with our TRS Lessees are not respected as true leases for federal income tax purposes, we would not qualify as a REIT.

To qualify as a REIT, we are required to satisfy two gross income tests pursuant to which specified percentages of our gross income must be passive income, such as rent.  For the rent paid pursuant to the leases with our TRS Lessees, which should constitute substantially all of our gross income, to qualify for purposes of the gross income tests, the leases must be respected as true leases for federal income tax purposes and must not be treated as service contracts, joint ventures or some other type of arrangement.  We plan to structure our leases so that they will be respected as true leases for federal income tax purposes, but there can be no assurance that the Internal Revenue Service (“IRS”) will agree with this characterization or will not challenge this treatment, or that a court would not sustain such a challenge.  If the leases were not respected as true leases for federal income tax purposes, we would not be able to satisfy either of the two gross income tests applicable to REITs and likely would fail to qualify for REIT status.

If our hotel operators do not qualify as “eligible independent contractors,” we would not qualify as a REIT.

Rent paid by a lessee that is a “related party tenant” of a REIT will not be qualifying income for purposes of the two gross income tests applicable to REITs.  We will lease all of the hotel properties to our TRS Lessees.  A TRS Lessee will not be treated as a “related party tenant,” and will not be treated as directly operating the hotel properties to the extent the hotel properties are operated by an “eligible independent contractor.”  If our hotel property operators do not qualify as “eligible independent contractors,” we would not qualify as a REIT.  Each of the management companies that enters into a management agreement with our TRS Lessees must qualify as an “eligible independent contractor” under the REIT rules in order for the rent paid to us by our TRS Lessees to be qualifying income for our REIT income test requirements.  In order to qualify as an eligible independent contractor, an operator must not own more than 35% of our outstanding shares (by value).  In addition, if the operator is a corporation, not more than 35% of the total combined voting power of whose stock (or 35% of the total shares of all classes of whose stock), or, if the operator is not a corporation, not more than 35% of the interest in whose assets or net profits is owned, directly or indirectly, by one or more persons owning 35% or more of our shares of common stock.  Complex ownership attribution rules apply for purposes of these 35% thresholds.  Although we intend to monitor ownership of our shares of common stock by our hotel property operators and their owners, there can be no assurance that these ownership levels will not be exceeded.

The lease of the hotel properties to a TRS is subject to special requirements.

We may lease certain “qualified lodging facilities” to a TRS (or a limited liability company of which a TRS is a member).  The TRS in turn will contract with a management company to operate the lodging facility operations at the hotels.  The rents paid by a TRS in this structure would be treated as qualifying rents from real property for purposes of the REIT requirements only if (i) they are paid pursuant to an arm’s-length lease of a qualified lodging facility property and (ii) the operator qualifies as an “eligible independent contractor” with respect to the property.  An operator will qualify as an eligible independent contractor if it meets certain ownership tests with respect to us, and if, at the time the operator enters into the management agreement, the operator is actively engaged in the trade or business of operating qualified lodging facility properties for any person who is not a related person to us or our TRSs.  If any of the above conditions are not satisfied, then the rents will not be considered income from a qualifying source for purposes of the REIT rules, which could cause us to incur penalty taxes or to fail to qualify as a REIT.

The ability of our board of directors to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders.

Our board of directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT.  If we cease to qualify as a REIT, we would become subject to federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on our total return to our stockholders.

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The ability of our board of directors to change our major policies may not be in your best interest.

Our board of directors determines our major policies, including policies and guidelines relating to our acquisitions, leverage, financing, growth, operations and distributions to stockholders and our continued qualification as a REIT.  Our board of directors may amend or revise these and other policies and guidelines from time to time without the vote or consent of our stockholders.  Accordingly, our stockholders will have limited control over changes in our policies and those changes could adversely affect our financial condition, results of operations, the market price of our shares of common stock and our ability to make distributions to our stockholders.

We have not established a minimum distribution payment level and we may be unable to generate sufficient cash flows from our operations to make distributions to our stockholders at any time in the future.

We are generally required to distribute to our stockholders at least 90% of our REIT taxable income each year for us to qualify as a REIT under the Code, which requirement we currently intend to satisfy.  To the extent we satisfy the 90% distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to federal corporate income tax on our undistributed taxable income.  We have not established a minimum distribution payment level, and our ability to make distributions to our stockholders may be adversely affected by the risk factors described herein.  Subject to satisfying the requirements for REIT qualification, we intend over time to make regular monthly distributions to our stockholders.  Our board of directors has the sole discretion to determine the timing, form and amount of any distributions to our stockholders.  Our board of directors makes determinations regarding distributions based upon factors that it deems relevant.

Among the factors that could impair our ability to make distributions to our stockholders are:

· our inability to realize attractive returns on our investments;

· unanticipated expenses that reduce our cash flow or non-cash earnings;

· decreases in the value of the underlying assets; and

· the fact that anticipated operating expense levels may not prove accurate, as actual results may vary from estimates.

As a result, no assurance can be given that we will be able to continue to make distributions to our stockholders or that the level of any distributions we do make to our stockholders will achieve a market yield or increase or even be maintained over time.  Distributions could be dilutive to our financial results and may constitute a return of capital to our investors, which would have the effect of reducing each stockholder’s basis in its shares.

If we are deemed to be an investment company under the Investment Company Act of 1940, our stockholders’ investment return may be reduced.

The Investment Company Act of 1940, as amended (the “Investment Company Act”) requires that any issuer that is beneficially owned by 100 or more persons and that owns certain securities be registered as required under the Investment Company Act.  Pursuant to the Operating Partnership Agreement, we are solely responsible for the management and operation of the Operating Partnership and, as a result, our interest in the Operating Partnership has significant incidents of a true general partnership interest and does not fall within the definition of a “security” for purposes of the Investment Company Act.  If our interest in the Operating Partnership is deemed to be a security or if the Operating Partnership fails to qualify for an exemption or exclusions from the Investment Company Act, we will be required to register under the Investment Company Act.  In the event we are required to register under the Investment Company Act, the returns to our stockholders will likely be significantly reduced.

We will be subject to certain risks relating to the Operating Partnership’s acceptance of contributed property in exchange for limited partnership interests.

We intend to own all of our assets through the Operating Partnership.  The Operating Partnership may accept contributions of property from certain persons in exchange for limited partnership interests in the Operating Partnership. 

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The acceptance of persons as limited partners in the Operating Partnership involves certain risks including (i) entering into certain indemnification agreements with the contributing limited partners that would cause us to indemnify such persons for tax liability that may be incurred by the contributing limited partners related to the sale of the contributed property, (ii) the fact that the contributing limited partners will have certain voting rights with respect to the Operating Partnership and (iii) the need for the Operating Partnership to allocate debt to contributing limited partners.

We may need to modify our investment portfolio in the future in order to qualify as a REIT, which may adversely affect our performance.

If the market value or income potential of our qualifying real estate assets changes as compared to the market value or income potential of our non-qualifying assets, or if the market value or income potential of our assets that are considered “real estate-related assets” under the Investment Company Act or REIT qualification tests changes as compared to the market value or income potential of our assets that are not considered “real estate-related assets” under the Investment Company Act or REIT qualification tests, whether as a result of increased interest rates, prepayment rates or other factors, we may need to modify our investment portfolio in order to qualify as a REIT or maintain our exclusion from the definition of an investment company.  If the decline in asset values or income occurs quickly, this may be especially difficult, if not impossible, to accomplish.  This difficulty may be exacerbated by the illiquid nature of many of the assets that we intend to own.  We may have to make investment decisions that we otherwise would not make absent REIT and Investment Company Act considerations.

Under Maryland law, our directors have limited liability if they perform their duties in good faith, in a manner he or she reasonably believes to be in our best interests, and with the care that an ordinarily prudent person in a like position would use under similar circumstances.  We are required to indemnify our directors and officers to the maximum extent permitted under Maryland law.

Maryland law provides that a director will not have any liability in that capacity so long as he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in our best interests, and with the care that an ordinarily prudent person in a like position would use under similar circumstances.  Our charter provides that to the maximum extent permitted by Maryland law, none of our present or former officers or directors will be liable to us or our stockholders for money damages.  In addition, the charter and the bylaws require us to indemnify (including advancement of expenses) our directors and officers for actions taken by them in those capacities to the maximum extent permitted by Maryland law.  As a result, we and our stockholders may have more limited rights against these persons than might otherwise exist under common law.

Maryland law prohibits business combinations with certain interested stockholder and their affiliates unless otherwise approved by our board of directors, which could inhibit a change in control.

Certain provisions of the Maryland General Corporation Law applicable to us prohibit business combinations with (i) any person who beneficially owns, directly or indirectly, 10% or more of the voting power of our outstanding voting stock, which is referred to as an “interested stockholder,” (ii) an affiliate or associate of the Company who, at any time within the two-year period prior to the date in question, beneficially owned, directly or indirectly, 10% or more of the voting power of our then outstanding stock, which is also referred to as an interested stockholder or (iii) an affiliate of an interested stockholder.  These prohibitions last for five years after the most recent date on which the interested stockholder became an interested stockholder.  Thereafter, any business combination with the interested stockholder must be recommended by our board of directors and approved by the affirmative vote of at least 80% of the votes entitled to be cast by holders of our outstanding voting stock and two-thirds of the votes entitled to be cast by holders of shares of our voting stock other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder.  These requirements could have the effect of inhibiting a change in control even if a change in control were in our stockholders’ interest.  These provisions of Maryland law do not apply, however, to business combinations that are approved or exempted by our board of directors prior to the time that someone becomes an interested stockholder.

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Provisions contained in Maryland law that are reflected in our charter and bylaws may have anti-takeover effects, potentially preventing investors from receiving a “control premium” for their shares.

Provisions contained in our charter and bylaws, as well as Maryland corporate law, may have anti-takeover effects that delay, defer or prevent a takeover attempt, which may prevent our stockholder from receiving a “control premium” for their shares.  For example, these provisions may defer or prevent tender offers for our common stock or purchases of large blocks of our common stock, thereby limiting the opportunities for our stockholders to receive a premium for their shares over then-prevailing market prices.  These provisions include the following:

· Ownership limit.  The ownership limit in our charter limits related investors including, among other things, any voting group, from acquiring no more than 9.8% of the value or number of the aggregate, whichever is more restrictive, of our then outstanding shares of common stock, and no more than 9.8% of the value of our then outstanding capital stock (which includes all of our common stock and preferred stock), without the consent of our board of directors.

· Preferred stock.  Our charter authorizes our board of directors to issue preferred stock in one or more classes and to establish the preferences and rights of any class of preferred stock issued.  These actions can be taken without soliciting stockholder approval.

· Maryland control share acquisition statute.  Maryland law limits the voting rights of “control shares” of a corporation in the event of a “control share acquisition.”

Federal Income Tax Risks

If we sell a built-in gain asset within five years of the effective date of our REIT election, we may be subject to corporate-level tax on the built-in gain component.

We currently own an interest in the Operating Partnership and therefore will be deemed to own a corresponding interest in the assets acquired by the Operating Partnership.  Upon conversion to a REIT, each such asset that has a fair market value in excess of its adjusted basis generally will be considered a “built-in gain asset.”  This built-in gain component will be fixed as of the date of conversion to REIT status.  If we sell a built-in gain asset within five years of the effective date of our REIT election, we will (subject to certain exceptions) be subject to a corporate-level tax on the built-in gain component.  To the extent that we are required to pay federal, state and local taxes, we will have less cash available for distributions.

Failure to qualify as a REIT would reduce our net earnings available for investment or distribution.

Our qualification as a REIT will depend upon our ability to meet requirements regarding our organization and ownership, distributions of our income, the nature and diversification of our gross income (an annual test) and assets (tested as of the end of each calendar quarter) and other tests imposed by the Code.  If we fail to qualify as a REIT for any taxable year after electing REIT status, we will be subject to federal income tax on our taxable income at corporate rates.  In addition, we would generally be disqualified from treatment as a REIT for the four taxable years following the year of losing our REIT status.  Losing our REIT status would reduce our net earnings available for investment or distributions to stockholders because of the additional tax liability.  In addition, distributions to stockholders would no longer qualify for the dividends-paid deduction and we would no longer be required to make distributions.  If this occurs, we might be required to borrow funds or liquidate some investments in order to pay the applicable tax. 

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Generally, ordinary dividends payable by REITs do not qualify for reduced U.S. federal income tax rates.

Currently, the maximum tax rate applicable to qualified dividend income payable to certain non-corporate U.S. stockholders, is 20%. Dividends payable by REITs, however, generally are not eligible for the reduced rates. REIT dividends that are not designated as qualified dividend income or capital gain dividends are taxable as ordinary income. Although this does not adversely affect the taxation of REITs or dividends payable by REITs, the more favorable rates applicable to regular corporate qualified dividend income could cause certain non-corporate investors to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends. However, under the Tax Cuts and Jobs Act of 2017, commencing with taxable years beginning on or after January 1, 2018 and continuing through 2025, non-corporate U.S. taxpayers may be entitled to claim a deduction in determining their taxable income of up to 20% of qualified REIT dividends (dividends other than capital gain dividends and dividends attributable to certain qualified dividend income received by us).  Prospective investors are urged to consult with their tax advisors regarding the effect of this change on their effective tax rate with respect to REIT dividends.

Even if we qualify as a REIT for federal income tax purposes, we may be subject to other tax liabilities that reduce our cash flow and our ability to make distributions to our stockholders.

Even if we qualify as a REIT for federal income tax purposes, we may still be subject to some federal, state and local taxes on our income or property.  For example:

· In order to qualify as a REIT, we must distribute annually at least 90% of our taxable income to our stockholders (which is determined without regard to the dividends-paid deduction or net capital gain).  To the extent that we satisfy the distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to federal corporate income tax on the undistributed income.  We intend to make distributions to our stockholders to comply with the REIT requirements of the Code.

· We will be subject to a 4.0% nondeductible excise tax on the amount, if any, by which distributions we pay in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years.

· If we have net income from the sale of foreclosure property that we hold primarily for sale to customers in the ordinary course of business or other non-qualifying income from foreclosure property, we must pay a tax on that income at the highest corporate income tax rate.

· If we sell an asset, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course of business, our gain would be subject to the 100% “prohibited transaction” tax unless such sale were made by one of our taxable REIT subsidiaries or we qualified for a “safe harbor” under the Code.

· If we hold or acquire assets when we are taxable as a corporation prior to our qualification as a REIT, such assets when held by us as a REIT may be subject to tax if sold in the five-year period following the acquisition of such assets.

The ownership limits that apply to REITs, as prescribed by the Code and by the charter, may inhibit market activity in our shares of common stock and restrict our business combination opportunities.

In order for us to qualify as a REIT, not more than 50% in value of our outstanding capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) at any time during the last half of each taxable year after the first year for which we elect to qualify as a REIT.  Additionally, at least 100 persons must beneficially own our capital stock during at least 335 days of a taxable year (other than the first taxable year for which we elect to be taxed as a REIT).  The charter, with certain exceptions, authorizes our board of directors to take such actions as are necessary and desirable to preserve our qualification as a REIT.  The charter also provides that, unless exempted by the Board, no person may own more than 9.8% by value or number of shares, whichever is more restrictive, of our outstanding shares of common stock, or 9.8% by value or number of shares, whichever is more restrictive, of our outstanding capital stock.  Our board of directors may, in its sole discretion, subject to such conditions

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as it may determine and the receipt of certain representations and undertakings, prospectively or retroactively, waive the ownership limit or establish a different limit on ownership, or excepted holder limit, for a particular stockholder if the stockholder’s ownership in excess of the ownership limit would not result in our being “closely held” under Code Section 856(h) or otherwise failing to qualify as a REIT.  These ownership limits could delay or prevent a transaction or a change in control of the Company that might involve a premium price for our shares of common stock or otherwise be in the best interest of our stockholders.

REIT distribution requirements could adversely affect our ability to execute our business plan.

To qualify as a REIT, we must distribute to our stockholders each year 90% of our REIT taxable income (which is determined without regard to the dividends-paid deduction or net capital gain).  Further, we must distribute 100% of our REIT taxable income in order to avoid a corporate level tax.  From time to time, we may generate taxable income greater than our income for financial reporting purposes, or our taxable income may be greater than our cash flow available for distribution to our stockholders (for example, where a borrower defers the payment of interest in cash pursuant to a contractual right or otherwise).  If we do not have other funds available in these situations, we could be required to borrow funds, sell investments at disadvantageous prices or find another alternative source of funds to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirement and to avoid corporate income tax and the 4.0% excise tax in a particular year.  These alternatives could increase our costs or reduce our equity.  Thus, compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.

Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.

To qualify as a REIT for federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our shares of common stock.  In order to meet these tests, we may be required to forego investments we might otherwise make.  Thus, compliance with the REIT requirements may hinder our performance.  In particular, we must ensure that at the end of each calendar quarter, at least 75% of the value of our gross assets consists of cash, cash items, government securities and qualified real estate assets.  The remainder of our investment in securities (other than government securities, securities that constitute qualified real estate assets and securities of our TRSs) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer.  In addition, in general, no more than 5% of the value of our gross assets (other than government securities, securities that constitute qualified real estate assets and securities of our TRSs) can consist of the securities of any one issuer, and no more than 20% of the value of our total gross assets can be represented by the securities of one or more TRSs.  If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences.  As a result, we may be required to liquidate otherwise attractive investments.  These actions could have the effect of reducing our income and amounts available for distribution to our stockholders.

The tax on prohibited transactions will limit our ability to engage in transactions that would be treated as sales for federal income tax purposes.

A REIT’s net income from prohibited transactions is subject to a 100% tax.  In general, prohibited transactions are sales or other dispositions of assets, other than foreclosure property, deemed held primarily for sale to customers in the ordinary course of business (subject to a safe harbor under the Code for certain sales).  It may be possible to reduce the impact of the prohibited transaction tax by conducting certain activities through taxable REIT subsidiaries.  However, to the extent that we engage in such activities through taxable REIT subsidiaries, the income associated with such activities may be subject to full corporate income tax.

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Non-United States investors may be subject to FIRPTA on the sale of its shares if we are unable to qualify as a “domestically controlled qualified investment entity.”

A non-United States person disposing of a United States real property interest, including shares of a United States corporation whose assets consist principally of United States real property interests, is generally subject to a tax under the Foreign Investment in Real Property Tax Act, known as FIRPTA, on the gain recognized on the disposition of such interest.  Note that “qualified foreign pension funds” and certain other qualified foreign stockholders may be generally exempt from FIRPTA.  In addition, FIRPTA does not apply, however, to the disposition of shares in a REIT if the REIT is a “domestically controlled qualified investment entity.”  A REIT is a domestically controlled qualified investment entity if, at all times during a specified testing period (the continuous five-year period ending on the date of disposition or, if shorter, the entire period of the REIT’s existence), less than 50% in value of its shares is held directly or indirectly by non-United States holders.  We cannot assure you that we will qualify as a domestically controlled qualified investment entity.  If we were to fail to so qualify, and if a separate exemption did not apply, gain realized by a non-United States investor on a sale of its shares would be subject to FIRPTA unless our shares of common stock were traded on an established securities market and the non-United States investor did not at any time during a specified testing period directly or indirectly own more than 10% of the value of our outstanding common stock.

Complying with the REIT requirements may limit our ability to hedge effectively.

The REIT provisions of the Code may limit our ability to hedge our assets and operations.  Under these provisions, any income that we generate from transactions intended to hedge our interest rate, inflation and/or currency risks, including gain from the disposition of certain hedging transactions, will be excluded from gross income for purposes of the REIT 75% and 95% gross income tests if the instrument hedges (i) interest rate risk on liabilities incurred to carry or acquire real estate, (ii) risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the REIT 75% or 95% gross income tests or (iii) risks associated with the extinguishment of certain indebtedness or the disposition of certain property related to prior hedging transactions described in (i) or (ii) above and each such instrument is properly identified under applicable Treasury Regulations.  Income from hedging transactions that do not meet these requirements will generally constitute nonqualifying income for purposes of both the REIT 75% and 95% gross income tests.  As a result of these rules, we may have to limit our use of hedging techniques that might otherwise be advantageous, which could result in greater risks associated with interest rate or other changes than we would otherwise incur.

If we were considered to actually or constructively pay a “preferential dividend” to certain of our stockholders, our status as a REIT could be adversely affected.

In order to qualify as a REIT, we must distribute annually to our stockholders at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gain.  For so long as we are not a publicly offered REIT, in order for distributions to be counted as satisfying the annual distribution requirements for REITs, and to provide us with a REIT-level tax deduction, the distributions must not be “preferential dividends.”  A dividend is generally not a preferential dividend if the distribution is pro rata among all outstanding shares of stock within a particular class, and in accordance with the preferences among different classes of stock as set forth in the REIT’s organizational documents.  There is no de minimis exception with respect to preferential dividends.  Therefore, if the IRS were to take the position that we inadvertently paid a preferential dividend, we may be deemed either to (a) have distributed less than 100% of our REIT taxable income and be subject to tax on the undistributed portion or (b) have distributed less than 90% of our REIT taxable income and our status as a REIT could be terminated for the year in which such determination is made if we were unable to cure such failure.  We can provide no assurance that we will not be treated as inadvertently paying preferential dividends.

Changes made to the U.S. tax laws could have a negative impact on our business.

The Tax Cuts and Jobs Act of 2017 (the “TCJA”) included provisions that changed the tax treatment of owning and operating real estate.  The TCJA, among other things:

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· Restricts the deductibility of interest expense by businesses (generally, to 30% of the business’ adjusted taxable income) except, among others, real property businesses electing out of such restriction; we have not yet determined whether we and/or our subsidiaries can and/or will make such an election;

· Requires the use of the less favorable alternative depreciation system to depreciate real property in the event a real property business elects to avoid the interest deduction restriction above;

· Restricts the benefits of like-kind exchanges that defer capital gains for tax purposes to exchanges of real property;

· Requires accrual method taxpayers to take certain amounts in income no later than the taxable year in which such income is taken into account as revenue in an applicable financial statement prepared under GAAP, which, with respect to certain leases, could accelerate the inclusion of rental income; and

· Limits certain deductions for individuals, including deductions for state and local income taxes, and eliminates deductions for miscellaneous itemized deductions (including certain investment expenses).

Many of the provisions in the TCJA, in particular those affecting individual taxpayers, expire at the end of 2025.

As a result of the changes to U.S. federal tax laws implemented by the TCJA, our taxable income and the amount of distributions to our stockholders required in order to maintain our REIT status, and our relative tax advantage as a REIT, could change.  As a REIT, we are required to distribute at least 90% of our taxable income to our stockholders annually.

The TCJA is a complex revision to the U.S. federal income tax laws with various impacts on different categories of taxpayers and industries, and will require subsequent rulemaking and interpretation in a number of areas.  The long-term impact of the TCJA on the overall economy, government revenues, our tenants, us, and the real estate industry cannot be reliably predicted at this time.  Furthermore, the TCJA may negatively impact certain of our tenants’ operating results, financial condition, and future business plans.  The TCJA may also result in reduced government revenues, and therefore reduced government spending, which may negatively impact some of our tenants that rely on government funding.  There can be no assurance that the TCJA will not negatively impact our operating results, financial condition, and future business operations.

We note further that the tax laws or regulations governing REITs or the administrative interpretations thereof may be amended at any time.  We cannot predict if or when any new or amended law, regulation, or administrative interpretation will be adopted, promulgated, or become effective, and an such change may apply retroactively.  Prospective investors are urged to consult with their tax advisors.

Retirement Plan Risks

If the fiduciary of an employee benefit plan fails to meet the fiduciary requirements and other standards under ERISA and the Code as a result of investment in our shares of common stock, the fiduciary could be subject to criminal and civil penalties.

Special considerations apply to (i) employee benefit plans subject to ERISA, (ii) plans, IRAs and other arrangements subject to Code Section 4975 (such as an individual retirement account (“IRA”)) and (iii) entities deemed under ERISA to hold the “plan assets” of any such employee benefit plans or plans that are investing in our shares of common stock.  Fiduciaries investing the assets of such a plan in our shares of common stock should, among other things, consider the following:

· whether the investment is in accordance with the documents and instruments governing such plan;

· the definition of “plan assets” under ERISA and the impact thereof on the plan’s investment in the Company;

· whether the investment satisfies the diversification requirements of Section 404(a)(1)(C) of ERISA (or other applicable law);

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· whether, under Section 404(a)(1)(B) of ERISA (or other applicable law), the investment is prudent, considering the nature of an investment in the Company and our compensation structure and the fact that there is not expected to be a market created in which our shares of common stock can be sold or otherwise disposed of;

· that we have a limited history of operations;

· whether we or any of our affiliates are a “party-in-interest” (within the meaning of Section 3(14) of ERISA) or “disqualified person” (within the meaning of Code Section 4975) with respect to the plan;

· the need to annually value our shares of common stock; and

· whether an investment in the Company will cause the plan to recognize unrelated business taxable income.

With respect to the annual valuation requirements described above, we will provide an estimated value for our shares of common stock annually beginning after the Initial Valuation Date.  We can make no claim whether such estimated value will or will not satisfy the applicable annual valuation requirements under ERISA and the Code.  The Department of Labor or the IRS may determine that a plan fiduciary is required to take further steps to determine the value of our shares of common stock.  In the absence of an appropriate determination of value, a plan fiduciary may be subject to damages, penalties or other sanctions.

Failure to satisfy the fiduciary standards of conduct and other applicable requirements of ERISA and the Code may result in the imposition of civil penalties and could subject the fiduciary to claims for damages or for equitable remedies.  In addition, if an investment in our shares of common stock constitutes a prohibited transaction under ERISA or the Code, the fiduciary who authorized or directed the investment may be subject to the imposition of excise taxes with respect to the amount invested.  In the case of a prohibited transaction involving an IRA owner, the IRA may loss its tax-exempt status and thus, the entire value of the IRA would be considered to be distributed and taxable to the IRA sponsor.  Plan fiduciaries should consult with their own legal advisors before making an investment in our shares of common stock.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties

Hotel Properties

As of December 31, 2019, we owned five hotel properties. The following table provides summary information regarding the properties owned by us as of December 31, 2019:

				Number
			Date	of Guest	Purchase			Transaction				%
Hotel	Property Type	Location	Purchased	Rooms	Price			Costs		Total		Interest
Holiday Inn Express (the “Cedar Rapids Property)	Limited Service	Cedar Rapids, IA	November 30, 2018	83	$	7,700,000		$	158,333	$	7,858,333	100	%
Hampton Inn & Suites (the “Pineville Property”)	Limited Service	Pineville, NC	March 19, 2019	111		13,897,358	(1)		303,744		14,201,102	100	%
Hampton Inn (the “Eagan Property”)	Limited Service	Eagan, MN	June 19, 2019	122		13,950,000			278,333		14,228,333	100	%
Home2 Suites (the “Prattville Property”)	Extended Stay	Prattville, AL	July 11, 2019	90		14,750,000			356,014		15,106,014	100	%
Home2 Suites (the “Lubbock Home2 Property”)	Extended Stay	Lubbock, TX	December 30, 2019	100		14,150,000			284,776		14,434,776	100	%
				506	$	64,447,358		$	1,381,200	$	65,828,558

⁽¹⁾ The seller of the Pineville Property may be entitled to additional cash consideration if the property exceeds certain performance criteria based on increases in the property’s net operating income ("NOI") for a selected 12‑month period of time.

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For a description of the debt associated with each of these properties, see Part II. Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt.”

For a description of hotel properties that were acquired subsequent to December 31, 2019, see Part II. Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Subsequent Events.”

Management Agreements

As of December 31, 2019, each of the Company’s properties was subject to a management agreement with NHS with an initial term expiring on December 31st of the fifth full calendar year following the effective date of the agreement, which will automatically renew for successive 5‑year periods unless terminated earlier in accordance with its terms. The day-to-day operations of the Pineville Property is currently being managed by Beacon IMG, Inc. (“Beacon”), an affiliate of the seller of the Pineville Property, pursuant to a sub-management agreement between NHS and Beacon.

Franchise Agreements

As of December 31, 2019, all of the Company’s hotel properties were operated under franchise agreements with initial terms of 10 to 18 years. Franchise agreements allow the hotel properties to operate under the respective brands. Pursuant to the franchise agreements, the Company pays a royalty fee of 5% to 6% of room revenue, plus additional fees for marketing, central reservation systems and other franchisor costs. Certain hotels are also charged a program fee of generally between 3% and 4% of room revenue. The Company paid an initial fee of $50,000 to $175,000 at the time of entering into each franchise agreement which is being amortized over the term of each agreement.

Item 3. Legal Proceedings.

We may from time to time be a party to legal proceedings which arise in the ordinary course of our business. Management is not aware of any current or pending legal proceedings to which we or any of our subsidiaries are a party or to which any of our property is subject, the outcome of which would, in management’s judgment based on information currently available, have a material adverse effect on our results of operations or financial condition, nor is management aware of any such legal proceedings contemplated by governmental authorities.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

No public market currently exists for our shares of common stock, and we currently have no plans to list our shares on a national securities exchange.

Share Valuation

We are not required to establish an updated net asset value of the Company (“Company NAV”) or an estimated net asset value per share (“Share NAV”) in accordance with FINRA Rules 5110 and 2231 as the Company is not conducting any public offering of its shares.  To the extent we choose to establish a Company NAV and a Share NAV, the Advisor will administer the Company’s valuation policy and will be responsible for the oversight of the valuation process, including the review and approval of the valuation and appraisal processes and methodologies used to determine our Company NAV and Share NAV, the consistency of the valuation and appraisal methodologies with real estate industry standards and practices, and the reasonableness of the assumptions used in the valuations and appraisals. To the

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extent we establish a Share NAV, we will disclose, in each annual report distributed to stockholders, the Share NAV, the method by which it was developed, and the date of the data used to develop the Share NAV.

The initial Share NAV is $10.00, the price at which we are offering our shares in the Offering, which was determined by our board of directors and bears no relationship to any established criteria of value such as book value or earnings per share, is not based on our past earnings, and does not reflect current market value for our assets.

To the extent we choose to establish a Company NAV, we expect the Advisor will determine the Company NAV by (i) taking into consideration the cost value of the hotel properties and other assets owned by us (if such hotel properties or other assets were acquired within 12 months of the applicable valuation), (ii) utilizing third-party appraisals or broker opinions of value (if such hotel properties or other assets have been owned by us for more than 12 months) or (iii) determining the enterprise value of the Company. If we choose to establish a Company NAV, we would not expect to determine the initial Company NAV until approximately 150 days following the second anniversary of breaking escrow in the Offering (the “Initial Valuation Date”). After the Initial Valuation Date, we would expect to subsequently update the Company NAV on an annual basis. We may determine the Company NAV on a more frequent basis if the Advisor and our board of directors determines, in their sole discretion, that a more frequent valuation is warranted.

At any time that the Company NAV is calculated as provided above prior to the termination of the Offering, we intend to adjust the Offering price of the shares in an amount equal to the Company NAV divided by the number of outstanding shares. Our board of directors will determine a new Share NAV at such times and in conjunction with the Company’s determination of the Company NAV, and we will report the new Share NAV to our stockholders.

Equity Compensation Plans

Our board of directors has approved the adoption of a phantom stock plan (the “Phantom Stock Plan”) for the Company. However, the specific terms of the Phantom Stock Plan have not yet been determined and approved by our board. We intend for the shares designated pursuant to the Phantom Stock Plan (the “Phantom Shares”) to be allocated to the Advisor, the TRS subsidiaries and NHS for distribution of the proceeds to their respective employees and service providers in accordance with their compensation plans, however, Corey Maple, Norman Leslie and Katie Cox will not receive any Phantom Shares pursuant to the Phantom Stock Plan.

Stockholder Information

As of March 24, 2020, we had 6,962,813 shares of our common stock outstanding, held by a total of 1,220 stockholders.

Distribution Information

During our Offering, when we may raise capital more quickly than we acquire income-producing assets, and from time to time after the Offering, we may not pay distributions solely from our cash flow from operating activities, in which case distributions may be paid in whole or in part from proceeds from the Offering or debt financing. 

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Distributions declared, distributions paid, and net cash flow used in operations during 2019 and 2018, aggregated by quarter, are as follows:

			Distribution								Net Cash
	Distributions		Declared Per		Distributions Paid (3)						Flows Used in
Period	Declared (1)		Share (1) (2)		Cash		Reinvested		Total		Operations
First Quarter 2019	$	280,080	$	0.175	$	98,912	$	115,475	$	214,387	$	(1,215,000)
Second Quarter 2019		505,418		0.175		256,191		191,395		447,586		(316,321)
Third Quarter 2019		745,048		0.175		422,533		266,527		689,060		(222,112)
Fourth Quarter 2019		994,364		0.175		718,930		225,736		944,666		(1,914,370)
	$	2,524,910	$	0.700	$	1,496,566	$	799,133	$	2,295,699	$	(3,667,803)
			Distribution								Net Cash
	Distributions		Declared Per		Distributions Paid (3)						Flows Used in
Period	Declared (1)		Share (1) (2)		Cash		Reinvested		Total		Operations
First Quarter 2018	$	—	$	0.175	$	—	$	—	$	—	$	—
Second Quarter 2018		—		0.175		—		—		—		(26,124)
Third Quarter 2018		31,572		0.175		17,392		2,957		20,349		(255,459)
Fourth Quarter 2018		143,630		0.175		61,664		46,573		108,237		(1,068,453)
	$	175,202	$	0.700	$	79,056	$	49,530	$	128,586	$	(1,350,036)

⁽¹⁾ Distributions for the periods from January 1, 2019 through December 31, 2019, and the Company’s inception (April 9, 2018) through December 31, 2018, were based on daily record dates and were calculated based on stockholders of record each day during this period at a rate of $0.00191781 per share per day.

⁽²⁾ Assumes each share was issued and outstanding each day that was a record date for distributions during the period presented.

⁽³⁾ Distributions are paid on a monthly basis. In general, distributions for all record dates of a given month are paid on or about the tenth day of the following month.

For the year ended December 31, 2019, we paid aggregate distributions of $2.3 million, including $1.5 million of distributions paid in cash and $0.8 million of distributions reinvested through our dividend reinvestment plan. For the year ended December 31, 2018, we paid aggregate distributions of $128,586, including $79,056 of distributions paid in cash and $49,530 of distributions reinvested through our dividend reinvestment plan. Our net loss for the year ended December 31, 2019 and period ended December 31, 2018 were $4.9 million and $1.2 million, respectively. Net cash flows used in operations for the year ended December 31, 2019 and period ended December 31, 2018 were $3.7 million and $1.4 million, respectively. We funded 100% of our distributions paid, which includes cash distributions and distributions reinvested by stockholders, with proceeds from the Offering.

To the extent that we pay distributions from sources other than our cash flows from operating activities, we will have less funds available for the acquisition of real estate investments, the overall return to our stockholders may be reduced and subsequent investors will experience dilution.

Going forward we expect our board of directors to continue to authorize and declare cash distributions based on daily record dates and to pay these distributions on a monthly basis. Cash distributions will be determined by our board of directors based on our financial condition and such other factors as our board of directors deems relevant. Our board of directors has not pre-established a percentage rate of return for cash distributions to stockholders. We have not established a minimum distribution level, and our charter does not require that we make distributions to our stockholders.

Unregistered Sales of Equity Securities

On June 1, 2018, we commenced a private placement offering of up to $100,000,000 in shares of our common stock. We are offering these securities in reliance upon exemptions from the registration requirements provided by Section 4(a)(2) of the Securities Act and Regulation D under the Securities Act relating to sales not involving any public offering. The securities are being offered and sold only to purchasers who are “accredited investors,” as defined in Rule 501 of Regulation D of the Securities Act, and without the use of general solicitation, as that concept is embodied in Regulation D. In addition to sales of common stock for cash, we have adopted a dividend reinvestment plan, which

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permits stockholders to reinvest their distributions back into the Company. Except as otherwise provided in the offering memorandum, we are offering the shares in the private offering at an initial price of $10.00 per share, with shares purchased in our dividend reinvestment plan at an initial price of $9.50 per share. During the year ended December 31, 2019, we sold 4,870,733 shares of common stock in the private offering, resulting in gross offering proceeds of approximately $47.9 million, including 84,119 shares issued pursuant to our dividend reinvestment plan. During the year ended December 31, 2019, aggregate selling commissions of $3.4 million and marketing and diligence allowances and other wholesale selling costs and expenses of $2.2 million were paid in connection with the private offering. During the period ended December 31, 2018, we sold 1,135,010 shares of common stock in the private offering, resulting in gross offering proceeds of approximately $11.1 million, including 5,214 shares issued pursuant to our dividend reinvestment plan. During the period ended December 31, 2018, aggregate selling commissions of $0.8 million and marketing and diligence allowances and other wholesale selling costs and expenses of $0.9 million were paid in connection with the private offering.

Share Repurchase Plan

The board of directors has adopted a share repurchase plan that may enable our stockholders to have their shares repurchased in limited circumstances. In its sole discretion, the board of directors could choose to terminate or suspend the plan or to amend its provisions without stockholder approval. The repurchase plan may be reviewed and modified by the board of directors as it deems necessary in its sole discretion. The following discussion summarizes the principal terms of our share repurchase plan.

Repurchase Price

Under certain circumstances and subject to the death repurchase described below, the prices at which we will repurchase shares under our repurchase plan are as follows:

· For those shares held by the stockholder for at least one year, 92% of the current share NAV;

· For those shares held by the stockholder for at least two years, 96% of the current share NAV; and

· For those shares held by the stockholder for at least three years, 100% of the current share NAV.

For purposes of determining the time period a stockholder has held each share, the time period begins as of the date the stockholder acquired the share, provided that shares purchased by the stockholder pursuant to our dividend reinvestment plan will be deemed to have been acquired on the same date as the initial shares to which the dividend reinvestment plan shares relate. The board of directors may, in its sole discretion, reject any request for repurchase and may, upon notice to the stockholders, amend, suspend or terminate the repurchase program at any time.

Limitations on Repurchase

There are several limitations on our ability to repurchase shares under our share repurchase plan:

· Unless the shares are being repurchased in connection with a stockholder’s death, we may not repurchase shares unless the stockholder has held the shares for at least one year.

· During any calendar year, we will repurchase only the number of shares that we could purchase with the amount of net proceeds from the sale of shares under our dividend reinvestment plan during the prior calendar year. However, we may increase or decrease the funding available for the repurchase of shares pursuant to our share repurchase plan upon 10 business days’ notice to our stockholders.

· During any calendar year, we will limit the total shares repurchased to no more than 5.0% of the weighted-average number of shares outstanding as of December 31 of the prior calendar year.

· We have no obligation to repurchase shares if the repurchase would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency.

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· We will not repurchase shares if the board of directors determines, in its sole discretion, that the repurchase price determined in accordance with the terms of our share repurchase plan exceeds the then current fair market value of the shares to be repurchased.

Procedures for Repurchase

We will repurchase shares within 21 days following the end of a calendar quarter. We must receive a written request for repurchase at least two business days before the end of the calendar quarter in order for us to repurchase a stockholder’s shares on the repurchase date. If we cannot repurchase all shares presented for repurchase in any quarter, we will attempt to honor repurchase requests on a pro rata basis. The board of directors may, in its sole discretion, reject any request for repurchase.

If we did not completely satisfy a stockholder’s repurchase request on a repurchase date because we did not receive the request in time, because of the limitations on repurchases set forth in our share repurchase plan or because of a suspension of our share repurchase plan, we would treat the unsatisfied portion of the repurchase request as a request for repurchase at the next repurchase date at which funds are available for repurchase unless the stockholder withdraws its request. Any stockholder may withdraw a repurchase request upon written notice to the program administrator if such notice is received at least two business days before the repurchase date.

All shares to be repurchased must be (i) fully transferable and not be subject to any liens or other encumbrances and (ii) free from any restrictions on transfer. If we determine that a lien or other encumbrance or restriction exists against the shares, we will not repurchase any such shares.

Neither we nor the board of directors will have any liability to any stockholder for any damages resulting from or related to the stockholder’s presentment of its shares. Further, stockholders will have complete responsibility for payment of all taxes, assessments and other applicable obligations and third-party costs resulting from or relating to our repurchase of shares. All repurchased shares shall be repurchased as treasury shares and may be made available for purchase to new or existing stockholders.

Special Repurchases—Death Repurchase

In the event of the death of a stockholder, the Company will, upon request and within six months from the date of the request, repurchase such stockholder’s shares regardless of the period the deceased stockholder has owned such shares at the following prices:

· 92% of the current share NAV if death occurs less than six months of the purchase;

· 96% of the current share NAV if death occurs from six months to one year of purchase; and

· 100% of the current share NAV if death occurs after one year of purchase.

We will not be obligated to repurchase a deceased stockholder’s shares if more than two years have elapsed from the date of death.

Amendment, Suspension or Termination of Program and Notice

The board of directors may, at any time and without stockholder approval, upon 10 business days’ written notice to the stockholders (i) amend, suspend or terminate our share repurchase plan and (ii) increase or decrease the funding available for the repurchase of shares pursuant to our share repurchase plan.

During the year ended December 31, 2019 and period ended December 31, 2018, we did not repurchase any shares pursuant to our share repurchase plan because no shares were submitted for repurchase. Based on the repurchase limits described above, as of December 31, 2019, we had $799,133 available for eligible repurchases for all of 2020.

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Item 6. Selected Financial Data.

Selected financial data disclosures have been omitted as permitted under rules applicable to smaller reporting companies.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

As used herein, the terms “we,” “our,” “us” and “the Company” refer to Lodging Fund REIT III, Inc., a Maryland corporation, Lodging Fund REIT III OP, LP, a Delaware limited partnership, which we refer to as the “Operating Partnership,” Lodging Fund REIT III TRS, Inc., a Delaware corporation, which we refer to as the “Master TRS” and their subsidiaries, except where the context otherwise requires. The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of the Company and the notes thereto.

Overview

We were formed on April 9, 2018 as a Maryland corporation for the primary purpose of acquiring a diversified portfolio of hotel properties located primarily in America’s Heartland, which we define as the geographic area from North Dakota to Texas and the Appalachian Mountains to the Rocky Mountains. We have elected to be taxed as a real estate investment trust, or REIT, beginning with the taxable year ending December 31, 2018. We conduct substantially all of our business and own substantially all real estate investments through the Operating Partnership. We are the sole general partner of the Operating Partnership. We and the Operating Partnership are advised by the Advisor pursuant to an advisory agreement, as amended, under which the Advisor performs advisory services regarding acquisition, financing and disposition of the hotel properties, and is responsible for managing, operating and maintaining the hotel properties and day-to-day management of the Company. The Advisor may, in its sole discretion, perform these duties through one or more affiliates. We have engaged NHS to manage several of the hotel properties acquired to date; however, we can engage third party property management companies, and did so in January 2020. The Pineville Property is currently being managed on a day-to-day basis by Beacon, an affiliate of the seller of the Pineville Property, pursuant to a sub-management agreement. NHS is wholly-owned by Norman Leslie, a director and executive officer of the Company and a principal of the Advisor. The Advisor has no direct employees. The employees of the Sponsor, an affiliate of the Advisor, provide services to the Company related to the negotiations of property acquisitions and financing, asset management, accounting, investor relations, and all other administrative services.

On June 1, 2018, we commenced an offering (the “Offering”) of up to $100,000,000 in shares of our common stock under a private placement to qualified purchasers who meet the definition of “accredited investors,” as provided in Regulation D of the Securities Act of 1933, as amended (the “Securities Act”). The Offering will continue until the earlier of (i) the date when the maximum offering amount is sold, (ii) June 1, 2020, which may be extended by our board of directors in its sole discretion, or (iii) a decision by the Company to terminate the Offering. As of December 31, 2019, the Company had issued 6,005,743 shares of common stock resulting in gross offering proceeds of approximately $59.0 million, including 89,333 shares issued under our dividend reinvestment plan. The net offering proceeds have been used to fund property acquisitions. No public market exists for the shares of our common stock and none is expected to develop.

Market Outlook

The hospitality industry is closely related to the U.S. general economic cycle because business and leisure travelers are directly affected by economic conditions that drive demand. The U.S. economy, measured by gross domestic product ("GDP") growth, has been growing since the third quarter of 2009. The Federal Reserve on Feb 7, 2020 released their Monetary Policy Report, and within that report indicated a 2.0% median (1.8-2.3% range) for 2020 real GDP growth. Hospitality cycles are also influenced by supply factors which, depending on general economic timing, can exacerbate downturns if there is over-supply in a market. Supply in America’s Heartland, the location of our primary target markets, has been growing consistent with industry averages.

The long period of growth for hospitality industry fundamentals that began in 2009 has tapered off and modest increases in average daily rate, or “ADR,” are offset by modest occupancy decreases for the 2020 forecast. According to the Smith Travel Research, or STR, the 2020 U.S. Hotel Forecast points to a flat year of revenue per available room, of

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“RevPAR” growth in the current year, with nominal increases in 2021. According to STR’s updated forecast for 2020, RevPAR, is expected to remain unchanged in 2020 and increase 0.5% in 2021. The year 2019 ended up as an increase of 0.9% RevPAR growth, which is the lowest year over year growth since 2009.

The limited-service, select-service and extended stay hotels we intend to target are generally classified by STR in the Upscale and Upper Midscale categories. According to the CBRE Hotels’ Hotel Horizons® March – May 2020 Edition, the compound average annual demand in the Upscale category is projected to increase 4.3% from 2020 to 2024, increasing 20.5% over the five-year period. Upper Midscale demand is projected to grow by 2.8% per year over the same period, increasing 12.6% overall. Compound annual RevPAR growth in the two categories for 2020 to 2024 is expected to be 2.4% and 1.8%, respectively. We believe these segments provide some of the best opportunities across the various hotel classifications.

After years of robust growth coming out of the deep trough that followed the recession that begin in 2008, we believe the hospitality industry has reached a relative plateau of stability. We believe that, in general, when markets mature and stabilize there will be more consolidation opportunities as the industry looks to generate scale benefits through acquisitions and there will be portfolio sale opportunities as this economic cycle continues to mature.

Ongoing Market Developments

As of the date of this Annual Report on Form 10-K, a growing number of cases of the reported coronavirus outbreak have been confirmed in numerous countries, including the United States. The extent to which our future results are affected by the coronavirus will largely depend on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others.

Liquidity and Capital Resources

Overview

We are dependent upon the net proceeds from our Offering to conduct our proposed operations. The Offering will continue until the earlier of (i) the date when the maximum offering amount is sold, (ii) June 1, 2020, which may be extended by our board of directors in its sole discretion, or (iii) a decision by the Company to terminate the Offering. We intend to obtain the capital required to make real estate and real estate-related investments and conduct our operations from the proceeds of our Offering, from secured or unsecured financings from banks and other lenders and from any undistributed funds from our operations. As of December 31, 2019, we had raised approximately $59.0 million in gross offering proceeds from the sale of shares of our common stock in the Offering. If we are unable to raise substantial funds in the Offering, we will make fewer investments resulting in less diversification in terms of the type, number and size of investments we make and the value of an investment in us will fluctuate more significantly with the performance of the specific assets we acquire. There may be a delay between the sale of shares of our common stock and our purchase of assets, which could result in a delay in the benefits to our stockholders, if any, of returns generated from our investment operations. Further, we will have certain fixed operating expenses regardless of whether we are able to raise substantial funds in the Offering. Our inability to raise substantial funds would increase our fixed operating expenses as a percentage of gross income, reducing our net income and cash flow and limiting our ability to make distributions to our stockholders.

As of December 31, 2019, we owned five properties. We acquired these investments with the proceeds from the sale of our common stock in the Offering and debt financing. Operating cash needs during the year ended December 31, 2019 were met through cash flow generated by these real estate investments and with proceeds from our Offering.

Our investments in real estate generate cash flow in the form of hotel room rentals and guest expenditures, which are reduced by operating expenditures, debt service payments and corporate general and administrative expenses. Each of our current properties is owned and future properties will be owned by a direct special purpose entity subsidiary of the Operating Partnership, which leases the properties to direct special purpose entity subsidiaries of the Master TRS, referred to as “TRS Lessees.” The TRS Lessees are or will be required to make rent payments to the owners of the properties pursuant to the lease agreements relating to each property. Such TRS Lessees’ ability to make rent payments

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to the owner subsidiaries and our liquidity, including our ability to make distributions to our stockholders, are dependent upon the TRS Lessees ability to generate cash flow from the operations of the hotel properties. The TRS Lessees are dependent upon the management companies with whom they have entered or will enter into management agreements with to operate the hotel properties.

Cash flow from operations from real estate investments will be primarily dependent upon the occupancy level and average daily rate, or “ADR”, of our portfolio, and how well we manage our expenditures.

We anticipate that the aggregate loan-to-value ratio for the Company will be between 35% and 65%. We will target a loan-to-value ratio for the hotel properties of between 35% and 70%, based on the purchase price of the hotel properties, however, we may obtain financing that is less than or higher than such loan-to-value ratio for an individual hotel property at the discretion of the board of directors. Though this is our estimated leverage, our charter does not limit us from incurring debt in excess of this amount. As of December 31, 2019, our aggregate loan-to-value ratio, based on the aggregate purchase price of the hotel properties, was approximately 62%.

In addition to making investments in accordance with our investment objectives, we expect to use capital resources to make certain payments to the Advisor and its affiliates. These payments include the various fees and expenses to be paid to the Advisor and its affiliates in connection with the selection, acquisition and management of hotel properties, as well as reimbursement of certain organization and other offering expenses described below. The Advisor earns a one-time acquisition fee of up to 1.4% of the hotel purchase price including funds allocated for any property improvement plan (“PIP”) at the time of each hotel property acquisition, a financing fee of up to 1.4% of the hotel purchase price including funds allocated for any PIP at the time of closing the initial financing, and an annual asset management fee of up to 0.75% of the gross assets of the Company, which is payable on a monthly basis. The Advisor may also be paid a refinancing fee of up to 0.75% of the principal amount of any refinancing at the time of closing the refinancing, a disposition fee equal to between 0.0% and 4.0% of the hotel sales price, payable at the closing of the disposition, and real estate commissions of up to 3.0% of the hotel purchase price in connection with the sale of a hotel property in which the Advisor or its affiliates provided substantial services, but in no event greater than one-half of the total commissions paid with respect to such property if a commission is paid to a third-party as well as the Advisor, and in no event will total commissions exceed 5.0% of the hotel sales price. Certain affiliates of the Advisor may receive an annual guarantee fee equal to 1.0% of the guaranty amount, paid on a monthly basis, for debt obligations of the hotel properties personally guaranteed by such affiliates. The Advisor may earn an annual subordinated performance fee equal to 20% of the distributions after the common stockholders and Operating Partnership limited partners (other than the Series B Limited Partnership Unit (“Series B LP Unit”) holders) have received a 6% cumulative, but not compounded, return per annum. Per the terms of the Operating Partnership’s operating agreement, the Advisor receives distributions from the Operating Partnership in connection with their ownership of non-voting Series B LP Units.

The Advisor and its affiliates may be reimbursed by us for certain organization and offering expenses in connection with the Offering, including legal, printing, marketing and other Offering costs and expenses. Following the termination of the Offering, the Advisor will reimburse us for any such amounts incurred by us in excess of 15% of the gross proceeds of the Offering. In addition, we may pay directly or reimburse the Advisor and its affiliates for certain costs incurred in connection with its provision of services to the Company, including certain acquisition costs, financing costs, and sales and marketing costs, as well as an allocable share of general and administrative overhead costs. All reimbursements are paid to the Advisor and its affiliates at cost.

NHS earns a monthly base management fee for property management services, including overseeing the day-to-day operations of the hotel properties in an amount up to 4% of gross revenue. NHS may also earn an accounting fee of $14.00 per room for accounting services, payable monthly, and an administrative fee equal to 0.60% of gross revenues for administrative and other services. The Company reimburses NHS for certain costs of operating the properties incurred on behalf of the Company. All reimbursements are paid to NHS at cost.

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Debt

Lines of Credit

On August 22, 2018, we entered into a $3.0 million revolving line of credit, collateralized by 300,000 partnership units of Lodging Fund REIT III OP, LP. The line of credit has a variable interest rate equal to the U.S. Prime Rate, plus 1.00%, with a minimum rate of 5.00%. As of December 31, 2019 and 2018, the interest rate was 5.75% and 6.50%, respectively, and there was no outstanding balance on the line of credit. The line of credit requires monthly payments of interest only, with all principal due at maturity. In November 2019, the line of credit was amended to extend the maturity date from November 22, 2019 to November 22, 2020, and lower the minimum interest rate from 6.0% to 5.0% per annum. The amendment also revised the guarantee of the line of credit to include a partial guarantee by Corey Maple and Norman Leslie, as the members of the Advisor, each in the amount of $1.2 million.

We terminated our $25.0 million revolving line of credit in September 2019, two months prior to its stated maturity. We had drawn $5.2 million on the line of credit in connection with the purchase of the Cedar Rapids Property, which remained outstanding at December 31, 2018. The outstanding balance was repaid in full in March 2019 when the Cedar Rapids property was refinanced. As of December 31, 2018, the interest rate was 5.60%.

Mortgage Loans

As of December 31, 2019, we had $41.7 million in outstanding mortgage debt secured by five properties, with maturity dates ranging from March 2024 to October 2026, fixed interest rates ranging from 4.13% to 5.33%, and a weighted-average interest rate of 4.72%. The loans generally require monthly payments of principal and interest on an amortized basis, with certain loans allowing for an interest-only period up to 12 months following origination, and generally require a balloon payment due at maturity. The following table sets forth the hotel properties securing each loan, the interest rate, maturity date, and the outstanding balance as of December 31, 2019 for each of our mortgage debt obligations. As of December 31, 2018, we did not have any outstanding mortgage debt. 

			Outstanding
			Balance as of
	Interest	Maturity	December 31,
Hotel Property	Rate	Date	2019
Holiday Inn Express - Cedar Rapids(1)	5.33%	03/01/2024	$	5,527,392
Hampton Inn & Suites - Pineville	5.13%	06/06/2024		9,154,289
Hampton Inn - Eagan	4.60%	07/01/2024		9,369,276
Home2 Suites - Prattville(1)	4.13%	08/01/2024		9,620,000
Home2 Suites - Lubbock	4.69%	10/06/2026		8,000,430
			$	41,671,387

⁽¹⁾ Loan is interest-only for the first 12 months after origination.

Properties Under Contract

As of the date of this filing, we had four hotel properties under contract for an aggregate contract purchase price of approximately $60.0 million. We are in various stages of our due diligence review with respect to each property. Each of these pending acquisitions is subject to our completion of satisfactory due diligence and other closing conditions. There can be no assurance that we will complete any of these pending acquisitions on the contemplated terms, or at all. See “- Subsequent Events.”

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Cash Flows

The following table provides a breakdown of our net change in our cash, cash equivalents, and restricted cash:

	For the Year Ended December 31,
	2019		2018*
Net cash used in operating activities	$	(3,667,803)	$	(1,350,036)
Net cash used in investing activities		(40,994,998)		(7,756,079)
Net cash provided by financing activities		56,304,768		13,638,519
Net increase in cash, cash equivalents and restricted cash	$	11,641,967	$	4,532,404

*The year ended December 31, 2018, includes activity from the Company’s inception (April 9, 2018) through December 31, 2018.

Cash Flows From Operating Activities

As of December 31, 2019, we owned five hotel properties and during the year ended December 31, 2019, net cash used in operating activities was $3.7 million. As of December 31, 2018, we owned one hotel property and during the period from the Company’s inception (April 9, 2018) to December 31, 2018, net cash used in operating activities was $1.4 million. We expect that our cash flows from operating activities will increase in future periods as a result of owning our current hotel properties for a full annual operating cycle, as well as anticipated future acquisitions of hotel properties and potential other real estate-related investments and the related operational performance of such investments. Our cash flows used in operating activities generally consist of the net cash generated by our hotel operations, partially offset by the cash paid for corporate expenses, certain acquisition-related expenses, property management fees, and other working capital changes. See Part II, Item 7, “Management Discussion and Analysis of Financial Condition and Results of Operations  –Results of Operations" for further discussion of our operating results for the year ended December 31, 2019, and the period from the Company’s inception (April 9, 2018) to December 31, 2018.

Cash Flows From Investing Activities

Net cash used in investing activities was $41.0 million for the year ended December 31, 2019, and primarily consisted of $40.7 million for the acquisition of four hotel properties, with an additional $0.3 million being used for capital improvements at certain of our hotel properties. Net cash used in investing activities was $7.8 million for the period from the Company’s inception (April 9, 2018) to December 31, 2018 and was related to the cash proceeds used for the acquisition of one hotel property.

Cash Flows From Financing Activities

During the year ended December 31, 2019, net cash provided by financing activities was $56.3 million and consisted primarily of the following:

· $39.7 million of net cash provided by offering proceeds related to our Offering, net of payments of commissions and other offering costs of $7.5 million;

· $18.1 million of net cash provided by debt financing as a result of proceeds from debt financing of $25.0 million, partially offset by principal payments on debt facilities of $5.9 million and payments of financing costs of $1.0 million;

· $1.5 million of net cash distributions, after giving effect to distributions reinvested by stockholders of $0.8 million.

During the period from the Company’s inception (April 9, 2018) to December 31, 2018, net cash provided by financing activities was $13.6 million and consisted primarily of the following:

· $8.7 million of net cash provided by offering proceeds related to our Offering, net of payments of commissions and other offering costs of $2.4 million;

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· $5.0 million of net cash provided by debt financing as a result of proceeds from debt financing of $6.2 million, partially offset by principal payments on debt facilities of $1.0 million and payments of financing costs of $0.2 million;

· $79,056 of net cash distributions, after giving effect to distributions reinvested by stockholders of $49,530.

See Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Distribution Information” for details regarding our distribution history as well as sources used to pay our distributions. 

Results of Operations

We expect that revenue, operating expenses, maintenance costs, real estate taxes and insurance, interest expense and management fees will each increase in future periods as a result of owning our current hotel properties for a full annual operating cycle, as well as anticipated future acquisitions of real estate investments. However, future operating results could be impacted by changing market and industry factors, see Part II, Item 7, “Management Discussion and Analysis of Financial Condition and Results of Operations – Market Outlook.”

Our results of operations for the year ended December 31, 2019 and the period from the Company’s inception (April 9, 2018) to December 31, 2018 are not indicative of those expected in future periods, as we were actively raising capital through our Offering and acquiring hotel properties during both of these periods, and as of December 31, 2019, had only owned one property for a full 12 month operating cycle.

In evaluating financial condition and operating performance, important indicators on which the Company focuses are revenue measurements, such as occupancy, ADR and RevPAR, and expenses, such as property operations expenses, general and administrative expenses and other expenses described below. Occupancy is the total number of rooms occupied for the period divided by the total number of available rooms for the period. ADR is equal to the total gross room revenue divided by the total number of rooms rented for the period. RevPAR is equal to the total gross room revenue divided by the total number of available rooms for the period.

Comparison of the year ended December 31, 2019 versus the period from the Company’s inception (April 9, 2018) to December 31, 2018

Revenue

Room revenues totaled $8.5 million and $123,024 for the year ended December 31, 2019 and the period from the Company’s inception (April 9, 2018) through December 31, 2018, respectively. Other revenue, which consists of revenues from other hotel services, was $114,628 and $706 for the year ended December 31, 2019 and the period from the Company’s inception (April 9, 2018) through December 31, 2018, respectively. For our portfolio of hotel properties owned during the period, occupancy, ADR, and RevPAR were 73.20%, $112.92, and $82.66, respectively, for the year ended December 31, 2019, compared to occupancy, ADR, and RevPAR of 48.72%, $95.07, and $46.32, respectively, for the period ended December 31, 2018.  We expect that room revenue, other revenue and total revenue will each increase in future periods as a result of owning our current hotel properties for a full operating period, as well as anticipated future acquisitions of real estate assets.

General and Administrative Expenses

General and administrative expenses were $4.6 million and $0.6 million for the year ended December 31, 2019 and the period from the Company’s inception (April 9, 2018) through December 31, 2018, respectively. These general and administrative expenses consisted primarily of administrative personnel costs, professional fees, and an allocable portion of certain administrative overhead costs. We expect general and administrative expenses will increase in future periods as a result of owning our current hotel properties for a full operating period, as well as anticipated future acquisitions of real estate assets, but to decrease as a percentage of total revenue.

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Sales and Marketing Expenses

Sales and marketing expenses were $1.0 million and $0.3 million for the year ended December 31, 2019 and the period from the Company’s inception (April 9, 2018) through December 31, 2018, respectively. These sales and marketing expenses consisted primarily of sales and marketing personnel costs, hotel brand loyalty program costs, advertising and other marketing costs. We expect sales and marketing expenses will increase in future periods as a result of owning our current hotel properties for a full operating period, as well as anticipated future acquisitions of real estate assets, but to decrease as a percentage of total revenue.

Property Operations Expenses

Property operations expenses were $3.4 million and $65,059 for the year ended December 31, 2019 and the period from the Company’s inception (April 9, 2018) through December 31, 2018, respectively. These property operations expenses consisted primarily of operational personnel costs, agent commissions, utility costs, property taxes, insurance, repair and maintenance costs, and other costs of operating our hotel properties. We expect property operating expenses will increase in future periods as a result of owning our current hotel properties for a full operating period, as well as anticipated future acquisitions of real estate assets.

Franchise Fees

Franchise fees were $0.8 million and $11,412 for the year ended December 31, 2019 and the period from the Company’s inception (April 9, 2018) through December 31, 2018, respectively. Franchise fees include the amortization of initial franchise fees, as well as monthly fees paid to franchisors for royalty, marketing, reservation fees and other related costs. We expect franchise fees will increase in future periods as a result of owning our current hotel properties for a full operating period, as well as anticipated future acquisitions of real estate assets.

Property Management Fees

Property management fees were $0.8 million and $22,446 for the year ended December 31, 2019 and the period from the Company’s inception (April 9, 2018) through December 31, 2018, respectively. Property management fees include asset management fees paid to the Advisor and management fees paid to property management service providers, including NHS, who manage the day-to-day operations of our hotel properties. We expect property management fees will increase in future periods as a result of owning our current hotel properties for a full operating period, as well as anticipated future acquisitions of real estate assets.    

Acquisition Expenses

Acquisition expenses were $0.5 million and $0.2 million for the year ended December 31, 2019 and the period from the Company’s inception (April 9, 2018) through December 31, 2018, respectively. Acquisition expenses include acquisition-related and due diligence costs that relate to a property that is not ultimately acquired, as well as costs related to hotel property acquisitions that are not attributable to a single distinct property. We expect acquisition expenses will increase in future periods to the extent the Offering remains open to new investment and we continue to acquire properties, but to decrease as a percentage of revenue, and to cease once the Offering is closed to new investment and we are no longer acquiring new properties.

Depreciation

Depreciation expense was $1.2 million and $43,810 for the year ended December 31, 2019 and the period from the Company’s inception (April 9, 2018) through December 31, 2018, respectively. We expect depreciation expense will increase in future periods as a result of owning our current hotel properties for a full operating period, as well as anticipated future acquisitions of real estate assets.

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Interest Expense

Interest expense was $1.4 million and $74,858 for the year ended December 31, 2019 and the period from the Company’s inception (April 9, 2018) through December 31, 2018, respectively. We expect that interest expense will increase in future periods as a result of owning our current hotel properties for a full operating period and having the related financing obligations for a full operating period, as well as anticipated future acquisitions of real estate assets. Furthermore, we expect that in future periods our interest expense will vary based on the amount of our borrowings, which will depend on the cost of borrowings, the amount of proceeds we raise in our Offering and our ability to identify and acquire real estate and real estate-related assets that meet our investment objectives.

Critical Accounting Policies

Below is a discussion of the accounting policies that management believes are or will be critical to our operations. We consider these policies critical in that they involve significant management judgments and assumptions, require estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses.

The Company, as an emerging growth company, has elected to use the extended transition period which allows us to defer compliance with new or revised accounting standards. This allows the Company to adopt new or revised accounting standards as of the effective date for non-public business entities.

Investment in Hotel Properties

We evaluate whether each hotel property acquisition should be accounted for as an asset acquisition or a business combination. If substantially all of the fair value of the gross assets acquired is concentrated in a single asset or a group of similar identifiable assets, then the transaction is considered to be an asset acquisition. All of our acquisitions since inception have been determined to be asset acquisitions. Transaction costs associated with asset acquisitions will be capitalized and transaction costs associated with business combinations will be expensed as incurred.

Our acquisitions generally consist of land, land improvements, buildings, building improvements, and furniture, fixtures and equipment (“FF&E”). We may also acquire intangible assets or liabilities related to in-place leases, management agreements, debt, and advanced bookings. For transactions determined to be asset acquisitions, we allocate the purchase price among the assets acquired and the liabilities assumed based on their respective fair values at the date of acquisition. For transactions determined to be business combination, we record the assets acquired and the liabilities assumed at their respective fair values at the date of acquisition. We determine the fair value by using market data and independent appraisals available to us and making numerous estimates and assumptions.

The difference between the relative fair value and the face value of debt assumed in connection with an acquisition is recorded as a premium or discount and amortized to interest expense over the remaining term of the debt assumed. The valuation of assumed liabilities is based on our estimate of the current market rates for similar liabilities in effect at the acquisition date.

Our investments in hotel properties are carried at cost and are depreciated using the straight-line method over the estimated useful lives of 15 years for land improvements, 15 years for building improvements, 40 years for buildings and three to seven years for FF&E. Maintenance and repairs are expensed and major renewals or improvements to the hotel properties are capitalized.

We assess the carrying value of our hotel properties whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The recoverability is measured by comparing the carrying amount to the estimated future undiscounted cash flows which take into account current market conditions and our intent with respect to holding or disposing of the hotel properties. If our analysis indicates that the carrying value is not recoverable on an

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undiscounted cash flow basis, we will recognize an impairment loss for the amount by which the carrying value exceeds the fair value. The fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions or third-party appraisals.

The use of projected future cash flows is based on assumptions that are consistent with a market participant’s future expectations for the travel industry and the economy in general and our expected use of the underlying hotel properties. The assumptions and estimates related to the future cash flows and the capitalization rates are complex and subjective in nature. Changes in economic and operating conditions that occur subsequent to a current impairment analysis and our ultimate use of the hotel property could impact the assumptions and result in future impairment losses to the hotel properties.

Fair Value Measurement

We establish fair value measures based on the fair value definition and hierarchy levels established by GAAP. These fair values are based on a three-tiered fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1  Observable inputs such as quoted prices in active markets.

Level 2     Directly or indirectly observable inputs, other than quoted prices in active markets.

Level 3     Unobservable inputs in which there is little or no market data, which require a reporting entity to develop its own assumptions.

Our estimates of fair value were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to develop estimated fair value. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. We classify assets and liabilities in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement.

Off-Balance Sheet Arrangements

As of December 31, 2019 and 2018, we had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Seasonality

Depending on a hotel’s location and market, operations for the hotel may be seasonal in nature. This seasonality can be expected to cause fluctuations in our quarterly operating performance. For hotels located in non-resort markets, demand is generally lower in the winter months due to decreased travel and higher in the spring and summer months during the peak travel season. Accordingly, we expect that we will have lower revenue, operating income and cash flow in the first and fourth quarters and higher revenue, operating income and cash flow in the second and third quarters.

Subsequent Events

Distributions Declared and Authorized

On January 1, 2020, our board of directors declared cash distributions on the outstanding shares of common stock based on daily record dates for (i) the period from January 1, 2020 through January 31, 2020, which was paid in February 2020, and (ii) the period from February 1, 2020 through February 29, 2020, which was paid in March 2020.  Our board of directors also authorized cash distributions on the outstanding shares of common stock based on daily record dates for the period from March 1, 2020 through March 31, 2020.  Investors may choose to receive cash distributions or purchase additional shares through the DRIP. Distributions for these periods will be calculated based on stockholders of record each day during these periods at a rate of $0.00191781 per share per day.

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Distributions Paid

On January 10, 2020, the Company paid distributions of $342,515, declared for daily record dates for each day in the period from December 1, 2019 through December 31, 2019, which included $130,304 of distributions paid pursuant to the DRIP. On February 10, 2020, the Company paid distributions of $358,474, declared for daily record dates for each day in the period from January 1, 2020, through January 31, 2020, which included $139,094 of distributions paid pursuant to the DRIP. On March 10, 2020, the Company paid distributions of $382,325, declared for daily record dates for each day in the period from February 1, 2020 through February 29, 2020, which included $150,022 of distributions paid pursuant to the DRIP.

Recent Property Acquisitions and Pending Acquisitions

On January 8, 2020, we acquired a 101-room Fairfield Inn & Suites by Marriott hotel property in Lubbock, Texas, for $15.15 million, exclusive of closing costs.  In connection with the acquisition, we assumed the existing loan secured by the property, which had an outstanding balance of $9.4 million at the time of the transaction.  The loan has a fixed interest rate of 4.93% per annum, matures on April 6, 2029, and requires monthly payments of principal and interest with a balloon payment due at maturity.  In connection with the acquisition, we also entered into an agreement with NHS to manage the property at terms consistent with the Company’s existing agreements with NHS. Additionally, we signed a new franchise agreement with Marriott that expires in August 2037.

On February 17, 2020, the due diligence period expired under the purchase agreement in which we agreed to acquire a 108-room Fairfield Inn & Suites by Marriott hotel in Hershey, Pennsylvania, a 107-room Home2 Suites by Hilton hotel in York, Pennsylvania, and a 100-room Hampton Inn & Suites by Hilton hotel in York, Pennsylvania (collectively, the “Pennsylvania Hotel Properties”). The contractual purchase price of the Pennsylvania Hotel Properties is approximately $46.9 million plus closing costs, subject to adjustment as provided in the purchase agreement. As required by the purchase agreement, we have deposited a total of $1.5 million into escrow as earnest money pending the closing or termination of the purchase agreement. Except in certain circumstances described in the purchase agreement, if we fail to complete the acquisition, we will forfeit the earnest money. There can be no assurance that the Company will complete these acquisitions on the contemplated terms, or at all.

On February 21, 2020, we acquired a 99-room Homewood Suites by Hilton hotel property located in Southaven, Mississippi, for $20.5 million, exclusive of closing costs.  In connection with the acquisition, we entered into a $13.46 million term loan. The loan has a fixed interest rate of 3.695% per annum, matures on March 3, 2025, requires monthly payments of interest-only through March 31, 2021, and thereafter requires monthly payments of principal and interest with a balloon payment due at maturity. The loan requires the maintenance of certain financial covenants, and pursuant to the loan agreement, Corey Maple, the Company’s Chief Executive Officer (the “Guarantor”), entered into a Guaranty, which is (i) a full recourse guarantee to the lender in certain circumstances, including the occurrence of certain events, including, without limitation, certain bankruptcy or insolvency proceedings involving the borrower, and (ii) recourse guarantee limited to the payment of all claims, actions, suits, damages, losses, expenses or other obligations actually incurred by the lender as a result of certain “bad boy” events, including criminal acts, fraud or misrepresentation in connection with the loan documents, damage to the collateral caused by gross negligence, reckless or intentional acts or omissions, or certain other intentional acts or omissions of the borrower or Guarantor, all as further described in the Guaranty. In connection with the acquisition we also entered a management agreement with Vista Host Inc. (“Vista Host”), a third-party management company, to provide property management and hotel operations management services. The agreement has an initial term expiring on February 21, 2025, which automatically renews for two successive five-year periods, unless terminated in accordance with its terms. We will pay Vista Host a base management fee for property management services equal to 3% of the prior month’s gross revenues (as defined in the management agreement), a monthly accounting fee of $1,000, and Vista Host may earn annual incentive management fees if certain growth and operational performance metrics are achieved.  We will also reimburse Vista Host for certain costs of operating the property incurred on our behalf.  All reimbursements are paid to Vista Host at cost.  We may terminate the management agreement without cause or in connection with the sale of the hotel upon at least sixty days’ written notice to Vista Host and the payment of a termination fee, the amount of which varies depending on the timing of such termination.

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Lines of Credit

On February 10, 2020, we entered into a $5.0 million revolving line of credit loan agreement (the “Line of Credit”).  The Line of Credit requires monthly payments of interest only, with all outstanding principal amounts being due and payable at maturity on February 10, 2021.  The Line of Credit has a variable interest rate equal to the Prime Rate as published in the Wall Street Journal, plus 0.50%, resulting in an effective rate of 5.25% per annum as of February 10, 2020.  The Line of Credit is secured by our Cedar Rapids Property and our Eagan Property, which are also subject to term loans with the same lender, and 100,000 limited partnership units of the Operating Partnership.  The Line of Credit includes cross-collateralization and cross-default provisions such that our existing mortgage loan agreements with respect to the Cedar Rapids Property and the Eagan Property, as well as future loan agreements that we may enter into with this lender, are cross-defaulted and cross-collateralized with each other.  The Line of Credit, including all cross-collateralized debt, is guaranteed by us and Corey Maple, our Chief Executive Officer.  As of March 24, 2020, we had an outstanding balance of $3.2 million on the Line of Credit.

On March 16, 2020, we drew $2.0 million on our $3.0 million revolving line of credit, which was outstanding as of March 24, 2020.

Status of the Offering

As of March 24, 2020, our private offering remained open for new investment, and since the inception of the offering we had issued and sold 6,962,813 shares of common stock, including 133,482 shares issued pursuant to the DRIP, resulting in the receipt of gross offering proceeds of $68.4 million.

Recent Developments

Subsequent to December 31, 2019, there was a global outbreak of a new strain of coronavirus, COVID-19. The global and domestic response to the COVID-19 outbreak continues to rapidly evolve. Thus far, certain responses to the COVID-19 outbreak have included mandates from federal, state and/or local authorities that required temporary closure of certain travel and hospitality. The COVID-19 outbreak and associated responses could negatively impact future hotel revenues and operations at our properties, which could result in a  material impact to the Company’s future results of operations, cash flows and financial condition.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Quantitative and qualitative disclosures about market risk have been omitted as permitted under rules applicable to smaller reporting companies.

Item 8. Financial Statements and Supplementary Data.

See the Index to Financial Statements at page F‑1 of this report.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.

Based on the evaluation of our disclosure controls and procedures (as defined in Securities Exchange Act of 1934 Rules 13a‑15(e) and 15d‑15(e)) required by Securities Exchange Act Rules 13a‑15(b) or 15d‑15(b), our Chief Executive Officer and our Chief Financial Officer have concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective.

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Internal Control over Financial Reporting

This Annual Report on Form 10‑K does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the Company’s registered public accounting firm due to a transition period established by rules of the SEC for newly public companies. Further, we have not evaluated any change in our internal control over financial reporting that occurred during our last fiscal quarter due to a transition period established by the rules of the SEC for newly public companies.

Item 9B. Other Information.

None.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information required by this item will be included under the heading “Certain Information About Management and Corporate Governance” in our definitive proxy statement for our 2020 Annual Meeting of Stockholders, which will be filed no later than 120 days after December 31, 2019, and such required information is incorporated herein by reference.

Item 11. Executive Compensation.

The information required by this item will be included under the heading “Certain Information About Management and Corporate Governance” in our definitive proxy statement for our 2020 Annual Meeting of Stockholders, which will be filed no later than 120 days after December 31, 2019, and such required information is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this item will be included under the heading “Securities Ownership of Certain Beneficial Owners and Management” in our definitive proxy statement for our 2020 Annual Meeting of Stockholders, which will be filed no later than 120 days after December 31, 2019, and such required information is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this item will be included under the heading “Certain Information About Management and Corporate Governance” in our definitive proxy statement for our 2020 Annual Meeting of Stockholders, which will be filed no later than 120 days after December 31, 2019, and such required information is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services.

The information required by this item will be included under the heading “Principal Accountant Fees and Services” in our definitive proxy statement for our 2020 Annual Meeting of Stockholders, which will be filed no later than 120 days after December 31, 2019, and such required information is incorporated herein by reference.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) Financial Statement Schedules

See the Index to Financial Statements at page F‑1 of this report.

The following financial statement schedule is included herein at page F-23 of this report:

Schedule III – Real Estate Assets and Accumulated Depreciation

(b) Exhibits

Exhibit No.		Description
	3.1	Articles of Amendment and Restatement, dated as of June 1, 2018 (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 10 filed August 8, 2019)

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3.2		Bylaws, dated of as April 9, 2018, as amended by Amendment No. 1 dated as of November 12, 2019 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed November 12, 2019)
3.3		Limited Partnership Agreement of the Operating Partnership, dated as of April 11, 2018 (incorporated by reference to Exhibit 3.3 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
4.1		Dividend Reinvestment Plan of the Registrant (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
4.2	*	Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, as amended
10.1		Amended and Restated Advisory Agreement among the Registrant, the Operating Partnership and the Advisor, effective as of June 1, 2018 (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.2		Form of Management Agreement with NHS dba National Hospitality Services (incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.3		Form of TRS Lease Agreement (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.4.1		Revolving Line of Credit among the Registrant, the Operating Partnership and TCF National Bank, dated as of November 15, 2018 (incorporated by reference to Exhibit 10.4.1 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.4.2		Promissory Note issued to TCF National Bank, dated as of November 15, 2018 (incorporated by reference to Exhibit 10.4.2 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.5.1		Promissory Note issued to Midwest Bank, dated as of August 22, 2018 (incorporated by reference to Exhibit 10.5.1 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.5.2		Modification of Note issued to Midwest Bank, effective as of July 9, 2019 (incorporated by reference to Exhibit 10.5.2 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.5.3		Commercial Security Agreement with Midwest Bank, dated as of August 22, 2018 (incorporated by reference to Exhibit 10.5.3 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.5.4		Commercial Guaranty with Midwest Bank, dated as of August 22, 2018 (incorporated by reference to Exhibit 10.5.4 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.5.5		Agreement to Provide Insurance with Midwest Bank, dated as of August 22, 2018 (incorporated by reference to Exhibit 10.5.5 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.5.6		Security Agreement with Midwest Bank, dated August 22, 2018 (incorporated by reference to Exhibit 10.5.6 to the Company’s Registration Statement on Form 10 filed August 8, 2019)

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10.6	Business Loan Agreement for the Cedar Rapids Property with Western State Bank, dated March 5, 2019 (incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.7	Promissory Note issued to Western State Bank relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.8	Mortgage relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.8 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.9	Assignment of Rents relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.10.1	Commercial Security Agreement (Fixtures) relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.10.1 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.10.2	Commercial Security Agreement (Inventory) relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.10.2 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.10.3	Commercial Security Agreement (Franchise) relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.10.3 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.11.1	Commercial Guaranty relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.11.1 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.11.2	Commercial Guaranty relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.11.2 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.12.1	Agreement to Provide Insurance (Property) relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.12.1 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.12.2	Agreement to Provide Insurance (Fixtures) relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.12.2 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.12.3	Agreement to Provide Insurance (Franchise) relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.12.3 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.13	Loan Assumption Agreement related to the Pineville Property, dated March 19, 2019 (incorporated by reference to Exhibit 10.13 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.14	Environmental Indemnity Agreement related to the Pineville Property, dated March 19, 2019 (incorporated by reference to Exhibit 10.14 to the Company’s Registration Statement on Form 10 filed August 8, 2019)

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10.15	Business Loan Agreement with Western State Bank relating to the Eagan Property, dated June 19, 2019 (incorporated by reference to Exhibit 10.15 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.16	Promissory Note issued to Western State Bank relating to the Eagan Property, dated June 19, 2019 (incorporated by reference to Exhibit 10.16 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.17	Mortgage to Western State Bank relating to the Eagan Property, dated June 19, 2019 (incorporated by reference to Exhibit 10.17 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.18	Assignment of Rents relating to the Eagan Property, dated June 19, 2019 (incorporated by reference to Exhibit 10.18 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.19.1	Commercial Security Agreement (Fixtures) relating to the Eagan Property, dated June 19, 2019 (incorporated by reference to Exhibit 10.19.1 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.19.2	Commercial Security Agreement (Inventory) relating to the Eagan Property, dated June 19, 2019 (incorporated by reference to Exhibit 10.19.2 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.19.3	Commercial Security Agreement (Franchise) relating to the Eagan Property, dated June 19, 2019 (incorporated by reference to Exhibit 10.19.3 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.20.1	Commercial Guaranty relating to the Eagan Property, dated June 19, 2019 (incorporated by reference to Exhibit 10.20.1 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.20.2	Commercial Guaranty relating to the Eagan Property, dated June 19, 2019 (incorporated by reference to Exhibit 10.20.2 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.21	Agreements to Provide Insurance relating to the Eagan Property, dated June 19, 2019 (incorporated by reference to Exhibit 10.21 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.22.1	Loan Agreement relating to the Prattville Property, dated as of July 11, 2019 (incorporated by reference to Exhibit 10.22.1 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.22.2	Promissory Note issued to Wells Fargo Bank relating to the Prattville Property, dated as of July 11, 2019 (incorporated by reference to Exhibit 10.22.2 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.22.3	Mortgage relating to the Prattville Property, dated as of July 11, 2019 (incorporated by reference to Exhibit 10.22.3 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.22.4	Security Agreement relating to the Prattville Property, dated as of July 11, 2019 (incorporated by reference to Exhibit 10.22.4 to the Company’s Registration Statement on Form 10 filed August 8, 2019)

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10.22.5	Environmental Indemnity Agreement relating to the Prattville Property, dated as of July 11, 2019 (incorporated by reference to Exhibit 10.22.5 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.22.6	Agreement Regarding Required Insurance relating to the Prattville Property, dated as of July 11, 2019 (incorporated by reference to Exhibit 10.22.6 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.22.7	Assignment, Consent and Subordination of Management Agreement relating to the Prattville Property, dated as of July 11, 2019 (incorporated by reference to Exhibit 10.22.7 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.22.8	Subordination Agreement relating to the Prattville Property, dated as of July 11, 2019 (incorporated by reference to Exhibit 10.22.8 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.22.9	Guaranty relating to the Prattville Property, dated as of July 11, 2019 (incorporated by reference to Exhibit 10.22.9 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.23	Asset Purchase Agreement for the purchase of the Cedar Rapids Property, dated as of October 11, 2018 (incorporated by reference to Exhibit 10.23 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.24	First Amendment to Asset Purchase Agreement for the Cedar Rapids Property, dated as of November 13, 2018 (incorporated by reference to Exhibit 10.24 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.25	Second Amendment to Asset Purchase Agreement for the Cedar Rapids Property, effective as of November 20, 2018 (incorporated by reference to Exhibit 10.25 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.26	Assignment of Agreement for Sale and Purchase of the Cedar Rapids Property, dated as of November 28, 2018 (incorporated by reference to Exhibit 10.26 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.27	Asset Purchase Agreement for the purchase of the Pineville Property, dated as of October 5, 2018 (incorporated by reference to Exhibit 10.27 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.28	First Amendment to Asset Purchase Agreement, dated as of November 7, 2018 (incorporated by reference to Exhibit 10.28 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.29	Second Amendment to Asset Purchase Agreement for the purchase of the Pineville Property between GNP Group of Pineville, LLC and Lodging Fund Real Estate Investment Trust III, dated as of November 26, 2018 (incorporated by reference to Exhibit 10.29 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.30	Third Amendment to Asset Purchase Agreement for the purchase of the Pineville Property, dated as of November 30, 2018 (incorporated by reference to Exhibit 10.30 to the Company’s Registration Statement on Form 10 filed August 8, 2019)

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10.31	Reinstatement of and Fourth Amendment to Asset Purchase Agreement for the purchase of the Pineville Property, dated as of December 10, 2018 (incorporated by reference to Exhibit 10.31 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.32	Fifth Amendment to Asset Purchase Agreement for the purchase of the Pineville Property, dated as of December 14, 2018 (incorporated by reference to Exhibit 10.32 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.33	Sixth Amendment to Asset Purchase Agreement for the purchase of the Pineville Property, dated as of December 19, 2018 (incorporated by reference to Exhibit 10.33 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.34	Seventh Amendment to Asset Purchase Agreement for the purchase of the Pineville Property, dated as of December 21, 2018 (incorporated by reference to Exhibit 10.34 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.35	Eighth Amendment to Asset Purchase Agreement for the purchase of the Pineville Property, dated as of December 28, 2018 (incorporated by reference to Exhibit 10.35 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.36	Assignment and Assumption of and Ninth Amendment to Asset Purchase Agreement for the purchase of the Pineville Property, dated as of March 19, 2019 (incorporated by reference to Exhibit 10.36 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.37	Assignment of Asset Purchase Agreement for the purchase of the Pineville Property, dated on or as of March 19, 2019 (incorporated by reference to Exhibit 10.37 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.38	Hotel Purchase and Sale Agreement for the purchase of the Eagan Property, dated as of April 10, 2019 (incorporated by reference to Exhibit 10.38 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.39	First Amendment to Hotel Purchase and Sale Agreement for the purchase of the Eagan Property, dated as of May 1, 2019 (incorporated by reference to Exhibit 10.39 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.40	Second Amendment to Hotel Purchase and Sale Agreement for the purchase of the Eagan Property, dated as of June 3, 2019 (incorporated by reference to Exhibit 10.40 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.41	Assignment of Hotel Purchase and Sale Agreement for the purchase of the Eagan Property, dated on or as of June 19, 2019 (incorporated by reference to Exhibit 10.41 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.42	Sale and Purchase Agreement for the purchase of the Prattville Property, dated as of May 9, 2019 (incorporated by reference to Exhibit 10.42 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.43	First Amendment to Sale and Purchase Agreement for the Prattville Property, effective as of June 28, 2019 (incorporated by reference to Exhibit 10.43 to the Company’s Registration Statement on Form 10 filed August 8, 2019)

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10.44		Account Closure Agreement, dated as of September 18, 2019, Regarding Revolving Line of Credit with TCF National Bank (incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2019)
10.45		Agreement of Purchase and Sale for the purchase of the Lubbock Home2 Suites, dated as of July 26, 2019 (incorporated by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2019)
10.46		First Amendment to the Agreement of Purchase and Sale for the Purchase of the Lubbock Home2 Suites, dated as of September 11, 2019 (incorporated by reference to Exhibit 10.13 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2019)
10.47		Reinstatement and Second Amendment to the Agreement of Purchase and Sale for the purchase of the Lubbock Home2 Suites, dated as of October 1, 2019 (incorporated by reference to Exhibit 10.14 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2019)
10.48		Assignment of Agreement of Purchase and Sale for the purchase of the Lubbock Home2 Suites, dated as of December 26, 2019 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed December 31, 2019)
10.49		Agreement of Purchase and Sale for the Purchase of the Lubbock Fairfield Inn & Suites, dated as of July 26, 2019 (incorporated by reference to Exhibit 10.15 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2019)
10.50		First Amendment to the Agreement of Purchase and Sale for the purchase of the Lubbock Fairfield Inn & Suites, dated as of September 11, 2019 (incorporated by reference to Exhibit 10.16 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2019)
10.51		Reinstatement and Second Amendment to the Agreement of Purchase and Sale for the Purchase of the Lubbock Fairfield Inn & Suites, dated as of October 1, 2019 (incorporated by reference to Exhibit 10.17 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2019)
10.52	*	Assignment of Agreement of Purchase and Sale for the purchase of the Lubbock Fairfield Inn & Suites, dated as of December 26, 2019
10.53.1	*	Asset Purchase Agreement for the Southaven Homewood Suites, effective as of November 5, 2019
10.53.2	*	First Amendment to Purchase Agreement for the Southaven Homewood Suites, effective as of January 3, 2020
10.53.3	*	Second Amendment to Purchase Agreement for the Southaven Homewood Suites, dated as of January 31, 2020
10.54.1	*	Assumption Agreement relating to the Lubbock Home2 Suites loan, dated as of December 30, 2019
10.54.2	*	Joinder by and Agreement of New Indemnitor relating to the Lubbock Home2 Suites, effective as of December 30, 2019
10.54.3	*	Assignment and Subordination of Management Agreement relating to the Lubbock Home2 Suites, dated as of December 30, 2019
10.54.4	*	Promissory Note relating to the Lubbock Home2 Suites, dated as of October 4, 2016
10.54.5	*	Loan Agreement relating to the Lubbock Home2 Suites, dated as of October 4, 2016

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10.54.6	*	Deed of Trust relating to the Lubbock Home2 Suites, dated as of October 4, 2016
10.54.7	*	Assignment of Leases and Rents relating to the Lubbock Home2 Suites, dated as of October 4, 2016
10.54.8	*	Guaranty of Recourse Obligations relating to the Lubbock Home2 Suites, dated as of October 4, 2016
10.55.1	*	Consent, Amendment and Assumption Agreement relating to the Lubbock Fairfield Inn loan, dated as of January 8, 2020
10.55.2	*	Promissory Note relating to the Lubbock Fairfield Inn, dated as of April 4, 2019
10.55.3	*	Loan Agreement relating to the Lubbock Fairfield Inn, dated as of April 4, 2019
10.55.4	*	Assignment of Leases and Rents relating to the Lubbock Fairfield Inn, dated as of April 4, 2019
10.55.5	*	Deed of Trust relating to the Lubbock Fairfield Inn, dated as of January 8, 2020
10.55.6	*	Guaranty of Recourse Obligations relating to the Lubbock Fairfield Inn, dated as of January 8, 2020
10.55.7	*	Environmental Indemnity Agreement relating to the Lubbock Fairfield Inn, dated as of January 8, 2020
10.55.8	*	Acknowledgement of Property Manager and Borrower relating to the Lubbock Fairfield Inn, dated as of January 8, 2020
10.56.1	*	Business Loan Agreement for Revolving Line of Credit with Western State Bank, dated February 10, 2020
10.56.2	*	Promissory Note issued to Western State Bank, dated February 10, 2020
10.56.3	*	Mortgage granted to Western State Bank relating to the Cedar Rapids Property, dated February 10, 2020
10.56.4	*	Mortgage granted to Western State Bank relating to the Eagan Property, dated February 10, 2020
10.56.5	*	Assignment of Rents granted to Western State Bank relating to the Cedar Rapids Property, dated February 10, 2020
10.56.6	*	Assignment of Rents granted to Western State Bank relating to the Eagan Property, dated February 10, 2020
10.56.7	*	Commercial Security Agreement relating to the Cedar Rapids Property, dated February 10, 2020
10.56.8	*	Commercial Security Agreement relating to the Eagan Property, dated February 10, 2020
10.56.10	*	Commercial Guaranty by Corey R. Maple to Western State Bank, dated February 10, 2020
10.56.11	*	Commercial Guaranty by the Registrant to Western State Bank, dated February 10, 2020
10.56.13	*	Agreement to Provide Insurance relating to the Eagan Property, dated February 10, 2020

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10.57.1	*	Agreement of Purchase and Sale for Hampton Inn York, Home2 Suites York, Fairfield Inn & Suites Hershey, dated as of November 22, 2019
10.57.2	*	First Amendment to Agreement of Purchase and Sale for Hampton Inn York, Home2 Suites York, Fairfield Inn & Suites Hershey, dated as of January 13, 2020
10.57.3	*	Second Amendment to Agreement of Purchase and Sale for Hampton Inn York, Home2 Suites York, Fairfield Inn & Suites Hershey, dated as of January 31, 2020
10.57.4	*	Third Amendment to Agreement of Purchase and Sale for Hampton Inn York, Home2 Suites York, Fairfield Inn & Suites Hershey, dated as of February 10, 2020
10.57.5	*	Fourth Amendment to Agreement of Purchase and Sale for Hampton Inn York, Home2 Suites York, Fairfield Inn & Suites Hershey, dated as of February 17, 2020
10.58.1	*	Loan Agreement with Wells Fargo Bank, National Association, relating to the Southaven Homewood Suites, dated as of February 21, 2020
10.58.2	*	Term Loan Note issued to Wells Fargo Bank, National Association, relating to the Southaven Homewood Suites, dated as of February 21, 2020
10.58.3	*	Security Agreement relating to the Southaven Homewood Suites, dated as of February 21, 2020
10.58.4	*	Environmental Indemnity Agreement by the subsidiary borrowers and Corey R. Maple relating to the Southaven Homewood Suites, dated as of February 21, 2020
10.58.5	*	Deed of Trust relating to the Southaven Homewood Suites, dated as of February 21, 2020
10.58.6	*	Guaranty by Corey R. Maple relating to the Southaven Homewood Suites, dated as of February 21, 2020
10.59	*	Hotel Management Agreement between LF Southaven TRS, LLC and Vista Host Inc. relating to the Southaven Homewood Suites, dated as of February 21, 2020
21.1	*	Subsidiaries of the Registrant
31.1	*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002
99.1		Share Repurchase Plan of the Registrant (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form 10 filed August 8, 2019)

*  Filed herewith.

101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema

55

101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

Item 16. Form 10‑K Summary.

None.

56

INDEX TO FINANCIAL STATEMENTS

LODGING FUND REIT III, INC. & SUBSIDIARIES

Report of Independent Registered Public Accounting Firm	F-2
Consolidated Financial Statements
Balance Sheets as of December 31, 2019 and 2018	F-3
Statements of Operations for the year ended December 31, 2019, and the Period from April 9, 2018 (Inception) to December 31, 2018	F-4
Statements of Changes in Equity for the year ended December 31, 2019, and the Period from April 9, 2018 (Inception) to December 31, 2018	F-5
Statements of Cash Flows for the year ended December 31, 2019, and the Period from April 9, 2018 (Inception) to December 31, 2018	F-6
Notes to the Consolidated Financial Statements	F-8
Schedule III – Real Estate and Accumulated Depreciation as of December 31, 2019	F-23

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Lodging Fund REIT III, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Lodging Fund REIT III, Inc. and subsidiaries (the "Company") as of December 31, 2019 and 2018, the related consolidated statements of operations, changes in equity, and cash flows, for the period ended December 31, 2019 and the period from April 9, 2018 (Inception) to December 31, 2018, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the period ended December 31, 2019 and the period from April 9, 2018 (Inception) to December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Phoenix, Arizona

March 24, 2020

We have served as the Company's auditor since 2018.

F-2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

LODGING FUND REIT III, INC.

CONSOLIDATED BALANCE SHEETS

	December 31,
	2019		2018
Assets
Investment in hotel properties, net of accumulated depreciation of $1,255,712 and $43,810	$	65,408,308	$	7,815,745
Cash and cash equivalents		10,898,556		3,732,404
Restricted cash		5,275,815		800,000
Accounts receivable, net		107,976		25,606
Franchise fees, net		721,690		49,444
Due from related parties		—		1,285
Prepaid expenses and other assets		1,623,584		785,168
Total Assets	$	84,035,929	$	13,209,652
Liabilities and Equity
Debt, net	$	40,980,632	$	4,999,140
Accounts payable		543,669		148,907
Accrued expenses		925,265		281,946
Due to related parties		966,379		713,350
Other liabilities		434,974		81,619
Total liabilities		43,850,919		6,224,962
Commitments and contingencies (See Note 12)
Equity
Preferred stock, $0.01 par value, 100,000,000 shares authorized; no shares issued and outstanding		—		—
Common stock, $0.01 par value, 900,000,000 shares authorized; 6,005,743 and 1,135,010 shares issued and outstanding		60,057		11,350
Additional paid-in capital		58,961,101		11,083,985
Accumulated deficit		(18,396,163)		(4,041,428)
Total stockholders' equity		40,624,995		7,053,907
Non-controlling interest		(439,985)		(69,217)
Total equity		40,185,010		6,984,690
Total Liabilities and Equity	$	84,035,929	$	13,209,652

See accompanying notes to consolidated financial statements.

F-3

LODGING FUND REIT III, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Year Ended December 31,
	2019		2018*
Revenues
Room revenue	$	8,460,842	$	123,024
Other revenue		114,628		706
Total revenue		8,575,470		123,730
Expenses
General and administrative		4,553,432		589,427
Sales and marketing		997,080		334,442
Property operations		3,364,836		65,059
Franchise fees		826,843		11,412
Property management fees		818,315		22,446
Acquisition expense		470,786		212,464
Depreciation		1,211,902		43,810
Total expenses		12,243,194		1,279,060
Other Income (Expense)
Other income (expense), net		(53,749)		94
Interest expense		(1,366,533)		(74,858)
Total other income (expense)		(1,420,282)		(74,764)
Net Loss Before Income Taxes		(5,088,006)		(1,230,094)
Income tax benefit		186,572		19,236
Net Loss		(4,901,434)		(1,210,858)
Net loss attributable to non-controlling interest		(244,521)		(60,473)
Net Loss Attributable to Common Stockholders	$	(4,656,913)	$	(1,150,385)
Basic and Diluted Net Loss Per Share of Common Stock	$	(1.36)	$	(3.45)
Weighted-average Shares of Common Stock Outstanding, Basic and Diluted		3,432,099		332,971

* The year ended December 31, 2018, includes activity from the Company's inception (April 9, 2018) through December 31, 2018.

See accompanying notes to consolidated financial statements.

F-4

LODGING FUND REIT III, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

	Common Stock			Additional				Total		Non-
		Par		Paid-In		Accumulated		Stockholders'		controlling		Total
	Shares	Value		Capital		Deficit		Equity		Interest		Equity
Balance at April 9, 2018 (Inception)	—	$	—	$	—	$	—	$	—	$	—	$	—
Issuance of common stock	1,129,796		11,298		11,034,507		—		11,045,805		—		11,045,805
Offering costs	—		—		—		(2,724,585)		(2,724,585)		—		(2,724,585)
Distributions declared ($0.70 per share)	—		—		—		(166,458)		(166,458)		(8,744)		(175,202)
Distributions reinvested	5,214		52		49,478		—		49,530		—		49,530
Net loss	—		—		—		(1,150,385)		(1,150,385)		(60,473)		(1,210,858)
Balance at December 31, 2018	1,135,010	$	11,350	$	11,083,985	$	(4,041,428)	$	7,053,907	$	(69,217)	$	6,984,690
Issuance of common stock	4,786,614		47,866		47,078,824		—		47,126,690		—		47,126,690
Offering costs	—		—		—		(7,299,159)		(7,299,159)		—		(7,299,159)
Distributions declared ($0.70 per share)	—		—		—		(2,398,663)		(2,398,663)		(126,247)		(2,524,910)
Distributions reinvested	84,119		841		798,292		—		799,133		—		799,133
Net loss	—		—		—		(4,656,913)		(4,656,913)		(244,521)		(4,901,434)
Balance at December 31, 2019	6,005,743	$	60,057	$	58,961,101	$	(18,396,163)	$	40,624,995	$	(439,985)	$	40,185,010

See accompanying notes to consolidated financial statements.

F-5

LODGING FUND REIT III, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Year Ended December 31,
	2019		2018*
Cash Flows from Operating Activities:
Net loss	$	(4,901,434)	$	(1,210,858)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation		1,211,902		43,810
Amortization		250,787		48,007
Write-off of unamortized deferred financing costs		25,629		—
Change in operating assets and liabilities:
Accounts receivable		(82,370)		(25,606)
Franchise fees		(700,000)		(50,000)
Due from related parties		1,285		(1,285)
Prepaid expenses and other assets		(838,416)		(785,168)
Accounts payable		410,036		89,782
Accrued expenses		460,124		229,349
Due to related parties		129,904		230,314
Other liabilities		364,750		81,619
Net cash used in operating activities		(3,667,803)		(1,350,036)
Cash Flows from Investing Activities:
Acquisitions of hotel properties		(40,686,810)		(7,754,857)
Improvements and additions to hotel properties		(308,188)		(1,222)
Net cash used in investing activities		(40,994,998)		(7,756,079)
Cash Flows from Financing Activities:
Proceeds from issuance of debt		25,078,427		6,229,000
Principal payments on debt		(5,919,455)		(1,000,000)
Payments of deferred financing costs		(1,027,619)		(173,368)
Proceeds from issuance of common stock		47,126,690		11,045,805
Payments of offering costs		(7,456,709)		(2,383,862)
Distributions paid		(1,496,566)		(79,056)
Net cash provided by financing activities		56,304,768		13,638,519
Net change in cash, cash equivalents, and restricted cash		11,641,967		4,532,404
Beginning Cash, Cash Equivalents, and Restricted Cash		4,532,404		—
Ending Cash, Cash Equivalents, and Restricted Cash	$	16,174,371	$	4,532,404

*     The year ended December 31, 2018, includes activity from the Company's inception (April 9, 2018) through December 31, 2018.

See accompanying notes to consolidated financial statements.

F-6

LODGING FUND REIT III, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

	For the Year Ended December 31,
	2019		2018*
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	1,021,163	$	1,389
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Debt assumed in connection with hotel property acquisition	$	17,699,541	$	—
Costs to acquire hotel properties included in due to related parties	$	109,926	$	103,476
Debt issuance costs included in due to related parties	$	109,459	$	103,943
Offering costs included in accounts payable	$	(15,274)	$	59,125
Offering costs included in due to related parties	$	(151,133)	$	266,873
Offering costs included in accrued expenses	$	8,857	$	14,725
Distributions included in accrued expenses	$	174,338	$	37,872
Distributions included in due to related parties	$	54,873	$	8,744
Reinvested distributions	$	799,133	$	49,530
Reconciliation of Cash, Cash Equivalents, and Restricted Cash:
Cash and cash equivalents, beginning of period	$	3,732,404	$	—
Restricted cash, beginning of period		800,000		—
Cash, cash equivalents, and restricted cash, beginning of period	$	4,532,404	$	—
Cash and cash equivalents, end of period	$	10,898,556	$	3,732,404
Restricted cash, end of period		5,275,815		800,000
Cash, cash equivalents, and restricted cash, end of period	$	16,174,371	$	4,532,404

*     The year ended December 31, 2018, includes activity from the Company's inception (April 9, 2018) through December 31, 2018.

See accompanying notes to consolidated financial statements.

F-7

LODGING FUND REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    ORGANIZATION

Lodging Fund REIT III, Inc. (“LF REIT III”), was formed on April 9, 2018 as a Maryland corporation. LF REIT III, together with its subsidiaries (the “Company”), was formed for the principal purpose of acquiring, through purchase or contribution, direct or indirect ownership interests in a diverse portfolio of limited-service, select-service and extended stay hotel properties located primarily in “America’s Heartland,” which the Company defines as the geographic area from North Dakota to Texas and the Appalachian Mountains to the Rocky Mountains. LF REIT III has elected to be treated as a real estate investment trust, or REIT, for federal income tax purposes beginning with the taxable year ended December 31, 2018. The Company’s business activities are directed and managed by Legendary Capital REIT III, LLC (the “Advisor”) and its affiliates, which are related parties through common management, pursuant to the Amended and Restated Advisory Agreement (the “Advisory Agreement”), dated June 1, 2018. The Company has no foreign operations or assets and its operating structure includes only one operating and reportable segment.

Substantially all of the Company’s assets and liabilities are held by, and substantially all of its operations are conducted through, Lodging Fund REIT III OP, LP (the “Operating Partnership,” or “OP”), a wholly-owned subsidiary of LF REIT III. The OP has two voting classes of partnership units, General Partnership Units and Common Limited Partnership Units, and one class of non-voting partnership units, Series B Limited Partnership Units.  LF REIT III was the sole general partner of the OP, as of December 31, 2019 and 2018. As of December 31, 2019 and 2018, there were no outstanding Common Partnership Units, and there were 1,000 outstanding Series B Limited Partnership Units, all of which were owned by the Advisor.

On June 1, 2018, the Company commenced a private offering of shares of common stock, $0.01 par value per share, with a maximum offering of $100,000,000 (the “Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. In addition to sales of common shares for cash, the Company has adopted a dividend reinvestment plan (“DRIP”), which permits stockholders to reinvest their distributions back into the Company. As of December 31, 2019, the Company had issued and sold 6,005,743 shares of common stock, including 89,333 shares attributable to the DRIP, and received aggregate proceeds of $59.0 million.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation—The accompanying consolidated financial statements and related notes have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the SEC applicable to annual financial information. The consolidated financial statements include the accounts of LF REIT III, the OP and its wholly-owned subsidiaries. For the controlled subsidiaries that are not wholly-owned, the interests owned by an entity other than the Company represent a noncontrolling interest, which is presented separately in the consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates—The preparation of the Company’s consolidated financial statements and the accompanying notes in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and the amounts of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition—Revenues consist of amounts derived from hotel operations, including room sales and other hotel revenues, and are presented on a disaggregated basis in the Company’s consolidated statements of operations. These revenues are recorded net of any sales and occupancy taxes collected from the hotel guests. All revenues are recorded on an accrual basis as they are earned. Any cash received prior to a guest’s arrival is recorded as an advance deposit from the guest and recognized as revenue at the time of the guest’s occupancy at the hotel property.

F-8

Investment in Hotel Properties—The Company evaluates whether each hotel property acquisition should be accounted for as an asset acquisition or a business combination. If substantially all of the fair value of the gross assets acquired is concentrated in a single asset or a group of similar identifiable assets, then the transaction is considered to be an asset acquisition. All of the Company’s acquisitions since inception have been determined to be asset acquisitions. Transaction costs associated with asset acquisitions are capitalized and transaction costs associated with business combinations would be expensed as incurred.

The Company’s acquisitions generally consist of land, land improvements, buildings, building improvements, and furniture, fixtures and equipment (“FF&E”). The Company may also acquire intangible assets or liabilities related to in-place leases, management agreements, debt, and advanced bookings. For transactions determined to be asset acquisitions, the Company allocates the purchase price among the assets acquired and the liabilities assumed on a relative fair value basis at the date of acquisition. The Company determines the fair value of assets acquired and liabilities assumed with the assistance of third-party valuation specialists, using cash flow analysis as well as available market and cost data.  The determination of fair value includes making numerous estimates and assumptions.

The difference between the fair value and the face value of debt assumed in connection with an acquisition is recorded as a premium or discount and amortized to interest expense over the remaining term of the debt assumed. The valuation of assumed debt liabilities is based on our estimate of the current market rates for similar liabilities in effect at the acquisition date.

The Company’s investments in hotel properties are carried at cost and are depreciated using the straight-line method over the estimated useful lives of 15 years for land improvements, 15 years for building improvements, 40 years for buildings and three to seven years for FF&E. Maintenance and repair costs are expensed in the period incurred and major renewals or improvements to the hotel properties are capitalized.

The Company assesses the carrying value of its hotel properties whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The recoverability is measured by comparing the carrying amount of the property to the estimated future undiscounted cash flows of the property, which take into account current market conditions and the Company’s intent with respect to holding or disposing of the hotel properties. If the Company’s analysis indicates that the carrying value is not recoverable on an undiscounted cash flow basis, the Company will recognize an impairment loss for the amount by which the carrying value exceeds the fair value. The fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions or third-party appraisals.

The use of projected future cash flows is based on assumptions that are consistent with a market participant’s future expectations for the industry and the economy in general and the Company’s expected use of the underlying hotel properties. The assumptions and estimates related to the future cash flows and the capitalization rates are complex and subjective in nature. Changes in economic and operating conditions that occur subsequent to a current impairment analysis and the Company’s ultimate use of the hotel property could impact the assumptions and result in future impairment losses to the hotel properties.

Advertising Costs—The Company expenses advertising costs as incurred. These costs represent the expense for franchise advertising and reservation systems under the terms of the hotel management and franchise agreements and expenses that are directly attributable to advertising and promotion. Advertising expense was $311,172 and $7,339 for the year ended December 31, 2019 and period ended December 31, 2018 respectively and is included in sales and marketing in the consolidated statements of operations.

Non-controlling Interest—Non-controlling interests represent the portion of equity in a subsidiary held by owners other than the Company. Non-controlling interests are reported in the consolidated balance sheets within equity, separate from stockholders’ equity. Revenue and expenses attributable to both the Company and the non-controlling interests are reported in the consolidated statements of operations, with net income or loss attributable to non-controlling interests reported separately from net income or loss attributable to the Company.

Cash and Cash Equivalents—Cash and cash equivalents include cash in bank accounts as well as highly liquid investments with an original maturity of three months or less. The Company deposits cash with several high-

F-9

quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to an insurance limit of $250,000. At times, the Company’s cash and cash equivalents may exceed federally insured levels.

Restricted Cash—Restricted cash primarily consists of earnest money deposits related to hotel property acquisitions, as well as certain funds maintained in escrow accounts to fund future payments for insurance, property tax obligations, and reserves for future capital expenditures, as required by our debt agreements.

Accounts Receivable—Accounts receivable consist primarily of receivables due from hotel guests for room stays and meeting and banquet room rentals, which are uncollateralized customer obligations. Management determines the likelihood of collectability of receivables on an individual customer basis, based on the amount of time the balance has been outstanding, likelihood of collecting, and the customer’s current economic status. The carrying amount of the accounts receivables is reduced by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected.

Deferred Financing Costs—Deferred financing costs represent origination fees, legal fees, and other costs associated with obtaining financing. Deferred financing costs are presented on the consolidated balance sheets as a direct deduction from the carrying amount of the related debt liability. These costs are amortized to interest expense over the terms of the respective financing agreements using the straight-line method, which approximates the effective interest method. The Company expenses unamortized deferred financing costs when the associated financing agreement is refinanced or repaid before maturity unless certain criteria are met that would allow for the carryover of such costs to the refinanced agreement. Costs incurred in connection with potential financial transactions that are not completed are expensed in the period in which it is determined the financing will not be completed.

Offering Costs—The Company has incurred certain costs related directly to the Company’s private offering consisting of, among other costs, commissions, legal, due diligence costs, printing, marketing, filing fees, postage, data processing fees, and other offering related costs. These costs are capitalized and recorded as a reduction of equity proceeds on the accompanying consolidated balance sheets.

Property Operations Expenses—Property operations expenses consist of expenses related to room rental, food and beverage sales, telephone usage, and other miscellaneous service costs, as well as all costs of operating the Company’s hotel properties such as building repairs, maintenance, property taxes, utilities, and other related costs.

Property Management Fees—Property management fees include expenses incurred for management services provided for the day-to-day operations of our hotel properties, which are generally charged at a rate of 4% of gross revenues. Property management fees also include asset management fees, which may be charged at an annual rate of up to 0.75% of gross assets and are paid to the Advisor.  For the year ended December 31, 2019 and period ended December 31, 2018, asset management fees were charged only on the value of investments in hotel properties.

Franchise Fees—The Company pays initial fees related to hotel franchise rights prior to acquiring a hotel property. The fees are included in prepaid expenses and other assets until the time the related hotel property is acquired. Initial franchise fees related to hotel properties that are acquired are amortized on a straight-line basis over the life of the agreement. Initial franchise fees related to hotel properties that are not acquired are refunded to the Company, net of any associated fees, and any fees are expensed as incurred. Franchise fees on the accompanying consolidated statements of operations include the amortization of initial franchise fees, as well as monthly fees paid to franchisors for royalty, marketing, and reservation fees and other related costs.

Acquisition Costs—The Company incurs costs during the review of potential hotel property acquisitions including legal fees, environmental reviews, market studies, financial advisory services, and other professional service fees. If the Company does complete a property acquisition, an acquisition fee of up to 1.4% is charged by the Advisor, based on the purchase price of the property plus any estimated property improvement plan (“PIP”) costs. For transactions determined to be asset acquisitions, these costs are capitalized as part of the overall cost of the project. For transactions determined to be business combinations, these costs would be expensed in the period incurred. Acquisition-related and acquisition due diligence costs that relate to a property that is not acquired, are expensed and included in acquisition costs on the accompanying consolidated statements of operations. Prior to the ultimate determination of

F-10

whether a property will be acquired or not, acquisition-related and acquisition due diligence costs are recorded as, and included in, prepaid expenses and other assets on the accompanying consolidated balance sheets.

Net Loss Per Share of Common Stock—Basic net loss per common share is computed based upon the weighted average number of shares outstanding during the period. Diluted net loss per common share is calculated after giving effect to all potential common shares that were dilutive and outstanding for the period. Basic and diluted net loss per common share were the same for the periods presented.

Income Taxes—The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it distribute at least 90% of its REIT taxable income, subject to certain adjustments and excluding any net capital gain, to stockholders. The Company’s intention is to adhere to the REIT qualification requirements and to maintain its qualification for taxation as a REIT.

As a REIT, the Company is generally not subject to U.S. federal corporate income tax on the portion of taxable income that is distributed to stockholders. If the Company fails to qualify for taxation as a REIT in any taxable year, the Company will be subject to U.S. federal income taxes at regular corporate rates and it may not be able to qualify as a REIT for four subsequent taxable years. As a REIT, the Company may be subject to certain state and local taxes on its income and property, and to U.S. federal income and excise taxes on undistributed taxable income. Taxable income from non-REIT activities managed through the Company’s taxable REIT subsidiary (“TRS”) is subject to U.S. federal, state, and local income taxes at the applicable rates.

The TRS accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax basis, and for net operating loss, capital loss and tax credit carryforwards. The deferred tax assets and liabilities are measured using the enacted income tax rates in effect for the year in which those temporary differences are expected to be realized or settled. The effect on the deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company performs periodic reviews for any uncertain tax positions and, if necessary, will record the expected future tax consequences of uncertain tax positions in the consolidated financial statements.

Fair Value Measurement—The Company establishes fair value measures based on the fair value definition and hierarchy levels established by GAAP. These fair values are based on a three-tiered fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1—Observable inputs such as quoted prices in active markets.

Level 2—Directly or indirectly observable inputs, other than quoted prices in active markets.

Level 3—Unobservable inputs in which there is little or no market data, which require a reporting entity to develop its own assumptions.

The Company’s estimates of fair value were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to develop estimated fair value. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. The Company classifies assets and liabilities in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement.

Reclassifications—Certain prior year amounts in the consolidated financial statements have been reclassified to conform to the current year presentation with no effect on previously reported net loss or equity.  In the prior year, certain earnest money deposits held in escrow accounts at the end of the period in the amount of $500,000 were included in separate line item titled deposit, and in the current year presentation this amount is included in restricted cash due to

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the similar nature of the earnest money deposits and the other amounts included within restricted cash.  In the prior year, the Company’s net deferred tax assets in the amount of $19,236 were presented in a separate line item titled deferred tax asset, and in the current year presentation this amount is included within prepaid expenses and other assets due to its insignificance compared to the balance sheet.

Recent Accounting Pronouncements—The Company, as an emerging growth company, has elected to use the extended transition period which allows us to defer the adoption of new or revised accounting standards. This allows the Company to adopt new or revised accounting standards as of the effective date for non-public business entities.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014‑09, Revenue from Contracts with Customers (Topic 606). The core principle of the new standard is that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014‑09 is effective for fiscal years beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. The Company adopted ASU 2014‑09 as of January 1, 2019 and has applied it on a modified retrospective basis. Based on the Company’s completed assessment of this updated accounting guidance, it does not materially affect the amount or timing of revenue recognition for the Company and the Company did not recognize any cumulative-effect adjustment as a result of adoption.

In February 2016, the FASB issued ASU No. 2016‑02, “Leases” (“ASU No. 2016‑02”) (Topic 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016‑02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. ASU No. 2016‑02 is effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. We plan to adopt ASU 2016‑02 for the year ending December 31, 2021. We do not anticipate any reclassifications or significant impacts on our consolidated financial statements as a result of this adoption.

In November 2016, the FASB issued ASU No. 2016‑18, Statement of Cash Flows (Topic 230), Restricted Cash, which is intended to reduce diversity in practice in the classification and presentation of changes in restricted cash in the statement of cash flows. Under this standard, restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown in the statement of cash flows. ASU 2016‑18 is effective for fiscal years beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019, and early adoption is permitted. The Company early adopted this standard as of its inception. Amounts included in restricted cash on the Company’s consolidated balance sheets are included with cash and cash equivalents in the Company’s consolidated statement of cash flows for the period presented.

In January 2017, the FASB issued ASU No. 2017‑01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU No. 2017‑01”), which changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. Under the new guidance, an entity first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set of transferred assets and activities is not a business. If it is not met, the entity then evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. ASU 2017‑01 is effective for fiscal years beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019, and early adoption is permitted. The Company early adopted this standard as of its inception and its hotel property acquisitions to date have been determined to be asset acquisitions and acquisition costs related to these asset acquisitions have been capitalized.

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3.    INVESTMENT IN HOTEL PROPERTIES

Investment in hotel properties as of December 31, 2019 and 2018 consisted of the following:

	December 31,
	2019		2018
Land and land improvements	$	7,738,495	$	1,536,966
Building and building improvements		53,238,276		5,558,557
Furniture, fixtures, and equipment		5,687,249		764,032
Investment in hotel properties, at cost		66,664,020		7,859,555
Less: accumulated depreciation		(1,255,712)		(43,810)
Investment in hotel properties, net	$	65,408,308	$	7,815,745

As of December 31, 2019, the Company owned five hotel properties with an aggregate of 506 rooms located in five states.

Acquisitions of Hotel Properties

The Company acquired four properties during the year ended December 31, 2019 and one property during the period ended December 31, 2018. Each of the Company’s hotel acquisitions to date have been determined to be asset acquisitions. The table below outlines the details of the properties acquired during the years ended December 31, 2019 and 2018, respectively.

2019 Acquisitions
				Number
			Date	of Guest	Purchase		Transaction				%
Hotel	Property Type	Location	Purchased	Rooms	Price		Costs		Total		Interest
Hampton Inn & Suites (the "Pineville Property")	Limited Service	Pineville, NC	March 19, 2019	111	$	13,897,358	$	303,744	$	14,201,102	100	%
Hampton Inn (the "Eagan Property")	Limited Service	Eagan, MN	June 19, 2019	122		13,950,000		278,333		14,228,333	100	%
Home2 Suites (the "Prattville Property")	Extended Stay	Prattville, AL	July 11, 2019	90		14,750,000		356,014		15,106,014	100	%
Home2 Suites (the “Lubbock Home2 Property”)	Extended Stay	Lubbock, TX	December 30, 2019	100		14,150,000		284,776		14,434,776	100	%
				423	$	56,747,358	$	1,222,867	$	57,970,225

2018 Acquisitions
				Number
			Date	of Guest	Purchase		Transaction				%
Hotel	Property Type	Location	Purchased	Rooms	Price		Costs		Total		Interest
Holiday Inn Express (the "Cedar Rapids Property")	Limited Service	Cedar Rapids, IA	November 30, 2018	83	$	7,700,000	$	158,333	$	7,858,333	100	%
				83	$	7,700,000	$	158,333	$	7,858,333

Each of the hotel properties listed above is subject to a management agreement with NHS, LLC dba National Hospitality Services (“NHS”) with an initial term expiring on December 31st of the fifth full calendar year following the effective date of the agreement, which will automatically renew for successive 5‑year periods unless terminated earlier in accordance with its terms. The Pineville Property is currently being managed on a day-to-day basis by Beacon IMG, Inc. (“Beacon”), an affiliate of the seller of the Pineville Property, pursuant to a sub-management agreement.

The seller of the Pineville Property, an affiliate of Beacon, may be entitled to additional cash consideration if the property exceeds certain performance criteria based on increases in the property’s net operating income (“NOI”) for a selected 12‑month period of time. At any time during the period beginning April 1, 2021 through the date of the final NOI determination (on or about April 30, 2023), the seller of the property may make a one-time election to receive the additional consideration. The variable amount of the additional consideration, if any, is based on the excess of the

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property’s actual NOI over a base NOI for the applicable 12‑month calculation period divided by the stated cap rate for such calculation period. Further, if the Company sells the Pineville Property or terminates the Beacon sub-management agreement without cause prior to March 31, 2021, the Company will be required to pay liquidated damages of at least $1.0 million unless the seller elects to receive the additional consideration described above.  As of December 31, 2019, no amounts were owed or paid to the seller of the Pineville Property, and no election to receive the additional consideration had been made.

The aggregate purchase price for the hotel properties acquired during the years ended December 31, 2019 and 2018 were allocated as follows:

	December 31,
	2019		2018
Land and land improvements	$	6,201,529	$	1,536,966
Building and building improvements		47,412,115		5,558,997
Furniture, fixtures, and equipment		4,772,707		762,370
Total assets acquired		58,386,351		7,858,333
Premium on assumed debt		(416,126)		—
Total liabilities assumed		(416,126)		—
Total purchase price(1)		57,970,225		7,858,333
Assumed mortgage debt		17,283,415		—
Net purchase price	$	40,686,810	$	7,858,333

(1) Total purchase price includes purchase price plus all transaction costs.

4.    PREPAID EXPENSES AND OTHER ASSETS

Prepaid expenses and other assets consisted of the following:

	December 31,
	2019		2018
Franchise fees	$	475,000	$	392,500
Acquisition costs		472,569		158,575
Deferred tax assets, net		205,808		19,236
Insurance		113,571		22,495
Other		356,636		192,362
	$	1,623,584	$	785,168

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5.    ACCRUED EXPENSES

Accrued expenses consisted of the following:

	December 31,
	2019		2018
Distributions payable	$	342,515	$	37,871
Acquisition costs		187,800		114,526
Property taxes		114,960		56,317
Interest		136,960		26,018
Other		143,030		47,214
	$	925,265	$	281,946

6.    DEBT

Lines of Credit

On August 22, 2018, the Company entered into a $3.0 million revolving line of credit, collateralized by 300,000 partnership units of Lodging Fund REIT III OP, LP. The line of credit has a variable interest rate equal to the U.S. Prime Rate, plus 1.00%, with a minimum rate of 5.00%. As of December 31, 2019 and 2018, the interest rate was 5.75% and 6.50%, respectively, and there was no outstanding balance on the line of credit. The line of credit requires monthly payments of interest only, with all principal due at maturity. In November 2019, the line of credit was amended to extend the maturity date from November 22, 2019 to November 22, 2020, and lower the minimum interest rate from 6.0% to 5.0% per annum. The amendment also revised the guarantee of the line of credit to include a partial guarantee by each of Corey Maple and Norman Leslie, as the members of the Advisor, each in the amount of $1.2 million.

On November 15, 2018, the Company entered into a $25.0 million revolving line of credit to provide immediate funds to acquire hotel properties. The facility had a variable interest rate equal to 30‑day LIBOR, plus 3.25% and had an initial term of 12 months. Each advance made under the facility was secured by a hotel property, required monthly payments of interest for the first three months following the advance, and monthly payments of principal and interest thereafter. The Company drew $5.2 million on the line of credit in connection with the purchase of the Cedar Rapids Property, which remained outstanding at December 31, 2018.  The outstanding balance was repaid in full in March 2019 when the Cedar Rapids property was refinanced.  As of December 31, 2018, the interest rate was 5.60%, and the line of credit was closed in September 2019.

Mortgage Debt

As of December 31, 2019, the Company had $41.7 million in outstanding mortgage debt secured by five properties, with maturity dates ranging from March 2024 to October 2026, with fixed interest rates ranging from 4.13% to 5.33%, and a weighted-average interest rate of 4.72%. The loans generally require monthly payments of principal and interest on an amortized basis, with certain loans allowing for an interest-only period up to 12 months following origination, and generally require a balloon payment due at maturity. As of December 31, 2019, certain mortgage debt was guaranteed by the members of the Advisor.  As of December 31, 2018, the Company did not have any outstanding mortgage debt. The Company was in compliance with all debt covenants as of December 31, 2019 and 2018. The following table sets forth the hotel properties securing each loan, the interest rate, maturity date, and the outstanding balance as of December 31, 2019 for each of the Company’s mortgage debt obligations.

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	Interest		Outstanding
	Rate as of		Balance as of
	December 31,	Maturity	December 31,
Hotel Property	2019	Date	2019
Holiday Inn Express - Cedar Rapids(1)	5.33%	03/01/2024	$	5,527,392
Hampton Inn & Suites - Pineville	5.13%	06/06/2024		9,154,289
Hampton Inn - Eagan	4.60%	07/01/2024		9,369,276
Home2 Suites - Prattville(1)	4.13%	08/01/2024		9,620,000
Home2 Suites - Lubbock	4.69%	10/06/2026		8,000,430
				41,671,387
Premium on assumed debt, net				389,285
Deferred financing costs, net				(1,080,040)
Debt, net			$	40,980,632

⁽¹⁾ Loan is interest-only for the first 12 months after origination.

Future Minimum Payments

As of December 31, 2019, the future minimum principal payments on the Company’s debt were as follows:

2020	$	745,181
2021		979,421
2022		1,027,297
2023		1,077,500
2024		30,969,668
Thereafter		6,872,320
		41,671,387
Premium on assumed debt, net		389,285
Deferred financing costs, net		(1,080,040)
	$	40,980,632

7.    FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments as of December 31, 2019 and 2018 consisted of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, lines of credit, and mortgage debt. With the exception of the Company’s mortgage debt, the carrying amounts of the financial instruments presented in the consolidated financial statements approximate their fair value as of December 31, 2019. The fair value of the Company’s mortgage debt was estimated by discounting each loan’s future cash flows over the remaining term of the mortgage using an estimate of current borrowing rates for debt instruments with similar terms and maturities, which are Level 3 inputs in the fair value hierarchy.  As of December 31, 2019, the estimated fair value of the Company’s mortgage debt was $42.7 million, compared to the gross carrying value $41.7 million. As of December 31, 2018, the carrying amounts of all of the financial instruments presented in the consolidated financial statements approximate their fair value.

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8.    INCOME TAXES

The Company’s earnings (losses), other than those generated by the Company’s TRS, are not generally subject to federal corporate and state income taxes due to the Company’s REIT election. The Company did not pay any federal and state income taxes for the periods ended December 31, 2019 and 2018. The Company did not have any uncertain tax positions as of December 31, 2019 and 2018, respectively.  For the year ended December 31, 2019 and period ended December 31, 2018, all distributions paid were determined to be 100% returns of capital distributions.

The Company’s TRS generated a net operating loss (“NOL”) for the year ended December 31, 2019 and period ended December 31, 2018, which can be carried forward to offset future taxable income. As of December 31, 2019 and 2018, the Company had recorded net deferred tax assets of $205,808 and $19,236, respectively, primarily attributable to its NOLs generated in the current year and prior periods, net of temporary differences primarily related to deprecation. The Company’s NOLs will expire in 2038‑2039 for state tax purposes and will not expire for federal tax purposes. As of December 31, 2019 and 2018, the Company had NOL carryforwards for federal income tax purposes of $1.1 million and $14,263, respectively, and NOL carryforwards for state income tax purposes of $268,502 and $4,973, respectively.  The Company expects to fully utilize the NOLs to offset future taxable income. As of December 31, 2019, the tax years 2018 and 2019 remain subject to examination by the U.S. Internal Revenue Service (“IRS”) and various state tax jurisdictions.

The components of the Company’s income tax benefit are as follows:

	For the Year Ended December 31,
	2019		2018
Federal:
Deferred	$	143,746	$	14,263
State:
Deferred		42,826		4,973
Income tax benefit	$	186,572	$	19,236

The provision for income taxes is difference from the income tax expense that is determined by applying the applicable U.S. statutory federal income tax rate to pretax income as a result of the following differences:

	For the Year Ended December 31,
	2019		%	2018		%
Expected income tax benefit at  U.S. Federal statutory rate	$	1,068,481	-21.0%	$	258,320	-21.0%
Tax impact of REIT election		(927,264)	18.2%		(242,363)	19.7%
Expected tax benefit at TRS		141,217	-2.8%		15,957	-1.3%
State income tax benefit, net		42,826	-0.8%		4,956	-0.4%
Temporary differences - deprecation		2,529	-0.1%		(1,677)	0.1%
Income tax benefit	$	186,572	-3.7%	$	19,236	-1.6%

F-17

As of December 31, 2019 and 2018, the Company’s deferred tax assets and liabilities consisted of the following:

	December 31,
	2019		2018
Deferred Tax Assets:
Net operating loss carryforwards - Federal	$	1,148,996	$	14,263
Net operating loss carryforwards - State		268,502		4,973
		1,417,498		19,236
Deferred Tax Liabilities:
Tax FF&E basis less than book basis - Federal		(990,986)		-
Tax FF&E basis less than book basis - State		(220,704)		-
		(1,211,690)		-
Deferred tax assets, net	$	205,808	$	19,236

9.    RELATED PARTY TRANSACTIONS

Legendary Capital REIT III, LLC—Substantially all of the Company’s business is managed by the Advisor and its affiliates, pursuant to the Advisory Agreement. The Company has no direct employees. The employees of Legendary Capital, LLC (the “Sponsor”), an affiliate of the Advisor, provide services to the Company related to the negotiations of property acquisitions and financing, asset management, accounting, investor relations, and all other administrative services. The Company reimburses the Advisor and its affiliates, at cost, for certain expenses incurred on behalf of the Company. The Advisory Agreement has a term of 10 years.

The Advisor earns a one-time acquisition fee of up to 1.4% of the hotel purchase price including funds allocated for any PIP at the time of each hotel property acquisition, a financing fee of up to 1.4% of the hotel purchase price including funds allocated for any PIP at the time of closing the initial financing, and an annual asset management fee of up to 0.75% of the gross assets of the Company, which is payable on a monthly basis. The Advisor will also be paid a refinancing fee of up to 0.75% of the principal amount of any refinancing at the time of closing the refinancing, and a disposition fee equal to between 0.0% and 4.0% of the hotel sales price, payable at the closing of the disposition, and real estate commissions of up to 3.0% of the hotel purchase price in connection with the sale of a hotel property in which the Advisor or its affiliates provided substantial services, but in no event greater than one-half of the total commissions paid with respect to such property if a commission is paid to a third-party as well as the Advisor, and in no event will total commissions exceed 5.0% of the hotel sales price. Certain affiliates of the Advisor may receive an annual guarantee fee equal to 1.0% of the guaranty amount, paid on a monthly basis, for debt obligations of the hotel properties personally guaranteed by such affiliates. The Advisor may earn an annual subordinated performance fee equal to 20% of the distributions after the common stockholders and Operating Partnership limited partners (other than the Series B Limited Partnership Unit (“Series B LP Unit”) holders) have received a 6% cumulative, but not compounded, return per annum.

Per the terms of the Operating Partnership’s operating agreement, the Advisor receives distributions from the Operating Partnership in connection with their ownership of non-voting Series B LP Units. The Advisor’s ownership of Series B LP Units is presented as non-controlling interest on the accompanying consolidated financial statements. In years other than the year of liquidation, after the Company’s common stockholders have received a 6% cumulative but not compounded return on their original capital contributions, the Advisor receives distributions equal to 5% of the total distributions made. In the year of liquidation, termination, merger or other cessation of the general partner, or the liquidation of the Operating Partnership, holders of the Series B LP Units shall be distributed an amount equal to 5% of the limited partners’ capital contributions after the common stockholders and the limited partners have received a return of their original capital contributions plus a 6% cumulative but not compounded return. In the year of liquidation, termination, merger or other cessation of the general partner, or the liquidation of the Operating Partnership holders of the Series B LP Units shall also be distributed an amount equal to 20% of the net proceeds from the sale of the properties, after the common stockholders and the limited partners have received a return of their original capital contributions plus a 6% cumulative but not compounded return from all distributions.

F-18

The Advisor and its affiliates may be reimbursed by the Company for certain organization and offering expenses in connection with the Offering, including legal, printing, marketing and other Offering-related costs and expenses. Following the termination of the Offering, the Advisor will reimburse the Company for any such amounts incurred by the Company in excess of 15% of the gross proceeds of the Offering. In addition, the Company may pay directly or reimburse the Advisor and its affiliates for certain costs incurred in connection with its provision of services to the Company, including certain acquisition costs, financing costs, and sales and marketing costs, as well as an allocable share of general and administrative overhead costs.  All reimbursements are paid to the Advisor and its affiliates at cost.

Fees and reimbursements earned and payable to the Advisor and its affiliates, for the year ended December 31, 2019 and period ended December 31 2018, were as follows:

	For the Year Ended December 31,
	2019		2018
Fees:
Acquisition fees	$	818,521	$	103,476
Financing fees		818,521		103,476
Asset management fees		305,398		10,286
Performance fees		68,534		4,747
	$	2,010,974	$	221,985
Reimbursements:
Offering costs	$	2,174,471	$	939,873
General and administrative		2,699,813		484,310
Sales and marketing		386,694		127,041
Financing costs		—		45,114
Acquisition costs		989,346		41,467
Other		11,053		7,140
	$	6,261,377	$	1,644,945

For the year ended December 31, 2019 and period ended December 31 2018, the Operating Partnership recognized distributions payable to the Advisor in the amount of $126,247 and $8,744, respectively, in connection with the Advisor’s ownership of Series B LP Units.  For the year ended December 31, 2019 and period ended December 31 2018, the Company paid distributions in the amount of $37,634 and $18,765, respectively, to Corey Maple and Norman Leslie in connection with their ownership of 53,763 shares each, of the Company’s common stock. 

As of December 31, 2019 and 2018, the Company had amounts due and payable to the Advisor and its affiliates of $918,863 and $685,685, respectively, which is included in due to related parties on the accompanying consolidated balance sheets.

NHS, LLC dba National Hospitality Services—NHS is wholly-owned by Norman Leslie, a director and executive officer of the Company and a principal of the Advisor. NHS provides property management and hotel operations management services for the Company’s hotel properties, pursuant to individual management agreements. The agreements have an initial term expiring on December 31st of the fifth full calendar year following the effective date of the agreement, which automatically renews for a period of five years on each successive five-year period, unless terminated in accordance with its terms.

NHS earns a monthly base management fee for property management services, including overseeing the day-to-day operations of the hotel properties equal to 4% of gross revenue. NHS may also earn an accounting fee of $14.00 per room for accounting services, payable monthly, and an administrative fee equal to 0.60% of gross revenues for administrative and other services. The Company reimburses NHS for certain costs of operating the properties incurred on behalf of the Company. All reimbursements are paid to NHS at cost.

F-19

Fees and reimbursements earned and payable to, NHS for the year ended December 31, 2019 and period ended December 31 2018, were as follows:

	For the Year Ended December 31,
	2019		2018
Fees:
Management fees	$	342,101	$	4,950
Administrative fees		52,605		687
Accounting fees		49,028		2,324
	$	443,734	$	7,961
Reimbursements	$	227,398	$	10,588

As of December 31, 2019 and 2018, the Company had amounts due and payable to NHS of $47,516 and $15,360, respectively, which is included in due to related parties on the accompanying consolidated balance sheets.

10.    FRANCHISE AGREEMENTS

As of December 31, 2019 and 2018, all of the Company’s hotel properties were operated under franchise agreements with initial terms of 10 to 18 years. Franchise agreements allow the hotel properties to operate under the respective brands. Pursuant to the franchise agreements, the Company pays a royalty fee of 5% to 6% of room revenue, plus additional fees for marketing, central reservation systems and other franchisor costs. Certain hotels are also charged a program fee of generally between 3% and 4% of room revenue. The Company paid an initial fee of $50,000 to $175,000 at the time of entering into each franchise agreement which is being amortized over the term of each agreement.

11.    STOCKHOLDERS’ EQUITY

The Company is authorized to issue 900,000,000 shares of common stock and 100,000,000 shares of preferred stock. Each share of common stock entitles the holder to one vote per share on all matters upon which stockholders are entitled to vote and to receive distributions as authorized by the Company’s board of directors. The rights of the holders of shares of preferred stock may be defined at such time any series of preferred shares are issued.

Initial Offering

On June 1, 2018, the Company commenced a private offering of shares of common stock, $0.01 par value per share, at a price of $10.00 per share, with a maximum offering of $100,000,000, to accredited investors only pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended.

Dividend Reinvestment Plan

The Company has adopted a dividend reinvestment plan (“DRIP”), which permits stockholders to reinvest their distributions back into the Company, purchasing shares of common stock at 95% of the then-current share net asset value (“NAV”).

Distributions

Distributions are determined by the board of directors based on the Company’s financial condition and other relevant factors. Effective the first day of each fiscal quarter since inception, the board of directors declared a cash distribution at a daily rate of $0.00191781 per share of common stock to the stockholders of record on the last day of each calendar month within the respective quarter, up to, and including the period ended December 31, 2019.  

F-20

Share Repurchase Plan

The board of directors has adopted a share repurchase plan that may enable its stockholders to have their shares repurchased in limited circumstances. In its sole discretion, the board of directors could choose to terminate or suspend the plan or to amend its provisions without stockholder approval. The repurchase plan may be reviewed and modified by the board of directors as it deems necessary in its sole discretion.  The price at which the Company will repurchase shares is dependent on the amount of time the holder has owned the shares, and the then current value of the shares.  There are several limitations on the Company’s ability to repurchase shares under the share repurchase plan, including, but not limited to, a limitation that during any calendar year, the maximum number of shares potentially eligible for repurchase can only be the number of shares that the Company could purchase with the amount of net proceeds from the sale of shares under the Company’s dividend reinvestment plan during the prior calendar year.  The board of directors may, in its sole discretion, reject any request for repurchase and may, at any time and without stockholder approval, upon 10 business days’ written notice to the stockholders (i) amend, suspend or terminate its share repurchase plan and (ii) increase or decrease the funding available for the repurchase of shares pursuant to our share repurchase plan.  At December 31, 2019 and 2018, the Company had $799,133 and $49,530, respectively, available for eligible repurchases.

12.    COMMITMENTS AND CONTINGENCIES

Legal Matters—From time to time, the Company may become party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on the Company’s results of operations, cash flows or financial condition.

13.    SUBSEQUENT EVENTS

On January 1, 2020, the Company’s board of directors declared cash distributions on the outstanding shares of common stock based on daily record dates for (i) the period from January 1, 2020 through January 31, 2020, which was paid in February 2020, and (ii) the period from February 1, 2020 through February 29, 2020, which was paid in March 2020.  Our board of directors also authorized cash distributions on the outstanding shares of common stock based on daily record dates for the period from March 1, 2020 through March 31, 2020.  Investors may choose to receive cash distributions or purchase additional shares through the DRIP. Distributions for these periods will be calculated based on stockholders of record each day during these periods at a rate of $0.00191781 per share per day.

On January 8, 2020, the Company acquired a 101-room Fairfield Inn & Suites by Marriott hotel property in Lubbock, Texas, for $15.15 million, exclusive of closing costs.  In connection with the acquisition, the Company assumed the existing loan secured by the property, which had an outstanding balance of $9.4 million at the time of the transaction.  The loan has a fixed interest rate of 4.93% per annum, matures on April 6, 2029, and requires monthly payments of principal and interest with a balloon payment due at maturity.  In connection with the acquisition, the Company also entered into an agreement with NHS to manage the property at terms consistent with the Company’s existing agreements with NHS. Additionally, the Company signed a new franchise agreement with Marriott that expires in August 2037.

On January 10, 2020, the Company paid distributions of $342,515, declared for daily record dates for each day in the period from December 1, 2019 through December 31, 2019, which included $130,304 of distributions paid pursuant to the DRIP. On February 10, 2020, the Company paid distributions of $358,474, declared for daily record dates for each day in the period from January 1, 2020, through January 31, 2020, which included $139,094 of distributions paid pursuant to the DRIP. On March 10, 2020, the Company paid distributions of $382,325, declared for daily record dates for each day in the period from February 1, 2020 through February 29, 2020, which included $150,022 of distributions paid pursuant to the DRIP.

On February 10, 2020, the Company entered into a $5.0 million revolving line of credit loan agreement (the “Line of Credit”).  The Line of Credit requires monthly payments of interest only, with all outstanding principal amounts being due and payable at maturity on February 10, 2021.  The Line of Credit has a variable interest rate equal to the Prime Rate as published in the Wall Street Journal, plus 0.50%, resulting in an effective rate of 5.25% per annum as of February 10, 2020.  The Line of Credit is secured by our Cedar Rapids Property and our Eagan Property, which are also

F-21

subject to term loans with the same lender, and 100,000 limited partnership units of the Operating Partnership.  The Line of Credit includes cross-collateralization and cross-default provisions such that the existing mortgage loan agreements with respect to the Cedar Rapids Property and the Eagan Property, as well as future loan agreements that the Company may enter into with this lender, are cross-defaulted and cross-collateralized with each other.  The Line of Credit, including all cross-collateralized debt, is guaranteed by Corey Maple, the Company’s Chief Executive Officer.  As of March 24, 2020, the outstanding balance on the Line of Credit was $3.2 million.

On February 17, 2020, the due diligence period expired under the purchase agreement in which the Company agreed to acquire a 108-room Fairfield Inn & Suites by Marriott hotel in Hershey, Pennsylvania, a 107-room Home2 Suites by Hilton hotel in York, Pennsylvania, and a 100-room Hampton Inn & Suites by Hilton hotel in York, Pennsylvania (collectively, the “Pennsylvania Hotel Properties”). The contractual purchase price of the Pennsylvania Hotel Properties is approximately $46.9 million plus closing costs, subject to adjustment as provided in the purchase agreement. As required by the purchase agreement, the Company has deposited a total of $1.5 million into escrow as earnest money pending the closing or termination of the purchase agreement. Except in certain circumstances described in the purchase agreement, if the Company fails to complete the acquisition, it will forfeit the earnest money.  There can be no assurance that the Company will complete these acquisitions on the contemplated terms, or at all.

On February 21, 2020, the Company acquired a 99-room Homewood Suites by Hilton hotel property located in Southaven, Mississippi, for $20.5 million, exclusive of closing costs.  In connection with the acquisition, the Company entered into a $13.46 million term loan. The loan has a fixed interest rate of 3.695% per annum, matures on March 3, 2025, requires monthly payments of interest-only through March 31, 2021, and thereafter requires monthly payments of principal and interest with a balloon payment due at maturity. The loan requires the maintenance of certain financial covenants, and pursuant to the loan agreement, Corey Maple, the Company’s Chief Executive Officer (the “Guarantor”), entered into a Guaranty, which is (i) a full recourse guarantee to the lender in certain circumstances, including the occurrence of certain events, including, without limitation, certain bankruptcy or insolvency proceedings involving the borrower, and (ii) recourse guarantee limited to the payment of all claims, actions, suits, damages, losses, expenses or other obligations actually incurred by the lender as a result of certain “bad boy” events, including criminal acts, fraud or misrepresentation in connection with the loan documents, damage to the collateral caused by gross negligence, reckless or intentional acts or omissions, or certain other intentional acts or omissions of the borrower or Guarantor, all as further described in the Guaranty. In connection with the acquisition the Company also entered a management agreement with Vista Host Inc. (“Vista Host”), a third-party management company, to provide property management and hotel operations management services. The agreement has an initial term expiring on February 21, 2025, which automatically renews for two successive five-year periods, unless terminated in accordance with its terms. The Company will pay Vista Host a base management fee for property management services equal to 3% of the prior month’s gross revenues, a monthly accounting fee of $1,000, and Vista Host may earn annual incentive management fees if certain growth and operational performance metrics are achieved. 

On March 16, 2020, the Company drew $2.0 million on our $3.0 million revolving line of credit, which was outstanding as of March 24, 2020.

As of March 24, 2020, the Company’s private offering remained open for new investment, and since the inception of the offering the Company had issued and sold 6,962,813 shares of common stock, including 133,482 shares issued pursuant to the DRIP, resulting in the receipt of gross offering proceeds of $68.4 million.

Subsequent to December 31, 2019, there was a global outbreak of a new strain of coronavirus, COVID-19. The global and domestic response to the COVID-19 outbreak continues to rapidly evolve. Thus far, certain responses to the COVID-19 outbreak have included mandates from federal, state and/or local authorities that required temporary closure of certain travel and hospitality. The COVID-19 outbreak and associated responses could negatively impact future hotel revenues and operations at our properties, which could result in a  material impact to the Company’s future results of operations, cash flows and financial condition.

******

F-22

LODGING FUND REIT III, INC. - SCHEDULE III

Real Estate and Accumulated Depreciation

As of December 31, 2019

									Costs
									Capitalized
									Subsequent to
					Initial Cost				Acquisition		Gross Amounts at End of Year
							Building,		Building,				Building,
					Land and		Building		Building		Land and		Building
	Date	Number			Land		Improvements		Improvements		Land		Improvements				Accumulated		Depreciable
Description	Acquired	of Rooms	Encumbrances		Improvements		and FF&E		and FF&E		Improvements		and FF&E		Total(1)		Depreciation		Lives
Holiday Inn Express - Cedar Rapids, IA	Nov - 2018	83	$	5,527,392	$	1,536,966	$	6,321,367	$	290,720	$	1,536,966	$	6,612,087	$	8,149,053	$	(310,451)	3 - 40 yrs.
Hampton Inn & Suites - Pineville, NC	Mar - 2019	111		9,154,289		2,014,533		12,327,740		38,090		2,014,533		12,365,830		14,380,363		(376,530)	3 - 40 yrs.
Hampton Inn - Eagan, MN	Jun - 2019	122		9,369,276		1,691,813		12,536,520		80,770		1,691,813		12,617,290		14,309,103		(291,830)	3 - 40 yrs.
Home2 Suites - Prattville, AL	Jul - 2019	90		9,620,000		1,691,954		13,414,060		8,860		1,691,954		13,422,920		15,114,874		(233,425)	3 - 40 yrs.
Home2 Suites - Lubbock, TX	Dec - 2019	100		8,000,430		803,229		13,906,502		896		803,229		13,907,398		14,710,627		(43,476)	3 - 40 yrs.
		506	$	41,671,387	$	7,738,495	$	58,506,189	$	419,336	$	7,738,495	$	58,925,525	$	66,664,020	$	(1,255,712)

⁽¹⁾ The aggregate cost for federal income tax purposes is approximately $66.3 million at December 31, 2019 (unaudited).

Investment in Real Estate:	2019		2018
Balance at beginning of period	$	7,859,555	$	-
Acquisitions		58,386,351		7,858,333
Improvements		418,114		1,222
Balance at end of period	$	66,664,020	$	7,859,555
Accumulated Depreciation:	2019		2018
Balance at beginning of period	$	(43,810)	$	-
Depreciation expense		(1,211,902)		(43,810)
Balance at end of period	$	(1,255,712)	$	(43,810)

F-23

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LODGING FUND REIT III, INC.
Date: March 24, 2020	By:	/s/ Corey R. Maple
		Corey R. Maple
		Chairman of the Board, Chief Executive Officer, Secretary and Director
		(principal executive officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated and on the dates indicated.

Date	Name and Title
March 24, 2020	/s/ Corey R. Maple
	Corey R. Maple, Chairman of the Board, Chief Executive Officer, Secretary and Director (principal executive officer)
March 24, 2020	/s/ Katie Cox
	Katie Cox, Chief Financial Officer (principal financial officer and principal accounting officer)
March 24, 2020	/s/ Norman H. Leslie
	Norman H. Leslie, President, Chief Investment Officer, Treasurer and Director
March 24, 2020	/s/ David G. Ekman
	David G. Ekman, Director
March 24, 2020	/s/ Brian Hagen
	Brian Hagen, Director
March 24, 2020	/s/ Jeffrey T. Leighton
	Jeffrey T. Leighton, Director
March 24, 2020	/s/ Perry Rynders
	Perry Rynders, Director

EX-4.2

EXHIBIT 4.2

DESCRIPTION OF LODGING FUND REIT III, INC. SECURITIES

REGISTERED PURSUANT TO SECTION 12(g) OF THE

SECURITIES EXCHANGE ACT OF 1934

The following is a summary of the material terms of shares of common stock of Lodging Fund REIT III, Inc. registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as set forth in our charter and bylaws, as amended and supplemented from time to time. This summary does not purport to be complete and is qualified in its entirety by reference to Maryland law, our charter and bylaws. References herein to “us,” “we,” “our,” or the “Company” refer to Lodging Fund REIT III, Inc.Under our charter, we have authority to issue a total of 1,000,000,000 shares of stock, consisting of (a) 900,000,000 shares of common stock, $0.01 par value per share, and (b) 100,000,000 shares of preferred stock, $0.01 par value per share. Our board of directors, with the approval of a majority of the entire board of directors and without any action by our stockholders, may amend our charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority to issue. 

Common Stock

        Subject to the provisions of our charter regarding the restrictions on ownership and transfer of our stock and except as may otherwise be specified in our charter, the holders of shares of our common stock are entitled to one vote per share on all matters voted on by stockholders, including the election of directors. Except as provided in our charter, including any articles supplementary with respect to any series of preferred stock that we may issue in the future, the holders of our common stock will possess exclusive voting power. Our charter does not provide for cumulative voting in the election of directors. Therefore, the holders of a majority of the outstanding shares of common stock can elect the Company's entire board of directors.

        Holders of our common stock will be entitled to receive such distributions as authorized from time to time by our board of directors and declared by us out of legally available funds, subject to any preferential rights of any preferred stock that we issue in the future. In any liquidation, each outstanding share of common stock entitles its holder to share (based on the percentage of shares held) in the assets that remain after we pay our liabilities and any preferential distributions owed to our preferred stockholders. Holders of shares of our common stock will not have preemptive rights, which means that stockholders will not have an automatic option to purchase any new shares that we issue, nor will holders of our common stock have any preference, conversion, exchange or sinking fund or rights. Holders of shares of our common stock will not have appraisal rights unless the board of directors determines that appraisal rights apply, with respect to all or any classes or series of stock, to one or more transactions occurring after the date of such determination in connection with which such stockholders would otherwise be entitled to exercise appraisal rights.

Preferred Stock

Under our charter, the board of directors may classify and reclassify any unissued shares of common stock or preferred stock from time to time, into one or more classes or series of stock.  Prior to issuance of shares of each class or series, the board of directors is required by the Maryland General Corporation Law and by our charter to set, subject to our charter restrictions on transfer of our stock, the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series. Thus, the board of directors could authorize the issuance of shares of common stock or preferred stock with terms and conditions which could have the effect of delaying, deferring or preventing a transaction or change in control of us.

Share Repurchase Plan

        The board of directors has adopted a share repurchase plan that may enable our stockholders to repurchase their shares in limited circumstances. In its sole discretion, the board of directors could choose to terminate or suspend the plan

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or to amend its provisions without stockholder approval. The repurchase plan may be reviewed and modified by the board of directors as it deems necessary in its sole discretion. The following discussion summarizes the principal terms of our share repurchase plan.

Repurchase Price

        Under certain circumstances and subject to the death repurchase described below, the prices at which we will repurchase shares under our repurchase plan are as follows:

· For those shares held by the repurchasing stockholder for at least one year, 92% of the current share NAV;

· For those shares held by the repurchasing stockholder for at least two years, 96% of the current share NAV; and

· For those shares held by the repurchasing stockholder for at least three years, 100% of the current share NAV.

        For purposes of determining the time period a repurchasing stockholder has held each share, the time period begins as of the date the stockholder acquired the share, provided that shares purchased by the repurchasing stockholder pursuant to our dividend reinvestment plan will be deemed to have been acquired on the same date as the initial shares to which the dividend reinvestment plan shares relate. The board of directors may, in its sole discretion, reject any request for repurchase and may, upon notice to the stockholders, amend, suspend or terminate the repurchase plan at any time.

Limitations on Repurchase

        There are several limitations on our ability to repurchase shares under our share repurchase plan:

· Unless the shares are being repurchased in connection with a stockholder's death, we may not repurchase shares unless the stockholder has held the shares for at least one year.

· During any calendar year, we will repurchase only the number of shares that we could purchase with the amount of net proceeds from the sale of shares under our dividend reinvestment plan during the prior calendar year. However, we may increase or decrease the funding available for the repurchase of shares pursuant to our share repurchase plan upon 10 business days' notice to our stockholders.

· During any calendar year, we will limit the total shares repurchased to no more than 5.0% of the weighted-average number of shares outstanding as of December 31 of the prior calendar year.

· We have no obligation to repurchase shares if the repurchase would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency.

· We will not repurchase shares if the board of directors determines, in its sole discretion, that the repurchase price determined in accordance with the terms of our share repurchase plan exceeds the then current fair market value of the shares to be repurchased.

Procedures for Repurchase

2

        We will repurchase shares within 21 days following the end of a calendar quarter. We must receive a written request for repurchase at least two business days before the end of the calendar quarter in order for us to repurchase a stockholder's shares on the repurchase date. If we cannot repurchase all shares presented for repurchase in any quarter, we will attempt to honor repurchase requests on a pro rata basis. The board of directors may, in its sole discretion, reject any request for repurchase.

        If we did not completely satisfy a stockholder's repurchase request on a repurchase date because we did not receive the request in time, because of the limitations on repurchases set forth in our share repurchase plan or because of a suspension of our share repurchase plan, we would treat the unsatisfied portion of the repurchase request as a request for repurchase at the next repurchase date at which funds are available for repurchase unless the stockholder withdraws its request. Any stockholder may withdraw a repurchase request upon written notice to the plan administrator if such notice is received at least two business days before the repurchase date.

        All shares to be repurchased must be (i) fully transferable and not be subject to any liens or other encumbrances and (ii) free from any restrictions on transfer. If we determine that a lien or other encumbrance or restriction exists against the shares, we will not repurchase any such shares.

        Neither we nor the board of directors will have any liability to any stockholder for any damages resulting from or related to the stockholder's presentment of its shares. Further, stockholders will have complete responsibility for payment of all taxes, assessments and other applicable obligations and third-party costs resulting from or relating to our repurchase of shares. All repurchased shares shall be repurchased as treasury shares and be made available for purchase to new or existing stockholders.

        Qualifying stockholders who desire to repurchase their shares must give written notice to us by completing a repurchase request form and returning it as follows:

· Regular mail: Lodging Fund REIT III, Inc., 1635 43rd Street South, Suite 205, Fargo, ND 58103, Attention: Investor Relations.

· Repurchase request forms are available to stockholders by contacting their financial advisor, or by calling Investor Relations at (701) 630-6500.

Special Repurchases—Death Repurchase

        In the event of the death of a stockholder, the Company will, upon request and within six months from the date of the request, repurchase such stockholder's shares regardless of the period the deceased stockholder has owned such shares at the following prices:

· 92% of the current share NAV if death occurs less than six months of the purchase;

· 96% of the current share NAV if death occurs from six months to one year of purchase; and

· 100% of the current share NAV if death occurs after one year of purchase.

        We will not be obligated to repurchase a deceased stockholder's shares if more than two years have elapsed from the date of death.

3

Amendment, Suspension or Termination of Plan and Notice

        The board of directors may, at any time and without stockholder approval, upon 10 business days' written notice to the stockholders (i) amend, suspend or terminate our share repurchase plan and (ii) increase or decrease the funding available for the repurchase of shares pursuant to our share repurchase plan.

Dividend Reinvestment Plan

        The board of directors has adopted a dividend reinvestment plan, which permits stockholders to reinvest their distributions back into the Company. Stockholders may elect to reinvest their distributions at 95% of the then-current Share NAV. The dividend reinvestment plan, as adopted, will be reviewed periodically and changes will be made, as necessary. The board of directors may, in its sole discretion, terminate or modify the dividend reinvestment plan at any time.

Stockholder Meetings

        Annual meetings of stockholders will be held at such date as may be determined by the board of directors. At the annual meeting, the stockholders will elect directors and transact such other business as may properly come before the meeting. Special meetings of stockholders may be called by the Chairman of the Board, Chief Executive Officer, President and the board of directors, and must be called by our secretary to act on any matter that may properly be considered at a meeting of stockholders upon the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast on such matter at the meeting. Each stockholder will have the right to vote in person or by proxy and will be entitled to one vote for each share registered in its name. A quorum for purposes of the meeting requires the attendance in person or by proxy of the holders of 30% of the shares issued and outstanding and entitled to vote at such meeting.

Matters Requiring Stockholder Approval

        The board of directors cannot take the following action without approval of a majority of the then outstanding shares: (i) sell all or substantially all of the Company's assets other than in the ordinary course of business; (ii) cause the merger or other reorganization of the Company; or (iii) dissolve or liquidate the Company.

4

Tender Offers

Our charter provides that any person making a tender offer that is not otherwise subject to Regulation 14D of the Exchange Act, including any “mini-tender” offer, must comply with most of the provisions of Regulation 14D of the Exchange Act, including the notice and disclosure requirements. In addition, the offeror must provide us notice of such tender offer at least 10 business days before initiating the tender offer. If the offeror does not comply with the provisions set forth above, we will have the right to repurchase that offeror’s shares, if any, and any shares acquired in such tender offer. In addition, the non-complying offeror will be responsible for all of our expenses in connection with that offeror’s noncompliance.

Restrictions on Transfer and Ownership of Shares

The shares of common stock purchased in our private offering are subject to restrictions on transfer imposed by applicable securities laws.

Ownership Limit

        To maintain our REIT qualification, not more than 50% in value of our outstanding shares may be owned, directly or indirectly, by five or fewer individuals (including certain entities treated as individuals under the Internal Revenue Code) during the last half of each taxable year. In addition, at least 100 persons who are independent of the Company and each other must beneficially own our outstanding shares for at least 335 days per 12-month taxable year or during a proportionate part of a shorter taxable year. Each of the requirements specified in the two preceding sentences will not apply in the first taxable year for which we make an election to be taxed as a REIT. We may prohibit certain acquisitions and transfers of the shares so as to ensure our continued qualification as a REIT under the Internal Revenue Code. However, there can be no assurance that this prohibition will be effective.

        To help ensure that we meet these tests, among other purposes, our charter prohibits any person or group of persons from acquiring, directly or indirectly, beneficial ownership of more than 9.8% in value of our aggregate outstanding shares of capital stock or 9.8% in value or number of shares, whichever is more restrictive, of our outstanding shares of common stock unless exempted by the board of directors.

        The board of directors may waive (prospectively or retroactively) this ownership limit with respect to a particular person if the ownership in excess of the limit will not result in the Company's being "closely held" within the meaning of Internal Revenue Code Section 856(h) or otherwise would result in the Company's failing to qualify as a REIT. In order to be considered by the board of directors for exemption, a person also must not own, directly or indirectly, an interest in a tenant of the Company (or a tenant of any entity which we own or control) that would cause us to own, directly or indirectly, more than a 9.9% interest in the tenant. The person seeking an exemption must represent to the satisfaction of the board of directors that it will not violate these two restrictions. The person also must agree that any violation or attempted violation of these restrictions will result in the automatic transfer of the shares of stock causing the violation to a trust as described below. For purposes of this provision, we treat corporations, partnerships and other entities as one person. Our charter also prohibits any person from beneficially or constructively owning shares that would result in the Company's being "closely held" within the meaning of Internal Revenue Code Section 856(h) or otherwise would result in the Company's failing to qualify as a REIT and any transfer of the shares that, if effective, would result in the shares being beneficially owned by fewer than 100 persons.

5

Transfer of Capital Stock in Trust

        Any attempted transfer of the shares that, if effective, would result in a violation of the Company's ownership limit or would result in a violation of any of the other restrictions on transfer and ownership described above will be null and void or will cause the number of shares causing the violation to be automatically transferred to a trust for the exclusive benefit of one or more charitable beneficiaries. The prohibited transferee will not acquire any rights in the shares. The automatic transfer will be deemed to be effective as of the close of business on the business day prior to the date of the attempted transfer. We will designate a trustee of the trust that will not be affiliated with us or the prohibited transferee. We will also name one or more charitable organizations as a beneficiary of the trust.

        Shares held in trust will remain issued and outstanding shares and will be entitled to the same rights and privileges as all other shares of the same class or series. The prohibited transferee will not benefit economically from any of the shares held in trust, will not have any rights to distributions and will not have the right to vote or any other rights attributable to the shares held in the trust. The trustee will receive all distributions on the shares held in trust and will hold such distributions in trust for the benefit of the charitable beneficiary. The trustee may vote any shares held in trust. Subject to Maryland law, the trustee will also have the authority (i) to rescind as void any vote cast by the prohibited transferee prior to our discovery that the shares have been transferred to the trust and (ii) to recast the vote in accordance with the desires of the trustee acting for the benefit of the charitable beneficiary. However, if we have already taken irreversible corporate action, then the trustee will not have the authority to rescind and recast the vote.

        Within 20 days of receiving notice from us that any of the shares have been transferred to the trust for the charitable beneficiary, the trustee will sell those shares to a person designated by the trustee whose ownership of the shares will not violate the above restrictions. Upon the sale, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute the net proceeds of the sale to the prohibited transferee and to the charitable beneficiary as follows. The prohibited transferee will receive the lesser of (i) the price paid by the prohibited transferee for the shares or, if the prohibited transferee did not give value for the shares in connection with the event causing the shares to be held in the trust (e.g., a gift, devise or other similar transaction), the Market Price (as defined in our charter) of the shares on the day of the event causing the shares to be held in the trust and (ii) the price per share received by the trustee from the sale or other disposition of the shares held in trust. The trustee may reduce the amount payable to the prohibited transferee by the amount of distributions which have been paid to the prohibited transferee and are owed by the prohibited transferee to the trustee and by the amount of any costs incurred by us in connection with the transfer. Any net sales proceeds in excess of the amount payable to the prohibited transferee will be paid immediately to the charitable beneficiary. If, prior to our discovery that shares have been transferred to the trustee, the shares are sold by the prohibited transferee, then (i) the shares will be deemed to have been sold on behalf of the trust and (ii) to the extent that the prohibited transferee received an amount for the shares that exceeds the amount such prohibited transferee was entitled to receive, the excess will be paid to the trustee upon demand.

        In addition, shares held in the trust for the charitable beneficiary will be deemed to have been offered for sale to us, or our designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in the transfer to the trust (or, in the case of a devise or gift, the Market Price at the time of the devise or gift) or (ii) the Market Price on the date we, or our designee, accepts the offer, both as reduced by the amount of any costs incurred by us in connection with the transfer. We will have the right to accept the offer until the trustee has sold the shares held in trust. Upon a sale to us, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute the net proceeds of the sale to the prohibited transferee. We may reduce the amount payable to the prohibited transferee by the amount of distributions which have been paid to the prohibited transferee and are owed by the prohibited transferee to the trustee. We may pay the amount of such reduction to the trustee for the benefit of the charitable beneficiary.

        Any person who acquires or attempts to acquire shares in violation of the foregoing restrictions or who would have owned the shares that were transferred to any such trust must immediately notify us of such event, and any person who proposes or attempts to acquire or receive shares in violation of the foregoing restrictions must give us at least 15 days'

6

written notice prior to such transaction. In both cases, such persons will provide to us such other information as we may request in order to determine the effect, if any, of such transfer on our status as a REIT.

        The foregoing restrictions will continue to apply until the board of directors determines it is no longer in our best interests to continue to qualify as a REIT or that compliance is no longer required for REIT qualification. The ownership limit does not apply to any underwriter in an offering of the shares or to a person or persons exempted from the ownership limit by the board of directors as described above.

        Within 30 days after the end of each taxable year, every owner of 5% or more of our outstanding stock will be asked to deliver to us a statement setting forth the number of shares owned directly or indirectly by such person and a description of how such person holds the shares. Each such owner will also provide us with such additional information as we may request in order to determine the effect, if any, of his or her beneficial ownership on our status as a REIT and to ensure compliance with our ownership limit.

        These restrictions could delay, defer or prevent a transaction or change in control of the Company that might involve a premium price for the shares of common stock or otherwise be in the best interests of our stockholders.

Phantom Stock Plan

        The board of directors has approved the adoption of a phantom stock plan (the "Phantom Stock Plan") for the Company. However, the specific terms of the Phantom Stock Plan have not yet been determined and approved by our board. The Company intends for the shares designated pursuant to the Phantom Stock Plan (the “Phantom Shares”) to be allocated to the Advisor, the TRSs collectively and NHS for distribution of the proceeds to their respective employees and service providers in accordance with their compensation plans; however, none of Corey R. Maple, Norman H. Leslie or Katie Cox will receive any Phantom Shares pursuant to the Phantom Stock Plan. The purpose of the Phantom Stock Plan is to advance the interests of the Company by providing an incentive to attract, retain and reward persons performing services for the Company or its affiliates and by motivating such persons to contribute to the growth and profitability of the Company.

Non-Certificated Interests

        Unless otherwise provided by the board of directors, the Company will not issue shares in certificated form. Information regarding restrictions on the transferability of the shares that, under Maryland law, would otherwise have been required to appear on the share certificates will instead be furnished to stockholders upon request and without charge. These requests should be delivered or mailed to: Lodging Fund REIT III, Inc., 1635 43rd Street South, Suite 205, Fargo, ND 58103, Attention: Investor Relations.

        The Company will maintain a stock ledger that contains the name and address of each stockholder and the number of shares that the stockholder holds. With respect to uncertificated stock, the Company will continue to treat the stockholder registered on the Company's stock ledger as the owner of the shares until the new owner delivers a properly executed form to the Company, which form the Company will provide to any registered holder upon request.

Amendments

        We may from time to time make any amendment to our charter, now or hereafter authorized by law, including any amendment altering the terms or contract rights, as expressly set forth in our charter, of any shares of outstanding stock. Except for those amendments permitted to be made without stockholder approval under Maryland law or by specific provision in our charter, any amendment to our charter will be valid only if declared advisable by the board of directors and approved by the affirmative vote of holders of shares entitled to cast a majority of all the votes entitled to be cast on the matter.

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Board of Directors

        We operate under the direction of the board of directors, the members of which are accountable to us and our stockholders in accordance with the standard of conduct under Section 2-405.1 of the Maryland General Corporation Law. The board of directors is responsible for the management and control of our affairs.

Number and Classes of Directors

        Our charter and bylaws provide that the board of directors consists of five directors, which number may be increased or decreased by a majority of the directors, but will be no fewer than the number required by the Maryland General Corporation Law (which is one) nor more than 11 at any time. Our bylaws, however, may be amended from time to time to increase or decrease the minimum or maximum number of directors. On April 19, 2019, the board of directors increased the number of directors to six.

        The board of directors are divided into three classes. At each annual meeting of stockholders, one class of directors will be elected for a term of three years and until his or her successor is duly elected and qualified; provided, however, that Mr. Maple as the initial Class I director will serve for an initial term of one year and Messrs. Leslie, Hagen and Rynders as the initial Class II directors will serve for an initial term of two years. There is no limit on the number of times a director may be elected to office. Our bylaws provide that a majority of the entire board of directors may at any time increase or decrease the number of directors, however, a decrease may not have the effect of shortening the term of any incumbent director. A classified board may render a change in control of us or removal of our incumbent management more difficult.

Vacancies

        Any vacancy on the board of directors for any reason may be filled by a majority of the remaining directors, even if such majority is less than a quorum. Any individual so elected as director will serve until the next annual meeting of the stockholders and until his or her successor is elected and qualifies.

Exclusive Forum for Certain Disputes

       Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, will be the sole and exclusive forum for any Internal Corporate Claim, as such term is defined in Section 1-101(p) of the Maryland General Corporation Law. The exclusive forum provision of our bylaws does not cover claims that arise under the Securities Act, the Exchange Act or other federal securities laws. This choice of forum provision may limit a stockholder's ability to bring a claim in a judicial forum that the stockholder believes is favorable for disputes with us or our directors, officers or employees, which may discourage meritorious claims from being asserted against us and our directors, officers, or employees. Alternatively, if a court were to find this provision of our bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations. We adopted this provision because we believe it makes it less likely that we will be forced to incur the expense of defending duplicative, costly and time-consuming actions in multiple forums, and we believe the risk of a court declining to enforce this provision is remote, as the General Assembly of Maryland has specifically amended the Maryland General Corporation Law to authorize the adoption of such provisions.

Maryland Business Combination Act

        Under the Maryland General Corporation Law, business combinations between a Maryland corporation and an interested stockholder or the interested stockholder's affiliate are prohibited for five years after the most recent date on

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which the stockholder becomes an interested stockholder. For this purpose, the term "business combination" includes mergers, consolidations, share exchanges, or, in circumstances specified in the statute, asset transfers and issuances or reclassifications of equity securities. An "interested stockholder" is defined for this purpose as: (i) any person who beneficially owns 10% or more of the voting power of the corporation's outstanding voting stock; or (ii) an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding stock of the corporation. A person is not an interested stockholder under the statute if the board of directors approved in advance, generally or specifically, the transaction by which such person otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.

        After the five-year prohibition, any business combination between the corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least (i) 80% of the votes entitled to be cast by holders of outstanding voting stock of the corporation and (ii) two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected, or held by an affiliate or associate of the interested stockholder.

        These supermajority vote requirements do not apply if the corporation's common stockholders receive a minimum price, as defined under the Maryland General Corporation Law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.

        None of these provisions of the Maryland General Corporation Law will apply, however, to business combinations that are approved or exempted by the board of directors of the corporation prior to the time that the interested stockholder becomes an interested stockholder.

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Maryland Control Share Acquisitions Act

        The Maryland General Corporation Law provides that the holders of control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of the other stockholders. Two-thirds of the votes entitled to be cast on the matter must vote in favor of granting the "control shares" voting rights. Shares owned by the acquirer, an officer of the corporation or an employee of the corporation who is also a director of the corporation are excluded from the vote on whether to accord voting rights to the control shares. "Control shares" are voting shares that, if aggregated with all other shares owned by the acquirer or with respect to which the acquirer has the right to vote or to direct the voting of, other than solely by virtue of revocable proxy, would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of voting powers.

· one-tenth or more but less than one-third;

· one-third or more but less than a majority; or

· a majority or more of all voting power.

        Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. Except as otherwise specified in the statute, a "control share acquisition" means the acquisition of issued and outstanding control shares.

        Once a person who has made or proposes to make a control share acquisition has undertaken to pay expenses and has satisfied other required conditions, the person may compel the board of directors to call a special meeting of stockholders to be held within 50 days of the demand to consider the voting rights of the shares. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting.

        If voting rights are not approved for the control shares at the meeting or if the acquiring person does not deliver an "acquiring person statement" for the control shares as required by the statute, the corporation may repurchase any or all of the control shares for their fair value, except for control shares for which voting rights have previously been approved. Fair value is to be determined for this purpose without regard to the absence of voting rights for the control shares, and is to be determined as of the date of the last control share acquisition or of any meeting of stockholders at which the voting rights for control shares are considered and not approved.

        If voting rights for control shares are approved at a stockholders meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may obtain rights as objecting stockholders and, thereunder, exercise appraisal rights. This means that stockholders would be able to force the Company to repurchase their shares for fair value. Under the Maryland General Corporation Law, the fair value of the shares as determined for purposes of these appraisal rights may not be less than the highest price per share paid in the control share acquisition. Furthermore, some of the limitations otherwise applicable to the exercise of dissenters' rights would not apply in the context of a control share acquisition.

        The control share acquisition statute does not apply to shares acquired in a merger, consolidation or share exchange if the Company is a party to the transaction or to acquisitions approved or exempted by our charter or bylaws.

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Subtitle 8 of the Maryland General Corporation Law

        Subtitle 8 of Title 3 of the Maryland General Corporation Law permits a Maryland corporation with a class of equity securities registered under the Exchange Act and at least three independent directors to elect to be subject, by provision in its charter or bylaws or a resolution of its board of directors and notwithstanding any contrary provision in the charter or bylaws, to any or all of the following provisions:

· a classified board;

· a two-thirds vote requirement for removing a director;

· a requirement that the number of directors be fixed only by vote of the directors;

· a requirement that a vacancy on the board be filled only by the remaining directors and for the remainder of the full term of the class in which the vacancy occurred; and

· a majority requirement for the calling of a stockholder-requested special meeting of stockholders.

        Through provisions in our charter and bylaws unrelated to Subtitle 8, we already (i) have a classified board, (ii) vest in the board of directors the exclusive power to fix the number of directorships and (iii) require, unless called by our chairman of the board, chief executive officer or president or any director, the written request of stockholders entitled to cast not less than a majority of the votes entitled to be cast on any matter that may properly be considered at a meeting of stockholders to call a special meeting to act on such matter. We have elected to provide that vacancies on the board of directors may be filled only by the affirmative vote of a majority of the remaining directors and for the remainder of the full term of the directorship in which the vacancy occurred.

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EX-10.52

EXHIBIT 10.52

ASSIGNMENT OF ASSET PURCHASE AGREEMENT

This Assignment of Agreement of Purchase and Sale (the “Assignment”) is entered into on or as of December 5, 2019. The parties to this Assignment are Lodging Fund REIT III OP, LP, a Delaware limited partnership (the “Assignor”), LF3 Lubbock Expo, LLC a Delaware limited liability company, and LF3 Lubbock Expo TRS, LLC, a Delaware limited liability company (collectively, the “Assignee”); all entities have an address of 1635 43rd Street South, Suite 305, Fargo, North Dakota 58103.

INTRODUCTORY STATEMENTS

A. The Assignor entered into an Agreement of Purchase and Sale effective as of July 26, 2019,(a copy of the Agreement of Purchase and Sale, as amended, is attached to this Assignment as Exhibit A and referred to herein as the “Purchase Agreement”) with respect to the purchase of a hotel business.

B. The Assignor and Assignee desire that Assignor assign its interest in the Purchase Agreement to Assignee under the terms and conditions set forth in this Agreement.

C.  Unless otherwise agreed upon, at closing, LF3 Lubbock Expo, LLC will take ownership of the Real Property (as defined in the Asset Purchase Agreement) and LF3 Lubbock Expo TRS, LLC will take ownership of all other Property (as defined in the Purchase Agreement).

In consideration of the above Introductory Statements, and the promises and provisions set forth in this Assignment, the parties agree as follows:

1. Assignment.  Assignor assigns to Assignee all of Assignor’s right, title, and interest in and to the Purchase Agreement, as amended.

2. Acceptance by Assignee. Assignee accepts the Assignment and all rights accruing to it under the Purchase Agreement, as amended, and assumes and agrees to perform all covenants and obligations of the Assignor under the Purchase Agreement, as amended, from and after this Assignment’s Effective Date.

3. Release of Assignor’s Liability. This Assignment does not relieve Assignor of any of its obligations to Seller under the Purchase Agreement.

4. Effective Date. This Assignment shall be effective upon signing.

5. Counterparts; Facsimile Signatures. This Assignment may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Assignment by telecopier or electronic mail shall be as effective as delivery of a manually executed signature page to this Agreement.

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The parties have executed this Assignment as of the date listed below each party’s signature.

ASSIGNOR

Lodging Fund REIT III OP, LP

a Delaware limited partnership

By:  Lodging Fund REIT III, Inc.

Its:  General Partner

/s/ Samuel C. Montgomery

By: Samuel C. Montgomery

Its:  Chief Operating Officer

ASSIGNEE

LF3 Lubbock Expo, LLC

a Delaware limited liability company

BY:  Lodging Fund REIT III OP, LP

ITS:  Sole Member

By:  Lodging Fund REIT III, Inc.

Its:  General Partner

/s/ Samuel C. Montgomery

Its:  Chief Operating Officer

LF3 Lubbock Expo TRS, LLC

a Delaware limited liability company

BY:  Lodging Fund REIT III TRS, Inc.

ITS:  Sole Member

BY:  Lodging Fund REIT III OP, LP

ITS:  Sole Shareholder

By:  Lodging Fund REIT III, Inc.

Its:  General Partner

/s/ Samuel C. Montgomery

By: Samuel C. Montgomery

Its:  Chief Operating Officer

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EX-10.53.1

Exhibit 10.53.1

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (the “Agreement”) is effective as of November 5, 2019 between CVH AIRWAYS, LLC, a Mississippi limited liability company, with an address of 6750 Poplar Avenue, Suite 107, Memphis, Tennessee 38138 (the “Seller”), and Lodging Fund REIT III OP, LP, a Delaware limited partnership with an address of 1635 43rd Street South, Suite 205, Fargo, North Dakota 58103 (the “Buyer”). This Agreement shall become effective (the “Effective Date”) upon delivery to and receipt of Buyer, of Seller’s signed acceptance and is made with reference to the following:

RECITALS

A.  Seller owns and operates a certain hotel business commonly known as Homewood Suites by Hilton Southaven located at 135 Homewood Drive, Southaven, Mississippi 38671 (the “Business”).

B.  Seller owns certain personal property used in connection with the Business (the “Personal Property”).

C.  Seller owns certain real estate, together with all improvements and appurtenances, with an address of 135 Homewood Drive, Southaven, Mississippi 38671 (the “Real Estate”).

D.   Seller desires to sell, and Buyer wishes to buy, all of the real and personal property owned by Seller necessary to run the Business.

AGREEMENT

1.    Agreement to Purchase and Sell.

1.1    Personal Property. At the Closing (as defined in this Agreement), Buyer shall purchase and Seller shall sell, assign, convey, transfer, set over, and deliver (by appropriate instrument of transfer) all of the assets, rights, and interests of every conceivable kind or character whatsoever, whether tangible or intangible, that are used in connection with the Business and are owned by Seller or in which Seller has an interest of any kind. These include, without limitation, levels of the following as required by brand standards (i) inventory, (ii) operating supplies, and (iii) linens (in no event less than 2 par), and the following (excluding, however, those assets specifically identified in this Agreement as the “Excluded Assets” set forth in 1.1):

a.   Trade Fixtures. Trade Fixtures and Equipment, as defined in the Mississippi Uniform Commercial Code (the “UCC”), limited specifically to the assets described in Exhibit 1.1(a) (the “Trade Fixtures and Equipment”);

b.   Miscellaneous Items. Any existing computer programs, software programs, software and technical libraries, license agreements, and all other intellectual and/or proprietary information and property and applications therefore or licenses thereof, used in connection with the Business (collectively, the “Miscellaneous Items”);

c.   Customer List and Miscellaneous Records. Any records, files, lists, and other tangible assets that pertain to the Business, including lists and records pertaining to any one or more of the following: Seller’s customers, suppliers, advertising, promotional material, sales, services, delivery, and/or operations, except those items, if any, required to be retained by law, including accounting records and returns (collectively, the “Customer List and Miscellaneous Records”).

d.   Remote Assets. All assets located off site from the location of the Business or in the possession of others, but owned and used by Seller in connection with the Business (collectively, the “Remote Assets”). The situs of the Remote Assets and the person or entity in possession or control thereof shall be delivered by Seller to Buyer at the Closing;

e.   Goodwill. The goodwill, telephone and fax numbers, yellow-page advertisements of the Business, and Seller’s right to use the registered name and all related names and derivations, including the business internet address(es) and web pages, if any (collectively, the “Goodwill”).

1.2    Sale of Real Estate. Buyer will purchase and Seller will sell the Real Estate, described on Exhibit 1.2, together with all improvements and appurtenances (the Personal Property and the Real Estate shall be at times collectively referred to as the “Purchased Assets”).

1.3    Covenant Not to Compete. Neither Seller nor any owner of Seller shall establish, engage in, or become interested in, directly or indirectly, as an owner, partner, agent, shareholder, employee, independent contractor, consultant, or otherwise, within a radius of 5 miles from the Business in the operation of a hotel for a period of 36 months. At the Closing, Seller and its owner shall execute the Non-Competition and Non-Solicitation Agreement set forth as Exhibit 1.3 (the “Non- Competition Agreement and Non-Solicitation Agreement”).

1.4    Leases; Assignment.

a.   Real Estate Lease; Leasehold Improvements. Seller agrees to assign to Buyer any lease with regard to the Real Estate and the leasehold improvements pertaining to the Business (the “Lease” and the “Lease Assignment”), together with security deposits, if any, and coupled with future obligations under the Lease, which is described on Exhibit 1.4.

b.   Miscellaneous Leases. On or before Closing, Seller shall pay off all leases, including finance leases, used in connection with the Business, such as contracts for hotel equipment, televisions, furniture, telephones, computers, and any other types and descriptions used in connection with the Business. The equipment will remain with the Business and be transferred to Buyer at Closing.

1.5    Excluded Assets. Except as otherwise set forth in this Agreement, this Agreement relating to the Personal Property contemplates the purchase and sale, inclusive of assignments, of the Personal Property. This Agreement specifically excludes, however, the following assets:

a.   Seller’s cash, cash equivalents, and investments not relating to the operation of the Business;

b.   Any Personal Property that contains hazardous materials that the Buyer requires to be removed;

c.   Any management agreement pertaining to the Business or Real Estate involving Seller, which management agreements must be terminated at Closing; and,

d.   Seller’s assets not specifically or by inference included in the above paragraphs or attached Exhibits.

Unless otherwise agreed in writing, Seller, at Seller’s expense, shall remove the Excluded Assets from the Real Estate as soon as possible after the Closing Date but in no event later than 7 days after the Closing Date. If Seller fails to comply with the foregoing provisions, Buyer may dispose of such items at Seller’s expense or make such other arrangements as Buyer may determine appropriate.

1.6    Liabilities Assumed and Excluded.

a.   Assumed Liabilities. To the extent assignable and to the extent that Buyer agrees (by written notice to Seller prior to expiration of the Review Period) to assume, all of Seller's rights and interests in and to all maintenance agreements, service contracts, equipment leases and other contracts, agreements and contract rights (collectively, the "Assumed Liabilities") of every kind concerning the operations of the Business all being more particularly described on Exhibit 1.16 attached hereto, and all related deposits, prepaid items and open orders for the purchase of Personal Property made in the ordinary course of the operation of the Business, excluding those Assumed Liabilities, which Buyer elects not to assume pursuant to Buyer’s inspection during the Review Period, the termination fees and costs for which Buyer shall pay at Closing. As of the Closing Date, Buyer shall assume, pay, and perform in due course the liabilities of Seller under the contracts arising after the close of business on the Closing Date and those trade payables and other liabilities, of the Assumed Liabilities.

b.   Excluded Liabilities. Except for the Assumed Liabilities, Buyer does not assume nor shall Buyer be obligated for any other liabilities or responsibilities whatsoever of Seller or the Business as conducted by Seller through the Closing Date, inclusive of obligations or liabilities resulting from Seller’s total or partial withdrawal from any pension, profit sharing, or retirement plans (the “Excluded Liabilities”).

2.    Purchase Price.

2.1   Purchase Price. The purchase price for the Purchased Assets, including the Noncompetition Agreement, is Twenty Million Five Hundred Thousand Dollars ($20,500,000.00) (the “Purchase Price”).

3.    Terms of Payment. The total Purchase Price shall be paid at the Closing, subject to the following:

a.   Down Payment. Buyer will deposit an earnest money deposit of Three Hundred Thousand Dollars ($300,000.00) (the “Earnest Money Deposit”) which shall be applied to the Purchase Price at Closing. The Earnest Money Deposit shall be deposited with First American Title Insurance Company, Attention: Beverly Carlson; Email: bevcarlson@firstam.com (the “Title Company”). The Earnest Money Deposit will become non-refundable after the expiration of the Review Period as defined in paragraph 10.2 of this Agreement.

If applicable, a second non-refundable down payment of $300,000.00 (the “Second Earnest Money Deposit”) will be remitted by Buyer after expiration of the Due Diligence Period. The Second Earnest Money Deposit shall be non-refundable but applied to the Purchase Price at Closing.

The First Earnest Money Deposit and the Second Earnest Money Deposit are collectively, the “Deposits”. Any interest earned on the Deposits shall be included in and added to the total amount of the Deposit.

b.   Unpaid Balance Paid with Borrowed Funds. The unpaid balance of the Purchase Price shall be paid in full by bank money order, wire transfer or other immediately available bank funds approved by Seller at the Closing.

c.   Independent Consideration. In all events, the sum of $100.00 (the “Independent Consideration”), which sum has been bargained for and agreed to as consideration for Seller’s execution and delivery of this Agreement, will be payable to Seller out of the Earnest Money Deposit, even if this Agreement is terminated under its express provisions. The Independent Consideration is independent of all other consideration provided in this Agreement, and is nonrefundable in all events. Buyer and Seller stipulate that the Independent Consideration is sufficient consideration to support this Agreement notwithstanding Buyer’s rights to terminate this Agreement as set out in this Agreement.

4.    Inventory and Accounts Receivable.

4.1    Inventory. In addition to the purchase and sale of the Personal Property, Seller shall sell and Buyer shall purchase the inventory of saleable merchandise of Seller.

a.   Merchandise Inventory. In exchange for the consideration stated under section 2.1, Seller will convey to Buyer all of the merchandise at the then current operating standard of hotel. As used in this Agreement, the “Merchandise” shall include only unopened merchandise and merchandise that (i) is not obsolete and (ii) has an expiration of 30 days or more after Closing Date.

b.   Inventory. Buyer will take an inventory of the of the linen on the day of closing, and if the linen inventory is in dispute, the parties will conduct a joint inventory and any discrepancies for shortages will be a closing adjustment.

4.2    Accounts Receivable. All accounts receivable for transactions occurring before the Closing Date shall remain the property of Seller irrespective of any payment for it to Buyer. If Buyer receives payment for any accounts receivable existing as of the Closing Date, Buyer shall promptly forward payment directly to Seller.

5.    Adjustments.

At the Closing, the following shall be adjusted or apportioned and, to the extent practicable, all such prorations shall be computed and paid at the Closing:

5.1    Personal Property.

a.   Taxes on Personal Property. Buyer shall pay all taxes and assessments, extraordinary as well as ordinary, that may be levied on any Personal Property which become due after the Closing Date and which arise from actions of Buyer or Buyer’s ownership of the Personal Property on or after the Closing; provided that Seller shall pay as and when the same become due in the ordinary course, for all taxes upon Personal Property that arise from Seller’s ownership of the Personal Property up to the Closing and which may be due on, before, or after the Closing Date. Current personal property taxes shall be prorated and adjusted between the Parties as of the Closing Date on a due date basis on the assumption that such taxes are paid in advance.

b.   Miscellaneous. If applicable, adjustments shall be made for payroll and any other prepaid items, and any other unspecified unpaid taxes.

5.2    Real Estate.

a.   Real Estate Taxes. “Taxes” shall mean general real estate taxes and water or sewer rates and charges (if not metered), any other governmental tax or charge, canopy permit fee, and any ordinary or extraordinary taxes levied or assessed against the Property for the calendar year in which Closing occurs. If the Closing will occur before the actual Taxes for the calendar year of Closing are known, the apportionment of Taxes will be upon the most recent available bill, provided that, if following the Closing, the Taxes for the year of Closing are determined to be more or less than the Taxes for the preceding year (after any appeal of the assessed valuation of it is concluded), Seller and Buyer promptly (but no later than the date that is thirty (30) days from and after the date that the final invoices for taxes for the Property for the year in which the Closing occurs are issued by the applicable taxing authority) will adjust the proration of the Taxes, and Seller or Buyer, as the case may be, will pay to the other any amount required as a result of the adjustment. Further, if Buyer undertakes a tax protest with respect to all or any portion of the Taxes for the year in which Closing occurs, any refund will be prorated as of the Closing Date. All Taxes assessed for periods after the Closing Date will be paid by Buyer, and all Taxes assessed for periods prior to the Closing Date will be paid by Seller.

b.   Recording Fees. Buyer shall assume the costs of recording the deed when it is delivered by Seller.

5.3    Transfer Fees; Sales Taxes. Buyer shall pay all transfer fees and applicable sales taxes, if any, arising under or on account of the purchase and sale of the Purchased Assets.

5.4    Adjustments. The following items shall be apportioned or prorated between Seller and Buyer as of 11:59 o'clock p.m. local time, on the day immediately preceding the Closing Date (the "Apportionment Date") and shall constitute adjustments to the Purchase Price to be paid by Buyer to Seller at Closing (all provisions of this Section 11 shall survive Closing):

5.4.1    Taxes. All Taxes, as hereafter defined, which have become a lien on the Real Estate and Personal Property, all charges for improvements or services already made to or for the benefit of the Business, and all assessments (general or special) arising out of or in connection with any assessment district created or confirmed prior to the date of Closing shall be paid by Seller at or before Closing. Taxes for the then current year shall be prorated at the Closing, effective as of the date of Closing, in accordance with local custom. Any special assessments that are a lien shall be paid by Seller without proration. If the Closing shall occur before the tax rate is filed for the then current year, the apportionment of the taxes shall be based upon the basis of the tax rate for the preceding year applied to the latest assessed valuation. Any difference in actual or estimated taxes for the year of sale actually paid by Buyer shall be adjusted between the parties upon receipt of written evidence of the payment thereof.

5.4.2    Charges for Telephone, Water, Electricity, Gas and Other Utilities. The consumption of all utilities is measured by meter, and Seller shall furnish a current reading of each meter at the Closing, which reading shall have been made no earlier than one (1) business day prior to Closing, and Seller shall pay or cause to be paid the charges therefor to the reading date or the Closing Date, as the case may be and Seller shall cause the Title Policy to be issued with an exception for the lien of any utilities. Seller shall notify the utility company servicing the Business prior to Closing or as soon thereafter as practicable that billing to Seller should be discontinued as of Closing. The telephone service will be changed over as of the Closing Date by Buyer and Buyer shall be responsible for charges incurred on the Closing Date and thereafter. All deposits, if any, made by Seller as security under any contract or license, shall be returned to Seller and Buyer shall be responsible for replacing any required deposits.

5.4.3    Room Charges. Room charges for the night commencing on the Apportionment Date and ending on the morning of the Closing Date shall be split between Seller and Buyer on a fifty/fifty basis.

5.4.4    Prepaid Expenses. A prorated portion of any expense which has been prepaid by Seller prior to the Closing Date of which Buyer has knowledge of and has approved in accordance with definition of Assumed Liabilities, and only which is attributable to a period on or after the Closing Date, including, without limitation, prepaid charges for transferable licenses, permits and other items, shall be credited to Seller. However, Buyer shall obtain its own insurance and no prepaid items related thereto shall be credited to Seller.

5.4.5    Prepaid Reservations. Buyer shall receive a credit for all prepaid reservations, advance room deposits, Reservation Deposits, security deposits under Tenant Leases, if any, or other such deposits assigned to Buyer hereunder.

5.4.6    Maintenance Agreements. Charges under the Assumed Liabilities (which shall be assumed by Buyer, provided that Buyer elects (by written notice to Seller given prior to expiration of the Review Period) to assume the same) shall be prorated at the Closing with Seller paying all such charges through and including the Apportionment Date.

5.4.7    Accounts Receivable. Seller shall retain the full amount of all accounts receivable, whereby Buyer is under no obligation to pay for any outstanding accounts, nor make any efforts to collect outstanding amounts (including room charges and other income due from guests of the Business and occupancy (guest ledger)) through the morning of the Closing Date; provided, however, room charges for the night commencing on the Apportionment Date shall be split between Buyer and Seller on a 50-50 basis as provided above, and the parties shall close out Hotel guests bills and reopen Hotel guests bills as part of the Closing Adjustments. Buyer shall be obligated to promptly deliver to Seller all collections received from and after Closing on any such pre-Closing receivables and shall report the status thereof to Seller promptly upon request.

5.4.8    House Banks. Subject to the proration provisions hereof and the credits due to Buyer for prepaid items and deposits as set out herein, cash, checks and other funds including till money and house banks held at the hotel as of the Apportionment Date (collectively, "House Banks") shall be turned over to Buyer and Seller shall receive a credit at Closing in the amount of the cash so delivered.

5.4.9    Advanced Deposits/Cash at Hotel. At the Closing, Buyer shall receive a credit to the Purchase Price and Seller a debit in the amount of all advanced booking deposits paid to Seller and not earned with respect to the period after the Closing and rather than remove Seller's cash from the Property upon the Closing, Buyer and Seller shall cause to be counted the amount of Seller's cash at the Property at 5:00 a.m. on the date of Closing. Such cash shall not be removed from the Property, by Seller and shall become the property of Buyer and Seller shall receive a credit and Buyer shall receive a debit to the Purchase Price in the amount of such cash at Closing. Buyer shall also receive a credit for outstanding gift certificates and trade out agreements.

5.4.10    Further Assurances. All items to be adjusted, in accordance with the foregoing Section 5.4.1- Section 5.4.9, for which figures are not available at Closing, will be adjusted and payment therefor will be made by Seller to Buyer or by Buyer to Seller, as appropriate, within ninety (90) days after Closing. Buyer or Seller, as appropriate, will deliver simultaneously with such payment, any and all data, information or other backup it may have with respect to such payment and/or such proration so as to fully indicate to the other party the calculation of the amount of payment contained therewith.

5.4.11  Benefit and Liability. The purpose and intent of the provisions as to the prorations, adjustments and apportionments set forth above and elsewhere in this Agreement are that Seller shall bear all expenses of ownership and operation of the Property and shall receive all income therefrom accruing to the Closing Date, and Buyer shall bear all such expenses and receive all such income accruing thereafter. Accordingly, effective as of 12:01 a.m. on the Closing Date, Seller agrees to indemnify and hold Buyer harmless from and against any and all costs and expenses relating to the operation of the Business during the period preceding the Closing Date, and Buyer agrees to indemnify, defend and hold Seller harmless from and against any and all costs and expenses relating to the operation of the Business from and after 12:01 a.m. on the Closing Date. If a computation of the apportionments and adjustments described in this Section 11 shows that a net amount is owed by Seller to Buyer, such amount shall be credited against the Purchase Price. If such computation shows that a net amount is owed by Buyer to Seller, Seller shall receive a credit on the closing statement at Closing for such amount, and the Purchase Price shall be reduced accordingly. All of the provisions of this Section 11 shall survive the Closing and shall not merge with the closing documents to be delivered at Closing. Parties agree to perform all reconciliations within one hundred and twenty (120) days post-closing, unless otherwise stated herein.

6.    Personal Property and Real Estate Title.

6.1.    Personal Property. At the Closing, title to the Personal Property shall be free, clear, and unencumbered, except as specifically set forth in this Agreement.

a.   Lien Search. Buyer shall order a tax lien search and UCC financing statement search, both certified, within 7 days of the Effective Date. The Seller shall pay the expense of the cost of the certified tax lien search and certified UCC financing statement search.

b.   Objection. Buyer shall have 10 days to object to the title of an asset reported on the lien search and UCC financing statement if, in Buyer’s discretion, the title is not in the condition required for performance under this Agreement. Seller shall have 10 days from the date Seller is notified in writing of the particular defects claimed to either (1) remedy the title, or make arrangements to remedy title at the Closing, or (2) on written demand made by Buyer, to refund the Earnest Money Deposit in full termination of this Agreement if Seller is unable to remedy title. Buyer may elect to complete the purchase and sale without any adjustment to the Purchase Price.

6.2.    Real Estate.

a.   Condition of Real Estate Title. At Closing, the title to the Real Estate shall be free, clear, and unencumbered, and shall be conveyed by a special warranty deed showing good and marketable title in the Real Estate to Buyer, subject to the following (the “Permitted Encumbrances:”)

1.    Zoning. Any zoning regulations or ordinances.

2.    Survey. Any conditions or other disclosures that an accurate survey may disclose.

3.    Restrictions. Any covenants, building restrictions, easements, or reservations in the chain of title, or of record, or that would show on an examination of the Real Estate, including any right of way granted to the State of Mississippi that does not affect the marketability of title.

4.    Taxes. Any future installments of ordinary, special, or extraordinary taxes that are now a lien on the Real Estate but are not now due and payable.

b.   Evidence of Title. As evidence of marketable title, Buyer shall order as soon as possible, but no later than 15 days after the Effective Date, a preliminary commitment for title insurance (the “Title Commitment,”) committing to insure marketable fee simple title as of the date of Closing, subject only to the permitted exceptions as set forth by Buyer in this Agreement. The Seller shall pay the expense of the cost of the title search and the Buyer shall pay the expense of the cost of the title commitment and the subsequently issued title insurance policy.

c.   Objection. On receipt of evidence of the Title Commitment (and a copy of the survey provided by Seller), Buyer shall have 10 days to object to title, if in Buyer’s discretion, the title is not in the condition required for performance under this Agreement. Seller shall have 30 days from the date Seller is notified in writing of the particular defects claimed to (1) remedy the title; (2) obtain title insurance insuring over the defect to Buyer’s satisfaction (as determined by Buyer in its discretion). If Seller remedies title or obtains a title insurance policy to the satisfaction of Buyer, within the time specified, Buyer agrees to complete the sale within on the date set for the Closing. If Seller fails to remedy the title, to obtain such title insurance, or to give Buyer written notification within such 30 days, the Buyer has the option to (a) cure title up to $25,000 which the costs of which will be credited against the purchase price at closing, provided that no encumbrance or defect is recorded after the effective date then Buyer may escrow 110%, or the amount required to bond over the defect, or (2), (b) proceed with the transaction, or (b) terminate this Agreement in which case the Earnest Money Deposit shall be refunded immediately in full termination of the rights of the Parties under this Agreement. Notwithstanding anything herein to the contrary, Seller shall be required to discharge on or before Closing all liens and judgments securing any monetary obligation that may be discharged by the payment of an ascertainable, fixed sum of money.

7.    Creditors of Seller.

7.1      Agreement of Payment. In addition to the warranties and representations contained in this Agreement, if for any reason any creditor or third party who is owed a debt by Seller on or before the Closing, or who otherwise possesses any type of right or interest in the Personal Property arising from the ownership or operation of the Business by Seller prior to the Closing, holds or obtains a lien on the Personal Property, then the following shall apply:

a.   Seller, without notice from Buyer, shall pay such monies arising from the ownership or operation of the Business by Seller prior to the Closing required to obtain the release of any lien on the property.

8.    Representations, Covenants, and Warranties of Seller.

As used in this Agreement, the phrase "Seller's knowledge" shall mean and apply to the actual, conscious knowledge of the "Named Representatives" (defined below) of Seller after due inquiry to the on-site senior manager for the Property Manager. The Named Representative of Seller is Kathie Long and Seller hereby represents and warrants to Buyer that Kathie Long is the individual affiliated with Seller or affiliated with the existing management of the Business, who have the most knowledge concerning the Property and the day to day operations of the Business.

Seller represents, and warrants to Seller’s knowledge, the following to be true, which representations and warranties shall survive the Closing for a period of twelve (12) months:

8.1      Status of Seller. Seller is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Mississippi and authorized to do business in the State of Mississippi, and, further, is properly authorized, according to its respective operating agreements and duly adopted Resolutions, to enter into and carry out the transactions contemplated by this Agreement. Furthermore, Seller has not in the last five years used or assumed any other name in connection with the conduct of the Business. A copy of Seller’s Articles of Organization and any amendments to date and an organizational chart are attached as Exhibit 8.1.

8.2      Authority. When executed, this Agreement and all instruments necessary to carry out the transactions contemplated by this Agreement (the “Related Documents”) will be legal, valid, and binding obligations of Seller.

8.3      Financial Statements. Upon the signing of this Agreement, Seller shall provide Buyer with financial statements concerning the Business as of the fiscal year preceding the Effective Date (together with any subsequently prepared financial statements supplied by Seller to Buyer (collectively, the “Financial Statements”)). The Financial Statements shall:

a.   Fairly present both the financial position of Seller as of the respective dates indicated and the results of operations, retained earnings, and changes in financial position of Seller for the respective periods indicated, and

b.   Have been prepared in accordance with generally accepted accounting principles.

8.4      Absence of Undisclosed Liabilities. Notwithstanding anything contained in this Agreement to the contrary, as of the dates of and except to the extent reserved or reflected in the Financial Statements, Seller have no known liabilities or obligations. Seller represents that Seller does not know or have reasonable grounds to know of any basis for the assertion against Seller, as of such dates, of any liability of any nature or in any amount not fully reserved or reflected in the Financial Statements.

8.5      Title to Properties. At Closing, Seller shall have good and marketable title to the Purchased Assets, subject to no mortgage, pledge, lien, encumbrance, security interest, or charge other than the Permitted Encumbrances. Further, to Seller’s knowledge, except as set forth in this Agreement, there are no other encumbrances to title that would affect the marketability of title of the Purchased Assets.

8.6      Business Name. Seller agrees that from and after the Closing Date, Buyer shall have all of Seller’s right to use in or in connection with the conduct of any business (1) Homewood Suites by Hilton Southaven (the “Name”); or (2) any part or portion of the Name, either alone or in combination with one or more other words. After the Closing Date, Seller agrees that it will not use the Name directly or indirectly, either alone or in combination with one or more other words, in or in connection with any business, activities, or operations that Seller directly or indirectly may carry on or conduct.

8.7      Status of Contracts. Seller has, to Seller’s knowledge, complied with all of the material provisions of written contracts (as disclosed on Exhibit 1.16) described in this Agreement and of all other written contracts to which Seller is a party. Further, other than those written contracts or agreements specifically described in this paragraph, Seller has no written contract extending beyond the Closing Date, which would be binding on Buyer or affect Buyer’s ability to close. All prepaid contracts being assigned have been fully paid by Seller.

8.8      Insurance. All assets owned by Seller are and will be adequately insured against fire and casualty to the Closing Date (collectively, the “Policies”). Further, the Policies are and will be outstanding and duly enforced and the premiums to become due on the Policies to the Closing Date will be paid when due. Seller has not received any notice of any cancellation of the Policies.

8.9      Taxes; Unemployment Liabilities; Tax Returns and Audits.

a.   Taxes. All personal property taxes and other taxes of any nature assessed against Seller and/or the Business are and will be fully paid by Seller as the same become due in the ordinary course of business. Without limiting the generality of the foregoing, all federal, state, county, and local taxes, including without limitation, income, corporate franchise, state business, stamp, transfer, sales and use, and ad valorem taxes due and payable by Seller on or before the Closing Date.

b.   Tax Returns; Audits. Seller has, and as of the Closing Date will have, filed all taxes and reports required to be filed by Seller pursuant to the operation of the Business with all such taxing authorities as of the Closing Date, including the unemployment insurance agency. Seller does not have any outstanding or unsatisfied deficiency assessments with respect to any taxes, and there are no current audits or investigations by or disputes with any authority with respect to any taxes.

c.   No Dispute. Seller is not involved in any dispute with any tax authority about the amount of taxes due, nor have they received any notice of any deficiency, audit, or other indication of deficiency from any tax authority not disclosed to the Parties to this Agreement.

8.10    Licenses and Permits. Seller presently possesses and will continue to possess at the Closing Date all governmental licenses, permits, certificates of inspection, other authorizations, filings, and registrations which are necessary for Seller to own and operate the Business as presently conducted.

8.11    Litigation or Insolvency Proceedings.

a.   Litigation. To Seller’s knowledge, there are no actions, suits, claims, investigations, or legal, administrative, or arbitration proceedings pending or threatened or likely to be asserted by or against Seller or relating to the Purchased Assets, this Agreement and/or the transactions contemplated hereby, before any court, governmental agency, or other body, including any quasi-judicial or administrative forum, and Seller has not received notice of any judgment, order, writ, injunction, decree, or other similar command of any course, governmental agency, or body being entered against or served upon Seller or upon any individual owner of Seller, except as expressed upon Exhibit 8.11.

b.   Insolvency Proceedings. Seller is not involved in any proceeding by or against Seller in any court under the Bankruptcy Code or any other insolvency or debtor’s relief act, whether state or federal, or for the appointment of a trustee, receiver, liquidator, assignee, or other similar official of Seller or Seller’s property.

8.12.1  Labor Relations—Employees. Seller does not have any employees at the Hotel but agrees to cause the following:

a.   Notification and Termination of Employees. At a mutually agreed upon time after this Agreement is executed that is not more than three (3) days prior to the Closing Date, Seller and Buyer shall jointly announce the Agreement to Seller’s employees, and shall cooperate so that Seller’s notices of termination and any offers of employment by Buyer are delivered simultaneously so that appropriate management representatives may explain the termination and any offers of employment to the employees. As of the Closing Date, Seller will terminate all employees and will pay to all employees all wages, salaries, commissions, bonuses, benefit plan contributions, and other compensation. Buyer may, in its discretion, re-employ some or all of such employees on the day after the Closing Date.

b.   Employment Regulations Compliance. To Seller’s knowledge, there are no unfair labor practice complaints against Seller pending before the National Labor Relations Board (“NLRB”), and no such complaints have been threatened; (2) there is no labor strike, dispute slowdown, or stoppage actually in progress or threatened against Seller; (3) no grievance or arbitration proceedings are pending and no such claim has been asserted; and (4) Buyer shall not incur any liability or obligation of any kind arising out of Seller’s employment of or termination of Seller’s employees nor for any other claim by any of Seller’s employees arising out of any employment relationship with Seller. In the event that the WARN Act or portions thereof apply to this Agreement, the Seller is responsible for compliance with the duties and obligations of the employer under the act.

8.13    Environmental Matters. To Seller’s knowledge, (i) there is no Hazardous Material in, on, or under the Real Estate and (ii) there are no presently pending or threatened administrative or enforcement actions, investigations, compliance orders, claims, demands, actions, or litigation based on environmental laws or regulations or otherwise related to the presence of Hazardous Material, in, on, or under the Real Estate. Seller makes no other environmental representations or warranties, but Seller acknowledges that neither Party is required to close the transactions contemplated by this Agreement unless satisfied prior to expiration of the Review Period, with the environmental reports or assessments conducted in accordance with this Agreement. For purposes of this paragraph, the term “Hazardous Material” shall mean any toxic or hazardous waste or substance (including without limitation asbestos and petroleum products) regulated by applicable local, state, or federal environmental laws or regulations by and electronic verification

8.14    Conduct of Business. From the date of the most recent Financial Statements delivered by Seller to Buyer to the Effective Date, the Business of Seller has been (and until the Closing Date shall be) open and conducted by Seller in a normal and regular manner; and further, Seller has not:

a.   Amended its Articles of Organization;

b.   Entered into any contract or commitment extending beyond the Closing, except normal commitments made in the ordinary course of business;

c.   Modified the compensation or benefits payable to or to become payable by Seller to any officer, employee, or agent without notifying Buyer of such changes as can made in the ordinary course of business;

d.   Encumbered any Purchased Assets;

e.   Experienced any adverse change or any material damage, destruction, or loss affecting its assets or the Business; and/or

f.   Entered into any written agreement not in the ordinary course of business, binding on the Seller.

8.15    ERISA Plans. Seller has no employee benefit plans now in effect which are subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended.

8.16    Condition of Purchased Assets. The following representations are made with respect to the Personal Property:

a.   The Personal Property is presently operating and has been regularly maintained and will be in the same working condition in all material respects as of the Closing Date.

b.   There are no known defects that have not been disclosed to Buyer.

c.   To Seller’s knowledge, there are no outstanding citations issued by any health, building, or other governmental agency, under the Occupational Safety and Health Act and/or    under

the Americans with Disabilities Act having jurisdiction over the operation of the Personal Property, including any claims of any violation of any federal, state, or local environmental statutes, regulations, ordinances, or other environmental regulatory requirements, except as expressed upon Exhibit 8.16.

8.17    No Violation or Breach. To Seller’s knowledge, the performance of this Agreement will not be in violation of any laws, statutes, local ordinances, state or federal regulations, court or administrative order, or ruling, nor is the performance of this Agreement in violation of the conditions or restrictions in effect for financing pursuant to any loan documents, whether any such loan is secured or unsecured.

8.18    Full Disclosure. This Agreement and any other information furnished to Buyer in connection with the transactions contemplated by this Agreement neither contains any untrue statement of material fact nor omits to state any material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading.

8.19    Competitors. Neither Seller nor any individual owner, officer, director, shareholder, or member has any direct or indirect interest in any person or entity engaged or involved in any business which is competitive with the Business.

8.20    Directors, Managers, Officers, and Owners. The directors, managers, officers, and other owners, will not compete directly or indirectly with Business following the Closing Date; and, the names of directors, managers, officers, and the resident agent of Seller, together with each individual owner, are set forth on attached Exhibit 8.20.

8.21    Broker’s or Finder’s Fees. Each party represents to the other that (i) it has not contacted, contracted with or entered into any agreement with any broker or agent in connection with the transaction contemplated by this Agreement, other than  (“Seller’s Broker”), who represent Seller in this transaction, and (ii) it has not taken any action which might result in any other broker’s fees, finder’s fees or other commissions (“Other Commissions”) being due or payable in connection with this transaction. Seller shall pay Seller’s Broker a commission per a separate agreement. Seller and Buyer shall each indemnify and save harmless the other from and against all costs, claims, expenses, or damages including reasonable attorney’s fees resulting from or related to any Other Commissions alleged to be due as a result of their respective actions.

8.22    Compliance. To Seller’s knowledge, Seller disclosed all notices received by Seller of violation of law or municipal ordinances, orders, or requirements noted in or issued by any governmental department, or quasi-governmental as of the date of this agreement and updated at the Closing Date.

8.23    Foreign Person. Seller is not a “foreign person” as that term is defined in IRC 1445(f)(3) and will, at Closing, execute a FIRPTA affidavit as required by law.

8.24    Mechanic’s Lien. Seller has not been served with any notice of intent to claim a Mechanic’s Lien on the Real Estate of the Business and states that all parties who have furnished labor or materials on or at  the Real Estate of the Business within the  last  90 days    whether  for  repair,

improvement, or otherwise have been fully compensated. Further, Seller has not contracted for nor is liable for obligations related to repairs, services, and other items that will not be paid in full at Closing, however, Seller will provide the Title Company with such documents requested by Title Company for the issuance of without the standard exception for liens.

8.25    Accuracy of Information. Seller represents and warrants that the information provided by Seller or its agents is accurate, true and correct in all material respects.

8.26    Brand Standards. Seller represents that to its knowledge that the Business is within brand standards, and that any future Property Improvement Plan (the “PIP”) items that have been negotiated for delayed implementation have been disclosed to Buyer.

8.27    Reliance. The foregoing representations and warranties are made by Seller with the knowledge and expectation that Buyer is placing complete reliance on them.

9.    Representations, Covenants, and Warranties of Buyer.

Buyer represent, covenant, and warrant the following to be true, which representations, covenants and warranties shall survive the Closing:

9.1      Status of Buyer. Buyer is a limited partnership duly organized and validly existing with all required reports filed with the State of Delaware, is in good standing under the laws of the State of Delaware, and is properly authorized, according to its respective operating agreements and duly adopted Resolutions, to enter into and carry out the transactions contemplated by this Agreement. A copy of Buyer’s Articles of Organization and any amendments to date and an organizational chart are attached as Exhibit 9.1.

9.2      Authority. This Agreement and all Related Documents when executed will be legal, valid, and binding obligations of each party signing such instruments on behalf of Buyer.

No Conflict or Required Consents. Neither the execution of this Agreement nor the consummation by Buyer of the transactions contemplated hereby will (i) conflict with or result   in a breach of the terms, conditions or provisions of or constitute a default, or result in the termination of any agreement or instrument to which Buyer is a party; (ii) violate any restriction to which Buyer is subject; or (iii) constitute a violation of any applicable code, resolution, law, statute, regulation, ordinance, judgment, rule, decree or order affecting Buyer or to which Buyer  is a party.

10.    Pre-Closing Actions and Miscellaneous Covenants.

From the Effective Date until the Closing:

10.1    Access by Buyer. Seller shall permit Buyer and its representatives to make a full business, financial, accounting, and legal review of the Business and Seller’s tax returns to the extent Buyer deems necessary in its reasonable judgment (the “Due Diligence Review”).

a.   Such right shall include the right to monitor the sales and operations of the Business from and after the Effective Date.

b.   Seller shall take all reasonable steps necessary to cooperate with Buyer in undertaking the Due Diligence Review.

c.   Except as set forth in this Agreement or as agreed by the Seller and Buyer, the Due Diligence Review by Buyer or its representatives shall not affect the representations and warranties of Seller or Buyer’s reliance on them.

10.2    Due Diligence Review by Buyer.

a.   Review Period. Buyer will have until December 19, 2019 (the “Review Period”) to conduct a due diligence period of the Business, review the Seller provided and ordered a current PIP (at cost of obtaining such PIP report shall be at Seller’s cost), to obtain approval of its Board of Directors, as well as to review Seller’s books and records, and conduct inspections of the Real Estate. If the Buyer does not notify the Seller and escrow agent in writing, signed only  by Norman Leslie  or  David  Durell,  on or  before the  expiration of Review Period that Buyer is satisfied with the Review Period (the “Satisfaction  Notice”) then the Buyer shall  be  deemed  to  have  exercised  its  right  of  termination  and this Agreement shall terminate. For the avoidance of doubt, if the Buyer does not provide a Satisfaction notice, then Buyer is deemed to have terminated this Agreement, and is entitled to a return of the Earnest Money Deposit.

b.   Review Period; Materials. Within the first three (3) days after execution of this agreement, Seller will provide those items listed on Schedule 10.2(b) via access to shared files. A delay by Seller of submission of information, at Buyer’s complete discretion, may extend the review period on a day to day basis as necessary or helpful in favor of the Buyer.

c.   Ongoing Duty to Provide Information. Seller’s duty to provide information to Buyer shall continue until the Closing even if the Review Period has  ended.

d.   Contact with Key Personnel. During the Review Period, the Seller’s primary point of contact will be Kathie Long (the “Seller Point of Contact”). Furthermore, during the Review Period, the Buyer will be given direct access, and ability to communicate to the General Manager, Assistant General Manager, Head Housekeeper, Chief Engineer, and Director of Sales (collectively, “Key Personnel”) with prior written notice to Seller and with a representative of Seller present if determined by  Seller.

e.   Any and all inspections, tests, audits and other investigations performed by Buyer or its agents and representatives shall be at Buyer’s sole cost and expense. Further, all such inspections and tests shall be performed by Buyer without unreasonable interference   with

the business operations conducted on the Real Property. Buyer agrees to indemnify and hold Seller harmless from and against any and all claims, liens (including, without limitation, mechanic's or materialmen's liens or claims of liens), demands, liabilities, losses, damages, costs and expenses including, reasonable attorneys' fees, resulting from any damage caused to the Property or injury to any persons which arises from any activity of Buyer or any of its agents and representatives pursuant to this Section 10.4. Prior to entering onto the Real Property, Buyer shall carry at its own expense at least $1,000,000.00 of commercial general liability insurance (including coverage for contractual liability) listing Seller and Vista Hosts, Inc. (“Property Manager”) each as an additional insured. No invasive testing, sampling or drilling shall occur without the prior written consent of Seller, such consent not to be unreasonably withheld, and Seller shall consent to or deny any request for invasive testing, sampling or drilling within three (3) business days after the request is submitted by Buyer to Seller. Notwithstanding anything herein to the contrary, Seller shall not withhold its consent for purposes wholly unrelated to scope or nature of the sampling or invasive procedure for which its consent was requested. If Seller fails to give written notice that it is denying it’s consent within such three (3) business days, then Seller’s consent shall be deemed given. In the event Buyer requests and Seller consents or (Seller is deemed to have given its consent) to such invasive testing, sampling or drilling, Buyer shall also furnish Seller with evidence that the party completing such testing, sampling or drilling has at least $1,000,000.00 of commercial general liability insurance (including coverage for contractual liability) listing Seller and Property Manager each as an additional insured from an insurance company and in a form reasonably satisfactory to Seller. Buyer shall repair any and all damage to the Real Property or Purchased Assets and return them to their condition immediately prior to such testing.

10.3    Accuracy of Representations and Warranties; Satisfaction of Conditions. Seller will immediately advise Buyer in writing if (1) any of Seller’s representations or warranties are untrue or incorrect in any material respect or (2) Seller becomes aware of the occurrence of any event or any state of facts that results in any of the representations and warranties of Seller being untrue or incorrect in any material respect, as if Seller was then making them. Seller will not take any action, or omit to take any action, that would result in any of Seller’s representations and warranties set forth in this Agreement being untrue or incorrect in any material respect as of the Closing Date. Seller will use Seller’s commercially reasonable efforts to cause all conditions within Seller’s control that are set forth in this Agreement to be satisfied as promptly as practicable under the circumstances.

10.4    Conduct of Business. Except as otherwise specifically provided in this Agreement, Seller will use all reasonable efforts to keep the Business organization intact; to preserve the relationships with Seller’s customers, suppliers, and others having business dealings with Seller; and to preserve the services of Seller’s employees, agents, and representatives, if any. Without limitation of the foregoing:

a.   Seller shall not undertake any action outside the ordinary course of its business not to exceed an aggregated amount of $5,000 without the prior written consent of Buyer that, if taken before the date of this Agreement, would have been required to be disclosed on any Exhibit or required to be disclosed pursuant to the provisions of this Agreement; and

b.   Seller will not undertake any action which would alter the nature of the Business or result in any change in the Personal Property, other than in the ordinary course of business consistent with past practices.

c.   Seller will notify Buyer of any matter which occurs outside the ordinary course of its operations which, in Seller’s reasonable judgment, could result in a material adverse change in the operation of the Business by Seller.

10.5    Survey, Environmental Studies and Remediation Activities.

a.   Survey and Environmental Studies. Within three (3) days after the Effective Date, Seller shall upload to the share site, copies of (1) all existing surveys and all existing Environmental Site Assessments (whether Phase I, Phase II, or otherwise) covering all or any portion of the Real Estate, to the extent the same are in Seller’s possession or Seller has access to them, and (2) any other environmental studies, reports, and information, including, without limitation, correspondence from governmental authorities, concerning the environmental condition of the Real Estate, to the extent the same are in Seller’s possession or Seller has access to them. (The foregoing information, whether obtained by Buyer or provided by Seller, is referred to collectively as the “Environmental Information”).

1.    At Buyer’s option, and Buyer’s expense, Buyer may obtain (1) new or updated surveys for the Real Estate certified to Buyer so that Buyer may rely on same, and/or (2) new or updated Environmental Site Assessments for the Real Estate certified to Buyer so that Buyer may rely on same, and/or (3) certification of the existing Environmental Site Assessments to Buyer, and/or (4) Phase II Environmental Site Assessments certified to both Seller and Buyer.

2.    Seller grants to Buyer and its contractors and representatives access to the Real Estate for the purpose of performing such studies or tests. Such persons shall conduct their studies and tests in such a manner as to minimize interference with the Business, and, upon completion of their activities on the Real Estate, shall restore each parcel of real property as nearly as is reasonably possible to the condition it was in immediately prior to such activities.

b.    Remediation.

1.    In the event that any of the Environmental Information or any studies or tests performed or commissioned by Buyer indicate the existence of any environmental conditions on the Real Estate, Seller shall have a period of 30 days after notification thereof in which to either (i) notify Buyer if it elects to remediate or otherwise cure the same in accordance with all applicable governmental requirements or (ii) to give notice in writing to Buyer that it will not undertake such remediation.

2.    In the event that an environmental condition exists or is discovered on the Real Estate and Seller fails or refuses to remediate or otherwise cure such environmental condition within the required 30-day period, or in the event such environmental condition is not capable of being remediated or otherwise cured within such 30-day period, then Buyer shall have the option to:

A.   By written notice of cancellation given to Seller prior to the Closing Date, in which event the Parties shall have no further obligations under this Agreement; or

B.   Waive in writing the remediation or cure of such environmental condition (without in any way waiving Buyer’s rights under this Agreement pertaining to Seller’s indemnification) and proceed to close the sale contemplated by this Agreement without a reduction in the Purchase Price.

11.    Conditions Precedent to Obligations of Buyer at Closing.

The obligations of Buyer to perform this Agreement at the Closing are subject to the satisfaction at or prior to the Closing of the following conditions prior to expiration of the Review Period, unless waived in writing by Buyer:

11.1    Accuracy of Representations and Warranties. The representations and warranties of Seller contained in this Agreement and all Related Documents shall be true and correct in all material respects at and as of the Closing Date as though such representations and warranties were made on the Closing Date. Further, upon request of Buyer, Seller shall deliver to Buyer a certificate certifying that as of the Closing Date all of the representations and warranties of Seller contained in this Agreement are true and correct in all material respects.

11.2    Performance of Covenants. Unless otherwise agreed or waived, Seller shall have in all respects performed and complied with all covenants, agreements, and conditions that this Agreement and all Related Documents require to be performed or complied with before or on the Closing Date.

11.3    Lien Search. Buyer shall have received UCC searches in form and content satisfactory to Buyer.

11.4    Closing Documents; Instruments of Transfer, Etc. Buyer shall have received the following:

a.   A special warranty deed or jurisdictional equivalent conveying good and indefeasible title, subject only to the Permitted Encumbrances, to the Real Estate to Buyer.

b.   A Special Warranty Bill of Sale, and an Assignment and Assumption of Maintenance Agreements, Service Contracts on Equipment Leases and Other Agreements (in the form attached hereto as Exhibit 11.4) containing the usual and customary covenants and warranties of title that are consistent with the requirements and the warranties of Seller in

this Agreement and that shall be convenient, necessary, or reasonably required to effectively transfer the Purchased Assets to Buyer with good title, free and clear of all encumbrances other than the Permitted Encumbrances.

c.   Resolutions of Seller approving and authorizing this Agreement and the transactions contemplated by this Agreement, and identifying the officers authorized to execute all documents.

d.   Seller’s affidavit of no liens on the Title Company’s standard form, sufficient to permit the Title Company to delete standard Schedule B exceptions.

e.   A Non-Foreign Person Affidavit (FIRPTA), if required by state or federal law.

f.   Closing Statements detailing all prorations and adjustments.

g.   Duly executed non-competition agreement, as incorporated as exhibit 1.3.

h.   3-05 Audit Acknowledgement. Seller covenants it will make all reasonable and good faith efforts to assist Buyer in any way helpful or necessary for Buyer’s third-party auditor (Deloitte) to collect necessary information as described on Exhibit 11.4(i).

11.5    Certificate of Good Standing State of Mississippi. Seller shall have applied for a certificate from the Mississippi Department of Revenue showing that Seller is in good standing under the laws of the State of Mississippi.

11.6    Change of Ownership PIP. Seller shall obtain and pay for all expenses associated with scheduling, ordering, and providing Buyer with a Brand approved change of ownership PIP report. Buyer shall be solely responsible for all costs and expenses associated with its franchise agreement.

11.7    Environmental Reports or Assessments. Prior to expiration of the Review Period, Buyer shall have received environmental reports or assessments on the Real Estate and operations requested by Buyer which show the Real Estate in an environmental condition reasonably satisfactory to Buyer. If Buyer does not request the foregoing, this condition shall be waived without any further action by any of the Parties.

11.8    No Material Adverse Change. Except as described in this Agreement, there shall have been no material adverse change in the Business caused by Seller, and at Closing Seller shall certify that its representations and warranties set forth in Section 8 are true and correct in all material respects.

11.10    Fire or Other Casualty/Risk of Loss.

a.   Assumption of Risk—Seller. Except as set forth in this Agreement, Seller assumes all risks of destruction, loss, or damage due to any casualty, including any liability arising out of ownership of the Purchased Assets, up to the time of the Closing.

b.   Assumption of Risk—Buyer.

1.    Notwithstanding the foregoing, Buyer assumes all risks of destruction, loss, or damage due to any casualty caused by Buyer’s negligence and in such event Buyer assumes all risks of destruction, loss, or damage pertaining to any of the Purchased Assets placed in the possession of Buyer prior to the Closing.

2.    After the Closing, Buyer assumes all risks of destruction, loss, or damage due to any casualty, including any liability arising out of ownership of the Purchased Assets.

c.   Insurance. In the event of casualty of any of the Purchased Assets prior to Closing, Seller’s insurance shall be applied toward repair or replacement of any such property. Any liability of Buyer shall be limited to damages in excess of any insurance proceeds received by Seller or Buyer and applied toward repair or replacement of the Purchased Assets. Seller shall expeditiously file a claim with Seller’s insurance carrier on notice of any such casualty covered by insurance, but authority to settle is limited by Buyer’s consent, such consent not to be unreasonably withheld, conditioned or delayed.

d.   Damage to Seller’s Property. If any of the Purchased Assets are materially damaged at any time before the Closing, and the damages cannot reasonably be repaired on payment of the sums available by insurance settlement or from any sums to be paid by Buyer to Seller at the Closing, Buyer, at Buyer’s option, shall have the right to terminate this Agreement and, on giving notice of such election, Buyer shall immediately receive a refund of the Earnest Money Deposit in full termination of Buyer’s rights under this Agreement. This paragraph shall not apply if damages are caused by any act or omission of Buyer, its agents, employees or invitees.

11.11    Possession. Buyer shall receive operating control and possession of all of the Purchased Assets following the Closing.

11.12    Buyer Financing. This Agreement is conditioned on Buyer obtaining a commercial loan. If Buyer is unable to obtain the commercial loan under terms acceptable to Buyer, in Buyer’s sole and absolute discretion, at any point prior to the expiration of the Review Period, Buyer shall give notice of such inability to Seller prior to the expiration of the Review Period and Buyer may then terminate this Agreement and receive the Earnest Money Deposit in full termination of the rights of the Parties under this Agreement.

11.13    Franchise Agreement. This Agreement is conditioned on Buyer obtaining a franchise agreement under term of years acceptable to Buyer, in Buyer’s sole and absolute discretion, prior to the expiration of the Review Period, Buyer shall give notice of such inability to Seller prior to the expiration of the Review Period and Buyer may then terminate this Agreement and receive the Earnest Money Deposit in full termination of the rights of the Parties under this Agreement.

12.    Conditions Precedent to Obligations of Seller at Closing.

Unless waived in writing by Seller, the obligations of Seller to perform this Agreement at the Closing are subject to satisfaction at or prior to the Closing of the following conditions:

12.1    Representations and Warranties. The representations and warranties of Buyer set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date.

12.2    Performance of Obligations of Buyer. Buyer shall have performed all obligations required to be performed by them under this Agreement prior to the Closing.

12.3    Closing Documentation. Seller shall have received the following payment and documents:

a.   The Earnest Money Deposit.

b.   All other instruments and documents reasonably required by this Agreement to be delivered by Buyer to Seller, and such other instruments and documents as Seller shall reasonably request which are not inconsistent with the provisions of this Agreement.

c.   Updated of Seller’s representations and warranties set forth in Section 8.

13.    Confidentiality.

a.   The parties acknowledge that each may become privy to confidential information of the other, and that communication of such confidential information to third parties (whether or not such communicated information is authorized) could injure each parties business in the event that this transaction is not completed.

b.   The parties agree to take reasonable steps to ensure that such information obtained about the other shall remain confidential and shall not be disclosed or revealed to outside sources.

c.   If this Agreement is terminated, each party will return to the other all originals and any copies they have made of the written information or disks provided by the other party, and the obligations not to disclose any information received under this Agreement will survive the termination of this Agreement.

d.   Buyer and its representatives shall hold in strictest confidence all data and information obtained with respect to Seller or its Business, whether obtained before or after the execution and delivery of this Agreement, and shall not disclose the same to others; provided, however, that it is understood and agreed that Buyer may disclose such data and information (a) to the agents, lenders, employees, consultants, accountants and attorneys of Buyer provided that such persons treat such data and information confidentially, or (b) as otherwise required by law. In the event this Agreement is terminated or Buyer fails to perform hereunder, upon Seller’s written request, Buyer shall promptly return to Seller any statements, documents, schedules,  exhibits or other  written  information obtained from

Seller in connection with this Agreement or the transaction contemplated herein. In the event of a breach or threatened breach by Buyer or its agents or representatives of this Section 10.1,

Seller shall be entitled to an injunction restraining Buyer or its agents or representatives from disclosing, in whole or in part, such confidential information. Notwithstanding the foregoing and anything to the contrary in this Agreement, nothing contained herein shall impair Buyer’s right (or the right of any permitted assignee or Lodging Fund REIT III, Inc. (“Parent”)) to disclose information relating to this Agreement or the Property (a) to any due diligence representatives and/or consultants that are engaged by, work for or are acting on behalf of, any securities dealers, investment advisors and/or broker-dealers evaluating Buyer, its permitted assignees or Parent, (b) in connection with any filings with governmental agencies (including the Securities and Exchange Commission) by Parent, and (c) to any broker-dealers or investment advisors in Parent’s selling group and any of Parent’s investors, including pursuant to the confidential offering memorandum used in connection with Parent’s ongoing private offering.

d. As used in this Agreement, “confidential information” includes information ordinarily known only to the disclosing parties personnel, and information such as customer lists, supplier lists, trade secrets, channels of distribution, pricing policy and records, inventory records, and other information normally understood to be confidential or designated as such.

14.       Notices. All notices, requests, demands, and other communications under this Agreement shall be in writing and shall be sent by hand messenger, electronic facsimile transmission, electronic mail (e-mail), reputable overnight courier, or certified mail, postage prepaid, return receipt requested. Notices and other communications shall be deemed to have been duly given, as applicable (i) if by hand delivery, on the date of delivery, if such date is a “Business Day” (Business Day(s) is defined as a work day.) (or if such date is not a Business Day, then on the first (1st) Business Day following such date), (ii) if by electronic facsimile transmission, the date of transmission as evidenced by automated date and time confirmation from sender’s machine, (iii) if given by e-mail, the communication is instantaneous and the day of receipt can be designated to be the same day as sending, so long as a confirmation of receipt has been tendered from the intended recipient to the sender within one (1) business day thereafter, (iv) if given by overnight courier, one (1) Business Day after deposit with the overnight courier, or (v) if given by certified mail, three (3) Business Days after deposit with the United States Post Office. Notices shall be addressed as set forth below, or to any other address that Buyer or Seller shall designate in writing:

If to Seller:	If to Buyer:
CVH Airways, LLC	Lodging Fund REIT III OP, LP
Attn: Stuart Cohen	c/o David Durell,
6750 Poplar Avenue, Suite 107	644 Lovett S.E., Suite A
Memphis, TN 38138	Grand Rapids, MI 49506
Fax:	ddurell@lodgingfund.com
Email:	Email: smontgomery@lodgingfund.com

With Copy to:	With Copy to:
Allison T. Gilbert, Attorney	John H. Faris
Harris Shelton Hanover Walsh, PLLC	McShane & Bowie, PLC
6060 Primacy Parkway, Suite 100	99 Monroe NW   Ave, Suite 1100
Memphis, TN 38119	Grand Rapids, Michigan 49503
Fax:	Fax:
Email:	Email: jhf@msblaw.com

15.    Indemnification.

15.1    If Buyer fails to perform any of Buyer's obligations hereunder, then Seller, at Seller's option, if such failure continues for fifteen (15) business days after written notice of such default from Seller and as Seller's sole and exclusive remedy, Seller shall have the right to terminate this Agreement by giving written notice to Buyer, in which event Seller shall be entitled to the full Earnest Money Deposit as liquidated damages, and neither Buyer nor Seller shall have any further rights or obligations under this Agreement except matters that survive termination. Notwithstanding the foregoing, this provision is not intended to limit Seller’s rights to enforce the Buyer’s repair and restoration obligations set forth under Section 9 hereof or Buyer’s obligations to indemnify Seller for certain matters as expressly provided in this Agreement.

15.2    Seller's Default. If Seller fails to perform any of Seller's closing obligations, then Seller will have three (3) days to cure after receipt of written notice from Buyer; if any of Seller's representations or warranties set forth herein are determined to be materially inaccurate or untrue when made and such failure continues for fifteen (15) business days after written notice thereof from Buyer (or such longer period as reasonably required by Seller to effect such cure, but in no event more than thirty (30) days) or the Closing Date of earlier, then Buyer, at Buyer’s option and as Buyer’s sole and exclusive remedies, shall have the right to either (i) terminate this Agreement by giving written notice to Seller, whereupon the Earnest Money shall be immediately delivered to Buyer by the Title Company upon receipt of written notice from Buyer of such termination and Seller shall reimburse Buyer for all of Buyer’s third party actual documented reasonable out-of- pocket expenses not to exceed One Hundred Thousand and No/100 Dollars ($100,000.00) (“Seller’s Breakage Fee,”) and thereafter neither Buyer nor Seller shall have any further rights or obligations hereunder except matters which survive termination, or (ii) pursue a damage claim not to exceed the Seller Breakage Fee (plus a refund of the Earnest Money) or (ii) enforce specific performance of the obligations of Seller under this Agreement. Any suit for specific performance must be filed within one hundred eighty (180) days after the Closing Date or shall thereafter be barred. Notwithstanding the above, if Seller shall be in default under this Agreement and, if as a consequence of such default, Buyer shall recover a money judgment against Seller, such judgment shall be satisfied only out of the right, title and interest of Seller in the Business as the same may then be encumbered and neither Seller nor any person or entity comprising Seller shall be liable for any deficiency. In no event shall Buyer have the right to levy execution against any property of Seller nor any person or entity comprising Seller other than its interest in the Business as herein expressly provided.

15.3    Default at Closing. Notwithstanding the notice provisions in Sections 15.1 and no notice for a failure to perform needs to be given with respect to a party’s obligation to close this transaction on the Closing Date.

15.4    Post-Closing Remedies. For a period of twelve (12) months from and after the Closing, Seller agrees to indemnify Buyer and hold Buyer harmless from and against any and all claims, demands, causes of action, liabilities, and judgments made or obtained by third parties (including, without limitation, reasonable attorneys’ fees incurred in connection with the enforcement of this indemnity), incurred or arising as a result of a breach of any of the representations or warranties or other agreements or covenants of Seller contained in this Agreement.

15.5    Indemnification by Buyer. Buyer shall defend, indemnify, and hold harmless Seller and Seller’s agents and employees, heirs, representatives, successors, and assigns from and against any and all costs, losses, claims, liabilities, fines, expenses, penalties, and damages (including reasonable legal fees) in connection with or resulting from:

a.   All debts, liabilities, and obligations of Buyer, whether accrued, absolute, contingent, known, unknown, or otherwise;

b.   Any failure by Buyer to perform or observe in full, or to have performed or observed in full, any covenant, agreement, or condition to be performed or observed by the Buyer under this Agreement.

16.    Consultation. Seller shall, at the request of Buyer, provide to Buyer consultation, general assistance, and informational services pertaining to the Business on a limited basis, as reasonably requested by Buyer; such services shall be based on owner’s reasonable availability, which shall be provided without charge for a period not to exceed 30 days, commencing on the Closing Date.

17.    Closing.

17.1   Closing Date. Unless otherwise agreed, the Closing shall be held on or before the 15th day after the expiration of the Review Period.

17.2    Closing Location. The Closing shall be held on the Closing Date at the offices of an attorney or title company or at such other location as may be agreed on by the Parties.

17.3    Documents. Seller shall be responsible for preparing the closing documents and delivering them to Buyer at least five (5) business days before the Closing Date for Buyer’s review and approval. At the Closing and at any time after it, the Parties shall execute documents which are reasonably necessary or helpful to put into effect the terms of this Agreement.

17.4    Seller's Expenses at Closing. Seller shall pay or cause to be paid at no expense to Buyer

(a) any termination fees relating to the existing management agreement with Property Manager, if any; (b) All attorneys' fees incurred by Seller in connection herewith and the Closing; (c) All costs in obtaining good standing certificates; (d) any recording costs pertaining to releases of any liens

against the Real Property; (e) the broker commissions to be paid to the Broker at Closing; (f) Fifty (50%) percent of all Title Company escrow fees; and (g) the cost of the title search.

17.5    Buyer’s Costs. Buyer shall pay: (a) all recording costs pertaining to the recording of the special warranty deed; (b) Fifty (50%) percent of all Title Company escrow fees: (c) the cost of a standard ALTA Owner’s Title Insurance Policy (with coverage up to the Purchase Price); (d) All costs and expenses incurred by Buyer in connection with any inspections performed pursuant to the terms herein; (e) all attorneys' fees incurred by Buyer in connection herewith and with the Closing; (f) the cost of the survey and Phase I environmental report, if deemed necessary by Buyer; (g) all transfer taxes, intangible taxes, documentary stamps and recording fees assessed on the conveyance of the Real Property and all taxes related to the transfer of any personal property; (h) all indebtedness taxes and recording costs for the deed of trust or other loan documents in connection with Buyer’s financing; (i) the cost of any mortgagee’s title policy, including extended coverage and any endorsements required by Buyer or its lender; and (j) all costs and expenses relating to the transfer of licenses and permits; all transfer fees and charges, as applicable, relating to either the issuance of the Franchise Agreement, including any liquidated damages.

18.    Miscellaneous.

18.1   Amendment. This Agreement shall not be amended, altered, or terminated except by a writing executed by each Party.

18.2  Choice of Law. This Agreement shall be governed in all respects by the laws of the State of Mississippi.

18.3  Headings. The paragraph headings used in this Agreement are included solely for convenience.

18.4  Entire Agreement. This Agreement sets forth the entire understanding of the Parties; further, this Agreement shall supersede and/or replace any oral or written agreement(s) relating to this subject matter entered into by the Parties before the date of this Agreement.

18.5   Waiver. The waiver by any Party of any breach or breaches of any provision of this Agreement shall not operate as or be construed to be a waiver of any subsequent breach of any provision of this Agreement.

18.6  Binding Effect. This Agreement, inclusive of its terms and provisions, shall survive the Closing and shall be binding on and inure to the benefit of, and be enforceable by, the respective heirs, legal representatives, successors, and assigns of the Parties.

18.7  Construction of Agreement. Each Party and its respective legal counsel has reviewed and revised this Agreement and has had equal opportunity for input into this Agreement. Neither Party nor their respective legal counsel shall be construed to be the drafter or primary drafter of this Agreement. In the event of any dispute regarding the construction of this Agreement or any of its provisions, ambiguities or questions of interpretation shall not be construed more in favor of one Party than the other; rather, questions of interpretation shall be construed equally as to each Party.

18.8  Consent. Unless otherwise provided, any required consent of a Party shall not be unreasonably withheld or delayed by such Party.

18.9  Counterpart Execution; Facsimile Execution.

a.   Counterpart Execution. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all counterparts, when taken together, will constitute one and the same agreement.

b.   Facsimile Execution. The Parties agree that signatures on this Agreement, as well as any other documents to be executed under this Agreement, may be delivered by facsimile in lieu of an original signature, and the Parties agree to treat facsimile signatures as original signatures and agree to be bound by this provision.

18.10 Assignment by Buyer. Buyer may assign its rights in this Agreement to a purchasing entity with which Buyer and/or its principal owners own a controlling interest in.

18.11 Days. All references to days in this Agreement shall be construed as calendar days unless otherwise specified and a day shall begin at    12:00 a.m. Central Standard Time and end at 11:59 p.m. Central Standard Time.

18.12 Calculating Time Periods. In calculating any time period prescribed or allowed by this Agreement, the day of the act or event from which the time period begins to run is not included and the last day of the time period is included.

(signatures on following page)

The Parties have executed this Agreement on the following dates to be effective as of the Effective Date:

SELLER:

CVH AIRWAYS, LLC

a Mississippi limited liability company

Dated: 11/5/19        By: /s/ Stewart Cohen

Its: Member

BUYER:

Lodging Fund REIT III, OP, LP a Delaware limited partnership

BY: Lodging Fund REIT III, Inc. ITS: General Partner

Dated: 11/05/19/s/ David R. Durell

By: Dave Durell

Its: Chief Acquisitions Officer

Exhibit 1.1

TRADE FIXTURES & EQUIPMENT

Seller to provide.

Exhibit 1.2

REAL ESTATE

Seller to provide.

Exhibit 1.3

NON-COMPETITION AND NON-SOLICITATION AGREEMENT

This NON-COMPETITION AND NON-SOLICITATION AGREEMENT (this “Agreement”) is dated as of , 2019 (the “Effective Date”), by and among Lodging Fund REIT III OP, LP, a Delaware limited partnership, with an address of 1635 – 43rd Street S, Suite 205, Fargo, ND 58103, or its assignee (“Buyer”), CVH AIRWAYS, LLC, a Mississippi limited liability company, with an address of 6750 Poplar Avenue, Suite 107, Memphis, TN 38138 (“Seller”), , its CFO, and , its manager and , operating officers of the Seller (the “Interested Parties”). The Seller and Interested Parties are collectively referred to herein as the “Restricted Parties.”

R E C I T A L S:

A.    The Buyer and Seller have entered into an Asset Purchase Agreement, dated as of , 2019, (the “Purchase Agreement”), pursuant to which Buyer has agreed to purchase from Seller the Homewood Suites by Hilton Southaven located at 135 Homewood Drive, Southaven, MS 38671 (the “Hotel”).

B.    The agreement of the Restricted Parties to deliver this Agreement was a material inducement to Buyer in entering into the Purchase Agreement, and the delivery of this Agreement by the Restricted Parties was a condition to Buyer’s obligation to purchase the Hotel and to pay the Purchase Price (as defined in the Purchase Agreement). Buyer seeks assurance that the Restricted Parties will refrain from competing with Buyer. The Restricted Parties acknowledge that the restrictions set forth in this Agreement are necessary to protect the legitimate business interests of the Buyer, their affiliates and the Hotel.

C.    The Buyer, as the owner of the Hotel from and after the date of closing of the Purchase Agreement, desires to preclude the Restricted Parties from competing against it during the term of this Agreement.

A G R E E M E N T

In consideration of the foregoing and the payment of the Purchase Price under the Purchase Agreement, and the covenants and agreements set forth in this Agreement and in the Purchase Agreement, the parties agree as follows:

SECTION 1.   COVENANTS AND CONSIDERATION

1.1    Non-Competition. The Restricted Parties covenant and agree that, for a period of three (3) years beginning on the closing date of the Purchase Agreement (the “Closing Date”), neither the Restricted Parties, nor any entity controlled by the Restricted Parties (an “Affiliate”) will, without the prior written consent of the Buyer, directly or indirectly, own, manage, operate, join, control, or engage or participate in the ownership, management, operation, or control of, or be connected as a shareholder, director, officer, agent, partner, joint venturer, lender, employee, consultant or advisor with, any business or organization any part of which engages in the business of hotel or motel ownership or management or is in competition with any of the business activities

of the Buyer, or any affiliate of the Buyer within the Non-Competition Area. The term “Non- Competition Area” in this Agreement means the area within a five (5) mile radius of the Hotel. This provision shall not apply to any business which was in operation prior to the Effective Date of the Asset Purchase Agreement including the following existing projects: . Provided further, this provision shall not restrict the Interested Parties, individually or as owners or employees of an entity from managing or consulting regarding one or more hotel(s) or motel(s) under management agreement for owner(s) or lender(s) which either or both Interested Party(ies):

(a) do business with prior to the Effective Date, (b) are part of a multi-property management relationship with owner(s); or a lender(s); or (c) is a property in receivership or foreclosure controlled by a lender.

1.2    Non-Disparagement. The Restricted Parties shall not: (a) make any disparaging or defamatory statements about Buyer, the Hotel or their affiliates, or (b) authorize, encourage or participate with anyone to make such statements.

SECTION 2.   ENFORCEABILITY; REMEDIES

2.1    Reasonableness; Independent Covenants. The Restricted Parties acknowledge that the restrictions set out in this Agreement are reasonable and necessary protect the legitimate business interests of Buyer and the Hotel from and after the Closing Date. The Restricted Parties further acknowledge that all of the restrictions in this Agreement are reasonable in all respects, including duration, territory and scope of activity restricted. The Restricted Parties agree that the covenants and provisions of this Agreement shall be construed as separate agreements independent of any other provision of this Agreement or of any other agreement between a Restricted Party and Buyer.

2.2    Remedies. The Restricted Parties agree that if they or any of their Affiliates engage or threaten to engage in any activity that constitutes a violation of any of the provisions of this Agreement, Buyer shall have the right and remedy to have the provisions of this Agreement specifically enforced to the extent permitted by law by any court having jurisdiction, it being acknowledged and agreed that any breach of this Agreement would cause immediate irreparable injury to Buyer and/or the Hotel and that money damages would not provide an adequate remedy at law for any breach. Therefore, the Restricted Parties agree that Buyer, without limiting any other legal or equitable remedies available to it, shall be entitled to obtain equitable relief by temporary restraining order, preliminary and permanent injunction or otherwise from any court of competent jurisdiction (without the requirement of posting a bond or other security), including, without limitation, injunctive relief to prevent the Restricted Parties’ failure to comply with the terms and conditions of Section 1 of this Agreement. Such right and remedy shall be in addition to, and not in lieu of, any other rights and remedies available to Buyer at law or in equity, including the right to seek monetary damages. The applicable three (3) year period of the covenants contained in Section 1 above shall be extended on a day for day basis for each day during which a Restricted Party is in violation of the covenant, so that each Restricted Party is restricted from engaging in the activities prohibited by the covenant for the full three (3) year time period. The Restricted Parties agree that the existence of any claim or cause of action by a Restricted Party against Buyer, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by Buyer of the covenants and restrictions in this Agreement.

2.3    Reformation. It is the intent of the parties to this Agreement that the provisions of the Agreement be enforced to the fullest extent permissible under applicable law. If any term or provision of this Agreement is determined to be void, illegal, invalid or unenforceable by any court of competent jurisdiction in any jurisdiction, then such term or provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction and such invalid or unenforceable provision shall be modified by such court so that it is enforceable to the extent permitted by applicable law. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party. If, in any judicial proceeding, a court shall refuse to enforce one or more of the covenants set forth in Section 1 of this Agreement because the duration is too long or the scope is too broad, it is expressly agreed between the parties that the court making such determination shall be empowered to reduce the duration and scope of the covenants set forth in Section 1 to the extent necessary to permit enforcement of such covenants.

SECTION 3.   MISCELLANEOUS

3.1    Notices. All notices, requests, demands, and other communications under this Agreement shall be in writing and shall be sent by hand messenger, electronic facsimile transmission, electronic mail (e-mail), reputable overnight courier, or certified mail, postage prepaid, return receipt requested. Notices and other communications shall be deemed to have been duly given, as applicable (i) if by hand delivery, on the date of delivery, if such date is a Business Day (or if such date is not a Business Day, then on the first (1st) Business Day following such date),

(ii) if by electronic facsimile transmission, the date of transmission as evidenced by automated date and time confirmation from sender’s machine, (iii) if given by e-mail, the communication is instantaneous and the day of receipt can be designated to be the same day as sending and a written copy must also be sent via certified mail, (iv) if given by overnight courier, one (1) Business Day after deposit with the overnight courier, or (v) if given by certified mail, three (3) Business Days after deposit with the United States Post Office. Notices shall be addressed as set forth below, or to any other address that the parties shall designate in writing:

If to the Restricted Parties:

CVH Airways, LLC Attn: Stuart Cohen

6750 Poplar Avenue, Suite 107

Memphis, TN 38138

With copy to:

Allison T. Gilbert, Attorney

Harris Shelton Hanover Walsh, PLLC 6060 Primacy Parkway, Suite 100

Memphis, TN 38119

If to Buyer:

Lodging Fund REIT III OP, LP c/o David Durell

644 Lovett St SE, Suite A Grand Rapids, MI 49506 Fax: (616) 264-3838

Email: ddurell@lodgingfund.com

With copy to:

John H. Faris

McShane & Bowie, PLC

99 Monroe NW Ave, Suite 1100 Grand Rapids, Michigan 49503

Email: jhf@msblaw.com

3.2    Benefit and Binding Effect. The Restricted Parties may not assign this Agreement without the prior written consent of Buyer. The Buyer may assign its rights and delegate its duties under this Agreement to any other person or entity that (i) acquires ownership or control of the Buyer or Hotel, (ii) acquires substantially all of the assets of the Buyer or Hotel, or (iii) is a successor entity through merger or conversion. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.

3.3    Further Assurances. The parties shall execute any other documents that may be necessary and desirable to the implementation and consummation of this Agreement.

3.4    Governing Law. It is understood and agreed that the construction and interpretation of this Agreement shall at all times and in all respects be governed by the internal laws of the State of Mississippi, without giving effect to the conflict of laws provisions thereof.

3.5    Entire Agreement. This Agreement constitutes the entire agreement and understanding between the parties hereto concerning the subject matter hereof.

3.6    Headings. The headings herein are included for ease of reference only and shall not control or affect the meaning or construction of the provisions of this Agreement.

3.7    Amendments/Waivers. This Agreement cannot be amended except by an agreement in writing that makes specific reference to this Agreement and which is signed by the party against which enforcement of any such amendment is sought. Any waiver of any provision of this Agreement must be in writing and signed by the party granting the waiver.

3.8    Counterparts. This Agreement may be signed in counterparts with the same effect as if the signature on each counterpart were upon the same instrument.

[signature page follows]

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

	SELLER:
Dated:		By:
Its:

BUYER:

Lodging Fund REIT III, OP, LP a Delaware limited partnership

BY: Lodging Fund REIT III, Inc. ITS: General Partner

Dated:

By: Samuel C. Montgomery Its: Chief Operating Officer

Exhibit 1.4

LEASES

Seller to provide.

Exhibit 1.5

ASSUMED LIABILITIES

Seller to provide.

Exhibit 2.2

PURCHASE PRICE ALLOCATION

Exhibit 8.1

SELLER’S ARTICLES OF ORGANIZATION AND ORGANIZATIONAL CHART

Seller to provide.

Exhibit 8.11

LITIGATION

Seller to provide.

Exhibit 8.16

OUTSTANDING CITATIONS

Seller to provide.

Exhibit 8.21

NAMES OF DIRECTORS, MANAGERS, OFFICERS, OWNERS, AND REGISTERED AGENTS OF SELLER

Seller to provide.

Exhibit 11.6

SELLER REPAIRS

Seller to provide.

EXHIBIT 11.4 (i)

3-05 Audit

3-05 or 3-14 Audit. Seller acknowledges that under either Rule 3-05 or Rule 3-14 of Regulation S-X, Buyer is required to provide certain information in connection with reports Buyer is required to file with the Securities and Exchange Commission.

Accordingly, Seller agrees to:

(a)    allow Buyer and Buyer’s representatives which includes third party auditors, at Buyer’s sole cost and expense, to perform an audit of the Hotel, Property, Personal Property and business operations of and at the properties to the extent required under either Rule 3-05 or Rule 3-14 of Regulation S-X (hereinafter a Rule 3-05 or 3-14 Audit); and

(b)    make available to Buyer and Buyer’s representatives for inspection and audit following the Closing, at the Seller’s offices the Seller’s books and records relating solely to the Seller’s operations that are reasonably requested by Buyer (but specifically excluding Seller’s tax returns) for any full or partial years reasonably necessary to complete the Rule 3-05 or 3-14 Audit; and

(c)    sign the management representation letter to be provided by the Buyer’s independent auditors.

In connection with the foregoing, Buyer shall give Seller no less than ten (10) business days’ prior written notice of Buyer’s plans to inspect and audit such books and records, and Seller’s obligation to perform herein, extends beyond closing.

Notwithstanding the foregoing, the Seller shall not be required to (a) prepare or compile any materials, (b) incur any third-party costs or expenses in connection with the Rule 3-05 or 3-14 Audit, (c) provide any books, records or materials that could reasonably be expected to be books, records or materials in the possession or control of the tenant parties, (d) provide any books, records or materials that are not within the possession or control of the Seller, or (e) make any representations or warranties with respect to such information beyond a customary management representation letter signed by the Seller reasonably requested by any accounting firm engaged by the Buyer to deliver its auditors report with respect to the Rule 3-05 or Rule 3-14 Audit. Buyer acknowledges and agrees that the foregoing accounting and financial materials to be provided by Seller does not include any information or materials related to the period prior to the acquisition of the property by Seller and is to be limited solely to information regarding the property after they were placed into operation by Seller. Seller acknowledges that the Rule 3-05 or Rule 3-14 Audit may require Buyer to perform a Rule 3-05 or 3-14 Audit both after the Effective Date and after the Closing Date and Seller agrees that Seller’s obligations under this Exhibit 11.4(i) are material to the term of this Agreement, and breach of this Exhibit 11.4(i) will constitute a default under the terms of the Agreement. Seller further agrees, that Buyer’s sole and absolute remedy in the event of default is that of specific performance.

EX-10.53.2

Exhibit 10.53.2

FIRST AMENDMENT TO PURCHASE AGREEMENT

This First Amendment to Purchase Agreement (“Amendment”), is effective as of January 3, 2020 between CVH AIRWAYS, LLC, a Mississippi limited liability company, with an address of 6750 Poplar Avenue, Suite 107, Memphis, Tennessee 38138 (the “Seller”), and Lodging Fund REIT III OP, LP a Delaware limited partnership with an address of 1635 43rd South Street, Suite 205, Fargo, North Dakota 58103 (the “Buyer”), is made with reference to the following:

RECITALS

A.  Buyer and Seller (the “Parties” or “Party” as context requires) have entered into the Purchase Agreement was effective as November 5, 2019 for the sale of a hotel commonly known as Homewood Suites by Hilton Southaven located at 135 Homewood Drive, Southaven, Mississippi 38671 (the “Business”) together with all real and personal property in connection with the Business.

B.  Except as specifically modified by this Amendment, all other the provisions of the Purchase Agreement remain in full force and effect. Unless otherwise defined in this Amendment, capitalized terms have the meanings set forth in the Purchase Agreement.

AGREEMENT

1.   Incorporation of Recitals. The Recitals above constitute material and operative provisions in this Amendment, they are incorporated by reference.

2.   Closing Date. Section 17.1 of the Agreement is hereby replaced in its entirety to state:

17.1  Closing Date.  The Closing shall be held on or before January 31, 2020, and parties may close at and earlier date as agreed to by both Buyer and Seller.

3.   Miscellaneous.

3.1  Amendment. This Amendment and the Purchase Agreement will not be amended, altered, or terminated except by a writing executed by each Party.

3.2  Choice of Law. This Amendment and the Purchase Agreement shall be governed in all respects by the laws of the State of Mississippi.

3.3  Headings. The paragraph headings used in this Amendment are included solely for convenience.

3.4  Entire Agreement. This Amendment sets forth the entire understanding of the Parties as it relates to the subject matter contained herein.

3.5  Counterpart Execution; Facsimile Execution.

3.5.1  Counterpart Execution. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, and all counterparts, when taken together, will constitute one and the same agreement.

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3.5.2    Facsimile Execution. The Parties agree that signatures on this Amendment may be delivered by facsimile in lieu of an original signature, and the parties agree to treat facsimile signatures as original signatures and agree to be bound by this provision.

The Parties have executed this Amendment on the following dates to be effective as of the Effective Date:

	SELLER
	CVH Airways, LLC
	a Mississippi limited liability company
Dated: 1/3/2020	/s/ Stuart Cohen
	By:	Stuart Cohen
	Its:	Member

	BUYER
	Lodging Fund REIT III, OP, LP
	a Delaware limited partnership
Dated: 1/3/2020	/s/ David Durell
	By:	David Durell
	Its:	Chief Acquisition Officer

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EX-10.53.3

EXHIBIT 10.53.3

SECOND AMENDMENT TO PURCHASE AGREEMENT

This Second Amendment to Purchase Agreement (“Amendment”), is effective as of January 31, 2020 between CVH AIRWAYS, LLC, a Mississippi limited liability company, with an address of 6750 Poplar Avenue, Suite 107, Memphis, Tennessee 38138 (the “Seller”), and Lodging Fund REIT III OP, LP a Delaware limited partnership with an address of 1635 43rd South Street, Suite 205, Fargo, North Dakota 58103 (the “Buyer”), is made with reference to the following:

RECITALS

A. Buyer and Seller (the “Parties” or “Party” as context requires) have entered into a Purchase Agreement effective as of November 5, 2019 for the sale of a hotel commonly known as Homewood Suites by Hilton Southaven located at 135 Homewood Drive, Southaven, Mississippi 38671 (the “Business”) together with all real and personal property in connection with the Business.

B. Except as specifically modified by this Amendment, all other provisions of the Purchase Agreement remain in full force and effect. Unless otherwise defined in this Amendment, capitalized terms have the meanings set forth in the Purchase Agreement.

AGREEMENT

1. Incorporation of Recitals. The above recitals constitute material and operative provisions in this Amendment, they are incorporated by reference.

2. Closing Date. Section 17.1 of the Agreement is hereby replaced in its entirety to state:

“17.1Closing Date.  The Closing shall be held on or before February 28, 2020, and parties may close on an earlier date as agreed to by both Buyer and Seller.”

3. Additional Earnest Money. Within two (2) business days after both party’s execution of this Agreement, Buyer will deposit with Title Company an additional Six Hundred Thousand Dollars and no/100 ($600,000.00) (the “Additional Earnest Money” together with the initial $600,000.00 deposit shall be the “Earnest Money”). Upon deposit, the Earnest Money, including the Additional Earnest Money, shall be non-refundable and held by the Title Company in accordance with the terms of the Purchase Agreement. 

4. Miscellaneous.

a. Amendment. This Amendment and the Purchase Agreement will not be amended, altered, or terminated except by a writing executed by each Party.

b. Choice of Law. This Amendment and the Purchase Agreement shall be governed in all respects by the laws of the State of Mississippi.

c. Headings. The paragraph headings used in this Amendment are included solely for convenience.

d. Entire Agreement. This Amendment sets forth the entire understanding of the Parties as it relates to the subject matter contained herein.

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e. Successors and Assigns.  This Amendment shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors, administrators and assigns.

f. Counterpart Execution. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, and all counterparts, when taken together, will constitute one and the same agreement.

g. Electronic Execution. The Parties agree that signatures on this Amendment may be delivered electronically in lieu of an original signature, and the parties agree to treat electronic signatures as original signatures and agree to be bound by this provision.

h. Ratification.  Except as set forth above, the terms of the Agreement are hereby ratified and confirmed in their entirety.

[Signature Page to Follow]

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The Parties have executed this Amendment on the following dates to be effective as of the Effective Date:

Dated: 1/31/2020 SELLER CVH Airways, LLC a Mississippi limited liability company /s/ Stuart Cohen By: Stuart Cohen Its: Member

1/30/2020
Dated: 1/30/2020	BUYER Lodging Fund REIT III, OP, LP a Delaware limited partnership /s/ David Durell By: David Durell Its: Chief Acquisition Officer

3

EX-10.54.1

EXHIBIT 10.54.1

After recording, return to:

Bilzin Sumberg Baena

Price & Axelrod LLP

1450 Brickell Avenue, 23rd Floor

Miami, Florida 33131-3456

Attn:  Post-Closing Department

(Space Above For Recorder's Use Only)

ASSUMPTION AGREEMENT

(JPMCC 2016-JP4)

THIS ASSUMPTION AGREEMENT ("Agreement") is entered into and effective as of December 30, 2019 (the "Effective Date"), between WILMINGTON TRUST, NATIONAL ASSOCIATION, AS TRUSTEE FOR THE BENEFIT OF THE REGISTERED HOLDERS OF JPMCC COMMERCIAL MORTGAGE SECURITIES TRUST 2016-JP4, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2016-JP4 ("Lender"), having an address at 1100 North Market Street, Wilmington, Delaware 19890, Re: JPMCC 2016-JP4; TREEMONT CAPITAL PARTNERS III, LP, a Texas limited partnership ("Original Borrower"), having an address at 1415 South Voss #110-94, Houston, Texas  77057, and LF3 LUBBOCK CASA, LLC, a Delaware limited liability company  ("Fee Borrower") and LF3 LUBBOCK CASA TRS, LLC, a Delaware limited liability company ("Operating Lessee" together with Fee Borrower, collectively, "New Borrower"), having an address at 1635 43rd Street South, Suite 205, Fargo, North Dakota  58103.  Original Borrower and New Borrower are sometimes collectively referred to as "Borrower Parties".

PRELIMINARY STATEMENT

Original Borrower is the current owner of fee title to the Property, commonly known as "Home2 Suites By Hilton Lubbock" located in the City of Lubbock, County of Lubbock, State of Texas, more particularly described in the attached Exhibit A.

Lender is the current owner and holder of a loan ("Loan") in the original principal amount of $8,600,000.00, made by Starwood Mortgage Capital LLC, a Delaware limited liability company ("Original Lender") to Original Borrower pursuant to the terms of a Loan Agreement dated October 4, 2016 (“Loan Origination Date”) between Original Borrower and Original Lender (the "Loan Agreement"), as evidenced and/or secured by the documents described in the Loan Agreement and on the attached Exhibit B (together with any and all other agreements, documents, and instruments evidencing, securing or in any manner relating to the Loan, as all of the same may be amended, restated, supplemented or otherwise modified from time to time, shall collectively be referred to as the "Loan Documents").  The Loan is secured in part by the Property, which Property is described in and encumbered by the "Security Instrument" described on Exhibit B.  Capitalized terms not otherwise defined in this Agreement shall have the meanings ascribed to them in the Loan Agreement.

Original Borrower desires to obtain Lender’s consent to the Requested Actions described below.

The Requested Actions, without Lender’s consent are prohibited by the terms of the Loan Documents.

Lender has consented to the following requested actions (collectively the "Requested Actions"): a)Original Borrower selling the Property to Fee Borrower, b)New Borrower assuming all of Original Borrower's obligations under the Loan Documents, and c)Fee Borrower, as landlord, and Operating Lessee, as tenant, entering into that certain Lease Agreement dated as of the Effective Date ("Operating Lease"), d)Operating Lessee and Hilton Franchise Holding LLC ("Franchisor") entering into that certain Franchise Agreement dated as of the Effective Date ("New Franchise Agreement"), and e)Operating Lessee and NHS LLC, a North Dakota limited liability company, d/b/a National Hospitality Services ("Property Manager") entering into that certain Management Agreement dated as of the Effective Date, all on the terms set forth below.

In consideration of $10.00 paid by each of the parties to the other, the mutual covenants set forth below, and other good and valuable consideration, receipt and sufficiency of which are acknowledged, the parties agree as follows:

ARTICLE 1

ACKNOWLEDGMENTS, WARRANTIES AND REPRESENTATIONS

1.1.      Original Borrower Representations.  As a material inducement to Lender to enter into this Agreement and to consent to the Requested Actions, Original Borrower acknowledges, warrants, represents and agrees to and with Lender as follows:

(a)        Incorporation of Recitals.  All of the facts set forth in the Preliminary Statement of this Agreement are true and correct and incorporated into this Agreement by this reference.

(b)        Authority of Original Borrower.

(i)            Original Borrower.  Original Borrower is a duly organized, validly existing limited partnership in good standing under the laws of the State of Texas.  Treemont Capital Partners III GP, LLC ("Original Borrower GP") is the general partner of Original Borrower.  Original Borrower GP, acting alone without the joinder of any other partner of Original Borrower or any other party, has the power and authority to execute this Agreement on behalf of and to duly bind Original Borrower under this Agreement.  The execution and delivery of, and performance under, this Agreement by Original Borrower have been duly and properly authorized pursuant to all requisite partnership action of Original Borrower and will not (x) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to Original Borrower or the certificate of limited partnership or limited partnership agreement or any other organizational document of Original Borrower or (y) result in a breach of or constitute or cause a default under any indenture, agreement, lease or instrument to which Original Borrower is a party or by which the Property may be bound or affected.

(ii)           Original Borrower GP.  Original Borrower GP is a duly organized, validly existing limited liability company in good standing under the laws of the State of Texas.

Treemont Investments, Inc. ("Original Borrower GP's Member") is the sole member of Original Borrower GP.  Original Borrower GP's Member, acting alone without the joinder of any other manager or member of Original Borrower GP or any other party, has the power and authority to execute this Agreement on behalf of and to duly bind Original Borrower GP and Original Borrower under this Agreement.  The execution and delivery of, and performance under, this Agreement by Original Borrower GP have been duly and properly authorized pursuant to all requisite limited liability company action of Original Borrower GP and will not (x) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to Original Borrower GP or the articles of organization, certificate of formation, operating agreement, limited liability company agreement or any other organizational document of Original Borrower GP or (y) result in a breach of or constitute or cause a default under any indenture, agreement, lease or instrument to which Original Borrower GP is a party or by which the Property may be bound or affected.

(iii)          Original Borrower GP's Member.  Original Borrower GP's Member is a duly organized, validly existing corporation in good standing under the laws of the State of Texas.  Philip A. McRae ("Original Borrower Authorized Signatory") is the President of Original Borrower GP's Member. Original Borrower Authorized Signatory, acting alone without the joinder of any other officer, director or shareholder of Original Borrower GP's Manager or any other party, has the power and authority to execute this Agreement on behalf of and to duly bind Original Borrower GP's Member, Original Borrower GP and Original Borrower under this Agreement.  The execution and delivery of, and performance under, this Agreement by Original Borrower GP's Member have been duly and properly authorized pursuant to all requisite corporate action of Original Borrower GP's Member and will not (x) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to Original Borrower GP's Member or the articles of incorporation or bylaws or any other organizational document of Original Borrower GP's Member or (y) result in a breach of or constitute or cause a default under any indenture, agreement, lease or instrument to which Original Borrower GP's Member is a party or by which the Property may be bound or affected.

(c)        Compliance with Laws.  To Original Borrower's knowledge, all permits, licenses, franchises or other evidences of authority to use and operate the Property as it is presently being operated and as contemplated by the Loan Documents are current, valid and in full force and effect.  Original Borrower has not received any written notice from any governmental entity claiming that Original Borrower or the Property is not presently in compliance with any laws, ordinances, rules and regulations bearing upon the use and operation of the Property, including, without limitation, any notice relating to any violations of zoning, building, environmental, fire, health, or other laws, ordinances, rules, codes or regulations.

(d)        Rent Roll.  The Rent Roll ("Rent Roll") attached as Exhibit C is a true, complete and accurate summary of all tenant leases ("Leases") affecting the Property as of the Effective Date.

(e)        Leases.  Other than unwritten agreements with transient hotel guests, there are no Leases affecting the Property as of the Effective Date.

(f)        Title to Property and Legal Proceedings.  Original Borrower is the current owner of fee title in the Property.  There are no pending or, to the best of Original Borrower's knowledge, threatened suits, judgments, arbitration proceedings, administrative claims, executions or other legal or equitable actions or proceedings against Original Borrower or the Property, or any pending or, to the best of Original Borrower's knowledge, threatened condemnation

proceedings or annexation proceedings affecting the Property, or any agreements to convey any portion of the Property, or any rights thereto to any person, entity, or government body or agency not disclosed in this Agreement, which could reasonably be expected to materially and adversely affect the Property.

(g)        Loan Documents.  The Loan Documents constitute valid and legally binding obligations of Original Borrower enforceable against Original Borrower and the Property in accordance with their terms. Original Borrower acknowledges and agrees that, nothing in this Agreement, or Lender's consent to the Requested Actions, shall release or relieve Original Borrower from its obligations and liabilities under the Loan Documents arising prior to the Effective Date.  Original Borrower has no defenses, setoffs, claims, counterclaims or causes of action of any kind or nature whatsoever against Lender, Wells Fargo Bank, N.A. ("Master Servicer"), LNR Partners, LLC ("LNR") and any and all other parties appointed and/or serving as servicers of the Loan together with Master Servicer and LNR (collectively, "Servicer"), all subsidiaries, parents and affiliates of Lender and Servicer and each of the foregoing parties' predecessors in interest, and each and all of their respective past, present and future partners, members, certificateholders, officers, directors, employees, agents, contractors, representatives, participants and heirs and each and all of the successors and assigns of each of the foregoing (collectively, "Lender Parties") or with respect to (i) the Loan, (ii) the Loan Documents, or (iii) the Property.  To the extent Original Borrower would be deemed to have any such defenses, setoffs, claims, counterclaims or causes of action as of the Effective Date, Original Borrower knowingly waives and relinquishes them.

(h)        Bankruptcy.  Original Borrower has no intent to (i) file any voluntary petition under any Chapter of the Bankruptcy Code, Title 11, U.S.C.A. ("Bankruptcy Code"), or in any manner to seek any proceeding for relief, protection, reorganization, liquidation, dissolution or similar relief for debtors ("Debtor Proceeding") under any local, state, federal or other insolvency law or laws providing relief for debtors, (ii) directly or indirectly cause any involuntary petition under any Chapter of the Bankruptcy Code to be filed against Original Borrower or any partners thereof or (iii) directly or indirectly cause the Property or any portion or any interest of Original Borrower in the Property to become the property of any bankrupt estate or the subject of any Debtor Proceeding.

(i)         No Default or Sweep Event Period.  To Original Borrower's knowledge, no event, fact or circumstance has occurred or failed to occur which constitutes, or with the lapse or passage of time, giving of notice or both, could constitute a default, an Event of Default or the commencement of a Sweep Event Period under the Loan Documents.

(j)         Original Franchise Agreement.  The Franchise Agreement, dated  September 5, 2013 ("Original Franchise Agreement"), between Original Borrower and HLT ESP Franchise LLC, a Delaware limited liability company ("Original Franchisor"), pursuant to which Original Borrower has the right to operate the hotel located on the Property under a name and/or hotel system controlled by such Original Franchisor, is in full force and effect and there is no default, breach, or violation existing thereunder by any party thereto and no event has occurred (other than payments due but not yet delinquent) that, with the passage of time or the giving of notice, or both, would constitute a default, breach or violation by any party thereunder. As of the Effective Date, the Original Franchise Agreement will have been terminated and all sums due thereunder paid in full.

(k)        Reaffirmation.  Original Borrower reaffirms and confirms the truth and accuracy of all representations and warranties set forth in the Loan Documents, in all material respects, as if made on the Effective Date.

1.2.      Acknowledgments, Warranties and Representations of New Borrower. As a material inducement to Lender to enter into this Agreement and to consent to the Requested Actions, New Borrower acknowledges, warrants, represents and agrees to and with Lender as follows:

(a)        Incorporation of Recitals.  All of the facts set forth in the Preliminary Statement of this Agreement are true and incorporated into this Agreement.

(b)        Authority of New Borrower.

(i)            Fee Borrower. Fee Borrower is a duly organized, validly existing limited liability company in good standing under the laws of the State of Delaware and is qualified to transact business in the State of Texas.  Lodging Fund REIT III OP, LP ("Fee Borrower Member") is the sole member of Fee Borrower.  Fee Borrower Member, acting alone without the joinder of any other manager or member of Fee Borrower or any other party, has the power and authority to execute this Agreement on behalf of and to duly bind Fee Borrower under this Agreement and the Loan Documents.  The execution and delivery of, and performance under, this Agreement and the Loan Documents by Fee Borrower have been duly and properly authorized pursuant to all requisite limited liability company action of Fee Borrower and will not (x) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to Fee Borrower or the articles of organization, certificate of formation, operating agreement, limited liability company agreement, or any other organizational document of Fee Borrower or (y) result in a breach of or constitute or cause a default under any indenture, agreement, lease or instrument to which Fee Borrower is a party or by which the Property may be bound or affected.

(ii)            Operating Lessee. Operating Lessee is a duly organized, validly existing limited liability company in good standing under the laws of the State of Delaware and is qualified to transact business in the State of Texas.  Lodging Fund REIT III TRS, Inc. ("Operating Lessee Member") is the sole member of Operating Lessee.  Operating Lessee Member, acting alone without the joinder of any other manager or member of Operating Lessee or any other party, has the power and authority to execute this Agreement on behalf of and to duly bind Operating Lessee under this Agreement and the Loan Documents.  The execution and delivery of, and performance under, this Agreement and the Loan Documents by Operating Lessee have been duly and properly authorized pursuant to all requisite limited liability company action of Operating Lessee and will not (x) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to Operating Lessee or the articles of organization, certificate of formation, operating agreement, limited liability company agreement, or any other organizational document of Operating Lessee or (y) result in a breach of or constitute or cause a default under any indenture, agreement, lease or instrument to which Operating Lessee is a party or by which the Property may be bound or affected.

(iii)           Operating Lessee Member.  Operating Lessee Member is a duly organized, validly existing corporation in good standing under the laws of the State of Delaware and is qualified to transact business in the State of Texas.  Fee Borrower Member is the sole shareholder of Operating Lessee Member.  Fee Borrower Member, acting alone without the joinder of any other officer, director or shareholder of Operating Lessee Member or any other party, has

the power and authority to execute this Agreement on behalf of and to duly bind Operating Lessee Member and Operating Lessee under this Agreement.  The execution and delivery of, and performance under, this Agreement by Operating Lessee Member have been duly and properly authorized pursuant to all requisite corporate action of Operating Lessee Member and will not (x) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to Operating Lessee Member or the articles of incorporation or bylaws or any other organizational document of Operating Lessee Member or (y) result in a breach of or constitute or cause a default under any indenture, agreement, lease or instrument to which Operating Lessee Member is a party or by which the Property may be bound or affected.

(iv)           Fee Borrower Member.  Fee Borrower Member is a duly organized, validly existing limited partnership in good standing under the laws of the State of Delaware and is qualified to transact business in the State of Texas.  Lodging Fund REIT III, Inc. ("REIT") is the sole general partner of Fee Borrower Member.  REIT, acting alone without the joinder of any other partner of Fee Borrower Member or any other party, has the power and authority to execute this Agreement on behalf of and to duly bind Fee Borrower Member, Fee Borrower, Operating Lessee Member, and Operating Lessee under this Agreement and the Loan Documents.  The execution and delivery of, and performance under, this Agreement and the Loan Documents by Fee Borrower Member have been duly and properly authorized pursuant to all requisite partnership action of Fee Borrower Member and will not (x) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to Fee Borrower Member or the certificate of limited partnership or limited partnership agreement or any other organizational document of Fee Borrower Member or (y) result in a breach of or constitute or cause a default under any indenture, agreement, lease or instrument to which Fee Borrower Member is a party or by which the Property may be bound or affected.

(v)            REIT.  REIT is a duly organized, validly existing corporation in good standing under the laws of the State of Maryland and is qualified to transact business in the State of Texas.  Katie Cox ("New Borrower Authorized Signatory") is the Chief Financial Officer of REIT. New Borrower Authorized Signatory, acting alone without the joinder of any other officer, director or shareholder of REIT or any other party, has the power and authority to execute this Agreement on behalf of and to duly bind REIT, Fee Borrower Member, Fee Borrower, Operating Lessee Member and Operating Lessee under this Agreement.  The execution and delivery of, and performance under, this Agreement by REIT have been duly and properly authorized pursuant to all requisite corporate action of REIT and will not (x) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to REIT or the articles of incorporation or bylaws or any other organizational document of REIT or (y) result in a breach of or constitute or cause a default under any indenture, agreement, lease or instrument to which REIT is a party or by which the Property may be bound or affected.

(c)        Financial Statements.  The financial statements and other information ("Financial Statements") of REIT and Fee Borrower Member (jointly and severally, and individually and collectively, as the context may require, “New Indemnitor”) which have been previously delivered to Lender are true, complete and accurate in all material respects and accurately represent the financial condition of New Indemnitor as of the date thereof.  All of the assets shown on each New Indemnitor's Financial Statements are owned by such New Indemnitor, individually, as its sole and separate property, and not otherwise jointly with any other person or entity.  There has not been any material adverse change to the financial condition of New

Indemnitor between the date of the Financial Statements and the Effective Date.  New Borrower also acknowledges and agrees to cause New Indemnitor to timely comply with all financial, bookkeeping and reporting requirements set forth in the Loan Documents, including, without limitation, those set forth in Section 4.1.7 of the Loan Agreement.  New Borrower acknowledges that the Financial Statements have been provided to Lender to induce Lender to enter into this Agreement and are being relied upon by Lender for such purposes.

(d)        Bankruptcy Proceedings.  None of New Borrower, Fee Borrower Member, Operating Lessee Member, and REIT (together with any other direct or indirect owners of 10% or more of New Borrower, collectively, the "New Borrower Parties") or any other entities which may be owned or controlled directly or indirectly by any of New Borrower Parties (collectively, the "Related Entities") has been a party to any Debtor Proceeding within ten (10) years prior to the Effective Date.

(e)        Defaults on Other Indebtedness.  None of New Borrower Parties or any Related Entities has materially defaulted under its or their obligations with respect to any other indebtedness.

(f)        New Borrower's Organizational Documents.  New Borrower has not transacted any business in New Borrower's name since its formation.  New Borrower is and will continue to be in full compliance with all of its organizational documents and the single purpose entity and separateness requirements of the Loan Documents and such organizational documents do not conflict with any of such single purpose entity and separateness requirements of the Loan Documents.

(g)        Assets of New Borrower.  The only assets of Fee Borrower are the Property, the personal property owned by Fee Borrower and used in connection with the Property and cash or cash equivalents. The only assets of Operating Lessee are the Operating Lessee's leasehold interest in the Property pursuant to the Operating Lease, the personal property owned by the Operating Lessee and used in connection with the Property and cash or cash equivalents.

(h)        Management of Property.  Operating Lessee is entering into a Management Agreement with Property Manager for the management of the Property (the "New Management Agreement").  The term "Management Agreement" or "management agreement" or such other similar term in the Loan Documents shall subsequently refer to the New Management Agreement.  The term "Manager" or such other similar term in the Loan Documents shall subsequently refer to the Property Manager.  New Borrower covenants and agrees to comply with and to cause the Property Manager to comply with all terms of the Loan Documents concerning the management of the Property, including without limitation the obligation to obtain Lender's consent to the management of the Property by any entity other than Property Manager.  Property Manager shall execute and deliver to Lender a subordination of the New Management Agreement in form acceptable to Lender.

(i)         Loans to Related Entities.  There are no loans payable by New Borrower to any of the Related Entities or any other entities or persons.

(j)         New Borrower Parties' Interests.  None of New Borrower Parties or any of the Related Entities is obtaining a loan to finance its direct or indirect interest in New Borrower or the Property or pledging its direct or indirect interest in New Borrower to any party, and none of the entities or individuals owning a direct or indirect interest in New Borrower has any right to take over control from any of such other entities or individuals.

(k)        Operating Lease.

(i)         As of the Effective Date, Operating Lessee has leased the Property from Fee Borrower pursuant to the Operating Lease.  Each New Borrower represents to Lender that, as of the Effective Date, (a) there are no Leases at the Property other than the Operating Lease, (b) Fee Borrower is the sole owner of the entire lessor’s interest in the Operating Lease, (c) the Operating Lease is valid and enforceable against Fee Borrower and Operating Lessee as set forth therein and is in full force and effect, (d) no party under the Operating Lease is in default, (e) none of the rents payable under the Operating Lease have been assigned or otherwise pledged or hypothecated other than as provided in the Security Instrument; (f) none of the rents have been collected for more than one (1) month in advance, (g) there exists no offsets or defenses to the payment of any portion of the rents and Fee Borrower has no monetary obligation to Operating Lessee under the Operating Lease, (h) the Operating Lease does not contain an option to purchase, right of first refusal to purchase or any other similar provision, and (i) there are no brokerage commissions or finder fee due and payable regarding the Operating Lease.

(ii)        Each New Borrower covenants and agrees: (a) to comply with all financial and other material terms and conditions of the Operating Lease, (b) not to terminate the Operating Lease or modify, change, supplement, alter or amend any financial or other material term of the Operating Lease without obtaining the prior written consent of Lender, which consent may be withheld in the Lender's sole and absolute discretion, (c) not to assign, transfer or pledge (other than to Lender) any of their respective interests in the Operating Lease to any third party, (d) not to consent or permit the assignment, pledge or other transfer of any right, title or interest in the Operating Lease or equity interests in Operating Lessee to any third party, (e) not to sublease, license or otherwise grant any of its right to use the Property to any third party in violation of the Loan Documents; (f) to pay to Lender any termination, consent or similar type fee paid or payable to Fee Borrower in connection with any termination of the Operating Lease (which fee shall be held by Lender as security for the Loan), (g) not to prepay or accept any prepayments of the rents, additional rents or other sums due under the Operating Lease for more than one (1) month in advance of the due dates thereof, and (h) use commercially reasonable efforts to enforce the terms and conditions of the Operating Lease despite the fact that the beneficial owners of each New Borrower may be related. Notwithstanding anything contained in this Section to the contrary, the Operating Lease may be modified or amended without the prior written consent of Lender to correct scrivener's errors and extend the term of the Operating Lease.

(iii)       Each New Borrower covenants and agrees that the Fixed Rent (as such term is defined in the Operating Lease) required to be paid by Operating Lessee to Fee Borrower on a monthly basis under the terms of the Operating Lease, shall be in excess of the monthly Debt Service and monthly deposits into the Reserve Funds collected under the Loan Documents.

(l)         Subordination of Operating Lease.  Notwithstanding anything to the contrary in the Operating Lease, Operating Lessee acknowledges and agrees that the Operating Lease and any and all rights and interests of Operating Lessee thereunder and to the Premises (as defined in the Operating Lease) are and shall be in all respects subject and subordinate to the lien and security interests created under the Security Instrument and other Loan Documents, and to all renewals, extensions, increases, supplements, amendments, modifications and replacements of any of the foregoing and any advances made thereunder.

(m)       Collateral Assignment of Operating Lease.  Contemporaneously with this Agreement, Operating Lessee has assigned its interest in the Operating Lease and other collateral

to Lender by the Collateral Assignment of Operating Lease as further security for the Loan.  Operating Lessee acknowledges and agrees that if an Event of Default occurs and is continuing under the Loan Documents, Lender may elect, as one of its remedies under the Loan Documents (but not its exclusive remedy), to terminate the Operating Lease and Lender shall not be obligated to pay Operating Lessee any termination fee or any other consideration (i.e. the provision of another location in which to operate) in connection with Lender’s termination of the Operating Lease.  To the extent any of the terms and provisions of the Operating Lease conflict with the terms of the Loan Documents (e.g. required insurance, use of casualty or condemnation provisions), the terms and conditions of the Loan Documents shall prevail.

(n)        New Franchise Agreement.  The New Franchise Agreement, a correct and complete copy of which has been delivered to Lender, under which Operating Lessee has the right to operate the hotel located on the Property (“Hotel”) as a Home2 Suites by Hilton, is in full force and effect and there is no default, breach, or violation existing thereunder by any party thereto and there is no default, breach or violation existing thereunder by any party thereto and no event has occurred that, with the passage of time or the giving of notice, or both, would constitute a default, breach or violation by any party thereunder.  All fees payable under the New Franchise Agreement have been paid through the Effective Date and payment of fees due thereunder is subordinate to the lien created by the Security Instrument.  Operating Lessee shall not terminate, modify, renew or extend the New Franchise Agreement, or enter into any agreement relating to the right to operate the Hotel under a name other than "Home2 Suites by Hilton Lubbock", without the prior express written consent of Lender.  Operating Lessee shall comply with all terms of the New Franchise Agreement and shall operate the Hotel in compliance with its terms, including, but not limited to, the maintenance and operation of the facilities required to serve alcoholic beverages.  New Borrower shall comply with all terms of the Loan Documents regarding the operation of the Property as a hotel.  Operating Lessee shall, and shall cause Franchisor to, execute and deliver to Lender a new comfort letter in favor of Lender in form and substance satisfactory to Lender (the "New Comfort Letter").  Following the Effective Date, the term "Franchise Agreement" in the Security Instrument shall refer to the New Franchise Agreement.

(o)        Property Improvement Plan.

(i)         In connection with the New Franchise Agreement, Franchisor requires Operating Lessee to make certain improvements, repairs, maintenance, alterations and/or renovations to the Property (collectively, the "PIP Improvements") by certain deadlines as more particularly set forth in the Property Improvement Plan dated as of August 23, 2019 (the "PIP"), a copy of which is attached to this Agreement as Exhibit F.  New Borrower shall comply, in all material respects, with all terms of the PIP and timely and diligently complete the PIP Improvements in a lien-free manner in accordance with the PIP Budget (as defined below), all Legal Requirements and in compliance with the requirements of the PIP, the New Franchise Agreement, this Agreement and the other Loan Documents on or before the deadlines set forth in the PIP and/or the New Franchise Agreement (or such longer time as the Franchisor may agree in writing).  The Hotel shall remain open for business at all times during the PIP Improvements. New Borrower shall promptly provide Lender with written notice of the timely completion of the PIP Improvements and, upon request by Lender from time to time, provide evidence of such timely, lien-free completion and compliance reasonably satisfactory to Lender.  New Borrower's failure to complete (or cause to be completed) the PIP Improvements lien-free on or before the deadlines prescribed by, or in conformance with, the PIP, the New Franchise Agreement, this Agreement and/or the other Loan Documents shall be an Event of Default under the Loan Documents.

(ii)        On the Effective Date, New Indemnitor shall execute and deliver to Lender a Payment and Completion Guaranty (the “Completion Guaranty”), guaranteeing, among other things, the payment and completion of all PIP Improvements as set forth in the PIP.

(iii)       On the Effective Date, New Borrower shall deposit with Lender, by wire transfer of immediately available funds, $68,273.00 (the "First PIP Reserve Deposit"), which shall be transferred to the FF&E Reserve Account held by Lender as additional security for the Loan and disbursed in accordance with Section 6.5.2 of the Loan Agreement.  On or prior to December 31, 2020, New Borrower shall deposit with Lender, by wire transfer of immediately available funds, $68,273.00 (the "Second PIP Reserve Deposit"), which shall be transferred to the FF&E Reserve Account held by Lender as additional security for the Loan and disbursed in accordance with Section 6.5.2 of the Loan Agreement.  On or prior to December 31, 2021, New Borrower shall deposit with Lender, by wire transfer of immediately available funds, $136,545.00 (the "Third PIP Reserve Deposit," together with the First PIP Reserve Deposit and the Second PIP Reserve Deposit, collectively, the "PIP Reserve Deposit"), which shall be transferred to the FF&E Reserve Account held by Lender as additional security for the Loan and disbursed in accordance with Section 6.5.2 of the Loan Agreement.  The PIP Reserve Deposit shall constitute part of the Reserve Funds described in the Loan Agreement. Notwithstanding anything to the contrary in Article 6 of the Loan Agreement, (i) the PIP Reserve Deposit shall be disbursed by Lender for payment of the PIP Costs (as such term is defined below) in accordance with the terms of this Agreement, the PIP Budget (as defined below) and the terms of Section 6.5.2 of the Loan Agreement, and (ii) the PIP Reserve Deposit released to New Borrower shall be used exclusively in respect of the PIP Improvements unless otherwise approved in writing by Lender.

(iv)       The PIP Reserve Deposit represents 125% of the estimated costs to complete the PIP (the "PIP Costs"), as more particularly outlined on the certified budget attached as Exhibit G to this Agreement (the "PIP Budget"). New Borrower shall complete the PIP Improvements in accordance with the PIP Budget approved by Lender. New Borrower shall not revise the PIP Budget without Lender's prior written consent. Lender may, as a condition to Lender's consent of any proposed changes to the PIP Budget, require New Borrower to deposit with Lender additional funds in such amount as Lender reasonably determines is necessary to cover any increases in the PIP Costs, which funds shall be paid to Lender within five (5) Business Days of such request made by Lender. Without the prior written consent of Lender, New Borrower shall not use any of the PIP Reserve Deposit released by Lender for any purpose other than the payment of the PIP Costs in amounts not to exceed the amounts set forth for each expense item in the PIP Budget.

(v)        Promptly upon the completion of the PIP Improvements and as a condition precedent to Lender's final disbursement of the PIP Reserve Deposit, New Borrower shall, in addition to any and all other requirements, items and conditions for disbursement required to be satisfied pursuant to Article 6 of the Loan Agreement, deliver to Lender: (i) an Officer's Certificate certifying to Lender the timely and lien-free completion of the PIP Improvements in compliance with the PIP, the New Franchise Agreement, this Agreement and the other Loan Documents; (ii) written acknowledgment of the Franchisor in form satisfactory to Lender confirming that the PIP Improvements have been completed in accordance with the requirements of the New Franchise Agreement and approved by Franchisor; (iii) evidence satisfactory to Lender that title to the Property is free and clear of all Liens other than the Permitted Encumbrances, including an updated and current title report and copies of all lien waivers and releases from all persons or entities performing labor thereon or furnishing materials therefor; and (iv) evidence that all permits for the PIP Improvements have been closed and all approvals by governmental authorities with respect to the completion of the PIP Improvements have been granted or issued.

(vi)       Lender shall have the right to establish subaccounts within the FF&E Reserve Account to segregate amounts on deposit from the PIP Reserve Deposit and monthly payments due to the FF&E Reserve Account as required under Article 6.5.1 of the Loan Agreement.

(vii)      The deposit by New Borrower of the PIP Reserve Deposit shall not relieve New Borrower from any of its obligations under the Loan Agreement or any of the other Loan Documents to make any deposit or monthly payments as required under Article 6 of the Loan Agreement.

(p)        Insurance.  Notwithstanding anything in the Operating Lease to the contrary, New Borrower shall maintain all insurance coverage required to be maintained by New Borrower under the Loan Documents and by Operating Lessee under the New Franchise Agreement, and shall cause Property Manager to maintain the insurance required of Property Manager under the Management Agreement and to comply in all material respects with all insurance requirements set forth in the Loan Documents.

(q)        Cash Management Agreement.  New Borrower shall execute and deliver to Lender contemporaneously with the execution and delivery of this Agreement, (a) a Deposit Account Control Agreement (Soft Lockbox) between Wells Fargo Bank, National Association, as Bank, Lender and New Borrower dated as of the Effective Date (the "New Clearing Account Agreement") in form and content acceptable to Lender, and (b) an Amendment to Cash Management Agreement between New Borrower, Lender and Property Manager dated as of the Effective Date (the "Amendment to CMA") in form and content acceptable to Lender, which New Clearing Account Agreement and Amendment to CMA shall be effective as of the Effective Date. New Borrower agrees and acknowledges that (i) the Cash Management Agreement is in full force and effect, and (ii) all actions have been taken to open any new accounts required under the New Clearing Account Agreement for the New Borrower.  The term "Clearing Account Agreement" in the Loan Documents shall subsequently refer to the New Clearing Account Agreement.  The term "Cash Management Agreement" in the Loan Documents shall subsequently refer to the Cash Management Agreement, as amended by the Amendment to CMA and this Agreement.  On the Effective Date, New Borrower shall deliver (A) a Tenant Direction Letter to each commercial Tenant at the Property and (B) a Credit Card Direction Letter to each of the credit card banks which New Borrower has entered into agreements for the clearance of credit card receipts, as set forth in the Cash Management Agreement.

(r)         Annual Budget.  Operating Lessee shall provide to Lender an Annual Budget for the Property pursuant to and in accordance with the requirements of Section 4.1.7(g) of the Loan Agreement.  Operating Lessee shall operate, or cause the Property Manager to operate, the Property in accordance with the Annual Budget or, if applicable, the Approved Annual Budget.

(s)        Prohibited Person.  After review of the website identified below, that none of New Borrower or, to the best of New Borrower's knowledge, New Borrower Parties or any of their respective officers, directors, shareholders, partners, members or affiliates (including other holders of indirect equity interests in New Borrower) is an entity or person (i) that is listed in the Annex to, or is otherwise subject to the provisions of, Executive Order 13224, issued on September 24, 2001 (“EO13224“), (ii) whose name appears on the United States Treasury Department’s Office of Foreign Assets Control (“OFAC“) most current list of “Specifically Designated Nationals and Blocked Persons“ (which list may be published from time to time in various media including, but not limited to, the OFAC website, http://www.treas.gov/offices/enforcement/ofac/sdn/t11sdn.pdf, (iii) who commits, threatens to

commit or supports “terrorism“, as that term is defined in EO13224, or (iv) who, to the knowledge of New Borrower, is otherwise affiliated with any entity or person listed above (any and all parties or persons described in clauses [i] – [iv] above are collectively referred to as a “Prohibited Person“).  None of New Borrower Parties or any of their respective officers, directors, shareholders, partners, members or affiliates (including other holders of indirect equity interests in New Borrower) will (a) knowingly conduct any business, or engage in any transaction or dealing, with any Prohibited Person, including, but not limited to, the making or receiving of any contribution of funds, goods, or services, to or for the benefit of a Prohibited Person, or (b) knowingly engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in EO13224.  New Borrower covenants and agrees to deliver (from time to time) to Lender any such certification as may be requested by Lender in its reasonable discretion, confirming that, based on reasonable inquiry (x) none of New Borrower Parties or any of their respective officers, directors, shareholders, partners, members or affiliates (including other holders of indirect equity interests in New Borrower) is a Prohibited Person and (y) none of New Borrower, or to the best of New Borrower's knowledge, any of the other New Borrower Parties, or their respective officers, directors, shareholders, partners, members or affiliates (including the holders of indirect equity interests in New Borrower) has (a) knowingly conducted any business, or engaged in any transaction or dealing, with any Prohibited Person, including,  but not limited to, the making or receiving of any contribution of funds, goods, or services, to or for the benefit of a Prohibited Person or (b) knowingly engaged in or conspired to engage in any transaction that evaded or avoided, or had the purpose of evading or avoiding, or attempted to violate, any of the prohibitions set forth in EO13224.

(t)         Loan Documents.  The Loan Documents, from and after the Effective Date, are valid and legally binding obligations of New Borrower, enforceable against New Borrower and the Property in accordance with their terms.  This Agreement and the execution of other contemplated documents do not constitute the creation of a new debt or the extinguishment of the debt evidenced by the Loan Documents, and they shall not in any way affect or impair the liens and security interests created by the Loan Documents, which New Borrower acknowledges to be valid and existing liens and security interests in the Property.  New Borrower agrees that the lien and security interests created by the Loan Documents continue to be in full force and effect, unaffected and unimpaired by this Agreement or by the transfer of the Property or any collateral described in financing statements filed in connection with the Loan Documents and that said liens and security interests shall so continue in their perfection and priority until the debt secured by the Loan Documents is fully discharged.  New Borrower has no defenses, affirmative defenses, setoffs, claims, counterclaims, crossclaims or causes of action of any kind or nature whatsoever against the Lender Parties with respect to (i) the Loan, (ii) the indebtedness due under the Loan Documents ("Indebtedness"), (iii) the Loan Documents, or (iv) the Property.  To the extent New Borrower would be deemed to have any such defenses, affirmative defenses, setoffs, claims, counterclaims, crossclaims or causes of action as of the Effective Date, New Borrower knowingly waives and relinquishes them.  New Borrower acknowledges that it has received copies of all of the Loan Documents.

(u)        No Default.  To New Borrower's knowledge, no event, fact or circumstance has occurred or failed to occur which constitutes, or with the lapse or passage of time, giving of notice or both, could constitute a default or Event of Default under the Loan Documents.

(v)        Inspections.  Other than the Property Condition Report and Visual Mold and Moisture Inspection Report for the Property dated September 12, 2019, prepared by Partner

Engineering and Science, Inc., under Project No. 19-256897, the Zoning Report for the Property dated September 6, 2019, prepared by Partner Engineering and Science, Inc., under Project No. 19-256897, the Phase 1 Environmental Site Assessment for the Property dated October 28, 2019, prepared by EBI Consulting under Project No. 1119006655, and the survey of the Property dated August 16, 2019, prepared by David Geomatics, LLC under Project No. 19-08-070, New Borrower has not obtained any other written inspection reports relating to the Property.  New Borrower has not obtained any tenant estoppel certificates from the tenants located at the Property that have not been delivered to Lender.

(w)       Organizational Chart.  The organizational chart attached hereto as Exhibit D is a true and correct representation of New Borrower's ownership structure.

(x)        Reaffirmation.  To New Borrower's actual knowledge, New Borrower affirms and confirms the truth and accuracy of all representations and warranties in the Loan Documents, in all material respects, as if made on the Effective Date.

ARTICLE 2

ACKNOWLEDGMENTS AND COVENANTS OF BORROWER PARTIES

As a material inducement to Lender to enter into this Agreement and to consent to Requested Actions each of Borrower Parties, as to itself only, acknowledges, warrants, represents, covenants and agrees to and with Lender as follows:

2.1.      Assumption of Loan.  New Borrower assumes the indebtedness due under the Note, the Loan and all of Original Borrower’s other obligations, as grantor, mortgagor, borrower, assignor, trustor, indemnitor, guarantor, or maker, as the case may be, under the Loan Documents to the same extent as if New Borrower had signed such instruments.  New Borrower agrees to comply with and be bound by all the terms, covenants and agreements, conditions and provisions set forth in the Loan Documents.

2.2.      Indebtedness.  As of December 18, 2019, the outstanding principal balance of the Loan was $8,000,429.81, and the following escrow and reserve balances (collectively, "Escrow Balances") are being held by Lender: (a) a tax escrow balance of $149,156.92; (b) an insurance escrow balance of $0.00; and (c) a FF&E reserve escrow balance of $410,058.08.  Borrower Parties acknowledge and agree that Lender will continue to hold the Escrow Balances for the benefit of New Borrower in accordance with the terms of the Loan Documents.  In the event of any error in,  or omission from, the foregoing, Lender shall not be prejudiced, limited, or estopped, in any way in its right to charge, collect and receive any and all monies lawfully due Lender under the Loan Documents.  Lender represents and warrants to New Borrower that to Lender's actual knowledge (i) the amounts set forth above are correct, (ii) Lender has not issued any written notices of default to Original Borrower which have not been cured, and (iii) there are no existing material defaults under the Loan Documents.

2.3.      Assumption and Other Fees.  Simultaneously with or prior to the Effective Date, New Borrower shall pay to or has paid Lender: (a) an processing fee of $25,000.00; (b) an assumption fee equal to $40,002.15, which is 0.5% of the outstanding principal balance of the Loan; (c) a modification fee equal to $40,002.15, which is 0.5% of the outstanding principal balance of the Loan; (d) reasonable legal fees; and (e) such other costs, fees, and expenses as shown in the closing statement executed by Borrower Parties in connection with the closing of this transaction.  Each of the Borrower Parties agrees that the foregoing are fees for new consideration and are not interest charged in connection with the Loan.

2.4.      Payment of Transaction Costs and Expenses.  New Borrower shall pay at the time of execution of this Agreement by Lender:  (a) the reasonable legal fees and disbursements of Lender's counsel, Bilzin Sumberg Baena Price & Axelrod LLP, in connection with the preparation of this Agreement and the transactions contemplated in this Agreement; (b) all recording costs and documentary stamps, or other taxes if any, due upon the recording of this Agreement; and (c) the costs of updating Lender's policy of title insurance insuring the Security Instrument to a current date and endorsing such policy to include this Agreement in the description of the Security Instrument with no additional exceptions, or, at Lender's option, the cost of obtaining a new Lender's policy of title acceptable to Lender insuring the Loan Documents as affected by this Agreement.

2.5.      Post Closing Transfer of Licenses.  The only licenses, permits and operating agreements (collectively the "Licenses") that are required by applicable law for the operation of the Property as it is currently being operated are described on the attached Exhibit E.  Within thirty (30) days after the Effective Date, the Licenses shall be either (a) transferred by Original Borrower into the name of Fee Borrower or Operating Lessee, as applicable, to the extent such Licenses are transferrable, or (b) obtained anew by Fee Borrower or Operating Lessee, as applicable. The failure to timely transfer or obtain, as applicable, the Licenses shall constitute an Event of Default under the Loan Agreement.

2.6.      Information.

(a)        New Borrower and New Indemnitor confirm that all information provided to Lender and/or any Servicer by or on behalf of New Borrower and/or New Indemnitor or any of their respective employees, officers, directors, partners, members, managers or representatives, in connection with or relating to (i) the Requested Actions, (ii) this Agreement or the contemplated transactions or (iii) the Property, contains no untrue statement of material fact and does not omit a material fact necessary in order to make such information not materially misleading (collectively, the "NB Disclosure Representations").  New Borrower and New Indemnitor, jointly and severally, agree to reimburse, indemnify and hold Lender Parties harmless from and against any and all liabilities, judgments, costs, claims, damages, penalties, expenses, losses or charges (including, but not limited to, all reasonable legal fees and court costs) (collectively, "Indemnification Costs"), which may now or in the future be undertaken, suffered, paid, awarded, assessed or otherwise incurred as a result of or arising out of any breach or inaccuracy of the NB Disclosure Representations or any fraudulent or tortious conduct of New Borrower and/or New Indemnitor in connection with the Requested Actions, this Agreement or the contemplated transactions, or the Property, including any misrepresentation of financial data presented to Lender and/or Servicer.  The provision of any such information by Lender or any Servicer to any rating agency is expressly consented to by New Borrower and New Indemnitor and will not infringe upon or violate any intellectual property rights of any party.

(b)        Original Borrower and Original Indemnitor (as such term is defined in the Joinder By and Agreement of Original Indemnitor attached to this Agreement (the "Original Indemnitor Joinder")), confirm that all information provided to Lender and/or any Servicer by or on behalf of Original Borrower and/or Original Indemnitor or any of their respective employees, officers, directors, partners, members, managers or representatives, in connection with or relating to (i) the Requested Actions, (ii) this Agreement or the contemplated transactions or (iii) the Property, contains no untrue statement of material fact and does not omit a material fact necessary in order to make such information not materially misleading, (collectively, the "OB Disclosure Representations").  Original Borrower and Original Indemnitor, jointly and severally, agree to reimburse, indemnify and hold Lender Parties harmless from and against any and all

Indemnification Costs, which may now or in the future be undertaken, suffered, paid, awarded, assessed or otherwise incurred as a result of or arising out of any breach or inaccuracy of the OB Disclosure Representations or any fraudulent or tortious conduct of Original Borrower and/or Original Indemnitor in connection with the Requested Actions, this Agreement or the contemplated transactions, or the Property, including any misrepresentation of financial data presented to Lender and/or Servicer.  The provision of any such information by Lender and/or any Servicer to any rating agency is expressly consented to by Original Borrower and Original Indemnitor and will not infringe upon or violate any intellectual property rights of any party.

2.7.      Release and Covenant Not To Sue.  Each of Borrower Parties and Original Indemnitor, as to itself and all of its heirs, successors and assigns (collectively, "Releasing Parties"), remises, releases, acquits, satisfies and forever discharges Lender Parties from any and all manner of debts, accountings, bonds, warranties, representations, covenants, promises, contracts, controversies, agreements, liabilities, obligations, expenses, damages, judgments, executions, actions, inactions, claims, demands and causes of action of any nature whatsoever, whether at law or in equity, whether known or unknown, either now accrued or subsequently maturing, which any of Releasing Parties now has or subsequently can, shall or may have by reason of any matter, cause or thing, from the beginning of the world to and including the Effective Date, including, without limitation, matters arising out of or relating to (a) the Loan, (b) the Loan Documents, (c) the Indebtedness, (d) the Property, and (e) any other agreement or transaction between Releasing Parties or any one of them and any of Lender Parties concerning matters arising out of or relating to the items set forth in subsections (a) – (d) above.  Each of Releasing Parties covenants and agrees never to institute or cause to be instituted or continue prosecution of any suit or other form of action or proceeding of any kind or nature whatsoever against any of Lender Parties by reason of or in connection with any of the foregoing matters, claims or causes of action.

2.8.      Immediate Repairs.  New Borrower shall perform the repairs at the Property set forth on Exhibit H hereto (such repairs hereinafter referred to as "Immediate Repairs"). New Borrower shall complete each of the Immediate Repairs within one hundred and twenty (120) days from the Effective Date and shall provide Lender with evidence of such completion.  The failure to timely complete the Immediate Repairs and provide Lender with evidence of such completion shall constitute an Event of Default under the Loan Agreement.

2.9.      Further Assurances.  Borrower Parties shall execute and deliver to Lender such agreements, instruments, documents, financing statements and other writings as may be requested from time to time by Lender to perfect and to maintain the perfection of Lender's security interest in and to the Property, and to consummate the transactions contemplated by or in the Loan Documents and this Agreement.

ARTICLE 3

ADDITIONAL PROVISIONS

3.1.      Modifications to Loan Documents.  The Loan Documents are modified in accordance with the terms of Schedule 3.1 attached.

3.2.      Consent of Lender.  Subject to the terms of this Agreement, Lender consents to the Requested Actions.  Each of Borrower Parties, Original Indemnitor and New Indemnitor  agrees that neither this Agreement nor Lender’s consent to the Requested Actions shall be deemed Lender’s consent or a waiver of Lender’s right to consent to any other action requiring Lender consent under the Loan Documents that may be contained in any of the documents or items

delivered to Lender in connection with the Requested Actions, whether or not such documents or items were reviewed and/or accepted by Lender.  Moreover, neither this Agreement nor Lender’s consent to the Requested Actions shall constitute a modification of any of the terms of the Loan Documents, except as expressly provided for in this Agreement.

3.3.      Release of Original Indemnitor and Original Borrower.  Lender releases (i) Original Indemnitor from its obligations under the Guaranty and the Environmental Indemnity  in accordance with and subject to the terms of the Original Indemnitor Joinder and (ii) Original Borrower for any acts or events occurring or obligations arising under the Loan Documents from and after the Effective Date with the exception of any liability of Original Borrower based upon (a) any material misrepresentation by Original Borrower or a breach of any covenant in any material respect in this Agreement or any other document executed in connection with this Agreement and/or (b) the obligations under (i) Section 11.22 of the Loan Agreement (the “Exculpation Environmental Obligations”), (ii) the Environmental Indemnity or (iii) any of the other Loan Documents that are caused by Original Borrower, Original Indemnitor or any of their agents or result from the existence of conditions existing prior to the Effective Date or migrating to or from any portion of the Property prior to the Effective Date, or result from a violation of Environmental Laws (as defined in the Environmental Indemnity) prior to the Effective Date (collectively, the "Borrower's Recourse Environmental Obligations"). Original Borrower shall bear the burden of proving when Hazardous Substances (as defined in the Environmental Indemnity) first existed upon, about or beneath the Property or began migrating to or from the Property and when a violation of Environmental Laws first occurred.  The foregoing burden of proof is for the benefit of the Lender, its successors and assigns, and is not for the benefit of any other party.

3.4.      UCC Filings.  New Borrower grants and confirms unto Lender a first lien priority security interest in all of New Borrower's assets owned as of the Effective Date or subsequently acquired, including but not limited to (i) all of its personal property and all of the fixtures located at the Property and (ii) the Personal Property (as such term is defined in the Security Instrument), including, without limitation, the Collateral (as such term is defined in the Security Instrument), to the maximum extent permitted by the Uniform Commercial Code ("UCC").  Borrower Parties hereby consent to the filing of any financing statements or UCC forms required to be filed in the applicable states or any other applicable filing office, including, but not necessarily limited to, the state of organization of New Borrower and in the Records (collectively "Filings") in order to perfect or continue the perfection of said interest and, notwithstanding anything contained in any of the Loan Documents to the contrary, in accordance with the UCC, as amended subsequent to the making of the Loan, said Filings may be made by Lender without the consent of either of the Borrower Parties.

3.5.      References to Loan Documents.  All references to the term Loan Documents in this Agreement (including the Joinders attached hereto), the Loan Agreement, the Security Instrument, the Guaranty and the other Loan Documents are modified to include this Agreement and all documents executed and/or required in connection with the Requested Actions. All references to the terms "Loan Documents," "Loan Agreement," "Security Instrument" and "Guaranty" in this Agreement, (including the Joinders attached hereto), the Loan Agreement, the Security Instrument and the other Loan Documents shall mean and refer to the Loan Documents, the Loan Agreement, the Security Instrument, and the Guaranty, as assumed and modified by the terms of this Agreement and/or the Joinder By and Agreement of New Indemnitor attached to this Agreement (the "New Indemnitor Joinder").

ARTICLE 4

MISCELLANEOUS PROVISIONS

4.1.      No Limitation of Remedies.  No right, power or remedy conferred upon or reserved to or by Lender in this Agreement is intended to be exclusive of any other right, power or remedy conferred upon or reserved to or by Lender under this Agreement, the Loan Documents or at law.  Each and every such right, power and remedy shall be cumulative and concurrent, and shall be in addition to each and every other right, power and remedy given under this Agreement, the Loan Documents or now or subsequently existing at law.

4.2.      No Waivers.  Except as otherwise expressly set forth in this Agreement, nothing in this Agreement shall constitute a waiver of any rights or remedies of Lender under the Loan Documents or at law.  No delay or failure on the part of any party in the exercise of any right or remedy under this Agreement shall operate as a waiver, and no single or partial exercise of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy.  No action or forbearance by any party contrary to the provisions of this Agreement shall be construed to constitute a waiver of any of the express provisions.  Any party may in writing expressly waive any of such party's rights under this Agreement without invalidating this Agreement.

4.3.      Successors or Assigns.  Whenever any party is named or referred to in this Agreement, the heirs, executors, legal representatives, successors, successors-in-title and assigns of such party shall be deemed included, but the provision shall not be deemed to permit any transfer by either of the Borrower Parties.  All covenants and agreements in this Agreement shall bind and inure to the benefit of the heirs, executors, legal representatives, successors, successors-in-title and assigns of the parties, whether so expressed or not.

4.4.      Construction of Agreement.  Each party to this Agreement acknowledges that it has participated in the negotiation of this Agreement and no provision shall be construed against or interpreted to the disadvantage of any party by any court or other governmental or judicial authority by reason of such party having or being deemed to have structured, dictated or drafted such provision.  Borrower Parties at all times have had access to an attorney in the negotiation of the terms of and in the preparation and execution of this Agreement and have had the opportunity to review and analyze this Agreement for a sufficient period of time prior to execution and delivery.  No representations or warranties have been made by or on behalf of Lender, or relied upon by Borrower Parties, pertaining to the subject matter of this Agreement, other than those set forth in this Agreement.  All prior statements, representations and warranties, if any, are totally superseded and merged into this Agreement, which represents the final and sole agreement of the parties with respect to the subject matters.  All of the terms of this Agreement were negotiated at arm's length, and this Agreement was prepared and executed without fraud, duress, undue influence or coercion of any kind exerted by any of the parties upon the others.  The execution and delivery of this Agreement are the free and voluntary act of Borrower Parties.

4.5.      Invalid Provision to Affect No Others.  If, from any circumstances whatsoever, fulfillment of any provision of this Agreement or any related transaction at the time performance of such provision shall be due, shall involve transcending the limit of validity presently prescribed by any applicable usury statute or any other applicable law, with regard to obligations of like character and amount, then ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity.  If any clause or provision operates or would prospectively operate to invalidate this Agreement, in whole or in part, then such clause or provision only shall be deemed deleted, as

though not contained in this Agreement, and the remainder of this Agreement shall remain operative and in full force and effect.

4.6.      Notices.  Notwithstanding anything to the contrary in any of the Loan Documents, any and all notices, elections, approvals, consents, demands, requests and responses ("Communications") permitted or required to be given under this Agreement or the Loan Documents shall not be effective unless in writing, signed by or on behalf of the party giving the same, and sent by certified or registered mail, postage prepaid, return receipt requested, by hand delivery or by a nationally recognized overnight courier service (such as FedEx), to the party to be notified at the address of such party set forth below or at such other address within the continental United States as such other party may designate by notice specifically designated as a notice of change of address and given in accordance with this Section.  Any Communications shall be effective upon the earlier of their receipt or three days after mailing in the manner indicated in this Section.  Receipt of Communications shall occur upon actual delivery but if attempted delivery is refused or rejected, the date of refusal or rejection shall be deemed the date of receipt.  Notice to outside counsel or parties other than the named Original Borrower, New Borrower and Lender, now or subsequently designated by a party as entitled to notice, are for convenience only and are not required for notice to a party to be effective in accordance with this Section.  Any Communication, if given to Lender, must be addressed as follows, subject to change as provided above:

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee

c/o Wells Fargo Bank, N.A.

Wells Fargo Commercial Mortgage Servicing

Three Wells Fargo

401 S. Tryon Street, 8th Floor

MAC D1050-084

Charlotte, North Carolina 28202

Re: JPMCC 2016-JP4;

With a copy to:

LNR Partners, LLC

1601 Washington Avenue, Suite 700

Miami Beach, Florida 33139

Attn:    Director of Loan Asset Management

Re:  JPMCC 2016-JP4

and, if given to Original Borrower, must be addressed as follows, notwithstanding any other address set forth in the Loan Documents to the contrary, subject to change as provided above:

TREEMONT CAPITAL PARTNERS III, LP

1415 South Voss #110-94

Houston, Texas  77057

Attn:  Philip A. McRae

With a copy to:

Sneed, Vine & Perry, P.C.

2705 Bee Cave Road, Suite 160

Austin, Texas  78745

Attn:  Adam S. Wilk/Kasi Moeskau

and, if given to New Borrower, must be addressed as follows, subject to change as provided above:

LF3 LUBBOCK CASA, LLC

LF3 LUBBOCK CASA TRS, LLC

1635 43Rd Street South, Suite 205

Fargo, North Dakota  58103

Attn:  David Durell

With a copy to:

McShane & Bowie, P.L.C.

99 Monroe Avenue NW, Suite 1100

Grand Rapids, Michigan  49503

Attn:  John Faris, Esq.

4.7.      Governing Law.  This Agreement shall be interpreted, construed and enforced in accordance with the provisions of Section 11.3 of the Loan Agreement.

4.8.      Headings; Exhibits.  The headings of the articles, sections and subsections of this Agreement are for the convenience of reference only, are not to be considered a part of this Agreement and shall not be used to construe, limit or otherwise affect this Agreement.

4.9.      Modifications.  The terms of this Agreement may not be changed, modified, waived, discharged or terminated orally, but only by an instrument or instruments in writing, signed by the party against whom the enforcement of the change, modification, waiver, discharge or termination is asserted. Lender's consent to the Requested Actions shall not be deemed to constitute Lender's consent to any provisions of the organizational documents that would be in violation of the terms of any of the Loan Documents.

4.10.    Time of Essence; Consents.  Time is of the essence of this Agreement and the Loan Documents.  Any provisions for consents or approvals in this Agreement shall mean that such consents or approvals shall not be effective unless in writing and executed by Lender.

4.11.    Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which will constitute the same agreement.  Any signature page of this Agreement may be detached from any counterpart of this Agreement without impairing the legal effect of any signatures thereon and may be attached to another counterpart of this Agreement identical in form but having attached to it one or more additional signature pages.

4.12.    New Indemnitor Joinder.  New Indemnitor shall assume the obligations of Original Borrower and/or Original Indemnitor under the Guaranty and the Environmental Indemnity pursuant to the New Indemnitor Joinder.

4.13.    WAIVER OF TRIAL BY JURY.  BORROWER PARTIES AND LENDER EACH HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER PARTIES AND LENDER AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

The parties have executed and delivered this Agreement as of the Effective Date.

Witnesses:			LENDER:
			WILMINGTON TRUST, NATIONAL
			ASSOCIATION, AS TRUSTEE FOR THE
			BENEFIT OF THE REGISTERED HOLDERS
			OF JPMCC COMMERCIAL MORTGAGE
			SECURITIES TRUST 2016-JP4, COMMERCIAL
			MORTGAGE PASS- THROUGH
			CERTIFICATES, SERIES 2016- JP4
			By:	LNR Partners, LLC, a Florida limited liability company, as attorney-in-fact
			By:	LNR Partners, LLC, a Florida limited liability company, as attorney-in-fact
/s/ Samira Colon			By:		/s/ Job Warsha
Print Name:	Samira Colon				Job Warsha_____, _President_
/s/ Ciney Torres
Print Name:	Ciney Torres
STATE OF FLORIDA		)
		) SS:
COUNTY OF MIAMI-DADE		)

The foregoing instrument was acknowledged before me this 26th day of December, 2019, by Job Warsha, as President of LNR Partners, LLC, a Florida limited liability company, on behalf of said limited liability company, as attorney-in-fact for WILMINGTON TRUST, NATIONAL ASSOCIATION, AS TRUSTEE FOR THE BENEFIT OF THE REGISTERED HOLDERS OF JPMCC COMMERCIAL MORTGAGE SECURITIES TRUST 2016-JP4, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2016-JP4, on behalf of the said trust.  He _x____ is personally known to me or _____ has produced a driver’s license as identification.

/s/ Patricia Mosquera
Notary Public, State of Florida
Print Name: Patricia Mosquera
My Commission Expires:	Sept.1 5, 2023

[AFFIX NOTARY STAMP ABOVE]

The parties have executed and delivered this Agreement as of the Effective Date.

Witnesses:			ORIGINAL BORROWER:
			TREEMONT CAPITAL PARTNERS III, LP,
			a Texas limited partnership
			By:	Treemont Capital Partners III GP, LLC,
				a Texas limited liability company,
				its general partner
			By:	Treemont Investments, Inc.,
				a Texas corporation, its sole member
/s/ LaKeisha Jorchia
By:	/s/ Philip A. McRae
Print Name:	LaKeisha Jorchia
Name:	Philip A. McRae
Title:	President
/s/ Amy Methenry
Print Name:	Amy Methenry
STATE OF TEXAS		)
		)
COUNTY OF		)

On 12/26     , 2019, before me,          Kay Street   , personally appeared Philip A. McRae who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of  Texas  that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature	/s/  Kay Street	(Seal)
Sharon K. Street
Notary Public State of Texas
Comm. Expires: 12-04-2021
Notary ID 1901703

The parties have executed and delivered this Agreement as of the Effective Date.

Witnesses:			NEW BORROWER:
			LF3 LUBBOCK CASA, LLC,
			a Delaware limited liability company
			By:	Lodging Fund REIT III OP, LP,
				a Delaware limited partnership,
				as sole member
			By:	Lodging Fund REIT III, Inc.,
				a Maryland corporation,
				as general partner
/s/ Mitch Bossert			By:		/s/ Katie Cox
Print Name:	Mitch Bossert		Name:		Katie Cox
			Title:		Chief Financial Officer
/s/ Angie Stock
Print Name:	Angie Stock
STATE OF NORTH DAKOTA		)
		)
COUNTY OF CASS		)

On December 26 , 2019, before me, Jennifer Moum , personally appeared Katie Cox who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of North Dakota that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature /s/  Jennifer Moum  (Seal)

Jennifer Moum

Notary Public

State of North Dakota

My Commission Expires April 25, 2022

Witnesses:			NEW BORROWER:
			LF3 LUBBOCK CASA TRS, LLC,
			a Delaware limited liability company
			By:	Lodging Fund REIT III TRS, Inc.,
				a Delaware corporation,
				as sole member
			By:	Lodging Fund REIT III OP, LP,
				a Delaware limited partnership,
				as sole shareholder
			By:	Lodging Fund REIT III, Inc.,
				a Maryland corporation,
				as general partner
/s/ Mitch Bossert			By:		/s/ Katie Cox
Print Name:	Mitch Bossert		Name:		Katie Cox
			Title:		Chief Financial Officer
/s/ Angie Stock
Print Name:	Angie Stock
STATE OF NORTH DAKOTA		)
		)
COUNTY OF CASS		)

On December 26 , 2019, before me, Jennifer Moum , personally appeared Katie Cox who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of North Dakota that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature /s/  Jennifer Moum  (Seal)

Jennifer Moum

Notary Public

State of North Dakota

My Commission Expires April 25, 2022

SCHEDULE 3.1

MODIFICATION TO LOAN DOCUMENTS

Section 3.1      From and after the Effective Date, the Loan Documents are modified as follows:

(a)        All Loan Documents:

(i)         All references to the term “Borrower” in each of the Loan Documents shall jointly and severally and individually and/or collectively, as the context may require, mean and refer to "LF3 LUBBOCK CASA, LLC, a Delaware limited liability company, and LF3 LUBBOCK CASA TRS, LLC, a Delaware limited liability company."

(ii)        All references to the term “Lender” in each of the Loan Documents shall mean and refer to "WILMINGTON TRUST, NATIONAL ASSOCIATION, AS TRUSTEE FOR THE BENEFIT OF THE REGISTERED HOLDERS OF JPMCC COMMERCIAL MORTGAGE SECURITIES TRUST 2016-JP4, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2016-JP4, together with its successors and assigns."

(iii)       All references (if any) to “Guarantor” in each of the Loan Documents shall jointly and severally and individually and/or collectively, as the context may require, mean and refer to "LODGING FUND REIT III, INC., a Maryland corporation and LODGING FUND REIT III OP, LP, a Delaware limited partnership."

(iv)       The references (if any) to the term "Franchise Agreement" or such other similar term in the Loan Documents shall mean and refer to the Franchise Agreement dated on or about the Effective Date between Franchisor and Operating Lessee with respect to the Property, together with any permitted amendment thereto or permitted replacement thereto.

(v)        The references (if any) to the term "Franchisor" or such other similar term in the Loan Documents shall mean and refer to Franchisor (as defined herein), together with any permitted replacement franchisor acceptable to Lender.

(vi)       The references (if any) to the term "Management Agreement" or "management agreement" or such other similar term in the Loan Documents shall hereafter refer to the New Management Agreement.

(vii)      The references (if any) to the term "Manager" or such other similar term in the Loan Documents shall hereafter refer to the Property Manager (as defined herein), or any other manager approved by Lender and the Rating Agencies in accordance with the terms and conditions of the Loan Documents.

(b)        Loan Agreement:

(i)         The following definitions are added to Section 1.1 of the Loan Agreement in their proper alphabetical order:

“Assumption Agreement” shall mean and refer to the Assumption Agreement entered into as of the Effective Date (as such term is defined in the Assumption Agreement) between

Lender, Original Borrower (as such term is defined therein) and New Borrower (as such term is defined therein), together with Joinder By and Agreement of Original Indemnitor executed by Original Indemnitor (as such term is defined therein) and Joinder By and Agreement of New Indemnitor executed by Guarantor.

"Assumption Effective Date" shall mean the Effective Date (as defined in the Assumption Agreement).

"Collateral Assignment of Operating Lease" shall mean that certain Collateral Assignment of Agreements, Permits and Items Affecting Hotel Operations and Subordination of Lease dated as of the Assumption Effective Date among Operating Lessee, Fee Borrower and Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

"Fee Borrower" shall mean LF3 Lubbock Casa, LLC, a Delaware limited liability company.

"Operating Lease" shall mean that certain Lease Agreement by and between Fee Borrower, as landlord, and Operating Lessee, as tenant, dated as of December ____, 2019, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time subject to the terms of the Loan Documents.

"Operating Lessee" shall mean LF3 Lubbock Casa TRS, LLC, a Delaware limited liability company.

"PIP" shall mean that certain Product Improvement Plan dated August 23, 2019, prepared by Franchisor and attached to the Franchise Agreement.

(ii)        The defined term "Assignment of Management Agreement" in Section 1.1 of the Loan Agreement is modified to read as follows: "Assignment of Management Agreement" shall mean that certain Assignment of Management Agreement and Subordination of Management Fees dated as of the Assumption Effective Date among Operating Lessee, Fee Borrower, Manager, and Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

(iii)      The defined term "Lease" in Section 1.1 of the Loan Agreement, and all references to such term in the Loan Agreement, shall hereafter exclude the Operating Lease.

(iv)       The defined term "Loan Documents" in Section 1.1 of the Loan Agreement, and all references to such term in the Loan Agreement, shall hereafter include the Collateral Assignment of Operating Lease.

(v)        The defined term "Operating Expenses" in Section 1.1 of the Loan Agreement and all references to such term in the Loan Agreement, shall hereinafter exclude all rent and other payments made under the Operating Lease.

(vi)       The defined term "PIP Work" in Section 1.1 of the Loan Agreement is modified to read as follows: "PIP Work" shall mean those certain improvements, repairs, replacements, maintenance, alterations and/or renovations to the Property as more particularly specified in the PIP and any other improvements, repairs, replacements, maintenance, alterations and/or renovations to the Property as may be required by Franchisor to be completed from time to time.

(vii)      Section 3.1.24(a) and (b) of the Loan Agreement is deleted and replaced with the following:

(a)        (A) as to Fee Borrower, Fee Borrower (i) has been, is, and will be organized solely for the purpose of acquiring, developing, owning, holding, selling, leasing, transferring, exchanging, managing and operating the Property, entering into this Agreement with the Lender, refinancing the Property in connection with a permitted repayment of the Loan, and transacting lawful business that is incident, necessary and appropriate to accomplish the foregoing, and (ii) has not owned, does not own, and will not own any asset or property other than the Property, and incidental personal property necessary for the ownership or operation of the Property; and (B) as to Operating Lessee, Operating Lessee (i) has been is, and will be organized solely for the purpose of leasing the Property that is subject to the Operating Lease and operating, managing and maintaining the Property subject to the Operating Lease and transacting lawful business that is incident, necessary and appropriate to accomplish the foregoing, and (ii) has not owned, does not own, and will not own any asset or property other than its leasehold interest in the Property pursuant to the Operating Lease and personal property necessary or incidental to such ownership or operation of the Property.

(b)        (A) as to Fee Borrower, Fee Borrower has not engaged and will not engage in any business other than the ownership, management and operation of the Property and Fee Borrower will conduct and operate its business as presently conducted and operated, and (B) as to Operating Lessee, Operating Lessee has not engaged and will not engage in any business unrelated to owning its leasehold interest in the Property pursuant to the Operating Lease and personal property necessary or incidental to such ownership or operation of the Property.

(viii)     Section 3.1.24(dd) of the Loan Agreement is deleted and replaced with the following: "(dd) Except as contemplated by the Loan Documents, Borrower has not, does not and will not have any of its obligations guaranteed by any Affiliates."

(ix)       Section 3.1.29 of the Loan Agreement is deleted and replaced with the following:

Organizational Status. Fee Borrower's exact legal name is: LF3 Lubbock Casa, LLC. Fee Borrower is of the following organizational type (e.g., corporation, limited liability company): limited liability company, and the jurisdiction in which Fee Borrower is organized is: Delaware. Fee Borrower's Tax I.D. number is 84-3293898 and Fee Borrower's Delaware Organizational I.D. number is 803445131.  Operating Lessee's exact legal name is: LF3 Lubbock Casa TRS, LLC. Operating Lessee is of the following organizational type (e.g., corporation, limited liability company): limited liability company, and the jurisdiction in which Operating Lessee is organized is: Delaware. Operating Lessee's Tax I.D. number is 84-3283804 and Operating Lessee's Delaware Organizational I.D. number is 803442100.

(x)        The first sentence of Section 4.1.7(a) of the Loan Agreement is deleted and replaced with the following:

Borrower shall keep and maintain or will cause to be kept and maintained proper and accurate books and records, in accordance with GAAP, or other sound accounting principles reasonably acceptable to Lender, consistently applied, the Uniform System of Accounts for Hotels, current edition, and the requirements of Regulation AB, to the extent applicable, reflecting the financial affairs of Borrower and all items of income and expenses in connection with the operation of the Property.

(xi)       The first sentence of Section 4.1.7(b) of the Loan Agreement is deleted and replaced with the following:

Not later than forty-five (45) days following the end of each fiscal quarter (and for the first twelve (12) months following the Closing Date, not later than fifteen (15) days following the end of each calendar month), Borrower shall deliver to Lender unaudited operating statements, internally prepared on an accrual basis including a balance sheet and profit and loss statement as of the end of such quarter and for the corresponding quarter of the previous year, and a statement of revenues and expenses for the year of date, a statement of Net Operating Income for such quarter, a comparison of the year to date results with (i) the results for the same period of the previous year, (ii) the results that had been projected by Borrower for such period and (iii) the Annual Budget for such period and the First Year, and a summary report detailing monthly occupancy, including average daily rate.

(xii)      The first sentence of Section 4.1.7(d) of the Loan Agreement is deleted and replaced with the following:

Not later than forty-five (45) days after the end of each fiscal quarter of Borrower's operations, Borrower shall deliver to Lender a true and complete rent roll for the Property, if applicable, dated as of the

last month of such fiscal quarter, showing the percentage of gross leasable area of the Property, if any, leased as of the last day of the preceding calendar quarter, the current annual rent for the Property, the expiration date of each lease, whether to Borrower’s knowledge any portion of the Property has been sublet, and if it has, the name of the subtenant, and such rent roll shall be accompanied by an Officer’s Certificate certifying that such rent roll is true, correct and complete in all material respects as of its date and stating whether Borrower, within the past three (3) months, has issued a notice of default with respect to any Lease which has not been cured and the nature of such default.

(xiii)     Section 6.1 of the Loan Agreement is deleted and replaced with the following:

Cash Management Arrangements.  On or prior to the Assumption Effective Date, Borrower shall establish and activate and thereafter, Borrower shall cause all Rents to be transmitted directly by all commercial tenants at the Property and all credit card banks which Borrower has entered into agreements for the clearance of credit card receipts into a trust account (the "Clearing Account") established and maintained by Borrower at the Clearing Bank as more fully described in the Clearing Account Agreement.  Without in any way limiting the foregoing, if Borrower or Manager receive any Gross Revenue from the Property, then (i) such amounts shall be deemed to be collateral for the Obligations and shall be held in trust for the benefit, and as the property, of Lender, (ii) such amounts shall not be commingled with any other funds or property of Borrower or Manager, and (iii) Borrower or Manager shall deposit such amounts in the Clearing Account within one (1) Business Day of receipt. Funds deposited into the Clearing Account shall be swept by the Clearing Bank on a daily basis into Borrower’s operating account at the Clearing Bank, unless a Sweep Event Period is continuing, in which event such funds shall be swept on a daily basis into an Eligible Account at the Cash Management Bank controlled by Lender (the “Cash Management Account”) and applied and disbursed in accordance with this Agreement and the Cash Management Agreement. Funds in the Cash Management Account shall be invested in Permitted Investments, as more particularly set forth in the Cash Management Agreement. Lender may also establish subaccounts of the Cash Management Account which shall at all times be Eligible Accounts (and may be ledger or book entry accounts and not actual accounts) (such subaccounts are referred to herein as “Accounts”). The Cash Management Account and all other Accounts will be under the sole control and dominion of Lender, and Borrower shall have no right of withdrawal therefrom. Borrower shall pay for all expenses of opening and maintaining all of the above accounts.

(xiv)     Section 6.11.1(a)(ix) of the Loan Agreement is deleted and replaced with the following:

(ix) Ninth, to the Borrower Operating Account, payments for the excess monthly rent due, if any, under the Operating Lease; and

(xv)      Section 6.11.1(a) of the Loan Agreement is modified to add the following as subsection (x):

(x) Lastly, all amounts remaining after payment of the amounts set forth in clauses (i) through (ix) above (the "Remaining Receipts") to the Excess Cash Flow Account.

(xvi)     Section 8.2 of the Loan Agreement is modified to add the following as subsection (c):

(c)       For so long as Fee Borrower owns the Property, Operating Lessee owns the leasehold interest in the Property pursuant to the Operating Lease, and Lodging Fund REIT III, Inc., a Maryland corporation (the "REIT") indirectly owns and indirectly controls Borrower, notwithstanding any provision in any Loan Document to the contrary, the following transfers shall constitute Permitted Transfers (subject only to any conditions set forth below) and shall not require Lender’s consent: the issuance sale, conveyance, transfer or other disposition (each, a "REIT Share Transfer") of any shares of common stock (the "REIT Shares") in the REIT so long as (A) at the time of the REIT Share Transfer, the REIT Shares are issued or traded in substantially the same method and manner as they are currently issued and traded as of the Assumption Effective Date, (B) the REIT Share Transfer does not cause a violation of any federal or state securities laws, and (C) the REIT Share Transfer does not result in or cause a Change of Control;

(i)         The foregoing shall not constitute and should in no manner be deemed to constitute Lender's consent to the filing of an initial public offering of the REIT Shares under a Form S-11 Registration Statement or otherwise in which the REIT Shares are listed on a nationally recognized stock exchange or are to be traded over the counter and listed in the National Association of Securities Dealers Automatic Quotations (a "Public Offering").  Borrower agrees not to conduct a Public Offering of the REIT Shares or any other securities of the REIT without first obtaining the Lender's prior written consent.

(ii)        For purposes of this Section 8.2(c), in addition to any other changes of Control contemplated by the Loan Documents, a "Change of Control" shall also occur if: (i) the REIT reduces its ownership interest in Lodging Fund REIT III OP, LP, a Delaware limited partnership ("OP") and Borrower below 51% or is no longer the sole general partner and in Control of the OP, (ii) the OP is no

longer the sole member of Fee Borrower and the sole shareholder of Lodging Fund REIT III TRS, Inc., a Delaware corporation ("TRS"), (iii) TRS is no longer the sole member of Operating Lessee, (iv) the REIT and OP are no longer the Guarantors of the Loan, (v) one Person or group of affiliated Persons acquires more than 49% of the REIT Shares in one or a series of transactions, (vi) Legendary Capital, LLC, a North Dakota limited liability company ("Advisor") is no longer the Advisor to the REIT, (vii) Corey R. Maple and Norman H. Leslie are no longer members of the Board of Directors and C-Suite executives of the REIT, (viii) Corey R. Maple and Norman H. Leslie are no longer the managing members or managers or otherwise in Control of the Advisor, or (ix) the REIT enters into a merger, consolidation or other business combination, or a sale of all or substantially all of the REIT's assets and/or ownership interests (each, a "Merger") which results in (1) the REIT or the OP not being the surviving entity, or (2) Borrower otherwise no longer being directly or indirectly controlled by the REIT.

(iii)       If a Merger results in the REIT or the OP being the surviving entity (a "Surviving REIT Merger"), no Change of Control shall occur provided such Surviving REIT Merger does not result in: (i) a material and adverse change in the financial condition of the REIT or the OP, (ii) Borrower no longer being directly or indirectly controlled by the REIT, (iii) the surviving REIT no longer being the sole general partner of the OP and in Control of Borrower, or (iv) a change in the majority of the Board of Directors of the REIT (collectively, the, "Surviving REIT Merger Conditions"). Borrower shall provide written notice to Lender of any such Surviving REIT Merger within ten (10) business days after the closing of such Surviving REIT Merger, which notice shall include a confirmation and reaffirmation from Borrower and any indemnitor/guarantor that the Loan Documents continue to be legally binding and enforceable against Borrower and such indemnitor/guarantor notwithstanding such Surviving REIT Merger and confirming that such Surviving REIT Merger does not result in a Change of Control and a breach of the Surviving REIT Merger Conditions. In addition to delivering the items set forth above with the respect to a Surviving REIT Merger, Borrower shall pay all of Lender's costs and expenses, including Lender's attorneys' fees and costs, incurred by Lender in connection with the Surviving REIT Merger and a processing fee of $5,000.00.

(iv)       The occurrence of any Change of Control as described above, without first having obtained the prior written consent of Lender, or a breach of the Surviving REIT Merger Conditions, shall constitute an "Event of Default" under Section 10.1(a)(v) of the Loan Agreement, a "Springing Recourse Event" under clause (iii) of the definition thereof under Section 11.22 of the Loan Agreement, and a "Guaranteed Obligation" under Section 1.1 of the Guaranty.

(17)      Section 10.1 of the Loan Agreement is modified to add the following clause (xxvii) at the end of subsection (a):

(xxvii)  if a material default shall occur under the Operating Lease which continues beyond any applicable cure period set forth in the Operating Lease or if any other default shall occur which entitles either Borrower to terminate the Operating Lease and seek monetary damages.

(v)        The first sentence of Section 11.21 of the Loan Agreement is deleted and replaced with the following: "Borrower hereby represents that, except for Eric Guerrero (“Broker”), it has dealt with no financial advisors, brokers, underwriters, placement agents, agents or finders in connection with the transactions contemplated by this Agreement."

(vi)       Section 11.22 of the Loan Agreement is modified to add the following as subsection (xx) to the definition of "Borrower's Recourse Liabilities":

(20)      Failure of Operating Lessee or Manager to fully cooperate with Lender in the transition and transferring of its management responsibilities to Manager, including, but not limited to, the employment of all eligible hotel employees at the Property by Manager,  in connection with any enforcement action or exercise or assertion of any right or remedy by or on behalf of Lender under or in connection with this Agreement, the Guaranty, the Note, the Mortgage or any other Loan Document. For purposes of this Section 11.22, "eligible hotel employees" shall mean hotel employees that (a) have not performed illegal acts, or (b) are not then under any disciplinary review or action.

(20)      Section 11.22 of the Loan Agreement is modified to add the following as subsections (xi) and (xii) to the definition of "Springing Recourse Event":

(xi)       Failure of Operating Lessee to cause Manager to employ all eligible hotel employees in connection with any enforcement action or exercise or assertion of any right or remedy by or on behalf of Lender under or in connection with this Agreement, the Guaranty, the Note, the Mortgage or any other Loan Document; or

(xii)       In the event Lender exercises its option to terminate the Management Agreement and transfers the responsibility for the management of the Property to a new manager selected by Lender, failure of Manager to fully cooperate in transferring its management responsibilities and the employment of all eligible hotel employees at the Property to a new manager and effectuate such transfer immediately upon written notice from Lender.

(vii)      The Rent Roll attached to this Agreement as Exhibit C shall replace and be substituted for the Rent Roll attached to the Loan Agreement as Schedule I.

(viii)    The organizational chart attached to this Agreement as Exhibit D shall replace and be substituted for the organizational chart attached to the Loan Agreement as Schedule III.

(ix)       From and after the Effective Date, and for so long as Fee Borrower owns the Property, the words "ninety (90) days" in Section 4.1.7(c) of the Loan Agreement shall be replaced with "one hundred and twenty (120) days."

(x)        From and after the Effective Date, and for so long as Fee Borrower owns the Property, the word "November" in Section 4.1.7(g) of the Loan Agreement shall be replaced with "December."

[END OF SCHEDULE 3.1]

EXHIBIT A

LEGAL DESCRIPTION

EXHIBIT B

LOAN DOCUMENTS

1.         Promissory Note dated as of the Loan Origination Date, in the principal amount of $8,600,000.00 (the "Note"), executed by Original Borrower in favor of Original Lender, and endorsed to the order of Lender.

2.         Loan Agreement, as assigned to Lender.

3.         Deed of Trust, Assignment of Leases and Rents and Security Agreement dated as of the Loan Origination Date (the "Security Instrument"), executed by Original Borrower in favor of Original Lender and recorded as Instrument No. 2016036108 in the Public Records of Lubbock County, Texas (the "Records"), as assigned to Lender.

4.         Assignment of Leases and Rents dated as of the Loan Origination Date, executed by Original Borrower in favor of Original Lender and recorded as Instrument No. 2016036109 of the Records, as assigned to Lender.

5.         UCC Financing Statement reflecting Original Borrower, as debtor, and Original Lender, as secured party, and recorded as Instrument No. 2016036110 of the Records, as assigned to Lender.

6.         UCC Financing Statement reflecting Original Borrower, as debtor, and Original Lender, as secured party, and filed with the Secretary of State of Texas under File No. 16-0033125021, as assigned to Lender.

7.         Guaranty of Recourse Obligations dated as of the Loan Origination Date (the "Guaranty"), executed by Original Indemnitor in favor of Original Lender, as assigned to Lender.

8.         Environmental Indemnity Agreement dated as of the Loan Origination Date (the "Environmental Indemnity"), executed by Original Borrower and Original Indemnitor in favor of Original Lender, as assigned to Lender.

9.         Assignment of Management Agreement and Subordination of Management Fees dated as of the Loan Origination Date executed by MH Partners, LLC, a Tennessee limited liability company ("Original Manager"), as Property Manager, and Original Borrower in favor of Original Lender, as assigned to Lender.

10.       Cash Management Agreement dated as of the Loan Origination Date executed by Original Lender, Original Borrower and Original Manager, as assigned to Lender.

11.       Deposit Account Control Agreement dated as of the Loan Origination Date executed by Original Lender, Original Borrower and Wells Fargo Bank, N.A., a national banking association, as assigned to Lender.

EXHIBIT C

RENT ROLL

N/A

EXHIBIT C

RENT ROLL

(INTENTIONALLY DELETED FOR PURPOSES OF RECORDING)

EXHIBIT D

NEW BORROWER ORGANIZATIONAL CHART

EXHIBIT D

NEW BORROWER ORGANIZATIONAL CHART

(INTENTIONALLY DELETED FOR PURPOSES OF RECORDING)

EXHIBIT E

LICENSES

1)   Wine&Beer Retailer's On Premise Permit

2)   Certificate of Compliance for Elevators, Escalators and Related Equipment

3)   Permit to Operate Recreational Water Indoor Pool

4)   Permit to Operate Food Service

EXHIBIT E

LICENSES

(INTENTIONALLY DELETED FOR PURPOSES OF RECORDING)

EXHIBIT F

PIP

EXHIBIT F

PIP

(INTENTIONALLY DELETED FOR PURPOSES OF RECORDING)

EXHIBIT G

PIP BUDGET

EXHIBIT G

PIP BUDGET

(INTENTIONALLY DELETED FOR PURPOSES OF RECORDING)

EXHIBIT H

IMMEDIATE REPAIRS

EXHIBIT H

IMMEDIATE REPAIRS

(INTENTIONALLY DELETED FOR PURPOSES OF RECORDING)

JOINDER BY AND AGREEMENT OF ORIGINAL INDEMNITOR

PHILIP A. MCRAE, an individual ("Original Indemnitor"), the guarantor/indemnitor under the Guaranty and the Environmental Indemnity executed in connection with the Loan described in the Agreement to which this Original Indemnitor Joinder is attached, represents and warrants to, and acknowledges and agrees with, Lender the following:

1.         Defined Terms.  All capitalized terms used in this Original Indemnitor Joinder, unless defined below, shall have the meanings given such terms in the Agreement.

2.         Reaffirmation of Guaranty and Environmental Indemnity.  The Guaranty and the Environmental Indemnity constitute the valid, legally binding obligations of Original Indemnitor, enforceable against Original Indemnitor in accordance with their respective terms.  Original Indemnitor waives and releases any and all defenses, affirmative defenses, setoffs, claims, counterclaims and causes of action of any kind or nature which Original Indemnitor has asserted, or might assert, against any of Lender Parties which in any way relate to or arise out of the Guaranty and  Environmental Indemnity or any of the other Loan Documents.

3.         Agreements of Original Indemnitor.  Original Indemnitor consents to the execution and delivery of the Agreement by Original Borrower and New Borrower and agrees and acknowledges that, except as set forth in paragraphs 5 and 6 below, the liability of Original Indemnitor under the Guaranty and the Environmental Indemnity shall not be diminished in any way by the execution and delivery of the Agreement or by the consummation of any of the transactions contemplated therein, including but not limited to the Requested Actions.

4.         Authority Representations by the Original Indemnitor. The execution and delivery of, and performance under, this Original Indemnitor Joinder, the Guaranty and the Environmental Indemnity by Original Indemnitor will not (a) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to Original Indemnitor or (b) result in a breach of or constitute or cause a default under any indenture, agreement, lease or instrument to which  Original Indemnitor is a party or by which the Property may be bound or affected.

5.         Release of Original Indemnitor under Guaranty.  Notwithstanding anything to the contrary in this Original Indemnitor Joinder, the Loan Agreement, the Security Instrument, or the other Loan Documents, Original Indemnitor's obligations under this Original Indemnitor Joinder and under the Guaranty shall not apply with respect to, and by acceptance of this Original Indemnitor Joinder, Lender agrees that Original Indemnitor is released from any and all of Original Indemnitor's obligations  under the Guaranty (the "Guaranteed Obligations") for acts or events occurring or obligations arising from and after the Effective Date except for:  (a) any material misrepresentation by Original Indemnitor in this Original Indemnitor Joinder or any other document executed in connection with this Original Indemnitor Joinder,  (b) Guaranteed Obligations that are caused by Original Borrower and/or Original Indemnitor and/or any of their agents, and/or (c) Guaranteed Obligations that relate to any of the Borrower's Recourse Environmental Obligations.  For purposes of this Original Indemnitor Joinder, Original Indemnitor shall bear the burden of proving when Hazardous Substances (as defined in the Environmental Indemnity) first existed upon, about or beneath the Property or began migrating to or from the Property and when a violation of Environmental Laws (as defined in the Environmental Indemnity) first occurred; provided however, the foregoing burden of proof is for the benefit of Lender, its successors and assigns, and is not for the benefit of any third party.

6.         Release of Original Indemnitor Under Environmental Indemnity.  Notwithstanding anything to the contrary in this Original Indemnitor Joinder, the Loan Agreement, the Security Instrument or the other Loan Documents, Original Indemnitor's obligations under this Original Indemnitor Joinder and under the Environmental Indemnity shall not apply with respect to, and by acceptance of this Original Indemnitor Joinder, Lender agrees that Original Indemnitor is released for all acts or events occurring or obligations arising under the Environmental Indemnity ("Environmental Indemnity Obligations") from and after the Effective Date unless such Environmental Indemnity Obligations:  (a) are caused by Original Borrower, Original Indemnitor and/or any of their agents, or (b) result from the existence of conditions existing prior to the Effective Date or migrating to or from any portion of the Property prior to the Effective Date, or result from a violation of Environmental Laws prior to the Effective Date.  For purposes of this Original Indemnitor Joinder, Original Indemnitor shall bear the burden of proving when Hazardous Substance first existed upon, about or beneath the Property or began migrating to or from the Property and when a violation of Environmental Laws first occurred.  The foregoing burden of proof is for the benefit of Lender, its successors and assigns, and is not for the benefit of any third party.

7.         Confirmation of Representations; Additional Representations.  Original Indemnitor confirms (a) the representations and warranties and agrees to the covenants regarding Original Indemnitor set forth in the Agreement, including, but not limited to the obligations to pay the Indemnification Costs, and (b) the truth and accuracy of all representations and warranties set forth in the Guaranty and Environmental Indemnity, as applicable.  Original Indemnitor represents and warrants that it delivered true and complete copies of the Guaranty and the Environmental Indemnity to New Indemnitor and warranted to New Indemnitor that such documents were true and complete copies of such documents as signed by Original Indemnitor.

8.         Governing Law.  This Original Indemnitor Joinder shall be interpreted, construed and enforced in accordance with the governing law provisions of the Guaranty and the Environmental Indemnity, as applicable.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

Original Indemnitor has executed and delivered this Original Indemnitor Joinder to be effective as of the Effective Date of the Agreement.

Witnesses:				ORIGINAL INDEMNITOR:
				/s/ Philip A. McRae
				PHILIP A. MCRAE
/s/  LaKeisha Jorchia
By:	/s/ Philip A. McRae
Print Name:	LaKeisha Jorchia
/s/ Amy Methenry
Print Name:		Amy Methenry
STATE OF TEXAS			)
			)
COUNTY OF			)

On 12/26     , 2019, before me,          Kay Street   , personally appeared Philip A. McRae who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of  Texas  that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature/s/  Kay Street      (Seal)

Sharon K. Street

Notary Public State of Texas

Comm. Expires: 12-04-2021

Notary ID 1901703

JOINDER BY AND AGREEMENT OF NEW INDEMNITOR

LODGING FUND REIT III, INC., a Maryland corporation ("REIT"), and LODGING FUND REIT III OP, LP, a Delaware limited partnership ("Fee Borrower Member", together with REIT, collectively, "New Indemnitor"), the New Indemnitor referred to in the Agreement to which this New Indemnitor Joinder is attached,  intending to be legally bound and assume the obligations under the Guaranty and the Environmental Indemnity pursuant to the provisions of this New Indemnitor Joinder, jointly and severally represents and warrants to and acknowledges and agrees with Lender the following:

Defined Terms.  All capitalized terms used in this New Indemnitor Joinder, unless defined below, shall have the meanings given such terms in the Agreement, and if not defined therein, then in the Original Indemnitor Joinder attached thereto.

Benefit to New Indemnitor.  Each New Indemnitor, owning a direct and/or indirect interest in New Borrower as a result of the Requested Actions, shall receive a substantial benefit from Lender's consent to the Requested Actions.

Assumption by New Indemnitor of Guaranty.  New Indemnitor, jointly and severally, assumes and agrees to be liable and responsible for and bound by, from and after the Effective Date, all of Original Indemnitor's obligations, agreements and liabilities, including but not limited to the jury waiver and other waivers set forth therein, under the Guaranty, as amended by this New Indemnitor Joinder, as fully and completely as if the New Indemnitor had originally executed and delivered such Guaranty as amended by this New Indemnitor Joinder, as the guarantor/indemnitor thereunder.  New Indemnitor further agrees to pay, perform and discharge each and every obligation of payment and performance of any guarantor/indemnitor under, pursuant to and as set forth in the Guaranty, as amended by this New Indemnitor Joinder, at the time, in the manner and otherwise in all respects as therein provided. Notwithstanding the foregoing, with respect to the environmental obligations under Section 1.1 of the Guaranty, as it relates to the Borrower's Recourse Environmental Obligation, the liability of New Indemnitor shall be joint and several with that of New Borrower and, if applicable, Original Borrower and Original Indemnitor and shall not be limited to environmental obligations occurring from and after the Effective Date.  From and after the Effective Date, the Guaranty is amended to provide that all references to the term "Borrower" used in the Guaranty shall mean and refer to New Borrower and the term "Guarantor" used in the Guaranty shall mean and refer to New Indemnitor.

Assumption by New Indemnitor of Environmental Indemnity.  New Indemnitor, jointly and severally, by this New Indemnitor Joinder assumes and agrees to be liable and responsible for and bound by all of the Original Indemnitor's obligations, agreements and liabilities, including but not limited to the jury waiver and other waivers set forth therein, under the Environmental Indemnity as fully and completely as if New Indemnitor had signed such Environmental Indemnity, as amended by this New Indemnitor Joinder, as the indemnitor/guarantor thereunder, including without limitation, all of those obligations, agreements and liabilities which would have been the obligations, agreements and liabilities of Original Indemnitor, without regard to when such obligations, agreements and liabilities arise, accrue or have arisen or accrued and without regard to the Original Indemnitor's responsibility therefore, if any.  New Indemnitor further agrees to pay, perform, and discharge each and every obligation of payment and performance of any guarantor/indemnitor under, pursuant to and as set forth in the Environmental Indemnity, as amended by this New Indemnitor Joinder, at the time, in the manner

and otherwise in all respects as therein provided.   The liability of New Indemnitor under this paragraph shall be joint and several with that of New Borrower and, if applicable, Original Borrower and Original Indemnitor.  From and after the Effective Date, the Environmental Indemnity is amended to provide that all references to the term "Borrower" used in the Environmental Indemnity shall mean and refer to the New Borrower and the term "Indemnitor" used in the Environmental Indemnity shall mean and refer to the New Indemnitor.

Confirmation of Representations; Additional Representations.  New Indemnitor confirms (a) the representations and warranties and agrees to the covenants regarding New Indemnitor set forth in the Agreement, including, but not limited to, obligations to pay the Indemnifications Costs and (b) the truth and accuracy of all representations and warranties set forth in the Guaranty and Environmental Indemnity, as applicable.  New Indemnitor represents and warrants that New Indemnitor received copies of the Guaranty and the Environmental Indemnity from Original Indemnitor, which copies were warranted by Original Indemnitor as being true and complete copies of such documents.

Authority Representations by New Indemnitor.

The execution and delivery of this New Indemnitor Joinder, and performance by New Indemnitor under the New Indemnitor Joinder, the Guaranty and the Environmental Indemnity will not (a) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to New Indemnitor or (b) result in a breach of or constitute or cause a default under any indenture, agreement, lease or instrument to which New Indemnitor is a party or by which the Property may be bound or affected.

REIT is a duly organized, validly existing corporation in good standing under the laws of the State of Delaware and is qualified to transact business in the State of Texas.  Katie Cox, as Chief Financial Officer of REIT, acting alone without the joinder of any other officer, director or shareholder of REIT or any other party, has the power and authority to execute this New Indemnitor Joinder on behalf of and to duly bind REIT.

Fee Borrower Member is a duly organized, validly existing limited partnership in good standing under the laws of the State of Delaware and is qualified to transact business in the State of Texas.  REIT, as the general partner of Fee Borrower Member, acting alone without the joinder of any other partner of Fee Borrower Member or any other person has the power and authority to execute this New Indemnitor Joinder on behalf of and to duly bind Fee Borrower Member. Katie Cox, as Chief Financial Officer of REIT, acting alone without the joinder of any other officer, director or shareholder of REIT or any other party, has the power and authority to execute this New Indemnitor Joinder on behalf of and to duly bind REIT and Fee Borrower Member.

Notices to New Indemnitor.  Lender shall deliver any notices to New Indemnitor which are required to be delivered pursuant to the Guaranty and the Environmental Indemnity, or are otherwise delivered by the Lender thereunder at Lender's sole discretion, to New Indemnitor at the following address:

LODGING FUND REIT III, INC.

LODGING FUND REIT III OP, LP

1635 43rd Street South, Suite 205

Fargo, North Dakota  58103

Attn: Sam Montgomery

With copy to:

McShane & Bowie, P.L.C.

99 Monroe Avenue NW, Suite 1100

Grand Rapids, Michigan  49503

Attn:  John Faris, Esq.

All notices to be sent by New Indemnitor to Lender under the Guaranty, the Environmental Indemnity and Loan Documents shall be sent to Lender in the manner set forth in and at the address shown in Section 4.6 of the Agreement.

Joint and Several Liability.  If New Indemnitor consists of more than one person or party, the obligations and liabilities of each such person or party shall be joint and several.

Governing Law.  This New Indemnitor Joinder shall be interpreted, construed, and enforced in accordance with the governing law provisions of the Guaranty and the Environmental Indemnity, as applicable.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

New Indemnitor has executed and delivered this New Indemnitor Joinder to be effective as of the Effective Date of the Agreement.

Witnesses:			NEW INDEMNITOR:
			LODGING FUND REIT III, INC.,
			a Maryland corporation
/s/ Mitch Bossert			By:	/s/ Katie Cox
Print Name:	Mitch Bossert		Name:	Katie Cox
			Title:	Chief Financial Officer
/s/ Angie Stock
Print Name:	Angie Stock
STATE OF NORTH DAKOTA		)
		)
COUNTY OF CASS		)

On December 26 , 2019, before me, Jennifer Moum , personally appeared Katie Cox who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of North Dakota that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature /s/  Jennifer Moum  (Seal)

Jennifer Moum

Notary Public

State of North Dakota

My Commission Expires April 25, 2022

Witnesses:				NEW INDEMNITOR:
				LODGING FUND REIT III OP, LP,
				a Delaware limited partnership
				By:		Lodging Fund REIT III, Inc.,
						a Maryland corporation,
						as general partner
/s/ Mitch Bossert				By:			/s/ Katie Cox
Print Name:	Mitch Bossert			Name:			Katie Cox
					Title:			Chief Financial Officer
/s/ Angie Stock
Print Name:		Angie Stock
STATE OF NORTH DAKOTA			)
			)
COUNTY OF CASS			)

On December 26 , 2019, before me, Jennifer Moum , personally appeared Katie Cox who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of North Dakota that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature /s/  Jennifer Moum  (Seal)

Jennifer Moum

Notary Public

State of North Dakota

My Commission Expires April 25, 2022

EX-10.54.2

EXHIBIT 10.54.2

JOINDER BY AND AGREEMENT OF NEW INDEMNITOR

LODGING FUND REIT III, INC., a Maryland corporation ("REIT"), and LODGING FUND REIT III OP, LP, a Delaware limited partnership ("Fee Borrower Member", together with REIT, collectively, "New Indemnitor"), the New Indemnitor referred to in the Agreement to which this New Indemnitor Joinder is attached,  intending to be legally bound and assume the obligations under the Guaranty and the Environmental Indemnity pursuant to the provisions of this New Indemnitor Joinder, jointly and severally represents and warrants to and acknowledges and agrees with Lender the following:

Defined Terms.  All capitalized terms used in this New Indemnitor Joinder, unless defined below, shall have the meanings given such terms in the Agreement, and if not defined therein, then in the Original Indemnitor Joinder attached thereto.

Benefit to New Indemnitor.  Each New Indemnitor, owning a direct and/or indirect interest in New Borrower as a result of the Requested Actions, shall receive a substantial benefit from Lender's consent to the Requested Actions.

Assumption by New Indemnitor of Guaranty.  New Indemnitor, jointly and severally, assumes and agrees to be liable and responsible for and bound by, from and after the Effective Date, all of Original Indemnitor's obligations, agreements and liabilities, including but not limited to the jury waiver and other waivers set forth therein, under the Guaranty, as amended by this New Indemnitor Joinder, as fully and completely as if the New Indemnitor had originally executed and delivered such Guaranty as amended by this New Indemnitor Joinder,as the guarantor/indemnitor thereunder.  New Indemnitor further agrees to pay, perform and discharge each and every obligation of payment and performance of any guarantor/indemnitor under, pursuant to and as set forth in the Guaranty, as amended by this New Indemnitor Joinder, at the time, in the manner and otherwise in all respects as therein provided. Notwithstanding the foregoing, with respect to the environmental obligations under Section 1.1 of the Guaranty, as it relates to the Borrower's Recourse Environmental Obligation, the liability of New Indemnitor shall be joint and several with that of New Borrower and, if applicable, Original Borrower and Original Indemnitor and shall not be limited to environmental obligations occurring from and after the Effective Date.  From and after the Effective Date, the Guaranty is amended to provide that all references to the term "Borrower" used in the Guaranty shall mean and refer to New Borrower and the term "Guarantor" used in the Guaranty shall mean and refer to New Indemnitor.

Assumption by New Indemnitor of Environmental Indemnity.  New Indemnitor, jointly and severally, by this New Indemnitor Joinder assumes and agrees to be liable and responsible for and bound by all of the Original Indemnitor's obligations, agreements and liabilities, including but not limited to the jury waiver and other waivers set forth therein, under the Environmental Indemnity as fully and completely as if New Indemnitor had signed such Environmental Indemnity, as amended by this New Indemnitor Joinder, as the indemnitor/guarantor thereunder, including without limitation, all of those obligations, agreements and liabilities which would have been the obligations, agreements and liabilities of Original Indemnitor, without regard to when such obligations, agreements and liabilities arise, accrue or have arisen or accrued and without regard to the Original Indemnitor's responsibility therefore, if any.  New Indemnitor further agrees to pay, perform, and discharge each and every obligation of payment and performance of any guarantor/indemnitor under, pursuant to and as set forth in the Environmental Indemnity, as amended by this New Indemnitor Joinder, at the time, in the manner and otherwise in all respects as therein provided.   The liability of New Indemnitor under this paragraph shall be joint and

several with that of New Borrower and, if applicable, Original Borrower and Original Indemnitor.  From and after the Effective Date, the Environmental Indemnity is amended to provide that all references to the term "Borrower" used in the Environmental Indemnity shall mean and refer to the New Borrower and the term "Indemnitor" used in the Environmental Indemnity shall mean and refer to the New Indemnitor. 

Confirmation of Representations; Additional Representations.  New Indemnitor confirms (a) the representations and warranties and agrees to the covenants regarding New Indemnitor set forth in the Agreement, including, but not limited to, obligations to pay the Indemnifications Costs and (b) the truth and accuracy of all representations and warranties set forth in the Guaranty and Environmental Indemnity, as applicable.  New Indemnitor represents and warrants that New Indemnitor received copies of the Guaranty and the Environmental Indemnity from Original Indemnitor, which copies were warranted by Original Indemnitor as being true and complete copies of such documents.

Authority Representations by New Indemnitor. 

The execution and delivery of this New Indemnitor Joinder, and performance by New Indemnitor under the New Indemnitor Joinder, the Guaranty and the Environmental Indemnity will not (a) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to New Indemnitor or (b) result in a breach of or constitute or cause a default under any indenture, agreement, lease or instrument to which New Indemnitor is a party or by which the Property may be bound or affected.

REIT is a duly organized, validly existing corporation in good standing under the laws of the State of Delaware and is qualified to transact business in the State of Texas.  Katie Cox, as Chief Financial Officer of REIT, acting alone without the joinder of any other officer, director or shareholder of REIT or any other party, has the power and authority to execute this New Indemnitor Joinder on behalf of and to duly bind REIT.

Fee Borrower Member is a duly organized, validly existing limited partnership in good standing under the laws of the State of Delaware and is qualified to transact business in the State of Texas.  REIT, as the general partner of Fee Borrower Member, acting alone without the joinder of any other partner of Fee Borrower Member or any other person has the power and authority to execute this New Indemnitor Joinder on behalf of and to duly bind Fee Borrower Member. Katie Cox, as Chief Financial Officer of REIT, acting alone without the joinder of any other officer, director or shareholder of REIT or any other party, has the power and authority to execute this New Indemnitor Joinder on behalf of and to duly bind REIT and Fee Borrower Member.

Notices to New Indemnitor.  Lender shall deliver any notices to New Indemnitor which are required to be delivered pursuant to the Guaranty and the Environmental Indemnity, or are otherwise delivered by the Lender thereunder at Lender's sole discretion, to New Indemnitor at the following address:

LODGING FUND REIT III, INC.

LODGING FUND REIT III OP, LP

1635 43rd Street South, Suite 205

Fargo, North Dakota  58103

Attn: Sam Montgomery

With copy to:

McShane & Bowie, P.L.C.

99 Monroe Avenue NW, Suite 1100

Grand Rapids, Michigan  49503

Attn:  John Faris, Esq.

All notices to be sent by New Indemnitor to Lender under the Guaranty, the Environmental Indemnity and Loan Documents shall be sent to Lender in the manner set forth in and at the address shown in Section 4.6 of the Agreement.

Joint and Several Liability.  If New Indemnitor consists of more than one person or party, the obligations and liabilities of each such person or party shall be joint and several.

Governing Law.  This New Indemnitor Joinder shall be interpreted, construed, and enforced in accordance with the governing law provisions of the Guaranty and the Environmental Indemnity, as applicable.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

New Indemnitor has executed and delivered this New Indemnitor Joinder to be effective as of the Effective Date of the Agreement.

		NEW INDEMNITOR:
Witnesses:		LODGING FUND REIT III, INC., a Maryland corporation
/s/ Mitch Bossert	By:	/s/ Katie Cox
Print Name: Mitch Bossert	Name:	Katie Cox
	Title:	Chief Financial Officer
/s/ Angie Stock
Print Name: Angie Stock

STATE OF NORTH DAKOTA	)
	)
COUNTY OF CASS	)

On December 26 , 2019, before me, Jennifer Moum , personally appeared Katie Cox who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of North Dakota that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature /s/  Jennifer Moum  (Seal)

Jennifer Moum

Notary Public

State of North Dakota

My Commission Expires April 25, 2022

		NEW INDEMNITOR:
Witnesses:		LODGING FUND REIT III, OP, LP., a  Delaware limited partnership
/s/ Mitch Bossert	By:	Lodging Fund REIT III, Inc.,
Print Name: Mitch Bossert		a Maryland corporation,
		as general partner
/s/ Angie Stock
Print Name: Angie Stock
	By:	/s/ Katie Cox
	Name:	Katie Cox
	Title:	Chief Financial Officer

STATE OF NORTH DAKOTA	)
	)
COUNTY OF CASS	)

On December 26 , 2019, before me, Jennifer Moum , personally appeared Katie Cox who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of North Dakota that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature /s/  Jennifer Moum  (Seal)

Jennifer Moum

Notary Public

State of North Dakota

My Commission Expires April 25, 2022

EX-10.54.3

EXHIBIT 10.54.3

Article I.   ASSIGNMENT OF MANAGEMENT AGREEMENT
AND SUBORDINATION OF MANAGEMENT FEES

Article II.   (JPMCC 2016-JP4)

THIS ASSIGNMENT OF MANAGEMENT AGREEMENT AND SUBORDINATION OF MANAGEMENT FEES (this “Assignment”) is made as of December 30, 2019, by LF3 LUBBOCK CASA TRS, LLC, a Delaware limited liability company, having its principal place of business at 1635 43rd Street South, Suite 205, Fargo, ND 58103 (“Operating Lessee”) to WILMINGTON TRUST, NATIONAL ASSOCIATION, AS TRUSTEE FOR THE BENEFIT OF THE REGISTERED HOLDERS OF JPMCC COMMERCIAL MORTGAGE SECURITIES TRUST 2016-JP4, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2016-JP4, having an address at c/o Wells Fargo Bank, N.A., Wells Fargo Commercial Mortgage Servicing, Three Wells Fargo, 401 S. Tryon Street, 8th Floor, MAC D1050-084, Charlotte, North Carolina 28202, Re: JPMCC 2016-JP4 (together with its successors and assigns, “Lender”), and is consented and agreed to by NHS LLC, a North Dakota limited liability company, d/b/a National Hospitality Services, having its principal place of business at 1635 43rd Street South, Suite 205, Fargo, ND 58103 (“Manager”) and LF3 LUBBOCK CASA, LLC, a Delaware limited liability company, having its principal place of business at 1635 43rd Street South, Suite 205, Fargo, ND 58103 ("Fee Borrower").  Fee Borrower and Operating Lessee are sometimes collectively, jointly and severally referred to as the "Borrower".

ARTICLE III.   RECITALS:

A. On October 4, 2016 (the "Origination Date"), Treemont Capital Partners III, LP, a Texas limited partnership ("Original Borrower"), executed a Promissory Note in favor of Starwood Mortgage Capital LLC, a Delaware limited liability company ("Original Lender"), predecessor-in-interest to Lender (as the same may be amended, restated, replaced, supplemented, renewed, extended or otherwise modified from time to time, the "Note") in the original principal amount of $8,600,000.00 (the "Loan"), which Loan was advanced pursuant to that certain Loan Agreement dated as of the Origination Date between Original Borrower and Original Lender (as the same may be amended, restated, replaced, supplemented, renewed, extended or otherwise modified from time to time, the "Loan Agreement").

B. The Loan is secured by, among other things, a Deed of Trust, Assignment of Leases and Rents and Security Agreement dated as of the Origination Date (as the same may be amended, restated, replaced, supplemented, renewed, extended or otherwise modified from time to time, the "Security Instrument"), which grants Lender, as successor-in-interest to Original Lender, a first priority lien on the property encumbered thereby and located at 6004 Marsha Sharp Freeway, Lubbock, Texas, more commonly known as Home2 Suites By Hilton Lubbock (the "Property"). The Loan Agreement, the Security Instrument, the Note, the Assumption Agreement (defined below), and all other documents and instruments evidencing and/or securing the Loan, together with all amendments, modifications, substitution or replacements thereof, are sometimes herein collectively referred to as the "Loan Documents".

C. Lender is the current owner and holder of all right, title and interest in the Loan and the Loan Documents.

D. Original Borrower desires to sell the Property to Fee Borrower, Fee Borrower desires to purchase the Property from Original Borrower and to lease the Property to Operating Lessee pursuant to that certain Lease Agreement dated of even date herewith between Fee Borrower and Operating Lessee (the “Operating Lease”), and Fee Borrower and Operating Lessee desire to assume the obligations of Original Borrower under the Loan Documents (the "Assumption").

E.In connection with the Assumption, Operating Lessee also desires to enter into that certain Management Agreement dated as of the date hereof, between Operating Lessee and Manager (the "Management Agreement") (a true and correct copy of which Management Agreement is attached hereto as Exhibit "A"), pursuant to which terms Operating Lessee will employ Manager to exclusively rent, lease, operate and manage the Property and Manager is entitled to receive certain fees (collectively "Management Fees") for its management services thereunder.

F.The Assumption and the other Requested Actions (as defined in that certain Assumption Agreement between Lender, Original Borrower, Fee Borrower and Operating Lessee of even date herewith (the "Assumption Agreement")), including the Operating Lessee entering into the Management Agreement, are prohibited by the terms of the Loan Agreement, without first obtaining the written consent of Lender.

G.Lender requires, as a condition to its consenting to the Assumption and other Requested Actions in accordance with the terms of the Assumption Agreement, that Operating Lessee confirm the conditional assignment of the Management Agreement to Lender and that Manager subordinate the Management Agreement and its rights and interest in the Management Fees in lien and payment to the Security Instrument and other Loan Documents as set forth below.

H.Manager has agreed to subordinate the Management Agreement and all of its rights and interest in the Management Fees in lien and payment to the Security Instrument and other Loan Documents and to comply with the other provisions of this Assignment as set forth below.

ARTICLE IV.  AGREEMENT

For good and valuable consideration, the parties hereto agree as follows:

Assignment of Management Agreement.  As additional collateral security for the Loan, Operating Lessee hereby conditionally transfers, sets over and assigns to Lender all of Operating Lessee’s right, title and interest in and to the Management Agreement, said transfer and assignment to automatically become a present, unconditional assignment, at Lender’s option, upon an Event of Default by Borrower under the Loan Agreement or any of the other Loan Documents.

Subordination of Management Agreement.  The Management Agreement and any and all liens, rights and interests (whether choate or inchoate and including, without limitation, all mechanic’s and materialmen’s liens under applicable law) owed, claimed or held, by Manager in and to the Property, are and shall be in all respects subordinate and inferior to the liens and security interests created, or to be created, for the benefit of Lender, and securing the repayment of the Note and the performance of the obligations under the Loan Agreement and the other Loan Documents,

and all renewals, extensions, increases, supplements, amendments, modifications or replacements thereof.

Termination.  At such time as the Loan is paid in full and the Security Instrument is released or assigned of record, this Assignment and all of Lender’s right, title and interest hereunder with respect to the Management Agreement shall terminate.

Estoppel.  Manager represents and warrants that (a) the Management Agreement is in full force and effect and has not been modified, amended or assigned other than pursuant to this Assignment, (b) neither Manager nor Operating Lessee is in default under any of the terms, covenants or provisions of the Management Agreement and Manager knows of no event which, but for the passage of time or the giving of notice or both, would constitute an event of default under the Management Agreement, (c) neither Manager nor Operating Lessee has commenced any action or given or received any notice for the purpose of terminating the Management Agreement and (d) the Management Fees and all other sums due and payable to the Manager under the Management Agreement as of the date hereof have been paid in full.

Agreement by Operating Lessee and Manager.  Operating Lessee and Manager hereby agree that after receipt of written notice from Lender advising Manager that (a) an Event of Default under the Loan Documents has occurred during the term of this Assignment, or (b) the occurrence of any other event which would entitle Lender to terminate, or cause the termination of, the Management Agreement in accordance with the terms of the Loan Documents, in which event (i) Manager shall, at the request of Lender, continue to perform all of Manager’s obligations under the terms of the Management Agreement with respect to the Property or (ii) at the option of Lender exercised by written notice to Operating Lessee and Manager, Operating Lessee and Manager shall immediately terminate the Management Agreement and Manager shall transfer its responsibility for the management of the Property to a manager selected by Lender, in which event Manager shall not be entitled to receive any termination fee or similar payment owed pursuant to the terms of the Management Agreement, including but not limited to, the "off boarding fee" set forth in the Management Fee Rider attached to the Management Agreement.

Hotel Employees.  Operating Lessee and Manager hereby acknowledge and agree that after receipt of written notice from Lender advising Manager that an Event of Default under the Loan Documents has occurred during the term of this Assignment, Manager shall, at the request of Lender, directly hire all of Operating Lessee's eligible hotel employees at the Property.  Manager further acknowledges and agrees that in the event Lender exercises its option to terminate the Management Agreement and transfers the responsibility for the management of the Property to a manager selected by Lender as provided herein, Manager shall fully cooperate in transferring its management responsibilities and the employment of all eligible hotel employees at the Property to such new manager and effectuate such transfer immediately upon written notice from Lender. For purposes of this Section 6, "eligible hotel employees" shall mean hotel employees that (i) have not performed illegal acts, or (ii) are not then under any disciplinary review or action.

Receipt of Management Fees.  Operating Lessee and Manager hereby agree that Manager shall not be entitled to receive any Management Fees or other fee, commission or other amount payable to Manager under the Management Agreement for and during any period of time that any Event of Default has occurred and is continuing; provided, however, that notwithstanding anything

to the contrary (a) Manager shall not be obligated to return or refund to Lender any Management Fee or other fee, commission or other amount already received by Manager prior to the occurrence of the Event of Default, and to which Manager was entitled under this Assignment and (b) in the event Operating Lessee loses possession of the Property in connection with exercise by Lender of its rights or remedies pursuant to this Assignment, the Note, the Security Instrument, the Loan Agreement or the other Loan Documents, Manager shall be entitled to collect any Management Fee or other fee, commission or other amount accrued but unpaid prior to the occurrence of the Event of Default, and to which Manager was entitled under this Assignment.  Nothing in this Assignment shall prohibit Manager from terminating the Management Agreement pursuant to the terms thereof for failure to receive the management fee due thereunder.

Consent and Agreement by Manager.  Manager hereby acknowledges and consents to this Assignment and the terms and provisions of Article 7 of the Loan Agreement.  Manager agrees that it will act in conformity with the provisions of this Assignment, such provisions of the Loan Agreement and Lender’s rights hereunder or otherwise related to the Management Agreement.  In the event that the responsibility for the management of the Property is transferred from Manager in accordance with the provisions hereof, Manager shall, and hereby agrees to, fully cooperate in transferring its responsibility to a new management company and effectuate such transfer no later than thirty (30) days from the date the Management Agreement is terminated.  Further, Manager hereby agrees (a) not to contest or impede the exercise by Lender of any right it has under or in connection with this Assignment and (b) that it shall, in the manner provided for in this Assignment, give at least thirty (30) days prior written notice to Lender of its intention to terminate the Management Agreement or otherwise discontinue its management of the Property.

Lender’s Agreement.  So long as an Event of Default has not occurred and is continuing, Lender agrees to permit any sums due to Operating Lessee under the Management Agreement to be paid directly to Operating Lessee.

Further Assurances.  Manager further agrees to (a) execute such affidavits and certificates as Lender shall require to further evidence the agreements herein contained, (b) on request from Lender, furnish Lender with copies of such information as Operating Lessee is entitled to receive under the Management Agreement and (c) cooperate with Lender’s representative in any inspection of all or any portion of the Property.  Manager hereby acknowledges that some, or all, permits, licenses and authorizations necessary for the use, operation and maintenance of the Property (collectively, the “Permits”) may be held by, or on behalf of, the Manager.  By executing this Assignment, Manager (i) agrees that it is holding or providing all such Permits for the benefit of Operating Lessee and (ii) agrees that as security for the repayment of the Obligations by Borrower in accordance with the Loan Agreement, to the extent permitted by applicable law, Manager hereby grants to Lender a security interest in and to the Permits.  Moreover, Manager hereby agrees that, upon an Event of Default, it will assign the Permits to Lender if such Permits are assignable or otherwise continue to hold such Permits for the benefit of Lender until such time as Lender can obtain such Permits in its own name or the name of a nominee.

Assignment of Proceeds.  Manager acknowledges that, as further security for the Note, (a) pursuant to the Assignment of Leases and Rents dated as of the Origination Date (as the same may be amended, restated, replaced, supplemented, or otherwise modified from time to time, the “Assignment of Leases”), Borrower has assigned to Lender, among other things, all of Borrower’s

right, title and interest in and to all of the revenues of the Property and (b) Borrower and Lender, among others, have entered into that certain Cash Management Agreement dated as of the Origination Date (as the same may be amended, restated, replaced, supplemented, or otherwise modified from time to time, the “Cash Management Agreement”), pursuant to which Borrower has agreed that any Rents, and other income and proceeds from the Property are to be deposited directly into an account of the Lender established pursuant to the Cash Management Agreement.  Manager hereby assumes the obligations of "MH Partners, LLC, a Tennessee limited liability company" under the Cash Management Agreement to the same extent as if Manager had signed the Cash Management Agreement as of the Origination Date.

Manager Not Entitled to Rents.  Manager acknowledges and agrees that it is collecting and processing the Rents solely as the agent for the Operating Lessee and Manager has no right to, or title in, the Rents.  Notwithstanding anything to the contrary in the Management Agreement, the Manager acknowledges and agrees that the Rents are the sole property of the Operating Lessee, encumbered by the lien of the Security Instrument and other Loan Documents in favor of Lender.  In any bankruptcy, insolvency or similar proceeding the Manager, or any trustee acting on behalf of the Manager, waives any claim to the Rents other than as such Rents may be used to pay the fees and compensation of the Manager pursuant to the terms and conditions of the Management Agreement.

Conflict with Loan Documents.  Each of Borrower and Manager acknowledge and agree that to the extent there is a conflict between the terms and conditions made between Operating Lessee and Manager in the Management Agreement and the terms and provisions of the Loan Documents, the Loan Documents and this Assignment shall control and Lender's consent to the Requested Actions shall not limit, impair or modify the terms and provisions of the Loan Documents or the applicability thereto to Borrower and the Property with respect to any terms or provisions of the Management Agreement that may conflict with the terms and provisions of the Loan Documents.  Lender reserves all of its rights and remedies under the Loan Documents with respect to the enforcement of any such conflicting provisions.

Representations and Warranties.  Each of Borrower and Manager represent and warrant to Lender that: (a) this Assignment and the Management Agreement have been executed by duly authorized representatives of Borrower and Manager and are valid, binding and enforceable obligations of each of Borrower and Manager and are in full force and effect and (b) each is the type of entity specified in the opening paragraph of this Assignment, is duly organized and in good standing under the laws of the state of its formation and is qualified to transact business in the state where the Property is located. 

Franchise Agreement.  Manager shall be responsible to operate the Property in accordance with the Franchise Agreement.  Manager agrees to operate the Property as required by the Franchise Agreement and agrees to promptly send Operating Lessee all notices received by Manager under the Franchise Agreement adversely affecting the franchise or Property upon receipt of such notices.

Permits and Contracts. Manager hereby acknowledges and agrees that some, or all, contracts executed by Manager for or on behalf of Operating Lessee, which contracts have been approved by Lender (if such approval is required by the Loan Documents), permits, licenses and

authorizations necessary for the use, operation and maintenance of the Property, including, but not limited to, the liquor license for alcoholic beverage services as the Property (the "Liquor License") (collectively, the "Permits and Contracts") may be held by, or executed in the name of, Manager or its affiliate.  By executing this Assignment, Manager (a) agrees that it or its affiliate is holding, providing or executing all such Permits and Contracts for the benefit of Operating Lessee (exclusive of any employment contracts or agreements) and (b) agrees that as security for the repayment of the Debt by Borrower in accordance with the Security Instrument, to the extent permitted by applicable laws and regulations, Manager hereby grants to Lender a security interest in and to the Permits and Contracts.  Moreover, Manager hereby agrees that, upon an Event of Default, subject to applicable laws and regulations, it will assign the Permits and Contracts to Lender or to Lender's designee, at the request of Lender, if such Permits and Contracts are assignable or otherwise continue to hold such Permits and Contracts for the benefit of Lender or such Lender's designee until such time as Lender or such Lender's designee can obtain such Permits and Contracts in its own name or the name of a nominee.  Manager further agrees to cooperate with Lender or Lender’s nominee in the application and liquor licensing process if such cooperation is required by the alcoholic beverages licensing authorities (the "Liquor License Authorities") in order to effect the transfer of the Liquor License to Lender or its nominee or in the issuance of a new liquor license in the name of Lender or Lender’s nominee, including, without limitation, the execution and delivery of such documents as may be required by the Liquor License Authorities.

Governing Law.  This Assignment shall be governed, construed, applied and enforced in accordance with Section 11.3 of the Loan Agreement.

Notices.  All notices, consents, approvals and requests required or permitted hereunder shall be delivered in accordance with Section 11.6 of the Loan Agreement and the following:

If to Manager:

NHS LLC d/b/a National Hospitality Services

1635 43rd Street South, Suite 205

Fargo, ND 58103

No Oral Change.  This Assignment may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Operating Lessee, Fee Borrower, Lender or Manager, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

Liability.  This Assignment shall be binding upon and inure to the benefit of Operating Lessee and Lender and their respective successors and assigns forever.

Inapplicable Provisions.  If any term, covenant or condition of this Assignment is held to be invalid, illegal or unenforceable in any respect, this Assignment shall be construed without such provision.

Headings, etc.  The headings and captions of various paragraphs of this Assignment are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

Duplicate Originals, Counterparts.  This Assignment may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original.  This Assignment may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Assignment.  The failure of any party hereto to execute this Assignment, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

Number and Gender.  Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

Miscellaneous.

Wherever pursuant to this Assignment (i) Lender exercises any right given to it to approve or disapprove, (ii) any arrangement or term is to be satisfactory to Lender or (iii) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove, all decisions that arrangements or terms are satisfactory or not satisfactory and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein.

Wherever pursuant to this Assignment it is provided that Borrower shall pay any costs and expenses, such costs and expenses shall include, but not be limited to, legal fees and disbursements of Lender, whether retained firms, the reimbursement for the expenses of in-house staff or otherwise.

Defined Terms.  Any capitalized terms not otherwise defined herein shall be defined as set forth in the Loan Agreement.

Joint and Several Liability.  If more than one Person has executed this Assignment as “Borrower,” the representations, covenants, warranties and obligations of all such Persons hereunder shall be joint and several.

[NO FURTHER TEXT ON THIS PAGE]

IN WITNESS WHEREOF, the undersigned have executed this Assignment as of the date and year first written above.

OPERATING LESSEE:

LF3 LUBBOCK CASA TRS, LLC,

a Delaware limited liability company

By:  Lodging Fund REIT III TRS, Inc.,

a Delaware corporation, as its Sole Member

By: Lodging Fund REIT III OP, LP, a Delaware limited partnership, as its Sole Shareholder

By:  Lodging Fund REIT III, Inc., a Maryland corporation, as its General Partner

By: /s/ Katie Cox

Name:  Katie Cox

Title:  Chief Financial Officer

FEE BORROWER:  

LF3 LUBBOCK CASA, LLC,

a Delaware limited liability company

By: Lodging Fund REIT III OP, LP, a Delaware limited partnership, as its Sole Member

By:  Lodging Fund REIT III, Inc., a Maryland corporation, as its General Partner

By: /s/ Katie Cox

Name:  Katie Cox

Title:  Chief Financial Officer

MANAGER:

NHS LLC, a North Dakota limited liability company, d/b/a National Hospitality Services

By: /s/ Norman H. Leslie

Name:Norman H. Leslie

Title: President

LENDER:

WILMINGTON TRUST, NATIONAL ASSOCIATION, AS TRUSTEE FOR THE BENEFIT OF THE REGISTERED HOLDERS OF JPMCC COMMERCIAL MORTGAGE SECURITIES TRUST 2016-JP4, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2016-JP4

By:LNR Partners, LLC, a Florida limited liability company, as attorney-in-fact

By: /s/ Job Warshaw
Name: Job Warshaw

Title: President

Article I. EXHIBIT A

Article II. (Management Agreement)

EX-10.54.4

Exhibit 10.54.4

PROMISSORY NOTE

$8,600,000.00 Lubbock, Texas October 4, 2016

FOR VALUE RECEIVED, TREEMONT CAPITAL PARTNERS III, LP, a Texas limited partnership, having its principal place of business at 1415 South Voss #110-94, Houston, Texas 77057, as maker ("Borrower"), hereby unconditionally promises to pay to the order of STARWOOD MORTGAGE CAPITAL LLC, a Delaware limited liability company, as lender, having an address at 1601 Washington Avenue, Suite 800, Miami Beach, Florida 33139 (together with its successors and assigns, "Lender"), or at such other place as the holder hereof may from time to time designate in writing, the principal sum of EIGHT MILLION SIX HUNDRED THOUSAND AND NO/100 DOLLARS ($8,600,000.00), or so much thereof as is advanced pursuant to that certain Loan Agreement dated the date hereof between Borrower and Lender (as the same may be amended, modified, supplemented, replaced or otherwise modified from time to time, the "Loan Agreement"), in lawful money of the United States of America, with interest thereon to be computed from the date of this Promissory Note (this "Note") at the Interest Rate (as defined in the Loan Agreement), and to be paid in accordance with the terms of this Note and the Loan Agreement. All capitalized terms not defined herein shall have the respective meanings set forth in the Loan Agreement.

ARTICLE 1: PAYMENT TERMS

Borrower agrees to pay the principal sum of this Note and interest on the unpaid principal sum of this Note and all other amounts due under the Loan Agreement and the other Loan Documents from time to time outstanding, at the rates and at the times specified in the Loan Agreement, and the outstanding balance of the principal sum of this Note and all accrued and unpaid interest thereon and all other amounts due under the Loan Agreement and the other Loan Documents shall be due and payable on the Maturity Date.

ARTICLE 2: DEFAULT AND ACCELERATION

The Debt shall without notice become immediately due and payable at the option of Lender upon the happening of any Event of Default (after expiration of any applicable notice or cure periods expressly set forth in the Loan Documents as part of such Event of Default).

ARTICLE 3: LOAN DOCUMENTS

This Note is secured by the Mortgage and the other Loan Documents. All of the terms, covenants and conditions contained in the Loan Agreement, the Mortgage and the other Loan Documents are hereby made part of this Note to the same extent and with the same force as if they were fully set forth herein. In the event of a conflict or inconsistency  between the terms of this Note and the Loan Agreement, the terms and provisions of the Loan Agreement shall govern.

ARTICLE 4: SAVINGS CLAUSE

Notwithstanding anything to the contrary contained herein, (a) all agreements and communications between Borrower and Lender are hereby and shall automatically be limited so that, after taking into account all amounts deemed to constitute interest, the interest contracted for, charged or received by Lender shall never exceed the Maximum Legal Rate, (b) in calculating whether any interest exceeds the Maximum Legal Rate, all such interest shall be amortized, prorated, allocated and spread over the full amount and term of all principal indebtedness of Borrower to Lender, and (c) if through any contingency or event,  Lender receives or is deemed to receive interest in excess of the Maximum Legal Rate, any such excess shall be deemed to have been applied toward the payment of the principal of any and all then outstanding indebtedness of Borrower to Lender, or if there is no such indebtedness, shall immediately be returned to Borrower.

ARTICLE 5: NO ORAL CHANGE

This Note may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party(ies) against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

ARTICLE 6:   WAIVERS

Borrower and all others who may become liable for the payment of all or any part of the Debt do hereby jointly and severally waive presentment and demand for payment, notice of dishonor, notice of intention to accelerate, notice of acceleration, protest and notice of protest and non-payment and all other notices of any kind. No release of any security for the Debt or extension of time for payment of this Note or any installment hereof, and no alteration, amendment or waiver of any provision of this Note, the Loan Agreement or the other Loan Documents made by agreement between Lender and any other Person shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Borrower or any other Person who may become liable for the payment of all or any part of the Debt under this Note, the Loan Agreement or the other Loan Documents. No notice to or demand on Borrower shall be deemed to be a waiver of the obligation of Borrower or of the right of Lender to take further action without further notice or demand as provided for in this Note, the Loan Agreement or the other Loan Documents. If Borrower is a partnership or limited liability company, the agreements herein contained shall remain in force and be applicable, notwithstanding any changes in the individuals or entities comprising the partnership or limited liability company, and the term "Borrower," as used herein, shall include any alternate or successor partnership or limited liability company, but any predecessor partnership or limited liability company and its partners or members shall not thereby be released from any liability. If Borrower is  a corporation, the agreements contained herein shall remain in full force and be applicable, notwithstanding any changes in the shareholders comprising, or the officers and  directors relating to, the corporation, and the term "Borrower," as used herein, shall include  any alternative or successor corporation, but any predecessor corporation shall not be relieved of liability hereunder. (Nothing in the foregoing two sentences shall be construed as a consent to,

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or a waiver of, any prohibition or restriction on transfers of interests in such partnership, limited liability company or corporation which may be set forth in the Loan Agreement, the Mortgage  or any other Loan Document.)

ARTICLE 7:   TRANSFER

Upon the transfer of this Note by Lender, Borrower hereby waiving notice of any such transfer, Lender may deliver all the collateral mortgaged, granted, pledged or assigned pursuant to the Loan Documents, or any part thereof, to the transferee who shall thereupon become vested with all the rights herein or under applicable law given to Lender with respect thereto, and Lender shall thereafter forever be relieved and fully discharged from any liability or responsibility in the matter; but Lender shall retain all rights hereby given to it with respect to any liabilities and the collateral not so transferred.

ARTICLE 8: EXCULPATION

The provisions of Section 11.22 of the Loan Agreement are hereby incorporated by reference into this Note to the same extent and with the same force as if fully set forth herein.

ARTICLE 9: GOVERNING LAW

THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST BORROWER ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OTHER LOAN DOCUMENT MAY BE INSTITUTED IN THE COURTS HAVING JURISDICTION IN THE CITY AND/OR COUNTY IN WHICH THE PROPERTY IS LOCATED, AND BORROWER HEREBY WAIVES ANY OBJECTIONS THAT IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING.

ARTICLE 10:   WAIVER OF JURY TRIAL

BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND FOREVER WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST, WITH REGARD TO THIS NOTE, THE MORTGAGE OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.

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ARTICLE 11: SUCCESSORS AND ASSIGNS

This Note shall be binding upon, and shall inure to the benefit of, Borrower and Lender and their respective successors and permitted assigns. Lender shall have the right to assign or transfer its rights under this Note in connection with any assignment of the Loan and the Loan Documents. Any assignee or transferee of Lender shall be entitled to all the benefits afforded to Lender under this Note. Borrower shall not have the right to assign or transfer its rights or obligations under this Note without the prior written consent of Lender, as provided in the Loan Agreement, and any attempted assignment without such consent shall be null and void.

ARTICLE 12:   NOTICES

All notices or other written communications hereunder shall be delivered in accordance with Section 11.6 of the Loan Agreement.

ARTICLE 13: JOINT AND SEVERAL LIABILITY

If more than one Person has executed this Note as "Borrower," the representations, covenants, warranties and obligations of all such Persons hereunder shall be joint and several.

[NO FURTHER TEXT ON THIS PAGE]

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IN WITNESS WHEREOF, Borrower has duly executed this Note as of the day and year first above written.

BORROWER:
TREEMONT CAPITAL PARTNERS III, LP, a Texaslimited partnership
By:	Treemont Capital Partners III GP, LLC, a Texas limited liability company, its general partner
By:	Treemont Investments, Inc., a Texas corporation, its sole member
By:	/s/ Philip A. McRae
	Name: Philip A. McRae
	Title:  President

Promissory Note (Home2Suites Lubbock)

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TEXAS ADDENDUM

The term "Maximum Rate" shall mean the highest lawful rate of interest applicable to this Note. In determining the Maximum Rate, due regard shall be given to all payments, fees, charges, deposits, balances and agreements which may constitute interest or be deducted from principal when calculating interest. If Chapter 303 of the Finance Code, Vernon's Texas Civil Statutes, is applicable to this Note, and applicable state or federal law does not permit a higher interest rate, the "weekly ceiling" (as defined in Chapter 303 of the Finance Code, Vernon's Texas Civil Statutes) shall be the interest rate ceiling applicable to this Note and shall be the basis for determining the Maximum Rate. If applicable state or federal law allows a higher interest rate or federal law preempts the state law limiting the rate of interest, then the foregoing interest rate ceiling shall not be applicable to this Note. If the Maximum Rate is increased by statute or other governmental action subsequent to the date of this Note, then the new Maximum Rate shall be applicable to this Note from the effective date thereof, unless otherwise prohibited by applicable law.25

Interest on the unpaid principal balance of this Note shall be computed on the basis set forth in the first paragraph of the first page of this Note (the "Stated Rate"), but in no event shall the Stated Rate be greater than the Maximum Rate described immediately above.

It is expressly stipulated and agreed to be the intent of the undersigned and holder hereof (the "Noteholder") at all times to comply with applicable law governing the Maximum

 Rate or amount of interest payable on or in connection with this Note and the Loan (or applicable United States federal law to the extent that it permits the Noteholder to contract for, charge, take, reserve or receive a greater amount of interest than under law of the state in which the Premises is located). If the applicable law is ever judicially interpreted so as to render usurious  any  amount called for under this Note or under the Mortgage or any other Loan Document, or contracted for, charged, taken, reserved or received with respect to the Loan, or if acceleration of the maturity of this Note or if any prepayment by the undersigned results in the undersigned having paid any interest in excess of that permitted by law, then it is the undersigned's and the Noteholder's express intent that all excess amounts theretofore collected by the Noteholder be credited on the principal balance of this Note (or, if this Note has been or would thereby be paid in full, refunded to the undersigned), and the provisions of this Note, the Mortgage and the other Loan Documents immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new documents, so as to comply with applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder. The right to accelerate maturity of this Note does not include the right to accelerate any interest which has not otherwise accrued on the date of such acceleration, and the Noteholder does not intend to collect any unearned interest in the event of acceleration. All sums paid or agreed to be paid to the Noteholder for the use, forbearance or detention of the indebtedness evidence hereby shall, to the extent permitted by applicable law be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full so that the rate or amount of interest on account of such indebtedness does not exceed the Maximum Rate. Notwithstanding any provisions contained in this Note, the Mortgage or in any of the other Loan Documents that permit the compounding of interest, including, without limitation, any provision by which any accrued interest is added to

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the principal amount of this Note, the total amount of interest that the undersigned is obligated to pay and the Noteholder is entitled to receive with respect to this Note shall not exceed the amount calculated on a simple (i.e., noncompounded) interest basis at the Maximum Rate on principal amounts actually advanced to or for the account of the undersigned, including all current and prior advances and any advances made pursuant to the Mortgage or other Loan Documents (such as for the payment of taxes, insurance premiums, repairs and other expenses or costs).

THE UNDERSIGNED AND ALL OTHER MAKERS, SIGNERS,  SURETIES, GUARANTORS AND ENDORSERS OF THIS NOTE (a) WAIVE: (i) DEMAND, (ii) PRESENTMENT, (iii) NOTICE OF DISHONOR, (iv) NOTICE OF INTENT TO DEMAND OR ACCELERATE PAYMENT HEREOF, (v) DILIGENCE IN COLLECTING, (vi) GRACE (EXCEPT AS EXPRESSLY PROVIDED IN THE LOAN DOCUMENTS), (vii) NOTICE AND

(ix) PROTEST AND (b) AGREE TO ONE OF MORE EXTENSIONS FOR ANY PERIOD OR PERIODS OF TIME AND PARTIAL PAYMENTS, BEFORE OR AFTER MATURITY, WITHOUT PREJUDICE TO THE HOLDER HEREOF. IF COLLECTION PROCEDURES ARE EVER COMMENCED, BY ANY MEANS, INCLUDING LEGAL PROCEEDINGS OR THROUGH A PROBATE OR BANKRUPTCY COURT, OR IF THIS NOTE IS PLACED IN THE HANDS OF ANY ATTORNEY FOR COLLECTION AFTER DEFAULT OR MATURITY, THE UNDERSIGNED AGREES TO PAY ALL COSTS OF COLLECTION OR ATTEMPTED    COLLECTION,     INCLUDING     REASONABLE     ATTORNEY'S  FEES.

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BORROWER:
TREEMONT CAPITAL PARTNERS Ill, LP, a Texaslimited partnership
By:	Treemont Capital Partners III GP, LLC, a Texas limited liability company, its general partner
By:	Treemont Investments, Inc., a Texas corporation, its sole member
By:	/s/ Philip A. McRae
	Name: Philip A. McRae
	Title:  President

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Addendum to Note (Home2Suites Lubbock)

EX-10.54.5

EXHIBIT 10.54.5

LOAN AGREEMENT

Dated as of October 4, 2016 Between

TREEMONT CAPITAL PARTNERS III, LP,

as Borrower and

STARWOOD MORTGAGE CAPITAL LLC,

as Lender

TABLE OF CONTENTS

ARTICLE 1  DEFINITIONS; PRINCIPLES OF CONSTRUCTION		1
Section 1.1	Specific Definitions	1
Section 1.2	Principles of Construction	18
ARTICLE 2 THE LOAN		18
Section 2.1	The Loan	18
Section 2.2	Interest Rate	18
Section 2.3	Loan Payments	19
Section 2.4	Prepayments	21
Section 2.5	Defeasance	22
ARTICLE 3 REPRESENTATIONS AND WARRANTIES		25
Section 3.1	Borrower Representations	25
Section 3.2	Survival of Representations	38
ARTICLE 4 BORROWER COVENANTS		39
Section 4.1	Borrower Affirmative Covenants	39
Section 4.2	Borrower Negative Covenants	49
ARTICLE 5 INSURANCE, CASUALTY AND CONDEMNATION		52
Section 5.1	Insurance	52
Section 5.2	Casualty	57
Section 5.3	Condemnation	58
Section 5.4	Restoration	59
ARTICLE 6 CASH MANAGEMENT  AND RESERVE FUNDS		64
Section 6.1	Cash Management Arrangements	64
Section 6.2	Required Repairs Funds	64
Section 6.3	Tax Funds	66
Section 6.4	Insurance Funds	67
Section 6.5	FF&E Reserve Funds	67
Section 6.6	Intentionally Omitted	69
Section 6.7	Intentionally Omitted	69
Section 6.8	Intentionally Omitted	69
Section 6.9	Excess Cash Flow Funds	69
Section 6.10	Security Interest in Reserve Funds	69
Section 6.11	Property Cash Flow Allocation	71
ARTICLE 7 PROPERTY MANAGEMENT		72
Section 7.1	The Management Agreement	72
Section 7.2	Prohibition Against Termination or Modification	72
Section 7.3	Replacement of Manager	73
ARTICLE 8 PERMITTED TRANSFERS		73
Section 8.1	Permitted Transfer of the Property	73

Section 8.2	Permitted Transfers of Interest in Borrower	74
Section 8.3	Cost and Expenses	75
ARTICLE 9 SALE AND SECURITIZATION OF MORTGAGE		75
Section 9.1	Sale of Mortgage and Securitization	75
Section 9.2	Securitization Indemnification	77
Section 9.3	Intentionally Omitted	79
Section 9.4	Severance Documentation	79
ARTICLE 10 DEFAULTS		80
Section 10.1	Events of Default	80
Section 10.2	Remedies	83
Section 10.3	Lender's Right to Perform	84
Section 10.4	Remedies Cumulative	85
ARTICLE 11 MISCELLANEOUS		85
Section 11.1	Survival; Successors and Assigns	85
Section 11.2	Lender's Discretion	85
Section 11.3	Governing Law	86
Section 11.4	Modification, Waiver in Writing	86
Section 11.5	Delay Not a Waiver	86
Section 11.6	Notices	86
Section 11.7	Trial by Jury	88
Section 11.8	Headings	88
Section 11.9	Severability	88
Section 11.10	Preferences	88
Section 11.11	Waiver of Notice	89
Section 11.12	Remedies of Borrower	89
Section 11.13	Expenses; Indemnity	89
Section 11.14	Schedules Incorporated	90
Section 11.15	Offsets, Counterclaims and Defenses	91
Section 11.16	No Joint Venture or Partnership; No Third Party Beneficiaries	91
Section 11.17	Publicity	91
Section 11.18	Waiver of Marshalling of Assets	92
Section 11.19	Waiver of Offsets/Defenses/Counterclaims	92
Section 11.20	Conflict; Construction of Documents; Reliance	92
Section 11.21	Brokers and Financial Advisors	92
Section 11.22	Exculpation	93
Section 11.23	Prior Agreements	96
Section 11.24	Servicer	96
Section 11.25	Joint and Several Liability	97
Section 11.26	Creation of Security Interest	97
Section 11.27	Assignments and Participations	97
Section 11.28	Counterparts	97
Section 11.29	Set-Off.	98

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LOAN AGREEMENT

THIS LOAN AGREEMENT, dated as of October 4, 2016 (as amended, restated, replaced, supplemented or otherwise modified from time to time, this "Agreement"), between STARWOOD MORTGAGE CAPITAL LLC, a Delaware limited liability company, having an address at 1601 Washington Avenue, Suite 800, Miami Beach, Florida 33139 (together with its successors and assigns, collectively, "Lender"), and TREEMONT CAPITAL PARTNERS III, LP, a Texas limited partnership, having an address at 1415 South Voss #110-94, Houston, Texas 77057 (together with its permitted successors and assigns, collectively, "Borrower").

All capitalized terms used herein shall have the respective meanings set forth in Article 1 hereof.

WITNESSETH:

WHEREAS, Borrower desires to obtain the Loan from Lender; and

WHEREAS, Lender has advised Borrower that subject to the terms of this Agreement and the documents to be executed in connection herewith, and based upon the representations, warranties, covenants and undertakings of Borrower herein and therein contained, Lender is willing to make the Loan to Borrower on the terms and conditions set forth herein and therein.

NOW, THEREFORE, in consideration of the covenants set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree, represent and warrant as follows:

ARTICLE 1

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

Section 1.1                                Specific Definitions.

For all purposes of this Agreement, except as otherwise expressly provided:

"Accounts" shall have the meaning set forth in Section 6.1.

"Acquired  Property  Statements"  shall  have  the  meaning  set  forth   m Section 9.l{c)(i).

"Affiliate" shall mean, as to any Person, any other Person that (i) owns directly or indirectly ten percent (10%) or more of all equity interests in such Person, and/or (ii) is in control of, is controlled by or is under common ownership or control with such Person, and/or

(iii) is a director or officer of such Person or of an Affiliate of such Person, and/or (iv) is the spouse, issue or parent of such Person or of an Affiliate of such Person. As used in this definition, the term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of such Person, whether through ownership of voting securities, by contract or otherwise.

"Alteration  Threshold" shall  mean  2% of the outstanding  principal amount of the Loan.

"Annual  Budget" shall  mean  the operating  and capital  budget for the Property

setting forth, on a month-by-month basis, in reasonable detail, each line item of Borrower's good faith estimate of anticipated Operating Income, FF&E Expenses, Operating Expenses and capital expenditures for the applicable Fiscal Year.

"Approved Annual Budget" shall have the meaning set forth in Section 4.l.7{g).

"Approved FF&E Expenses" shall mean FF&E Expenses incurred by Borrower and either (i) included in the Approved Annual Budget or (ii) approved by Lender, which approval shall not be unreasonably withheld or delayed.

"Approved Operating Expenses" shall mean Operating Expenses incurred by Borrower which (i) are included in the Approved Annual Budget for the current calendar month,(ii) are for real estate taxes, insurance premiums, electric, gas, oil, water, sewer or other utility service to the Property, (iii) are for property management fees payable to Manager under the Management Agreement, such amounts not to exceed 3% of the monthly Operating Income, or (iv) have been approved by Lender.

"Assignment of Leases" shall mean that certain first priority Assignment of Leases and Rents, dated as of the date hereof, from Borrower, as assignor, to Lender, as assignee, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

"Assignment of Management Agreement" shall  mean  that certain  Assignment of Management Agreement and Subordination of Management Fees dated as of the date hereof among Borrower, Manager and Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

"Award" shall mean any compensation paid by any Governmental Authority in connection with a Condemnation.

"Bankruptcy Code" shall mean Title 11 of the United States Code entitled "Bankruptcy", as amended from time to time, and any successor statute or statutes and all rules and regulations from time to time promulgated thereunder, and any comparable foreign laws relating to bankruptcy, insolvency or creditors' rights.

"Borrower" shall have the meaning set forth in the introductory paragraph hereto, together with its successors and permitted assigns.

"Borrower Operating Account" shall mean an account specified to Lender by Borrower in writing from time to time as Borrower's operating account.

"Borrower's Recourse Liabilities" shall have the meaning set forth in Section 11.22.

"Broker" shall have the meaning set forth in Section 11.21.

"Business Day" shall mean any day other than a Saturday, a Sunday or a legal holiday on which national banks are not open for general business in (i) the State of New York,

(ii)  the state where the corporate trust office of the Trustee is located, or (iii) the state where the servicing offices of the Servicer are located.

"Cash Management Account" shall have the meaning set forth in Section 6.1.

Lender may in its sole discretion change the Cash Management Account from time to time.

"Cash Management Agreement" shall mean that certain Cash Management Agreement of even date herewith among Lender, Borrower, and Manager.

"Cash Management Bank" shall mean the bank or banks selected by Lender to maintain the Cash Management Account. Lender may in its sole discretion change the Cash Management Bank from time to time.

"Casualty" shall have the meaning set forth in Section 5.2.

"Casualty and Condemnation Account" shall have the meaning set forth in the Cash Management Agreement.

"Casualty Consultant" shall have the meaning set forth in Section 5.4(b(iii).

"Casualty Retainage" shall have the meaning set forth in Section 5.4(b)(iv).

"Certification of Borrower" shall mean that certain Borrower's Closing Certificate dated as of the date hereof made by Borrower to Lender.

"Clearing Account" shall have the meaning set forth in Section 6.1.

"Clearing Account Agreement" shall mean that certain Deposit Account Control Agreement dated the date hereof by and among Borrower, Lender and Clearing Bank.

"Clearing Bank" shall mean Wells Fargo Bank, N.A., a national banking

association.

"Closing Date" shall mean the date of the funding of the Loan.

"Code" shall mean the Internal Revenue Code of 1986, as amended, and as it may be further amended from time to time, any successor statutes thereto, and applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form.

"Condemnation" shall mean a temporary or permanent taking by any Governmental Authority as the result or in lieu or in anticipation of the exercise of the right of condemnation or eminent domain, of all or any part of the Property, or any interest therein or right accruing thereto, including any right of access thereto or any change of grade affecting the Property or any part thereof.

"Control" shall mean, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, through the ownership of voting securities, by contract or otherwise, and the terms Controlled, Controlling and Common Control shall have correlative meanings.

"Debt" shall mean the Outstanding Principal Balance together with all interest accrued and unpaid thereon and all other sums (including the Prepayment Fee, if applicable) due to Lender in respect of the Loan under the Note, this Agreement, the Mortgage, the Environmental Indemnity or any other Loan Document.

"Debt Service" shall mean, with respect to any particular period of time, the aggregate amount of scheduled principal and interest payments due and payable under the Note.

"Debt Service Account" shall have the meaning set forth in the Cash Management Agreement.

"Debt Service Coverage Ratio" shall mean, a ratio, as determined by Lender in its sole discretion for the applicable period in which:

(a)        the numerator is the Net Operating Income for such period; and

(b)       the denominator is the Debt Service due for such period.

"Default" shall mean the occurrence of any event hereunder or under any other Loan Document which, but for the giving of notice or passage of time, or both, would constitute an Event of Default.

"Default Rate" shall mean, with respect to the Loan, a rate per annum equal to the lesser of (i) the Maximum Legal Rate or (ii) five percent (5%) above the Interest Rate.

"Defeasance Collateral" shall have the meaning set forth in Section 2.5.l(c)(i).

"Defeasance Lockout Expiration Date" shall have the meaning set forth in

Section 2.5.1.

"Defeasance Rights and Obligations" shall have the meaning set forth  in

Section 2.5.3.

"Defeasance Security Agreement" shall have the  meanmg set forth in

Section 2.5.l(c)(ii).

"Disclosure Document" shall have the meaning set forth in Section 9.2(a).

"Disclosure Document Date" shall have the meaning set forth in Section 9.l(c)(iv).

"Discount Rate" shall mean the rate which, when compounded monthly, 1s equivalent to the Treasury Rate when compounded semiannually.

"Easements" shall have the meaning set forth in Section 3.1.12.

"Eligible Account" shall mean a separate and identifiable account from all other funds held by the holding institution that is either (i) an account or accounts (or subaccounts thereof) maintained with a federal or state-chartered depository institution or trust company which complies with the definition of Eligible Institution or (ii) a segregated trust account or accounts (or subaccounts thereof) maintained with a federal or state chartered depository institution or trust company acting in its fiduciary capacity which, in the case of a state chartered depository institution or trust company is subject to regulations substantially similar to 12 C.F.R. §9.10(b), having in any case a combined capital and surplus of at least Fifty Million and No/100 Dollars ($50,000,000.00) and subject to supervision or examination by federal and state authorities. An Eligible Account will not be evidenced by a certificate of deposit, passbook or other instrument. "Eligible Institution" shall mean a depository institution or trust company the short term unsecured debt obligations or commercial paper of which are rated at least A-1+ by S&P, P-1 by Moody's, and F-1+ by Fitch in the case of accounts in which funds are held for thirty (30) days or less or, in the case of Letters of Credit or accounts in which funds are held for more than thirty (30) days, the long term unsecured debt obligations of which are rated at least "A" by Fitch and S&P and "Aa2" by Moody's.

"Embargoed Person" shall have the meaning set forth in Section 4.2.15.

"Environmental Indemnity" shall mean that certain Environmental Indemnity Agreement dated as of the date hereof executed by Borrower and Guarantor in connection with the Loan for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

"Equipment" shall have the meaning set forth in the granting clause of the Mortgage.

"ERISA" shall have the meaning set forth in Section 4.2.13.

"Event of Default" shall have the meaning set forth in Section 10.1.

"Excess Cash Flow Account" shall have the meaning set forth in Section 6.9.  "Excess Cash Flow Funds" shall have the meaning set forth in Section 6.9.  "Exchange Act" shall have the meaning set forth in Section 9.2(a).  "Exchange Act Filing" shall have the meaning set forth in Section 9.l(c)(vi).

"Extraordinary Expense" shall have the meaning set forth in Section 4.1.7(g).

"FF&E Expense" for any period shall mean the amount expended for FF&E

Work in, at or to the Property.

"FF&E Reserve Account" shall have the meaning set forth in Section 6.5.1.

"FF&E Reserve Funds" shall have the meaning set forth in Section 6.5.1.

"FF&E Work" shall have the meaning set forth in Section 6.5.1.

"Fiscal Year" shall mean each twelve (12) month period commencing on January 1 and ending on December 31 during each year of the Term.

"Fitch" shall mean Fitch, Inc.

"Franchise Agreement" shall mean that certain Franchise Agreement, dated September 5, 2013, between Borrower and Franchisor, together with any permitted amendment thereto or permitted replacement thereof.

"Franchisor" shall mean HLT ESP FRANCHISE LLC, a Delaware limited liability company, together with any permitted replacement franchisor acceptable to Lender.

"FRBNY" shall mean the Federal Reserve Bank of New Yark.

"Full Replacement Cost" shall have the meaning set forth in Section 5.1.l(a)(i).

"GAAP" shall mean generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), or in such other statements by such entity as may be in general use by significant segments of the U.S. accounting profession.

"Governmental Authority" shall mean any court, board, agency, commission, office or authority of any nature whatsoever or any governmental unit (federal, state, commonwealth, county, district, municipal, city or otherwise) whether now or hereafter in existence.

"Government Lists" shall have the meaning set forth in Section 4. l .14(b).

"Gross Revenue" shall mean all revenue derived from the ownership and operation of the Property from whatever source, including Rents and any Insurance Proceeds, but only if and to the extent Lender elects to treat any such Insurance Proceeds as business or rental interruption Insurance Proceeds pursuant to Section 5.4(e) hereof.

"Guarantor" shall mean Philip A. McRae, an individual.

"Guaranty" shall mean that certain Guaranty of Recourse Obligations of even date herewith from Guarantor for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise amended from time to time.

"Improvements" shall have the meaning set forth in the granting clause of the

Mortgage.

"Indebtedness" shall mean, for any Person, without duplication: (i) all indebtedness of such Person for borrowed money, for amounts drawn under a letter of credit, or for the deferred purchase price of property for which such Person or its assets is liable, (ii) all unfunded amounts under a loan agreement, letter of credit, or other credit facility for which such Person would be liable if such amounts were advanced thereunder, (iii) all amounts required to be paid by such Person as a guaranteed payment to partners or a preferred or special dividend, including any mandatory redemption of shares or interests, (iv) all indebtedness guaranteed by such Person, directly or indirectly, (v) all obligations under leases that constitute capital leases for which such Person is liable, and (vi) all obligations of such Person under interest rate swaps, caps, floors, collars and other interest hedge agreements, in each case for which such Person is liable or its assets are liable, whether such Person (or its assets) is liable contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which obligations such Person otherwise assures a creditor against loss.

"Indemnified Liabilities" shall have the meaning set forth in Section l 1.13(b).

"Initial Interest Period" shall have the meaning set forth in Section 2.3.1.

"Insurance Account" shall have the meaning set forth in Section 6.4.1.

"Insurance Funds" shall have the meaning set forth in Section 6.4.1.

"Insurance Premiums" shall have the meaning set forth in Section 5.1.l(b).

"Insurance Proceeds" shall have the meaning set forth in Section 5.4(b).

"Interest Period" shall have the meaning set forth in Section 2.3.3.

"Interest  Rate"  shall  mean  a  rate  of  four  and  sixty-nine  hundredths percent (4.69%) per annum.

"Lease" shall mean any lease, sublease or sub-sublease, letting, license, concession or other agreement (whether written or oral and whether now or hereafter in effect) pursuant to which any Person is granted a possessory interest in, or right to use or occupy, all or any portion of any space in the Property, and every modification, amendment or other agreement relating to such lease, sublease, sub-sublease or other agreement entered into in connection with such lease, sublease, sub-sublease or other agreement and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto.

"Legal Requirements" shall mean all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, building codes, land laws, judgments, decrees and injunctions of Governmental Authorities affecting the Loan, any Secondary Market Transaction with respect to the Loan, the Borrower or the Property or any part thereof or the construction, use, alteration or operation thereof, or any part thereof, whether now

or hereafter enacted and in force, including, without limitation, zoning and land use laws and the Americans with Disabilities Act of 1990, and all permits, licenses and authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Borrower, at any time in force affecting the Property or any part thereof, including any which may (i) require repairs, modifications or alterations in or to the Property or any part thereof, or (ii) in any way limit the use and enjoyment thereof.

"Lender Affiliate" shall have the meaning set forth in Section 9.2(b).

"Lender Group" shall have the meaning set forth in Section 9.2(b).

"Letter of Credit" shall mean an irrevocable, unconditional, transferable (without payment of any transfer fee), clean sight draft letter of credit acceptable to Lender and the Rating Agencies (either an evergreen letter of credit or one which does not expire until at least thirty (30) Business Days after the Stated Maturity Date) in favor of Lender and entitling Lender to draw thereon in New York, New York, issued by a domestic Eligible Institution or the

U.S. agency or branch of a foreign Eligible Institution. If at any time the bank issuing any such Letter of Credit shall cease to be an Eligible Institution, Lender shall have the right immediately to draw down the same in full and hold the proceeds of such draw in accordance with the applicable provisions hereof. If, at any time, any Letter of Credit is due to expire prior to the termination of the event or events that gave rise to the requirement that Borrower deliver such Letter of Credit to Lender, Lender shall have the right to draw down the same in full and hold or apply the proceeds thereof in accordance with the provisions of this Agreement unless Borrower delivers a replacement Letter of Credit from an Eligible Institution within thirty (30) days prior to the expiration date of such Letter of Credit.

"Liabilities" shall have the meaning set forth in Section 9.2(b).

"Lien" shall mean any mortgage, deed of trust, lien (statutory or otherwise), pledge, hypothecation, easement, restrictive covenant, preference, assignment, security interest, or any other encumbrance, charge or transfer of, or any agreement to enter into or create any of the foregoing, on or affecting all or any portion of the Property or any interest therein, or any direct or indirect interest in Borrower, including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and mechanic's, materialmen' s and other similar liens and encumbrances.

"Loan" shall mean the loan in the original principal amount of Eight Million Six Hundred Thousand and No/100 Dollars ($8,600,000.00) made by Lender to Borrower pursuant to this Agreement.

"Loan Documents" shall mean, collectively, this Agreement, the Note, the Mortgage, the Assignment of Leases, the Cash Management Agreement, the Clearing Account Agreement, the Environmental Indemnity, the Assignment of Management Agreement, the Guaranty, the Certificate of Borrower and any other documents, agreements and instruments now or hereafter evidencing, securing or delivered to Lender in connection with the Loan.

"Loan to Value Ratio" shall mean the ratio, as of a particular date, in which the numerator is equal to the Outstanding Principal Balance and the denominator is equal to the appraised value of the Property as determined by Lender in its sole discretion.

"Major Contract" shall mean (i) any management, brokerage or leasing agreement, or (ii) any cleaning, maintenance, service or other contract or agreement of any kind (other than Leases) of a material nature (materiality for these purposes to include, without limitation, contracts which extend beyond one year (unless cancelable on thirty (30) days or less notice without requiring the payment of termination fees or payments  of any kind)), in either case relating to the ownership, leasing, management, use, operation, maintenance, repair or restoration of the Property, whether written or oral.

"Major Lease" shall mean any commercial Lease entered into at the Property.

"Management Agreement" shall mean the management agreement entered into by and between Borrower and the Manager, pursuant to which the Manager is to provide management and other services with respect to the Property.

"Manager" shall mean MH Partners, LLC, a Tennessee limited  liability company, or any other manager approved by Lender and the Rating Agencies in accordance with the terms and conditions of the Loan Documents.

"Manager Termination Ratio" shall have the meaning set forth in Section 7.3.

"Material Alteration" shall have the meaning set forth in Section 4.1.11.

"Maturity Date" shall mean the date on which the final payment of principal of the Note becomes due and payable as herein and therein provided, whether at the Stated Maturity Date, by declaration of acceleration, extension or otherwise.

"Maximum Legal Rate" shall mean the maximum nonusurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the indebtedness evidenced by the Note and as provided for herein or the other Loan Documents, under the laws of such Governmental Authority whose laws are held by any court of competent jurisdiction to govern the interest rate provisions of the Loan.

"Monthly Debt Service Payment Amount" shall mean a constant monthly payment of$48,733.77.

"Monthly Operating Expense Budgeted Amount" shall mean the monthly amount for Operating Expenses set forth in the Approved Annual Budget for the calendar month in which such Monthly Payment Date occurs.

"Monthly Payment Date" shall mean the sixth (6th₎ day of every calendar month occurring during the Term.

"Moody's" shall mean Moody's Investors Service, Inc.

"Mortgage" shall mean that certain first priority Deed of Trust, Assignment of Leases and Rents and Security Agreement, dated the date hereof, executed and delivered by Borrower as security for the Loan and encumbering the Property, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

"Net Operating Income" shall mean the amount obtained by subtracting Operating Expenses from Operating Income.

"Net Proceeds" shall mean: (i) the net amount of all Insurance Proceeds payable as a result of a Casualty to the Property, after deduction of reasonable costs and expenses (including reasonable attorneys' fees and costs), if any, in collecting such Insurance Proceeds, or

(ii) the net amount of the Award, after deduction of reasonable costs and expenses (including reasonable attorneys' fees and costs), if any, in collecting such Award.

"Net Proceeds Deficiency" shall have the meaning set forth in Section 5.4(b)(vi).

"Note" shall have the meaning set forth in Section 2.1.3.

"Notice" shall have the meaning set forth in Section 11.6.

"Obligations" shall mean, collectively, Borrower's obligations for the payment of the Debt and the performance of the Other Obligations.

"OFAC" shall have the meaning set forth in Section 4.l.14(b).

"Officer's Certificate" shall mean a certificate delivered to Lender by Borrower which is signed by an authorized senior officer of Borrower.

"Open Prepayment  Date" shall  mean the Monthly  Payment Date occurring in July, 2026.

"Operating   Agreements"   shall   mean  the  REA,   and  any  other covenants, restrictions, easements, declarations or agreements of record relating to the construction, operation or use of the Property.

"Operating Expenses" shall mean, for any period, without duplication, all expenses actually paid or payable by Borrower during such period in connection with the operation, management, maintenance, repair and use of the Property, determined on an accrual basis, and, except to the extent otherwise provided in this definition, in accordance with GAAP, and the Uniform System of Accounts for Hotels, current edition. Operating Expenses specifically shall include (i) all expenses incurred in the immediately preceding twelve (12) month period based on quarterly financial statements delivered to Lender in accordance with Section 4.1.7 hereof, (ii) all payments required to be made pursuant to any Operating Agreements, (iii) property management fees in an amount  equal  to  the  greater  of  three percent (3%) of Operating Income and the management fees actually paid under the Management Agreement, (iv) administrative, payroll, security and general expenses for the Property, (v) the cost of utilities, inventories and fixed asset supplies consumed in the operation of the Property, (vi) a reasonable reserve for uncollectible accounts, (vii) costs and fees of

independent professionals (including, without limitation, legal, accounting, consultants and other professional expenses), technical consultants, operational experts (including quality assurance inspectors) or other third parties retained to perform services required or permitted hereunder, (viii) cost of attendance by employees at training and manpower development programs, (ix)  association dues, (x) computer processing charges, (xi) operational equipment and other lease payments as reasonably approved by Lender, (xii) Taxes and Other Charges (other than income taxes or Other Charges in the nature of income taxes) and insurance premiums and (xiii)  all underwritten reserves required by Lender hereunder (without duplication). Notwithstanding the foregoing, Operating Expenses shall not include (1) depreciation or amortization, (2) income taxes or Other Charges in the nature of income taxes, (3) any expenses (including legal, accounting and other professional fees, expenses and disbursements) incurred in connection with the making of the Loan or the sale, exchange, transfer, financing or refinancing of all or any portion of the Property or in connection with the recovery of Insurance Proceeds or Awards which are applied to prepay the Note, (4) intentionally omitted, (5) Debt Service, (6) FF&E Expenses and (7) any item of expense which would otherwise be considered within Operating Expenses pursuant to the provisions above but is paid directly by any Tenant.

"Operating Income" shall mean, for any period, all income of Borrower during such period from the use, ownership or operation of the Property, including:

(a)         all amounts payable to Borrower by any Person as Rent and other amounts under Leases or other agreements relating to the Property;

(b)        business interruption insurance proceeds allocable to the applicable reporting period; and

(c)         all other amounts which in accordance with GAAP, the Uniform System of Accounts for Hotels, current edition, are included in Borrower's annual financial statements as operating income attributable to the Property.

Notwithstanding the foregoing, Operating Income shall not include (a) any Insurance Proceeds (other than business interruption insurance proceeds and only to the extent allocable to the applicable reporting period), (b) any proceeds resulting from the Transfer of all or any portion of the Property, (c) any Rent attributable to a Lease prior to the date in which the Tenant thereunder has taken occupancy or in which the actual payment of rent is required to commence thereunder, (d) any item of income otherwise included in Operating Income but paid directly by any Tenant to a Person other than Borrower as an offset or deduction against Rent payable by such Tenant, provided such item of income is for payment of an item of expense (such as payments for utilities paid directly to a utility company) and such expense is otherwise excluded from the definition of Operating Expenses pursuant to clause "(6)" of the definition thereof, (e) security deposits received from Tenants until forfeited or applied, and (f) any Rents paid by or on behalf of any Tenant under a Lease which is the subject of any proceeding or action relating to its bankruptcy, reorganization or other arrangement pursuant to federal bankruptcy law or any similar federal or state law or which has been adjudicated a bankrupt or insolvent unless such Lease has been assumed by the trustee in such proceeding or action. Operating Income shall be calculated on the accrual basis of accounting and, except to the extent

otherwise provided in this definition, m accordance with GAAP, the Uniform System of Accounts for Hotels, current edition.

"Other Charges" shall mean all ground rents, maintenance charges, impositions other than Taxes and any other charges, including vault charges and license fees for the use of vaults, chutes and similar areas adjoining the Property, now or hereafter levied or assessed or imposed against the Property or any part thereof.

"Other Obligations" shall mean (a) the performance of all obligations of Borrower contained herein; (b) the performance of each obligation of Borrower contained in any other Loan Document; and (c) the performance of each obligation of Borrower contained in any renewal, extension, amendment, modification, consolidation, change of, or substitution or replacement for, all or any part of this Agreement, the Note or any other Loan Document.

"Outstanding Principal Balance" shall mean, as of any date, the outstanding principal balance of the Loan.

"Patriot Act" shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT ACT) of 2001, as the same may be amended from time to time, and corresponding provisions of future laws.

"Patriot Act Offense" shall have the meaning set forth in Section 4.l.14{b).

"Permitted Encumbrances" shall mean, collectively, (i) the Liens and security interests created by the Loan Documents, (ii) all encumbrances and other matters disclosed in the Title Insurance Policy and otherwise acceptable to Lender in its sole discretion, (iii) Liens,  if any, for Taxes or Other Charges imposed by any Governmental Authority not yet due or delinquent, and (iv) such other title and survey exceptions as Lender has approved or may approve in writing in Lender's sole discretion.

"Permitted Indebtedness" shall have the meaning set forth in Section 3.l.24{d).

"Permitted Investments" shall have the meaning set forth in the Cash Management Agreement.

"Permitted Transfer" shall have the meaning set forth in Section 8.2{a).

"Permitted Transferee" shall mean a corporation, partnership or limited liability company (i) acceptable to Lender in its sole discretion, (ii) that qualifies as a single purpose, bankruptcy remote entity under criteria established by the Rating Agencies, and (iii) such entity, together with the direct and indirect owners of such entity and any related guarantor, are reputable Persons of good character, creditworthy and with sufficient financial worth considering the obligations assumed and undertaken, as evidenced by financial statements and other information reasonably requested by Lender.

"Person" shall mean any individual, corporation, partnership, limited liability company, joint venture, estate, trust, unincorporated association, any other entity, any

Governmental Authority and any fiduciary acting in such capacity on behalf of any of the foregoing.

"Physical Condition Report" shall mean a report prepared by a company satisfactory to Lender regarding the physical condition of the Property, satisfactory in form and substance to Lender in its sole discretion, which report shall, among other things, (i) confirm that the Property and its use comply, in all material respects, with all applicable Legal Requirements (including zoning, subdivision and building laws), and (ii) include a copy of a final certificate of occupancy with respect to all Improvements.

"PIP Work" shall mean those certain replacements and/or alterations to the Property as may be required by the Franchisor to be completed from time to time.

"Policies" shall have the meaning set forth in Section 5.1.l{b).

"Prepayment Date" shall mean the date of a prepayment of the Loan pursuant to the provisions of Section 2.4 hereof.

"Prepayment Fee" shall mean an amount equal to the greater of (i) the Yield Maintenance Amount, or (ii) five percent (5%) of the unpaid principal balance of the Note as of the Prepayment Date.

"Prepayment Notice" shall mean a prior irrevocable written notice to Lender specifying the proposed Business Day on which a prepayment is to be made  pursuant  to Section 2.4 hereof, which date must be a Monthly Payment Date and shall be no earlier than thirty (30) days after the date of such Prepayment Notice and no later than sixty (60) days after the date of such Prepayment Notice.

"Property" shall mean the parcel of real property described on Exhibit A attached hereto and made a part hereof, the Improvements now or hereafter erected or installed thereon and all personal property owned by Borrower and encumbered by the Mortgage, together with all rights pertaining to such property and Improvements, all as more particularly described in the Granting Clauses of the Mortgage.

"Rating Agencies" shall mean, prior to the final Securitization of the Loan, each of S&P, Moody's, Fitch, Realpoint LLC and DBRS, Inc. or any other nationally-recognized statistical rating agency which has been designated by Lender and, after the final Securitization of the Loan, shall mean any of the foregoing that have rated any of the Securities.

"Rating Agency Confirmation" shall mean a written affirmation from each of the Rating Agencies that the credit rating of the Securities by such Rating Agency immediately prior to the occurrence of the event with respect to which such Rating Agency Confirmation is sought will not be qualified, downgraded or withdrawn as a result of the occurrence of such event, which affirmation may be granted or withheld in such Rating Agency's sole and absolute discretion. For the purposes of this Agreement and the other Loan Documents, if any Rating Agency shall waive, decline or refuse to review or otherwise engage any request for a Rating Agency Confirmation hereunder or under the other Loan Documents (hereinafter a "RA Consent"), such RA Consent shall be deemed to eliminate, for such request only, the condition

that a Rating Agency Confirmation by such Rating Agency (only) be obtained for purposes of this Agreement or the other Loan Documents, as applicable; provided, however, if Lender does not have a separate and independent approval right with respect to such event set forth herein or in the other Loan Documents, as applicable, then the term "Rating Agency Confirmation" shall be deemed instead to require the approval of Lender based on its good faith determination of whether the applicable Rating Agency would issue a Rating Agency Confirmation for the applicable event. For purposes of clarity, any such waiver, declination or refusal to review or otherwise engage in any request for a Rating Agency Confirmation hereunder or under the other Loan Documents shall not be deemed a waiver, declination or refusal to review or otherwise engage in any subsequent request for a Rating Agency Confirmation hereunder  or under the other Loan Documents, and the condition for Rating Agency Confirmation pursuant to this Agreement and the other Loan Documents for any subsequent request shall apply regardless of any previous waiver, declination or refusal to review or otherwise engage in such prior request.

"REA" shall mean, collectively, as the same may be amended, restated, supplemented or otherwise modified from time to time, any reciprocal easement agreement or similar document affecting the Property now or hereafter of record.

"Registration Statement" shall have the meaning set forth in Section 9.2(b).

"Regulation AB" shall mean Regulation AB under the Securities Act and the Exchange Act, as such Regulation may be amended from time to time.

"Related Loan" shall mean a loan to an Affiliate of Borrower or Guarantor or secured by a Related Property, that is included in a Securitization with the Loan, and any other loan that is cross-collateralized with the Loan.

"Related Party" shall have the meaning set forth in Section 3.1.46(k).

"Related Property" shall mean a parcel of real property, together with improvements thereon and personal property related thereto, that is "related" within the meaning of the definition of Significant Obligor, to the Property.

"Release Date" shall have the meaning set forth in Section 2.5.l(a).

"Remaining Receipts" shall have the meaning set forth in Section 6.11.1.

"REMIC Trust" shall mean a "real estate mortgage investment conduit" within the meaning of Section 860D of the Code that holds the Note.

"Rents" shall mean all rents, rent equivalents, revenues from the rental of rooms, guest suites, conference and banquet rooms, food and beverage facilities, telephone services, laundry, vending, television and parking, moneys payable as damages (including payments by reason of the rejection of a Lease in a bankruptcy proceeding) or in lieu of rent or rent equivalents, royalties (including all oil and gas or other mineral royalties and bonuses), income, fees, receivables, receipts, revenues, deposits (including security, utility and other deposits), accounts, cash, issues, profits, charges for services rendered, and other payment and consideration of whatever form or nature received by or paid to or for the account of or benefit of

Borrower, Manager or any of their respective agents or employees from any and all sources arising from or attributable to the Property and the Improvements, including all receivables, customer obligations, installment payment obligations and other obligations now existing or hereafter arising or created out of the sale, lease, sublease, license, concession or other grant of the right of the use and occupancy of the Property or rendering of services by Borrower, Manager or any of their respective agents or employees, and Insurance Proceeds, if any, from business interruption or other loss of income insurance, but only to the extent Lender elects to treat such Insurance Proceeds as business or rental interruption Insurance Proceeds pursuant to Section 5.4(e) hereof.

"Reporting Failure" shall have the meaning set forth in Section 4.1.7(i).

"Required Financial Item" shall have the meaning set forth in Section 4.1.7(i).

"Required Repairs Account" shall have the meaning set forth in Section 6.2.1.

"Required Repairs Funds" shall have the meaning set forth in Section 6.2.1.

"Required Repairs" shall have the meaning set forth in Section 6.2.1.

"Reserve Funds" shall mean, collectively, all funds deposited by Borrower with Lender or Cash Management Bank pursuant to Article 6 of this Agreement, including, but not limited to, the Insurance Funds, the Tax Funds, the Required Repairs Funds, the FF&E Reserve Funds, and the Excess Cash Flow Funds.

"Reserve Items" shall have the meaning set forth in Section 6.10.4.

"Restoration" shall mean the repair and restoration of the Property after a Casualty or Condemnation as nearly as possible to the condition the Property was in immediately prior to such Casualty or Condemnation, with such alterations as may be reasonably approved by Lender.

"Restoration DSCR" shall mean, as of any date of determination, the ratio of

(a) the Net Operating Income of the Property, based on rents in place (annualized) and trailing 12-month expenses, to (b) an amount equal to twelve (12) times the Monthly Debt Service Payment Amount.

"Restoration Threshold" shall mean 1% of the outstanding principal amount of

the Loan.

"RICO" shall have the meaning set forth in Section 11.22.

"S&P" shall mean Standard & Poor's Ratings Group, a division of the McGraw-Hill Companies.

"Secondary Market Transaction" shall have the meaning set forth m

Section 9.l(a).

"Securities" shall have the meaning set forth in Section 9.1(a).

"Securities Act" shall have the meaning set forth in Section 9.2(a).

"Securitization" shall have the meaning set forth in Section 9.l(a).

"Servicer" shall have the meaning set forth in Section 11.24.

"Servicing Agreement" shall have the meaning set forth in Section 11.24.

"Severed Loan Documents" shall have the meaning set forth in Section 10.2(c).

"Significant Obligor" shall have the meaning set forth in Item 1101(k) of Regulation AB under the Securities Act.

"Springing Recourse Event" shall have the meaning set forth in Section 11.22.

"Standard Statements" shall have the meaning set forth in Section 9.l(c)(i).

"State" shall mean Texas.

"Stated Maturity Date" shall mean October 6, 2026.

"Successor Borrower" shall have the meaning set forth in Section 2.5.3.

"Survey" shall mean a survey of the Property prepared by a surveyor licensed in the State and satisfactory to Lender and the company or companies issuing the Title Insurance Policy, and containing a certification of such surveyor satisfactory to Lender.

"Sweep Event Period" shall mean a period commencing upon the earlier of (i) the occurrence of an Event of Default, (ii) the Debt Service Coverage Ratio (based on the trailing twelve (12) calendar months, as calculated by Lender) being less than 1.15 to 1.00, or (iii) any cancellation, termination or expiration of the Franchise Agreement, which such Sweep Event Period shall expire (a) with regard to any Sweep Event Period commenced in connection with clause (i) above, upon the cure (if applicable) of such Event of Default and Lender's acceptance of such cure in its sole and absolute discretion (provided that no other Sweep Event Period has commenced and is continuing), (b) with regard to any Sweep Event Period commenced in connection with clause (ii) above, the Debt Service Coverage Ratio (based on the trailing twelve (12) calendar months, as calculated by Lender) is equal to or greater than 1.25 to 1.00 for two (2) consecutive calendar quarters (provided that no other Sweep Event Period has commenced and is continuing), or (c) with regard to any Sweep Event Period commenced in connection with clause (iii) above, Borrower enters into a franchise extension agreement or a replacement franchise agreement in form and substance satisfactory to Lender (provided that no other Sweep Event Period has commenced and is continuing).

"Tax Account" shall have the meaning set forth in Section 6.3.1.

"Tax Funds" shall have the meaning set forth in Section 6.3.1.

"Taxes" shall mean all real estate and personal property taxes, assessments, water rates or sewer rents, now or hereafter levied or assessed or imposed against the Property or part thereof, together with all interest and penalties thereon.

"Tenant" shall mean any Person obligated by contract or otherwise to pay monies (including a percentage of gross income, revenue or profits) under any Lease now or hereafter affecting all or any part of the Property.

"Term" shall mean the entire term of this Agreement, which shall expire upon repayment in full of the Debt and full performance of each and every obligation to be performed by Borrower pursuant to the Loan Documents.

"Title Insurance Policy" shall mean a TLTA mortgagee title insurance policy in the form acceptable to Lender issued with respect to the Property and insuring the Lien of the Mortgage.

"ALTA" shall mean Texas Land Title Association, or any successor thereto.

"Transfer" shall have the meaning set forth in Section 4.2.1.

"Treasury Rate" shall mean the yield calculated by the linear interpolation of the yields, as reported in Federal Reserve Statistical Release H.15 Selected Interest Rates under the heading U.S. Government Securities/Treasury Constant Maturities for the week ending prior to the Prepayment Date, of U.S. Treasury constant maturities with maturity dates (one longer and one shorter) most nearly approximating the Stated Maturity Date. (In the event Release H.15 is no longer published, Lender shall select a comparable publication to determine the Treasury Rate.)

"Trustee" shall mean any trustee holding the Loan in a Securitization.

"UCC" or "Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect in the State.

"Underwriter Group" shall have the meaning set forth in Section 9.2{b).

"Updated Information" shall have the meaning set forth in Section 9.l{b){i).

"U.S. Obligations" shall mean securities evidencing an obligation to timely pay principal and/or interest in a full and timely manner that are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged, (ii) not subject to prepayment, call or early redemption and (iii) "government securities" as defined in the Treasury Regulations Section 1.860G-2(a)(8)(ii).

"U.S. Person" shall mean any Person that is (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized under the laws of the United States or any state, commonwealth or district thereof, or (iii) any estate or trust that is subject to United States federal income taxation, regardless of the source of its income.

"Yield Maintenance Amount" shall mean the present value, as of the Prepayment Date, of the remaining scheduled payments of principal and interest from the Prepayment Date through the Stated Maturity Date (including any balloon payment) determined by discounting such payments at the Discount Rate, less the amount of principal being prepaid.

Section 1.2                                Principles of Construction.

All references to sections and schedules are to sections and schedules in or to this Agreement unless otherwise specified. Unless otherwise specified, the words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement and the word "including" shall mean "including but not limited to". Unless otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to both the singular and  plural fonns of the terms so defined.

ARTICLE2

THE LOAN

Section 2.1                                The Loan.

2.1 :1 Agreement to Lend and Borrow. Subject to and upon the terms and conditions set forth herein, Lender shall make the Loan to Borrower and Borrower shall accept the Loan from Lender on the Closing Date.

2.1.2    Single Disbursement to Borrower. Borrower shall receive only one borrowing hereunder in respect of the Loan and any amount borrowed and repaid hereunder in respect of the Loan may not be reborrowed.

2.1.3    The Note. The Loan shall be evidenced by that certain  Promissory  Note of even date herewith, in the stated principal amount of EIGHT MILLION SIX HUNDRED THOUSAND and No/100 Dollars ($8,600,000.00) executed by Borrower and payable to the order of Lender in evidence of the Loan (as the same may hereafter be amended, supplemented, restated, increased, extended or consolidated from time to time, the "Note") and shall be repaid in accordance with the terms of this Agreement and the Note.

2.1.4    Use of Proceeds. Borrower shall use proceeds of the Loan to (i) pay and discharge any existing loans relating to the Property, (ii) pay all past-due Taxes, Insurance Premiums and Other Charges, if any, in respect of the Property, (iii) make initial deposits of the Reserve Funds, (iv) pay costs and expenses incurred in connection with the closing of the Loan, and (v) to the extent any proceeds remain after satisfying clauses (i) through (iv) above, for such other general corporate purposes as Borrower shall designate.

Section 2.2                                Interest Rate.

2.2.1    Interest Rate. Interest on the Outstanding Principal Balance shall accrue throughout the Term at the Interest Rate.

2.2.2    Intentionally Omitted.

2.2.3    Default Rate. In the event that, and for so long as, any Event of Default shall have occurred and be continuing, the Outstanding Principal Balance and, to the extent permitted by law, overdue interest in respect of the Loan, shall accrue interest at the Default Rate, calculated from the date such payment was due without regard to any grace or cure periods contained herein. Interest at the Default Rate shall be paid immediately upon demand, which demand may be made as frequently as Lender shall elect.

2.2.4    Interest Calculation. Interest on the Outstanding Principal Balance  shall be calculated by multiplying (A) the actual number of days elapsed in the period for which the calculation is being made by (B) a daily rate based on a three hundred sixty (360) day year (that is, the Interest Rate or the Default Rate, as then applicable, expressed as an annual rate divided by 360) by (C) the Outstanding Principal Balance. The accrual  period for calculating  interest due on each Monthly Payment Date shall be the Interest Period immediately prior to such Monthly Payment Date.

2.2.5    Usury Savings. This Agreement and the other Loan Documents  are subject to the express condition that at no time shall Borrower be required to pay interest on the principal balance of the Loan at a rate which could subject Lender to either civil or criminal liability as a result of being in excess of the Maximum Legal Rate. If by the terms of this Agreement or the other Loan Documents, Borrower is at any time required or obligated to pay interest on the principal balance due hereunder at a rate in excess of the Maximum Legal Rate, the Interest Rate or the Default Rate, as the case may be, shall be deemed to be immediately reduced to the Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the sums due under the Loan, shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full stated term of the Loan until payment in full so that the rate or amount of interest on account of the Loan does not exceed the Maximum Legal Rate from time to time in effect and applicable to the Loan for so long as the Loan is outstanding.

Section 2.3                                Loan Payments.

2.3.1    Payments. Borrower shall pay to Lender (a) on the date hereof, an amount equal to interest only on the Outstanding Principal Balance from the Closing Date up to and including October 5, 2016 (the "Initial Interest Period"), (b) on each Monthly Payment Date thereafter beginning on November 6, 2016 up to and including the Maturity Date, a payment of principal and interest in an amount equal to the Monthly Debt Service Payment Amount, which payments shall be applied first to accrued and unpaid interest and the balance to the Outstanding Principal Balance, and (c) all amounts required in respect of Reserve Funds as set forth in Article 6 hereof. The Monthly Debt Service Payment Amount and any deposits required  to be made with respect to the Reserve Funds due on the first Monthly Payment Date shall be collected by Lender on the Closing Date and shall be applied to the Debt Service and/or to make initial deposits of the Reserve Funds, as applicable, on the first Monthly Payment Date.

2.3.2    Intentionally Omitted.

2.3.3    Payments Generally. After the Initial Interest Period, each interest accrualperiod thereafter (each, an "Interest Period") shall commence on the sixth (6th)day of eachcalendar month during the Term and shall end on and include the fifth (5th) day of the following calendar month. For purposes of making payments hereunder, but not for  purposes  of calculating interest accrual periods, if the day on which such payment is due is not a Business Day, then amounts due on such date shall be due on the immediately preceding Business Day. Lender shall have the right from time to time, in its sole discretion, upon not less than thirty (30) days' prior written notice to Borrower, to change the Monthly Payment Date to a different calendar day and, if requested by Lender, Borrower shall promptly execute an amendment to this Agreement to evidence such change; provided, however, that if Lender shall have elected to change the Monthly Payment Date as aforesaid, Lender shall have the option, but not the obligation, to adjust the Interest Period accordingly. With respect to payments of principal due  on the Maturity Date, interest shall be payable at the Interest Rate or the Default Rate, as the case may be, through and including the day immediately preceding such Maturity Date. All amounts due pursuant to this Agreement and the other Loan Documents shall be payable without setoff, counterclaim, defense or any other deduction whatsoever.

2.3.4    Payment on Maturity Date. Borrower shall pay to Lender on the Maturity Date the Outstanding Principal Balance, all accrued and unpaid interest and all other amounts due hereunder and under the Note, the Mortgage and the other Loan Documents.

2.3.5    Late Payment Charge. If any principal, interest or any other sum  due under the Loan Documents (other than the Outstanding Principal Balance due and payable on the Maturity Date) is not paid by Borrower on the date on which it is due (taking into account any applicable notice and/or grace period provided pursuant to the terms of the Loan Documents), Borrower shall pay to Lender upon demand an amount equal to the lesser of five percent (5%) of such unpaid sum or the maximum amount permitted by applicable law in order to defray the expense incurred by Lender in handling and processing such delinquent payment and to compensate Lender for the loss of the use of such delinquent payment.  Any such amount shall be secured by the Mortgage and the other Loan Documents to the extent permitted by law.

2.3.6    Method and Place of Payment.

(a)        Except as otherwise specifically provided herein, all payments and prepayments under this Agreement and the Note shall be made to Lender not later than 12:00 noon, New York City time, on the date when due and shall be made in lawful money of the United States of America in immediately available funds at Lender's office or at such other place as Lender shall from time to time designate, and any funds received by Lender after such time shall, for all purposes hereof, be deemed to have been paid on the next succeeding Business Day.

(b)       Whenever any payment to be made hereunder or under any other Loan Document shall be stated to be due on a day which is not a Business Day, the due date thereof shall be the immediately preceding Business Day.

(c)        All payments required to be made by Borrower hereunder or under the Note or the other Loan Documents shall be made irrespective of, and without deduction for, any setoff, claim or counterclaim and shall be made irrespective of any defense thereto.

Section 2.4                               Prepayments.

2.4.1    Prepayments. Except as otherwise provided herein, Borrower shall not have the right to prepay the Loan in whole or in part prior to the Stated Maturity Date.

2.4.2     Intentionally Omitted.

2.4.3    Open Prepayment. Notwithstanding anything to the contrary contained herein, provided no Event of Default shall have occurred, and provided that Borrower shall deliver to Lender a Prepayment Notice, Borrower may prepay the entire principal balance of the Note and any other amounts outstanding under the Note, this Agreement, or any of the other Loan Documents (including, without limitation, all amounts pursuant to Section 2.4.6(a) and Section 2.4.6(c) hereof), without payment of the Prepayment Fee or any other prepayment premium or fee, on any Monthly Payment Date on or after the Open Prepayment Date.

2.4.4    Mandatory Prepayments. If Lender is not obligated to make Net Proceeds available to Borrower for Restoration, on the next occurring Monthly Payment Date following the date on which (a) Lender actually receives any Net Proceeds, and (b) Lender has determined that such Net Proceeds shall be applied against the Outstanding Principal Balance, (1) Borrower shall prepay, or authorize Lender to apply Net Proceeds as a prepayment of, the Outstanding Principal Balance in an amount equal to one hundred percent (100%) of such Net Proceeds and

(2) Borrower shall comply with the provisions set forth in Section 2.4.6. Notwithstanding anything herein to the contrary, so long as no Event of Default has occurred and is continuing, no Prepayment Fee shall be due in connection with any  prepayment  made  pursuant  to  this Section 2.4.4. Any partial prepayment under this Section 2.4.4 shall be applied to the last payments of principal due under the Loan.

2.4.5    Prepayments After Default. If after the occurrence and during the continuance of an Event of Default, payment of all or any part of the Debt is tendered by Borrower or otherwise recovered by Lender (including through application of any Reserve Funds), such tender or recovery shall be deemed (a) to have been made on the next occurring Monthly Payment Date together with the Monthly Debt Service Payment Amount, and (b) to be  a voluntary prepayment by Borrower in violation of the prohibition against prepayment set forth in Section 2.4.1 hereof, and Borrower shall pay, in addition to the Debt, an amount equal to the Prepayment Fee.

2.4.6    Payments in Connection with a Prepayment.

(a)        On the date on which a prepayment, voluntary or mandatory, is made under the Note or as required under this Agreement, which date must be a Business Day, Borrower shall pay to Lender all unpaid interest on the portion of the Outstanding Principal Balance prepaid plus, if the Prepayment Date is not a Monthly Payment Date, all interest accruing for the full Interest Period in which the Prepayment Date falls.

(b)        On the Prepayment Date, Borrower shall pay to Lender (i) the Prepayment Fee and (ii) all other sums, excluding scheduled interest payments, then due under the Note, this Agreement, the Mortgage, and the other Loan Documents.

(c)        Borrower shall pay all costs and expenses of Lender incurred in connection with the prepayment (including without limitation, any costs and expenses associated with a release of the Lien of the Mortgage as set forth in Section 2.4.7 below and reasonable attorneys' fees and expenses).

2.4.7     Release on Payment in Full. Lender shall, upon the written request and at the expense of Borrower, upon payment in full of all principal and interest due on the Loan and all other amounts due and payable under the Loan Documents in accordance with the terms and provisions of the Note and this Agreement, release the Lien of the Mortgage.

Section 2.5                                  Defeasance.

2.5.1     Conditions to Defeasance. Provided no Event of Default has occurred and is continuing, at any time after the date which is the earlier to occur of (A) two (2) years after the "startup day," within the meaning of Section 860G(a)(9) of the Code, of the final "real estate mortgage investment conduit," established within the meaning of Section 860D of the Code, that holds any note that evidences all or any portion of the Loan or (B) three (3) years after the date hereof (the "Defeasance Lockout Expiration Date"), Borrower may cause the release of the Property (in whole but not in part) from the Lien of the Mortgage and the other Loan Documents upon the satisfaction of the following conditions:

(a)        not less than sixty (60) days' prior written notice shall be given to Lender specifying a date (the "Release Date") on which the Defeasance Collateral is to be delivered, such Release Date to occur only on a Monthly Payment Date;

(b)        all accrued and unpaid interest and all other sums due under the Note and under the other Loan Documents up to the Release Date, including, without limitation, all costs and expenses incurred by Lender or its agents in connection with such release (including, without limitation, the standard and customary fees and expenses incurred by attorneys and accountants in connection with the review of the proposed Defeasance Collateral and the preparation of the Defeasance Security Agreement and related documentation), shall be paid in full on or prior to the Release Date; and

(c)        Borrower shall deliver to Lender on or prior to the Release Date:

(i)         an amount equal to that which is sufficient to purchase U.S. Obligations that provide for payments (1) on or prior to, but as close as possible to and including, all successive scheduled Monthly Payment Dates after the Release Date through the Stated Maturity Date, and (2) in amounts equal to or greater than the Monthly Debt Service Payment Amount through and including the Stated Maturity Date together with payment in full of the Outstanding Principal Balance as of the Stated Maturity Date (the "Defeasance Collateral"), each of which shall be duly endorsed by the holder thereof as directed by Lender or accompanied by a written instrument of transfer in form and substance wholly satisfactory to Lender

(including, without limitation, such instruments as may be required by the depository institution holding such securities to effectuate book-entry transfers and pledges through the book-entry facilities of such institution) in order to create a first priority security interest therein in favor of the Lender in conformity with all applicable state and federal laws governing granting of such security interests;

(ii)       a pledge and security agreement, in form and substance satisfactory to Lender in its sole discretion, creating a first priority security interest in favor of Lender in the Defeasance Collateral (the  "Defeasance Security Agreement"), which shall provide, among other things, that any payments generated by the Defeasance Collateral shall be paid directly to Lender and applied by Lender in satisfaction of all amounts then due and payable hereunder and any excess received by Lender from the Defeasance Collateral over the amounts payable by Borrower hereunder or under the Note shall be refunded to Borrower promptly after each Monthly Payment Date;

(iii)      a certificate of Borrower certifying that all of the requirements set forth in this Section 2.5 have been satisfied;

(iv)      an opinion of counsel for Borrower in form and substance and delivered by counsel satisfactory to Lender in its sole discretion stating, among other things, that (1) Lender has a perfected first priority security interest in the Defeasance Collateral and that the Defeasance Security Agreement is enforceable against Borrower in accordance with its terms; and (2) that any REMIC Trust formed pursuant to a Securitization will not fail to maintain its status as a "real estate mortgage investment conduit" within the meaning of Section 860D of the Code as a result of such defeasance;

(v)        evidence in writing from the applicable Rating Agencies to the effect that the defeasance of the Loan and collateral substitution will not result in a downgrading, withdrawal or qualification of the respective ratings in effect immediately prior to such defeasance event for any securities issued in connection with the Securitization which are then outstanding;

(vi)      a certificate from a firm of independent public accountants acceptable to Lender certifying that the Defeasance Collateral is sufficient to satisfy the provisions of Section 2.5.1(c)(i) above;

(vii)     such other certificates, documents or instruments as Lender may reasonably require;

(viii)    in connection with  the conditions set forth in Section 2.5.l(c) above, Borrower hereby appoints Lender as its agent and attorney in  fact for the purpose of  using the amounts delivered pursuant to Section 2.5.l(c)(i) above to purchase the Defeasance Collateral; and

(ix)      payment of all escrow, closing, recording, legal, appraisal, Rating Agency and other fees, costs and expenses paid or incurred by Lender or

its agents in connection with Borrower's exercise of its rights under this Section 2.5, the release of the lien of Mortgage on the Property, the review of the proposed Defeasance Collateral and the preparation of the Defeasance Security Agreement and related documentation.

2.5.2     Release of Property. Upon compliance with the requirements of this Section 2.5, the Property shall be released from the Lien of the Mortgage and the other Loan Documents, and the Defeasance Collateral shall constitute the only collateral which shall secure the Note and all other Obligations. Lender will, at Borrower's expense, execute and deliver any agreements reasonably requested by Borrower to release the Lien of the Mortgage from the Property. Borrower, pursuant to the Defeasance Security Agreement, shall authorize and direct that the payments received from Defeasance Collateral be made directly to Lender and applied to satisfy the Obligations, including payment in full of the Outstanding Principal Balance as of the Stated Maturity Date.

2.5.3     Successor Borrower. Upon the release of the Property in accordance with Section 2.5.2, Borrower shall assign all its Obligations, together with the pledged Defeasance Collateral, to a successor, single purpose, bankruptcy remote entity designated by Lender in its sole discretion or, at the option of Lender, designated by Borrower and approved by Lender (in each case, the "Successor Borrower"). Lender shall have the right to establish or designate the Successor Borrower and to purchase, or cause to be purchased, the Defeasance Collateral (the "Defeasance Rights and Obligations"). Such rights to designate or establish the Successor Borrower as provided above or to purchase, or cause the purchase of, on behalf of Borrower the pledged Defeasance Collateral as provided above may be exercised by Starwood Mortgage Capital LLC in its sole discretion and shall be retained by Starwood Mortgage Capital LLC as the original Lender herein (and any successor or assign of Starwood Mortgage Capital LLC under a specific assignment of such retained rights separate and apart from a Secondary Market Transaction related to all or any portion of the Loan), notwithstanding any Secondary Market Transaction related to all or any portion of the Loan. Such successor entity shall execute an assumption agreement in form and substance satisfactory to Lender in its sole discretion pursuant to which it shall assume Borrower's Obligations and the Defeasance Security Agreement. As conditions to such assignment and assumption, Borrower shall (i) deliver to Lender an opinion of counsel in form and substance and delivered by counsel satisfactory to Lender in its sole discretion stating, among other things, that such assumption agreement is enforceable against Borrower and such successor entity in accordance with its terms and that the Note, the Defeasance Security Agreement and the other Loan Documents, as so assumed, are enforceable against such successor entity in accordance with their respective terms, and (ii) pay all costs and expenses incurred by Lender or its agents in connection with such assignment and assumption (including, without limitation, the review of the proposed transferee and the preparation of the assumption agreement and related documentation). Additionally, Borrower shall pay all costs and expenses incurred by Successor Borrower, including reasonable attorneys' fees and expenses, incurred in connection therewith. Upon such assumption, Borrower shall be relieved of its Obligations hereunder, under the other Loan Documents and under the Defeasance Security Agreement other than those Obligations which are specifically intended to survive the termination, satisfaction or assignment of this Agreement or the exercise of Lender's rights and remedies hereunder.

2.5.4    Appointment as Attorney in Fact. In connection with the conditions set forth in this Section 2.5, Borrower hereby appoints Lender as its agent and attorney-in-fact for the purpose of purchasing the Defeasance Collateral with funds provided  by  Borrower. Borrower shall pay any and all expenses incurred in the purchase of the Defeasance Collateral and any revenue, documentary stamp or intangible taxes or any other tax or charge due in connection with the transfer of the Note or otherwise required to accomplish the agreements of this Section 2.5.

ARTICLE3 REPRESENTATIONS AND WARRANTIES

Section 3.1                                Borrower Representations.

Borrower represents and warrants and, to the extent applicable, covenants:

3.1.1    Organization. Borrower is duly organized, validly existing and in good standing with full power and authority to own its assets and conduct its business, and is duly qualified and in good standing in all jurisdictions in which the ownership or lease of its property or the conduct of its business requires such qualification, and Borrower has taken all necessary action to authorize the execution, delivery and performance of this Agreement and  the other Loan Documents by it, and has the power and authority to execute, deliver and perform under this Agreement, the other Loan Documents and all the transactions contemplated hereby. Borrower possesses all rights, licenses, permits and authorizations, governmental or otherwise, necessary to entitle it to own its properties and to transact the businesses in which it is now engaged, and the sole business of Borrower is the ownership, management and operation of the Property.

3.1.2    Proceedings. This Agreement and the other Loan Documents have been duly authorized, executed and delivered by Borrower and, as applicable, by Guarantor or other obligor thereunder, and constitute a legal, valid and binding obligation of Borrower and, as applicable, by Guarantor or other obligor thereunder, enforceable against such parties in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization or other similar laws affecting the enforcement of creditors' rights generally, and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

3.1.3    No Conflicts. The execution and delivery of this Agreement and the other Loan Documents by Borrower and the performance of its Obligations hereunder and thereunder will not conflict with any provision of any law or regulation to which Borrower is subject, or conflict with, result in a breach of, or constitute a default under, any of the terms, conditions or provisions of any of Borrower's organizational documents or any agreement or instrument to which Borrower is a party or by which it is bound, or any order or decree applicable to Borrower, or result in the creation or imposition of any Lien on any of Borrower's assets or property (other than pursuant to the Loan Documents).

3.1.4     Litigation. There is no action, suit, proceeding or investigation  pending or, to the best of Borrower's knowledge, threatened against Borrower, Guarantor, the Manager or the Property in any court or by or before any other Governmental Authority which, in each case, if adversely determined, could reasonably be expected to materially and adversely affect (a) title to the Property, (b) the validity or enforceability of the Mortgage, (c) Borrower's ability to perform under the Loan Documents, (d) Guarantor's ability to perform under the Guaranty, (e) the use, operation or value of the Property, (f) the principal benefit of the security intended to be provided by the Loan Documents, (g) the current ability of the Property to generate net cash flow sufficient to service the Loan, (h) the current principal use of the Property or (i) the condition (financial or otherwise) or business of Borrower (including the ability of Borrower to carry out the transactions contemplated by this Agreement), Guarantor, or the condition or ownership of the Property.

3.1.5     Agreements. Borrower is not a party to any agreement or instrument or subject to any restriction which could reasonably be expected to materially and adversely affect Borrower or the Property, or Borrower's business, properties or assets, operations or condition, financial or otherwise. Borrower is not in default with respect to any order or decree of any  court or any order, regulation or demand of any Governmental Authority, which default could reasonably be expected to have consequences that would materially and adversely affect the condition (financial or other) or operations of Borrower or its properties or might have consequences that would adversely affect its performance hereunder. To the best of Borrower's knowledge, Borrower is not in default in any material respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Permitted Encumbrance or any other agreement or instrument to which it is a party or by which it or the Property is bound. Borrower has no material financial obligation (contingent or otherwise) under any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which Borrower is a party or by which Borrower or the Property is otherwise bound, other than (a)  obligations incurred in the ordinary course of the operation of the Property and (b)  obligations under the Loan Documents.

3.1.6     Consents. No consent, approval, authorization or order of any court or Governmental Authority is required for the execution, delivery and performance by Borrower of, or compliance by Borrower with, this Agreement or the other Loan Documents or the consummation of the transactions contemplated hereby, other than those which have been obtained by Borrower.

3.1.7     Title. Borrower has good, marketable and insurable fee simple title to the real property comprising part of the Property and good title to the balance of the Property owned by it, free and clear of all Liens whatsoever except the Permitted Encumbrances. The Mortgage, when properly recorded in the appropriate records, together with any Uniform Commercial Code financing statements required to be filed in connection therewith, will create (i) a legal, valid and enforceable first priority, perfected Lien on Borrower's interest in the Property, subject only to Permitted Encumbrances, and (ii) valid, perfected security interests in and to, and perfected collateral assignments of, all personal property and personalty (including the Leases), all in accordance with the terms thereof, in each case subject only to the Permitted Encumbrances. There are no mechanics', materialman's or other similar Liens, encumbrances or claims which have been filed (and no rights exist which under law could give rise to any such lien or

encumbrance) which are or may be Liens prior to, or equal or coordinate with, the Lien of the Mortgage. None of the Permitted Encumbrances, individually or in the aggregate, (a) materially interfere with the benefits of the security intended to be provided by the Mortgage and this Agreement, (b) materially and adversely affect the value of the Property, (c) impair the use or operation of the Property (as currently used), or (d) impair Borrower's ability to pay its Obligations in a timely manner.

3.1.8    No Plan Assets. As of the date hereof and throughout the Term (i) Borrower does not sponsor, is not obligated to contribute to, and is not itself and will not be an "employee benefit plan," as defined in Section 3(3) of ERISA, subject to Title I of ERISA or Section 4975 of the Code, (ii) none of the assets of Borrower constitutes or will constitute "plan assets" of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101,(iii) Borrower is not and will not be a "governmental plan" within the meaning of Section 3(3) of ERISA, and (iv) transactions by or with Borrower are not and will not be subject to state statutes regulating investment of, and fiduciary obligations with respect to, governmental plans within the meaning of Section 3(3) of ERISA which is similar to the provisions of Section 406 of ERISA or Section 4975 of the Code and which prohibit or otherwise restrict the transactions contemplated by this Agreement including, but not limited to, the exercise by Lender of any of its rights under the Loan Documents.

3.1.9    Compliance. Borrower and the Property (including, but not limited to the Improvements) and the use thereof comply in all material respects with all applicable Legal Requirements, including parking, building and zoning and land use laws, ordinances, regulations, rules, covenants, restrictions and codes. Borrower is not in default or violation of any order,  writ, injunction, decree or demand of any Governmental Authority, the violation of which could reasonably be expected to materially adversely affect the condition (financial or otherwise) or business of Borrower. To the best of Borrower's knowledge, Borrower has not committed  any act which may give any Governmental Authority the right to cause Borrower to forfeit the Property or any part thereof or any monies paid in performance of Borrower's Obligations under any of the Loan Documents. The Property is used exclusively as a hotel and for  other appurtenant and related uses. In the event that all or any part of the Improvements are destroyed or damaged, said Improvements can be legally reconstructed to their condition prior to such damage or destruction, and thereafter exist for the same use without violating any zoning or other ordinances applicable thereto and without the necessity of obtaining any variances or special permits. No legal proceedings are pending or, to the knowledge of Borrower, threatened with respect to the zoning of the Property. Neither the zoning nor any other right to construct, use or operate the Property is in any way dependent upon or related to any property other than the Property. The use being made of the Property is in conformity with the certificate of occupancy issued for the Property and all other restrictions, covenants and conditions affecting the Property.

3.1.10  Financial Information. All financial data, including the statements of cash flow and income and operating expense, that have been delivered to Lender in connection with the Loan (i) are true, complete and correct in all material respects, (ii) accurately represent the financial condition of the Property as of the date of such reports, and (iii) have been prepared in accordance with GAAP or sound accounting principles, consistently applied, throughout the periods covered, except as disclosed therein. Borrower does not have any contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated

losses from any unfavorable commitments that are known to Borrower and reasonably likely to have a materially adverse effect on the Property or the operation thereof, except as referred to or reflected in said financial statements. Since the date of the financial statements,  there has been no material adverse change in the financial condition, operations or business of Borrower or the Property from that set forth in said financial statements.

3.1.11  Condemnation. No Condemnation or other proceeding has been commenced or, to Borrower's best knowledge, is contemplated with respect to all or any portion of the Property or for the relocation of roadways providing access to the Property.

3.1.12  Easements; Utilities and Public Access. All easements, cross easements, licenses, air rights and rights-of-way or other similar property interests (collectively, "Easements"), if any, necessary for the full utilization of the Improvements for their intended purposes have been obtained, are described in the Title Insurance Policy and are in full force and effect without default thereunder. The Property is located on or adjacent to a public road and has direct legal access to such road, or has access via an irrevocable easement or irrevocable right of way permitting ingress and egress to and from a public road. The Property is served by water, sewer, sanitary sewer and storm drain facilities and all required utilities, each of which is appropriate to service the Property for its intended uses. All public utilities necessary or convenient to the full use and enjoyment of the Property are located in the public right-of-way abutting the Property, and all such utilities are connected so as to serve the Property without passing over other property absent a valid irrevocable easement. All roads necessary for the use of the Property for its current purpose have been completed and dedicated to public use and accepted by all Governmental Authorities.

3.1.13  Separate Lots. The Property is comprised of one (1) or more  parcels which constitute separate tax lots and do not constitute a portion of any other tax lot not a part of the Property.

3.1.14  Assessments. There are no pending or proposed special or other assessments for public improvements or otherwise affecting the Property, nor are there any contemplated improvements to the Property that may result in such special or other assessments.

3.1.15  Enforceability. The Loan Documents are not subject to any right of rescission, offset, counterclaim or defense by Borrower or Guarantor including the defense of usury, nor would the operation of any of the terms of the Loan Documents, or the exercise of any right thereunder, render the Loan Documents unenforceable, and none of Borrower or Guarantor have asserted any right ofrescission, set-off, counterclaim or defense with respect thereto.

3.1.16  Assignment of Leases. The Assignment of Leases creates a valid, first priority collateral assignment of, or a valid, first priority security interest in, rents and certain rights under the Leases, subject only to a license granted to Borrower to exercise certain rights and to perform certain obligations of the lessor under the Leases, including the right to operate the Property. No Person other than Lender has any interest in or assignment of the Leases or any portion of the Rents due and payable or to become due and payable thereunder.

3.1.17  Insurance. Borrower has obtained and has delivered to Lender original or certified copies of all of the Policies, with all premiums prepaid thereunder, reflecting the insurance coverages, amounts and other requirements set forth in this Agreement. No claims have been made under any of the Policies, and no Person, including Borrower, has done, by act or omission, anything which would impair the coverage of any of the Policies.

3.1.18  Licenses. All certifications, permits, licenses, franchises, consents, approvals and any other applicable governmental authorizations, including, without limitation, certificates of completion and occupancy permits required of Borrower for the legal use, occupancy and operation of the Property as a hotel (collectively, the "Licenses"), have been obtained and are in full force and effect. Borrower shall keep and maintain all  Licenses necessary for the operation of the Property as a hotel. The use being made of the Property is in conformity with the certificate of occupancy issued for the Property.

3.1.19  Flood Zone. None of the Improvements on the Property is located in an area identified by the Federal Emergency Management Agency as a special flood hazard area, or, if so located, the flood insurance required pursuant to Section 5.1.l(a) hereof is in full force and effect with respect to the Property.

3.1.20  Physical Condition. Except as may be expressly set forth in the Physical Condition Report, the Property, including all buildings, improvements, parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection systems, electrical systems, equipment, elevators, exterior sidings and doors, landscaping, irrigation systems and all structural components, are in good condition, order and repair in all material respects; to the best of Borrower's knowledge, there exists no structural or  other material defect or damage in the Property, whether latent or otherwise, and Borrower has not received notice from any insurance company or bonding company of any defects or inadequacies in the Property, or any part thereof, which would adversely affect the insurability of the same or cause the imposition of extraordinary premiums or charges thereon or of any termination or threatened termination of any policy of insurance or bond.

3.1.21  Boundaries. All of the Improvements which were included in determining the appraised value of the Property lie wholly within the boundaries and building restriction lines of the Property, and no improvements on adjoining properties encroach upon the Property, and no easements or other encumbrances affecting the Property encroach upon any of the Improvements, so as to affect the value or marketability or current use of the Property. No improvements on adjoining parcels encroach onto the Property except for encroachments that do not materially and adversely affect the value or current use of the Property. No Improvements encroach upon any easements except for encroachments the removal of which would not materially and adversely affect the value or current use of the Property.

3.1.22  Leases. Other than unwritten agreement with transient hotel guests, as of the Closing Date, there are no Leases in place affecting the Property.

3.1.23  Filing and Recording Taxes. All transfer taxes, deed stamps, intangible taxes or other amounts in the nature of transfer taxes required to be paid under applicable Legal Requirements in connection with the transfer of the Property to Borrower have been paid or are

being paid simultaneously herewith. All mortgage, mortgage recording, stamp, intangible or other similar tax required to be paid under applicable Legal Requirements in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Loan Documents, including the Mortgage, have been paid or are being paid simultaneously herewith. All taxes and governmental assessments due and owing in respect of the Property have been paid, or an escrow of funds in an amount sufficient to cover such payments has been established hereunder or are insured against by the Title Insurance Policy.

3.1.24  Single Purpose. Borrower hereby represents and warrants to, and covenants with, Lender that since the date of its formation and at all times on and after the date hereof and until such time as the Obligations shall be paid and performed in full:

(a)        Borrower (i) has been, is, and will be organized solely for the purpose of acquiring, developing, owning, holding, selling, leasing, transferring, exchanging, managing and operating the Property, entering into this Agreement with the Lender, refinancing the Property in connection with a permitted repayment of the Loan, and transacting lawful business that is incident, necessary and appropriate to accomplish the foregoing, and (ii) has not owned, does not own, and will not own any asset or property other than (A) the Property, and (B) incidental personal property necessary for the ownership or operation of the Property.

(b)       Borrower has not engaged and will not engage in any business other than the ownership, management and operation of the Property and Borrower will conduct and operate its business as presently conducted and operated.

(c)        Borrower has not and will not enter into any contract or agreement with any Affiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair, commercially reasonable, and no less favorable to it than would be available on an arms-length basis with third parties other than any such party.

(d)       Borrower has not incurred and will not incur any Indebtedness other than (i) the Debt, and (ii) unsecured trade payables and operational debt not evidenced by a note and in an aggregate amount not exceeding two percent (2%) of the original principal amount of the Loan at any one time; provided that any Indebtedness incurred pursuant to subclause (ii) shall be (A) outstanding not more than sixty (60) days, and (B) incurred in the ordinary course of business (the Indebtedness described in the foregoing clauses (i) and (ii) is referred to herein, collectively, as "Permitted Indebtedness"). No Indebtedness other than the Debt may be secured  (senior, subordinate or pari passu) by the Property.

(e)        Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and has not and shall not acquire obligations or securities of its Affiliates.

(f)         Borrower has been, is, and will remain solvent and Borrower has paid and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall become due.

(g)        Borrower has done or caused to be done, and will do, all things necessary to observe organizational formalities and preserve its existence, and Borrower has not and will not, (i) terminate or fail to comply with the provisions of its organizational documents, or (ii) unless (A) Lender has consented and (B) following a Securitization of the Loan, the applicable Rating Agencies have issued a Rating Agency Confirmation in connection therewith, amend, modify or otherwise change its partnership certificate, partnership agreement, articles of incorporation and bylaws, operating agreement, trust or other organizational documents in all material respects.

(h)        Borrower has maintained and will maintain all of its books, records, financial statements and bank accounts separate from those of its Affiliates and any other Person. Borrower's assets will not be listed as assets on the financial statement of any other Person, provided, however, that Borrower's assets may be included in a consolidated financial statement of its Affiliates provided that (i) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of Borrower and such Affiliates and to indicate that Borrower's assets and credit are not available to satisfy the debts and other obligations of such Affiliates or any other Person, and (ii) such assets shall be listed on Borrower's own separate balance sheet. Borrower will file its own tax returns (to the extent Borrower is required to file any such tax returns) and will not file a consolidated federal income tax return with any other Person. Borrower has maintained and shall maintain its books, records, resolutions and agreements as official records.

(i)         Borrower has been, will be, and at all times has held and will hold itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent party of Borrower), shall correct any known misunderstanding regarding its status as a separate entity, shall conduct business in its own name, shall not identify itself or any of its Affiliates as a division or department or part of the other and shall maintain and utilize separate stationery, invoices and checks bearing its own name.

(j)         Borrower has maintained and intends to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, nothing herein shall require any partners or members of Borrower to make additional capital contributions.

(k)        Neither Borrower nor any constituent party of Borrower has sought or will seek or effect the liquidation, dissolution, winding up, consolidation, asset sale or merger, in whole or in part, of Borrower.

(1)        Borrower has not and will not commingle the funds and other assets of Borrower with those of any Affiliate or constituent party or any other Person, and has held and will hold all of its assets in its own name.

(m)       Borrower has and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate or constituent party or any other Person.

(n)        Borrower has not and will not assume or guarantee or become obligated for the debts of any other Person and does not and will not hold itself out to be responsible for or have its credit available to satisfy the debts or obligations of any other Person.

(o)        Intentionally omitted.

(p)        The organizational documents of Borrower shall also provide an express acknowledgment that Lender is an intended third-party beneficiary of the "special purpose" provisions of such organizational documents.

(q)        Intentionally omitted.

(r)         Intentionally omitted.

(s)         Intentionally omitted.

(t)         Borrower has not permitted and will not permit any Affiliate or constituent party independent access to its bank accounts.

(u)        Borrower has paid and shall pay its own liabilities and expenses, including the salaries of its own employees (if any) from its own funds, and has maintained and shall maintain a sufficient number of employees (if any) in light of its contemplated business operations.

(v)        Borrower has compensated and shall compensate each of its consultants and agents from its funds for services provided to it and pay from its own assets all obligations of any kind incurred.

(w)       Borrower has not, and without the unanimous consent of all of its directors or members, as applicable, will not (i) file a bankruptcy, insolvency or reorganization petition or otherwise institute insolvency proceedings or otherwise seek any relief under any laws relating to the relief from debts or the protection of debtors generally, (ii) seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar official for such entity or for all or any portion of Borrower's properties, (iii) make any assignment for the benefit of Borrower's creditors, or (iv) take any action that could reasonably be expected to cause Borrower to become insolvent; provided, however, nothing herein shall require any partners or members of Borrower to make additional capital contributions.

(x)        Borrower has maintained and will maintain an arm's-length relationship with its Affiliates.

(y)        Borrower has allocated and will allocate fairly and reasonably any overhead expenses that are shared with any Affiliate, including shared office space.

(z)         Except in connection with the Loan, Borrower has not pledged and will not pledge its assets for the benefit of any other Person.

(aa) Borrower has and will have no obligation to indemnify its officers, directors, members or partners, as the case may be, or has such an obligation that is fully subordinated to the Debt and will not constitute a claim against it if cash flow in excess of the amount required to pay the Debt is insufficient to pay such obligation.

(bb) if such Borrower is (i) a limited liability company, has articles of organization, a certificate of formation and/or an operating agreement, as applicable, (ii)  a limited partnership, has a limited partnership agreement, or (iii) a corporation, has a certificate of incorporation or articles that, in each case, provide that such entity will not: (A)  dissolve, merge, liquidate, consolidate; (B) sell, transfer, dispose, or encumber (except with respect to the Loan Documents) all or substantially all of its assets or acquire all or substantially all of the assets of any Person; or (C) engage in any other business activity, or amend its organizational documents with respect to the matters set forth in this Section 3.1.24 without the consent of the Lender.

(cc) Borrower will consider the interests of Borrower's creditors m connection with all limited liability company actions.

(dd) Borrower has not, does not, and will not have any of its obligations guaranteed by any Affiliate.

3.1.25   Tax Filings. To the extent required, Borrower has filed (or has obtained effective extensions for filing) all federal, state, commonwealth, district and local tax returns required to be filed and has paid or made adequate provision for the payment of all federal, state, commonwealth, district and local taxes, charges and assessments payable by Borrower. Borrower's tax returns (if any) properly reflect the income and taxes of Borrower for the periods covered thereby, subject only to reasonable adjustments required by the Internal Revenue Service or other applicable tax authority upon audit.

3.1.26   Solvency. Borrower (i) has not entered into the Loan transaction or any Loan Document with the actual intent to hinder, delay, or defraud any creditor, and (ii) received reasonably equivalent value in exchange for its Obligations under the Loan Documents. Giving effect to the Loan, the fair saleable value of Borrower's assets exceeds and will, immediately following the making of the Loan, exceed Borrower's total liabilities, including subordinated, unliquidated, disputed and contingent liabilities. The fair saleable value of Borrower's assets is, and immediately following the making of the Loan, will be, greater than Borrower's probable liabilities, including the maximum amount of its contingent liabilities on its debts as such debts become absolute and matured. Borrower's assets do not and, immediately following the making of the Loan will not, constitute unreasonably small capital to carry out its business as conducted

or as proposed to be conducted. Borrower does not intend to, and does not believe that it will, incur Indebtedness and liabilities (including contingent liabilities and other commitments) beyond its ability to pay such Indebtedness and liabilities as they mature (taking into account the timing and amounts of cash to be received by Borrower and the amounts to be payable on or in respect of the obligations of Borrower). No petition in bankruptcy has been filed against Borrower or any constituent Person of Borrower, and neither Borrower nor any constituent Person of Borrower has ever made an assignment for the benefit of creditors or taken advantage of any insolvency act for the benefit of debtors. Neither Borrower nor any of its constituent Persons are contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency laws or the liquidation of all or a major portion of Borrower's assets or properties, and Borrower has no knowledge of any Person contemplating the filing of any such petition against it or such constituent Persons. Neither the Property, nor any portion thereof, is the subject of, and neither Borrower nor Guarantor is a debtor in, state or federal bankruptcy, insolvency or similar proceeding. None of Borrower, any Person owning a direct ownership interest in Borrower of 20% or greater, or Guarantor has ever been in a state or federal bankruptcy or insolvency proceeding or convicted of a felony.

3.1.27  Federal Reserve Regulations. No part of the proceeds of the Loan will be used for the purpose of purchasing or acquiring any "margin stock" within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or for any other purpose which would be inconsistent with such Regulation U or any other Regulations of such Board of Governors, or for any purposes prohibited by Legal Requirements or by the terms and conditions of this Agreement or the other Loan Documents.

3.1.28  Organizational Chart. The organizational chart attached as Schedule III, relating to Borrower and certain Affiliates and other parties, is true, complete and correct on and as of the date hereof and accurately identifies all beneficial controlling owners of Borrower (i.e., managing members, general partners or similar controlling person of Borrower).  No Person other than those Persons shown on Schedule III have any ownership interest in, or right of control, directly or indirectly, in Borrower and no direct or indirect interest in Borrower is  subject to any pledge or other security interest.

3.1.29  Organizational Status. Borrower's exact legal name is: Treemont Capital Partners III, LP. Borrower is of the following organizational type (e.g., corporation, limited liability company): limited partnership, and the jurisdiction in which Borrower is organized is: Texas. Borrower's Tax I.D. number is 38-3918992 and Borrower's Texas Organizational I.D. number is 801804631.

3.1.30  Bank Holding Company. Borrower is not a "bank holding company" or a direct or indirect subsidiary of a "bank holding company" as defined in the Bank Holding Company Act of 1956, as amended, and Regulation Y thereunder of the Board of Governors of the Federal Reserve System.

3.1.31  No Casualty. The Improvements have suffered no material casualty or damage which has not been fully repaired and the cost thereof fully paid.

3.1.32  Purchase Options. Neither the Property nor any part thereof are subject to any purchase options, rights of first refusal, rights of first offer or other similar rights in favor of third parties.

3.1.33  FIRPTA. Borrower is not a "foreign person" within the meaning of Sections 1445 or 7701 of the Code.

3.1.34  Investment Company Act. Borrower  is not (i) an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or (ii) subject to any other United States federal or state law or regulation which purports to restrict or regulate its ability to borrow money.

3.1.35  Use of Property. The Property consists solely of a hotel and related operations and is used for no other purpose.

3.1.36  Fiscal Year. Each fiscal year of Borrower commences on January 1.

3.1.37  No Other Financing. Borrower has not borrowed any funds which have  not heretofore been repaid in full, except for the Loan.

3.1.38  Contracts.

(a)        Borrower has not entered into, and is not bound by, any Major Contract which continues in existence, except those previously disclosed in writing to Lender.

(b)       Each of the Major Contracts is in full force and effect, there are no monetary or other material defaults by Borrower thereunder and, to the best knowledge of Borrower, there are no monetary or other material defaults thereunder by any other party thereto. None of Borrower, Manager or any other Person acting on Borrower's  behalf  has given or received any notice of default under any of the Major Contracts that remains uncured or in dispute.

(c)        Borrower has delivered true, correct and complete copies of the Major Contracts (including all amendments and supplements thereto) to Lender.

(d)        No Major Contract has as a party an Affiliate of Borrower. All fees and other compensation for services previously performed under the Management Agreement have been paid in full.

3.1.39  Full and Accurate Disclosure. No statement of fact made by Borrower in this Agreement or in any of the other Loan Documents contains any untrue statement of a material fact or omits to state any material fact necessary to make statements contained herein or therein not misleading. There is no material fact presently known to Borrower which has not been disclosed to Lender which adversely affects, nor as far as Borrower can foresee, could reasonably expected to adversely affect, the Property or the business, operations or condition (financial or otherwise) of Borrower.

3.1.40  Other Obligations and Liabilities. Borrower has no liabilities or other obligations that arose or accrued prior to the date hereof that, either individually or in the aggregate, could have a material adverse effect on Borrower, the Property and/or Borrower's ability to pay the Debt. Borrower has no known contingent liabilities.

3.1.41  Intentionally Omitted.

3.1.42  REA. Each REA is in full force and effect and neither Borrower nor, to Borrower's knowledge, any other party to any REA, is in default thereunder, and to the best of Borrower's knowledge, there are no conditions which, with the passage of time or the giving of notice, or both, would constitute a default thereunder. No REA has been modified, amended or supplemented.

3.1.43  Franchise Agreement. The Franchise Agreement, pursuant to which Borrower has the right to operate the hotel located on the Property under a name and/or hotel system controlled by such Franchisor, is in full force and effect and there is no default, breach or violation existing thereunder by any party thereto and no event has occurred (other than payments due but not yet delinquent) that, with the passage of time or the giving of notice, or both, would constitute a default, breach or violation by any party thereunder. Neither the execution and delivery of the Loan Documents or Borrower's performance thereunder will adversely affect Borrower's rights under the Franchise Agreement. The  "comfort  letter" provided to Lender by Franchisor is enforceable against Franchisor.

3.1.44  Illegal Activity. No portion of the Property has been or will be purchased with proceeds of any illegal activity.

3.1.45  Business Purposes. The Loan is solely for the business purpose of Borrower, and is not for personal, family, household, or agricultural purposes.

3.1.46  Past Activities. Borrower hereby represents and warrants that, from the date of its formation to the date of this Agreement, Borrower:

(a)        is and always has been duly formed, validly existing, and in good standing in the state of its incorporation and in all other jurisdictions where it is qualified to do business;

(b)        has no judgments or liens of any nature against it except for tax liens not yet due;

(c)        is in compliance with all laws, regulations, and orders applicable to it and has received all permits necessary for it to operate;

(d)        is not involved in any dispute with any taxing authority;

(e)        has paid all Taxes that it owes;

(f)         has never owned any real property other than the Property and personal property necessary or incidental to its ownership or operation of the Property and has never engaged in any business other than the ownership and operation of the Property;

(g)        is not now, nor has ever been, party to any lawsuit, arbitration, summons, or legal proceeding that is still pending or that resulted in a judgment against it that has not been paid in full;

(h)        has provided Lender with complete financial statements that reflect a fair and accurate view of the entity's financial condition;

(i)         has passed a Phase I environmental audit for the Property;

(j)         has no material contingent or actual obligations not related to the Property;

(k)        has not entered into any contract or agreement with any of its Affiliates, constituents, or owners, or any guarantors of any of its obligations or any Affiliate of any of the foregoing (each, a "Related Party"), except upon terms and conditions that are commercially reasonable and substantially similar to those available in an arm's-length transaction with an unrelated party;

(1)                                 has paid all of its debts and liabilities from its assets;

(m)       has done or caused to be done all things necessary to observe all organizational formalities applicable to it and to preserve its existence;

(n)        has maintained all of its books, records, financial statements and bank accounts separate from those of any other Person;

(o)        has not had its assets listed as assets on the financial statement of any other Person;

(p)        has filed its own tax returns (except to the extent that it has been a tax- disregarded entity not required to file tax returns under applicable law) and, if it is a corporation, has not filed a consolidated federal income tax return with any other Person;

(q)        has been, and at all times has held itself out to the public as, a legal entity separate and distinct from any other Person (including any Affiliate or other Related Party);

(r)         has corrected any known misunderstanding regarding its status as a separate entity;

(s)         has conducted all of its business and held all of its assets in its own name;

(t)         has not identified itself or any of its Affiliates as a division or part of the

other;

(u)       has maintained and utilized separate stationery, mvmces and checks bearing its own name;

(v)       has not commingled its assets with those of any other Person and has held all of its assets in its own name;

(w)      has not guaranteed or become obligated for the debts of any other Person;

(x)       has not held itself out as being responsible for the debts or obligations of any other Person;

(y)       has allocated fairly and reasonably any overhead expenses that have been shared with an Affiliate, including paying for office space and services performed by any employee of an Affiliate or Related Party;

(z)        has not pledged its assets to secure the obligations of any other Person and no such pledge remains outstanding except in connection with the Loan; (aa) has maintained adequate capital in light of its contemplated business operations; (bb) has maintained a sufficient number of employees in  light  of  its contemplated business operations and has paid the salaries of its own employees from its own funds; (cc) has not owned any subsidiary or any equity interest in any other entity; (dd) has not incurred any Indebtedness that is still outstanding other than Indebtedness that is permitted under the Loan Documents; (ee) has not had any of its obligations guaranteed by an affiliate, except for guarantees that have been either released or discharged (or that will be discharged as a result of the closing of the Loan) or guarantees that are expressly contemplated by the Loan Documents; and (ff) has not leased any  portion of the Property  to a Tenant that is an Affiliate  of Borrower.

Section 3.2      Survival of Representations.

The representations and warranties set forth in Section 3.1 and elsewhere in this Agreement and the other Loan Documents shall survive until the Obligations have been paid and performed in full.

ARTICLE4 BORROWER COVENANTS

Section 4.1                                  Borrower Affirmative Covenants.

Borrower hereby covenants and agrees with Lender that throughout the Term:

4.1.1     Payment and Performance of Obligations. Borrower shall pay and otherwise perform the Obligations in accordance with the terms of this Agreement and the other Loan Documents.

4.1.2     Existence; Compliance with Legal Requirements. Borrower and shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence, rights, licenses, permits and franchises and comply with all Legal Requirements applicable to it and the Property. There shall never be committed by Borrower and Borrower shall not permit any other Person in occupancy of or involved with the operation or use of the Property to commit any act or omission affording the federal government or any state or local government the right of forfeiture against the Property or any part thereof or any monies paid in performance of Borrower's obligations under any of the Loan Documents. Borrower hereby covenants and agrees not to commit, permit or suffer to exist any act or omission affording such right of forfeiture. Borrower shall at all times maintain, preserve and protect all franchises and trade names and preserve all the remainder of its property used or useful in the conduct of its business and shall keep the Property in good working order and repair, and from time to time make, or cause to be made, all reasonably necessary repairs, renewals, replacements, betterments and improvements thereto, all as more fully provided in the Mortgage. Borrower shall keep the Property insured at all times by financially sound and reputable insurers, to such extent and against such risks, and maintain liability and such other insurance, as is more fully provided in this Agreement.

4.1.3     Taxes and Other Charges. Borrower shall pay all Taxes and  Other Charges now or hereafter levied, assessed or imposed as the same become due and payable, and shall furnish to Lender receipts for the payment of the Taxes and the Other Charges prior to the date the same shall become delinquent (provided, however, that Borrower need not pay Taxes directly nor furnish such receipts for payment of Taxes to the extent that funds to pay for such Taxes have been deposited into the Tax Account pursuant to Section 6.3). Borrower will deliver to Lender receipts for payment or other evidence satisfactory to Lender that the Taxes and Other Charges have been so paid no later than ten (10) days prior to the date on which the Taxes and/or Other Charges would be delinquent if not paid. Borrower shall not permit or suffer, and shall promptly discharge, any Lien or charge against the Property, and shall promptly pay for all utility services provided to the Property. After prior notice to Lender, Borrower, at its own expense, may contest by appropriate legal proceeding, conducted in good faith and with due diligence, the amount or validity of any Taxes or Other Charges, provided that (i) no Default or Event of Default has occurred and remains uncured; (ii) such proceeding shall be permitted under and be conducted in accordance with all applicable statutes, laws and ordinances; (iii)      neither the Property nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, canceled or lost; (iv) Borrower shall promptly upon final determination

thereof pay the amount of any such Taxes or Other Charges, together with all costs, interest and penalties which may be payable in connection therewith; (v) such proceeding shall suspend the collection of Taxes or Other Charges from the Property; (vi) Borrower shall deposit with Lender cash, or other security as may be approved by Lender, in an amount equal to one hundred twenty-five percent (125%) of the contested amount, to insure the payment of any such Taxes or Other Charges, together with all interest and penalties thereon, (vii) failure to pay such Taxes or Other Charges will not subject Lender to any civil or criminal liability, (viii) such contest shall not affect the ownership, use or occupancy of the Property, and (ix) Borrower shall, upon request by Lender, give Lender prompt notice of the status of such proceedings and/or confirmation of the continuing satisfaction of the conditions set forth in clauses (i) - (viii) of this Section 4.1.3. Lender may pay over any such cash or other security held by Lender to the claimant entitled thereto at any time when, in the judgment of Lender, the entitlement of such claimant is established or the Property (or any part thereof or interest therein) shall be in danger of being sold, forfeited, terminated canceled or lost or there shall be any danger of the Lien of the Mortgage being primed by any related Lien.

4.1.4    Litigation. Borrower shall give prompt  notice to Lender of any litigation or governmental proceedings pending or threatened against the Property, Borrower, or Guarantor which could reasonably be expected to materially and adversely affect the Property  or Borrower's or Guarantor's condition (financial or otherwise) or business (including Borrower's ability to perform its Obligations hereunder or under the other Loan Documents).

4.1.5    Access to Property. Borrower shall permit agents, representatives, consultants and employees of Lender to inspect the Property or any part thereof at reasonable hours upon reasonable advance notice (which may be given verbally). Lender or its agents, representatives, consultants and employees as part of any inspection may take soil, air, water, building material and other samples from the Property, subject to the rights of Tenants under Leases.

4.1.6    Further Assurances; Supplemental Mortgage Affidavits.  Borrower shall, at Borrower's sole cost and expense:

(a)        furnish to Lender all instruments, documents, boundary surveys, footing or foundation surveys, certificates, plans and specifications, appraisals, title and other insurance reports and agreements, and each and every other document, certificate, agreement and instrument required to be furnished by Borrower pursuant to the terms of the Loan Documents or which are reasonably requested by Lender in connection therewith;

(b)       execute and deliver to Lender such documents, instruments, certificates, assignments and other writings, and do such other acts necessary  or desirable, to evidence, preserve and/or protect the collateral at any time securing or intended to secure the Obligations, as Lender may reasonably require; and

(c)        do and execute all and such further lawful and reasonable acts, conveyances and assurances for the better and more effective carrying out of the intents

and purposes of this Agreement and the other Loan Documents, as Lender shall reasonably require from time to time.

4.1.7    Financial Reporting.

(a)        Borrower shall keep and maintain or will cause to be kept and maintained proper and accurate books and records, in accordance with GAAP, or other sound accounting principles reasonably acceptable to Lender, consistently applied, the Uniform System of Accounts for Hotels, current edition, and the requirements of Regulation AB, reflecting the financial affairs of Borrower and all items of income and expense in connection with the operation of the Property. Lender shall have the right from time to time during normal business hours upon reasonable notice (which may be given verbally) to Borrower to examine such books and records at the office of Borrower or other Person maintaining such books and records and to make such copies or extracts thereof as Lender shall desire. After an Event of Default, Borrower shall pay any costs incurred by Lender to examine such books, records and accounts, as Lender shall determine to be necessary or appropriate in the protection of Lender's interest.

(b)       Not later than forty-five (45) days following the end of each fiscal quarter (and for the first twelve (12) months following the Closing Date, not later than fifteen (15) days following the end of each calendar month), Borrower shall deliver to Lender unaudited operating statements, internally prepared on a cash basis including a balance sheet and profit and loss statement as of the end of such quarter and for the corresponding quarter of the previous year, and a statement of revenues and expenses for the year to date, a statement of Net Operating Income for such quarter, a comparison of the year to date results with (i) the results for the same period of the previous year, (ii) the results that had been projected by Borrower for such period and (iii) the Annual Budget for such period and the Fiscal Year, and a summary report detailing monthly occupancy, including average daily rate. Such statements for each quarter shall be accompanied  by an Officer's Certificate certifying to the best of the signer's knowledge, (A) that such statements fairly represent  the financial condition and results of operations of  Borrower,(B)  that as of the date of such Officer's Certificate, no Default exists under this Agreement, the Note or any other Loan Document or, if so, specifying the nature and status of each such Default and the action then being taken by Borrower or proposed to  be taken to remedy such Default, (C) that as of the date of each Officer's Certificate, no litigation  exists  involving  Borrower  or the Property  in which  the amount  involved  is $250,000 (in the aggregate) or more or in which all or substantially all of the potential liability is not covered by insurance, or, if so, specifying such litigation and the actions being taking in relation thereto and (D) the amount by which actual Operating Expenses were greater than or less than the Operating Expenses anticipated in the applicable Annual Budget. Such financial statements shall contain such other information as shall  be reasonably requested by Lender for purposes of calculations to be made by Lender pursuant to the terms hereof.

(c)        Not later than ninety (90) days after the end of each Fiscal Year of Borrower's operations, Borrower shall deliver to Lender unaudited financial statements and operating statements, covering the Property, including a balance sheet as of the end

of such year, a statement of Net Operating Income for the year and for the fourth quarter thereof and a statement of revenues and expenses for such year, and stating in comparative form the figures for the previous fiscal year and the Annual Budget for such fiscal year, as well as the supplemental schedule of net income or loss presenting the net income or loss for the Property and occupancy statistics for the Property, and copies of all federal income tax returns to be filed. Such annual financial statements shall also be accompanied by an Officer's Certificate in the form required pursuant to Section 4.1.7(b) above. Notwithstanding the foregoing, upon either the occurrence and during the continuance of an Event of Default or if Lender in its good faith believes that the unaudited financial statements and operating statements delivered by Borrower as required by this Section 4.1.7(c) are not materially accurate, then, at Lender's request, Borrower shall deliver such financial statements and operating statements required pursuant to this Section 4.l.7(c) audited by an Independent Accountant in accordance with GAAP or such other accounting method reasonably acceptable to Lender, consistently applied, and the requirements of Regulation AB.

(d)        Not later than forty-five (45) days after the end of each fiscal quarter of Borrower's operations, Borrower shall deliver to Lender a true and complete rent roll for the Property, dated as of the last month of such fiscal quarter, showing the percentage of gross leasable area of the Property, if any, leased as of the last day of the preceding calendar quarter, the current annual rent for the Property, the expiration date of each lease, whether to Borrower's knowledge any portion of the Property has been sublet, and if it has, the name of the subtenant, and such rent roll shall be accompanied by an Officer's Certificate certifying that such rent roll is true, correct and complete in all material respects as of its date and stating whether Borrower, within the past three (3) months, has issued a notice of default with respect to any Lease which has not been cured and the nature of such default.

(e)        Borrower shall, within ninety (90) days after the end of each calendar year during the term of the Note, deliver to Lender an annual summary of any and all FF&E Expenses made at the Property during the prior twelve (12) month period.

(f)         Borrower shall deliver to Lender, within ten (10) Business Days of the receipt thereof by Borrower, a copy of all reports prepared by Manager pursuant to the Management Agreement, including, without limitation, the Annual Budget and any inspection reports.

(g)        Borrower shall submit to Lender by November 1 of each year the Annual Budget for the succeeding Fiscal Year. Upon and after the commencement of a Sweep Event Period, Lender shall have the right to approve each Annual Budget (which approval shall not be unreasonably withheld so long as no Event of Default has occurred) and Annual Budgets approved by Lender shall hereinafter be referred to as an "Approved Annual Budget". Upon and after the commencement of a Sweep Event Period, in the event that Borrower incurs an extraordinary operating expense or extraordinary capital expenditure not set forth in the Approved Annual Budget (each an "Extraordinary Expense"), then Borrower shall promptly deliver to Lender a reasonably  detailed  explanation  of such proposed  Extraordinary  Expense  for Lender's

approval. Upon and after the commencement of a Sweep Event Period, until such time that any Annual Budget has been approved by Lender, the prior Approved  Annual Budget shall apply for all purposes hereunder (with such adjustments as reasonably determined by Lender to reflect actual increases in Taxes, Insurance Premiums and utilities expenses). Neither Borrower nor Manager shall change or modify the Annual Budget that has been approved by Lender without the prior written consent of Lender.

(h)       Borrower shall, promptly after written request by Lender or, if a Securitization shall have occurred, the Rating Agencies, furnish or cause to be furnished to Lender, in such manner and in such detail as may be reasonably requested by Lender, such additional information as may be reasonably requested with respect to the Property.

(i)        If any financial statements and other items required to be delivered to Lender pursuant to this Section 4.1.7 (each a "Required Financial Item" and collectively, the "Required Financial Items") is not timely delivered ("Reporting Failure"), within 30 days of written notice from Lender, Borrower shall promptly pay to Lender, as a late charge, the sum of Five Hundred and No/100 Dollars ($500.00) per Required Financial Item. In addition, Borrower shall promptly pay to Lender an additional late charge of Two Hundred Fifty and No/100 Dollars ($250.00) per Required Financial Item for each full month during which such Reporting Failure continues following written notice from Lender. Borrower acknowledges that Lender will incur additional expenses as a result of any such Reporting Failure, which expenses would be impracticable to quantify, and that Borrower's payments under this Section 4.1.7 are a reasonable estimate of such expenses. Borrower acknowledges further that payment by Borrower of this late charge does not in any manner affect or otherwise impair or waive any rights and remedies Lender may have hereunder, under the Loan Documents or under applicable law for any Event of Default.

4.1.8    Title to the Property. Borrower shall warrant and defend (a) its title to the Property and every part thereof, subject only to Permitted Encumbrances and (b) the validity and priority of the Liens of the Mortgage, the Assignment of Leases and this Agreement on the Property, subject only to Permitted Encumbrances, in each case against the claims of all Persons whomsoever. Borrower shall reimburse Lender for any losses, costs, damages or expenses (including reasonable attorneys' fees and court costs) incurred by Lender if an interest in the Property, other than as permitted hereunder, is claimed by another Person.

4.1.9    Estoppel Statement.

(a)        After request by Lender, Borrower shall within five (5) Business Days furnish Lender with a statement, duly acknowledged and certified, stating (i) the Outstanding Principal Balance of the Note, (ii) the Interest Rate, (iii) the date installments of interest and/or principal were last paid, (iv) any offsets or defenses to the payment and performance of the Obligations, if any, and (v) that this Agreement and the other Loan Documents have not been modified or if modified, giving particulars of such modification.

(b)       Intentionally Omitted.

(c)        Borrower shall deliver to Lender, upon request, an estoppel certificate from each Tenant under any Lease (provided that Borrower shall only be required to use commercially reasonable efforts to obtain an estoppel certificate from any Tenant not required to provide an estoppel certificate under its Lease) in form and substance reasonably satisfactory to Lender; provided, that Borrower shall not  be required to deliver such certificates more frequently than three (3) times in any calendar year.

(d)        Borrower shall deliver to Lender, upon request, estoppel certificates from each party under any REA, in form and substance reasonably satisfactory to Lender; provided, that Borrower shall not be required to deliver such certificates more than three (3) times during the Term and not more frequently than once per calendar year (or twice during any calendar year in which a Securitization occurs).

4.1.10  Leases.

(a)        Lender acknowledges that no Leases are in effect at the Property as of the Closing Date. All Leases and all renewals of Leases executed after the date hereof shall (i) provide for economic terms, including rental rates, comparable to existing local market rates for similar properties, (ii) be on commercially reasonable terms, (iii) have a term of not less than three (3) years (unless Lender approves in writing a shorter term), (iv) have a term of not more than ten (10) years, including all extensions and renewals (unless Lender approves in writing a longer term), (v) provide that such Lease is subordinate to the Mortgage and the Assignment of Leases and that the  Tenant thereunder will attom to Lender and any purchaser at a foreclosure sale, (vi) be  to Tenants that are creditworthy, (vii) be written substantially in accordance with the standard form of Lease which shall have been approved by Lender (subject to any commercially reasonable changes made in the course of negotiations with the applicable Tenant), (viii) not be to an Affiliate of Borrower or Guarantor, and (ix) not contain any option to purchase, any right of first refusal to purchase, any right to terminate (except in the event of the destruction or condemnation of substantially all of the Property), any requirement for a non-disturbance or recognition agreement, or any other terms which would materially adversely affect Lender's rights under the Loan Documents. All Major Leases and all renewals, amendments and modifications thereof executed after the date hereof shall be subject to Lender's prior approval. Borrower shall not permit or consent  to any assignment or sublease of any Major Lease without Lender's prior  written approval (other than assignments or subleases expressly permitted under any Major Lease pursuant to a unilateral right of the Tenant thereunder not requiring the consent of Borrower). Lender, at Borrower's sole cost and expense, shall execute and deliver  its then standard form of subordination, non-disturbance and attomment agreement to Tenants under any future Major Lease approved by Lender upon request, with such commercially reasonable changes as may be requested by such Tenants and which are acceptable to Lender.

(b)        Borrower (i) shall observe and perform the obligations imposed upon the lessor under the Leases in a commercially reasonable manner; (ii) shall enforce the terms, covenants and conditions contained in the Leases upon the part of the Tenants

thereunder to be observed or performed in a commercially reasonable manner, provided, however, Borrower shall not terminate or accept a surrender of a Lease without Lender's prior approval; (iii) shall not collect any of the Rents more than one (1) month in advance (other than security deposits); (iv) shall not execute any assignment of lessor's interest in the Leases or the Rents (except as contemplated by the Loan Documents); and (v) shall not alter, modify or change any Lease so as to change the amount of or payment date for rent, change the expiration date, grant any option for additional space or term, materially reduce the obligations of the Tenant or increase the obligations of the lessor. Upon request, Borrower shall furnish Lender with executed copies of all Leases. Borrower shall promptly send copies to Lender of all written notices of material default which Borrower shall receive under the Leases.

(c)         All security deposits of Tenants, whether held in cash or any other form, shall be held in compliance with all Legal Requirements, shall not be commingled with any other funds of Borrower and, if cash, shall be deposited by Borrower at a separately designated account under Borrower's control at the Clearing Bank. After the commencement of a Sweep Event Period, Borrower shall, upon Lender's request, if permitted by applicable Legal Requirements, cause all such security deposits (and any interest theretofore earned thereon) to be transferred into the Cash Management Account (which shall then be held by Cash Management Bank in a separate Account), which shall be held by Cash Management Bank subject to the terms of the Leases. Any bond or other instrument which Borrower is permitted to hold in lieu of cash security deposits under any applicable Legal Requirements (i) shall be maintained in full force and effect in the full amount of such deposits unless replaced by cash deposits as herein above described, (ii) shall be issued by an institution reasonably satisfactory to Lender, (iii) shall, if permitted pursuant to any Legal Requirements, name Lender as payee or mortgagee thereunder (or at Lender's option, be fully assignable to Lender), and (iv) shall in all respects comply with any applicable Legal Requirements and otherwise be satisfactory to Lender. Borrower shall, upon request, provide Lender with evidence satisfactory to Lender of Borrower's compliance with the foregoing.

(d)        Borrower shall have the right, without the consent or approval of Lender, to terminate or accept a surrender of any Lease that is not a Major Lease so long as such termination or surrender is (i) by reason of a tenant default and (ii) in a commercially reasonable manner to preserve and protect the Property.

4.1.11   Alterations. Lender's prior approval shall be required in connection with any alterations to any Improvements (i) that may have a material adverse effect on Borrower's financial condition, the value or use of the Property or the ongoing revenues and expenses of the Property, (ii) the cost of which (including any related alteration, improvement or replacement) is reasonably anticipated to exceed the Alteration Threshold, or (iii) that adversely affects any structural component of any Improvements, any utility or HVAC system contained in the Improvements or the exterior of any building constituting a part of any Improvements (any of the foregoing, a "Material Alteration"). If the total unpaid amounts incurred and to be incurred with respect to such alterations to the Improvements shall at any time exceed the Alteration Threshold, Borrower shall promptly deliver to Lender as security for the payment of such amounts and as additional security for Borrower's Obligations under the Loan Documents any of

the following: (i) cash, (ii) a Letter of Credit, (iii) U.S. Obligations, (iv) other secunt1es acceptable to Lender, provided that Lender shall have received a Rating Agency Confirmation as to the form and issuer of same, or (v) a completion bond, provided that Lender shall have received a Rating Agency Confirmation as to the form and issuer of same. Such security shall be in an amount equal to the excess of the total unpaid amounts incurred and to be incurred with respect to such alterations to the Improvements (other than such amounts to be paid or reimbursed by Tenants under the Leases) over the Alteration Threshold, and Lender may apply such security from time to time at the option of Lender to pay for such alterations. Upon substantial completion of any Material Alteration, Borrower shall provide evidence satisfactory to Lender that (i) the Material Alteration was constructed in accordance with applicable Legal Requirements, (ii) all contractors, subcontractors, materialmen and professionals who provided work, materials or services in connection with the Material Alteration have been paid in full and have delivered unconditional releases of liens, and (iii) all material licenses and permits necessary for the use, operation and occupancy of the Material Alteration (other than those which depend on the performance of tenant improvement work) have been issued.

4.1.12   Approval of Major Contracts. Borrower shall be required to obtain Lender's prior written approval of any and all Major Contracts affecting the Property, which approval may be granted or withheld in Lender's sole discretion.

4.1.13   After Acquired Property. Borrower will grant to Lender a first Lien security interest in and to all equipment and other personal property owned by Borrower, whether or not used in the construction, maintenance and/or operation of the Improvements, immediately upon acquisition of same or any part of same.

4.1.14   Patriot Act Compliance.

(a)        Borrower will use its good faith and commercially reasonable efforts to comply with the Patriot Act and all applicable requirements of Governmental Authorities having jurisdiction over Borrower and/or the Property, including those relating to money laundering and terrorism. Lender shall have the right to audit Borrower's compliance with the Patriot Act and all applicable requirements of Governmental Authorities having jurisdiction over Borrower and/or the Property, including those relating to money laundering and terrorism. In the event that Borrower fails to comply with the Patriot Act or any such requirements of Governmental Authorities, then Lender may, at its option, cause Borrower to comply therewith and any and all costs and expenses incurred by Lender in connection therewith shall be secured by the Mortgage and the other Loan Documents and shall be immediately due and payable.

(b)        Neither Borrower nor any owner of a direct or indirect interest in Borrower (i) is listed on any Government Lists, (ii) is a person who has been determined by competent authority to be subject to the prohibitions contained in Presidential Executive Order No. 13224 (Sept. 23, 2001) or any other similar prohibitions contained in the rules and regulations of OFAC or in any enabling legislation or other Presidential Executive Orders in respect thereof, (iii) has been previously indicted for or convicted of any felony involving a crime or crimes of moral turpitude or for any Patriot Act Offense, or (iv) is currently under investigation by any Governmental Authority for alleged

criminal act1v1ty. For purposes hereof, the term "Patriot Act Offense" means any violation of the criminal laws of the United States of America or of any of the several states, or that would be a criminal violation if committed within the jurisdiction of the United States of America or any of the several states, relating to terrorism or the laundering of monetary instruments, including any offense under (A) the criminal laws against terrorism, (B) the criminal laws against money laundering, (C) the Bank Secrecy Act, as amended, (D) the Money Laundering Control Act of 1986, as amended, or (E) the Patriot Act. "Patriot Act Offense" also includes the crimes of conspiracy to commit, or aiding and abetting another to commit, a Patriot Act Offense. For purposes hereof, the term "Government Lists" means (1) the Specially Designated Nationals and Blocked Persons Lists maintained by the Office of Foreign Assets Control ("OFAC"), (2) any other list of terrorists, terrorist organizations or narcotics traffickers maintained pursuant to any of the Rules and Regulations of OFAC that Lender notified Borrower in writing is now included in "Government Lists", or (3) any similar lists maintained by the United States Department of State, the United States Department of Commerce or any other Governmental Authority or pursuant to any Executive Order of the President of the United States of America that Lender notified Borrower in writing is now included in "Government Lists".

4.1.15   Personal Property Taxes. Borrower shall timely file and pay all personal property taxes relating to the Property in accordance with all applicable governmental rules and regulations.

4.1.16   Hotel Covenants. Borrower further covenants and agrees with Lender as follows:

(a)        Borrower shall cause the hotel located on the Property to be operated pursuant to the Franchise Agreement.

(b)        Borrower shall (i) promptly perform and/or observe all of the covenants and agreements required to be performed and observed by it under the Franchise Agreement and do all things necessary to preserve and to keep unimpaired its material rights thereunder; (ii) promptly notify Lender of any default by Franchisor under the Franchise Agreement of which it is aware; (iii) promptly notify Lender of the giving of any written notice by the Franchisor to Borrower of any default by Borrower in the performance or observance of any of the terms, covenants or agreements of the Franchise Agreement on the part of Borrower, as franchisee thereunder, to be performed or observed, and deliver to Lender a true copy of each such notice, (iv) promptly deliver to Lender a copy of each financial statement, business plan, capital expenditures plan, notice, report and estimate received by it under the Franchise Agreement; and (v) promptly enforce the performance and observance of all of the covenants and agreements required to be performed and/or observed by the Franchisor under the Franchise Agreement.

(c)        If Borrower shall enter into any new or amended Franchise Agreement, Lender shall receive within thirty (30) days following the execution of such Franchise Agreement a comfort letter from the Franchisor in which Franchisor shall agree

(i) that Lender shall have the right, but not the obligation, to cure any defaults under the Franchise Agreement, (ii) to give Lender written notice of, and a reasonable time to cure, any default of Borrower under the Franchise Agreement, (iii) not to assert against Lender any defaults which by their nature are personal to Borrower and not curable by Lender; (iv) to allow Lender to change managers of the hotel operated at the Property; (v) that, if Lender or its Affiliate shall acquire title to the Property, Lender or its affiliate shall have an option to succeed to the interest of Borrower under the Franchise Agreement (or to be granted a new license agreement on the same terms as the Franchise Agreement) without payment of any fees to Franchisor; (vi) that the Franchise Agreement will remain in effect during any foreclosure proceedings by Lender provided Lender cures all monetary defaults under the Franchise Agreement; (vii) not to modify, cancel, surrender, assign, transfer or otherwise terminate the Franchise Agreement during the Term without the consent of Lender; and (viii) that if Lender or its Affiliate succeeds to Borrower's interest under the Franchise Agreement, Lender may assign its rights therein to any entity which acquires the Property from Lender or its Affiliate (subject to Franchisor's reasonable approval). The foregoing to the contrary notwithstanding, Lender will not unreasonably withhold approval of Franchisor's standard form of "comfort letter" addressing those matters set forth above.

4.1.17   Notice of Default. Borrower shall promptly advise Lender of any material adverse change in Borrower's or Guarantor's condition, financial or otherwise, or of the occurrence of any Default or Event of Default of which Borrower has knowledge.

4.1.18   Cooperate in Legal Proceedings. Borrower shall cooperate fully with Lender with respect to any proceedings before any court, board or other Governmental Authority which may in any way affect the rights of Lender hereunder or any rights obtained by Lender under any of the other Loan Documents and, in connection therewith, permit Lender, at its election, to participate in any such proceedings.

4.1.19   Award and Insurance Benefits. Borrower shall cooperate with Lender in obtaining for Lender the benefits of any Awards or Insurance Proceeds lawfully or equitably payable in connection with the Property (including the payment by Borrower of the expense of an appraisal on behalf of Lender in case of Casualty or Condemnation affecting the Property or any part thereof), and Lender shall be reimbursed for any expenses incurred in connection therewith (including reasonable attorneys' fees and disbursements) out of such Insurance Proceeds and Awards.

4.1.20   Business and Operations. Borrower will continue to engage in the businesses presently conducted by it as and to the extent the same are necessary for the ownership, maintenance, management and operation of the Property.  Borrower will qualify to do business and will remain in good standing under the laws of (a) the State and (b) each other jurisdiction as and to the extent the same are required for the ownership, maintenance, management and operation of the Property.

4.1.21   Costs of Enforcement. In the event (a) that the Mortgage is foreclosed in whole or in part or that the Mortgage is put into the hands of an attorney for collection, suit, action or foreclosure, (b) of the foreclosure of any mortgage prior to or subsequent to the

Mortgage in which proceeding Lender is made a party, (c) of the bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of Borrower or any of its constituent Persons or an assignment by Borrower or any of its constituent Persons for the benefit of its creditors or (d) an Event of Default occurs and Lender exercises any of its remedies under the Loan Documents, Borrower, its successors or assigns, shall be chargeable with and agrees to pay all costs of collection and defense (including, without limitation, the taxes, appraisals and legal fees), incurred by Lender or Borrower in connection therewith and in connection with any appellate proceeding or post-judgment action involved therein, together with all required service or use taxes.

4.1.22  Performance by Borrower. Borrower shall in a timely manner observe, perform and fulfill each and every covenant, term and provision of each Loan Document executed and delivered by, or applicable to, Borrower, and shall not enter into or otherwise suffer or permit any amendment, waiver, supplement, termination or other modification of any Loan Document executed and delivered by, or applicable to, Borrower without the prior consent of Lender.

Section 4.2                                Borrower Negative Covenants.

Borrower covenants and agrees with Lender that throughout the Term:

4.2.1    Due on Sale and Encumbrance; Transfers of Interests. Without the prior written consent of Lender, but, in each instance, subject to the provisions of Article 8, neither Borrower nor any other Person having a direct or indirect ownership or beneficial interest in Borrower shall sell, convey, mortgage, grant, bargain, encumber, pledge, assign or transfer the Property or any part thereof, or any interest, direct or indirect, in Borrower, whether voluntarily or involuntarily (a "Transfer"). A Transfer within the meaning of this Section 4.2.1 shall be deemed to include (i) an installment sales agreement wherein Borrower agrees to sell the Property or any part thereof for a price to be paid in installments; (ii) an agreement by Borrower for the leasing of all or a substantial part of the Property for any purpose other than the actual occupancy by a space tenant thereunder or a sale, assignment or other transfer of, or the grant of a security interest in, Borrower's right, title and interest in and to any Leases or any Rents; (iii) if Borrower, Guarantor or any general partner, managing member or controlling shareholder of Borrower or Guarantor is a corporation, the voluntary or involuntary sale, conveyance or transfer of such corporation's stock (or the stock of any corporation directly or indirectly controlling such corporation by operation of law or otherwise) or the creation or issuance of new stock; (iv) if Borrower, Guarantor or any general partner, managing member or controlling shareholder of Borrower or Guarantor is a limited or general partnership, joint venture or limited liability company, the change, removal, resignation or addition of a general partner, managing partner, limited partner, joint venturer or member or the transfer of the partnership interest of any general partner, managing partner or limited partner or the transfer of the interest of any joint venturer or member; and (v) any pledge, hypothecation, assignment, transfer or other encumbrance of any direct or indirect ownership interest in Borrower.

4.2.2    Liens. Borrower shall not create, incur, assume or permit to exist any Lien on any direct or indirect interest in Borrower or any portion of the Property, except for the Permitted Encumbrances.

4.2.3     Dissolution. Borrower shall not (i) engage in any dissolution, liquidation or consolidation or merger with or into any other business entity, (ii) engage in any business activity not related to the ownership and operation of the Property, (iii) transfer, lease or sell, in one transaction or any combination of transactions, all or substantially all of the property or assets of Borrower except to the extent expressly permitted by the Loan Documents, in each case without obtaining the prior consent of Lender.

4.2.4     Change in Business. Borrower shall not enter into any line of business other than the ownership and operation of the Property. Borrower shall not change the current use of the Property in any material respect.

4.2.5     Debt Cancellation. Borrower shall not cancel or otherwise forgive or release any claim or debt (other than the termination of Leases in accordance herewith) owed to Borrower by any Person, except for adequate consideration and in the ordinary course of Borrower's business.

4.2.6     Affiliate Transactions. Borrower shall not enter into, or be a party to, any transaction with an Affiliate of Borrower or any of the partners, members or shareholders, as applicable, of Borrower except in the ordinary course of business and on terms which are fully disclosed to Lender in advance and are no less favorable to Borrower or such Affiliate than would be obtained in a comparable arm's-length transaction with an unrelated third party.

4.2.7     Zoning. Borrower shall not initiate or consent to any zoning reclassification of any portion of the Property or seek any variance under any existing zoning ordinance or use or permit the use of any portion of the Property in any manner that could result in such use becoming a non-conforming use under any zoning ordinance or any other applicable land use law, rule or regulation, without the prior consent of Lender.

4.2.8     Assets. Borrower shall not purchase or own any property other than the Property and any property necessary or incidental for the operation of the Property.

4.2.9     No Joint Assessment. Borrower shall not suffer, permit or initiate the joint assessment of the Property (i) with any other real property constituting a tax lot separate from the Property, and (ii) with any portion of the Property which may be deemed to constitute personal property, or any other procedure whereby the Lien of any taxes which may be levied against such personal property shall be assessed or levied or charged to the Property.

4.2.10   Principal Place of Business. Borrower shall not change its principal place of business from the address set forth on the first page of this Agreement without first giving Lender thirty (30) days' prior written notice.

4.2.11   Change of Name, Identity or Structure. Borrower shall not change Borrower's name, identity (including its trade name or names) or, if not an individual, Borrower's corporate, partnership or other structure without notifying Lender of such change in writing at least thirty (30) days prior to the effective date of such change and without first obtaining the prior written consent of Lender. Borrower shall execute and deliver to Lender, prior to or contemporaneously with the effective date of any such change, any financing statement or financing statement change required by Lender to establish or maintain the validity,

perfection and priority of the security interest granted herein. At the request  of  Lender, Borrower shall execute a certificate in form satisfactory to Lender listing the trade names under which Borrower intends to operate the Property, and representing and warranting that Borrower does business under no other trade name with respect to the Property.

4.2.12  Special Purpose. Without in any way limiting the provisions of  this Article 4, Borrower shall not take or permit any action that would result in Borrower not being in compliance with the representations, warranties and covenants set forth in Section 3.1.24.

4.2.13  BRISA.

(a)       Borrower shall not engage in any transaction which would cause any obligation, or action taken or to be taken, hereunder (or the exercise by Lender of any of its rights under the Note, this Agreement or the other Loan Documents) to be a non-exempt (under a statutory or administrative class exemption) prohibited transaction under the Employee Retirement Income Security Act of 1974, as amended ("ERISA").

(b)       Borrower shall deliver to Lender such certifications or other evidence from time to time throughout the Term, as requested by Lender in its sole discretion, that (A) Borrower is not and does not maintain an "employee benefit plan" as defined in Section 3(32) of BRISA, which is subject to Title I of BRISA, or a "governmental plan" within the meaning of Section 3(32) of BRISA; (B) Borrower is not subject to state statutes regulating investments and fiduciary obligations with respect to governmental plans; and (C) one or more of the following circumstances is true:

(i)        Equity interests in Borrower are publicly offered securities, within the meaning of29 C.F.R §2510.3-101(b)(2);

(ii)       Less than twenty-five percent (25%) of each outstanding class of equity interests in Borrower are held by "benefit plan investors" within the meaning of29 C.F.R §2510.3-101(±)(2);

(iii)      Borrower qualifies as an "operating company" or a "real estate operating company" within the meaning of 29 C.F.R §2510.3-l0l(c) or (e); or

(iv)      The assets of Borrower are not otherwise "plan assets" of one or more "employee benefit plans" (as defined in Section 3(3) of BRISA) subject to Title I ofERISA, within the meaning of 29 C.F.R. §2510.3-101.

4.2.14  Intentionally Omitted.

4.2.15  Embargoed Person. At all times throughout the term of the Loan, including after giving effect to any Transfers permitted pursuant to the Loan Documents,

(a) none of the funds or other assets of Borrower or Guarantor shall constitute property of, or shall be beneficially owned, directly or indirectly, by any Person subject to trade restrictions under United States law, including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1

et seq., and any Executive Orders or regulations promulgated thereunder, with the result that the investment in Borrower or Guarantor, as applicable (whether directly or indirectly), would be prohibited by law (each, an "Embargoed Person"), or the Loan made by Lender would be in violation of law, (b) no Embargoed Person shall have any interest of any nature whatsoever in Borrower or Guarantor, as applicable, with the result that the investment in Borrower or Guarantor, as applicable (whether directly or indirectly), would be prohibited by law or the Loan would be in violation oflaw, and (c) none of the funds of Borrower or Guarantor, as applicable, shall be derived from any unlawful activity with the result that the investment in Borrower or Guarantor, as applicable (whether directly or indirectly), would be prohibited by law or the Loan would be in violation of law.

4.2.16  Operating Agreements. Borrower shall at all times comply in all material respects with all Operating Agreements. Borrower agrees that without the prior written consent of Lender, Borrower will not amend, modify or terminate any of the Operating Agreements.

4.2.17  Hotel Covenants. Borrower shall not, without Lender's prior written consent (i) surrender, terminate or cancel the Franchise Agreement; (ii) reduce or consent to the reduction of the term of the Franchise Agreement; (iii) increase or consent to the increase of the amount of any charges under the Franchise Agreement; or (iv) otherwise modify, change, supplement, assign, transfer, alter or amend, or waive or release any of its rights and remedies under, the Franchise Agreement.

ARTICLES

INSURANCE, CASUALTY AND CONDEMNATION

Section 5.1                                Insurance.

5.1.1    Insurance Policies.

(a)        Borrower, at its sole cost and expense, shall obtain and maintain during the entire Term, or cause to be maintained, insurance policies for Borrower and the Property providing at least the following coverages:

(i)        Property insurance against loss or damage by fire,  lightning, riot and civil commotion, vandalism, malicious mischief, burglary and theft, terrorism and such other perils as are normally included in a "special form" policy (formerly known as an "all-risk" policy), (A) in an amount equal to one hundred percent (100%) of the "Full Replacement Cost" of the Property, which for purposes of this Agreement shall mean actual replacement value (exclusive of costs of excavations, foundations, underground utilities and footings) with a waiver of depreciation and a deductible in an amount acceptable to Lender; (B) containing an agreed amount endorsement with respect to the Improvements and personal  property   at  the  Property   waiving  all  co-insurance   provisions;  and (C) containing an "Ordinance or Law Coverage" or "Enforcement"  endorsement if any of the Improvements or the use of the Property shall at any time constitute legal  non-conforming structures  or uses,  and compensating  for  loss  of value or

property resulting from operation of law and the cost of demolition and the increased cost of construction in amounts as required by Lender. In addition, Borrower shall obtain: (y) if any portion of the Improvements is currently or at any time in the future located in a federally designated "special flood  hazard area", flood insurance in an amount equal to the maximum amount of such insurance available under the National Flood Insurance Program, or such greater amount as Lender shall require; and (z) earthquake insurance in an amount equal to one and one-half times (1.5x) the probable maximum loss of the Property as determined by Lender in its sole discretion and in form and substance satisfactory to Lender in the event the Property is located in an area with a high degree of seismic activity, provided that the insurance pursuant to clauses (y) and (z) hereof shall be on terms consistent with the comprehensive all risk insurance policy required under this subsection (i);

(ii)        commercial general liability insurance, including a broad form comprehensive general liability endorsement and coverages against claims for personal injury, bodily injury, death or property damage occurring upon, in or about the Property, such insurance (A) to be on the so-called "occurrence" form and containing minimum limits per occurrence of One Million and No/100 Dollars ($1,000,000.00), with a combined limit per policy year, excluding umbrella coverage, of not less than Two Million and No/100 Dollars ($2,000,000.00); (B) to continue at not less than the aforesaid limit until required to be changed by Lender by reason of changed economic conditions making such protection inadequate; and (C) to cover at least the following hazards: (1) premises and operations; (2) products and completed operations on an "if any" basis; (3) independent contractors; (4) blanket contractual liability for all legal contracts; and (5) contractual liability covering the indemnities contained in Article 9 of the Mortgage to the extent the same is available;

(iii)      rent loss and/or business interruption insurance (A) with loss payable to Lender; (B) covering all risks required to be covered by the insurance provided for in subsection (i) above and Section 5.1.l{h) below; (C) covering a period of restoration of eighteen (18) months and containing an extended period of indemnity endorsement which provides that after the physical loss to the Improvements and Personal Property has been repaired, the continued loss of income will be insured until such income either returns to the same level it was at prior to the loss, or the expiration of one hundred eighty (180) days from the date that the Property is repaired or replaced and operations are resumed, whichever first occurs, and notwithstanding that the policy may expire prior to the end of such period; (D) in an amount equal to one hundred percent (100%) of the projected Gross Revenue from the Property for a period of eighteen (18) months from the date that the Property is repaired or replaced and operations are resumed; and (E) covering the actual loss sustained during the restoration. The amount of such business income insurance shall be determined prior to the date hereof and at least once each year thereafter based on Borrower's reasonable estimate of the Gross Revenue from the Property for the succeeding eighteen (18) month period. All proceeds payable to Lender pursuant to this subsection shall be held by

Lender and shall be applied to the Obligations secured by the Loan Documents from time to time due and payable hereunder and under the Note; provided, however, that nothing herein contained shall be deemed to relieve Borrower of its Obligations to pay the Debt on the respective dates of payment provided for in the Note and the other Loan Documents except to the extent such amounts are actually paid out of the proceeds of such business income insurance;

(iv)       at all times during which structural construction, repairs or alterations are being made with respect to the Improvements, and only if the Property coverage form does not otherwise apply, (A) owner's contingent or protective liability insurance covering claims not covered by or under the terms or provisions of the above-mentioned commercial general liability insurance policy; and (B) the insurance provided for in subsection (i) above written in a so-called builder's risk completed value form (1) on a non-reporting basis, (2) against all risks insured against pursuant to subsection (i) above, (3) including permission to occupy the Property, and (4) with an agreed amount endorsement waiving co-insurance provisions;

(v)        workers' compensation, subject to the statutory limits  of the state in which the Property is located, and employer's liability insurance with limits which are required from time to time by Lender in respect of any work or operations on or about the Property, or in connection with the Property or its operation (if applicable);

(vi)       comprehensive boiler and machinery insurance, if applicable, in amounts as shall be reasonably required by Lender on terms consistent with the commercial property insurance policy required under subsection (i) above;

(vii)      umbrella liability insurance in addition to primary coverage in an amount not less than Five Million and No/100 Dollars ($5,000,000.00) per occurrence on terms consistent with the commercial general liability insurance policy required under subsection (ii) above and (viii) below;

(viii)     motor vehicle liability coverage for all owned and non-owned vehicles, including rented and leased vehicles containing minimum limits per occurrence, including umbrella coverage, with limits which are required from time to time by Lender;

(ix)       windstorm insurance in an amount equal one hundred percent (100%) of the Full Replacement Cost of the Property, with a deductible acceptable to Lender;

(x)        if applicable, insurance against employee dishonesty in an amount not less than one (1) month of Gross Revenue from the Property and with a deductible not greater than Ten Thousand and No/100 Dollars ($10,000.00); and

(xi)      upon sixty (60) days' notice, such other reasonable insurance and in such reasonable amounts as Lender from time to time may reasonably request against such other insurable hazards which at the time are commonly insured against for properties similar to the Property located in or around the region in which the Property is located.

(b)        All insurance provided for in Section 5.1.l{a) shall be obtained under valid and enforceable policies (collectively, the "Policies" or in the singular, the "Policy") and shall be subject to the approval of Lender as to form and substance, including insurance companies, amounts, deductibles, loss payees and insureds. Not less than ten (10) days prior to the expiration dates of the Policies theretofore furnished to Lender, certificates of insurance evidencing the Policies (and, upon the written request of Lender, copies of such Policies) accompanied by evidence satisfactory to Lender of payment of the premiums then due thereunder (the "Insurance Premiums"), shall be delivered by Borrower to Lender.

(c)        Any blanket insurance Policy shall specifically allocate to the Property the amount of coverage from time to time required hereunder and shall otherwise provide the same protection as would a separate Policy insuring only the Property in compliance with the provisions of Section 5.1.l{a).

(d)        All Policies of insurance provided  for  or  contemplated  by Section 5.1.l{a), except for the Policy referenced in Section 5.1.l{a)(v), shall name Borrower as the insured and Lender and its successors and/or assigns as the additional insured, as its interests may appear, and in the case of property damage, boiler and machinery, windstorm,  flood  and  earthquake  insurance,  shall  contain  a  so-called New York standard non-contributing mortgagee clause in favor of Lender providing that the loss thereunder shall be payable to Lender. Additionally, if Borrower  obtains property  insurance  coverage  in  addition  to  or  in  excess  of  that  required   by Section 5.1.l{a)(i), then such insurance policies shall also contain a so-called New York standard non-contributing mortgagee clause in favor of Lender providing that the loss thereunder shall be payable to Lender. So long as the blanket insurance policy insuring the Property insures the Property, Borrower covenants that no additional properties not currently insured under such insurance policy will be insured thereunder. Lender acknowledges that the blanket policy of general liability insurance in effect on the Closing Date, which currently covers 4  locations (inclusive of the Property), complies with the requirements set forth in this Agreement, and provided that either (i) such policy continues to cover no more than seven (7) locations (inclusive of the Property) at any  time or (ii) so long as the annual aggregate cap divided by the number of properties covered by such policy at any time is no less than $2MM, and such policy otherwise complies with the requirements set forth in this Agreement, such blanket policy  of general liability insurance shall comply with the requirements set forth in this Agreement

(e)        All Policies of insurance provided for in Section 5.1.l{a). except for the Policies referenced in Section 5.1.l{a)(v) and (a)(viii), shall contain clauses or endorsements to the effect that:

(i)          no act or negligence of Borrower, or anyone acting for Borrower, or of any Tenant or other occupant, or failure to comply with the provisions of any Policy, which could reasonably be expected to otherwise result in a forfeiture of the insurance or any part thereof, shall in any way affect the validity or enforceability of the insurance insofar as Lender is concerned;

(ii)         the Policy shall not be canceled or terminated without at least thirty (30) days' written notice to Lender and any other party named therein as an additional insured and shall not be materially changed (other than to increase the coverage provided thereby) without such a thirty (30) day notice;

(iii)       Lender shall not be liable for any Insurance Premiums thereon or subject to any assessments thereunder; and

(iv)        the issuers thereof shall give notice to Lender if the Policies have not been renewed fifteen (15) days prior to its expiration; and

(f)         If at any time Lender is not in receipt of written evidence that all insurance required hereunder is in full force and effect, Lender shall have the right, without notice to Borrower, to take such action as Lender deems necessary to protect its interest in the Property, including the obtaining of such insurance coverage as Lender in its sole discretion deems appropriate and all premiums incurred by Lender in connection with such action or in obtaining such insurance and keeping it in effect (including, without limitation, reasonable attorney's fees) shall be paid by Borrower to Lender upon demand and until paid shall be secured by the Mortgage and shall bear interest at the Default Rate.

(g)        In the event of foreclosure of the Mortgage or other transfer of title to the Property in extinguishment in whole or in part of the Obligations, all right, title and interest of Borrower in and to the Policies that are not blanket Policies then in force concerning the Property and all proceeds payable thereunder shall thereupon vest in the purchaser at such foreclosure or Lender or other transferee in the event of such other transfer of title.

(h)        The property insurance and rental loss and/or business interruption insurance required under Sections 5.1.I(a)(i) and (iii) above shall cover perils  of terrorism and acts of terrorism and Borrower shall maintain property insurance and rental loss and/or business interruption insurance for loss resulting from perils and acts of terrorism on  terms  (including  amounts)  consistent  with  those  required  under Sections 5.1.I(a)(i) and (iii) above at all times during the term of the Loan.

(i)         The property and loss of rents/business interruption insurance policies required in this Section 5.1 shall not exclude "Acts of Terrorism" as defined in the Terrorism Risk Insurance Act of 2002, as amended by the Terrorism Risk Insurance Program Reauthorization Act of 2007, as extended and modified by the Terrorism Risk Insurance Program Authorization Act of 2015, as the same may be further modified, amended, or extended.

5.1.2     Insurance Company. All Policies required pursuant to Section 5.1.1 (i) shall be issued by companies authorized to do business in the state where the Property is located, with a financial strength and claims paying ability rating of at least "A-:VIII" from A.M. Best Company or "A" from Moody's Investors Service, Inc. or "A-" from Standard & Poor's Ratings Service; (ii) shall, with respect to all property insurance policies, name Lender and its successors and/or assigns as their interest may appear as lender and mortgagee; (iii) shall, with respect to all property insurance policies and rental loss and/or business interruption insurance policies, contain a Standard Mortgagee Clause and a Lender's Loss Payable Endorsement, or their equivalents, naming Lender and its successors and/or assigns as the person to whom all payments made by such insurance company shall be paid; (iv) shall, with respect to all liability policies, name Lender and its successors and/or assigns as an additional insured; (v) shall contain a waiver of subrogation against Lender; (vi) shall contain such provisions as Lender deems reasonably necessary or desirable to protect its interest including endorsements providing (A) that neither Borrower, Lender nor any other party shall be a co-insurer under said Policies, (B)  that Lender shall receive at least thirty (30) days' prior written notice of any modification, reduction or cancellation, and (C) for a deductible per loss of an amount not more than that which is customarily maintained by prudent owners of properties with a standard of operation and maintenance comparable to and in the general vicinity of the Property, but in no event in excess of an amount reasonably acceptable to Lender; and (vii) shall be satisfactory in form and substance to Lender and shall be approved by Lender as to amounts, form, risk coverage, deductibles, loss payees and insureds. No property or rental loss/business interruption insurance policy required hereunder shall include any so called "terrorist exclusion" or similar exclusion or exception to insurance coverage relating to the acts of terrorist groups or individuals. Certified copies of the Policies shall be delivered to Lender, 1601 Washington Avenue, Suite 800, Miami Beach, Florida 33139, on the date hereof with  respect  to  the  current  Policies  and  within thirty (30) days after the effective date thereof with respect to all renewal Policies. Borrower shall pay the Insurance Premiums annually in advance as the same become due and payable and shall furnish to Lender evidence of the renewal of each of the Policies with receipts for the payment of the Insurance Premiums or other evidence of such payment reasonably satisfactory to Lender (provided, however, that Borrower shall not be required to pay such Insurance Premiums nor furnish such evidence of payment to Lender in the event that the amounts required to pay such Insurance Premiums have been deposited into  the  Insurance  Account  pursuant  to Section 6.4 hereof). In addition to the insurance coverages described in Section 5.1.1 above, Borrower shall obtain such other insurance as may from time to time be reasonably required by Lender in order to protect its interests. Within thirty (30) days after request by Lender, Borrower shall obtain such increases in the amounts of coverage required hereunder as may be reasonably requested by Lender, taking into consideration changes in the value of money over time, changes in liability laws, changes in prudent customs and practices, and the like.

Section 5.2                                  Casualty.

If the Property shall be damaged or destroyed, in whole or in part, by fire or other casualty (a "Casualty"), Borrower shall give prompt notice of such damage to Lender and shall promptly commence and diligently prosecute the completion of the Restoration of the Property as nearly as possible to the condition the Property was in immediately prior to such Casualty, with such alterations as may be reasonably approved by Lender and otherwise in accordance with Section 5.4. Borrower shall pay all costs of such Restoration whether or not such costs are

covered by insurance. Lender may, but shall not be obligated to make proof of loss if not made promptly by Borrower. In addition, Lender may participate in any settlement discussions with any insurance companies (and shall approve any final settlement) with respect to any Casualty in which the Net Proceeds or the costs of completing the Restoration are equal to or greater than the Restoration Threshold  and Borrower shall deliver to Lender all instruments required by Lender to permit such participation. Any Insurance Proceeds in connection with any Casualty (whether or not Lender elects to settle and adjust the claim or Borrower settles such claim) shall be due and payable solely to Lender and held by Lender in accordance with the terms of  this Agreement. In the event Borrower or any party other than Lender is a payee on any check representing Insurance Proceeds with respect to any Casualty, Borrower shall immediately endorse, and cause all such third parties to endorse, such check payable to the order of Lender. Borrower hereby irrevocably appoints Lender as its attorney-in-fact, coupled with an interest, to endorse any such check payable to the order of Lender. The expenses incurred by Lender in the adjustment and collection of Insurance Proceeds shall become part of the Obligations, shall be secured by the Loan Documents and shall be reimbursed by Borrower to Lender upon demand. Borrower hereby releases Lender from any and all liability with respect to the settlement and adjustment by Lender of any claims in respect of any Casualty.

Section 5.3                               Condemnation.

Borrower shall promptly give Lender notice of the actual or threatened commencement of any proceeding for the Condemnation of all or any portion  of the Property and shall deliver to Lender copies of any and all papers served in connection with such proceedings. Lender may participate in any such proceedings, and Borrower shall from time to time deliver to Lender all instruments requested by it to permit such participation. Borrower shall, at its expense, diligently prosecute any such proceedings, and shall consult with Lender, its attorneys and experts, and cooperate with them in the carrying on or defense of any such proceedings. Notwithstanding any taking by any public or quasi-public authority through Condemnation or otherwise (including, but not limited to, any transfer made in lieu of or in anticipation of the exercise of such taking), Borrower shall continue to pay the Debt at the time and in the manner provided for its payment in the Note and in this Agreement and the Debt shall not be reduced until any Award shall have been actually received and applied by Lender, after the deduction of expenses of collection, to the reduction or discharge of the Debt. Lender shall not be limited to the interest paid on the Award by the condemning authority but shall be entitled to receive out of the Award interest at the rate or rates provided herein or in the Note. If the Property or any portion thereof is taken by a condemning authority, Borrower shall promptly commence and diligently prosecute the Restoration of the Property and otherwise comply with the provisions of Section 5.4, whether or not an Award is available. If the Property is sold, through foreclosure or otherwise, prior to the receipt by Lender of the Award, Lender shall have the right, whether or not a deficiency judgment on the Note shall have been sought, recovered or denied, to receive the Award, or a portion thereof sufficient to pay the Debt.

Section 5.4                               Restoration.

The following provisions shall apply in connection with the Restoration:

(a)        If the Net Proceeds shall be less than the Restoration  Threshold and the costs of completing the Restoration shall be less than the Restoration Threshold, the Net Proceeds will be disbursed by Lender to Borrower upon receipt, provided that all of the conditions set forth in Section 5.4(b)(i) are met and Borrower delivers to Lender a written undertaking to expeditiously commence and to satisfactorily complete with due diligence the Restoration in accordance with the terms of this Agreement.

(b)       If the Net Proceeds are equal to or greater than the Restoration Threshold or the costs of completing the Restoration is equal to or greater than the Restoration Threshold, the Net Proceeds will be held by Lender and Lender shall make the Net Proceeds available for the Restoration in accordance with the provisions of this Section 5.4. The term "Net Proceeds" for purposes of this Section 5.4 shall mean: (i)  the  net  amount  of  all  insurance  proceeds  received  by  Lender  pursuant   to Section 5.1.l(a)(i), (iv), and (vi) as a result of such damage or destruction, after deduction of its reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same ("Insurance Proceeds"), or (ii) the net amount of the Award, after deduction of its reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same ("Condemnation Proceeds"), whichever the case may be. (i)        The Net Proceeds shall be made available to Borrower for Restoration upon the approval of Lender in its sole discretion that the following conditions are met:

continuing;

(A)      no Event of Default shall have occurred and be

(B)       (1) in the event the Net Proceeds are Insurance

Proceeds, less than twenty-five percent (25%) of the total floor area of the Improvements on the Property has been damaged, destroyed or rendered unusable as a result of such Casualty or (2) in the event the Net Proceeds are Condemnation Proceeds, less than ten percent (10%) of the land constituting the Property is taken, and such land is located along the perimeter or periphery of the Property, and no portion of the  Improvements is located on such land;

(C)        Leases demising in the aggregate a percentage amount equal to or greater than seventy-five percent (75%) of the total rentable space in the Property which has been demised under executed and delivered Leases in effect as of the date of the occurrence of such Casualty or Condemnation, whichever the case may be, shall remain in full force and effect during and after the completion of the Restoration without abatement of rent beyond the time required for Restoration,

notwithstanding the occurrence of any such Casualty or Condemnation, whichever the case may be, and will make all necessary repairs and restorations thereto at their sole cost and expense;

(D)        Borrower shall commence the Restoration (including application of necessary licenses or permits) as soon as reasonably practicable (but in no event later than ninety (90) days after such Casualty or Condemnation, whichever the case may be, occurs) and shall diligently pursue the same to satisfactory completion;

(E)        Lender shall be satisfied that any operating deficits, including all scheduled payments of principal and interest under the Note, which will be incurred with respect to the Property as a result of the occurrence of any such Casualty or Condemnation, whichever the case may be, will be covered out of (1) the Net Proceeds, (2) the insurance coverage referred to in Section 5.1.l(a)(iii). if applicable, or (3) by other funds of Borrower;

(F)        Lender shall be satisfied that the Restoration will be completed on or before the earliest to occur of (1) the date six (6) months prior to the Stated Maturity Date, (2) the earliest date required for such completion under the terms of any Lease, if any Leases are in place at the Property, (3) such time as may be required under applicable Legal Requirements or (4) the expiration of the insurance coverage referred to in Section 5.1.l(a)(iii);

(G)        the Property and the use thereof after the Restoration will be in compliance with and permitted under all applicable Legal Requirements;

(H)        the Restoration shall be done and completed by Borrower in an expeditious and diligent fashion and in compliance with all applicable Legal Requirements;

(I)         such Casualty or Condemnation, as applicable, does not result in the loss of access to the Property or the related Improvements;

(J)         the Restoration DSCR, after giving effect to the Restoration, shall be equal to or greater than 1.50 to 1.00;

(K)        the Loan to Value Ratio after giving effect to the Restoration, shall be equal to or less than seventy percent (70%);

(L)        Borrower shall deliver, or cause to be delivered, to Lender a signed detailed budget approved in writing by Borrower's architect or engineer stating the entire cost of completing the Restoration, which budget shall be acceptable to Lender; and

(M)      the Net Proceeds together with any cash or cash equivalent deposited by Borrower with Lender are sufficient in Lender's discretion to cover the cost of the Restoration.

(ii)       The Net Proceeds shall be held by Lender in the Casualty and Condemnation Account and, until disbursed in accordance with  the provisions of this Section 5.4(b). shall constitute additional security for the Debt and other obligations under the Loan Documents. The Net Proceeds shall be disbursed by Lender to, or as directed by, Borrower from time to time during the course of the Restoration, upon receipt of evidence satisfactory to Lender that (A) all materials installed and work and labor performed (except to the extent that they are to be paid for out of the requested disbursement) in connection with the Restoration have been paid for in full, and (B) there exist no notices of pendency, stop orders, mechanic's or materialman's liens or notices of intention to file same, or any other liens or encumbrances of any nature whatsoever on the Property which have not either been fully bonded to the satisfaction of Lender and discharged of record or in the alternative fully insured to the satisfaction  of Lender by the title company issuing the Title Insurance Policy.

(iii)      All plans and specifications required in connection with the Restoration shall be subject to the prior approval of Lender and an independent consulting engineer selected by Lender (the "Casualty Consultant").  Lender shall have the use of the plans and specifications and all permits, licenses and approvals required or obtained in connection with the Restoration. The identity of the contractors, subcontractors and materialmen engaged in the Restoration, as well as the contracts under which they have been engaged, shall be subject to the approval of Lender and the Casualty Consultant. All costs and expenses incurred by Lender in connection with recovering, holding and advancing the Net Proceeds for the Restoration including, without limitation, reasonable attorneys' fees and disbursements and the Casualty Consultant's fees and  disbursements, shall  be paid by Borrower.

(iv)      In no event shall Lender be obligated to make disbursements of the Net Proceeds in excess of an amount equal to the costs actually incurred from time to time for work in place as part of the Restoration, as certified by the Casualty Consultant, less the Casualty Retainage. The term "Casualty Retainage" shall mean, as to each contractor, subcontractor or materialman engaged in the Restoration, an amount equal to ten percent (10%) of the costs actually incurred for work in place as part of the Restoration, as certified by the Casualty Consultant, until the Restoration has been completed. The Casualty Retainage shall in no event, and notwithstanding anything to  the contrary set forth above in this Section 5.4(b), be less than the amount actually held back by Borrower from contractors, subcontractors and materialmen engaged in the Restoration. The Casualty Retainage shall not be released  until  the Casualty Consultant certifies to Lender that the Restoration has been completed in accordance with the provisions of this Section 5.4(b) and that all approvals necessary for the re-occupancy and use of the Property have been obtained from

all appropriate Governmental Authorities, and Lender receives evidence satisfactory to Lender that the costs of the Restoration have been paid in full or will be paid in full out of the Casualty Retainage; provided, however, that Lender will release the portion of the Casualty Retainage being held with respect to any contractor, subcontractor or materialman engaged in the Restoration as of the date upon which (i) the Casualty Consultant certifies to Lender that such contractor, subcontractor or materialman has satisfactorily completed all work and has supplied all materials in accordance with the provisions of such contractor's, subcontractor's or materialman's contract, (ii) the contractor, subcontractor or materialman delivers the lien waivers and evidence of payment in full of all sums due to the contractor, subcontractor or materialman as may be reasonably requested by Lender or by the title company issuing the Title Insurance Policy, and (iii) Lender receives an endorsement to the Title Insurance Policy insuring the continued priority of the Lien of the Mortgage and evidence of payment of any premium payable for such endorsement. If required by Lender, the release of any such portion of the Casualty Retainage shall be approved by the surety company, if any, which has issued a payment or performance bond with respect to the contractor, subcontractor or materialman.

(v)        Lender shall not be obligated to make disbursements of the Net Proceeds more frequently than once every calendar month.

(vi)      If at any time the Net Proceeds or the undisbursed balance thereof shall not, in the opinion of Lender in consultation with the Casualty Consultant, be sufficient to pay in full the balance of the costs which  are estimated by the Casualty Consultant to be incurred in connection with the completion of the Restoration, Borrower shall deposit the deficiency (the "Net Proceeds Deficiency") with Lender (for deposit into the Casualty and Condemnation Account) before any further disbursement of the Net Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall be deposited by Lender into the Casualty and Condemnation Account and shall be disbursed for costs actually incurred in connection with the Restoration on the same conditions applicable to the disbursement of the Net Proceeds, and until so disbursed pursuant to this Section 5.4{b) shall constitute additional security for the Obligations.

(vii)     The excess, if any, of the Net Proceeds and the remaining balance, if any, of the Net Proceeds Deficiency deposited with Lender after the Casualty Consultant certifies to Lender that the Restoration has been completed in accordance with the provisions of this Section 5.4{b). and the receipt by Lender of evidence satisfactory to Lender that all costs incurred in connection with the Restoration have been paid in full, shall be remitted by Lender to Borrower, provided no Event of Default shall have occurred and shall be continuing.

(c)        All Net Proceeds not required (i) to be made available for the Restoration or (ii) to be returned to Borrower as excess Net  Proceeds  pursuant  to Section 5.4{b){vii). may be retained and applied by Lender in accordance with

Section 2.4.4 hereof toward the payment of the Debt whether or not then due and payable in such order, priority and proportions as Lender in its sole discretion shall deem proper, or, at the discretion of Lender, the same may be paid, either in whole or in part, to Borrower for such purposes as Lender shall approve, in its discretion. Additionally, throughout the term of the Loan, if a Default or an Event of Default has occurred, then the Borrower shall pay to Lender, with respect to any payment of the Debt pursuant to this Section 5.4(c), an additional amount equal to the Prepayment Fee; provided, however, that if a Default or an Event of Default has not occurred, then the Prepayment Fee shall not be payable.

(d)        In the event of foreclosure of the Mortgage, or other transfer of title to the Property in extinguishment in whole or in part of the Debt, all right, title and interest of Borrower in and to the Policies that are not blanket Policies then in force concerning the Property, and all proceeds payable thereunder, shall thereupon vest in the purchaser at such foreclosure, or Lender or other transferee in the event of such other transfer of title.

(e)        Notwithstanding anything to the contrary contained herein, if in connection with a Casualty any insurance company makes a payment under a property insurance Policy that Borrower proposes be treated as business or rental interruption insurance, then, notwithstanding any designation (or lack of designation) by the insurance company as to the purpose of such payment, as between Lender and Borrower, such payment shall not be treated as business or rental interruption Insurance Proceeds unless Borrower has demonstrated to Lender's satisfaction that the remaining Net Proceeds that have been received from the property insurance companies are sufficient to pay 100% of the cost of the Restoration or, if such Net Proceeds are to be applied to repay the Obligations in accordance with the terms hereof, that such remaining Net Proceeds will be sufficient to satisfy the Obligations in full.

(f)         Notwithstanding the foregoing provisions of this Section 5.4, if the Loan is included in a REMIC Trust and, immediately following a release of any portion of the real property relating to the Property following a Casualty or Condemnation, the ratio of the unpaid principal balance of the Loan to the value of the remaining real property relating to the Property is greater than 125% (such value to be determined, in Lender's sole discretion, by any commercially reasonable method permitted to a REMIC Trust, based solely on real property and excluding personal property and going concern value, if any), Lender shall not be required to release any Net Proceeds for Restoration of the Property, and the principal  balance  of the Loan must  be paid  down  by Borrower by the greater of (A) such amount as may be required such that the Securitization will not fail to maintain its status as a REMIC Trust as a result of the related release of lien or (B) least of the following amounts: (i) the Net Proceeds, (ii) the fair market value of the released Property at the time of the release, or (iii) an amount such that the loan-to-value ratio of the Loan (as so determined by Lender) does not increase after the release.

ARTICLE6

CASH MANAGEMENT AND RESERVE FUNDS

Section 6.1                                Cash Management Arrangements.

Upon the commencement of a Sweep Event Period, Borrower shall establish and activate and, thereafter, Borrower shall cause all Rents to be transmitted directly by all commercial tenants of the Property into a trust account (the "Clearing Account")  established and maintained by Borrower at the Clearing Bank as more fully described in the Clearing Account Agreement. Without in any way limiting the foregoing, if Borrower or Manager receive any Gross Revenue from the Property from and after the commencement of a Sweep Event Period, then (i) such amounts shall be deemed to be collateral for the Obligations and shall be held in trust for the benefit, and as the property, of Lender, (ii) such amounts shall not be commingled with any other funds or property of Borrower or Manager, and (iii) Borrower or Manager shall deposit such amounts in the Clearing Account within one (1) Business Day of receipt. Funds deposited into the Clearing Account shall be swept by the Clearing Bank on a daily basis into Borrower's operating account at the Clearing Bank, unless a Sweep Event Period is continuing, in which event such funds shall be swept on a daily basis into an Eligible Account at the Cash Management Bank controlled by Lender (the "Cash Management Account") and applied and disbursed in accordance with this Agreement and the Cash Management Agreement. Funds in the Cash Management Account shall be invested in Permitted Investments, as more particularly set forth in the Cash Management Agreement. Lender may also establish subaccounts of the Cash Management Account which shall at all times be Eligible Accounts (and may be ledger or book entry accounts and not actual accounts) (such subaccounts are referred to herein as "Accounts"). The Cash Management Account and all other Accounts will be under the sole control and dominion of Lender, and Borrower shall have no right of withdrawal therefrom. Borrower shall pay for all expenses of opening and maintaining all of the above accounts.

Section 6.2                                Required Repairs Funds.

6.2.1    Deposit of Required Repairs Funds. Borrower shall perform the repairs and other work at the Property as set forth on Schedule II (such repairs and other  work hereinafter referred to as "Required Repairs") and shall complete each of the Required Repairs on or before the earlier of (i) the respective deadline for each repair as set forth on Schedule II. On the Closing Date, Borrower shall deposit an amount equal to $0 with Lender to perform the Required Repairs (the "Required Repairs Funds"), which Required Repairs Funds shall be transferred by Cash Management Bank into an Account established to hold such funds (the "Required Repairs Account").

6.2.2    Release of Required Repairs Funds.

(a)        Lender shall direct Servicer to disburse the Required  Repairs Funds to Borrower out of the Required Repairs Account upon satisfaction by Borrower of each of the following conditions with respect to each such disbursement: (i) Borrower shall submit a request for payment to Lender at least thirty (30) days prior to the date on which Borrower requests such payment be made, which request shall specify the

Required Repairs to be paid; (ii) on the date such request is received by Lender  and on the date such payment is to be made, no Event of Default shall exist and remain uncured; and (iii) Lender shall have received (1) an Officer's Certificate from Borrower (A) stating that all Required Repairs to be funded by the requested disbursement have been completed in a good and workmanlike manner and in accordance with all applicable Legal Requirements, (B) identifying each Person that supplied materials or labor in connection with the Required Repairs to be funded by the requested disbursement, (C)  stating that each such Person has been paid in full or will be paid in full upon such disbursement, (D) stating that the Required Repairs to be funded have not been the subject of a previous disbursement, (E) stating that all previous disbursements of Required Repairs Funds have been used to pay the previously identified Required Repairs, and (F) stating that all outstanding trade payables (other than those to be paid from the requested disbursement or those constituting Permitted Indebtedness) have been paid in full, (2) a copy of any license, permit or other approval by any Governmental Authority required in connection with the Required Repairs and not previously delivered to Lender, (3) lien waivers or other evidence of payment satisfactory to Lender, (4) at Lender's option, a title search for the Property indicating that the Property is free from all Liens, claims and other encumbrances not previously approved by Lender, and (5) such other evidence as Lender shall reasonably request to demonstrate that the Required Repairs to be funded by the requested disbursement have been completed and are paid for or will be paid upon such disbursement to Borrower. Lender shall not be required to disburse Required Repairs Funds more frequently than once each calendar month, and Lender shall not be required to make disbursements from the Required Repairs Account unless such requested disbursement is in an amount greater than $10,000 (or a lesser amount if the total amount in the Required Repairs Account is less than $10,000, in  which case only one disbursement of the amount remaining in the account shall  be made). Upon Borrower's completion of all Required Repairs in accordance with this Section 6.2, Lender shall direct Servicer to release any remaining Required Repairs Funds, if any, in the Required Repairs Account to Borrower.

(b)       Nothing in this Section 6.2.2 shall (i) make Lender responsible for performing or completing any Required Repairs; (ii) require Lender to expend funds in addition to the Required Repairs Funds to complete any Required Repairs; (iii) obligate Lender to proceed with any Required Repairs; or (iv) obligate Lender to demand from Borrower additional sums to complete any Required Repairs.

(c)        Borrower shall permit Lender and Lender's agents and representatives (including Lender's engineer, architect or inspector) or third parties to enter onto the Property during normal business hours (subject to the rights of Tenants under their Leases) to inspect the progress of any Required Repairs and all materials being used in connection therewith and to examine all plans and shop drawings relating to such Required Repairs. Borrower shall cause all contractors and subcontractors to cooperate with Lender or Lender's representatives or such other Persons described above in connection with inspections described in this Section 6.2.2(c).

(d)        If a disbursement of Required Repairs Funds will exceed Twenty Thousand and No/100 Dollars ($20,000.00), Lender may require an inspection of the

Property at Borrower's expense prior to making a disbursement of Required Repairs Funds in order to verify completion of the Required Repairs for which reimbursement is sought. Lender may require that such inspection be conducted by an appropriate independent qualified professional selected by Lender and may require a certificate of completion by an independent qualified professional architect acceptable to Lender prior to the disbursement of Required Repairs Funds. Borrower shall pay the expense of the inspection as required hereunder, whether such inspection is conducted by Lender or by an independent qualified professional architect.

(e)        In addition to any insurance required under the Loan Documents, Borrower shall provide or cause to be provided workmen's compensation insurance, builder's risk insurance, public liability insurance and other insurance to the extent required under applicable law in connection with the Required Repairs. All such policies shall be in form and amount satisfactory to Lender.

Section 6.3                               Tax Funds.

6.3.1    Deposits of Tax Funds. Borrower shall deposit with Lender (i) an amount reasonably determined by Lender on the Closing Date, and (ii) on each Monthly Payment Date, an amount equal to one-twelfth of the Taxes that Lender estimates will be payable during the next ensuing twelve (12) months, in order to accumulate sufficient funds to pay all such Taxes at least thirty (30) days prior to their respective due dates, which amounts shall be transferred into an Account established by or on behalf of Lender to hold such funds (the "Tax Account"). Amounts deposited from time to time into the Tax Account pursuant to this Section 6.3.1 are referred to herein as the "Tax Funds". If at any time Lender reasonably determines that the Tax Funds will not be sufficient to pay the Taxes, Lender shall notify Borrower of such determination and the monthly deposits for Taxes shall be increased by the amount that Lender estimates is sufficient to make up the deficiency by the date that is at least thirty (30) days prior to the respective due dates for the Taxes; provided, that if Borrower receives notice of any deficiency after the date that is thirty (30) days prior to the date that Taxes are due, Borrower will deposit with or on behalf of Lender such amount within three (3) Business Day after its receipt of such notice.

6.3.2    Release of Tax Funds. Provided no Event of Default shall exist  and remain uncured, Lender shall direct Servicer to apply the Tax Funds in the Tax Account to payments of Taxes, provided Borrower shall furnish Lender with all bills, invoices and statements for the Taxes for which such funds are required at least thirty (30) days prior to the date on which such charges first become payable. In making any payment relating to Taxes, Lender may do so according to any bill, statement or estimate procured from the appropriate public office (with respect to Taxes) without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien or title or claim thereof. If the amount of the Tax Funds shall exceed the amounts due for Taxes, Lender shall, in its sole discretion, return any excess to Borrower or credit such excess against future payments to be made to the Tax Funds. Any Tax Funds remaining in the Tax Account after the Obligations have been paid in full shall be returned to Borrower.

Section 6.4                                  Insurance Funds.

6.4.1     Deposits of Insurance Funds. Borrower shall deposit with Lender (i) an amount reasonably determined by Lender on the Closing Date, and (ii) on each Monthly Payment Date, an amount equal to one-twelfth of the Insurance Premiums that Lender estimates will be payable for the renewal of the coverage afforded by the Policies upon the expiration thereof, in order to accumulate sufficient funds to pay all such Insurance Premiums  at least thirty (30) days prior to the expiration of the Policies, which amounts shall be transferred into an Account established by or on behalf of Lender to hold such funds (the "Insurance Account"). Amounts deposited from time to time into the Insurance Account pursuant to this Section 6.4.1 are referred to herein as the "Insurance Funds". If at any time Lender reasonably determines that the Insurance Funds will not be sufficient to pay the Insurance Premiums, Lender shall notify Borrower of such determination and the monthly deposits for Insurance Premiums shall be increased by the amount that Lender estimates is sufficient to make up the deficiency by the date that is at least thirty (30) days prior to the expiration of the Policies; provided, that if Borrower receives notice of any deficiency after the date that is thirty (30) days prior to the expiration of the Policies, Borrower will deposit with or on behalf of Lender such amount within one (1) Business Day after its receipt of such notice.

6.4.2     Release of Insurance Funds. Provided no Event of Default shall exist and remain uncured, Lender shall direct Servicer to apply the Insurance Funds in the Insurance Account to payment of Insurance Premiums, provided Borrower shall furnish Lender with all bills, invoices and statements for the Insurance Premiums for which such funds are required at least thirty (30) days prior to the date on which such charges first become payable. In making any payment relating to Insurance Premiums, Lender may do so according to any bill, statement or estimate procured from the insurer or its agent, without inquiry into the accuracy of such bill, statement or estimate. If the amount of the Insurance Funds shall exceed the amounts due for Insurance Premiums, Lender shall, in its sole discretion, return any excess to Borrower or credit such excess against future payments to be made to the Insurance Funds. Any Insurance Funds remaining in the Insurance Account after the Obligations have been paid in full shall be returned to Borrower.

Section 6.5                                  FF&E Reserve Funds

6.5.1     Deposits of FF&E Reserve Funds. Borrower shall deposit with Lender on each Monthly Payment Date, an amount equal to one-twelfth of an amount equal  to  four percent (4.0%) of the annual Gross Revenue for the Property as determined by Lender for the repair and replacement of the furniture, fixtures and equipment at or in or used in the operation of the Property (the "FF&E Work") that may be incurred following the date hereof, which amounts shall be transferred into an Account established by or on behalf of Lender to hold such funds (the "FF&E Reserve Account"). Lender may from time to time reassess its estimate of the required monthly amount necessary for the FF&E Work and, upon notice to Borrower, Borrower shall be required to deposit with or on behalf of Lender each month such reassessed amount, which shall be transferred into the FF&E Reserve Account. Amounts deposited from time to time into the FF&E Reserve Account pursuant to this Section 6.8.1 are referred to herein as the "FF&E Reserve Funds".

6.5.2    Release of FF&E Reserve Funds.

(a)        Lender shall direct Servicer to disburse the FF&E Reserve Funds to Borrower out of the FF&E Reserve Account upon satisfaction by Borrower of each of the following conditions with respect to each such disbursement: (i) such disbursement is for an Approved FF&E Expense; (ii) Borrower shall submit a request for payment to Lender at least ten (10) days prior to the date on which Borrower requests such payment be made, which request shall specify the Approved FF&E Expenses to be paid; (iii) on the date such request is received by Lender and on the date such payment is to be made, no Event of Default shall exist and remain uncured, and (iv) Lender shall have received (1)  an Officer's Certificate from Borrower (A) stating that the items to be funded by the requested disbursement are Approved FF&E Expenses, and a description thereof, (B) stating that all Approved FF&E Expenses to be funded by the requested disbursement have been completed in a good and workmanlike manner and in accordance with all applicable Legal Requirements, (C) identifying each Person that supplied materials or labor in connection with the Approved FF&E Expenses to be funded by the requested disbursement, (D) stating that each such Person has been paid in full or will be paid in  full upon such disbursement, (E) stating that the Approved FF&E Expenses to be funded have not been the subject of a previous disbursement, (F) stating that all previous disbursements of FF&E Reserve Funds have been used to pay the previously identified Approved FF&E Expenses, and (G) stating that all outstanding trade payables (other than those to be paid from the requested disbursement or those constituting Permitted Indebtedness) have been paid in full, (2) a copy of any license, permit or other approval required by any Governmental Authority in connection with the Approved FF&E Expenses and not previously delivered to Lender, (3) lien waivers or other evidence of payment satisfactory to Lender, (4) at Lender's option, a title search for the Property indicating that the Property is free from all Liens, claims and other encumbrances not previously approved by Lender, and (5) such other evidence as Lender shall reasonably request to demonstrate that the Approved FF&E Expenses to be funded by the requested disbursement have been completed and are paid for or will be paid upon such disbursement to Borrower. Lender shall not be required to disburse FF&E Reserve Funds more frequently than once each calendar month, and Lender shall not be required to make disbursements from the FF&E Reserve Account unless such requested disbursement is in an amount greater than $10,000 (or a lesser amount if the total amount in the FF&E Reserve Account is less than $10,000, in which case only one disbursement of  the amount remaining in the account shall be made).

(b)        Nothing in this Section 6.8.2 shall (i) make Lender responsible for performing or completing any FF&E Work; (ii) require Lender to expend funds in addition to the FF&E Reserve Funds to complete any FF&E Work; (iii) obligate Lender to proceed with any FF&E Work; or (iv) obligate Lender to demand from Borrower additional sums to complete any FF&E Work.

(c)        Borrower shall permit Lender and Lender's agents and representatives (including Lender's engineer, architect or inspector) or third parties to enter onto the Property during normal business hours (subject to the rights of Tenants under their Leases) to inspect the progress of any FF&E Work and all materials being

used in connection therewith and to examine all plans and shop drawings relating to such FF&E Work. Borrower shall cause all contractors and subcontractors to cooperate with Lender or Lender's representatives or such other Persons described above in connection with inspections described in this Section 6.8.2{c).

(d)       If a disbursement of FF&E Reserve Funds will exceed $25,000.00, Lender may require an inspection of the Property at Borrower's expense prior to making  a disbursement of FF&E Reserve Funds in order to verify completion of the FF&E Work for which reimbursement is sought. Lender may require that such inspection  be conducted by an appropriate independent qualified professional selected by Lender and may require a certificate of completion by an independent qualified professional architect acceptable to Lender prior to the disbursement of FF&E Reserve Funds. Borrower shall pay the expense of the inspection as required hereunder, whether such inspection is conducted by Lender or by an independent qualified professional architect.

(e)        In addition to any insurance required under the Loan Documents, Borrower shall provide or cause to be provided workmen's compensation insurance, builder's risk insurance, public liability insurance and other insurance to the extent required under applicable law in connection with the FF&E Work. All such policies shall be in form and amount satisfactory to Lender.

Section 6.6 Intentionally Omitted. Section 6.7 Intentionally Omitted. Section 6.8 Intentionally Omitted.

Section 6.9 Excess Cash Flow Funds. Borrower shall deposit or cause to be deposited with or on behalf of Lender the funds specified in Section 6.11 hereof, which amounts shall be transferred by Cash Management Bank into an Account established to hold such funds (the "Excess Cash Flow Account") and held as additional collateral and security for the Loan. Amounts deposited from time to time into the Excess Cash Flow Account pursuant to this Section 6.9 and Section 6.11 are referred to herein as the "Excess Cash Flow Funds." Upon a termination, if any, of a Sweep Event Period, provided no other Sweep Event Period is continuing, Lender shall distribute the Excess Cash Flow Funds on deposit in the Excess Cash Flow Account to Borrower.

Section 6.10                              Security Interest in Reserve Funds.

6.10.1  Grant of Security Interest. Borrower shall be the owner of the Reserve Funds. Borrower hereby pledges, assigns and grants to Lender a first-priority perfected security interest to Lender, as security for the payment and performance of the Obligations, in all of Borrower's right, title and interest in and to the Reserve Funds. The Reserve Funds shall  be under the sole dominion and control of Lender. The Reserve Funds shall not constitute a trust fund and may be commingled with other monies held by Lender.

6.10.2  Income Taxes; Interest. Borrower shall report on its federal, state, commonwealth, district and local income tax returns all interest or income accrued on the

Reserve Funds. The Reserve Funds shall earn interest at a rate commensurate with the rate of interest paid from time to time on money market accounts at a commercial bank selected by Lender in its sole discretion from time to time, with interest credited monthly to such Reserve Funds (with the exception of the Tax Funds, the Insurance Funds and the Required Repairs Funds). All earnings or interest on each of the Reserve Funds (with the exception of the Tax Funds, the Insurance Funds and the Required Repairs Funds) shall be and become part of the respective Reserve Fund and shall be disbursed as provided in the paragraph(s) of this  Agreement applicable to each such Reserve Fund. No earnings or interest on the Tax Funds, the Insurance Funds or the Required Repairs Funds shall be payable to Borrower.

6.10.3  Prohibition Against Further Encumbrance.  Borrower shall not, without  the prior consent of Lender, further pledge, assign or grant any security interest in the Reserve Funds or permit any Lien or encumbrance to attach thereto or any levy to be made thereon or any UCC-1 financing statements to be filed with respect thereto, except those naming Lender as the secured party.

6.10.4  Lender Remedy for Failure to Perform. In addition to Lender's remedies following an Event of Default, Borrower acknowledges that Lender shall have the right (but not the obligation) to complete or perform the Required Repairs, tenant improvements and FF&E Work (individually and collectively, as the context requires, the "Reserve Items") for which amounts have been reserved under this Loan Agreement (or pay the leasing commissions as applicable) and for such purpose, Borrower hereby appoints Lender its attorney-in-fact with full power of substitution (and which shall be deemed to be coupled with an interest and irrevocable until the Loan is paid in full and the Mortgage is discharged of record, with Borrower hereby ratifying all that its said attorney shall do by virtue thereof): (i) to complete or undertake such work in the name of Borrower; (ii) to proceed under existing contracts or to terminate existing contracts (even where a termination penalty may be incurred) and employ such contractors, subcontractors, watchman, agents, architects and inspectors as Lender determines necessary or desirable for completion of such work; (iii) to make any additions, changes and corrections to the scope of the work as Lender deems necessary or desirable for timely completion; (iv) to pay, settle or compromise all existing bills and claims which are or may become Liens against the Property or as may be necessary or desirable for completion of such work; (v) to execute all applications and certificates in the name of Borrower which may be required to obtain permits and approvals for such work or completion of such work; (vi) to prosecute and defend all actions or proceedings in connection with the repair or improvements to the Property; and (vii) to do any and every act which Borrower might do in its own behalf to fulfill the terms of Borrower's obligations under this Agreement. Amounts expended by Lender which exceed amounts held in the Accounts shall be added to the Outstanding Principal Balance, shall be immediately due and payable, and shall bear interest at the Default Rate from the date of disbursement by Lender until paid in full. In addition, in order to perform inspections or, following an Event of Default, to complete Reserve Items which Borrower has failed to perform, Borrower hereby grants Lender and its agents the right, from time to time, to enter onto the Property.

Section 6.11                             Property Cash Flow Allocation.

6.11.1  Order of Priority of Funds in Cash Management Account.

(a)        During the continuation of a Sweep Event Period, on each Monthly Payment Date during the Term, except during the continuance of an Event of Default, all funds deposited into the Cash Management Account during the immediately preceding Interest Period shall be applied on such Monthly Payment Date in the following order of priority:

(i)         First, to the Tax Account, to make the required payments of Tax Funds as required under Section 6.3;

(ii)       Second, to the Insurance Account, to make the required payments of Insurance Funds as required under Section 6.4;

(iii)       Third, to Lender, funds sufficient to pay the Monthly Debt Service Payment Amount, applied first to the payment of interest computed at the Interest Rate with the remainder applied to the reduction of the Outstanding Principal Balance;

(iv)       Fourth, subject to the terms of the Cash Management Agreement, to the Borrower Operating Account, funds in an amount equal to the Monthly Operating Expense Budgeted Amount payable to third parties unaffiliated with Borrower;

(v)        Fifth, to the FF&E Reserve Account, to make the required payments ofFF&E Reserve Funds as required under Section 6.5;

(vi)      Sixth, to Lender, of any other amounts then due and payable under the Loan Documents;

(vii)     Seventh, subject to the terms of the Cash Management Agreement, to the Borrower Operating Account, funds in an amount equal to the Monthly Operating Expense Budgeted Amount payable to parties that are not classified as third parties unaffiliated with Borrower;

(viii)    Eighth, to the Borrower Operating Account, payments for Extraordinary Expenses approved by Lender, if any; and

(ix)       Lastly, all amounts remaining after payment of the amounts set forth in clauses (i) through (viii) above (the "Remaining Receipts") to the Excess Cash Flow Account.

6.11.2  Failure to Make Payments. The failure of Borrower to make all of the payments required under clauses (i) through (vi) of Section 6.11.l(a) in full on each Monthly Payment Date shall constitute an Event of Default under this Agreement; provided, however, if adequate funds are available in the Cash Management Account for such payments, and Borrower

is not otherwise in Default hereunder, the failure by the Cash Management Bank to allocate such funds into the appropriate Accounts shall not constitute an Event of Default.

6.11.3   Application After Event of Default. Notwithstanding anything to the contrary contained in this Article 6, upon the occurrence of an Event of Default, Lender, at its option, may withdraw the Reserve Funds and any other funds of Borrower then in the possession of Lender, Servicer or Cash Management Bank (including any Gross Revenue) and apply such funds to the items for which the Reserve Funds were established or to the payment of the Debt in such order, proportion and priority as Lender may determine in its sole discretion. Lender's right to withdraw and apply any of the foregoing funds shall be in addition to all other rights and remedies provided to Lender under the Loan Documents.

ARTICLE 7 PROPERTY MANAGEMENT

Section 7.1                                  The Management Agreement.

Borrower shall (i) cause Manager to manage the Property in accordance with the Management Agreement, (ii) diligently perform and observe all of the terms, covenants and conditions of the Management Agreement on the part of Borrower to be performed and observed, (iii) promptly notify Lender of any default under the Management Agreement of which it is aware, (iv) promptly deliver to Lender a copy of each financial statement, business plan, capital expenditures plan, report and estimate received by it under the Management Agreement, and (v) promptly enforce the performance and observance of all of the covenants required to be performed and observed by Manager under the Management Agreement. If Borrower shall default in the performance or observance of any material term, covenant or condition of the Management Agreement on the part of Borrower to be performed or observed, then, without limiting Lender's other rights or remedies under this Agreement or the other Loan Documents, and without waiving or releasing Borrower from any of its Obligations hereunder or under the Management Agreement, Lender shall have the right, but shall be under no obligation, to pay any sums and to perform any act as may be appropriate to cause all the material terms, covenants and conditions of the Management Agreement on the part of Borrower to be performed or observed.

Section 7.2                                   Prohibition Against Termination or Modification.

Borrower shall not (i) surrender, terminate, cancel, modify, renew or extend the Management Agreement, (ii) enter into any other agreement relating to the management or operation of the Property with Manager or any other Person, (iii) consent to the assignment by the Manager of its interest under the Management Agreement, or (iv) waive or release any of its rights and remedies under the Management Agreement, in each case without the express consent of Lender, which consent shall not be unreasonably withheld; provided, however, with respect to a new manager such consent may be conditioned upon Borrower delivering a Rating Agency Confirmation as to such new manager and management agreement. If at any time Lender consents to the appointment of a new manager, such new manager and Borrower shall, as a condition of Lender's consent, execute (i) a management agreement in form and substance

reasonably acceptable to Lender, and (ii) a subordination of management agreement in a form reasonably acceptable to Lender.

Section 7.3                                  Replacement of Manager.

Lender shall have the right to require Borrower to replace the Manager with a Person chosen by Borrower and approved by Lender (provided, that such approval may be conditioned upon Borrower delivering a Rating Agency Confirmation as to such new manager and management agreement) upon the occurrence of any one or more of the following events: (i)  at any time following the occurrence and during the continuance of an Event of Default, (ii) if at any time the Debt Service Coverage Ratio falls below 1.10 to 1.00 (the "Manager Termination Ratio"), as determined by Lender in its sole discretion, (iii) if Manager shall be in default under the Management Agreement beyond any applicable notice and cure period, (iv) if Manager shall become insolvent or a debtor in any bankruptcy or insolvency proceeding, or (v) if at any time the Manager has engaged in gross negligence, fraud, willful misconduct or misappropriation of funds. Notwithstanding the foregoing, after the occurrence and during the continuance of an Event of Default, Lender may, but shall not be obligated to, select the replacement property manager.

ARTICLES PERMITTED TRANSFERS

Section 8.1                                  Permitted Transfer of the Property.

From and after the date that is one year after the Closing Date, Lender shall not withhold  its consent to the conveyance of the Property  to a Permitted  Transferee provided that (a)  Borrower shall give Lender written notice of such Transfer request not less than sixty (60) days prior to the proposed date of such Transfer and pay to Lender a non-refundable processing fee in the amount of $25,000, (b) Lender has received a Rating Agency Confirmation as to the conveyance of the Property to the Permitted Transferee, (c) Lender has received an agreement, acceptable to it in its sole discretion, pursuant to which Permitted Transferee assumes all of Borrower's obligations under the Loan Documents, (d) Lender receives a transfer fee equal to (1) for the first assumption, 0.5% of the then-outstanding amount of the Loan (but in no event less than $15,000) and (2) for any subsequent assumption, 1% of the then-outstanding amount of the Loan (but in no event less than $15,000), (e) Lender shall have received such documents, certificates and legal opinions as it may reasonably request, (f) no Event of Default or event which with the giving of notice or the passage of time or both would constitute an Event of Default shall have occurred and remain uncured; (g) the Permitted Transferee and its property manager shall have sufficient experience in the ownership and management of properties similar to the Property, and Lender shall be provided with reasonable evidence thereof (and Lender reserves the right to approve the Permitted Transferee without approving the substitution of the property manager); (h) the Permitted Transferee shall have executed and delivered to Lender an assumption agreement in form and substance acceptable to Lender, evidencing such Permitted Transferee's agreement to abide and be bound by the terms of the Note, this Agreement and the other Loan Documents and an Affiliate of such Permitted Transferee acceptable to Lender shall execute a recourse guaranty and an environmental  indemnity  in form and substance identical to

the Guaranty and Environmental Indemnity, respectively, with such changes to each of the foregoing as may be reasonably required by Lender, together with such legal opinions and title insurance endorsements as may be reasonably requested by Lender; and (i) prior to any release of the Guarantor, a substitute guarantor acceptable to Lender shall have assumed the Guaranty executed by Guarantor or executed a replacement guaranty reasonably satisfactory to Lender. Notwithstanding the foregoing or anything herein to the contrary, Borrower may not exercise its rights pursuant to this Section 8.1 during the period that commences on the date that is sixty (60) days prior to the date of any intended Securitization of the Loan and ending on the date that is sixty (60) days after the date of such Securitization of the Loan.

Section 8.2                                  Permitted Transfers of Interest in Borrower.

(a)        Notwithstanding anything to the contrary contained in Section 4.2.1, the following Transfers ("Permitted Transfers") shall be deemed to be permitted hereunder without the consent of Lender:

(i)         provided that no Default or Event of Default shall have occurred and remain uncured, a Transfer (but not a pledge) of a direct or indirect interest in Borrower, provided that (A) such Transfer shall not (y) cause the transferee (together with its Affiliates) to acquire Control of Borrower (if such transferee did not previously Control Borrower), or (z) result in Borrower no longer being Controlled by Guarantor,

(B) after giving effect to such Transfer, the aggregate of all Transfers of direct or indirect interests in Borrower shall not exceed forty-nine percent (49%) of the direct and indirect interests in Borrower existing as of the date hereof, (C) Borrower shall give Lender notice of such Transfer together with copies of all instruments effecting such Transfer not less than ten (10) days prior to the date of such Transfer, (D) to the extent any transferee owns twenty percent (20%) or more of the direct or indirect interests in Borrower immediately following such Transfer (provided such transferee did not own 20% or more of the direct or indirect ownership interests in Borrower as of the Closing Date), Borrower shall, prior to such Transfer, deliver, at Borrower's sole cost and expense, customary searches (credit, judgment, lien, etc.) acceptable to Lender with respect to such transferee, and (E) the legal and financial structure of Borrower and its members or partners, as applicable, and the single purpose nature and bankruptcy remoteness of Borrower and its members or partners, as applicable, after such Transfer, shall satisfy Lender's then current applicable underwriting criteria and requirements;

(ii)        provided that no Default or Event of Default shall have occurred and remain uncured, a Transfer (but not a pledge) of an indirect interest in Borrower that occurs by maintenance, devise or bequest or by operation of law upon the death of a natural person that was the holder of such interest to a member of the immediate family of such interest holder or a trust established for the benefit of such immediate family member, provided that (A) no such Transfer shall result in a change of the day-to-day management of the Property, (B) Borrower shall give Lender notice of such Transfer together with copies of all instruments effecting such Transfer not more than ten (10) days after the date of such Transfer, (C) the legal and financial structure of Borrower and its members or partners, as applicable, and the single purpose nature and bankruptcy remoteness of Borrower and its members or partners, as applicable after such Transfer,

shall satisfy Lender's then current applicable underwriting criteria and requirements, (D) to the extent any transferee owns twenty percent (20%) or more of the direct or indirect interests in Borrower immediately following such Transfer (provided such transferee did not own 20% or more of the direct or indirect ownership interests in Borrower as of the Closing Date), Borrower shall deliver, at Borrower's sole cost and expense, customary searches (credit, judgment, lien, etc.) acceptable to Lender with respect to such transferee within thirty (30) days after any such Transfer, (E) if any such Transfer would result in a change of Control of Borrower and occurs prior to Securitization, such Transfer is approved by Lender in writing in its sole and absolute discretion within thirty (30) days after any such Transfer, and (F) if any such Transfer would result in a change of Control of Borrower, Borrower, at Borrower's sole cost and expense, shall, within thirty (30)  days after any such Transfer, (y) deliver (or cause to be delivered) if such Transfer occurs after a Securitization, a Rating Agency Confirmation to Lender, and (z) obtain the written consent of Lender, which shall not be unreasonably withheld.

(b)        For purposes of this Section 8.2, (i) a change of "Control" of Borrower shall be deemed to have occurred if (A) there is any change in the identity of any individual or entity or any group of individuals or entities who have the right, by virtue of any partnership agreement, articles of incorporation, by-laws, articles of organization, operating agreement or any other agreement, with or without taking any formative action, to cause Borrower to take some action or to prevent, restrict or impede Borrower from taking some action which, in either case, Borrower could take or could refrain from taking were it not for the rights of such individuals, or (B) the individual or entity or group of individuals or entities that "Control" Borrower as described in clause

(A)  ever cease to own at least fifty-one percent (51%) of all equity interests (direct or indirect) in Borrower; and (ii) an "immediate family member" shall mean a sibling, spouse or a child of any interest holder.

Section 8.3                                  Cost and Expenses.

Borrower shall pay all costs and expenses of Lender in connection with any Transfer, whether or not such Transfer is deemed to be a Permitted Transfer, including, without limitation, all fees and expenses of Lender's counsel, whether internal or outside, and the cost of any required counsel opinions related to REMIC or other securitization or tax issues and any Rating Agency fees.

ARTICLE9

SALE AND SECURITIZATION OF MORTGAGE

Section 9.1                                   Sale of Mortgage and Securitization.

(a)        Lender shall have the right (i) to sell or otherwise transfer the Loan or any portion thereof as a whole loan, (ii) to sell participation interests in the Loan, or

(iii) to securitize the Loan or any portion thereof in a single asset securitization or a pooled loan securitization. (The transactions referred to in clauses (i), (ii) and (iii) shall hereinafter be referred to collectively as "Secondary Market Transactions" and the

transactions referred to in clause (iii) shall hereinafter be referred to as a "Securitization". Any certificates, notes or other securities issued in connection with a Securitization are hereinafter referred to as "Securities").

(b)       If requested by Lender, Borrower shall assist Lender,  at Borrower's reasonable expense, in satisfying the market standards to which Lender customarily adheres or which may be required in the marketplace or by the Rating Agencies or any Governmental Authority in connection with any Secondary Market Transactions, including to:

(i)        (A) provide updated financial and other information with respect to the Property, the business operated at the Property, Borrower and the Manager, (B) provide updated budgets relating to the Property, and (C) provide updated appraisals, market studies, environmental reviews and reports (Phase I's and, if appropriate, Phase II's), property condition reports and other due diligence investigations of the Property (the "Updated Information"), together, if customary, with appropriate verification of the Updated Information through letters of auditors or opinions of counsel acceptable to Lender and the Rating Agencies;

(ii)       provide opinions of counsel, which may be relied upon by Lender, the Rating Agencies, and their respective counsel, agents and representatives, as to fraudulent conveyance and true sale or any other opinion customary in Secondary Market Transactions or required by the Rating Agencies with respect to the Property and Borrower and its Affiliates, which counsel and opinions shall be satisfactory to Lender and the Rating Agencies;

(iii)      provide updated, as of the closing date of the Secondary Market Transaction, representations and warranties made in the Loan Documents and such additional representations and warranties as the Rating Agencies may require; and

(iv)       execute amendments to the Loan Documents and Borrower's organizational documents requested by Lender; provided, however, that Borrower shall not be required to modify or amend any Loan Document if such modification or amendment would (A) change the interest rate, the stated maturity or the amortization of principal as set forth herein or in the Note, or (B) modify or amend any other material economic term of the Loan.

(c)        Upon request, Borrower shall furnish to Lender from time to time such financial data and financial statements as Lender determines to be necessary, advisable or appropriate for complying with any applicable law (including those applicable to Lender or any Servicer (including, without limitation and to the extent applicable, Regulation AB)) within the timeframes necessary, advisable or appropriate in order to comply with such applicable law.

Section 9.2                               Securitization Indemnification.

(a)        Borrower understands that information provided to Lender by Borrower and its agents, counsel and representatives, including information contained in the Certification of Borrower may be included in disclosure documents in connection with the Securitization, including an offering circular, a prospectus, prospectus supplement, private placement memorandum or other offering document (each, a "Disclosure Document") and may also be included in filings with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the "Securities Act"), or the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and may be made available to investors or prospective investors in the Securities, the Rating Agencies and service providers relating to the Securitization.

(b)       Borrower shall provide in connection with each of (i) a preliminary and a final private placement memorandum or (ii) a preliminary and final prospectus or prospectus supplement, as applicable, an agreement (A) certifying that Borrower has examined such Disclosure Documents specified by Lender and that each such Disclosure Document, as it relates to Borrower, Guarantor, Borrower's Affiliates, the Property, Manager and all other aspects of the Loan, does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, (B) indemnifying Lender (and for purposes of this Section 9.2, Lender hereunder shall include its officers and directors), the Affiliate of Lender ("Lender Affiliate") that has filed the registration statement relating to the Securitization (the "Registration Statement"), each of its directors, each of its officers who have signed the Registration Statement and each Person that controls the Affiliate within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the  "Lender Group"), Lender Affiliate, and any other placement agent or underwriter with respect to the Securitization, each of their respective directors and each Person who controls Lender Affiliate or any other placement agent or underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the "Underwriter Group") for any losses, claims, damages or liabilities (collectively, the "Liabilities") to which Lender, the Lender Group or the Underwriter Group may become subject insofar as the Liabilities arise out of, or are based upon, any untrue statement or alleged untrue statement of any material fact contained in such sections or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated in such sections or necessary in order to make the statements in such sections, in light of the circumstances under which they were made, not misleading, and (C) agreeing to reimburse Lender, the Lender Group and/or the Underwriter Group for any legal or other expenses reasonably incurred by Lender, the Lender Group and/or the Underwriter Group in connection with investigating or defending the Liabilities; provided, however, that Borrower will be liable in any such case under clauses (B) or (C) above only to the extent that any such Liability arises out of, or is based upon, any such untrue statement or omission made therein in reliance upon, and in conformity with, information furnished to Lender by or on behalf of Borrower in connection with the preparation of the Disclosure Document or in connection with the underwriting or closing of the Loan, including financial statements of Borrower, operating statements and rent rolls with respect to the

Property. This indemnity agreement will be in addition to any liability which Borrower may otherwise have.

(c)        In connection with any Exchange Act Filing, Borrower shall (i) indemnify Lender, the Lender Group and the Underwriter Group for Liabilities to which Lender, the Lender Group and/or the Underwriter Group may become subject insofar as the Liabilities arise out of, or are based upon, the omission or alleged omission to state in the Disclosure Document a material fact required to be stated in the Disclosure Document in order to make the statements in the Disclosure Document, in light of the circumstances under which they were made, not misleading, and (ii) reimburse Lender, the Lender Group and/or the Underwriter Group for any legal or other expenses reasonably incurred by Lender, the Lender Group and/or the Underwriter Group in connection with defending or investigating the Liabilities.

(d)       In connection with any  ecuritization,     Borrower  shall (i) indemnify Lender, the Lender Group and the Underwriter Group for Liabilities to which Lender, the Lender Group and/or the Underwriter Group may become subject insofar as the Liabilities arise out of or are based upon, any error or omission in any Disclosure Document and (ii) reimburse Lender, the Lender Group_ and/or the Underwriter Group for any legal or other expenses reasonably incurred by Lender, the Lender Group and/or the Underwriting Group in connection with defending or investigating the Liabilities.

(e)        Promptly after receipt by  an  indemnified  party  under  this Section 9.2 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party  under  this Section 9.2, notify the indemnifying party in writing of the commencement thereof, but the omission to so notify the indemnifying party will not relieve the indemnifying party from any liability which the indemnifying party may have to any indemnified party hereunder except to the extent that failure to notify causes prejudice to the indemnifying party. In the event that any action is brought against any indemnified party, and  it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled, jointly with any other indemnifying party, to participate therein and, to the extent that it (or they) may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel satisfactory to such indemnified  party.  After notice from the indemnifying party to such indemnified party under this Section 9.2,  such indemnified party shall pay for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there are any legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party at the cost of the indemnifying party. The indemnifying party shall not be liable for the expenses of more than one separate counsel

unless an indemnified party shall have reasonably concluded that there may be legal defenses available to it that are different from or additional to those available to the indemnifying party.

(f)        In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Section 9.2(b) or ill is for any reason held to be unenforceable as to an indemnified party in respect of any Liabilities (or action in respect thereof) referred to therein which would otherwise be indemnifiable under Section 9.2(b) or ill, the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such Liabilities (or action in respect thereof); provided, however, that no Person guilty of fraudulent misrepresentation (within the meaning of Section 1l(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. In determining the amount of contribution to which the respective parties are entitled, the following factors shall be considered: (i) Lender Affiliate's and Borrower's relative knowledge and access to information concerning the matter with respect to which the claim was asserted; (ii) the opportunity to correct and prevent any statement or omission; and (iii) any other equitable considerations appropriate in the circumstances. Lender and Borrower hereby agree that it would not be equitable if the amount of such contribution were determined by pro rata or per capita allocation.

(g)       The liabilities and obligations of both Borrower and Lender under this Section 9.2 shall survive the termination of this Agreement and the satisfaction and discharge of the Debt.

Section 9.3 Intentionally Omitted. Section 9.4 Severance Documentation.

Lender, without in any way limiting Lender's other rights hereunder, in its sole and absolute discretion, shall have the right, at any time (whether prior to or after any sale, participation or Securitization of all or any portion of the Loan), to require the Borrower to execute and deliver "component" notes and/or modify the Loan in order to create one or more senior and subordinate notes (i.e., an A/B or A/B/C structure) and/or one or more additional components of the Note or Notes (including the implementation of a mezzanine loan structure), reduce the number of components of the Note or Notes, revise the interest rate for each component, reallocate the principal balances of the Notes and/or the components, increase or decrease the monthly debt service payments for each component or eliminate the component structure and/or the multiple note structure of the Loan (including the elimination of the related allocations of principal and interest payments), provided that the Outstanding Principal Balance of all components immediately after the effective date of such modification equals the Outstanding Principal Balance immediately prior to such modification and the weighted average of the interest rates for all components immediately after the effective date of such modification equals the interest rate of the original Note immediately prior to such modification. At Lender's election, each note comprising the Loan may be subject to one or more Securitizations. Lender shall have the right to modify the Note and/or Notes and any components in accordance with this Section 9.4 and, provided that such modification shall comply with the terms of this Section 9.4,

it shall become immediately effective. If requested by Lender, Borrower shall promptly execute an amendment to the Loan Documents to evidence any such modification. Borrower shall (1)  cooperate with all reasonable requests of Lender in order to establish the "component" notes, and (2) execute and deliver such documents as shall be required by Lender and any Rating Agency in connection therewith, all in form and substance satisfactory to Lender and satisfactory to any Rating Agency, including, without limitation, the severance of security documents if requested. In the event Borrower fails to execute and deliver such documents to Lender within five (5) Business Days following such request by Lender, Borrower hereby absolutely and irrevocably appoints Lender as its true and lawful attorney, coupled with an interest, in its name and stead to make and execute all documents necessary or desirable to effect such transactions, Borrower hereby ratifying all that such attorney shall do by virtue thereof. It shall be an Event of Default under this Agreement, the Note, the Mortgage and the other Loan Documents if Borrower fails to comply with any of the terms, covenants or conditions of this Section 9.4 after expiration of ten (10) Business Days after notice thereof.

ARTICLE 10 DEFAULTS

Section 10.1                             Events of Default.

(a)       Each of the following events shall constitute an event of default hereunder (an "Event of Default"):

(i)         if (A) the Obligations are not paid in full on the Maturity Date, (B) any regularly scheduled monthly payment of interest, and, if applicable, principal due under the Note is not paid in full on or by the applicable Monthly Payment Date, (C) any prepayment of principal due under this Agreement or the Note is not paid when due, (D) the Prepayment Fee is not paid when due, or (E) any deposit to the Reserve Funds is not made on the required deposit date therefor;

(ii)        if any other amount payable pursuant to this  Agreement, the Note or any other Loan Document (other than as set forth in the foregoing clause (i)) is not paid in full when due and payable in accordance with the provisions of the applicable Loan Document, with  such failure  continuing  for ten (10) Business Days after Lender delivers written notice thereof to Borrower;

(iii)      if any of the Taxes or Other Charges are not paid when due (provided that it shall not be an Event of Default ifthere are sufficient funds in the Tax Account to pay such amounts when due, no other Event of Default is then continuing and Servicer fails to make such payment in violation of this Agreement);

(iv)      if the Policies are not (A) delivered to Lender and (B) kept in full force and effect, each in accordance with the terms and conditions hereof;

(v)       if Borrower breaches or permits or suffers a breach of the provisions of Section 4.2.1;

(vi)      if any certification, representation or warranty made by Borrower or Guarantor herein or in any other Loan Document, or in any report, certificate, financial statement or other instrument, agreement or document furnished to Lender, including but not limited to the Certification of Borrower, shall have been false or misleading in any material respect as of the date such representation or warranty was made;

(vii)     if Borrower or Guarantor shall make an assignment for the benefit of creditors;

(viii)    if a receiver, liquidator or trustee shall be appointed for Borrower or Guarantor or if Borrower or Guarantor shall be adjudicated a bankrupt or insolvent, or if any petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state law, shall be filed by or against, consented to, or acquiesced in by, Borrower or Guarantor, or if any proceeding for the dissolution or liquidation of Borrower or Guarantor shall be instituted; provided, however, if such appointment, adjudication, petition or proceeding was involuntary and not consented to by Borrower or Guarantor, upon the same not being discharged, stayed or dismissed within thirty (30) days following its filing;

(ix)      if Borrower attempts to assign its rights under this Agreement or any of the other Loan Documents or any interest herein or therein  in contravention of the Loan Documents;

(x)       intentionally omitted;

(xi)      if Borrower breaches any representation, warranty or covenant contained in Section 3.1.24 or Section 3.1.46 hereof;

(xii)     if Borrower shall be in default under any mortgage or security agreement covering any part of the Property whether it be superior, pari passu or junior in Lien to the Mortgage;

(xiii)    subject to Borrower's right to contest as provided in  Section 3.6 of the Mortgage, if the Property becomes subject to any mechanic's, materialman's or other Lien except a Lien for Taxes not then due and payable;

(xiv)    except as expressly permitted herein, the alteration, improvement, demolition or removal of any of the Improvements without the prior consent of Lender;

(xv)      if, without Lender's prior written consent, (i) the Management Agreement is terminated, (ii) the ownership, management or control of Manager is transferred, (iii) there is a material change in the Management

Agreement, or (iv) if there shall be a material default by Borrower under the Management Agreement;

(xvi)    if Borrower ceases to continuously operate the Property or any material portion thereof as a hotel for any reason whatsoever (other than temporary cessation in connection with any repair or renovation thereof undertaken with the consent of Lender);

(xvii)   if Borrower shall continue to be in Default under any of the other terms, covenants or conditions of this Agreement not specified in subsections (i) to (xvi) above or in subsections (xviii) to (xxvi) below, and such Default shall continue for ten (10) days after notice to Borrower from Lender, in the case of any such Default which can be cured by the payment of a sum of money, or for thirty (30) days after notice to Borrower from Lender in the case of any other such Default; provided, however, that if such non-monetary Default is susceptible of cure but cannot reasonably be cured within such 30-day period, and provided further that Borrower shall have commenced to cure such Default within such 30-day period shall and thereafter diligently and expeditiously proceed to cure the same, such 30-day period shall be extended for such time as is reasonably necessary for Borrower in the exercise of due diligence to cure such Default, such additional period not to exceed sixty (60) days;

(xviii)  if Borrower or any Person owning a direct or indirect ownership interest in Borrower shall be convicted of a Patriot Act Offense by a court of competent jurisdiction;

(xix)    if  Borrower  breaches  any  covenant  contained   m Section 4.1.7 hereof and such failure continues for ten (10) Business Days following written notice from Lender;

(xx)     except as expressly permitted pursuant to the Loan Documents, if Borrower or any other Person grants any easement, covenant or restriction (other than the Permitted Encumbrances) over the Property;

(xxi)    if Borrower breaches the negative covenant contained in Section 4.2.16 hereof or acts or neglects to act in such a manner as to be considered a default under any of the Operating Agreements;

(xxii)   intentionally omitted;

(xxiii)  if without Lender's prior consent, there is any material change in the Franchise Agreement (or any successor franchise agreement);

(xxiv)  if a default has occurred and continues beyond any applicable cure period under the Franchise Agreement (or any successor franchise agreement) if such default permits the Franchisor to terminate or cancel the Franchise Agreement (or any successor franchise agreement);

(xxv)    if Borrower fails to comply with the provisions of Section hl hereof or the provisions of the Cash Management Agreement relating to the establishment of a Clearing Account or Cash Management Account, or with the institution and operation of cash management as provided herein and therein; or

(xxvi)   if there shall occur any other event which is defined as an Event of Default in this Agreement or in any other Loan Document or if there shall be a default under any of the other Loan Documents beyond any applicable cure periods contained in such Loan Documents, whether as to Borrower, Guarantor or the Property, or if any other such event shall occur or condition shall exist, if the effect of such event or condition is to accelerate the maturity of any portion of the Obligations or to permit Lender to accelerate the maturity of all or any portion of the Obligations.

(b)       Upon the occurrence of an Event of Default (other than an Event of Default described in clauses (vii), (viii) or (ix) above) and at any time thereafter, Lender may, in addition to any other rights or remedies available to it pursuant to this Agreement and the other Loan Documents or at law or in equity, take such action, without notice or demand, that Lender deems advisable to protect and enforce its rights against Borrower and in and to the Property, including declaring the Obligations to be immediately due and payable, and Lender may enforce or avail itself of any or all rights or remedies provided in the Loan Documents against Borrower and the Property, including all rights or remedies available at law or in equity; and upon any Event of Default described  in clauses (vii), (viii) or (ix) above, the Obligations of Borrower hereunder and under the other Loan Documents shall immediately and automatically become due and payable, without notice or demand, and Borrower hereby expressly waives any such notice or demand, anything contained herein or in any other Loan Document to the contrary notwithstanding.

Section 10.2                             Remedies.

(a)        Upon the occurrence and during the continuance of an Event of Default, all or any one or more of the rights, powers, privileges and other remedies available to Lender against Borrower under this Agreement or any of the other Loan Documents executed and delivered by, or applicable to, Borrower or at law or in equity may be exercised by Lender at any time and from time to time, whether or not all or any of the Obligations shall be declared due and payable, and whether or not Lender shall have commenced any foreclosure proceeding or other action for the enforcement of its rights and remedies under any of the Loan Documents with respect to the Property. Any such actions taken by Lender shall be cumulative and concurrent and may be pursued independently, singly, successively, together or otherwise, at such time and in such order as Lender may determine in its sole discretion, to the fullest extent permitted by law, without impairing or otherwise affecting the other rights and remedies of Lender permitted by law, equity or contract or as set forth herein or in the other  Loan Documents. Without limiting the generality of the foregoing, if an Event of Default is continuing (i) Lender shall not be subject to any "one action" or "election of remedies" law or rule, and (ii) all Liens and other rights, remedies or privileges provided to Lender

shall remain in full force and effect until Lender has exhausted all of its remedies against the Property and the Mortgage has been foreclosed, sold and/or otherwise realized upon in satisfaction of the Obligations or the Obligations have been paid in full.

(b)       Lender shall have the right from time to time to partially foreclose the Mortgage in any manner and for any amounts secured by the Mortgage then due and payable as determined by Lender in its sole discretion, including the following circumstances: (i) in the event Borrower defaults beyond any applicable grace period in the payment of one or more scheduled payments of principal and interest, Lender may foreclose the Mortgage to recover such delinquent payments, or (ii) in the event Lender elects to accelerate less than the entire Outstanding Principal Balance, Lender may foreclose the Mortgage to recover so much of the principal balance of the Loan as Lender may accelerate and such other sums secured by the Mortgage as Lender may elect. Notwithstanding one or more partial foreclosures, the Property shall remain subject to the Mortgage to secure payment of the sums secured by the Mortgage and not previously recovered.

(c)        Lender shall have the right from time to time to sever the Note and the other Loan Documents into one or more separate notes, mortgages and other security documents (the "Severed Loan Documents") in such denominations as Lender shall determine in its sole discretion for purposes of evidencing and enforcing its rights and remedies provided hereunder. Borrower shall execute and deliver to Lender from time to time, promptly after the request of Lender, a severance agreement and such other documents as Lender shall request in order to effect the severance described in the preceding sentence, all in form and substance reasonably satisfactory to  Lender. Borrower hereby absolutely and irrevocably appoints Lender as its true and lawful attorney, coupled with an interest, in its name and stead to make and execute all documents necessary or desirable to effect the aforesaid severance, Borrower ratifying all that its said attorney shall do by virtue thereof; provided, however, Lender shall not make or execute any such documents under such power until three (3) days after notice has been given to Borrower by Lender of Lender's intent to exercise its rights under such power. Except as may be required in connection with a Securitization  pursuant  to Section 9.1 hereof, (i) Borrower shall not be obligated to pay any costs or expenses incurred in connection with the preparation, execution, recording or filing of the Severed Loan Documents, and (ii) the Severed Loan Documents shall not contain any representations, warranties or covenants not contained in the Loan Documents.

(d)       Any amounts recovered from the Property or any other collateral for the Loan after an Event of Default may be applied by Lender toward the payment of any interest and/or principal of the Loan and/or any other amounts due under the Loan Documents, in such order, priority and proportions as Lender in its sole discretion shall determine.

Section 10.3                              Lender's Right to Perform.

If Borrower fails to perform any covenant or obligation contained herein and such failure shall continue for a period of five (5) Business Days after Borrower's receipt of written

notice thereof from Lender, without in any way limiting Lender's right to exercise any of its rights, powers or remedies as provided hereunder, or under any of the other Loan Documents, Lender may, but shall have no obligation to, perform, or cause the performance of, such covenant or obligation, and all costs, expenses, liabilities, penalties and fines of Lender incurred or paid in connection therewith shall be payable by Borrower to Lender upon demand and if not paid shall be added to the Obligations (and to the extent permitted under applicable laws, secured by the Mortgage and the other Loan Documents) and shall bear interest thereafter at the Default Rate. Notwithstanding the foregoing, Lender shall have no obligation to send notice to Borrower of any such failure.

Section 10.4                                Remedies Cumulative.

The rights, powers and remedies of Lender under this Agreement shall be cumulative and not exclusive of any other right, power or remedy which Lender may have against Borrower pursuant to this Agreement or the other Loan Documents, or existing at law or in equity or otherwise. Lender's rights, powers and remedies may be pursued singly, concurrently or otherwise, at such time and in such order as Lender may determine in Lender's sole discretion. No delay or omission to exercise any remedy, right or power accruing upon an Event of Default shall impair any such remedy, right or power or shall be construed as a waiver thereof, but any such remedy, right or power may be exercised from time to time and as often as may be deemed expedient. A waiver of one Default or Event of Default with respect to  Borrower shall not be construed to be a waiver of any subsequent Default or Event of Default by Borrower or to impair any remedy, right or power consequent thereon.

ARTICLE 11 MISCELLANEOUS

Section 11.1                                Survival; Successors and Assigns.

This Agreement and all covenants, agreements, representations and warranties made herein and in the certificates delivered pursuant hereto shall survive the making by Lender of the Loan and the execution and delivery to Lender of the Note, and shall continue in full force and effect so long as all or any of the Obligations are outstanding and unpaid unless a longer period is expressly set forth herein or in the other Loan Documents. Whenever in  this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the legal representatives, successors and assigns of such party. All covenants, promises and agreements in this Agreement, by or on behalf of Borrower, shall inure to the benefit of the legal representatives, successors and assigns of Lender.

Section 11.2                                Lender's Discretion.

Whenever pursuant to this Agreement Lender exercises any right given to it to approve or disapprove any matter, or any arrangement or term is to be satisfactory to Lender, the decision of Lender to approve or disapprove such matter or to decide whether arrangements or terms are satisfactory or not satisfactory shall (except as is otherwise specifically herein provided) be in the sole discretion of Lender and shall be final and conclusive. Prior to a

Securitization, whenever pursuant to this Agreement the Rating Agencies are given any right to approve or disapprove any matter, or any arrangement or term is to be satisfactory to the Rating Agencies, the decision of Lender to approve or disapprove such matter or to decide whether arrangements or terms are satisfactory or not satisfactory, based upon Lender's determination of Rating Agency criteria, shall be substituted therefor.

Section 11.3                                Governing Law.

THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED AND THE APPLICABLE LAWS OF

THE UNITED STATES OF AMERICA. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE INSTITUTED IN THE COURTS HAVINO JURISDICTION IN THE CITY AND/OR COUNTY IN WHICH THE PROPERTY IS LOCATED, AND EACH OF LENDER AND BORROWER HEREBY WAIVES ANY OBJECTIONS THAT IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING.

Section 11.4                                Modification, Waiver in Writing.

No modification, amendment, extension, discharge, termination or waiver of any provision of this Agreement or of any other Loan Document, nor consent to any departure by Borrower therefrom, shall in any event be effective unless the same shall be in a writing signed by the party or parties against whom enforcement is sought, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which given. Except as otherwise expressly provided herein, no notice to, or demand on Borrower, shall entitle Borrower to any other or future notice or demand in the same, similar or other circumstances.

Section 11.5                                Delay Not a Waiver.

Neither any failure nor any delay on the part of Lender in insisting upon strict performance of any term, condition, covenant or agreement, or exercising any right, power, remedy or privilege hereunder or under any other Loan Document, shall operate as or constitute a waiver thereof, nor shall a single or partial exercise thereof preclude any other future exercise, or the exercise of any other right, power, remedy or privilege. In particular, and not by way of limitation, by accepting payment after the due date of any amount payable under this Agreement or any other Loan Document, Lender shall not be deemed to have waived any right either to require prompt payment when due of all other amounts due under this Agreement or the other Loan Documents, or to declare a default for failure to effect prompt payment of any such other amount. Lender shall have the right to waive or reduce any time periods that Lender is entitled  to under the Loan Documents in its sole and absolute discretion.

Section 11.6                                Notices.

All notices, demands, requests, consents, approvals or other communications (any of the foregoing, a "Notice") required, permitted or desired to be given hereunder shall be in writing and shall be sent by telefax (with answer back acknowledged) or by registered or

certified mail, postage prepaid, return receipt requested, or delivered by hand or by reputable overnight courier, addressed to the party to be so notified at its address hereinafter set forth, or to such other address as such party may hereafter specify in accordance with the provisions of this Section 11.6. Any Notice shall be deemed to have been received: (a) three (3) days after the date such Notice is mailed, (b) on the date of sending by telefax if sent during business hours on a Business Day (otherwise on the next Business Day), (c) on the date of delivery by hand if delivered during business hours on a Business Day (otherwise on the next Business Day), and

(d)  on the next Business Day if sent by an overnight commercial courier, in each case addressed to the parties as follows:

If to Lender:                                             Starwood Mortgage Capital LLC

160I Washington Avenue, Suite 800 Miami Beach, Florida 33139 Attention: Ms. Leslie K. Fairbanks Facsimile No. (305) 695-5539

with a copy to:                                         Winstead PC

201 North Tryon Street Suite 2000

Charlotte, North Carolina 28202 Attention: Jeffrey J. Lee, Esq.

Facsimile No.: (704) 339-1701

and with a copy to:                                  Wells Fargo Commercial Mortgage Services Duke Energy Center

550 South Tryon St., 12th Floor

MAC D1086-120

Charlotte, North Carolina 28202

Attention: Asset Manager - Starwood Mortgage Capital Facsimile No.: (704) 715-0036

If to Borrower: Treemont Capital Partners III, LP 1415 South Voss #110-94

Houston, Texas 77057 Attention: Philip A. McCrae

with a copy to: Sneed, Vine & Perry, P.C.

900 Congress Avenue, Suite 300
Austin, Texas 78701 Attention: Adam S. Wilk Facsimile No. 512-476-1825

Any party may change the address to which any such Notice is  to be delivered  by furnishing ten (10) days written notice of such change to the other parties in accordance with the provisions of this Section 11.6. Notices shall be deemed to have been given on the date as set forth above, even if there is an inability to actually deliver any such Notice because of a changed address of

which no Notice was given, or there is a rejection or refusal to accept any Notice offered for delivery. Notice for any party may be given by its respective counsel. Additionally, Notice from Lender may also be given by Servicer and Lender hereby acknowledges and agrees that Borrower shall be entitled to rely on any Notice given by Servicer as if it had been sent by Lender.

Section 11.7                              Trial by Jury.

BORROWER AND LENDER EACH HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIYER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE  AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN  ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIYER.

Section 11.8                              Headings.

The Article and/or Section headings and the Table of Contents in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

Section 11.9                              Severability.

Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

Section 11.10 Preferences.

Lender shall have the continuing and exclusive right to apply or reverse and reapply any and all payments by Borrower to any portion of the Obligations of Borrower hereunder. To the extent Borrower makes a payment or payments to Lender, which payment or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds received, the Obligations hereunder or part thereof intended to be satisfied shall be revived and continue in full force and effect, as if such payment or proceeds had not been received by Lender.

Section 11.11 Waiver of Notice.

Borrower shall not be entitled to any notices of any nature whatsoever from Lender except with respect to matters for which this Agreement or the other Loan Documents specifically and expressly provide for the giving of notice by Lender to Borrower and except with respect to matters for which Borrower is not, pursuant to applicable Legal Requirements, permitted to waive the giving of notice. Borrower hereby expressly waives the right to receive any notice from Lender with respect to any matter for which this Agreement or the other Loan Documents do not specifically and expressly provide for the giving of notice by Lender to Borrower.

Section 11.12 Remedies of Borrower.

In the event that a claim or adjudication is made that Lender or its agents have acted unreasonably or unreasonably delayed acting in any case where, by law or under this Agreement or the other Loan Documents, Lender or such agent, as the case may be, has an obligation to act reasonably or promptly, neither Lender nor its agents shall be liable for any monetary damages and Borrower's sole remedy shall be limited to commencing an  action seeking injunctive relief or declaratory judgment. Any action or proceeding to  determine whether Lender has acted reasonably shall be determined by an action seeking declaratory judgment.

Section 11.13 Expenses; Indemnity.

(a)        Borrower shall pay or, if Borrower fails to pay, reimburse Lender upon receipt of notice from Lender, for all costs and expenses (including reasonable attorneys' fees and disbursements) incurred by Lender in connection with (i) Borrower's ongoing performance of and compliance with Borrower's agreements and covenants contained in this Agreement and the other Loan Documents on its part to be performed or complied with after the Closing Date, including confirming compliance with environmental and insurance requirements; (ii) Lender's ongoing performance of and compliance with all agreements and covenants contained in this Agreement and the other Loan  Documents  on its part  to be performed  or complied  with after the Closing  Date; (iii) the negotiation, preparation, execution, delivery and administration of any consents, amendments, waivers or other modifications to this Agreement and the other Loan Documents and any other documents or matters requested by Borrower; (iv) the filing and recording fees and expenses, title insurance and reasonable fees and expenses of counsel for providing to Lender all required legal opinions, and other similar expenses incurred in creating and perfecting the Liens in favor of Lender pursuant to this Agreement and the other Loan Documents; (v) enforcing or preserving any rights, in response to third party claims or the prosecuting or defending of any action or proceeding or other litigation, in each case against, under or affecting Borrower, this Agreement, the other   Loan   Documents,   the  Property   or  any  other   security   given   for  the  Loan; (vi) enforcing any Obligations of or collecting any payments due from Borrower under this Agreement, the other Loan Documents or with respect to the Property or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement  in  the nature  of a "work-out"  or of any insolvency or bankruptcy

proceedings, including, but not limited to any servicer or special servicer fees, and (vii) Borrower's failure to comply with the requirements of Section 4.1.15 or Section 9.1 hereof; provided, however, that Borrower shall not be liable for the payment of any such costs and expenses to the extent the same arise by reason of the active gross negligence, illegal acts, fraud or willful misconduct of Lender. Any costs due and payable to Lender may be paid, at Lender's election in its sole discretion, from any amounts in the Cash Management Account.

(b)        Borrower shall indemnify, defend and hold harmless Lender from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for Lender in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not Lender shall be designated a party thereto), that may be imposed on, incurred by, or asserted against Lender in any manner relating to or arising out of (i) any breach by Borrower of its Obligations under, or any material misrepresentation by Borrower contained in, this Agreement or the other Loan Documents, (ii) the use or intended use of the proceeds of the Loan, (iii) any information provided by or on behalf of Borrower, or contained in any documentation approved by Borrower; (iv) ownership of the Mortgage, the Property or any interest therein, or receipt of any Rents; (v) any accident, injury to or death of persons or loss of or damage to property occurring in, on or about the Property or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (vi) any use, nonuse or condition in, on or about the Property or on adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (vii) performance of any labor or services or the furnishing of any materials or other property in respect of the Property; (viii) any failure of the Property to comply with any Legal Requirement; (ix) any claim by brokers, finders or similar persons claiming to be entitled to a commission in connection with any Lease or other transaction involving the Property or any part thereof, or any liability asserted against Lender with respect thereto; and (x) the claims of any lessee of any portion of the Property or any Person acting through or under any lessee or otherwise arising under or as a consequence of any Lease (collectively, the "Indemnified Liabilities"); provided, however, that Borrower shall not have any obligation to Lender hereunder to the extent that such Indemnified Liabilities arise from the active gross negligence, illegal acts, fraud or willful misconduct of Lender. To the extent that the undertaking to indemnify, defend and hold harmless set forth in the preceding sentence may be unenforceable because it violates any law or public policy, Borrower shall  pay the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by Lender.

Section 11.14 Schedules Incorporated.

The Schedules annexed hereto are hereby incorporated herein as a part of this Agreement with the same effect as if set forth in the body hereof.

Section 11.15 Offsets, Counterclaims and Defenses.

Any assignee of Lender's interest in and to this Agreement and the other Loan Documents shall take the same free and clear of all offsets, counterclaims or defenses which are unrelated to such documents which Borrower may otherwise have against any assignor of such documents, and no such unrelated counterclaim or defense shall be interposed or asserted by Borrower in any action or proceeding brought by any such assignee upon such documents and any such right to interpose or assert any such unrelated offset, counterclaim or defense in any such action or proceeding is hereby expressly waived by Borrower.

Section 11.16 No Joint Venture or Partnership; No Third Party Beneficiaries.

(a)        Borrower and Lender intend that the relationships created hereunder and under the other Loan Documents be solely that of borrower and lender. Nothing herein or therein is intended to create a joint venture, partnership, tenancy-in-common or joint tenancy relationship between Borrower and Lender nor to grant Lender any interest in the Property other than that of mortgagee, beneficiary or lender.

(b)       This Agreement and the other Loan Documents are solely for the benefit of Lender and nothing contained in this Agreement or the other Loan Documents shall be deemed to confer upon anyone other than Lender any right to insist upon or to enforce the performance or observance of any of the Obligations contained herein or therein. All conditions to the obligations of Lender to make the Loan (and disburse Reserve Funds) hereunder are imposed solely and exclusively for the benefit of Lender and no other Person shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that Lender will refuse to make the Loan (or make any disbursement of Reserve Funds) in the absence of strict compliance with any or all thereof and no other Person shall under any circumstances be deemed to be a beneficiary of such conditions, any or all of which may be freely waived in whole or in part by Lender if, in Lender's sole discretion, Lender deems it advisable or desirable to do so.

Section 11.17 Publicity.

All news releases, publicity or advertising by Borrower or its Affiliates through any media intended to reach the general public which refers to the Loan Documents or the financing evidenced by the Loan Documents, to Lender, Lender Affiliate or any of their affiliates shall be subject to the prior written approval of Lender. Borrower hereby agrees that Lender and its affiliated entities and its subsidiaries, may publicly identify details of the Loan in their respective advertising and public communications of all kinds, including, but not limited to, press releases, direct mail, newspapers, magazines, journals, e-mail or internet advertising or communications. Such details may include the name of the Property, the address of the Property, the amount of the Loan, the names of the Borrower and/or Guarantor, the Closing Date, and a description of the size and location of the Property.

Section 11.18 Waiver of Marshalling of Assets.

To the fullest extent permitted by law, Borrower, for itself and its successors and assigns, waives all rights to a marshalling of the assets of Borrower, Borrower's members or partners, as applicable, and others with interests in Borrower, and of the Property, and shall not assert any right under any laws pertaining to the marshalling of assets, the sale in inverse order of alienation, homestead exemption, the administration of estates of decedents, or any other matters whatsoever to defeat, reduce or affect the right of Lender under the Loan Documents to a sale of the Property for the collection of the Obligations without any prior or different resort for collection, or of the right of Lender to the payment of the Obligations out of the net proceeds of the Property in preference to every other claimant whatsoever.

Section 11.19 Waiver of Offsets/Defenses/Counterclaims.

Borrower hereby waives the right to assert a counterclaim, other than a compulsory counterclaim, in any action or proceeding brought against it by Lender or its agents or otherwise to offset any obligations to make the payments required by the Loan Documents. No failure by Lender to perform any of its obligations hereunder shall be a valid defense to, or result in any offset against, any payments which Borrower is obligated to make under any of the Loan Documents.

Section 11.20 Conflict; Construction of Documents; Reliance.

In the event of any conflict between the provisions of this Agreement and any of the other Loan Documents, the provisions of this Agreement shall control. The parties hereto acknowledge that they were represented by competent counsel in connection with the negotiation, drafting and execution of the Loan Documents and that such Loan Documents shall not be subject to the principle of construing their meaning against the party which drafted same. Borrower acknowledges that, with respect to the Loan, Borrower shall rely solely on its own judgment and advisors in entering into the Loan, without relying in any manner on any statements, representations or recommendations of Lender or any parent, subsidiary or affiliate of Lender. Lender shall not be subject to any limitation whatsoever in the exercise of any rights or remedies available to it under any of the Loan Documents or any other agreements or instruments which govern the Loan by virtue of the ownership by it or any parent, subsidiary or affiliate of Lender of any equity interest any of them may acquire in Borrower, and Borrower hereby irrevocably waives the right to raise any defense or take any action on the basis of the foregoing with respect to Lender's exercise of any such rights or remedies. Borrower acknowledges that Lender engages in the business of real estate financings and other real estate transactions and investments which may be viewed as adverse to or competitive with the business of Borrower or its Affiliates.

Section 11.21 Brokers and Financial Advisors.

Borrower hereby represents that, except for Pinnacle Hotel Finance ("Broker"), it has dealt with no financial advisors, brokers, underwriters, placement agents, agents or finders in connection with the transactions contemplated by this Agreement. Borrower will pay Broker a commission pursuant to a separate agreement. Borrower shall indemnify, defend and hold

Lender harmless from and against any and all claims, liabilities, costs and expenses of any kind (including Lender's reasonable attorneys' fees and expenses) in any way relating to or arising from a claim by any Person (including Broker) that such Person acted on behalf of Borrower or Lender in connection with the transactions contemplated herein.  The  provisions  of  this Section 11.21 shall survive the expiration and termination of this Agreement and the payment of the Obligations.

Section 11.22 Exculpation.

Subject to the qualifications below, Lender shall not enforce the liability and obligation of Borrower to perform and observe the Obligations contained in the Note, this Agreement, the Mortgage or the other Loan Documents by any action or proceeding wherein a money judgment shall be sought against Borrower, except that Lender may bring a foreclosure action, an action for specific performance or any other appropriate action or proceeding to enable Lender to enforce and realize upon its interest under the Note, this Agreement, the Mortgage and the other Loan Documents, or in the Property, the Gross Revenues or any other collateral given to Lender pursuant to the Loan Documents; provided, however, that, except as specifically provided herein, any judgment in any such action or proceeding shall be enforceable against Borrower only to the extent of Borrower's interest in the Property, in the Gross Revenues and in any other collateral given to Lender, and Lender, by accepting the Note, this Agreement, the Mortgage and the other Loan Documents, shall not sue for, seek or demand any deficiency judgment against Borrower in any such action or proceeding under or by reason of or under or in connection with the Note, this Agreement, the Mortgage or the other Loan Documents. The provisions of this Section 11.22 shall not, however, (a) constitute a waiver, release or impairment of any obligation evidenced or secured by any of the Loan Documents; (b) impair the right of Lender to name Borrower as a party defendant in any action or suit for foreclosure and sale under the Mortgage; (c) affect the validity or enforceability of any of the Loan Documents or any guaranty made in connection with the Loan or any of the rights and remedies of Lender thereunder; (d) impair the right of Lender to obtain the appointment of a receiver; (e) impair the enforcement of the Assignment of Leases; (f) constitute a prohibition against Lender to seek a deficiency judgment against Borrower in order to fully realize the security granted by the Mortgage or to commence any other appropriate action or proceeding in order for Lender to exercise its remedies against the Property; or (g) constitute a waiver of the right of Lender to enforce the liability and obligation of Borrower, by money judgment or otherwise, to the extent of any loss, damage, cost, expense, liability, claim or other obligation incurred by Lender (including reasonable attorneys' fees and costs reasonably incurred) arising out of or in connection with the following (all such liability and obligation of Borrower for any or all of the following being referred to herein as "Borrower's Recourse Liabilities"):

(i)         fraud, gross negligence, willful misconduct, misrepresentation or failure to disclose a material fact by or on behalf of Borrower, Guarantor, any Affiliate of Borrower or Guarantor, or any of their respective agents or representatives in connection with the Loan;

(ii)        the breach of any representation, warranty, covenant or indemnification provision in the Environmental Indemnity or in any other Loan

Document concerning environmental laws, hazardous substances and/or asbestos and any indemnification of Lender with respect thereto in either document;

(iii)      wrongful removal or destruction of any portion of the Property or damage to the Property caused by willful misconduct or gross negligence;

(iv)      any material, physical waste at the Property;

(v)        the forfeiture by Borrower of the Property, or any portion thereof, because of the conduct or purported conduct of criminal activity by Borrower or Guarantor or any of their respective agents or representatives in connection therewith, including by reason of any claim under the Racketeer Influenced and Corrupt Organizations Act ("RICO");

(vi)      the misapplication, misappropriation or conversion by or on behalf of Borrower (including, without limitation, in connection with the institution or operation of cash management as provided in the Loan Documents) of (A) any Insurance Proceeds actually received by or on behalf of Borrower which were paid by reason of any loss, damage or destruction to the Property,

(B) any Awards or other amounts actually received in connection with the Condemnation of all or a portion of the Property, or (C) any Gross Revenues (including Rents, security deposits, advance deposits or any other deposits) actually received by or on behalf of Borrower;

(vii)     failure to pay charges for labor or materials or  other charges that can create Liens on any portion of the Property;

(viii)    any security deposits, advance deposits or any other deposits collected with respect to the Property which are not delivered to Lender in accordance with the provisions of the Loan Documents;

(ix)      the failure to pay Taxes (except to the extent (A) there is insufficient cash flow from the Property to pay such Taxes and/or (B) amounts have been deposited with Lender sufficient to pay the Taxes pursuant to the Loan Documents, and the same are not applied toward payment of such Taxes);

(x)       failure to obtain and maintain the fully paid for Policies in accordance with Section 5.1.1 hereof (except to the extent that any such failure is the result of the non-payment of the premiums therefore and (A) there is insufficient cash flow from the Property to pay for such Policies and/or (B) amounts have been deposited with Lender sufficient to pay the Policies pursuant to the Loan Documents, and the same are not applied toward payment of such Policies);

(xi)       the failure to permit on-site inspections of the Property to the extent required by, and in accordance with, the terms and provisions of this

Agreement and the Mortgage and such failure continues for ten (10) days after receipt of written notice from Lender of such failure;

(xii)     the failure to provide financial information to the extent required by, and in accordance with, the terms and provisions of this Agreement and the Mortgage and such failure continues for thirty (30) days after receipt of written notice from Lender of such failure;

(xiii)    the failure to timely appoint a new property manager upon the request of Lender after the occurrence of any of the events set forth in Section

7.3 hereof and such failure continues for ten (10) days after receipt of written notice from Lender of such failure;

(xiv)    the failure by Borrower or Guarantor to cooperate with Lender's execution of a Secondary Market Transaction pursuant to the terms and provisions of Section 9.1;

(xv)      Borrower's indemnification  of  Lender  set  forth  in Section 9.2 hereof;

(xvi)    the failure of Borrower to timely file and pay any personal property taxes as required by governmental authorities;

(xvii)   the failure of Borrower to complete any PIP Work to the satisfaction of Franchisor or any replacement Franchisor under a new, amended, or replacement franchise agreement and/or

(xviii)  the blanket insurance policy insuring the Property either (i) covers more than seven (7) locations (inclusive of the Property) at any time or (ii) the annual aggregate cap divided by the number of properties covered by such policy at any time is not equal to at least Two Million Dollars ($2,000,000.00);

(xix)    Borrower fails to comply with the provisions of Sections

3.1.24 or 3.1.46 hereof.

Notwithstanding anything to the contrary in this Agreement or any of the other Loan Documents, (A) Lender shall not be deemed to have waived any right which Lender may have under Section 506(a), 506(b), 11ll(b) or any other provisions of the Bankruptcy Code to  file a claim for the full amount of the Obligations or to require that all collateral shall continue to secure all of the Obligations owing to Lender in accordance with the Loan Documents, and (B) the Obligations shall be fully recourse to Borrower in the event that any of the following occur (each, a "Springing Recourse Event"): (i) Borrower fails to comply with the provisions of Section 3.1.24 hereof or breaches a representation contained in Section 3.1.46 and such failure or breach results in the substantive consolidation of any of Borrower's assets with the assets of any other Person; (ii) Borrower fails to obtain Lender's prior consent to any subordinate financing secured by the Property or other voluntary Lien encumbering the Property; (iii) Borrower fails to obtain Lender's prior consent to any Transfer of the Property or any interest therein or any Transfer of any direct or indirect interest in Borrower, in either case as required by the Mortgage

or this Agreement other than a Permitted Transfer; (iv) Borrower files a voluntary petition under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law; (v) the filing of an involuntary petition against Borrower under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law by any other Person in which Borrower and/or Guarantor colludes with or otherwise assists such Person, and/or Borrower and/or Guarantor solicits or causes to be solicited petitioning creditors for any involuntary petition against Borrower by any Person; (vi) Borrower and/or Guarantor files an answer consenting to, or otherwise acquiescing in, or joining in, any involuntary petition filed against it by any other Person under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law; (vii) Borrower or any Affiliate, officer, director or representative which controls Borrower consents to, or acquiesces in, or joins in, an application for the appointment of a custodian, receiver, trustee or examiner for Borrower or any portion of the Property; (viii) Borrower and/or Guarantor makes an assignment for the benefit of creditors or admits, in writing or in any legal proceeding, its insolvency or inability to pay its debts as they become due; or (ix) if Guarantor (or any Person comprising Guarantor), Borrower or any Affiliate of any of the foregoing, in connection with any enforcement action or exercise or assertion of any right or remedy by or on behalf of Lender under or in connection with the Guaranty, the Note, the Mortgage or any other Loan Document, seeks a defense, judicial intervention or injunctive or other equitable relief of any kind, or asserts in a pleading filed in connection with a judicial proceeding any defense against Lender or any right in connection with any security for the Loan; or (x) the Franchise Agreement terminates or expires, until such time as (Y) a replacement franchise agreement, which is satisfactory to Lender in Lender's sole discretion, is entered into for the Property and (Z) a satisfactory comfort letter, in Lender's sole discretion, is delivered to Lender.

Section 11.23 Prior Agreements.

This Agreement and the other Loan Documents contain the entire agreement of the parties hereto and thereto in respect of the transactions contemplated hereby and thereby, and all prior agreements among or between such parties, whether oral or written, including the Loan Application dated August 26, 2016 (as amended) submitted by Guarantor to Lender, are superseded by the terms of this Agreement and the other Loan Documents. In  addition, Borrower hereby agrees that it is not relying on and has not relied on any representations, warranties or statements, whether written or oral, of the Lender, any Affiliate of the Lender or any other party in connection with its decision to enter into the transaction described in this Agreement and the related Loan Documents and that this Agreement and the related Loan Documents set forth the entire set of representations, warranties and understandings of the Borrower with respect to the transaction described herein and in the Loan Documents.

Section 11.24 Servicer.

At the option of Lender, the Loan may be serviced by a servicer (the "Servicer") selected by Lender and Lender may delegate all or any portion of its responsibilities under this Agreement and the other Loan Documents to the Servicer pursuant to a servicing agreement (the "Servicing Agreement") between Lender and Servicer.

Section 11.25 Joint and Several Liability.

If more than one Person has executed this Agreement as "Borrower," the representations, covenants, warranties and obligations of all such Persons hereunder shall be joint and several.

Section 11.26 Creation of Security Interest.

Notwithstanding any other provision set forth in this Agreement, the Note, the Mortgage or any of the other Loan Documents, Lender may at any time create a security interest in all or any portion of its rights under this Agreement, the Note, the Mortgage and any other Loan Document (including the advances owing to it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System.

Section 11.27 Assignments and Participations.

(a)        Lender may assign, without the consent of Borrower, to one or more Persons all or a portion of its rights and obligations under this Agreement and the other Loan Documents.

(b)       Upon such execution and delivery, from and after  the effective date specified in the related assignment and acceptance agreement, the assignee thereunder shall be a party hereto and shall have the rights and obligations of Lender hereunder to the extent of its interest in the Loan.

(c)        Lender may sell participations to one or more Persons  in or to all or a portion of its rights and obligations under this Agreement; provided, however, that

(i) Lender's obligations under this Agreement shall remain unchanged, (ii) Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) Lender shall remain the holder of any Note for all purposes of this Agreement, and (iv) Borrower shall continue to deal solely and directly with Lender in connection with Lender's rights and obligations under and in respect of this Agreement and the other Loan Documents.

Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 11.27, disclose to the assignee or participant or proposed assignees or participants, as the case may be, any information relating to Borrower or any of its Affiliates or to any aspect of the Loan that has been furnished to Lender by or on behalf of the Borrower or any of its Affiliates.

Section 11.28 Counterparts.

This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.

Section 11.29 Set-Off.

In addition to any rights and remedies of Lender provided by this Agreement and by law, Lender shall have the right in its sole discretion, without prior notice to Borrower, any such notice being expressly waived by Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by Borrower hereunder (whether at the stated maturity, by acceleration or otherwise), to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by Lender or any Affiliate thereof to or for the credit or the account of Borrower. Lender agrees promptly  to notify Borrower after any such set-off and application made by Lender; provided that the failure to give such notice shall not affect the validity of such set-off and application.

[NO FURTHER TEXT ON THIS PAGE]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized representatives, all as of the day and year first above written.

BORROWER:

TREEMONT CAPITAL PARTNERS III, LP, a Texas

limited partnership

By:                                                                   Treemont Capital Partners III GP, LLC, a Texas limited liability company, its general partner

By:                                                                                                                   Treemont Investments, Inc., a Texas corporation, its sole member

By:       /s/ Philip A. McRae

Name: Philip A. McRae

Title:  President

Loan Agreement (Home2Suites Lubbock)

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized representatives, all as of the day and year first above written.

LENDER:

STARWOOD MORTGAGE CAPITAL

LLC, a Delaware limited liability company

By:

/s/ Leslie K. Fairbanks

Name: Leslie K. Fairbanks

Title: Executive Vice President

Loan Agreement (Home2Suites Lubbock)

SCHEDULE I

RENT ROLL

NIA

SCHEDULE II

REQUIRED REPAIRS

None.

EXHIBIT A

Legal Description

Tract I:

Tract "A", HOME 2 LUBBOCK, an Addition to the City of Lubbock, Lubbock County, Texas, according to the map, plat and/or dedication deed thereof recorded May 7, 2014 under County Clerk File No. 2014016086, Official Public Records, Lubbock County, Texas.

Tract II:

As created in Declaration of Restrictions and Reciprocal Easement Agreement recorded in Volume 10138, Page 14, Official Public Records, Lubbock County, Texas; in First Amendment recorded April 21, 2011 under County Clerk File No. 2011012478, Official Public Records, Lubbock County, Texas and in Ratification and Correction recorded July 31, 2013 under County Clerk File No. 2013030944, Official Public Records, Lubbock County, Texas.

FOR INFORMATIONAL PURPOSES ONLY: TAX PARCEL ID#R325521

EX-10.54.6

EXHIBIT 10.54.6

TREEMONT CAPITAL PARTNERS III, LP,

a Texas limited partnership, as grantor (Borrower)

to

NICHOLAS M. PYKA,

an individual, as trustee (Trustee)

For the benefit of

STARWOOD MORTGAGE CAPITAL LLC, as beneficiary (Lender)

DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT

Dated:	As of October 4, 2016
Location:	6004 Marsha Sharp Freeway Lubbock, Texas
County:	Lubbock

PREPARED BY AND UPON RECORDA TION RETURN TO:

Winstead PC

201 North Tryon Street Suite 2000

Charlotte, North Carolina 28202 Attention: Jeffrey J. Lee, Esq.

DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT

THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS AND

SECURITY AGREEMENT (this "Deed of Trust") is made as of this 4th day of October, 2016, by TREEMONT CAPITAL PARTNERS III, LP, a Texas limited partnership, having its  principal place of business at 1415 South Voss #110-94, Houston, Texas 77057, as grantor ("Borrower"), to NICHOLAS M. PYKA, an individual, having an address at 401 Congress Avenue, Suite 2100, Austin, Texas 78701, as trustee ("Trustee"), for the benefit of STARWOOD MORTGAGE CAPITAL LLC, a Delaware limited liability company, having an address at 1601 Washington Avenue, Suite 800, Miami Beach, Florida 33139, as beneficiary (together with its successors and assigns, "Lender").

WI  T N E  S S E  T H:

A.         This Deed of Trust is given to secure a loan (the "Loan") in the principal sum of EIGHT MILLION SIX HUNDRED THOUSAND AND NO/100 DOLLARS ($8,600,000.00) or so much thereof as may be advanced pursuant to that certain Loan Agreement dated as of the date hereof between Borrower and Lender (as the same may be amended,  restated, replaced, supplemented or otherwise modified from time to time, the "Loan Agreement"), and evidenced by that certain Promissory Note dated the date hereof made by Borrower to Lender (such Note, together with all extensions, renewals, replacements, restatements or modifications thereof, being hereinafter referred to as the "Note"). Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Loan Agreement.

B.         Borrower desires to secure the payment of the outstanding principal amount of the Loan together with all interest accrued and unpaid thereon and all other sums (including the Prepayment Fee) due to Lender in respect of the Loan and the Loan Documents (the "Debt") and the performance of all of its obligations under the Note, the Loan Agreement and the other Loan Documents.

C.        This Deed of Trust is given pursuant to the Loan Agreement, and payment, fulfillment and performance by Borrower of its obligations thereunder and under the other Loan Documents are secured hereby, and each and every term and provision of the Loan Agreement, the Note, and that certain Assignment of Leases and Rents of even date herewith made by Borrower in favor of Lender delivered in connection with this Deed of Trust (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the "Assignment of Leases"), including the rights, remedies, obligations, covenants, conditions, agreements, indemnities, representations and warranties of the parties therein, are hereby incorporated by reference herein as though set forth in full and shall be considered a part of this Deed of Trust.

NOW THEREFORE, in consideration of the making of the Loan by Lender and the covenants, agreements, representations and warranties set forth in this Deed of Trust:

ARTICLE 1 GRANTS OF SECURITY

Section 1.1 Property Conveyed. Borrower does hereby irrevocably grant,

bargain, sell, pledge, assign, warrant, transfer and convey to Trustee and its successors and assigns, in trust, with power of sale for the benefit of Lender as beneficiary in trust, the following property, rights, interests and estates now owned or hereafter acquired by Borrower (collectively, the "Property"):

(a)       Land. The real property described in Exhibit A attached  hereto and made a part hereof (the "Land");

(b)       Additional Land. All additional lands, estates and development rights hereafter acquired by Borrower for use in connection with the Land and the development of the Land and all additional lands and estates therein which may, from time to time, by supplemental mortgage or otherwise be expressly made subject to the lien of this Deed of Trust;

(c)       Improvements. The buildings, structures, fixtures,  additions, enlargements, extensions, modifications, repairs, replacements and improvements now or hereafter erected or located on the Land (collectively, the "Improvements");

(d)       Easements. All easements, rights-of-way or use, rights, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, and all estates, rights, titles, interests, privileges, liberties, servitudes, tenements, hereditaments and appurtenances of any nature whatsoever, in any way now or hereafter belonging, relating or pertaining to the Land and the Improvements and the reversion and reversions, remainder and remainders, and all land lying in the bed of any street, road or avenue, opened or proposed, in front of or adjoining the Land, to the center line thereof and all the estates, rights, titles, interests, dower and rights of dower, curtesy and rights of curtesy, property, possession, claim and demand whatsoever, both at law and in equity, of Borrower of, in and to the Land and the Improvements and every part and parcel thereof, with the appurtenances thereto;

(e)       Equipment. All "equipment," as such term is defined in Article 9 of the Uniform Commercial Code (as hereinafter defined), now owned or hereafter acquired by Borrower, which is used at or in connection with the Improvements or the Land or is located thereon or therein (including, but not limited to, all machinery, equipment, furnishings, and electronic data-processing and other office equipment now owned or hereafter acquired by Borrower and any and all additions, substitutions and replacements of any of the foregoing), together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto (collectively, the "Equipment"). Notwithstanding the foregoing,  Equipment shall not include any property belonging to Tenants under Leases except to the extent that Borrower shall have any right or interest therein;

(f)       Fixtures. All Equipment now owned, or the ownership of which is hereafter acquired, by Borrower which is so related to the Land and Improvements forming part

of the Property that it is deemed fixtures or real property under the law of the particular state in which the Equipment is located, including, without limitation, all building or construction materials intended for construction, reconstruction, alteration or repair of or installation on the Property, construction equipment, appliances, machinery, plant equipment, fittings, apparatuses, fixtures and other items now or hereafter attached to, installed in or used in connection with (temporarily or permanently) any of the Improvements or the Land, including, but not limited to, engines, devices for the operation of pumps, pipes, plumbing, cleaning, call and sprinkler systems, fire extinguishing apparatuses and equipment, heating, ventilating, plumbing, laundry, incinerating, electrical, air conditioning and air cooling equipment and systems, gas and electric machinery, appurtenances and equipment, pollution control equipment, security systems, disposals, dishwashers, refrigerators and ranges, recreational equipment and facilities of all kinds, wind driven facilities, solar power facilities and related power infrastructure, cell towers, and water, gas, electrical, storm and sanitary sewer facilities, utility lines and equipment  (whether owned individually or jointly with others, and, if owned jointly, to the extent of Borrower's interest therein) and all other utilities whether or not situated in easements, all water tanks, water supply, water power sites, fuel stations, fuel tanks, fuel supply, and all other structures, together with all accessions, appurtenances, additions, replacements, betterments and substitutions for any of the foregoing and the proceeds thereof (collectively, the "Fixtures"). Notwithstanding the foregoing, "Fixtures" shall not include any property which Tenants are entitled to remove pursuant to Leases except to the extent that Borrower shall have any right or interest therein;

(g)       Personal Property. All furniture, furnishings, objects of art, machinery, goods, tools, supplies, appliances, general intangibles, contract rights, accounts, accounts receivable, franchises, licenses, certificates and permits, and all other personal property of any kind or character whatsoever (as defined in and subject to the provisions of the Uniform Commercial Code), other than Fixtures, which are now or hereafter owned by Borrower and which are located within or about the Land and the Improvements, together with all accessories, replacements and substitutions thereto or therefor and the proceeds thereof (collectively, the "Personal Property"), and the right, title and interest of Borrower in and to any of the Personal Property which may be subject to any security interests, as defined in the Uniform Commercial Code, as adopted and enacted by the state or states where any of the Property is located (as amended from time to time, the "Uniform Commercial Code"), superior in lien to the lien of  this Deed of Trust, and all proceeds and products of any of the above;

(h)       Leases and Rents. All leases, subleases or subsubleases, lettings, licenses, concessions or other agreements (whether written or oral) pursuant to which any Person is granted a possessory interest in, or right to use or occupy all or any portion of the Land (including, without limitation, any subsurface rights) and the Improvements, and every modification, amendment or other agreement relating to such leases, subleases, subsubleases, or other agreements entered into in connection with such leases, subleases, subsubleases, or other agreements and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto, heretofore or hereafter entered into, whether before or after the filing by or against Borrower of any petition for relief under 11 U.S.C. §101 et seq., as the same may be amended from time to time (the "Bankruptcy Code") (collectively, the "Leases"), and all right, title and interest of Borrower, its successors and assigns, therein and thereunder, including, without limitation, cash or securities deposited

thereunder to secure the performance by the lessees of their obligations thereunder and all rents, additional rents, revenues, issues and profits (including all oil and gas or other mineral royalties and bonuses) from the Land and the Improvements, whether paid or accruing before or after the filing by or against Borrower of any petition for relief under the Bankruptcy Code (collectively, the "Rents"), and all proceeds from the sale or other disposition of the Leases and the right to receive and apply the Rents to the payment and performance of the Obligations, including the payment of the Debt;

(i)       Condemnation Awards. All awards or payments, including interest thereon, which may heretofore and hereafter be made with respect to the Property, whether from the exercise of the right of eminent domain (including, but not limited to, any transfer made in lieu of or in anticipation of the exercise of such right), or for a change of grade, or for any other injury to or decrease in the value of the Property;

G) Insurance Proceeds. All proceeds in respect of the Property under any insurance policies covering the Property, including, without limitation, the right to receive and apply the proceeds of any insurance, judgments or settlements made in lieu thereof, for damage to the Property;

(k)       Tax Certiorari. All refunds, rebates or credits in connection with any reduction in Taxes or Other Charges charged against the Property as a result of tax certiorari proceedings or any other applications or proceedings for reduction;

(1)       Rights. The right, in the name and on behalf of Borrower, to appear in and defend any action or proceeding brought with respect to the Property and to commence any action or proceeding to protect the interest of Lender in the Property;

(m)       Agreements. All agreements, contracts, certificates, instruments, franchises, permits, licenses, plans, specifications and other documents, now or hereafter entered into, and all rights therein and thereto, respecting or pertaining to the use, occupation, construction, management or operation of the Land and any part thereof and any Improvements or respecting any business or activity conducted on the Land and any part thereof and all right, title and interest of Borrower therein and thereunder, including, without limitation, the right, upon the happening of any default hereunder, to receive and collect any sums payable to Borrower thereunder;

(n)       Trademarks. All tradenames, trademarks, servicemarks, logos, copyrights, goodwill, books and records and all other general intangibles relating to or used in connection with the operation of the Property;

(o)       Accounts. All (i) accounts receivable (including, without limitation, any account, fees, charges or other payments arising from the use and occupancy of hotel rooms and/or other hotel or public facilities at the Property), (ii) credit card receivables and debit card receivables, and (iii) reserves, escrows and deposit accounts maintained by Borrower with respect to the Property, including, without limitation, all accounts established or maintained pursuant to the Loan Agreement, the Cash Management Agreement, the Clearing Account Agreement or any other Loan Document, together with all deposits or wire transfers made to

such accounts, and all cash, checks, drafts, certificates, securities, investment property, financial assets, instruments and other property held therein from time to time, and all proceeds, products, distributions, dividends and/or substitutions thereon and thereof;

(p)       Uniform Commercial Code Property. All documents, instruments, chattel paper and intangibles, as the foregoing terms are defined in the Uniform Commercial Code, and general intangibles relating to the Property;

(q)       Minerals. All minerals, oil, gas, shale, crops, timber, trees, shrubs, flowers and landscaping features and rights (including, without limitation, extracting rights) now or hereafter located on, under or above Land;

(r)       Proceeds. All proceeds of any of the foregoing, including, without limitation, proceeds of insurance and condemnation awards, whether in cash or in liquidation or other claims, or otherwise; and

(s)       Other Rights. Any and all other rights of Borrower in and to the items set forth in Subsections (a) through (r) above.

AND, without limiting any of the other provisions of this Deed of Trust, to the extent permitted by applicable law, Borrower expressly grants to Lender, as secured party, a security interest in the portion of the Property which is or may be subject to the provisions of the Uniform Commercial Code which are applicable to secured transactions; it being understood and agreed that the Improvements and Fixtures are part and parcel of the Land (the Land, the Improvements and the Fixtures collectively referred to as the "Real Property") appropriated to the use thereof and, whether affixed or annexed to the Land or not, shall for the purposes of this Deed of Trust be deemed conclusively to be real estate and conveyed hereby.

Section 1.2 Assignment of Rents. Borrower hereby absolutely and unconditionally assigns to Lender and Trustee all of Borrower's right, title and interest in and to all current and future Leases and Rents; it being intended by Borrower that this assignment constitutes a present, absolute assignment and not an assignment for additional security only. Nevertheless, subject to the terms of the Assignment of Leases, the Cash Management Agreement, and Section 7.l(h) of this Deed of Trust, Lender grants to Borrower a revocable license to collect, receive, use and enjoy the Rents. Borrower shall hold the Rents, or a portion thereof sufficient to discharge all current sums due on the Debt, for use in the payment of such sums.

Section 1.3 Security Agreement. This Deed  of Trust is both  a  real property  deed of trust and a "security agreement" within the meaning of the Uniform Commercial Code. The Property includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Borrower in the Property. By executing and delivering this Deed of Trust, Borrower hereby grants to Lender, as security for the Obligations, a security interest in the Fixtures, the Equipment, the Personal Property and the other property constituting the Property to the full extent that the Fixtures, the Equipment, the Personal Property and such other property may be subject to the Uniform Commercial Code (said portion of the Property so subject to the Uniform Commercial Code being called the "Collateral"). If an Event of Default

shall occur and be continuing, Lender, in addition to any other rights and remedies which it may have, shall have and may exercise immediately and without demand, any and all rights and remedies granted to a secured party upon default under the Uniform Commercial Code, including, without limiting the generality of the foregoing, the right to take possession of the Collateral or any part thereof, and to take such other measures as Lender may deem necessary for the care, protection and preservation of the Collateral. Upon request or demand of Lender after the occurrence and during the continuance of an Event of Default, Borrower shall, at its expense, assemble the Collateral and make it available to Lender at a convenient place (at the Land if tangible property) reasonably acceptable to Lender. Borrower shall pay to Lender on demand any and all expenses, including reasonable attorneys' fees and costs, incurred or paid by Lender in protecting its interest in the Collateral and in enforcing its rights hereunder with respect to the Collateral after the occurrence and during the continuance of an Event of Default. Any notice of sale, disposition or other intended action by Lender with respect to the Collateral sent to Borrower in accordance with the provisions hereof at least ten (10) Business Days prior to such action, shall, except as otherwise provided by applicable law, constitute reasonable notice to Borrower. The proceeds of any disposition of the Collateral, or any part thereof, may, except as otherwise required by applicable law, be applied by Lender to the payment of the Debt in such priority and proportions as Lender in its discretion shall deem proper. The principal place of business of Borrower (Debtor) is as set forth on page one hereof and the address of Lender (Secured Party) is as set forth on page one hereof.

Section 1.4 Fixture Filing.  Certain of the Property is or will become "fixtures" (as that term is defined in the Uniform Commercial Code) on the Land, described or referred to in this Deed of Trust, and this Deed of Trust, upon being filed for record in the real estate records of the city or county wherein such fixtures are situated, shall operate also as a financing statement naming Borrower as the Debtor and Lender as the Secured Party filed as a fixture filing in accordance with the applicable provisions of said Uniform Commercial Code upon such of the Property that is or may become fixtures. Borrower is the debtor with the address set forth above, Lender is the secured party with the address set forth above and the organizational identification number of Borrower is 0801804631.

Section 1.5 Pledges of Monies Held. Borrower  hereby  pledges to Lender any and all monies now or hereafter held by Lender or on behalf of Lender in connection with the Loan, including, without limitation, any sums deposited in the Accounts (as defined in the Cash Management Agreement) and the Net Proceeds, as additional security for the Obligations until expended or applied as provided in this Deed of Trust.

CONDITIONS TO GRANT

TO HAVE AND TO HOLD the above granted and described Property unto and to the use and benefit of Trustee and its successors and assigns, forever;

IN TRUST, WITH POWER OF SALE, to secure payment to Lender of the Obligations at the time and in the manner provided for its payment in the Note and in this Deed of Trust.

PROVIDED, HOWEVER, these presents are upon the express condition that, if Borrower shall well and truly pay and perform the Obligations (including the payment of the Debt) at the time and in the manner provided in this Deed of Trust, the Note, the Loan Agreement and the other Loan Documents, and shall well and truly abide by and comply with each and every covenant and condition set forth herein and in the Note, the Loan Agreement and the other Loan Documents, these presents and the estate hereby granted shall cease, terminate and be void: provided, however, that Borrower's obligation to indemnify and hold harmless Lender pursuant to the provisions hereof shall survive any such payment or release.

ARTICLE2

DEBT AND OBLIGATIONS SECURED

Section 2.1 Obligations. This Deed of Trust and the grants, assignments and transfers made in Article 1 are given for the purpose of securing the Obligations, including, but not limited to, the Debt.

Section 2.2 Other Obligations.  This Deed of Trust and the grants, assignments and transfers made in Article 1 are also given for the purpose of securing the following (collectively, the "Other Obligations"):

(a)        the performance of all other obligations of Borrower contained herein;

(b)       the performance of each obligation of Borrower contained in the Loan Agreement and in each other Loan Document; and

(c)       the performance of each obligation of Borrower contained in any renewal, extension, amendment, modification, consolidation, change of, or substitution or replacement for, all or any part of the Note, the Loan Agreement or any other Loan Document.

Section 2.3 Debt and Other Obligations.  Borrower's  obligations  for  the  payment of the Debt and the performance of the Other Obligations shall be referred to collectively herein as the "Obligations."

ARTICLE3 BORROWER COVENANTS

Borrower covenants and agrees that throughout the term of the Loan:

Section 3.1  Payment  of Debt.   Borrower  will  pay the Debt at the time and in the manner provided in the Loan Agreement, the Note and this Deed of Trust.

Section 3.2 Incorporation by Reference. All the covenants, conditions and agreements contained in (a) the Loan Agreement, (b) the Note, and (c) all and any of the other Loan Documents, are hereby made a part of this Deed of Trust to the same extent and with the same force as if fully set forth herein.

Section 3.3 Insurance. Borrower shall obtain and maintain, or cause to be maintained, in full force and effect at all times insurance with respect to Borrower and the Property as required pursuant to the Loan Agreement.

Section 3.4 Maintenance of Property. Borrower shall cause the Property to be maintained in a good and safe condition and repair. The Improvements, the Fixtures, the Equipment and the Personal Property shall not be removed, demolished or materially altered (except for normal replacement of the Fixtures, the Equipment or the Personal Property, tenant finish and refurbishment of the Improvements) without the consent of Lender or as otherwise may be expressly permitted pursuant to the Loan Agreement. Borrower shall promptly repair, replace or rebuild any part of the Property which may be destroyed by any Casualty, or become damaged, worn or dilapidated or which may be affected by any Condemnation, and shall complete and pay for any structure at any time in the process of construction or repair on the Land.

Section 3.5 Waste. Borrower shall not commit or suffer any waste of  the Property, or make any change in the use of the Property which will in any way materially increase the risk of fire or other hazard arising out of the operation of the Property, or take any action that might invalidate or allow the cancellation of any Policy, or do or permit to be done thereon anything that may in any way materially impair the value of the Property or the security of this Deed of Trust. Borrower will not, without the prior written consent of Lender, permit any drilling or exploration for or extraction, removal, or production of any minerals from the surface or the subsurface of the Land, regardless of the depth thereof or the method of mining or extraction thereof.

Section 3.6 Payment for Labor and Materials.

(a)       Subject to Section 3.6(b) hereof, Borrower (i) will promptly pay when due all bills and costs for labor, materials and specifically fabricated materials ("Labor and Material Costs") incurred in connection with the Property, (ii) never permit to exist beyond the due date thereof in respect of the Property, or any part thereof, any Lien or security interest, even though inferior to the Liens and security interests created hereby and by the other Loan Documents, and (iii) never permit to be created or exist in respect of the Property or any part thereof any other or additional Lien or security interest other than the Liens or security interests created hereby and by the other Loan Documents, except for the Permitted Encumbrances.

(b)        After prior written notice to Lender, Borrower, at its own expense, may contest by appropriate legal proceeding, promptly initiated and conducted at all times in good faith and with due diligence, the amount or validity or application in whole or in part of any of the Labor and Material Costs, provided that: (i) no Event of Default has occurred and is continuing under the Loan Agreement, the Note, this Deed of Trust or any of the other Loan Documents; (ii) Borrower is permitted to do so under the provisions of any other mortgage, deed of trust or deed to secure debt affecting the Property; (iii) such proceeding shall suspend the collection of the Labor and Material Costs from Borrower and from the Property or Borrower shall have paid all of the Labor and Material Costs under protest; (iv) such proceeding shall be permitted under and be conducted in accordance with the provisions of any other instrument to which Borrower is subject and shall not constitute a default thereunder; (v) neither the Property

nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, canceled or lost; (vi) Borrower shall have furnished to Lender either (A) a cash deposit equal to 110% of the amount of such contested Labor and Material Costs, or (B) an indemnity bond satisfactory to Lender with a surety satisfactory to Lender, in the amount of such Labor and Material Costs, plus in either of the foregoing cases a reasonable additional sum to pay all costs, interest and penalties that may be imposed or incurred in connection therewith; (vii) such contest by Borrower shall not materially and adversely affect the ownership, use or occupancy of the Property; and (viii) such contest by Borrower shall not subject Lender or Borrower to civil or criminal liability (other than the civil liability of Borrower for the amount of the Labor and Material Costs in question plus interest).

(c)       Notwithstanding the foregoing, it shall not be a default under the terms and conditions of this Section 3.6 if, in respect of a mechanic's or materialman's lien asserted against the Property for Labor and Material Costs (each, a "Mechanic's Lien"): (i) Borrower shall have provided Lender with written notice of such Mechanic's Lien within five (5) days of obtaining knowledge thereof; (ii) within five (5) days of obtaining knowledge of the filing of any Mechanic's Lien, Borrower shall have furnished to Lender either (A) a cash deposit equal to 110% of the amount of the Labor and Material Costs which are the subject of such Mechanic's Lien, or (B) an indemnity bond satisfactory to Lender with a surety satisfactory to Lender, in the amount of the Labor and Material Costs which are the subject of such Mechanic's Lien, plus in each instance a reasonable additional sum to pay all costs, interest and penalties that may be imposed or incurred in connection therewith; (iii) no Event of Default shall have occurred and be continuing under the Loan Agreement, the Note, this Deed of Trust or any of the other Loan Documents; (iv) Borrower shall at all times diligently prosecute the discharge of such Mechanic's Lien, and shall update Lender regarding the status of same from time to time upon Lender's request; (v) neither the Property nor any part thereof nor any interest therein shall be in danger of being sold, forfeited, terminated, canceled or lost; (vi) Borrower shall preclude the collection of, or other realization upon, any contested amount from the Property or any revenues from or interest in the Property; (vii) such contest by Borrower shall not materially and adversely affect the ownership, use or occupancy of the Property, (viii) such contest by Borrower shall not subject Lender or Borrower to civil or criminal liability (other than the civil liability of Borrower for the amount of the Lien in question plus interest); and (ix) Borrower has not consented to such Mechanic's Lien.

Section 3.7 Performance of Other Agreements. Borrower shall observe and perform each and every term, covenant and provision to be observed or performed by Borrower pursuant to the Loan Agreement, any other Loan Document and any other agreement or recorded instrument affecting or pertaining to the Property, and any amendments, modifications or changes thereto.

ARTICLE 4 OBLIGATIONS AND RELIANCES

Section 4.1 Relationship  of Borrower  and  Lender.   The relationship between

Borrower and Lender is solely that of debtor and creditor, and Lender has no fiduciary or other special relationship with Borrower, and no term or condition of any of the Loan Agreement, the

Note, this Deed of Trust or the other Loan Documents shall be construed so as to deem the relationship between Borrower and Lender to be other than that of debtor and creditor.

Section 4.2 No Reliance on Lender. The general partner of Borrower is experienced in the ownership and operation of properties similar to the Property, and Borrower and Lender are relying solely upon such expertise and business plan in connection with the ownership and operation of the Property. Borrower is not relying on  Lender's  expertise, business acumen or advice in connection with the Property.

Section 4.3 No Lender Obligations.

(a)        Notwithstanding the provisions  of  Subsections 1.l(h)  and .(m}  or Section 1.2, Lender is not undertaking the performance of (i) any obligations under the Leases, or (ii) any obligations with respect to any other agreements, contracts, certificates, instruments, franchises, permits, trademarks, licenses or other documents.

(b)        By accepting or approving anything required to be observed, performed or fulfilled or to be given to Lender pursuant to this Deed of Trust, the Loan Agreement, the Note or the other Loan Documents, including, without limitation, any officer's certificate, balance sheet, statement of profit and loss or other financial statement, survey, appraisal or insurance policy, Lender shall not be deemed to have warranted, consented to, or affirmed the sufficiency, legality or effectiveness of same, and such acceptance or approval thereof shall not constitute any warranty or affirmation with respect thereto by Lender.

Section 4.4 Reliance. Borrower  recognizes  and  acknowledges  that  in  accepting the Loan Agreement, the Note, this Deed of Trust and the other Loan Documents, Lender is expressly and primarily relying on the truth and accuracy of the warranties and representations set forth in Article 3 of the Loan Agreement without any obligation to investigate the Property and notwithstanding any investigation of the Property by Lender; that such reliance existed on the part of Lender prior to the date hereof; that the warranties and representations are  a material inducement to Lender in making the Loan; and that Lender would not be willing to make the Loan and accept this Deed of Trust in the absence of the warranties and representations as set forth in Article 3 of the Loan Agreement.

ARTICLES FURTHER ASSURANCES

Section 5.1     Recording  of  Deed  of  Trust,  Etc.   Borrower  forthwith  upon the

execution and delivery of this Deed of Trust and thereafter, from time to time, will cause this Deed of Trust and any of the other Loan Documents creating a Lien or security interest or evidencing the Lien hereof upon the Property and each instrument of further assurance to be filed, registered or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect and perfect the Lien or security interest hereof upon, and the interest of Lender in, the Property. Borrower will pay all taxes, filing, registration or recording fees, and all expenses incident to the preparation, execution, acknowledgment and/or recording of the Note, this Deed of Trust, the other Loan Documents,

any note, deed of trust or mortgage supplemental hereto, any security instrument with respect to the Property and any instrument of further assurance, and any modification or amendment of any of the foregoing documents, and all federal, state, county and municipal taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Deed of Trust, any deed of trust or mortgage supplemental hereto, any security instrument with respect to the Property or any instrument of further assurance, and any modification or amendment of any of the foregoing documents, except where prohibited by law so to do.

Section 5.2 Further Acts, Etc. Borrower will, at the cost of Borrower,  and  without expense to Lender, do, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, deeds of trust, mortgages, assignments, notices of assignments,  transfers and assurances as Lender shall, from time to time, reasonably require, for the better assuring, conveying, assigning, transferring, and confirming unto Lender and Trustee the property and rights hereby deeded, granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and transferred or intended now or hereafter so to be, or which Borrower may be or may hereafter become bound to convey or assign to Trustee or Lender, or for carrying out the intention or facilitating the performance of the terms of this Deed of Trust or for filing, registering or recording this Deed of Trust, or for complying with all Legal Requirements. Borrower, on demand, will execute and deliver, and in the event it shall fail to so execute and deliver, hereby authorizes Lender to execute in the name of Borrower or without the signature of Borrower to the extent Lender may lawfully do so, one or more financing statements to evidence more effectively the security interest of Lender in the Property. Borrower grants to Lender an irrevocable power of attorney coupled with an interest for the purpose of exercising and perfecting any and all rights and remedies available to Lender at law and in equity, including, without limitation, such rights and remedies available to Lender pursuant to this Section 5.2.

Section 5.3 Changes in Tax, Debt, Credit and Documentary Stamp Laws.

(a)        If any law is enacted or adopted or amended after the date of this Deed of Trust which deducts the Debt from the value of the Property for the purpose of taxation or which imposes a tax, either directly or indirectly, on the Debt or Lender's interest in the Property, Borrower will pay the tax, with interest and penalties thereon, if any. If Lender is advised by counsel chosen by it that the payment of tax by Borrower would be unlawful or taxable to  Lender or unenforceable or provide the basis for a defense of usury, then Lender shall have the option by written notice of not less than one hundred twenty (120) days to declare the Debt immediately due and payable.

(b)       Borrower will not claim or demand or be entitled to any credit or credits on account of the Debt for any part of the Taxes or Other Charges assessed against the Property, or any part thereof, and no deduction shall otherwise be made or claimed from the assessed value of the Property, or any part thereof, for real estate tax purposes by reason of this Deed of Trust or the Debt. If such claim, credit or deduction shall be required by law, Lender shall have the option, by written notice of not less than one hundred twenty (120) days, to declare the Debt immediately due and payable.

(c)        If at any time the United States of America, any State thereof or any subdivision of any such State shall require revenue or other stamps to be affixed to the Note, this

Deed of Trust, or any of the other Loan Documents or shall impose any other tax or charge on the same, Borrower will pay for the same, with interest and penalties thereon, if any.

Section 5.4    Splitting  of Deed  of Trust.  This Deed of Trust and the Note may, at any time until the same shall be fully paid and satisfied, at the sole election of Lender, be split or divided into two or more notes and two or more deeds of trust, in such denominations as Lender shall determine in its sole discretion (subject to the following sentence), each of which shall cover all or a portion of the Property to be more particularly described therein. To that end, Borrower, upon written request of Lender, shall execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered by the then owner of the Property, to Lender and/or its designee or designees, substitute notes and deeds of trust in such principal amounts, aggregating not more than the then unpaid principal amount of the Note, and containing terms, provisions and clauses similar to those contained herein and in the Note, and such other documents and instruments as may be required by Lender.

Section 5.5 Replacement Documents.  Upon  receipt  of  an  affidavit  of  an officer of Lender as to the loss, theft, destruction or mutilation of the Note or any other Loan Document which is not of public record, and, in the case of any such mutilation, upon surrender and cancellation of the Note or such other Loan Document, Borrower will issue, in lieu thereof, a replacement Note or a replacement of such other Loan Document, dated the date of such lost, stolen, destroyed or mutilated Note or other Loan Document in the same principal amount thereof and otherwise of like tenor.

ARTICLE 6

DUE ON SALE/ENCUMBRANCE

Section 6.1 Lender Reliance. Borrower  acknowledges  that  Lender  has examined and relied on the experience of Borrower and its general partners, members, principals and (if Borrower is a trust) beneficial owners in owning and operating properties such as the Property in agreeing to make the Loan, and will continue to rely on Borrower's ownership of the Property as a means of maintaining the value of the Property as security for the payment and performance of the Obligations, including the repayment of the Debt. Borrower acknowledges that Lender has a valid interest in maintaining the value of the Property so as to ensure that, should Borrower default in the payment and/or performance of the Obligations, including the repayment of the Debt, Lender can recover the Debt by a sale of the Property.

Section 6.2 No Transfer. Borrower shall not permit or suffer any Transfer  to occur except in accordance with the terms of the Loan Agreement.

ARTICLE 7

RIGHTS AND REMEDIES UPON DEFAULT

Section 7.1 Remedies. Upon the occurrence and during the continuance of any Event of Default, Borrower agrees that Lender or Trustee, or both may take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Borrower and in

and to the Property, including, but not limited to, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such order as Lender or Trustee may determine, in their sole discretion, without impairing or otherwise affecting the other rights and remedies of Lender or Trustee:

(a)        declare the entire unpaid Debt to be immediately due and payable;

(b)        institute proceedings, judicial or otherwise, for the complete foreclosure of this Deed of Trust under any applicable provision of law, in which case the Property or any interest therein may be sold for cash or upon credit in one or more parcels or in several interests or portions and in any order or manner;

(c)        with or without entry, to the extent permitted and pursuant to the procedures provided by applicable law, institute proceedings for the partial foreclosure of this Deed of Trust for the portion of the Debt then due and payable, subject to the continuing lien and security interest of this Deed of Trust for the balance of the Obligations not then due, unimpaired and without loss of priority;

(d)        sell for cash or upon credit the Property or any part thereof and all estate, claim, demand, right, title and interest of Borrower therein and rights of redemption thereof, pursuant to power of sale or otherwise, at one or more sales, as an entirety or in parcels, at such time and place, upon such terms and after such notice thereof, all as may be required  or permitted by law; and, without limiting the foregoing:

(i)       In connection with any sale or sales hereunder, Lender or the Trustee shall be entitled to elect to treat any of the Property which consists of (x) a right in action, or (y) property that can be severed from the Real Property covered hereby, or 

(z)  any improvements (without causing structural damage thereto), as if the same were personal property, and dispose of the same in accordance with applicable law, separate and apart from the sale of the Real Property. Where the Property consists of Real Property, Personal Property, Equipment or Fixtures, whether or not such Personal Property or Equipment is located on or within the Real Property, Lender and/or the Trustee shall be entitled to elect to exercise its rights and remedies against any or all of the Real Property, Personal Property, Equipment and Fixtures in such order and manner as is now or hereafter permitted by applicable law;

(ii)        Lender and/or the Trustee shall be entitled to elect to proceed against any or all of the Real Property, Personal Property, Equipment and Fixtures in any manner permitted under applicable law; and if Lender and/or the Trustee so elects pursuant to applicable law, the power of sale herein granted shall be exercisable with respect to all or any of the Real Property, Personal Property, Equipment and Fixtures covered hereby, as designated by Lender and/or the Trustee and Trustee is hereby authorized and empowered to conduct any such sale of any Real Property, Personal Property, Equipment and Fixtures in accordance with the procedures applicable to Real Property;

(iii)       Should Lender and/or the Trustee elect to sell any portion of the Property which is Real Property or which is Personal Property, Equipment or Fixtures that the Lender and/or the Trustee has elected under applicable law to sell together with Real Property in accordance with the laws governing a sale of the Real Property, Lender and/or the Trustee shall give such notice of the occurrence of an Event of Default, if any, and election to sell such Property, each as may then be required by law. Thereafter, upon the expiration of such time and the giving of such notice of sale as may then be required by law, subject to the terms hereof and of the other Loan Documents, and without the necessity of any demand on Borrower, Lender and/or the Trustee at the time and place specified in the notice of sale, shall sell such Real Property or part thereof at public auction to the highest bidder for cash in lawful money of the United States. Lender or the Trustee may from time to time postpone any sale hereunder by public announcement thereof at the time and place noticed for any such sale; and

(iv)       If the Property consists of several lots, parcels or items of property, Lender or the Trustee shall, subject to applicable law, (A) designate the order in which such lots, parcels or items shall be offered for sale or sold, or (B) elect to sell such lots, parcels or items through a single sale, or through two or more successive sales, or in any other manner Lender or the Trustee designates. Any Person, other than the Trustee, including Borrower or Lender, may purchase at any sale hereunder. Should Lender or the Trustee desire that more than one sale or other disposition of the Property be conducted, Lender or the Trustee shall, subject to applicable law, cause such sales or dispositions to be conducted simultaneously, or successively, on the same day, or at such different days or times and in such order as Lender or the Trustee may designate, and no such sale shall terminate or otherwise affect the Lien of this Deed of Trust on any part of the Property not sold until all the Obligations have been satisfied in full. In the event Lender or the Trustee elects to dispose of the Property through more than one sale, except as otherwise provided by applicable law, Borrower agrees to pay the costs and expenses of each such sale and of any judicial proceedings wherein such sale may be made;

(e)         institute an action, suit or proceeding in equity for the specific performance of any covenant, condition or agreement contained herein, in the Note, in the Loan Agreement or in the other Loan Documents;

(f)         recover judgment on the Note either before, during or after any proceedings for the enforcement of this Deed of Trust or the other Loan Documents;

(g)        apply for the appointment of a receiver, trustee, liquidator or conservator of the Property, without notice and without regard for the adequacy of the security for the Debt and without regard for the solvency of Borrower, any guarantor or indemnitor with respect to the Loan or any Person otherwise liable for the payment of the Debt or any part thereof;

(h)        the license granted to Borrower under Section 1.2 hereof shall automatically be revoked and Lender may enter into or upon the Property, either personally or by its agents, nominees or attorneys and dispossess Borrower and its agents and servants therefrom, without liability for trespass, damages or .otherwise and exclude Borrower and its agents or servants wholly therefrom, and take possession of all books, records and accounts relating

thereto and Borrower agrees to surrender possession of the Property and of such books, records and accounts to Lender upon demand, and thereupon Lender may (i) use, operate, manage, control, insure, maintain, repair, restore and otherwise deal with all and every part of the Property and conduct the business thereat; (ii) complete any construction on the Property in such manner and form as Lender deems advisable; (iii) make alterations, additions, renewals, replacements and improvements to or on the Property; (iv) exercise all rights and powers of Borrower with respect to the Property, whether in the name of Borrower or otherwise, including, without limitation, the right to make, cancel, enforce or modify Leases, obtain and evict tenants and demand, sue for, collect and receive all Rents of the Property and every part thereof;

(v)  require Borrower to pay monthly in advance  to Lender,  or any  receiver  appointed  to collect  the Rents, the fair and reasonable rental value for the use and occupation of such part  of  the Property as may be occupied by Borrower; (vi) require Borrower to  vacate  and  surrender possession of the Property to Lender or to such receiver and, in default thereof, Borrower may be evicted by summary proceedings or otherwise; and (vii) apply  the  receipts  from  the Property  to the payment and performance of the Obligations  (including,  without  limitation,  the  payment  of the Debt), in such order, priority and proportions as Lender shall deem appropriate in its sole discretion after deducting therefrom all expenses (including reasonable attorneys' fees and costs) incurred in connection with the aforesaid operations and all amounts necessary to pay the Taxes, Other Charges, Insurance Premiums and  other expenses  in connection  with  the Property,  as well as just and reasonable compensation for the services of  Lender,  its  counsel,  agents  and  employees;

(i)         exercise any and all rights and remedies granted to a secured party upon default under the Uniform Commercial Code, including, without limiting the generality of the foregoing: (i) the right to take possession of the Fixtures, the Equipment and/or the Personal Property, or any part thereof, and to take such other measures as Lender may deem necessary for the care, protection and preservation of the Fixtures, the Equipment and the Personal Property, and (ii) request Borrower, at its sole cost and expense, to assemble the Fixtures, the Equipment and/or the Personal Property and make it available to Lender at a convenient place acceptable to Lender. Any notice of sale, disposition or other intended action by Lender with respect to the Fixtures, the Equipment and/or the Personal Property sent to Borrower in accordance with the provisions hereof at least five (5) days prior to such action, shall constitute commercially reasonable notice to Borrower;

G)        apply any sums then deposited or held in escrow or otherwise by or on behalf of Lender in accordance with the terms of the Loan Agreement, this Deed of Trust or any other Loan Document to the payment of the following items in any order in its sole discretion:

(i)         Taxes and Other Charges;

(ii)        Insurance Premiums;

(iii)       Interest on the unpaid principal balance of the Note;

(iv)       Amortization of the unpaid principal balance of the Note; and/or

(v)        All other sums payable pursuant to the Note, the Loan Agreement, this Deed of Trust and the other Loan Documents, including, without limitation, the Prepayment Fee, if applicable, and advances made by Lender pursuant to the terms of this Deed of Trust;

(k)        pursue such other remedies as Lender may have under applicable law;

and/or

(l)        apply the undisbursed balance of any Net Proceeds Deficiency deposit,

together with interest thereon, to the payment of the Debt in such order, priority and proportions as Lender shall deem to be appropriate in its sole discretion.

In the event of a sale, by foreclosure, power of sale or otherwise, of less than all of Property, this Deed of Trust shall continue as a Lien and security interest on the remaining portion of the Property unimpaired and without loss of priority.

Section 7.2   Application of Proceeds.  The purchase money proceeds and avails of any disposition of the Property or any part thereof, or any other sums collected by Lender pursuant to the Note, this Deed of Trust or the other Loan Documents, may be applied by Lender to the payment of the Obligations in such priority and proportions as Lender in its discretion shall deem proper, to the extent consistent with law.

Section 7.3 Right to Cure Defaults. Upon the occurrence and during the continuance of any Event of Default or if Borrower fails to make any payment or to do any act as herein provided, Lender may, but without any obligation to do so and without notice to or demand on Borrower, and without releasing Borrower from any obligation hereunder, make or do the same in such manner and to such extent as Lender may deem necessary to protect the security hereof. Lender is authorized to enter upon the Property for such purposes, or appear in, defend or bring any action or proceeding to protect its interest in the Property or to foreclose this Deed of Trust or to collect the Debt, and the cost and expense thereof (including reasonable

· attorneys' fees and expenses, to the extent permitted by law), with interest as provided in this Section 7.3, shall constitute a portion of the Debt and shall be due and payable to Lender upon demand. All such costs and expenses incurred by Lender in remedying any Default or Event of Default or such failed payment or act or in appearing in, defending or bringing any such action or proceeding, as hereinabove provided, shall bear interest at the Default Rate, for the period beginning on the first day after notice from Lender that such cost or expense was incurred and continuing until the date of payment to Lender. All such costs and expenses incurred by Lender together with interest thereon calculated at the Default Rate shall be deemed to constitute a portion of the Debt and to be secured by this Deed of Trust and the other Loan Documents and shall be immediately due and payable upon demand by Lender therefor.

Section 7.4 Actions and Proceedings. Lender or Trustee shall have the right to appear in and defend any action or proceeding brought with respect to the Property and to bring any action or proceeding, in the name and on behalf of Borrower, which Lender, in its sole discretion, decides should be brought to protect its interest in the Property.

Section 7.5 Recovery of  Sums Required  to  be Paid.  Lender  shall  have the  right from time to time to take action to recover any sum or sums which constitute a part of the Debt as the same become due, without regard to whether or not the balance of the Debt shall be due, and without prejudice to the right of Lender or Trustee thereafter to bring an action of foreclosure, or any other action, for any Default or Event of Default by Borrower existing at the time such earlier action was commenced.

Section 7.6 Examination of Books and Records. At reasonable times and upon reasonable notice (which may be given verbally), Lender, its agents, accountants and attorneys, shall have the right to examine the records, books and management and other papers of Borrower which reflect upon its financial condition, either at the Property or at any office regularly maintained by Borrower where such books and records are located. Lender and its agents shall have the right to make copies and extracts from the foregoing records and other papers. In addition, at reasonable times and upon reasonable notice (which may be given verbally), Lender, its agents, accountants and attorneys shall have the right to examine and audit the books and records of Borrower pertaining to the income, expenses and operation of the Property during reasonable business hours at any office of Borrower where the books and records are located. This Section 7.6 shall apply throughout the term of the Note and without regard to whether an Event of Default has occurred or is continuing.

Section 7.7                                Other Rights, Etc.

(a)        The failure of Lender or Trustee to insist upon strict performance of any term hereof shall not be deemed to be a waiver of any term of this Deed of Trust. Borrower shall not be relieved of Borrower's obligations hereunder by reason of (i) the failure of Lender to comply with any request of Borrower or any guarantor or indemnitor with respect to the Loan to take any action to foreclose this Deed of Trust or otherwise enforce any of the provisions hereof or of the Note or the other Loan Documents, (ii) the release, regardless of consideration, of the whole or any part of the Property, or of any Person liable for the Obligations or any portion thereof, or (iii) any agreement or stipulation by Lender extending the time of payment or otherwise modifying or supplementing the terms of the Note, this Deed of Trust or the other Loan Documents.

(b)        It is agreed that the risk of loss or damage to the Property is on Borrower, and Lender shall have no liability whatsoever for any decline in value of the Property, for failure to maintain the Policies, or for failure to determine whether insurance in force is adequate as to the amount of risks insured. Possession by Lender shall not be deemed an election of judicial relief, if any such possession is requested or obtained, with respect to any Property or collateral not in Lender's possession.

(c)        Lender may resort for the payment and performance of the Obligations (including, but not limited to, the payment of the Debt) to any other security held by Lender in such order and manner as Lender, in its discretion, may elect. Lender or Trustee may take action to recover the Debt, or any portion thereof, or to enforce the Other Obligations or any covenant hereof, without prejudice to the right of Lender or Trustee thereafter to foreclose this Deed of Trust. The rights of Lender or Trustee under this Deed of Trust shall be separate, distinct and cumulative and none shall be given effect to the exclusion of the others. No act of Lender or

Trustee shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision. Neither Lender nor Trustee shall be limited exclusively to the rights and remedies herein stated but shall be entitled to every right and remedy now or hereafter afforded at law or in equity.

Section 7.8 Right to Release Any Portion of the Property.  Lender may release any portion of the Property for such consideration as Lender may require without, as to the remainder of the Property, in any way impairing or affecting the Lien or priority of this Deed of Trust, or improving the position of any subordinate lienholder with respect thereto, except to the extent that the Debt shall have been reduced by the actual monetary consideration, if any, received by Lender for such release, and Lender may accept by assignment, pledge or otherwise any other property in place thereof as Lender may require without being accountable for so doing to any other lienholder. This Deed of Trust shall continue as a Lien and security interest in the remaining portion of the Property.

Section 7.9  Violation  of Laws.   If the Property  is not in full compliance  with all Legal Requirements, Lender may impose additional requirements upon Borrower in connection herewith, including, without limitation, monetary reserves or financial equivalents.

Section 7.10 Recourse and Choice of Remedies. Notwithstanding any other prov1s1on of this Deed of Trust or the  Loan  Agreement,  including,  without  limitation, Section 11.22 of the Loan Agreement, Lender and the other Indemnified Parties (as hereinafter defined) are entitled to enforce the obligations of Borrower and any guarantor or indemnitor of the Loan contained in Sections 8.1, 8.2 and 8.3 herein and Section 9.2 of the Loan Agreement without first resorting to or exhausting any security or collateral and without first having recourse to the Note or any of the Property, through foreclosure, exercise of a power of sale or acceptance of a deed in lieu of foreclosure or otherwise, and in the event Lender commences a foreclosure action against the Property, or exercises the power of sale pursuant to this Deed of Trust, Lender shall be entitled to pursue a deficiency judgment with respect to such obligations against Borrower and any guarantor or indemnitor with respect to the Loan. The provisions of Sections 8.1, 8.2 and 8.3 herein and Section 9.2 of the Loan Agreement are exceptions to any non-recourse or exculpation provisions in the Loan Agreement, the Note, this Deed of Trust and/or the other Loan Documents, and Borrower and any guarantor or indemnitor with respect to the Loan are fully and personally liable for the Obligations set forth  in said Sections 8.1, 8.2  and 8.3 herein and Section 9.2 of the Loan Agreement. The liability of Borrower and any guarantor or indemnitor with respect to the Obligations set forth in Sections 8.1, 8.2 and 8.3 herein and Section 9.2 of the Loan Agreement is not limited to the original principal amount of the Note. Notwithstanding the foregoing, nothing herein shall inhibit or prevent Lender from foreclosing or exercising a power of sale pursuant to this Deed of Trust or exercising any other rights and remedies pursuant to the Loan Agreement, the Note, this Deed of Trust and/or the other Loan Documents, whether simultaneously with foreclosure proceedings or in any other sequence. A separate action or actions may be brought and prosecuted against Borrower with respect to the Obligations set forth in Sections 8.1, 8.2 and 8.3 herein and Section 9.2 of the Loan Agreement, whether or not an action is brought against any other Person and whether or not any other Person is joined in such action or actions. In addition, Lender shall have the right but not the obligation to join and participate in, as a party if it so elects, any administrative or judicial

proceedings or actions initiated in connection with any matter addressed in the Environmental Indemnity.

Section 7.11 Right of Entry. Upon reasonable notice (which may be given verbally) to Borrower, Lender and its agents shall have the right to enter and inspect the Property at all reasonable times.

ARTICLE 8 INDEMNIFICATION

Section 8.1      General  Indemnification.    Borrower  shall,  at  its  sole  cost  and

expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all claims, suits, liabilities (including, without limitation, strict liabilities), actions, proceedings, obligations, debts, damages, losses, costs, expenses, diminutions in value, fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in settlement, punitive damages, foreseeable and unforeseeable consequential damages, of whatever kind or nature (including, but not limited to, reasonable attorneys' fees and other costs of defense) (collectively, the "Losses"), imposed upon or incurred by or asserted against any Indemnified Parties and directly  or indirectly  arising out of or in any way relating  to any one or more of the following:

(a)  ownership of this Deed of Trust, the -Property or any interest therein or receipt of any Rents;

(b)  any amendment to, or restructuring of, the Obligations (including, but not limited to, the Debt) and the Note, the Loan Agreement,  this Deed of Trust and/or any other Loan  Document;

(c)  any and all lawful action that may be taken by Lender in connection with the enforcement of the provisions of this Deed of Trust or the Loan Agreement or the Note or any of the other Loan Documents, whether or not suit is filed in connection with same, or in connection with Borrower, any guarantor or indemnitor and/or any partner, member, joint venturer or shareholder thereof becoming a party to a voluntary or involuntary federal or state bankruptcy, insolvency or similar proceeding; (d) any accident, injury to or death of persons or loss of or damage to property occurring in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (e) any use, non-use or condition in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (f) any failure on the part of Borrower to perform or to be in compliance with any of the terms of this Deed of Trust; (g) performance of any labor or services or the furnishing of any materials or other property in respect of the Property or any part thereof; (h) the failure of any Person to file timely with the Internal Revenue Service an accurate Form 1099-B, Statement for Recipients of Proceeds from Real Estate, Broker and Barter Exchange Transactions, which may be required in connection with this Deed of Trust, or to supply a copy thereof in a timely fashion to the recipient of the proceeds of the transaction in connection with which this Deed of Trust is made; (i) any failure of the Property to be in compliance with any Legal Requirements; (j) the enforcement by any of the Indemnified Parties of the provisions of this Article 8; (k) any and all claims and demands whatsoever which may be asserted against Lender by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants or agreements contained in any Lease; (I) the payment of any commission, charge or brokerage fee to anyone claiming through Borrower (or any affiliate thereof) which may be payable in connection with the funding of the Loan; or

(m)  any misrepresentation made by Borrower in this Deed of Trust or in any other Loan

Document; provided, however, that Borrower shall not be liable for the payment of such Losses to the extent that the same are the result of the gross negligence or willful misconduct of Lender.. Any amounts payable to Lender by reason of the application of this Section 8.1 shall become immediately due and payable and shall bear interest at the Default Rate from the date any Loss is sustained by Lender until such amounts and any applicable interest are paid. For purposes of this Article 8, the term "Indemnified Parties" means (A) Lender and any Person who is or will have been involved in the origination of the Loan, (B) any Person who is or will have been involved in the servicing of the Loan secured hereby, (C) any Person in whose name the encumbrance created by this Deed of Trust is or will have been recorded, (D) Persons who may hold or acquire or will have held a full or partial interest in the Loan (including, but not limited to, investors or prospective investors in the Securities, as well as custodians, trustees and other fiduciaries who hold, have held or may hold a full or partial interest in the Loan secured hereby for the benefit of third parties), and (E) the respective directors, officers, shareholders, partners, members, employees, agents, servants, representatives, contractors, subcontractors, affiliates, subsidiaries, participants, successors and assigns of any and all of the foregoing (including, but not limited to, any other Person who holds or acquires or will have held a participation or other full or partial interest in the Loan, whether during the term of the Loan or as a part of or following a foreclosure of the Loan, and including, but not limited to, any successors by merger, consolidation or acquisition of all or a substantial portion of Lender's assets and business).

Section 8.2  Deed  of  Trust  and/or  Intangible  Tax.  Borrower  shall,  at  its  sole cost and expense, protect, defend, indemnify, release and hold  harmless the Indemnified  Parties from and against any and all Losses imposed upon or incurred by or asserted against  any Indemnified Parties and directly or indirectly  arising  out of or in any  way  relating  to any tax on the making and/or recording of this Deed of  Trust, the Note or any of the other Loan  Documents, but excluding any income, franchise or other similar taxes.

Section 8.3 BRISA Indemnification. Borrower shall, at its  sole  cost  and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all Losses (including, without limitation, reasonable attorneys' fees and costs incurred in the investigation, defense and/or settlement of Losses incurred in correcting any prohibited transaction or in the sale of a prohibited loan, and in obtaining any individual prohibited transaction exemption under BRISA that may be required, in Lender's sole discretion) that Lender may incur, directly or indirectly, as a result of a default under Section 4.2.13 of the Loan Agreement.

Section 8.4 Duty to Defend; Attorneys' Fees and  Other Fees and  Expenses. Upon written request by any Indemnified Party, Borrower shall defend such Indemnified Party (if requested by any Indemnified Party, in the name of the Indemnified Party) by attorneys and other professionals approved by the Indemnified Parties. Notwithstanding the foregoing, if the defendants in any such claim or proceeding include both Borrower and any Indemnified Party and Borrower and such Indemnified Party shall have reasonably concluded that there are any legal defenses available to it and/or other Indemnified Parties that are different from or in addition to those available to Borrower, such Indemnified Party shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such Indemnified Party. Upon demand, Borrower shall pay or, in the sole and absolute discretion of the Indemnified Parties, reimburse, the Indemnified Parties for the

payment of the reasonable fees and disbursements of attorneys, engineers, environmental consultants, laboratories and other professionals in connection therewith.

ARTICLE 9 WAIVERS

Section 9.1 Waiver of Counterclaim. To the extent permitted by applicable

law, Borrower hereby waives the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against it by Lender arising out of or in any way connected with this Deed of Trust, the Loan Agreement, the Note, any of the other Loan Documents or the Obligations.

Section 9.2 Marshalling and Other Matters. To the extent  permitted  by applicable law, Borrower hereby waives the benefit of all appraisement, valuation, stay, extension, reinstatement and redemption laws now or hereafter in force and all rights of marshalling in the event of any sale hereunder of the Property or any part thereof or any interest therein. Further, to the extent permitted by applicable law, Borrower hereby expressly waives any and all rights of redemption from sale under any order or decree of foreclosure of this Deed of Trust on behalf of Borrower, and on behalf of each and every Person acquiring any interest in or title to the Property subsequent to the date of this Deed of Trust.

Section 9.3 Waiver of Notice. To the extent permitted by applicable law, Borrower shall not be entitled to any notices of any nature whatsoever from Lender or Trustee, except with respect to matters for which this Deed of Trust or the Loan Documents specifically and expressly provide for the giving of notice by Lender or Trustee to Borrower, and except with respect to matters for which Lender or Trustee is required by applicable law to give notice, and Borrower hereby expressly waives the right to receive any notice from Lender or Trustee with respect to any matter for which this Deed of Trust does not specifically and expressly provide for the giving of notice by Lender or Trustee to Borrower.

Section 9.4 Waiver of Statute of Limitations. To the extent permitted by applicable law, Borrower hereby expressly waives and releases its right to plead any statute of limitations as a defense to the payment and performance of the Obligations (including, without limitation, the payment of the Debt).

Section 9.5 Waiver of Jury Trial. BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND FOREVER WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST, WITH REGARD TO THE NOTE, THIS DEED OF TRUST OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS

HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.

Section 9.6 Survival.  The indemnifications made pursuant  to Article 8 herein and the representations and warranties, covenants, and other obligations arising under the Environmental Indemnity, shall continue indefinitely in full force and effect and shall survive and shall in no way be impaired by (a) any satisfaction, release or other termination of this Deed of Trust or any other Loan Document, (b) any assignment or other transfer of all or any portion of this Deed of Trust or any other Loan Document or Lender's interest in the Property (but, in such case, such indemnifications shall benefit both the Indemnified Parties and any such assignee or transferee), (c) any exercise of Lender's rights and remedies pursuant hereto, including, but not limited to, foreclosure or acceptance of a deed in lieu of foreclosure, any exercise of any rights and remedies pursuant to the Loan Agreement, the Note or any of the other Loan Documents, any transfer of all or any portion of the Property (whether by Borrower or by Lender following foreclosure or acceptance of a deed in lieu of foreclosure or at any other time), (d) any amendment to this Deed of Trust, the Loan Agreement, the Note or any other Loan Document, and/or (e) any act or omission that might otherwise be construed as a release or discharge of Borrower from the Obligations or any portion thereof.

ARTICLE 10 EXCULPATION

The provisions of Section 11.22 of the Loan Agreement are hereby incorporated

by reference into this Deed of Trust to the same extent and with the same force as if fully set forth herein.

ARTICLE 11 NOTICES

All notices or other written communications hereunder shall be delivered in

accordance with Section 11.6 of the Loan Agreement and the following:

If to Trustee:                                             Nicholas M. Pyka c/o Winstead P.C.

401 Congress Avenue

Suite 2100

Austin, Texas 78701

Facsimile No.: (512) 370-2850

ARTICLE 12 APPLICABLE LAW

Section 12.1                                Governing     Law.       THIS    DEED   OF   TRUST   SHALL        BE

GOVERNED BY THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. ANY LEGAL

SUIT, ACTION OR PROCEEDING AGAINST BORROWER ARISING OUT OF OR RELATING TO THIS DEED OF TRUST OR ANY OTHER LOAN DOCUMENT MAY BE INSTITUTED IN THE COURTS HAVING JURISDICTION IN THE CITY AND/OR COUNTY IN WHICH THE PROPERTY IS LOCATED, AND BORROWER HEREBY WAIVES ANY OBJECTIONS THAT IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING.

Section 12.2 Usury Laws. Notwithstanding anything to the contrary, (a) all agreements and communications between Borrower and Lender are hereby and shall automatically be limited so that, after taking into account all amounts deemed to constitute interest, the interest contracted for, charged or received by Lender shall never exceed the Maximum Legal Rate, (b) in calculating whether any interest exceeds the Maximum Legal Rate, all such interest shall be amortized, prorated, allocated and spread over the full amount and term of all principal indebtedness of Borrower to Lender, and (c) if through any contingency or event, Lender receives or is deemed to receive interest in excess of the Maximum Legal Rate, any such excess shall be deemed to have been applied toward payment of the principal of any and all then outstanding indebtedness of Borrower to Lender, or if there is no such indebtedness, shall immediately be returned to Borrower.

Section 12.3 Provisions Subject to Applicable Law. All rights, powers and remedies provided in this Deed of Trust may be exercised only to the extent that the exercise thereof does not violate any applicable provisions of law and are intended to be limited to the extent necessary so that they will not render this Deed of Trust invalid, unenforceable or not entitled to be recorded, registered or filed under the provisions of any applicable law. If any  term of this Deed of Trust or any application thereof shall be invalid or unenforceable, the remainder of this Deed of Trust and any other application of the term shall not be affected thereby.

ARTICLE 13 DEFINITIONS

Unless the context clearly indicates a contrary intent or unless otherwise

specifically provided herein, words used in this Deed of Trust may be used interchangeably in the singular or plural form and the word "Borrower" shall mean "each Borrower and any subsequent owner or owners of the Property or any part thereof or any interest therein," the word "Lender" shall mean "Lender and any subsequent holder of the Note," the word "Note" shall mean "the Note and any other evidence of indebtedness secured by this Deed of Trust," the word "Property" shall include any portion of the Property and any interest therein, and the phrases "attorneys' fees", "legal fees" and "counsel fees" shall include any and all attorneys', paralegal and law clerk fees and disbursements, including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels, incurred or paid by Lender in protecting its interest in the Property, the Leases and/or the Rents and/or in enforcing its rights hereunder. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms.

ARTICLE 14 MISCELLANEOUS PROVISIONS

Section 14.1 No Oral Change. This Deed of Trust, and any provisions hereof,

may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party(ies) against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

Section 14.2 Successors and Assigns. This Deed of Trust shall be binding upon, and shall inure to the benefit of, Borrower and Lender and their respective successors and permitted assigns, as set forth in the Loan Agreement. Lender shall have the right, without the consent of Borrower, to assign or transfer its rights under this Deed of Trust in connection with any assignment of the Loan and the Loan Documents. Any assignee or transferee of Lender  shall be entitled to all the benefits afforded to Lender under this Deed of Trust. Borrower shall not have the right to assign or transfer its rights or obligations under this Deed of Trust without the prior written consent of Lender, as provided in the Loan Agreement, and any attempted assignment without such consent shall be null and void.

Section 14.3 Inapplicable Provisions. If any provision of this Deed of Trust  is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Deed of Trust, such provision shall be fully severable and this Deed of Trust shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Deed of Trust, and the remaining provisions of this Deed of Trust shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Deed of Trust, unless such continued effectiveness of this Deed of Trust, as modified, would be contrary to the basic understandings and intentions of the parties as expressed herein.

Section 14.4  Headings,  Etc.  The headings and captions of the various Sections of this Deed of Trust are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

Section 14.5 Subrogation. If any or all of the proceeds of the Note  have  been used to extinguish, extend or renew any indebtedness heretofore existing against the Property, then, to the extent of the funds so used, Lender shall be subrogated to all of the rights, claims, liens, titles and interests existing against the Property heretofore held by, or in favor of, the holder of such indebtedness and such former rights, claims, liens, titles and interests, if any, are not waived, but rather are continued in full force and effect in favor of Lender and are merged with the Lien and security interest created herein as cumulative security for the payment, performance and discharge of the Obligations (including, but not limited to, the payment of the Debt).

Section 14.6 Entire Agreement. The Note, the Loan Agreement, this Deed of Trust and the other Loan Documents constitute the entire understanding and agreement between Borrower and Lender with respect to the transactions arising in connection with the Obligations

and supersede all prior written or oral understandings and agreements between Borrower and Lender with respect thereto. Borrower hereby acknowledges that, except as incorporated in writing in the Note, the Loan Agreement, this Deed of Trust and the other Loan Documents, there are not, and were not, and no Persons are or were authorized by Lender to make, any representations, understandings, stipulations, agreements or promises, oral or written, with respect to the transaction which is the subject of the Note, the Loan Agreement, this Deed of Trust and the other Loan Documents.

Section 14.7 Limitation on Lender's Responsibility.  No provision of this Deed  of Trust shall operate to place any obligation or liability for the control, care, management or repair of the Property upon Lender, nor shall it operate to make Lender responsible or liable for any waste committed on the Property by the Tenants or any other Person, or for any dangerous or defective condition of the Property, or for any negligence in the management, upkeep, repair or control of the Property resulting in loss or injury or death to any Tenant, licensee, employee or stranger. Nothing herein contained shall be construed as constituting Lender a "mortgagee in possession."

Section 14.8 Recitals. The recitals hereof are a part hereof, form a basis for this Deed of Trust and shall be considered prima facie evidence of the facts and documents referred to therein.

Section 14.9 Joint and Several Liability. If more than one Person has executed this Deed of Trust as "Borrower," the representations, covenants, warranties and obligations of all such Persons hereunder shall be joint and several.

ARTICLE 15

DEED OF TRUST PROVISIONS

Section 15.1 Concerning the Trustee. Trustee shall be under no duty to take any action hereunder except as expressly required hereunder or by law, or to perform any act which would involve Trustee in any expense or liability or to institute or defend  any  suit  in  respect hereof, unless properly  indemnified  to Trustee's  reasonable  satisfaction.  Trustee,  by  acceptance of this Deed of Trust, covenants to perform and fulfill the trusts herein created, being  liable, however, only for willful negligence or misconduct, and hereby waives  any  statutory  fee  and agrees to accept reasonable compensation, in lieu thereof, for any services rendered by Trustee in accordance with the terms hereof. Trustee may resign at any time upon  giving thirty  (30) days' notice to Borrower and to Lender. Lender may  remove  Trustee  at any time or from  time to time and select a successor trustee. In the event of the death, removal, resignation, refusal to act, or inability to act of Trustee, or in its sole  discretion  for  any  reason  whatsoever  Lender  may, without notice and without specifying any reason therefor and  without  applying  to  any  court, select and appoint a successor trustee, by an instrument recorded wherever this Deed of Trust is recorded and all powers, rights, duties and authority of Trustee, as aforesaid,  shall  thereupon become vested in such successor. Such  substitute  trustee shall  not  be required  to give  bond  for the faithful performance of the duties of Trustee hereunder unless required by  Lender.  The procedure provided for in this paragraph  for substitution  of Trustee shall be in addition  to and  not in exclusion of any other provisions for substitution, by law or otherwise.

Section 15.2 Trustee's Fees. Borrower shall pay all reasonable costs, fees and expenses incurred by Trustee and Trustee's agents and counsel in connection with the performance by Trustee of Trustee's duties hereunder and all such costs, fees and expenses shall be secured by this Deed of Trust.

Section 15.3 Certain Rights. With  the approval  of Lender,  Trustee shall have  the right to take any and all of the following actions: (i) to select, employ, and advise with counsel (who may be, but need not be, counsel for Lender) upon any matters arising hereunder, including the preparation, execution, and interpretation of the Loan Agreement, the Note, this Deed of Trust or the other Loan Documents, and shall be fully protected in relying as to legal matters on the advice of counsel, (ii) to execute any of the trusts and powers hereof and to perform any duty hereunder either directly or through his agents or attorneys, (iii) to select and employ, in and about the execution of his duties hereunder, suitable accountants, engineers and other experts, agents and attorneys-in-fact, either corporate or individual, not regularly in the employ of Trustee, and Trustee shall not be answerable for any act, default, negligence, or misconduct of any such accountant, engineer or other expert, agent or attorney-in-fact, if selected with reasonable care, or for any error of judgment or act done by Trustee in good faith, or be otherwise responsible or accountable under any circumstances whatsoever, except for Trustee's gross negligence or bad faith, and (iv) any and all other lawful action as Lender may instruct Trustee to take to protect or enforce Lender's rights hereunder. Trustee shall not be personally liable in case of entry by Trustee, or anyone entering by virtue of the powers herein granted to Trustee, upon the Property for debts contracted for or liability or damages incurred in the management or operation of the Property. Trustee shall have the right to rely on any instrument, document, or signature authorizing or supporting an action taken or proposed to be taken by Trustee hereunder, believed by Trustee in good faith to be genuine. Trustee shall be entitled to reimbursement for actual expenses incurred by Trustee in the performance of Trustee's duties hereunder and to reasonable compensation for such of Trustee's services hereunder as shall be rendered.

Section 15.4 Retention of Money. All moneys received by Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by applicable law) and Trustee shall be under no liability for interest on any moneys received by Trustee hereunder.

Section 15.5 Perfection of Appointment. Should any deed, conveyance, or instrument of any nature be required from Borrower by any Trustee or substitute trustee to more fully and certainly vest in and confirm to the Trustee or substitute trustee such estates rights, powers, and duties, then, upon request by the Trustee or substitute trustee, any and all such deeds, conveyances and instruments shall be made, executed, acknowledged, and delivered and shall be caused to be recorded and/or filed by Borrower.

Section 15.6 Succession Instruments.  Any substitute trustee appointed pursuant  to any of the provisions hereof shall, without any further act, deed, or conveyance, become vested with all the estates, properties, rights, powers, and trusts of its or his predecessor in the rights hereunder with like effect as if originally named as Trustee herein; but nevertheless, upon the written request of Lender or of the substitute trustee, the Trustee ceasing to act shall execute

and deliver any instrument transferring to such substitute trustee, upon the trusts herein expressed, all the estates, properties, rights, powers, and trusts of the Trustee so ceasing to act, and shall duly assign, transfer and deliver any of the property and moneys held by such Trustee to the substitute trustee so appointed in the Trustee's place.

ARTICLE 16

STATE-SPECIFIC PROVISIONS

Section 16.1 Principles of Construction. In the event of any inconsistencies between the terms and conditions of this Article 16 and the other terms and conditions of this Deed of Trust, the terms and conditions of this Article 16 shall control and be binding.

Section 16.2 Instrument. This Deed of Trust shall be deemed to be and shall be enforceable as a deed of trust, leasehold deed of trust, and financing statement.

Section 16.3 Assignment of Rents.

(a)        Definitions. As used in this Deed of Trust, the following terms shall have the meanings set forth below:

"Act": Chapter 64 of the Texas Property Code, as amended from time to time. "Notice of Enforcement": A notice in substantially the form set forth in Section

64.056 of the Act sent by Lender or Trustee to a lessee demanding payment by the lessee to Lender of all unpaid accrued Rents and all unaccrued Rents as they accrue.

"Rent Demand": Written notice from Lender or the Trustee to Borrower instructing Borrower to deliver to Lender all accruing Rents and all Rents that have accrued but are unpaid.

(b)       Assignment of Rents. Section 1.2 hereof shall be deleted  in its entirety and replaced with the following in lieu thereof:

Assignment of Rents. Borrower hereby presently and unconditionally assigns to Lender and Trustee a security interest in all of Borrower's right, title and interest in and to all current and future Leases and Rents; whether now owned by Borrower or hereafter acquired and whether now existing or hereafter corning into existence, as security for repayment of the Debt and performance of the Obligations and to provide a source of future payment of the Debt, it being intended by Borrower that this assignment constitutes a present, unconditional assignment that is immediately effective.

(c)        No License. The phrase in the first sentence of Section 7.l(h) of this Deed of Trust that reads "the license granted to Borrower under Section 1.2 hereof shall automatically be revoked and" shall be deleted in its entirety.

(d)        Collection of Rent. At any time during which Borrower is receiving Rents directly from any of the lessees, Borrower shall, upon receipt of written direction from Lender or Trustee, make demand and/or sue for all Rents due and payable under one or more Leases, as directed by Lender, as it becomes due and payable, including Rents that are past due and unpaid. If Borrower fails to take such action, or at any time during which Borrower is not receiving Rents directly from lessees, Lender may, without obligation, demand, collect, and sue for, in its own name or in the name of Borrower, all Rents due and payable under the Leases, as they become due and payable, including Rents that are past due and unpaid.

(e)        Rights Relating to Rents. Lender may (in its sole discretion), upon the occurrence of an Event of Default deliver a Rent Demand to Borrower or deliver a Notice of Enforcement to the lessees. Borrower agrees that pursuant  to Section 64.002(a)(3) of the Act, any Rent Demand sent by Lender may be sent to Borrower in any manner and to any address described in the Loan Agreement. As described in Section 64.060 of the Act, Borrower shall, within ten days after its receipt of a Rent Demand, deliver to Lender such Rents as are described in the Rent Demand. Notwithstanding the provisions of Section 64.058 of the Act, Borrower agrees that Rents so received or collected by Lender or Trustee for any period prior to foreclosure under this Deed of Trust or acceptance of a deed in lieu of such foreclosure may be applied by Lender to the payment of the following (in such order and priority as Lender shall determine): (a) all operating expenses of the Property; (b) all expenses incident to taking and retaining possession of the Property and/or collecting Rent as it becomes due and payable; and

(c)  the Debt. If the costs, expenses, and attorneys' fees shall exceed the amount of Rents collected, the excess shall be added to the Debt, shall bear interest at the Default Rate, and shall be immediately due and payable. Borrower further acknowledges that Lender shall have no obligation to apply any Rents received by Lender toward the expenses of protecting or maintaining the Property.

Section 16.4 Foreclosure. Upon the occurrence of any Event of Default, Lender may request Trustee to proceed with foreclosure under the power of sale which is hereby conferred, such foreclosure to be accomplished in accordance with the following provisions:

(a)        Public Sale. Trustee is hereby authorized and empowered, and it shall be Trustee's special duty, upon such request of Lender, to sell the Property, or any part thereof, at public auction to the highest bidder for cash, with or without having taken possession of same. Any such sale (including notice thereof) shall comply with the applicable requirements, at the time of the sale, of Section 51.002 of the Texas Property Code or, if and to the extent such statute is not then in force, with the applicable requirements, at the time of the sale, of the successor statute or statutes, if any, governing sales of Texas real property under powers of sale conferred by deeds of trust. If there is no statute in force at the time of the sale governing sales of Texas real property under powers of sale conferred by deeds of trust, such sale shall comply with applicable law, at the time of the sale, governing sales of Texas real property under powers of sale conferred by deeds of trust. Trustee or his successor or substitute may appoint or delegate any one or more persons as agent to perform any act or acts necessary or incident to any sale  held by Trustee, including the posting of notices, and the conduct of sale, but in the name and on behalf of Trustee, his successor or substitute.

(b)         Right to Require Proof of Financial Ability and/or Cash Bid. At any time during the bidding, the Trustee may require a bidding party (A) to disclose its full name, state and city of residence, occupation, and specific business office location, and the name and address of the principal the bidding party is representing (if applicable), and (B) to demonstrate reasonable evidence of the bidding party's financial ability (or, if applicable, the financial ability of the principal of such bidding party), as a condition to the bidding party submitting bids at the foreclosure sale. If any such bidding party (the "Questioned Bidder") declines to comply with the Trustee's requirement in this regard, or if such Questioned Bidder does respond but the Trustee, in Trustee's sole and absolute discretion, deems the information or the evidence of the financial ability of the Questioned Bidder (or, if applicable, the principal of such bidding party) to be inadequate, then the Trustee may continue the bidding with reservation; and in such event

(1) the Trustee shall be authorized to caution the Questioned Bidder concerning the legal obligations to be incurred in submitting bids, and (2) if the Questioned Bidder is not the highest bidder at the sale, or if having been the highest bidder the Questioned Bidder fails to deliver the cash purchase price payment promptly to the Trustee, all bids by the Questioned Bidder shall be null and void. The Trustee may, in Trustee's sole and absolute discretion, determine that a credit bid may be in the best interest of the Borrower and Lender, and elect to sell the Property for credit or for a combination of cash and credit; provided, however, that the Trustee shall have no obligation to accept any bid except an all cash bid. In the event the Trustee requires a cash bid and cash is not delivered within a reasonable time after conclusion of the bidding process, as specified by the Trustee, but in no event later than 3:45 p.m. local time on the day of sale, then said contingent sale shall be null and void, the bidding process may be recommenced, and any subsequent bids or sale shall be made as if no prior bids were made or accepted.

(c)         Sale Subject to Unmatured Debt. In addition to the rights and powers of sale granted under the preceding provisions of this subsection, if default is made in the payment of any installment of the Debt, Lender may, at Lender's option, at once or at any time thereafter while any matured installment remains unpaid, without declaring the entire Debt to be due and payable, orally or in writing direct Trustee to enforce this Deed of Trust and to sell the Property subject to such unmatured Debt and to the rights, powers, liens, security interests, and assignments securing or providing recourse for payment of such unmatured Debt, in the same manner, all as provided in the preceding provisions of this subsection. Sales made without maturing the Debt may be made hereunder whenever there is a default in the payment of any installment of the Debt, without exhausting the power of sale granted hereby, and without affecting in any way the power of sale granted under this subsection, the unmatured balance of the Debt or the rights, powers, liens, security interests, and assignments securing or providing recourse for payment of the Debt.

(d)         Partial Foreclosure. Sale of a part of the Property shall not exhaust the power of sale, but sales may be made from time to time until the Debt is paid in full. It is intended by each of the foregoing provisions of this subsection that Trustee may, after any request or direction by Lender, sell not only the Land and the Improvements, but also the Personal Property and other interests constituting a part of the Property or any part thereof, along with the Land and the Improvements or any part thereof, as a unit and as a part of a single sale, or may sell at any time or from time to time any part or parts of the Property separately from the remainder of the Property. It shall not be necessary to have present or to exhibit at any sale any of the Property. Any sale of personal property made hereunder shall be deemed to have been a

public sale conducted in a commercially reasonable manner if held contemporaneously with, or as part of, and upon the same notice as required for the sale of real property under the power of sale granted herein.

(e)        Trustee's Deeds. After any sale under this subsection, Trustee shall make good and sufficient deeds, assignments, and other conveyances to the purchaser or purchasers thereunder in the name of Grantor, conveying the Property or any part thereof so sold to the purchaser or purchasers with general warranty of title by Borrower. It is agreed that in any deeds, assignments or other conveyances given by Trustee, any and all statements of fact or other recitals therein made as to the identity of Lender, the occurrence or existence of any Event of Default, the notice of intention to accelerate, or acceleration of, the maturity of the Debt, the request to sell, notice of sale, time, place, terms and manner of sale, and receipt, distribution, and application of the money realized therefrom, the due and proper appointment of a substitute trustee, and without being limited by the foregoing, any other act or thing having been duly done by or on behalf of Lender or by or on behalf of Trustee, shall be taken by all courts of law and equity as prima facie evidence that such statements or recitals state true, correct, and complete facts and are without further question to be so accepted, and Borrower does hereby ratify and confirm any and all acts that Trustee may lawfully do in the premises by virtue hereof.

Section 16.5 Receiver. Lender, as a matter of right and without regard to the sufficiency of the security for repayment of the Debt and performance and discharge of the obligations hereunder, without notice to Borrower and without any showing of insolvency, fraud, or mismanagement on the part of Borrower, and without the necessity of filing any judicial or other proceeding other than the proceeding for appointment of a receiver, shall be entitled to the appointment of a receiver or receivers of the Property or any part thereof, and of the Rents, and Borrower hereby irrevocably consents to the appointment of a receiver or receivers. Any receiver appointed pursuant to the provisions of this subsection shall have the usual powers and duties of receivers in such matters.

Section 16.6  Inapplicability of Finance  Code.  In no event shall the provisions  of Chapter 346, Texas Finance Code (which regulates certain revolving credit loan accounts and revolving triparty accounts) apply to the loan evidenced by the Loan Documents and/or secured hereby.

Section 16.7 ENTIRE AGREEMENT. THIS DEED OF TRUST AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDER-STANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.

Section 16.8 Maturity Date. The maturity date of the Note secured hereby is the 6th day of October, 2026.

Section 16.9    NOTICE      OF      INDEMNIFICATION.    BORROWER ACKNOWLEDGES THAT THIS DEED OF TRUST PROVIDES FOR INDEMNIFICATION OF LENDER BY BORROWER.

[NO FURTHER TEXT ON THIS PAGE]

IN WITNESS WHEREOF, THIS DEED OF TRUST has been executed by Borrower as of the day and year first above written.

BORROWER:

TREEMONT CAPITAL PARTNERS III, LP, a Texas

limited partnership

By:	Treemont Capital Partners III GP, LLC, a Texas limited
	liability company, its general partner

By:	Treemont Investments, Inc., a Texas
	corporation, its sole member

By:	/s/ Philip A. McRae
Name:	Philip A. McRae
Title:	President

	ACKNOWLEDGMENT
STATE OF TEXAS	§
	§
COUNTY OF HARRIS	§

This instrument was ACKNOWLEDGED before me on September 29,  2016, by Philip A. McRae, the President of Treemont Investments, Inc., a Texas corporation, the sole member of Treemont Capital Partners III GP, LLC, a Texas limited liability company, the general partner of TREEMONT CAPITAL PARTNERS III, LP, a Texas limited partnership, on behalf of said limited partnership.

[SEAL]	JamieBetik
	Printed Name of Notary Public

My Commission Expires:	/s/ Jamie Betik
	Notary Public State of Texas
1/15/2018

EXHIBIT A

Legal Description

Tract I:

Tract "A", HOME 2 LUBBOCK, an Addition to the City of Lubbock, Lubbock County, Texas, according to the map, plat and/or dedication deed thereof recorded May 7, 2014 under County Clerk File No. 2014016086, Official Public Records, Lubbock County, Texas.

Tract II:

As created in Declaration of Restrictions and Reciprocal Easement Agreement recorded in Volume 10138, Page 14, Official Public Records, Lubbock County, Texas; in First Amendment recorded April 21, 2011 under County Clerk File No. 2011012478, Official Public Records, Lubbock County, Texas and in Ratification and Correction recorded July 31, 2013 under County Clerk File No. 2013030944, Official Public Records, Lubbock County, Texas.

FOR INFORMATIONAL PURPOSES ONLY: TAX PARCEL ID#R325521

EX-10.54.7

EXHIBIT 10.54.7

TREEMONT CAPITAL PARTNERS III, LP,

a Texas limited partnership, as grantor

(Borrower)

to

NICHOLAS M. PYKA,

an individual, as trustee

(Trustee)

For the benefit of

STARWOOD MORTGAGE CAPITAL LLC, as beneficiary

(Lender)

DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT

Dated: Location:	As of October 4, 2016
	6004 Marsha Sharp Freeway Lubbock, Texas
County:	Lubbock

PREPARED BY AND UPON RECORDA TION RETURN TO:

Winstead PC

201 North Tryon Street Suite 2000

Charlotte, North Carolina 28202 Attention: Jeffrey J. Lee, Esq.

DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT

THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT (this "Deed of Trust") is made as of this 4th day of October, 2016, by TREEMONT CAPITAL PARTNERS III, LP, a Texas limited partnership, having its  principal place of business at 1415 South Voss #110-94, Houston, Texas 77057, as grantor ("Borrower"), to NICHOLAS M. PYKA, an individual, having an address at 401 Congress Avenue, Suite 2100, Austin, Texas 78701, as trustee ("Trustee"), for the benefit of STARWOOD MORTGAGE CAPITAL LLC, a Delaware limited liability company, having an address at 1601 Washington Avenue, Suite 800, Miami Beach, Florida 33139, as beneficiary (together with its successors and assigns, "Lender").

WI  T N E  S S E  T H:

A.        This Deed of Trust is given to secure a loan (the "Loan") in the principal sum of EIGHT MILLION SIX HUNDRED THOUSAND AND NO/100 DOLLARS ($8,600,000.00) or so much thereof as may be advanced pursuant to that certain Loan Agreement dated as of the date hereof between Borrower and Lender (as the same may be amended,  restated, replaced, supplemented or otherwise modified from time to time, the "Loan Agreement"), and evidenced by that certain Promissory Note dated the date hereof made by Borrower to Lender (such Note, together with all extensions, renewals, replacements, restatements or modifications thereof, being hereinafter referred to as the "Note"). Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Loan Agreement.

B.         Borrower desires to secure the payment of the outstanding principal amount of the Loan together with all interest accrued and unpaid thereon and all other sums (including the Prepayment Fee) due to Lender in respect of the Loan and the Loan Documents (the "Debt") and the performance of all of its obligations under the Note, the Loan Agreement and the other Loan Documents.

C.        This Deed of Trust is given pursuant to the Loan Agreement, and payment, fulfillment and performance by Borrower of its obligations thereunder and under the other Loan Documents are secured hereby, and each and every term and provision of the Loan Agreement, the Note, and that certain Assignment of Leases and Rents of even date herewith made by Borrower in favor of Lender delivered in connection with this Deed of Trust (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the "Assignment of Leases"), including the rights, remedies, obligations, covenants, conditions, agreements, indemnities, representations and warranties of the parties therein, are hereby incorporated by reference herein as though set forth in full and shall be considered a part of this Deed of Trust.

NOW THEREFORE, in consideration of the making of the Loan by Lender and the covenants, agreements, representations and warranties set forth in this Deed of Trust:

ARTICLE 1

GRANTS OF SECURITY

Section 1.1 Property Conveyed. Borrower does hereby irrevocably grant, bargain, sell, pledge, assign, warrant, transfer and convey to Trustee and its successors and assigns, in trust, with power of sale for the benefit of Lender as beneficiary in trust, the following property, rights, interests and estates now owned or hereafter acquired by Borrower (collectively, the "Property"):

(a)       Land. The real property described in Exhibit A attached  hereto and made a part hereof (the "Land");

(b)        Additional Land. All additional lands, estates and development rights hereafter acquired by Borrower for use in connection with the Land and the development of the Land and all additional lands and estates therein which may, from time to time, by supplemental mortgage or otherwise be expressly made subject to the lien of this Deed of Trust;

(c)        Improvements. The buildings, structures, fixtures,  additions, enlargements, extensions, modifications, repairs, replacements and improvements now or hereafter erected or located on the Land (collectively, the "Improvements");

(d)        Easements. All easements, rights-of-way or use, rights, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, and all estates, rights, titles, interests, privileges, liberties, servitudes, tenements, hereditaments and appurtenances of any nature whatsoever, in any way now or hereafter belonging, relating or pertaining to the Land and the Improvements and the reversion and reversions, remainder and remainders, and all land lying in the bed of any street, road or avenue, opened or proposed, in front of or adjoining the Land, to the center line thereof and all the estates, rights, titles, interests, dower and rights of dower, curtesy and rights of curtesy, property, possession, claim and demand whatsoever, both at law and in equity, of Borrower of, in and to the Land and the Improvements and every part and parcel thereof, with the appurtenances thereto;

(e)        Equipment. All "equipment," as such term is defined in Article 9 of the Uniform Commercial Code (as hereinafter defined), now owned or hereafter acquired by Borrower, which is used at or in connection with the Improvements or the Land or is located thereon or therein (including, but not limited to, all machinery, equipment, furnishings, and electronic data-processing and other office equipment now owned or hereafter acquired by Borrower and any and all additions, substitutions and replacements of any of the foregoing), together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto (collectively, the "Equipment"). Notwithstanding the foregoing,  Equipment shall not include any property belonging to Tenants under Leases except to the extent that Borrower shall have any right or interest therein;

(f)         Fixtures. All Equipment now owned, or the ownership of which is hereafter acquired, by Borrower which is so related to the Land and Improvements forming part

of the Property that it is deemed fixtures or real property under the law of the particular state in which the Equipment is located, including, without limitation, all building or construction materials intended for construction, reconstruction, alteration or repair of or installation on the Property, construction equipment, appliances, machinery, plant equipment, fittings, apparatuses, fixtures and other items now or hereafter attached to, installed in or used in connection with (temporarily or permanently) any of the Improvements or the Land, including, but not limited to, engines, devices for the operation of pumps, pipes, plumbing, cleaning, call and sprinkler systems, fire extinguishing apparatuses and equipment, heating, ventilating, plumbing, laundry, incinerating, electrical, air conditioning and air cooling equipment and systems, gas and electric machinery, appurtenances and equipment, pollution control equipment, security systems, disposals, dishwashers, refrigerators and ranges, recreational equipment and facilities of all kinds, wind driven facilities, solar power facilities and related power infrastructure, cell towers, and water, gas, electrical, storm and sanitary sewer facilities, utility lines and equipment  (whether owned individually or jointly with others, and, if owned jointly, to the extent of Borrower's interest therein) and all other utilities whether or not situated in easements, all water tanks, water supply, water power sites, fuel stations, fuel tanks, fuel supply, and all other structures, together with all accessions, appurtenances, additions, replacements, betterments and substitutions for any of the foregoing and the proceeds thereof (collectively, the "Fixtures"). Notwithstanding the foregoing, "Fixtures" shall not include any property which Tenants are entitled to remove pursuant to Leases except to the extent that Borrower shall have any right or interest therein;

(g)        Personal Property. All furniture, furnishings, objects of art, machinery, goods, tools, supplies, appliances, general intangibles, contract rights, accounts, accounts receivable, franchises, licenses, certificates and permits, and all other personal property of any kind or character whatsoever (as defined in and subject to the provisions of the Uniform Commercial Code), other than Fixtures, which are now or hereafter owned by Borrower and which are located within or about the Land and the Improvements, together with all accessories, replacements and substitutions thereto or therefor and the proceeds thereof (collectively, the "Personal Property"), and the right, title and interest of Borrower in and to any of the Personal Property which may be subject to any security interests, as defined in the Uniform Commercial Code, as adopted and enacted by the state or states where any of the Property is located (as amended from time to time, the "Uniform Commercial Code"), superior in lien to the lien of  this Deed of Trust, and all proceeds and products of any of the above;

(h)        Leases and Rents. All leases, subleases or subsubleases, lettings, licenses, concessions or other agreements (whether written or oral) pursuant to which any Person is granted a possessory interest in, or right to use or occupy all or any portion of the Land (including, without limitation, any subsurface rights) and the Improvements, and every modification, amendment or other agreement relating to such leases, subleases, subsubleases, or other agreements entered into in connection with such leases, subleases, subsubleases, or other agreements and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto, heretofore or hereafter entered into, whether before or after the filing by or against Borrower of any petition for relief under 11 U.S.C. §101 et seq., as the same may be amended from time to time (the "Bankruptcy Code") (collectively, the "Leases"), and all right, title and interest of Borrower, its successors and assigns, therein and thereunder, including, without limitation, cash or securities deposited

thereunder to secure the performance by the lessees of their obligations thereunder and all rents, additional rents, revenues, issues and profits (including all oil and gas or other mineral royalties and bonuses) from the Land and the Improvements, whether paid or accruing before or after the filing by or against Borrower of any petition for relief under the Bankruptcy Code (collectively, the "Rents"), and all proceeds from the sale or other disposition of the Leases and the right to receive and apply the Rents to the payment and performance of the Obligations, including the payment of the Debt;

(i)         Condemnation Awards. All awards or payments, including interest thereon, which may heretofore and hereafter be made with respect to the Property, whether from the exercise of the right of eminent domain (including, but not limited to, any transfer made in lieu of or in anticipation of the exercise of such right), or for a change of grade, or for any other injury to or decrease in the value of the Property;

G) Insurance Proceeds. All proceeds in respect of the Property under any insurance policies covering the Property, including, without limitation, the right to receive and apply the proceeds of any insurance, judgments or settlements made in lieu thereof, for damage to the Property;

(k)        Tax Certiorari. All refunds, rebates or credits in connection with any reduction in Taxes or Other Charges charged against the Property as a result of tax certiorari proceedings or any other applications or proceedings for reduction;

(1)         Rights. The right, in the name and on behalf of Borrower, to appear in and defend any action or proceeding brought with respect to the Property and to commence any action or proceeding to protect the interest of Lender in the Property;

(m)       Agreements. All agreements, contracts, certificates, instruments, franchises, permits, licenses, plans, specifications and other documents, now or hereafter entered into, and all rights therein and thereto, respecting or pertaining to the use, occupation, construction, management or operation of the Land and any part thereof and any Improvements or respecting any business or activity conducted on the Land and any part thereof and all right, title and interest of Borrower therein and thereunder, including, without limitation, the right, upon the happening of any default hereunder, to receive and collect any sums payable to Borrower thereunder;

(n)        Trademarks. All tradenames, trademarks, servicemarks, logos, copyrights, goodwill, books and records and all other general intangibles relating to or used in connection with the operation of the Property;

(o)        Accounts. All (i) accounts receivable (including, without limitation, any account, fees, charges or other payments arising from the use and occupancy of hotel rooms and/or other hotel or public facilities at the Property), (ii) credit card receivables and debit card receivables, and (iii) reserves, escrows and deposit accounts maintained by Borrower with respect to the Property, including, without limitation, all accounts established or maintained pursuant to the Loan Agreement, the Cash Management Agreement, the Clearing Account Agreement or any other Loan Document, together with all deposits or wire transfers made to

such accounts, and all cash, checks, drafts, certificates, securities, investment property, financial assets, instruments and other property held therein from time to time, and all proceeds, products, distributions, dividends and/or substitutions thereon and thereof;

(p)         Uniform Commercial Code Property. All documents, instruments, chattel paper and intangibles, as the foregoing terms are defined in the Uniform Commercial Code, and general intangibles relating to the Property;

(q)         Minerals. All minerals, oil, gas, shale, crops, timber, trees, shrubs, flowers and landscaping features and rights (including, without limitation, extracting rights) now or hereafter located on, under or above Land;

(r)         Proceeds. All proceeds of any of the foregoing, including, without limitation, proceeds of insurance and condemnation awards, whether in cash or in liquidation or other claims, or otherwise; and

(s)         Other Rights. Any and all other rights of Borrower in and to the items set forth in Subsections (a) through (r) above.

AND, without limiting any of the other provisions of this Deed of Trust, to the extent permitted by applicable law, Borrower expressly grants to Lender, as secured party, a security interest in the portion of the Property which is or may be subject to the provisions of the Uniform Commercial Code which are applicable to secured transactions; it being understood and agreed that the Improvements and Fixtures are part and parcel of the Land (the Land, the Improvements and the Fixtures collectively referred to as the "Real Property") appropriated to the use thereof and, whether affixed or annexed to the Land or not, shall for the purposes of this Deed of Trust be deemed conclusively to be real estate and conveyed hereby.

Section 1.2 Assignment of Rents. Borrower hereby absolutely and unconditionally assigns to Lender and Trustee all of Borrower's right, title and interest in and to all current and future Leases and Rents; it being intended by Borrower that this assignment constitutes a present, absolute assignment and not an assignment for additional security only. Nevertheless, subject to the terms of the Assignment of Leases, the Cash Management Agreement, and Section 7.l(h) of this Deed of Trust, Lender grants to Borrower a revocable license to collect, receive, use and enjoy the Rents. Borrower shall hold the Rents, or a portion thereof sufficient to discharge all current sums due on the Debt, for use in the payment of such sums.

Section 1.3 Security Agreement. This Deed  of Trust is both  a  real property  deed of trust and a "security agreement" within the meaning of the Uniform Commercial Code. The Property includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Borrower in the Property. By executing and delivering this Deed of Trust, Borrower hereby grants to Lender, as security for the Obligations, a security interest in the Fixtures, the Equipment, the Personal Property and the other property constituting the Property to the full extent that the Fixtures, the Equipment, the Personal Property and such other property may be subject to the Uniform Commercial Code (said portion of the Property so subject to the Uniform Commercial Code being called the "Collateral"). If an Event of Default

shall occur and be continuing, Lender, in addition to any other rights and remedies which it may have, shall have and may exercise immediately and without demand, any and all rights and remedies granted to a secured party upon default under the Uniform Commercial Code, including, without limiting the generality of the foregoing, the right to take possession of the Collateral or any part thereof, and to take such other measures as Lender may deem necessary for the care, protection and preservation of the Collateral. Upon request or demand of Lender after the occurrence and during the continuance of an Event of Default, Borrower shall, at its expense, assemble the Collateral and make it available to Lender at a convenient place (at the Land if tangible property) reasonably acceptable to Lender. Borrower shall pay to Lender on demand any and all expenses, including reasonable attorneys' fees and costs, incurred or paid by Lender in protecting its interest in the Collateral and in enforcing its rights hereunder with respect to the Collateral after the occurrence and during the continuance of an Event of Default. Any notice of sale, disposition or other intended action by Lender with respect to the Collateral sent to Borrower in accordance with the provisions hereof at least ten (10) Business Days prior to such action, shall, except as otherwise provided by applicable law, constitute reasonable notice to Borrower. The proceeds of any disposition of the Collateral, or any part thereof, may, except as otherwise required by applicable law, be applied by Lender to the payment of the Debt in such priority and proportions as Lender in its discretion shall deem proper. The principal place of business of Borrower (Debtor) is as set forth on page one hereof and the address of Lender (Secured Party) is as set forth on page one hereof.

Section 1.4 Fixture Filing.  Certain of the Property is or will become "fixtures" (as that term is defined in the Uniform Commercial Code) on the Land, described or referred to in this Deed of Trust, and this Deed of Trust, upon being filed for record in the real estate records of the city or county wherein such fixtures are situated, shall operate also as a financing statement naming Borrower as the Debtor and Lender as the Secured Party filed as a fixture filing in accordance with the applicable provisions of said Uniform Commercial Code upon such of the Property that is or may become fixtures. Borrower is the debtor with the address set forth above, Lender is the secured party with the address set forth above and the organizational identification number of Borrower is 0801804631.

Section 1.5 Pledges of Monies Held. Borrower  hereby  pledges to Lender any and all monies now or hereafter held by Lender or on behalf of Lender in connection with the Loan, including, without limitation, any sums deposited in the Accounts (as defined in the Cash Management Agreement) and the Net Proceeds, as additional security for the Obligations until expended or applied as provided in this Deed of Trust.

CONDITIONS TO GRANT

TO HAVE AND TO HOLD the above granted and described Property unto and to the use and benefit of Trustee and its successors and assigns, forever;

IN TRUST, WITH POWER OF SALE, to secure payment to Lender of the Obligations at the time and in the manner provided for its payment in the Note and in this Deed of Trust.

PROVIDED, HOWEVER, these presents are upon the express condition that, if Borrower shall well and truly pay and perform the Obligations (including the payment of the Debt) at the time and in the manner provided in this Deed of Trust, the Note, the Loan Agreement and the other Loan Documents, and shall well and truly abide by and comply with each and every covenant and condition set forth herein and in the Note, the Loan Agreement and the other Loan Documents, these presents and the estate hereby granted shall cease, terminate and be void: provided, however, that Borrower's obligation to indemnify and hold harmless Lender pursuant to the provisions hereof shall survive any such payment or release.

ARTICLE 2

DEBT AND OBLIGATIONS SECURED

Section 2.1 Obligations. This Deed of Trust and the grants, assignments and transfers made in Article 1 are given for the purpose of securing the Obligations, including, but not limited to, the Debt.

Section 2.2 Other Obligations.  This Deed of Trust and the grants, assignments and transfers made in Article 1 are also given for the purpose of securing the following (collectively, the "Other Obligations"):

(a)        the performance of all other obligations of Borrower contained herein;

(b)        the performance of each obligation of Borrower contained in the Loan Agreement and in each other Loan Document; and

(c)        the performance of each obligation of Borrower contained in any renewal, extension, amendment, modification, consolidation, change of, or substitution or replacement for, all or any part of the Note, the Loan Agreement or any other Loan Document.

Section 2.3 Debt and Other Obligations.  Borrower's  obligations  for  the  payment of the Debt and the performance of the Other Obligations shall be referred to collectively herein as the "Obligations."

ARTICLE 3

BORROWER COVENANTS

Borrower covenants and agrees that throughout the term of the Loan:

Section 3.1  Payment  of Debt.   Borrower  will  pay the Debt at the time and in the manner provided in the Loan Agreement, the Note and this Deed of Trust.

Section 3.2 Incorporation by Reference. All the covenants, conditions and agreements contained in (a) the Loan Agreement, (b) the Note, and (c) all and any of the other Loan Documents, are hereby made a part of this Deed of Trust to the same extent and with the same force as if fully set forth herein.

Section 3.3 Insurance. Borrower shall obtain and maintain, or cause to be maintained, in full force and effect at all times insurance with respect to Borrower and the Property as required pursuant to the Loan Agreement.

Section 3.4 Maintenance of Property. Borrower shall cause the Property to be maintained in a good and safe condition and repair. The Improvements, the Fixtures, the Equipment and the Personal Property shall not be removed, demolished or materially altered (except for normal replacement of the Fixtures, the Equipment or the Personal Property, tenant finish and refurbishment of the Improvements) without the consent of Lender or as otherwise may be expressly permitted pursuant to the Loan Agreement. Borrower shall promptly repair, replace or rebuild any part of the Property which may be destroyed by any Casualty, or become damaged, worn or dilapidated or which may be affected by any Condemnation, and shall complete and pay for any structure at any time in the process of construction or repair on the Land.

Section 3.5 Waste. Borrower shall not commit or suffer any waste of  the Property, or make any change in the use of the Property which will in any way materially increase the risk of fire or other hazard arising out of the operation of the Property, or take any action that might invalidate or allow the cancellation of any Policy, or do or permit to be done thereon anything that may in any way materially impair the value of the Property or the security of this Deed of Trust. Borrower will not, without the prior written consent of Lender, permit any drilling or exploration for or extraction, removal, or production of any minerals from the surface or the subsurface of the Land, regardless of the depth thereof or the method of mining or extraction thereof.

Section 3.6 Payment for Labor and Materials.

(a)        Subject to Section 3.6(b) hereof, Borrower (i) will promptly pay when due all bills and costs for labor, materials and specifically fabricated materials ("Labor and Material Costs") incurred in connection with the Property, (ii) never permit to exist beyond the due date thereof in respect of the Property, or any part thereof, any Lien or security interest, even though inferior to the Liens and security interests created hereby and by the other Loan Documents, and (iii) never permit to be created or exist in respect of the Property or any part thereof any other or additional Lien or security interest other than the Liens or security interests created hereby and by the other Loan Documents, except for the Permitted Encumbrances.

(b)         After prior written notice to Lender, Borrower, at its own expense, may contest by appropriate legal proceeding, promptly initiated and conducted at all times in good faith and with due diligence, the amount or validity or application in whole or in part of any of the Labor and Material Costs, provided that: (i) no Event of Default has occurred and is continuing under the Loan Agreement, the Note, this Deed of Trust or any of the other Loan Documents; (ii) Borrower is permitted to do so under the provisions of any other mortgage, deed of trust or deed to secure debt affecting the Property; (iii) such proceeding shall suspend the collection of the Labor and Material Costs from Borrower and from the Property or Borrower shall have paid all of the Labor and Material Costs under protest; (iv) such proceeding shall be permitted under and be conducted in accordance with the provisions of any other instrument to which Borrower is subject and shall not constitute a default thereunder; (v) neither the Property

nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, canceled or lost; (vi) Borrower shall have furnished to Lender either (A) a cash deposit equal to 110% of the amount of such contested Labor and Material Costs, or (B) an indemnity bond satisfactory to Lender with a surety satisfactory to Lender, in the amount of such Labor and Material Costs, plus in either of the foregoing cases a reasonable additional sum to pay all costs, interest and penalties that may be imposed or incurred in connection therewith; (vii) such contest by Borrower shall not materially and adversely affect the ownership, use or occupancy of the Property; and (viii) such contest by Borrower shall not subject Lender or Borrower to civil or criminal liability (other than the civil liability of Borrower for the amount of the Labor and Material Costs in question plus interest).

(c)         Notwithstanding the foregoing, it shall not be a default under the terms and conditions of this Section 3.6 if, in respect of a mechanic's or materialman's lien asserted against the Property for Labor and Material Costs (each, a "Mechanic's Lien"): (i) Borrower shall have provided Lender with written notice of such Mechanic's Lien within five (5) days of obtaining knowledge thereof; (ii) within five (5) days of obtaining knowledge of the filing of any Mechanic's Lien, Borrower shall have furnished to Lender either (A) a cash deposit equal to 110% of the amount of the Labor and Material Costs which are the subject of such Mechanic's Lien, or (B) an indemnity bond satisfactory to Lender with a surety satisfactory to Lender, in the amount of the Labor and Material Costs which are the subject of such Mechanic's Lien, plus in each instance a reasonable additional sum to pay all costs, interest and penalties that may be imposed or incurred in connection therewith; (iii) no Event of Default shall have occurred and be continuing under the Loan Agreement, the Note, this Deed of Trust or any of the other Loan Documents; (iv) Borrower shall at all times diligently prosecute the discharge of such Mechanic's Lien, and shall update Lender regarding the status of same from time to time upon Lender's request; (v) neither the Property nor any part thereof nor any interest therein shall be in danger of being sold, forfeited, terminated, canceled or lost; (vi) Borrower shall preclude the collection of, or other realization upon, any contested amount from the Property or any revenues from or interest in the Property; (vii) such contest by Borrower shall not materially and adversely affect the ownership, use or occupancy of the Property, (viii) such contest by Borrower shall not subject Lender or Borrower to civil or criminal liability (other than the civil liability of Borrower for the amount of the Lien in question plus interest); and (ix) Borrower has not consented to such Mechanic's Lien.

Section 3.7 Performance of Other Agreements. Borrower shall observe and perform each and every term, covenant and provision to be observed or performed by Borrower pursuant to the Loan Agreement, any other Loan Document and any other agreement or recorded instrument affecting or pertaining to the Property, and any amendments, modifications or changes thereto.

ARTICLE 4

OBLIGATIONS AND RELIANCES

Section 4.1 Relationship  of Borrower  and  Lender.   The relationship between

Borrower and Lender is solely that of debtor and creditor, and Lender has no fiduciary or other special relationship with Borrower, and no term or condition of any of the Loan Agreement, the

Note, this Deed of Trust or the other Loan Documents shall be construed so as to deem the relationship between Borrower and Lender to be other than that of debtor and creditor.

Section 4.2 No Reliance on Lender. The general partner of Borrower is experienced in the ownership and operation of properties similar to the Property, and Borrower and Lender are relying solely upon such expertise and business plan in connection with the ownership and operation of the Property. Borrower is not relying on  Lender's  expertise, business acumen or advice in connection with the Property.

Section 4.3 No Lender Obligations.

(a)        Notwithstanding the provisions  of  Subsections 1.l(h)  and .(m}  or Section 1.2, Lender is not undertaking the performance of (i) any obligations under the Leases, or (ii) any obligations with respect to any other agreements, contracts, certificates, instruments, franchises, permits, trademarks, licenses or other documents.

(b)        By accepting or approving anything required to be observed, performed or fulfilled or to be given to Lender pursuant to this Deed of Trust, the Loan Agreement, the Note or the other Loan Documents, including, without limitation, any officer's certificate, balance sheet, statement of profit and loss or other financial statement, survey, appraisal or insurance policy, Lender shall not be deemed to have warranted, consented to, or affirmed the sufficiency, legality or effectiveness of same, and such acceptance or approval thereof shall not constitute any warranty or affirmation with respect thereto by Lender.

Section 4.4 Reliance. Borrower  recognizes  and  acknowledges  that  in  accepting the Loan Agreement, the Note, this Deed of Trust and the other Loan Documents, Lender is expressly and primarily relying on the truth and accuracy of the warranties and representations set forth in Article 3 of the Loan Agreement without any obligation to investigate the Property and notwithstanding any investigation of the Property by Lender; that such reliance existed on the part of Lender prior to the date hereof; that the warranties and representations are  a material inducement to Lender in making the Loan; and that Lender would not be willing to make the Loan and accept this Deed of Trust in the absence of the warranties and representations as set forth in Article 3 of the Loan Agreement.

ARTICLES

FURTHER ASSURANCES

Section 5.1  Recording  of  Deed  of  Trust,  Etc.  Borrower  forthwith  upon the execution and delivery of this Deed of Trust and thereafter, from time to time, will cause this Deed of Trust and any of the other Loan Documents creating a Lien or security interest or evidencing the Lien hereof upon the Property and each instrument of further assurance to be filed, registered or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect and perfect the Lien or security interest hereof upon, and the interest of Lender in, the Property. Borrower will pay all taxes, filing, registration or recording fees, and all expenses incident to the preparation, execution, acknowledgment and/or recording of the Note, this Deed of Trust, the other Loan Documents,

any note, deed of trust or mortgage supplemental hereto, any security instrument with respect to the Property and any instrument of further assurance, and any modification or amendment of any of the foregoing documents, and all federal, state, county and municipal taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Deed of Trust, any deed of trust or mortgage supplemental hereto, any security instrument with respect to the Property or any instrument of further assurance, and any modification or amendment of any of the foregoing documents, except where prohibited by law so to do.

Section 5.2 Further Acts, Etc. Borrower will, at the cost of Borrower,  and  without expense to Lender, do, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, deeds of trust, mortgages, assignments, notices of assignments,  transfers and assurances as Lender shall, from time to time, reasonably require, for the better assuring, conveying, assigning, transferring, and confirming unto Lender and Trustee the property and rights hereby deeded, granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and transferred or intended now or hereafter so to be, or which Borrower may be or may hereafter become bound to convey or assign to Trustee or Lender, or for carrying out the intention or facilitating the performance of the terms of this Deed of Trust or for filing, registering or recording this Deed of Trust, or for complying with all Legal Requirements. Borrower, on demand, will execute and deliver, and in the event it shall fail to so execute and deliver, hereby authorizes Lender to execute in the name of Borrower or without the signature of Borrower to the extent Lender may lawfully do so, one or more financing statements to evidence more effectively the security interest of Lender in the Property. Borrower grants to Lender an irrevocable power of attorney coupled with an interest for the purpose of exercising and perfecting any and all rights and remedies available to Lender at law and in equity, including, without limitation, such rights and remedies available to Lender pursuant to this Section 5.2.

Section 5.3 Changes in Tax, Debt, Credit and Documentary Stamp Laws.

(a)        If any law is enacted or adopted or amended after the date of this Deed of Trust which deducts the Debt from the value of the Property for the purpose of taxation or which imposes a tax, either directly or indirectly, on the Debt or Lender's interest in the Property, Borrower will pay the tax, with interest and penalties thereon, if any. If Lender is advised by counsel chosen by it that the payment of tax by Borrower would be unlawful or taxable to  Lender or unenforceable or provide the basis for a defense of usury, then Lender shall have the option by written notice of not less than one hundred twenty (120) days to declare the Debt immediately due and payable.

(b)       Borrower will not claim or demand or be entitled to any credit or credits on account of the Debt for any part of the Taxes or Other Charges assessed against the Property, or any part thereof, and no deduction shall otherwise be made or claimed from the assessed value of the Property, or any part thereof, for real estate tax purposes by reason of this Deed of Trust or the Debt. If such claim, credit or deduction shall be required by law, Lender shall have the option, by written notice of not less than one hundred twenty (120) days, to declare the Debt immediately due and payable.

(c)       If at any time the United States of America, any State thereof or any subdivision of any such State shall require revenue or other stamps to be affixed to the Note, this

Deed of Trust, or any of the other Loan Documents or shall impose any other tax or charge on the same, Borrower will pay for the same, with interest and penalties thereon, if any.

Section 5.4    Splitting  of Deed  of Trust.  This Deed of Trust and the Note may, at any time until the same shall be fully paid and satisfied, at the sole election of Lender, be split or divided into two or more notes and two or more deeds of trust, in such denominations as Lender shall determine in its sole discretion (subject to the following sentence), each of which shall cover all or a portion of the Property to be more particularly described therein. To that end, Borrower, upon written request of Lender, shall execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered by the then owner of the Property, to Lender and/or its designee or designees, substitute notes and deeds of trust in such principal amounts, aggregating not more than the then unpaid principal amount of the Note, and containing terms, provisions and clauses similar to those contained herein and in the Note, and such other documents and instruments as may be required by Lender.

Section 5.5 Replacement Documents.  Upon  receipt  of  an  affidavit  of  an officer of Lender as to the loss, theft, destruction or mutilation of the Note or any other Loan Document which is not of public record, and, in the case of any such mutilation, upon surrender and cancellation of the Note or such other Loan Document, Borrower will issue, in lieu thereof, a replacement Note or a replacement of such other Loan Document, dated the date of such lost, stolen, destroyed or mutilated Note or other Loan Document in the same principal amount thereof and otherwise of like tenor.

ARTICLE 6

DUE ON SALE/ENCUMBRANCE

Section 6.1 Lender Reliance. Borrower  acknowledges  that  Lender  has examined and relied on the experience of Borrower and its general partners, members, principals and (if Borrower is a trust) beneficial owners in owning and operating properties such as the Property in agreeing to make the Loan, and will continue to rely on Borrower's ownership of the Property as a means of maintaining the value of the Property as security for the payment and performance of the Obligations, including the repayment of the Debt. Borrower acknowledges that Lender has a valid interest in maintaining the value of the Property so as to ensure that, should Borrower default in the payment and/or performance of the Obligations, including the repayment of the Debt, Lender can recover the Debt by a sale of the Property.

Section 6.2 No Transfer. Borrower shall not permit or suffer any Transfer  to occur except in accordance with the terms of the Loan Agreement.

ARTICLE 7

RIGHTS AND REMEDIES UPON DEFAULT

Section 7.1 Remedies. Upon the occurrence and during the continuance of any Event of Default, Borrower agrees that Lender or Trustee, or both may take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Borrower and in

and to the Property, including, but not limited to, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such order as Lender or Trustee may determine, in their sole discretion, without impairing or otherwise affecting the other rights and remedies of Lender or Trustee:

(a)        declare the entire unpaid Debt to be immediately due and payable;

(b)        institute proceedings, judicial or otherwise, for the complete foreclosure of this Deed of Trust under any applicable provision of law, in which case the Property or any interest therein may be sold for cash or upon credit in one or more parcels or in several interests or portions and in any order or manner;

(c)        with or without entry, to the extent permitted and pursuant to the procedures provided by applicable law, institute proceedings for the partial foreclosure of this Deed of Trust for the portion of the Debt then due and payable, subject to the continuing lien and security interest of this Deed of Trust for the balance of the Obligations not then due, unimpaired and without loss of priority;

(d)        sell for cash or upon credit the Property or any part thereof and all estate, claim, demand, right, title and interest of Borrower therein and rights of redemption thereof, pursuant to power of sale or otherwise, at one or more sales, as an entirety or in parcels, at such time and place, upon such terms and after such notice thereof, all as may be required  or permitted by law; and, without limiting the foregoing:

(i)         In connection with any sale or sales hereunder, Lender or the Trustee shall be entitled to elect to treat any of the Property which consists of (x) a right in action, or (y) property that can be severed from the Real Property covered hereby, or (z) any improvements (without causing structural damage thereto), as if the same were personal property, and dispose of the same in accordance with applicable law, separate and apart from the sale of the Real Property. Where the Property consists of Real Property, Personal Property, Equipment or Fixtures, whether or not such Personal Property or Equipment is located on or within the Real Property, Lender and/or the Trustee shall be entitled to elect to exercise its rights and remedies against any or all of the Real Property, Personal Property, Equipment and Fixtures in such order and manner as is now or hereafter permitted by applicable law;

(ii)        Lender and/or the Trustee shall be entitled to elect to proceed against any or all of the Real Property, Personal Property, Equipment and Fixtures in any manner permitted under applicable law; and if Lender and/or the Trustee so elects pursuant to applicable law, the power of sale herein granted shall be exercisable with respect to all or any of the Real Property, Personal Property, Equipment and Fixtures covered hereby, as designated by Lender and/or the Trustee and Trustee is hereby authorized and empowered to conduct any such sale of any Real Property, Personal Property, Equipment and Fixtures in accordance with the procedures applicable to Real Property;

(iii)       Should Lender and/or the Trustee elect to sell any portion of the Property which is Real Property or which is Personal Property, Equipment or Fixtures that the Lender and/or the Trustee has elected under applicable law to sell together with Real Property in accordance with the laws governing a sale of the Real Property, Lender and/or the Trustee shall give such notice of the occurrence of an Event of Default, if any, and election to sell such Property, each as may then be required by law. Thereafter, upon the expiration of such time and the giving of such notice of sale as may then be required by law, subject to the terms hereof and of the other Loan Documents, and without the necessity of any demand on Borrower, Lender and/or the Trustee at the time and place specified in the notice of sale, shall sell such Real Property or part thereof at public auction to the highest bidder for cash in lawful money of the United States. Lender or the Trustee may from time to time postpone any sale hereunder by public announcement thereof at the time and place noticed for any such sale; and

(iv)       If the Property consists of several lots, parcels or items of property, Lender or the Trustee shall, subject to applicable law, (A) designate the order in which such lots, parcels or items shall be offered for sale or sold, or (B) elect to sell such lots, parcels or items through a single sale, or through two or more successive sales, or in any other manner Lender or the Trustee designates. Any Person, other than the Trustee, including Borrower or Lender, may purchase at any sale hereunder. Should Lender or the Trustee desire that more than one sale or other disposition of the Property be conducted, Lender or the Trustee shall, subject to applicable law, cause such sales or dispositions to be conducted simultaneously, or successively, on the same day, or at such different days or times and in such order as Lender or the Trustee may designate, and no such sale shall terminate or otherwise affect the Lien of this Deed of Trust on any part of the Property not sold until all the Obligations have been satisfied in full. In the event Lender or the Trustee elects to dispose of the Property through more than one sale, except as otherwise provided by applicable law, Borrower agrees to pay the costs and expenses of each such sale and of any judicial proceedings wherein such sale may be made;

(e)        institute an action, suit or proceeding in equity for the specific performance of any covenant, condition or agreement contained herein, in the Note, in the Loan Agreement or in the other Loan Documents;

(f)         recover judgment on the Note either before, during or after any proceedings for the enforcement of this Deed of Trust or the other Loan Documents;

(g)        apply for the appointment of a receiver, trustee, liquidator or conservator of the Property, without notice and without regard for the adequacy of the security for the Debt and without regard for the solvency of Borrower, any guarantor or indemnitor with respect to the Loan or any Person otherwise liable for the payment of the Debt or any part thereof;

(h)         the license granted to Borrower under Section 1.2 hereof shall automatically be revoked and Lender may enter into or upon the Property, either personally or by its agents, nominees or attorneys and dispossess Borrower and its agents and servants therefrom, without liability for trespass, damages or .otherwise and exclude Borrower and its agents or servants wholly therefrom, and take possession of all books, records and accounts relating

thereto and Borrower agrees to surrender possession of the Property and of such books, records and accounts to Lender upon demand, and thereupon Lender may (i) use, operate, manage, control, insure, maintain, repair, restore and otherwise deal with all and every part of the Property and conduct the business thereat; (ii) complete any construction on the Property in such manner and form as Lender deems advisable; (iii) make alterations, additions, renewals, replacements and improvements to or on the Property; (iv) exercise all rights and powers of Borrower with respect to the Property, whether in the name of Borrower or otherwise, including, without limitation, the right to make, cancel, enforce or modify Leases, obtain and evict tenants and demand, sue for, collect and receive all Rents of the Property and every part thereof; (v)  require Borrower to pay monthly in advance  to Lender,  or any  receiver  appointed  to collect  the Rents, the fair and reasonable rental value for the use and occupation of such part  of  the Property as may be occupied by Borrower; (vi) require Borrower to  vacate  and  surrender possession of the Property to Lender or to such receiver and, in default thereof, Borrower may be evicted by summary proceedings or otherwise; and (vii) apply  the  receipts  from  the Property  to the payment and performance of the Obligations  (including,  without  limitation,  the  payment  of the Debt), in such order, priority and proportions as Lender shall deem appropriate in its sole discretion after deducting therefrom all expenses (including reasonable attorneys' fees and costs) incurred in connection with the aforesaid operations and all amounts necessary to pay the Taxes, Other Charges, Insurance Premiums and  other expenses  in connection  with  the Property,  as well as just and reasonable compensation for the services of  Lender,  its  counsel,  agents  and  employees;

(i)         exercise any and all rights and remedies granted to a secured party upon default under the Uniform Commercial Code, including, without limiting the generality of the foregoing: (i) the right to take possession of the Fixtures, the Equipment and/or the Personal Property, or any part thereof, and to take such other measures as Lender may deem necessary for the care, protection and preservation of the Fixtures, the Equipment and the Personal Property, and (ii) request Borrower, at its sole cost and expense, to assemble the Fixtures, the Equipment and/or the Personal Property and make it available to Lender at a convenient place acceptable to Lender. Any notice of sale, disposition or other intended action by Lender with respect to the Fixtures, the Equipment and/or the Personal Property sent to Borrower in accordance with the provisions hereof at least five (5) days prior to such action, shall constitute commercially reasonable notice to Borrower;

G)        apply any sums then deposited or held in escrow or otherwise by or on behalf of Lender in accordance with the terms of the Loan Agreement, this Deed of Trust or any other Loan Document to the payment of the following items in any order in its sole discretion:

(i)         Taxes and Other Charges;

(ii)        Insurance Premiums;

(iii)       Interest on the unpaid principal balance of the Note;

(iv)       Amortization of the unpaid principal balance of the Note; and/or

(v)        All other sums payable pursuant to the Note, the Loan Agreement, this Deed of Trust and the other Loan Documents, including, without limitation, the Prepayment Fee, if applicable, and advances made by Lender pursuant to the terms of this Deed of Trust;

(k)        pursue such other remedies as Lender may have under applicable law;

and/or

(l)        apply the undisbursed balance of any Net Proceeds Deficiency deposit, 

together with interest thereon, to the payment of the Debt in such order, priority and proportions as Lender shall deem to be appropriate in its sole discretion.

In the event of a sale, by foreclosure, power of sale or otherwise, of less than all of Property, this Deed of Trust shall continue as a Lien and security interest on the remaining portion of the Property unimpaired and without loss of priority.

Section 7.2   Application of Proceeds.  The purchase money proceeds and avails of any disposition of the Property or any part thereof, or any other sums collected by Lender pursuant to the Note, this Deed of Trust or the other Loan Documents, may be applied by Lender to the payment of the Obligations in such priority and proportions as Lender in its discretion shall deem proper, to the extent consistent with law.

Section 7.3 Right to Cure Defaults. Upon the occurrence and during the continuance of any Event of Default or if Borrower fails to make any payment or to do any act as herein provided, Lender may, but without any obligation to do so and without notice to or demand on Borrower, and without releasing Borrower from any obligation hereunder, make or do the same in such manner and to such extent as Lender may deem necessary to protect the security hereof. Lender is authorized to enter upon the Property for such purposes, or appear in, defend or bring any action or proceeding to protect its interest in the Property or to foreclose this Deed of Trust or to collect the Debt, and the cost and expense thereof (including reasonable

   attorneys' fees and expenses, to the extent permitted by law), with interest as provided in this Section 7.3, shall constitute a portion of the Debt and shall be due and payable to Lender upon demand. All such costs and expenses incurred by Lender in remedying any Default or Event of Default or such failed payment or act or in appearing in, defending or bringing any such action or proceeding, as hereinabove provided, shall bear interest at the Default Rate, for the period beginning on the first day after notice from Lender that such cost or expense was incurred and continuing until the date of payment to Lender. All such costs and expenses incurred by Lender together with interest thereon calculated at the Default Rate shall be deemed to constitute a portion of the Debt and to be secured by this Deed of Trust and the other Loan Documents and shall be immediately due and payable upon demand by Lender therefor.

Section 7.4 Actions and Proceedings. Lender or Trustee shall have the right to appear in and defend any action or proceeding brought with respect to the Property and to bring any action or proceeding, in the name and on behalf of Borrower, which Lender, in its sole discretion, decides should be brought to protect its interest in the Property.

Section 7.5 Recovery of  Sums Required  to  be Paid.  Lender  shall  have the  right from time to time to take action to recover any sum or sums which constitute a part of the Debt as the same become due, without regard to whether or not the balance of the Debt shall be due, and without prejudice to the right of Lender or Trustee thereafter to bring an action of foreclosure, or any other action, for any Default or Event of Default by Borrower existing at the time such earlier action was commenced.

Section 7.6 Examination of Books and Records. At reasonable times and upon reasonable notice (which may be given verbally), Lender, its agents, accountants and attorneys, shall have the right to examine the records, books and management and other papers of Borrower which reflect upon its financial condition, either at the Property or at any office regularly maintained by Borrower where such books and records are located. Lender and its agents shall have the right to make copies and extracts from the foregoing records and other papers. In addition, at reasonable times and upon reasonable notice (which may be given verbally), Lender, its agents, accountants and attorneys shall have the right to examine and audit the books and records of Borrower pertaining to the income, expenses and operation of the Property during reasonable business hours at any office of Borrower where the books and records are located. This Section 7.6 shall apply throughout the term of the Note and without regard to whether an Event of Default has occurred or is continuing.

Section 7.7 Other Rights, Etc.

(a)        The failure of Lender or Trustee to insist upon strict performance of any term hereof shall not be deemed to be a waiver of any term of this Deed of Trust. Borrower shall not be relieved of Borrower's obligations hereunder by reason of (i) the failure of Lender to comply with any request of Borrower or any guarantor or indemnitor with respect to the Loan to take any action to foreclose this Deed of Trust or otherwise enforce any of the provisions hereof or of the Note or the other Loan Documents, (ii) the release, regardless of consideration, of the whole or any part of the Property, or of any Person liable for the Obligations or any portion thereof, or (iii) any agreement or stipulation by Lender extending the time of payment or otherwise modifying or supplementing the terms of the Note, this Deed of Trust or the other Loan Documents.

(b)        It is agreed that the risk of loss or damage to the Property is on Borrower, and Lender shall have no liability whatsoever for any decline in value of the Property, for failure to maintain the Policies, or for failure to determine whether insurance in force is adequate as to the amount of risks insured. Possession by Lender shall not be deemed an election of judicial relief, if any such possession is requested or obtained, with respect to any Property or collateral not in Lender's possession.

(c)        Lender may resort for the payment and performance of the Obligations (including, but not limited to, the payment of the Debt) to any other security held by Lender in such order and manner as Lender, in its discretion, may elect. Lender or Trustee may take action to recover the Debt, or any portion thereof, or to enforce the Other Obligations or any covenant hereof, without prejudice to the right of Lender or Trustee thereafter to foreclose this Deed of Trust. The rights of Lender or Trustee under this Deed of Trust shall be separate, distinct and cumulative and none shall be given effect to the exclusion of the others. No act of Lender or

Trustee shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision. Neither Lender nor Trustee shall be limited exclusively to the rights and remedies herein stated but shall be entitled to every right and remedy now or hereafter afforded at law or in equity.

Section 7.8 Right to Release Any Portion of the Property.  Lender may release any portion of the Property for such consideration as Lender may require without, as to the remainder of the Property, in any way impairing or affecting the Lien or priority of this Deed of Trust, or improving the position of any subordinate lienholder with respect thereto, except to the extent that the Debt shall have been reduced by the actual monetary consideration, if any, received by Lender for such release, and Lender may accept by assignment, pledge or otherwise any other property in place thereof as Lender may require without being accountable for so doing to any other lienholder. This Deed of Trust shall continue as a Lien and security interest in the remaining portion of the Property.

Section 7.9  Violation  of Laws.   If the Property  is not in full compliance  with all Legal Requirements, Lender may impose additional requirements upon Borrower in connection herewith, including, without limitation, monetary reserves or financial equivalents.

Section 7.10 Recourse and Choice of Remedies. Notwithstanding any other prov1s1on of this Deed of Trust or the  Loan  Agreement,  including,  without  limitation, Section 11.22 of the Loan Agreement, Lender and the other Indemnified Parties (as hereinafter defined) are entitled to enforce the obligations of Borrower and any guarantor or indemnitor of the Loan contained in Sections 8.1, 8.2 and 8.3 herein and Section 9.2 of the Loan Agreement without first resorting to or exhausting any security or collateral and without first having recourse to the Note or any of the Property, through foreclosure, exercise of a power of sale or acceptance of a deed in lieu of foreclosure or otherwise, and in the event Lender commences a foreclosure action against the Property, or exercises the power of sale pursuant to this Deed of Trust, Lender shall be entitled to pursue a deficiency judgment with respect to such obligations against Borrower and any guarantor or indemnitor with respect to the Loan. The provisions of Sections 8.1, 8.2 and 8.3 herein and Section 9.2 of the Loan Agreement are exceptions to any non-recourse or exculpation provisions in the Loan Agreement, the Note, this Deed of Trust and/or the other Loan Documents, and Borrower and any guarantor or indemnitor with respect to the Loan are fully and personally liable for the Obligations set forth  in said Sections 8.1, 8.2  and 8.3 herein and Section 9.2 of the Loan Agreement. The liability of Borrower and any guarantor or indemnitor with respect to the Obligations set forth in Sections 8.1, 8.2 and 8.3 herein and Section 9.2 of the Loan Agreement is not limited to the original principal amount of the Note. Notwithstanding the foregoing, nothing herein shall inhibit or prevent Lender from foreclosing or exercising a power of sale pursuant to this Deed of Trust or exercising any other rights and remedies pursuant to the Loan Agreement, the Note, this Deed of Trust and/or the other Loan Documents, whether simultaneously with foreclosure proceedings or in any other sequence. A separate action or actions may be brought and prosecuted against Borrower with respect to the Obligations set forth in Sections 8.1, 8.2 and 8.3 herein and Section 9.2 of the Loan Agreement, whether or not an action is brought against any other Person and whether or not any other Person is joined in such action or actions. In addition, Lender shall have the right but not the obligation to join and participate in, as a party if it so elects, any administrative or judicial

proceedings or actions initiated in connection with any matter addressed in the Environmental Indemnity.

Section 7.11 Right of Entry. Upon reasonable notice (which may be given verbally) to Borrower, Lender and its agents shall have the right to enter and inspect the Property at all reasonable times.

ARTICLE 8

INDEMNIFICATION

Section 8.1      General  Indemnification.    Borrower  shall,  at  its  sole  cost  and

expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all claims, suits, liabilities (including, without limitation, strict liabilities), actions, proceedings, obligations, debts, damages, losses, costs, expenses, diminutions in value, fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in settlement, punitive damages, foreseeable and unforeseeable consequential damages, of whatever kind or nature (including, but not limited to, reasonable attorneys' fees and other costs of defense) (collectively, the "Losses"), imposed upon or incurred by or asserted against any Indemnified Parties and directly  or indirectly  arising out of or in any way relating  to any one or more of the following:

(a)  ownership of this Deed of Trust, the -Property or any interest therein or receipt of any Rents;

(b)  any amendment to, or restructuring of, the Obligations (including, but not limited to, the Debt) and the Note, the Loan Agreement,  this Deed of Trust and/or any other Loan  Document;

(c)  any and all lawful action that may be taken by Lender in connection with the enforcement of the provisions of this Deed of Trust or the Loan Agreement or the Note or any of the other Loan Documents, whether or not suit is filed in connection with same, or in connection with Borrower, any guarantor or indemnitor and/or any partner, member, joint venturer or shareholder thereof becoming a party to a voluntary or involuntary federal or state bankruptcy, insolvency or similar proceeding; (d) any accident, injury to or death of persons or loss of or damage to property occurring in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (e) any use, non-use or condition in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (f) any failure on the part of Borrower to perform or to be in compliance with any of the terms of this Deed of Trust; (g) performance of any labor or services or the furnishing of any materials or other property in respect of the Property or any part thereof; (h) the failure of any Person to file timely with the Internal Revenue Service an accurate Form 1099-B, Statement for Recipients of Proceeds from Real Estate, Broker and Barter Exchange Transactions, which may be required in connection with this Deed of Trust, or to supply a copy thereof in a timely fashion to the recipient of the proceeds of the transaction in connection with which this Deed of Trust is made; (i) any failure of the Property to be in compliance with any Legal Requirements; (j) the enforcement by any of the Indemnified Parties of the provisions of this Article 8; (k) any and all claims and demands whatsoever which may be asserted against Lender by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants or agreements contained in any Lease; (I) the payment of any commission, charge or brokerage fee to anyone claiming through Borrower (or any affiliate thereof) which may be payable in connection with the funding of the Loan; or (m)  any misrepresentation made by Borrower in this Deed of Trust or in any other Loan

Document; provided, however, that Borrower shall not be liable for the payment of such Losses to the extent that the same are the result of the gross negligence or willful misconduct of Lender.. Any amounts payable to Lender by reason of the application of this Section 8.1 shall become immediately due and payable and shall bear interest at the Default Rate from the date any Loss is sustained by Lender until such amounts and any applicable interest are paid. For purposes of this Article 8, the term "Indemnified Parties" means (A) Lender and any Person who is or will have been involved in the origination of the Loan, (B) any Person who is or will have been involved in the servicing of the Loan secured hereby, (C) any Person in whose name the encumbrance created by this Deed of Trust is or will have been recorded, (D) Persons who may hold or acquire or will have held a full or partial interest in the Loan (including, but not limited to, investors or prospective investors in the Securities, as well as custodians, trustees and other fiduciaries who hold, have held or may hold a full or partial interest in the Loan secured hereby for the benefit of third parties), and (E) the respective directors, officers, shareholders, partners, members, employees, agents, servants, representatives, contractors, subcontractors, affiliates, subsidiaries, participants, successors and assigns of any and all of the foregoing (including, but not limited to, any other Person who holds or acquires or will have held a participation or other full or partial interest in the Loan, whether during the term of the Loan or as a part of or following a foreclosure of the Loan, and including, but not limited to, any successors by merger, consolidation or acquisition of all or a substantial portion of Lender's assets and business).

Section 8.2  Deed  of  Trust  and/or  Intangible  Tax.  Borrower  shall,  at  its  sole cost and expense, protect, defend, indemnify, release and hold  harmless the Indemnified  Parties from and against any and all Losses imposed upon or incurred by or asserted against  any Indemnified Parties and directly or indirectly  arising  out of or in any  way  relating  to any tax on the making and/or recording of this Deed of  Trust, the Note or any of the other Loan  Documents, but excluding any income, franchise or other similar taxes.

Section 8.3 BRISA Indemnification. Borrower shall, at its  sole  cost  and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all Losses (including, without limitation, reasonable attorneys' fees and costs incurred in the investigation, defense and/or settlement of Losses incurred in correcting any prohibited transaction or in the sale of a prohibited loan, and in obtaining any individual prohibited transaction exemption under BRISA that may be required, in Lender's sole discretion) that Lender may incur, directly or indirectly, as a result of a default under Section 4.2.13 of the Loan Agreement.

Section 8.4 Duty to Defend; Attorneys' Fees and  Other Fees and  Expenses. Upon written request by any Indemnified Party, Borrower shall defend such Indemnified Party (if requested by any Indemnified Party, in the name of the Indemnified Party) by attorneys and other professionals approved by the Indemnified Parties. Notwithstanding the foregoing, if the defendants in any such claim or proceeding include both Borrower and any Indemnified Party and Borrower and such Indemnified Party shall have reasonably concluded that there are any legal defenses available to it and/or other Indemnified Parties that are different from or in addition to those available to Borrower, such Indemnified Party shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such Indemnified Party. Upon demand, Borrower shall pay or, in the sole and absolute discretion of the Indemnified Parties, reimburse, the Indemnified Parties for the

payment of the reasonable fees and disbursements of attorneys, engineers, environmental consultants, laboratories and other professionals in connection therewith.

ARTICLE 9

WAIVERS

Section 9.1 Waiver of Counterclaim. To the extent permitted by applicable

law, Borrower hereby waives the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against it by Lender arising out of or in any way connected with this Deed of Trust, the Loan Agreement, the Note, any of the other Loan Documents or the Obligations.

Section 9.2 Marshalling and Other Matters. To the extent  permitted  by applicable law, Borrower hereby waives the benefit of all appraisement, valuation, stay, extension, reinstatement and redemption laws now or hereafter in force and all rights of marshalling in the event of any sale hereunder of the Property or any part thereof or any interest therein. Further, to the extent permitted by applicable law, Borrower hereby expressly waives any and all rights of redemption from sale under any order or decree of foreclosure of this Deed of Trust on behalf of Borrower, and on behalf of each and every Person acquiring any interest in or title to the Property subsequent to the date of this Deed of Trust.

Section 9.3 Waiver of Notice. To the extent permitted by applicable law, Borrower shall not be entitled to any notices of any nature whatsoever from Lender or Trustee, except with respect to matters for which this Deed of Trust or the Loan Documents specifically and expressly provide for the giving of notice by Lender or Trustee to Borrower, and except with respect to matters for which Lender or Trustee is required by applicable law to give notice, and Borrower hereby expressly waives the right to receive any notice from Lender or Trustee with respect to any matter for which this Deed of Trust does not specifically and expressly provide for the giving of notice by Lender or Trustee to Borrower.

Section 9.4 Waiver of Statute of Limitations. To the extent permitted by applicable law, Borrower hereby expressly waives and releases its right to plead any statute of limitations as a defense to the payment and performance of the Obligations (including, without limitation, the payment of the Debt).

Section 9.5 Waiver of Jury Trial. BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND FOREVER WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST, WITH REGARD TO THE NOTE, THIS DEED OF TRUST OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS

HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.

Section 9.6 Survival.  The indemnifications made pursuant  to Article 8 herein and the representations and warranties, covenants, and other obligations arising under the Environmental Indemnity, shall continue indefinitely in full force and effect and shall survive and shall in no way be impaired by (a) any satisfaction, release or other termination of this Deed of Trust or any other Loan Document, (b) any assignment or other transfer of all or any portion of this Deed of Trust or any other Loan Document or Lender's interest in the Property (but, in such case, such indemnifications shall benefit both the Indemnified Parties and any such assignee or transferee), (c) any exercise of Lender's rights and remedies pursuant hereto, including, but not limited to, foreclosure or acceptance of a deed in lieu of foreclosure, any exercise of any rights and remedies pursuant to the Loan Agreement, the Note or any of the other Loan Documents, any transfer of all or any portion of the Property (whether by Borrower or by Lender following foreclosure or acceptance of a deed in lieu of foreclosure or at any other time), (d) any amendment to this Deed of Trust, the Loan Agreement, the Note or any other Loan Document, and/or (e) any act or omission that might otherwise be construed as a release or discharge of Borrower from the Obligations or any portion thereof.

ARTICLE 10

EXCULPATION

The provisions of Section 11.22 of the Loan Agreement are hereby incorporated by reference into this Deed of Trust to the same extent and with the same force as if fully set forth herein.

ARTICLE 11

NOTICES

All notices or other written communications hereunder shall be delivered in accordance with Section 11.6 of the Loan Agreement and the following:

If to Trustee:	Nicholas
M. Pyka c/o Winstead P.C. 401 Congress Avenue Suite 2100 Austin, Texas 78701 Facsimile No.: (512) 370-2850

ARTICLE 12

APPLICABLE LAW

Section 12.1 Governing Law. THIS DEED OF TRUST SHALL BE GOVERNED BY THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. ANY LEGAL

SUIT, ACTION OR PROCEEDING AGAINST BORROWER ARISING OUT OF OR RELATING TO THIS DEED OF TRUST OR ANY OTHER LOAN DOCUMENT MAY BE INSTITUTED IN THE COURTS HAVING JURISDICTION IN THE CITY AND/OR COUNTY IN WHICH THE PROPERTY IS LOCATED, AND BORROWER HEREBY WAIVES ANY OBJECTIONS THAT IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING.

Section 12.2 Usury Laws. Notwithstanding anything to the contrary, (a) all agreements and communications between Borrower and Lender are hereby and shall automatically be limited so that, after taking into account all amounts deemed to constitute interest, the interest contracted for, charged or received by Lender shall never exceed the Maximum Legal Rate, (b) in calculating whether any interest exceeds the Maximum Legal Rate, all such interest shall be amortized, prorated, allocated and spread over the full amount and term of all principal indebtedness of Borrower to Lender, and (c) if through any contingency or event, Lender receives or is deemed to receive interest in excess of the Maximum Legal Rate, any such excess shall be deemed to have been applied toward payment of the principal of any and all then outstanding indebtedness of Borrower to Lender, or if there is no such indebtedness, shall immediately be returned to Borrower.

Section 12.3 Provisions Subject to Applicable Law. All rights, powers and remedies provided in this Deed of Trust may be exercised only to the extent that the exercise thereof does not violate any applicable provisions of law and are intended to be limited to the extent necessary so that they will not render this Deed of Trust invalid, unenforceable or not entitled to be recorded, registered or filed under the provisions of any applicable law. If any  term of this Deed of Trust or any application thereof shall be invalid or unenforceable, the remainder of this Deed of Trust and any other application of the term shall not be affected thereby.

ARTICLE 13

DEFINITIONS

Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Deed of Trust may be used interchangeably in the singular or plural form and the word "Borrower" shall mean "each Borrower and any subsequent owner or owners of the Property or any part thereof or any interest therein," the word "Lender" shall mean "Lender and any subsequent holder of the Note," the word "Note" shall mean "the Note and any other evidence of indebtedness secured by this Deed of Trust," the word "Property" shall include any portion of the Property and any interest therein, and the phrases "attorneys' fees", "legal fees" and "counsel fees" shall include any and all attorneys', paralegal and law clerk fees and disbursements, including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels, incurred or paid by Lender in protecting its interest in the Property, the Leases and/or the Rents and/or in enforcing its rights hereunder. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms.

ARTICLE 14

MISCELLANEOUS PROVISIONS

Section 14.1 No Oral Change. This Deed of Trust, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party(ies) against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

Section 14.2 Successors and Assigns. This Deed of Trust shall be binding upon, and shall inure to the benefit of, Borrower and Lender and their respective successors and permitted assigns, as set forth in the Loan Agreement. Lender shall have the right, without the consent of Borrower, to assign or transfer its rights under this Deed of Trust in connection with any assignment of the Loan and the Loan Documents. Any assignee or transferee of Lender  shall be entitled to all the benefits afforded to Lender under this Deed of Trust. Borrower shall not have the right to assign or transfer its rights or obligations under this Deed of Trust without the prior written consent of Lender, as provided in the Loan Agreement, and any attempted assignment without such consent shall be null and void.

Section 14.3 Inapplicable Provisions. If any provision of this Deed of Trust  is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Deed of Trust, such provision shall be fully severable and this Deed of Trust shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Deed of Trust, and the remaining provisions of this Deed of Trust shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Deed of Trust, unless such continued effectiveness of this Deed of Trust, as modified, would be contrary to the basic understandings and intentions of the parties as expressed herein.

Section 14.4  Headings,  Etc.  The headings and captions of the various Sections of this Deed of Trust are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

Section 14.5 Subrogation. If any or all of the proceeds of the Note  have  been used to extinguish, extend or renew any indebtedness heretofore existing against the Property, then, to the extent of the funds so used, Lender shall be subrogated to all of the rights, claims, liens, titles and interests existing against the Property heretofore held by, or in favor of, the holder of such indebtedness and such former rights, claims, liens, titles and interests, if any, are not waived, but rather are continued in full force and effect in favor of Lender and are merged with the Lien and security interest created herein as cumulative security for the payment, performance and discharge of the Obligations (including, but not limited to, the payment of the Debt).

Section 14.6 Entire Agreement. The Note, the Loan Agreement, this Deed of Trust and the other Loan Documents constitute the entire understanding and agreement between Borrower and Lender with respect to the transactions arising in connection with the Obligations

and supersede all prior written or oral understandings and agreements between Borrower and Lender with respect thereto. Borrower hereby acknowledges that, except as incorporated in writing in the Note, the Loan Agreement, this Deed of Trust and the other Loan Documents, there are not, and were not, and no Persons are or were authorized by Lender to make, any representations, understandings, stipulations, agreements or promises, oral or written, with respect to the transaction which is the subject of the Note, the Loan Agreement, this Deed of Trust and the other Loan Documents.

Section 14.7 Limitation on Lender's Responsibility.  No provision of this Deed  of Trust shall operate to place any obligation or liability for the control, care, management or repair of the Property upon Lender, nor shall it operate to make Lender responsible or liable for any waste committed on the Property by the Tenants or any other Person, or for any dangerous or defective condition of the Property, or for any negligence in the management, upkeep, repair or control of the Property resulting in loss or injury or death to any Tenant, licensee, employee or stranger. Nothing herein contained shall be construed as constituting Lender a "mortgagee in possession."

Section 14.8 Recitals. The recitals hereof are a part hereof, form a basis for this Deed of Trust and shall be considered prima facie evidence of the facts and documents referred to therein.

Section 14.9 Joint and Several Liability. If more than one Person has executed this Deed of Trust as "Borrower," the representations, covenants, warranties and obligations of all such Persons hereunder shall be joint and several.

ARTICLE 15

DEED OF TRUST PROVISIONS

Section 15.1 Concerning the Trustee. Trustee shall be under no duty to take any action hereunder except as expressly required hereunder or by law, or to perform any act which would involve Trustee in any expense or liability or to institute or defend  any  suit  in  respect hereof, unless properly  indemnified  to Trustee's  reasonable  satisfaction.  Trustee,  by  acceptance of this Deed of Trust, covenants to perform and fulfill the trusts herein created, being  liable, however, only for willful negligence or misconduct, and hereby waives  any  statutory  fee  and agrees to accept reasonable compensation, in lieu thereof, for any services rendered by Trustee in accordance with the terms hereof. Trustee may resign at any time upon  giving thirty  (30) days' notice to Borrower and to Lender. Lender may  remove  Trustee  at any time or from  time to time and select a successor trustee. In the event of the death, removal, resignation, refusal to act, or inability to act of Trustee, or in its sole  discretion  for  any  reason  whatsoever  Lender  may, without notice and without specifying any reason therefor and  without  applying  to  any  court, select and appoint a successor trustee, by an instrument recorded wherever this Deed of Trust is recorded and all powers, rights, duties and authority of Trustee, as aforesaid,  shall  thereupon become vested in such successor. Such  substitute  trustee shall  not  be required  to give  bond  for the faithful performance of the duties of Trustee hereunder unless required by  Lender.  The procedure provided for in this paragraph  for substitution  of Trustee shall be in addition  to and  not in exclusion of any other provisions for substitution, by law or otherwise.

Section 15.2 Trustee's Fees. Borrower shall pay all reasonable costs, fees and expenses incurred by Trustee and Trustee's agents and counsel in connection with the performance by Trustee of Trustee's duties hereunder and all such costs, fees and expenses shall be secured by this Deed of Trust.

Section 15.3 Certain Rights. With  the approval  of Lender,  Trustee shall have  the right to take any and all of the following actions: (i) to select, employ, and advise with counsel (who may be, but need not be, counsel for Lender) upon any matters arising hereunder, including the preparation, execution, and interpretation of the Loan Agreement, the Note, this Deed of Trust or the other Loan Documents, and shall be fully protected in relying as to legal matters on the advice of counsel, (ii) to execute any of the trusts and powers hereof and to perform any duty hereunder either directly or through his agents or attorneys, (iii) to select and employ, in and about the execution of his duties hereunder, suitable accountants, engineers and other experts, agents and attorneys-in-fact, either corporate or individual, not regularly in the employ of Trustee, and Trustee shall not be answerable for any act, default, negligence, or misconduct of any such accountant, engineer or other expert, agent or attorney-in-fact, if selected with reasonable care, or for any error of judgment or act done by Trustee in good faith, or be otherwise responsible or accountable under any circumstances whatsoever, except for Trustee's gross negligence or bad faith, and (iv) any and all other lawful action as Lender may instruct Trustee to take to protect or enforce Lender's rights hereunder. Trustee shall not be personally liable in case of entry by Trustee, or anyone entering by virtue of the powers herein granted to Trustee, upon the Property for debts contracted for or liability or damages incurred in the management or operation of the Property. Trustee shall have the right to rely on any instrument, document, or signature authorizing or supporting an action taken or proposed to be taken by Trustee hereunder, believed by Trustee in good faith to be genuine. Trustee shall be entitled to reimbursement for actual expenses incurred by Trustee in the performance of Trustee's duties hereunder and to reasonable compensation for such of Trustee's services hereunder as shall be rendered.

Section 15.4 Retention of Money. All moneys received by Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by applicable law) and Trustee shall be under no liability for interest on any moneys received by Trustee hereunder.

Section 15.5 Perfection of Appointment. Should any deed, conveyance, or instrument of any nature be required from Borrower by any Trustee or substitute trustee to more fully and certainly vest in and confirm to the Trustee or substitute trustee such estates rights, powers, and duties, then, upon request by the Trustee or substitute trustee, any and all such deeds, conveyances and instruments shall be made, executed, acknowledged, and delivered and shall be caused to be recorded and/or filed by Borrower.

Section 15.6 Succession Instruments.  Any substitute trustee appointed pursuant  to any of the provisions hereof shall, without any further act, deed, or conveyance, become vested with all the estates, properties, rights, powers, and trusts of its or his predecessor in the rights hereunder with like effect as if originally named as Trustee herein; but nevertheless, upon the written request of Lender or of the substitute trustee, the Trustee ceasing to act shall execute

and deliver any instrument transferring to such substitute trustee, upon the trusts herein expressed, all the estates, properties, rights, powers, and trusts of the Trustee so ceasing to act, and shall duly assign, transfer and deliver any of the property and moneys held by such Trustee to the substitute trustee so appointed in the Trustee's place.

ARTICLE 16

STATE-SPECIFIC PROVISIONS

Section 16.1 Principles of Construction. In the event of any inconsistencies between the terms and conditions of this Article 16 and the other terms and conditions of this Deed of Trust, the terms and conditions of this Article 16 shall control and be binding.

Section 16.2 Instrument. This Deed of Trust shall be deemed to be and shall be enforceable as a deed of trust, leasehold deed of trust, and financing statement.

Section 16.3 Assignment of Rents.

(a)        Definitions. As used in this Deed of Trust, the following terms shall have the meanings set forth below: 

"Act": Chapter 64 of the Texas Property Code, as amended from time to time. "Notice of Enforcement": A notice in substantially the form set forth in Section 64.056 of the Act sent by Lender or Trustee to a lessee demanding payment by the lessee to Lender of all unpaid accrued Rents and all unaccrued Rents as they accrue.

"Rent Demand": Written notice from Lender or the Trustee to Borrower instructing Borrower to deliver to Lender all accruing Rents and all Rents that have accrued but are unpaid.

(b)       Assignment of Rents. Section 1.2 hereof shall be deleted  in its entirety and replaced with the following in lieu thereof:

Assignment of Rents. Borrower hereby presently and unconditionally assigns to Lender and Trustee a security interest in all of Borrower's right, title and interest in and to all current and future Leases and Rents; whether now owned by Borrower or hereafter acquired and whether now existing or hereafter corning into existence, as security for repayment of the Debt and performance of the Obligations and to provide a source of future payment of the Debt, it being intended by Borrower that this assignment constitutes a present, unconditional assignment that is immediately effective.

(c)        No License. The phrase in the first sentence of Section 7.l(h) of this Deed of Trust that reads "the license granted to Borrower under Section 1.2 hereof shall automatically be revoked and" shall be deleted in its entirety.

(d)        Collection of Rent. At any time during which Borrower is receiving Rents directly from any of the lessees, Borrower shall, upon receipt of written direction from Lender or Trustee, make demand and/or sue for all Rents due and payable under one or more Leases, as directed by Lender, as it becomes due and payable, including Rents that are past due and unpaid. If Borrower fails to take such action, or at any time during which Borrower is not receiving Rents directly from lessees, Lender may, without obligation, demand, collect, and sue for, in its own name or in the name of Borrower, all Rents due and payable under the Leases, as they become due and payable, including Rents that are past due and unpaid.

(e)        Rights Relating to Rents. Lender may (in its sole discretion), upon the occurrence of an Event of Default deliver a Rent Demand to Borrower or deliver a Notice of Enforcement to the lessees. Borrower agrees that pursuant  to Section 64.002(a)(3) of the Act, any Rent Demand sent by Lender may be sent to Borrower in any manner and to any address described in the Loan Agreement. As described in Section 64.060 of the Act, Borrower shall, within ten days after its receipt of a Rent Demand, deliver to Lender such Rents as are described in the Rent Demand. Notwithstanding the provisions of Section 64.058 of the Act, Borrower agrees that Rents so received or collected by Lender or Trustee for any period prior to foreclosure under this Deed of Trust or acceptance of a deed in lieu of such foreclosure may be applied by Lender to the payment of the following (in such order and priority as Lender shall determine): (a) all operating expenses of the Property; (b) all expenses incident to taking and retaining possession of the Property and/or collecting Rent as it becomes due and payable; and (c)  the Debt. If the costs, expenses, and attorneys' fees shall exceed the amount of Rents collected, the excess shall be added to the Debt, shall bear interest at the Default Rate, and shall be immediately due and payable. Borrower further acknowledges that Lender shall have no obligation to apply any Rents received by Lender toward the expenses of protecting or maintaining the Property.

Section 16.4 Foreclosure. Upon the occurrence of any Event of Default, Lender may request Trustee to proceed with foreclosure under the power of sale which is hereby conferred, such foreclosure to be accomplished in accordance with the following provisions:

(a)        Public Sale. Trustee is hereby authorized and empowered, and it shall be Trustee's special duty, upon such request of Lender, to sell the Property, or any part thereof, at public auction to the highest bidder for cash, with or without having taken possession of same. Any such sale (including notice thereof) shall comply with the applicable requirements, at the time of the sale, of Section 51.002 of the Texas Property Code or, if and to the extent such statute is not then in force, with the applicable requirements, at the time of the sale, of the successor statute or statutes, if any, governing sales of Texas real property under powers of sale conferred by deeds of trust. If there is no statute in force at the time of the sale governing sales of Texas real property under powers of sale conferred by deeds of trust, such sale shall comply with applicable law, at the time of the sale, governing sales of Texas real property under powers of sale conferred by deeds of trust. Trustee or his successor or substitute may appoint or delegate any one or more persons as agent to perform any act or acts necessary or incident to any sale  held by Trustee, including the posting of notices, and the conduct of sale, but in the name and on behalf of Trustee, his successor or substitute.

(b)         Right to Require Proof of Financial Ability and/or Cash Bid. At any time during the bidding, the Trustee may require a bidding party (A) to disclose its full name, state and city of residence, occupation, and specific business office location, and the name and address of the principal the bidding party is representing (if applicable), and (B) to demonstrate reasonable evidence of the bidding party's financial ability (or, if applicable, the financial ability of the principal of such bidding party), as a condition to the bidding party submitting bids at the foreclosure sale. If any such bidding party (the "Questioned Bidder") declines to comply with the Trustee's requirement in this regard, or if such Questioned Bidder does respond but the Trustee, in Trustee's sole and absolute discretion, deems the information or the evidence of the financial ability of the Questioned Bidder (or, if applicable, the principal of such bidding party) to be inadequate, then the Trustee may continue the bidding with reservation; and in such event (1) the Trustee shall be authorized to caution the Questioned Bidder concerning the legal obligations to be incurred in submitting bids, and (2) if the Questioned Bidder is not the highest bidder at the sale, or if having been the highest bidder the Questioned Bidder fails to deliver the cash purchase price payment promptly to the Trustee, all bids by the Questioned Bidder shall be null and void. The Trustee may, in Trustee's sole and absolute discretion, determine that a credit bid may be in the best interest of the Borrower and Lender, and elect to sell the Property for credit or for a combination of cash and credit; provided, however, that the Trustee shall have no obligation to accept any bid except an all cash bid. In the event the Trustee requires a cash bid and cash is not delivered within a reasonable time after conclusion of the bidding process, as specified by the Trustee, but in no event later than 3:45 p.m. local time on the day of sale, then said contingent sale shall be null and void, the bidding process may be recommenced, and any subsequent bids or sale shall be made as if no prior bids were made or accepted.

(c)        Sale Subject to Unmatured Debt. In addition to the rights and powers of sale granted under the preceding provisions of this subsection, if default is made in the payment of any installment of the Debt, Lender may, at Lender's option, at once or at any time thereafter while any matured installment remains unpaid, without declaring the entire Debt to be due and payable, orally or in writing direct Trustee to enforce this Deed of Trust and to sell the Property subject to such unmatured Debt and to the rights, powers, liens, security interests, and assignments securing or providing recourse for payment of such unmatured Debt, in the same manner, all as provided in the preceding provisions of this subsection. Sales made without maturing the Debt may be made hereunder whenever there is a default in the payment of any installment of the Debt, without exhausting the power of sale granted hereby, and without affecting in any way the power of sale granted under this subsection, the unmatured balance of the Debt or the rights, powers, liens, security interests, and assignments securing or providing recourse for payment of the Debt.

(d)         Partial Foreclosure. Sale of a part of the Property shall not exhaust the power of sale, but sales may be made from time to time until the Debt is paid in full. It is intended by each of the foregoing provisions of this subsection that Trustee may, after any request or direction by Lender, sell not only the Land and the Improvements, but also the Personal Property and other interests constituting a part of the Property or any part thereof, along with the Land and the Improvements or any part thereof, as a unit and as a part of a single sale, or may sell at any time or from time to time any part or parts of the Property separately from the remainder of the Property. It shall not be necessary to have present or to exhibit at any sale any of the Property. Any sale of personal property made hereunder shall be deemed to have been a

public sale conducted in a commercially reasonable manner if held contemporaneously with, or as part of, and upon the same notice as required for the sale of real property under the power of sale granted herein.

(e)        Trustee's Deeds. After any sale under this subsection, Trustee shall make good and sufficient deeds, assignments, and other conveyances to the purchaser or purchasers thereunder in the name of Grantor, conveying the Property or any part thereof so sold to the purchaser or purchasers with general warranty of title by Borrower. It is agreed that in any deeds, assignments or other conveyances given by Trustee, any and all statements of fact or other recitals therein made as to the identity of Lender, the occurrence or existence of any Event of Default, the notice of intention to accelerate, or acceleration of, the maturity of the Debt, the request to sell, notice of sale, time, place, terms and manner of sale, and receipt, distribution, and application of the money realized therefrom, the due and proper appointment of a substitute trustee, and without being limited by the foregoing, any other act or thing having been duly done by or on behalf of Lender or by or on behalf of Trustee, shall be taken by all courts of law and equity as prima facie evidence that such statements or recitals state true, correct, and complete facts and are without further question to be so accepted, and Borrower does hereby ratify and confirm any and all acts that Trustee may lawfully do in the premises by virtue hereof.

Section 16.5 Receiver. Lender, as a matter of right and without regard to the sufficiency of the security for repayment of the Debt and performance and discharge of the obligations hereunder, without notice to Borrower and without any showing of insolvency, fraud, or mismanagement on the part of Borrower, and without the necessity of filing any judicial or other proceeding other than the proceeding for appointment of a receiver, shall be entitled to the appointment of a receiver or receivers of the Property or any part thereof, and of the Rents, and Borrower hereby irrevocably consents to the appointment of a receiver or receivers. Any receiver appointed pursuant to the provisions of this subsection shall have the usual powers and duties of receivers in such matters.

Section 16.6  Inapplicability of Finance  Code.  In no event shall the provisions  of Chapter 346, Texas Finance Code (which regulates certain revolving credit loan accounts and revolving triparty accounts) apply to the loan evidenced by the Loan Documents and/or secured hereby.

Section 16.7 ENTIRE AGREEMENT. THIS DEED OF TRUST AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDER-STANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.

Section 16.8 Maturity Date. The maturity date of the Note secured hereby is the 6th day of October, 2026.

Section 16.9 NOTICE OF INDEMNIFICATION. BORROWER ACKNOWLEDGES THAT THIS DEED OF TRUST PROVIDES FOR INDEMNIFICATION OF LENDER BY BORROWER.

[NO FURTHER TEXT ON THIS PAGE]

IN WITNESS WHEREOF, THIS DEED OF TRUST has been executed by Borrower as of the day and year first above written.

BORROWER:

TREEMONT CAPITAL PARTNERS III, LP, a Texas limited partnership	By: Treemont Capital Partners III GP, LLC, a Texas limited liability company, its general partner
	By: Treemont Investments, Inc., a Texas corporation, its sole member
	By:	/s/ Philip A. McRae
	Name: Philip A. McRae
	Title:  President

ACKNOWLEDGMENT

STATE OF TEXAS	§
	§
COUNTY OF  HARRIS	§

This instrument was ACKNOWLEDGED before me on September 29,  2016, by Philip A. McRae, the President of Treemont Investments, Inc., a Texas corporation, the sole member of Treemont Capital Partners III GP, LLC, a Texas limited liability company, the general partner of TREEMONT CAPITAL PARTNERS III, LP, a Texas limited partnership, on behalf of said limited partnership.

[SEAL]	Jamie Betik
	Printed Name of Notary Public
My Commission Expires:	/s/ Jamie Betik
	Notary Public State of Texas
1/15/2018

EXHIBIT A

Legal Description

Tract I:

Tract "A", HOME 2 LUBBOCK, an Addition to the City of Lubbock, Lubbock County, Texas, according to the map, plat and/or dedication deed thereof recorded May 7, 2014 under County Clerk File No. 2014016086, Official Public Records, Lubbock County, Texas.

Tract II:

As created in Declaration of Restrictions and Reciprocal Easement Agreement recorded in Volume 10138, Page 14, Official Public Records, Lubbock County, Texas; in First Amendment recorded April 21, 2011 under County Clerk File No. 2011012478, Official Public Records, Lubbock County, Texas and in Ratification and Correction recorded July 31, 2013 under County Clerk File No. 2013030944, Official Public Records, Lubbock County, Texas.

FOR INFORMATIONAL PURPOSES ONLY: TAX PARCEL ID#R325521

1

EX-10.54.8

EXHIBIT 10.54.8

GUARANTY OF RECOURSE OBLIGATIONS

This GUARANTY OF RECOURSE OBLIGATIONS (this "Guaranty") is executed as of October 4, 2016 by PHILIP A. MCCRAE, an individual, having an address at 11003 Hedwig Green, Houston, Texas 77057 ("Guarantor" and "Guarantors"), for the benefit of STARWOOD MORTGAGE CAPITAL LLC, a Delaware limited liability company, having an address at 1601 Washington Avenue, Suite 800, Miami Beach, Florida 33139 (together with its successors and assigns, "Lender").

W I TN E S S E TH:

Pursuant to that certain Promissory Note, dated of even date herewith, executed by TREEMONT CAPITAL PARTNERS III, LP, a Texas limited partnership ("Borrower") and payable to the order of Lender in the original principal amount of EIGHT MILLION SIX HUNDRED THOUSAND and No/100 Dollars ($8,600,000.00) (together with all renewals, modifications, increases and extensions thereof, the "Note"), Borrower has become indebted, and may from time to time be further indebted, to Lender with respect to a loan (the "Loan") which is made pursuant to that certain Loan Agreement, dated of even date herewith, between Borrower and Lender (as the same may be amended, modified, supplemented, replaced or otherwise modified from time to time, the "Loan Agreement"). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Loan Agreement.

Lender is not willing to make the Loan, or otherwise extend credit, to Borrower unless Guarantors unconditionally guarantee the payment and performance to Lender of the Guaranteed Obligations (as herein defined).

Guarantors are the owners of direct or indirect interests in Borrower, and each Guarantor will directly benefit from Lender's making the Loan to Borrower.

NOW, THEREFORE, as an inducement to Lender to make the Loan to Borrower and to extend such additional credit as Lender may from time to time agree to extend under the Loan Documents, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:

ARTICLE 1

NATURE AND SCOPE OF GUARANTY

Section 1.1Guaranty of Obligation.

Each Guarantor hereby irrevocably and unconditionally guarantees to Lender and its successors and assigns the payment and performance of the Guaranteed Obligations (as defined below) as and when the same shall be due and payable, whether by lapse of time, by acceleration of maturity or otherwise. Each Guarantor hereby irrevocably and unconditionally covenants and agrees that it is liable for the Guaranteed Obligations as a primary obligor.

As used herein, the term "Guaranteed Obligations" means (i) Borrower's Recourse Liabilities and (ii) from and after the date that any Springing Recourse Event occurs, payment of all of the Obligations.

Notwithstanding anything to the contrary in this Guaranty or in any of the other Loan Documents, Lender shall not be deemed to have waived any right which Lender may have under Section 506(a), 506(b), 11ll(b) or any other provisions of the Bankruptcy Code  to file a claim for the full amount of the Obligations or to require that all collateral shall continue to secure all of the Obligations owing to Lender in accordance with the Loan Documents.

Section 1.2 Nature of Guaranty. This Guaranty is an irrevocable, absolute, continuing guaranty of payment and performance and not a guaranty of collection.  This Guaranty may not be revoked by any Guarantor and shall continue to be effective with respect to any Guaranteed Obligations arising or created after any attempted revocation by any Guarantor and after (if such Guarantor is a natural person) such Guarantor's death (in which event this Guaranty shall be binding upon such Guarantor's estate and such Guarantor's legal representatives and heirs). The fact that at any time or from time to time the Guaranteed Obligations may be increased or reduced shall not release or discharge the obligation of any Guarantor to Lender with respect to the Guaranteed Obligations. This Guaranty may be enforced by Lender and any subsequent holder of the Note and shall not be discharged by the assignment or negotiation of all or part of the Note.

Section 1.3 Guaranteed Obligations Not Reduced by Offset. The Guaranteed Obligations and the liabilities and obligations of Guarantors to Lender hereunder shall not be reduced, discharged or released because or by reason of any existing or future offset, claim or defense of Borrower or any other party against Lender or against payment of the Guaranteed Obligations, whether such offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

Section 1.4 Payment By Guarantors. If all or any part of the Guaranteed Obligations shall not be punctually paid when due, whether at demand, maturity, acceleration or otherwise, Guarantors shall, within ten (10) days after written demand by Lender and without presentment, protest, notice of protest, notice of non-payment, notice of intention to accelerate the maturity, notice of acceleration of the maturity or any other notice whatsoever, all such notices being hereby waived by Guarantors, pay in lawful money of the United States of America, the amount due on the Guaranteed Obligations to Lender at Lender's address as set forth herein. Such demand(s) may be made at any time coincident with or after the time for payment of all or part of the Guaranteed Obligations and may be made from time to time with respect to the same or different items of Guaranteed Obligations. Such demand shall be deemed made, given and received in accordance with the notice provisions hereof.

Section 1.5 No Duty To Pursue Others. It shall  not be necessary  for Lender (and each Guarantor hereby waives any rights which such Guarantor may have to require Lender), in order to enforce the obligations of Guarantors hereunder, first to (i) institute suit or exhaust its remedies against Borrower or others liable on the Loan or the Guaranteed Obligations or any other Person, (ii) enforce Lender's rights against any

collateral which shall ever have been given to secure the Loan, (iii) enforce Lender's rights against any other guarantors of the Guaranteed Obligations, (iv) join Borrower or any others liable on the Guaranteed Obligations in any action seeking to enforce this Guaranty, (v) exhaust any remedies available to Lender against any collateral which shall ever have been given to secure the Loan, or (vi) resort to any other means of obtaining payment of the Guaranteed Obligations. Lender shall not be required to mitigate damages or take any other action to reduce, collect or enforce the Guaranteed Obligations.

Section 1.6 Waivers. Each Guarantor agrees to the provisions of the Loan Documents and hereby waives notice of (i) any loans or advances made by Lender  to Borrower,

(ii) acceptance of this Guaranty, (iii) any amendment or extension of the Note, the Mortgage, the Loan Agreement or any other Loan Document, (iv) the execution and delivery by Borrower and Lender of any other loan or credit agreement or of Borrower's execution and delivery of any promissory note or other document arising under the Loan Documents or in connection with the Property, (v) the occurrence of (A) any breach by Borrower of any of the terms or conditions of the  Loan  Agreement   or  any  of  the  other   Loan   Documents,   or  (B) an  Event   of Default, (vi) Lender's transfer or disposition of the Guaranteed Obligations, or any part thereof, (vii) the sale or foreclosure (or the posting or advertising for the sale or foreclosure) of any collateral for the Guaranteed  Obligations,  (viii) protest,  proof  of  non-payment  or default  by  Borrower,  or any other action at any time taken or omitted by Lender and, generally, all demands and notices of every kind in connection with this Guaranty, the Loan Documents, any documents or agreements evidencing, securing or relating to any of the Guaranteed Obligations and/or the obligations hereby guaranteed.

Section 1.7  Payment of Expenses. In the event that any Guarantor shall breach or fail to timely perform any provisions of this Guaranty, Guarantors shall, immediately upon demand by Lender, pay Lender all costs and expenses (including court costs and reasonable attorneys' fees) incurred by Lender in the enforcement hereof or the preservation of Lender's rights hereunder, together with interest thereon at the Default Rate from the date requested by Lender until the date of payment to Lender. The covenant contained in this Section shall survive the payment and performance of the Guaranteed Obligations.

Section 1.8 Effect of Bankruptcy. In the event that pursuant to any insolvency, bankruptcy, reorganization, receivership or other debtor relief law or any judgment, order or decision thereunder, Lender must rescind or restore any payment or any part thereof received by Lender in satisfaction of the Guaranteed Obligations, as set forth herein, any prior release or discharge from the terms of this Guaranty given to Guarantors by Lender shall be without effect and this Guaranty shall remain (or shall be reinstated to be) in full force and effect. It is the intention of Borrower and Guarantors that Guarantors' obligations hereunder shall not be discharged except by Guarantors' performance of such obligations and then only to the extent of such performance.

Section 1.9 WaiverofSubrogation,ReimbursementandContribution. Notwithstanding anything to the contrary contained in this Guaranty, each Guarantor hereby unconditionally and irrevocably waives, releases and abrogates any and all rights it may now or hereafter have under any agreement, at law or in equity (including, without limitation, any law subrogating Guarantors to the rights of Lender), to assert any claim

against or seek contribution, indemnification or any other form of reimbursement from Borrower or any other party liable for the payment of any or all of the Guaranteed Obligations for any payment made by Guarantors under or in connection with this Guaranty or otherwise.

ARTICLE2

EVENTS AND CIRCUMSTANCES NOT REDUCING OR DISCHARGING GUARANTORS' OBLIGATIONS

Each Guarantor hereby consents and agrees to each of the following and agrees that such Guarantor's obligations under this Guaranty shall not be released, diminished, impaired, reduced or adversely affected by any of the following and waives any common law, equitable, statutory or other rights (including, without limitation, rights to notice) which such Guarantor might otherwise have as a result of or in connection with any of the following:

Section 2.1 Modifications. Any renewal, extension, increase, modification, alteration or rearrangement of all or any part of the Guaranteed Obligations, the Note, the Mortgage, the Loan Agreement, the other Loan Documents or any other document, instrument, contract or understanding between Borrower and Lender or any other parties pertaining to the Guaranteed Obligations or any failure of Lender to notify Guarantors of any such action.

Section 2.2 Adjustment. Any adjustment, indulgence, forbearance  or  compromise that might be granted or given by Lender to Borrower or any Guarantor.

Section 2.3 ConditionofBorrowerorGuarantors.  The  insolvency,  bankruptcy, arrangement, adjustment, composition, liquidation, disability, dissolution or lack of power of Borrower, any Guarantor or any other Person at any time liable for the payment of all or part of the Guaranteed Obligations; or any dissolution of Borrower or any Guarantor or any sale, lease or transfer of any or all of the assets of Borrower or any Guarantor or any changes in the direct or indirect shareholders, partners or members, as applicable, of Borrower or any Guarantor; or any reorganization of Borrower or any Guarantor.

Section 2.4 Invalidity of Guaranteed Obligations. The invalidity, illegality or unenforceability of all or any part of the Guaranteed Obligations or any document or agreement executed in connection with the Guaranteed Obligations for any reason whatsoever, including, without limitation, the fact that (i) the Guaranteed Obligations or any part thereof exceeds the amount permitted by law, (ii) the act of creating the Guaranteed Obligations or any part thereof is ultra vires, (iii) the officers or representatives executing the Note, the Mortgage, the Loan Agreement or the other Loan Documents or otherwise creating the Guaranteed Obligations acted in excess of their authority, (iv) the Guaranteed Obligations violate applicable usury laws, (v) the Borrower has valid defenses, claims or offsets (whether at law, in equity or by agreement) which render the Guaranteed Obligations wholly or partially uncollectible from Borrower, (vi) the creation, performance or repayment of the Guaranteed Obligations (or the execution, delivery and performance of any document or instrument representing part of the Guaranteed Obligations or executed in connection with the Guaranteed Obligations or

given to secure the repayment of the Guaranteed Obligations) is illegal, uncollectible or unenforceable, or (vii) the Note, the Mortgage, the Loan Agreement or any of the other Loan Documents have been forged or otherwise are irregular or not genuine or authentic, it being agreed that Guarantors shall remain liable hereon regardless of whether Borrower or any other Person be found not liable on the Guaranteed Obligations or any part thereof for any reason.

Section 2.5 Release of Obligors. Any full or partial release of the liability of Borrower for the Guaranteed Obligations or any part thereof, or of any co-guarantors, or of any other Person now or hereafter liable, whether directly or indirectly, jointly, severally, or jointly and severally, to pay, perform, guarantee or assure the payment of the Guaranteed Obligations, or any part thereof, it being recognized, acknowledged and agreed by each Guarantor that such Guarantor may be required to pay the Guaranteed Obligations in full without assistance or support from any other Person, and no Guarantor has been induced to enter into this Guaranty on the basis of a contemplation, belief, understanding or agreement that other Persons (including Borrower) will be liable to pay or perform the Guaranteed Obligations or that Lender will look to other Persons (including Borrower) to pay or perform the Guaranteed Obligations.

Section 2.6 Other Collateral. The taking or accepting of any other security, collateral or guaranty, or other assurance of payment, for all or any part of the Guaranteed Obligations.

Section 2.7 ReleaseofCollateral. Any release, surrender, exchange, subordination, deterioration, waste, loss or impairment (including, without limitation, negligent, willful, unreasonable or unjustifiable impairment) of any collateral, property or security at any time existing in connection with, or assuring or securing payment of, all or any part of the Guaranteed Obligations.

Section 2.8 Care and Diligence. The failure of Lender or any other party to exercise diligence or reasonable care in the preservation, protection, enforcement, sale or other handling or treatment of all or any part of any collateral, property or security, including, but not limited to, any neglect, delay, omission, failure or refusal of Lender (i) to take or prosecute any action for the collection of any of the Guaranteed Obligations, or (ii) to foreclose, or initiate any action to foreclose, or, once commenced, prosecute to completion any action to foreclose upon any security therefor, or (iii) to take or prosecute any action in connection with any instrument or agreement evidencing or securing all or any part of the Guaranteed Obligations.

Section 2.9 Unenforceability. The fact that any collateral, security, security interest or lien contemplated or intended to be given, created or granted as security for the repayment of the Guaranteed Obligations, or any part thereof, shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other security interest or lien, it being recognized and agreed by each Guarantor that such Guarantor is not entering into this Guaranty in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectability or value of any of the collateral for the Guaranteed Obligations.

Section 2.10 Offset. Any existing or future right of offset, claim or defense

of Borrower against Lender, or any other party, or against payment of the Guaranteed Obligations, whether such right of offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

Section 2.11 Merger.  The reorganization, merger or consolidation  of Borrower or any Guarantor into or with any other Person.

Section 2.12 Preference. Any payment by Borrower to Lender is held  to constitute a preference under bankruptcy laws or for any reason Lender is required to refund such payment or pay such amount to Borrower or to any other Person.

Section 2.13 Other Actions Taken or Omitted. Any other  action  taken  or  omitted to be taken with respect to the Loan Documents, the Guaranteed Obligations or the security and collateral therefor, whether or not such action or omission prejudices Guarantors or increases the likelihood that Guarantors will be required to pay the Guaranteed Obligations pursuant to the terms hereof, it being the unambiguous and unequivocal intention of Guarantors that such Guarantors shall be obligated to pay the Guaranteed Obligations when due, notwithstanding any occurrence, circumstance, event, action or omission whatsoever, whether contemplated or uncontemplated, and whether or not otherwise or particularly described herein, which obligation shall be deemed satisfied only upon the full and final payment and satisfaction of the Guaranteed Obligations.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

To induce Lender to enter into the Loan Documents and to extend credit to Borrower, each Guarantor represents and warrants to Lender as follows:

Section 3.1   Benefit.  Each Guarantor  is an Affiliate of Borrower, is the owner  of a direct or indirect interest in Borrower and has received, or will receive, direct or indirect benefit from the making of this Guaranty with respect to the Guaranteed Obligations.

Section 3.2 Familiarity and Reliance. Each Guarantor is familiar with, and has independently reviewed books and records regarding, the financial condition of Borrower and is familiar with the value of any and all collateral intended to be created as security for the payment of the Note or Guaranteed Obligations; however, such Guarantor is not relying on such financial condition or the collateral as an inducement to enter into this Guaranty.

Section 3.3 No Representation By Lender.  Neither Lender nor any other party has made any representation, warranty or statement to any Guarantor in order to induce such Guarantor to execute this Guaranty.

Section 3.4 Each Guarantor's Financial Condition.  As of the date hereof, and after giving effect to this Guaranty and the contingent obligation evidenced hereby, each Guarantor (a) is and will be solvent, (b) has and will have assets which, fairly valued, exceed its obligations, liabilities (including contingent liabilities) and debts, and (c) has

and will have property and assets sufficient to satisfy and repay its obligations and liabilities, including the Guaranteed Obligations.

Section 3.5 Legality. The execution, delivery and performance  by  each Guarantor of this Guaranty and the consummation of the transactions contemplated hereunder do not and will not contravene or conflict with any law, statute or regulation whatsoever to which such Guarantor is subject, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the breach of, any indenture, mortgage, charge, lien, contract, agreement or other instrument to which such Guarantor is a party or which may be applicable to such Guarantor. This Guaranty is a legal and binding obligation of each Guarantor and is enforceable against such Guarantor in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors' rights.

Section 3.6 Survival. All representations and warranties made  by  each  Guarantor herein shall survive the execution hereof.

ARTICLE 4

SUBORDINATION OF CERTAIN INDEBTEDNESS

Section 4.1 Subordination of All Guarantor Claims. As used herein, the term "Guarantor Claims" shall mean all debts and liabilities of Borrower to Guarantors, whether such debts and liabilities now exist or are hereafter incurred or arise, and whether the obligations of Borrower thereon be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such debts or liabilities be evidenced by note, contract, open account, or otherwise, and irrespective of the Person or Persons in whose favor such debts or liabilities may, at their inception, have been, or may hereafter be, created, or the manner in which they have been, or may hereafter be, acquired by Guarantors. The Guarantor Claims shall include, without limitation, all rights and claims of Guarantors against Borrower (arising as a result of subrogation or otherwise) as a result of Guarantors' payment of all or a portion of the Guaranteed Obligations. So long as any portion of the Obligations or the  Guaranteed Obligations remain outstanding, no Guarantor shall receive or collect, directly or indirectly, from Borrower or any other Person any amount upon the Guarantor Claims.

Section 4.2 Claims inBankruptcy. In  the  event  of  any  receivership, bankruptcy, reorganization, arrangement, debtor's relief or other insolvency  proceeding involving any Guarantor as a debtor, Lender shall have the right to prove its claim in any such proceeding so as to establish its rights hereunder and receive directly from the receiver, trustee or other court custodian dividends and payments which would otherwise be payable upon Guarantor Claims. Each Guarantor hereby assigns such dividends and payments to Lender. Should Lender receive, for application against the Guaranteed Obligations, any dividend or payment which is otherwise payable to any Guarantor and which, as between Borrower and Guarantors, shall constitute a credit against the Guarantor Claims, then, upon payment to Lender in full of the Obligations and the Guaranteed Obligations, such Guarantor shall become subrogated to the rights of Lender to the extent that such payments to Lender on the Guarantor Claims have contributed toward the liquidation of the Guaranteed Obligations, and such subrogation shall be with

respect to that proportion of the Guaranteed Obligations which would have been unpaid if Lender had not received dividends or payments upon the Guarantor Claims.

Section 4.3 Payments Held in Trust. Notwithstanding anything to the contrary contained in this Guaranty, in the event that any Guarantor should receive any funds, payments, claims and/or distributions which are prohibited by this Guaranty, such Guarantor agrees to hold in trust for Lender an amount equal to the amount of all funds, payments, claims and/or distributions so received, and agrees that it shall have absolutely no dominion over the amount of such funds, payments, claims and/or distributions so received except to pay such funds, payments, claims and/or distributions promptly to Lender, and such Guarantor covenants promptly to pay the same to Lender.

Section 4.4 Liens Subordinate. Each Guarantor agrees that any liens, security interests, judgment liens, charges or other encumbrances upon Borrower's assets securing payment of the Guarantor Claims shall be and remain inferior and subordinate to any liens, security interests, judgment liens, charges or other encumbrances upon Borrower's assets securing payment of the Guaranteed Obligations, regardless of whether such encumbrances in favor of Guarantors or Lender presently exist or are hereafter created or attach. Without  the prior written consent of Lender, no Guarantor shall (i) exercise or enforce any creditor's rights it may have against Borrower, or (ii) foreclose, repossess, sequester or otherwise take steps or institute any action or proceedings Judicial or otherwise, including, without limitation, the commencement of, or the joinder in, any liquidation, bankruptcy, rearrangement, debtor's relief or insolvency proceeding) to enforce any liens, mortgages, deeds of trust, security interests, collateral rights, judgments or other encumbrances on the assets of Borrower held by any Guarantor. The foregoing shall in no manner vitiate or amend, nor be deemed to vitiate or amend, any prohibition in the Loan Documents against Borrower granting liens or security interests in any of its assets to any Person other than Lender.

ARTICLE 5

COVENANTS

Section 5.1Definitions.As used in this Article 5, the following terms shall have the respective meanings set forth below:

"GAAP" shall mean generally accepted accounting principles, consistently applied.

"Liquid Asset" shall mean any of the following, but only to the extent owned individually, free of all security interests, liens, pledges, charges or any other encumbrance: (a) cash, (b) certificates of deposit (with a maturity of two years or less) issued by, or savings account with, any bank or other financial institution reasonably acceptable to Lender or (c) marketable securities listed on a national or international exchange reasonably acceptable to Lender, marked to market.

"Net Worth" shall mean, as of a given date, (i) a Guarantor's total assets as of such date less (ii) such Guarantor's total liabilities as of such date, determined in accordance with GAAP.

Section 5.2 Covenants. Until all of the Obligations and the Guaranteed Obligations have been paid in full, each Guarantor (i) intentionally omitted; (ii) shall not sell, pledge, mortgage or otherwise transfer any of its assets, or any interest therein, on terms materially less favorable than would be obtained in an arms-length transaction, (iii) within forty five (45) days following the end of each calendar quarter, shall deliver to Lender, with respect to the prior calendar quarter, unaudited quarterly and year-to-date statements of income and expense and cash flow prepared on a cash basis for such Guarantor, together with a balance sheet as of the end of such prior calendar quarter for such Guarantor, together with a certificate from such Guarantor (A) setting forth in reasonable detail such Guarantor's Net Worth and Liquid Assets as of the end of such prior calendar quarter and based on the foregoing quarterly financial statements, and (B) certifying that such quarterly financial statements are true, correct, accurate and complete and fairly present the financial condition and results of the operations of such Guarantor in a manner consistent with GAAP and the requirements of Regulation AB, and (iv) within ninety (90) days following the end of each calendar year, shall deliver to Lender a complete copy of such Guarantor's annual financial statements prepared and reviewed by an independent certified public accountant acceptable to Lender prepared in accordance with GAAP and the requirements of Regulation AB, if applicable to the Loan, including statements of income and expense and cash flow and a balance sheet for such Guarantor, together with a certificate from such Guarantor (A) setting forth in reasonable detail such Guarantor's Net Worth and Liquid Assets as of the end of such prior calendar year and based on such annual financial statements, and (B) certifying that such annual financial statements are true, correct, accurate and complete and fairly present the financial condition and results of the operations of such Guarantor.

Section 5.3 Prohibited Transactions. No Guarantor shall, at any time while a default  in the  payment  of the Guaranteed  Obligations  has occurred  and  is continuing,  either enter into or effectuate any transaction with any Affiliate which would reduce the Net Worth of such Guarantor, including, without limitation, the payment of any dividend or distribution to a shareholder, partner or member as applicable, or the redemption, retirement, purchase or other acquisition  for  consideration  of any  stock  or other  ownership  interest  in such  Guarantor, or sell, pledge, mortgage or otherwise transfer to any Person any of such Guarantor's assets, or any interest therein.

ARTICLE 6

MISCELLANEOUS

Section 6.1 Waiver. No failure to exercise, and no delay in exercising, on the part of Lender, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right. The rights of Lender hereunder shall be in addition to all other rights provided by law. No modification or waiver of any provision of this Guaranty, nor any consent to any departure therefrom, shall be effective unless in writing and no such consent or waiver shall extend beyond the particular case and purpose involved. No notice or demand given in any case shall constitute a waiver of the right to take other action in the same, similar or other instances without such notice or demand.

Section 6.2 Notices. All notices, demands, requests, consents,  approvals  or  other communications (any of the foregoing, a "Notice") required, permitted or desired to be given hereunder shall be in writing and shall be sent by telefax (with answer back acknowledged) or by registered or certified mail, postage prepaid, return receipt requested, or delivered by hand or by reputable overnight courier, addressed to the party to be so notified at its address hereinafter set forth, or to such other address as such party may hereafter specify in accordance with the provisions of this Section 6.2. Any Notice shall be deemed to have been received: (a) three (3) days after the date such Notice is mailed, (b) on the date of sending by telefax if sent during business hours on a Business Day (otherwise on the next Business Day), (c) on the date of delivery by hand if delivered during business hours on a Business Day (otherwise on the next Business Day), and (d) on the next Business Day if sent by an overnight commercial courier, in each case addressed to the parties as follows:

If to Lender:

Starwood Mortgage Capital LLC

1601 Washington Avenue, Suite 800

Miami Beach, Florida 33139

Attention: Ms. Leslie K. Fairbanks

Facsimile No. (305) 695-5539

with a copy to:

Winstead PC

201 North Tryon Street Suite 2000

Charlotte, North Carolina 28202

Attention: Jeffrey J. Lee, Esq.

Facsimile No.: (704) 339-1701

and with a copy to:

Wells Fargo Commercial Mortgage Services

Duke Energy Center

550 South Tryon St., 12th Floor MAC D1086-120

Charlotte, North Carolina 28202

Attention: Asset Manager - Starwood Mortgage Capital

Facsimile No.: (704) 715-0036

If to Guarantors

Philip McRae

1415 South Voss #110-94

Houston, Texas 77057

With a copy to:

Sneed, Vine & Perry, P.C.

900 Congress Avenue, Suite 300

Austin, Texas 78701

Attention Adam S. Wilk

Facsimile No. 512-476-1825

Any party may change the address to which any such Notice is to be delivered by furnishing ten (10) days' written notice of such change to the other parties in accordance with the provisions of this Section 6.2. Notices shall be deemed to have been given on the date set forth above, even if there is an inability to actually deliver any Notice because of a changed address of which no Notice was given or there  is a rejection  or  refusal  to accept any Notice  offered  for  delivery.  Notice for any party may be given by its respective counsel. Additionally, Notice from Lender may also be given by Servicer.

Section 6.3 Governing  Law.  THIS  GUARANTY  SHALL  BE GOVERNED BY THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER, GUARANTOR OR BORROWER ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT MAY BE INSTITUTED IN THE COURTS HAVING JURISDICTION IN THE CITY AND/OR COUNTY IN WHICH THE PROPERTY IS LOCATED, AND EACH OF LENDER, GUARANTOR AND BORROWER HEREBY WAIVES ANY OBJECTIONS THAT IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING.

Section 6.4 Invalid Provisions. If any provision of this Guaranty is held to be illegal, invalid, or unenforceable under present or future laws effective during the term of this Guaranty, such provision shall be fully severable and this Guaranty shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Guaranty, and the remaining provisions of this Guaranty shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Guaranty, unless such continued effectiveness of this Guaranty, as modified, would be contrary to the basic understandings and intentions of the parties as expressed herein.

Section 6.5 Amendments. This Guaranty may be amended  only  by  an instrument in writing executed by the party(ies) against whom such amendment is sought to be enforced.

Section 6.6  Parties Bound; Assignment.  This Guaranty  shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, permitted assigns, heirs and legal representatives. Lender shall have the right to assign or transfer its rights under this Guaranty in connection with any assignment of the Loan and the Loan Documents. Any assignee or transferee of Lender shall be entitled to all the benefits afforded to Lender under this Guaranty. No Guarantor shall have the right to assign or transfer its rights or obligations under this Guaranty without the prior written consent of Lender, and any attempted assignment without such consent shall be null and void.

Section 6.7 Headings. Section headings are for convenience of reference only and shall in no way affect the interpretation of this Guaranty.

Section 6.8 Recitals. The recitals and introductory paragraphs hereof are a part hereof, form a basis for this Guaranty and shall be considered prima facie evidence of the facts and documents referred to therein.

Section 6.9 Counterparts. To facilitate execution, this Guaranty  may  be  executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single instrument. It shall not be necessary in making proof of this Guaranty to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages.

Section 6.10 Rights and Remedies. If any Guarantor becomes liable for any indebtedness owing by Borrower to Lender, by endorsement or otherwise, other than under this Guaranty, such liability shall not be in any manner impaired or affected hereby and the rights of Lender hereunder shall be cumulative of any and all other rights that Lender may ever have against Guarantor. The exercise by Lender of any right or remedy hereunder or under any other instrument, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any other right or remedy.

Section 6.11 Entirety. THIS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT OF GUARANTORS AND LENDER WITH RESPECT TO GUARANTORS' GUARANTY OF THE GUARANTEED OBLIGATIONS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY  IS INTENDED BY GUARANTORS AND LENDER AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY, AND NO COURSE OF DEALING BETWEEN GUARANTORS AND LENDER, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTORS AND LENDER.

Section 6.12 Waiver of Right To Trial By Jury. EACH GUARANTOR HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS GUARANTY, THE NOTE, THE MORTGAGE, THE LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH GUARANTOR AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT

TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY GUARANTORS.

Section 6.13 Cooperation. Each Guarantor acknowledges that Lender and its successors and assigns may (i) sell this Guaranty, the Note and the other Loan Documents to one or more investors as a whole loan, (ii) participate the Loan secured by this Guaranty to one or more investors, (iii) deposit this Guaranty, the Note and the other Loan Documents with a trust, which trust may sell certificates to investors evidencing an ownership interest in the trust assets, or (iv) otherwise sell the Loan or one or more interests therein to investors (the transactions referred to in clauses (i) through (iv) are hereinafter each referred to as "Secondary Market Transaction"). Each Guarantor shall cooperate with Lender in effecting any such Secondary Market Transaction and shall cooperate to implement all requirements imposed by any of the Rating Agencies involved in any Secondary Market Transaction. Each Guarantor shall provide such information and documents relating to such Guarantor, Borrower, the Property and any tenants of the Property as Lender may reasonably request in connection with such Secondary Market Transaction. In addition, each Guarantor shall make available to Lender all information concerning its business and operations that Lender may reasonably request. Lender shall be permitted to share all such information with the investment banking firms, Rating Agencies, accounting firms, law firms and other third-party advisory firms involved with the Loan and the Loan Documents or the applicable Secondary Market Transaction. It is understood that the information provided by Guarantors to Lender, including any and all financial statements provided to Lender pursuant to Section 5.2 hereof, may ultimately be incorporated into the offering documents for the Secondary Market Transaction and thus various investors and potential investors may also see some or all of the information. Lender and all of the aforesaid third-party advisors and professional firms shall be entitled to rely on the information supplied by, or on behalf of, Guarantors in the form as provided by Guarantors. Lender may publicize the existence of the Loan in connection with its marketing for a Secondary Market Transaction or otherwise as part of its business development.

Section 6.14 Reinstatementin Certain Circumstances. If at any time any payment of the principal of or interest under the Note or any other amount payable by Borrower under the Loan Documents is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, Guarantors' obligations hereunder with respect to such payment shall be reinstated as though such payment had been due but not made at such time.

Section 6.15 Gender; Number; General Definitions. Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, (a) words used in this Guaranty may be used interchangeably in the singular or plural form, (b) any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, (c) the word "Borrower" shall mean "each Borrower and any subsequent owner or owners of the Property or any part thereof or interest therein", (d) the word "Lender" shall mean "Lender and any subsequent holder of the Note", (e) the word "Note" shall mean "the Note and any other evidence of indebtedness secured by the Loan Agreement", (f) the word "Property" shall include

any portion of the Property and any interest therein, and (g) the phrases "attorneys' fees", "legal fees" and "counsel fees" shall include any and all attorneys', paralegal and law clerk fees and disbursements, including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels, incurred or paid by Lender in protecting its interest in the Property, the Leases and/or the Rents and/or in enforcing its rights hereunder.

Section 6.16 Joint and Several. The obligations of each Guarantor  hereunder are joint and several.

[NO FURTHER TEXT ON THIS PAGE]

IN WITNESS WHEREOF, each Guarantor has executed this Guaranty as of the day and year first above written.

GUARANTOR:

/s/ Philip A. McRae

PHILIP A. MCRAE, an individual

Guaranty of Recourse Obligations (Home2Suites Lubbock)

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EX-10.55.1

EXHIBIT 10.55.1

NOTICE OF CONFIDENTIALITY RIGHTS:  IF YOU ARE A NATURAL PERSON, YOU REMOVE OR STRIKE ANY OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS:  YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.

RECORDING REQUESTED BY AND

AFTER RECORDING RETURN TO:

Kathleen J. Wu, Esq.
Hunton Andrews Kurth LLP
1445 Ross Avenue, Suite 3700
Dallas, Texas 75202

CONSENT, AMENDMENT AND ASSUMPTION AGREEMENT

This Consent, Amendment and Assumption Agreement (this “Agreement”) is made as of January ___, 2020, by and among TREEMONT CAPITAL PARTNERS IV, LP, a Texas limited partnership (“Seller”), LF3 LUBBOCK EXPO, LLC, a Delaware limited liability company (“Fee Owner”) and LF3 LUBBOCK EXPO TRS, LLC, a Delaware limited liability company (“Operating Lessee”; together with Fee Owner, individually and collectively, jointly and severally, “Buyer”), PHILIP A. MCRAE, individually (“Original Guarantor”), LODGING FUND REIT III, INC., a Maryland corporation,  and LODGING FUND REIT III OP, LP, a Delaware limited partnership (individually and collectively, “Guarantor”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee for Morgan Stanley Capital I Trust 2019-H6, Commercial Mortgage Pass-Through Certificates, Series 2019-H6,  acting by and through its Master Servicer, Midland Loan Services, a Division of PNC Bank, National Association (collectively referred to herein as “Lender”), with reference to the following facts:

RECITALS

A.        Seller is presently the owner of certain real property located at 6435 50th Street, Lubbock, Texas, commonly known as “Fairfield Inn & Suites Lubbock”, and more particularly described in Exhibit “A” attached hereto and incorporated herein by reference for all purposes together with all improvements, fixtures and personal property located thereon and or/described in any of the herein defined Loan Documents which, with the above described real property (the “Real Property”), is collectively referred to as the “Property”.  Further, as used herein, the term “Property” shall mean the Property or, where applicable, such portions thereof as are owned by Buyer.  The Property is encumbered by a first lien and security interest on the Property evidenced by, among other things, that certain (i) Deed of Trust, Assignment of Leases and Rents and Security Agreement dated April 4, 2019, executed by Seller to Starwood Mortgage Capital LLC (“Original Lender”), as beneficiary, recorded as Instrument No. 2019011813 in the Real Property Records of Lubbock County, Texas (the “Security Instrument”), (ii) Assignment of Leases and Rents dated April 4, 2019, executed by Seller for the benefit of Original Lender recorded as Instrument No. 2019011814 in the Real Property Records of Lubbock County, Texas (the “Assignment”), and (iii) Environmental Indemnity Agreement dated April 4, 2019, executed by Seller and Original Guarantor as indemnitors thereunder for the benefit of Original Lender (the “Environmental

Indemnity”).  Original Guarantor guaranteed certain obligations of Seller under the Loan Documents (as hereinafter defined) pursuant to that certain Guaranty of Recourse Obligations dated April 4, 2019, executed by Original Guarantor, as guarantor, for the benefit of Original Lender (the “Guaranty”).  The personal property, fixtures and other collateral covered by the Security Instrument and the other Loan Documents is subject to a first lien and security interest on the Property evidenced by, among other things, certain UCC-1 Financing Statements filed with the Secretary of State of Texas and in the official records of Lubbock County, Texas (collectively, said UCC-1 Financing Statements shall be referred to as the “UCC-1 Financing Statement”).  The Security Instrument, the Assignment, the Environmental Indemnity, the Guaranty and the UCC-1 Financing Statement are collectively referred to herein as the “Security Documents”.

B.         The Security Documents secure a repayment of a loan (the “Loan”) to Seller evidenced by a Promissory Note (collectively with all amendments and modifications thereto, the “Note”) dated April 4, 2019, in the original principal amount of $9,500,000.00 executed by Seller, as maker, in favor of Original Lender, as payee.

C.         The Loan is further evidenced by that certain Loan Agreement dated as of April 4, 2019, executed by Seller and Original Lender (the “Loan Agreement”).

D.        The Security Documents further secure performance of all the obligations, covenants, and agreements contained in the Security Instrument and in all other documents executed by Seller or any other party evidencing, securing, memorializing or in any way relating to the Loan or perfecting the lien or security interest created by any Security Document (such documents, instruments and agreements together with the Note, the Loan Agreement, the Security Instrument, the Assignment, the Environmental Indemnity, the Guaranty and the other Security Documents, as same may be amended, reinstated, consolidated, supplemented, increased, decreased, restated, extended or otherwise modified at any time, and from time to time, are collectively and individually referred to herein as the “Loan Documents”).

E.         Lender is the holder of all of Original Lender’s interest in and under the Security Instrument and the other Loan Documents.  Midland Loan Services, a Division of PNC Bank, National Association, services the Loan as an authorized servicer.

F.         Seller and Lodging Fund REIT III OP, LP entered into that certain Agreement of Purchase and Sale dated July 26, 2019 (as amended and assigned to Fee Owner and Operating Lessee pursuant to that certain Assignment of Asset Purchase Agreement dated as of the date hereof, the “Contract of Sale”) for the sale and purchase of the Property.  In the event Seller fails to obtain Lender’s consent to the transfer contemplated by the Contract of Sale, the provisions of the Loan Documents entitle Lender to, among other things, accelerate payment of the balance owing under the Note, to foreclose the Security Instrument and exercise any and all rights, remedies or recourses to which it is entitled under any of the Loan Documents.  Seller will sell, transfer, and convey the Property, subject to the Loan Documents, to Buyer (i) if Buyer assumes, to Lender’s full satisfaction, the Loan and all of Seller’s obligations, agreements, covenants, liabilities, representations, warranties, duties and the like (collectively, the “Obligations”) arising under the Loan Documents, and (ii) if Lender agrees not to exercise its right under the Security Instrument to accelerate the unpaid balance of the Note as a result of such transfer to Buyer and allows Buyer to assume the Loan and all of Seller’s obligations under the Loan Documents.

G.        Fee Owner and Operating Lessee are affiliates and Fee Owner, as landlord, and Operating Lessee, as tenant, entered into that certain Lease Agreement dated as of the date hereof with respect to the operation of a hotel on the Land and Improvements (the “Operating Lease”) under and pursuant to such Operating Lease.

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H.        In connection with the Buyer’s assumption of the Loan, Operating Lessee will to grant to Lender a lien and security interest on, inter alia, its leasehold interest in the property pursuant to a Leasehold Deed of Trust, Assignment of Leases and Rents and Security Agreement dated as of the date hereof (the “Leasehold Deed of Trust”).

I.          Subject to the terms and conditions of this Agreement and the Loan Documents, Lender is willing to consent to the transfer of the Property to Buyer and permit Buyer’s assumption of the Loan and Obligations arising under the Loan Documents.  Lender’s willingness to consent to such assumption by Buyer is expressly conditioned on, among other things, Buyer’s agreement that it is specifically assuming all Obligations under the Note and other Loan Documents which are fully and unconditionally recourse subject, however, to the non-recourse provisions set forth in the Loan Documents.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties agree as follows:

GENERAL.    Lender and Buyer confirm and agree that a)the current outstanding principal balance of the Note is $9,400,772.31 and Buyer hereby ratifies, reaffirms and consents to all of the other terms of each of the Loan Documents, as applicable; b)the current effective interest rate of the Note is 4.93% per annum; c)the Note contains a fixed interest rate and, subject to the Loan Agreement, a maturity date of April 6, 2029; d)the current effective monthly principal and interest installment payment under the Note is $50,592.41, which is due and payable on the sixth day of each and every calendar month or, if such day is not a Business Day, the immediately preceding Business Day in accordance with the Loan Agreement (the “Monthly Payment Date”); e)the current effective monthly escrow payment to Lender for taxes on the Property is $13,769.74, which is due and payable on the Monthly Payment Date; f)subject to adjustment under the Loan Agreement, the current effective monthly escrow payment to Lender for insurance on the Property is $2,903.95, which is due and payable on the Monthly Payment Date; g)the current effective monthly escrow payment to Lender for FF&E Work is $5,404.03 and, after the date hereof, $10,808.06, which is subject to adjustment in accordance with the terms of this Agreement and is due and payable on the Monthly Payment Date; h)intentionally omitted;  i)all installment payments due up to and including January 6, 2020, under the Note, Loan Agreement and/or Security Instrument shall have been paid current; j)there are no defenses or claims of setoffs with respect to any such sums or other amounts owing under the Note, Security Instrument or any of the other Loan Documents; k)Lender is the current holder of the Note, Security Instrument and other Loan Documents; l)no payment default exists of any amount due and owing under the Loan Documents and no late charges are currently owing thereunder and to Lender’s knowledge, without any inquiry or investigation whatsoever, no other default exists under the Loan Documents; m)there are no currently outstanding default notices issued pursuant to the Loan Documents; and n)unless and until Lender provides an alternative address for Lender, all Loan payments and all notices and correspondence to Lender shall be made or given to Lender at the address of Lender set forth below the signature of Lender on the signature page of this Agreement.

CONSENT TO TRANSFER.  Lender hereby consents to the transfer of the Property from Seller to Buyer subject to satisfaction of all of the following conditions precedent and the other terms of this Agreement:  o)the complete execution and acknowledgment of this Agreement by all of the parties hereto and the delivery thereof to Lender for recordation concurrently with the closing of Buyer’s acquisition of the Property as contemplated by the Contract of Sale (the “Closing”); p)recordation and filing, as appropriate, at Closing of the New Financing Statements (defined below) in form and substance satisfactory to Lender; q)the delivery to Lender of satisfactory

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evidence of Buyer’s satisfaction of all insurance requirements as set forth in the Loan Documents; r)the issuance to Lender of the Title Endorsements (defined below) in form and substance acceptable to Lender; s)the full release and reconveyance of any other liens or monetary encumbrances against the Property which are not in favor of Lender; t)the payment to Lender of the Assumption Fee (defined below), and the Note installment and all other payments, fees and expenses required by Section 3 of this Agreement to be paid at Closing by Buyer and/or Seller or as required by any of the Loan Documents; u)the delivery of evidence of the capacity and authority of Seller, Buyer, Original Guarantor and Guarantor to consummate the transactions contemplated in the Contract of Sale and/or this Agreement, as the case may be, consents and resolutions of Seller and Buyer authorizing the transactions contemplated in this Agreement and/or the Contract of Sale together with a true, correct and complete copy of the operating, LLC or company agreements of Buyer, as amended, which shall include, without limitation, certain “special purpose entity” provisions acceptable to Lender which shall include, without limitation, those provisions required in the Loan Documents, all in form and substance satisfactory to Lender; v)intentionally omitted; w)a current written opinion of counsel for Buyer, in form and substance satisfactory to Lender, to the effect, among other things as Lender may require, that the Loan is not usurious or otherwise illegal under applicable law, that the Loan Documents, as amended, and this Agreement are valid and binding upon Buyer, and are enforceable in accordance with their terms, that the persons executing this Agreement and any other documents, instruments or agreements related hereto have the requisite authority to execute such documents on behalf of Buyer and that Buyer has authorized the execution of this Agreement and the documents contemplated hereby; x)Buyer and/or Seller shall pay all costs of Buyer, Seller and Lender associated with Closing and/or this Agreement; y)all monthly debt service payments and real estate taxes and insurance premiums, must be current; z)Buyer shall provide to Lender evidence, in a form and substance satisfactory to Lender, that all insurance premiums due to maintain all insurance required by the Security Instrument have been paid in full as of the date of this Agreement and that no delinquencies exist with regard to same; aa)Buyer shall provide to Lender evidence, in form and substance satisfactory to Lender, that all taxes, charges, assessments, and impositions of any kind have been paid in full as of the date of this Agreement and that no delinquencies exist with regard to same; bb)copies of all management or other similar agreements in form and substance satisfactory to Lender and certified by Buyer to be true and correct; and cc)Buyer and Seller shall execute and deliver to Lender any and all other documents, instruments and agreements reasonably necessary for the completion of the transaction contemplated by this Agreement.

The validity and effect of this Agreement including the consent of Lender as contemplated herein are wholly conditioned on delivery of aforesaid items to Lender on or before the Closing.

ASSUMPTION FEE; INSTALLMENT PAYMENT; THE TITLE ENDORSEMENTS AND EXPENSES.  In consideration for Lender’s consent to the transfer of the Property from Seller to Buyer, Buyer covenants and agrees to pay to Lender at Closing dd)$47,003.86 (.50% of the outstanding principal balance) which represent the assumption fee for consenting to Buyer’s assumption (the “Assumption Fee”). Neither the Assumption Fee nor any impounds shall be credited against the principal balance.  In addition, at Closing, Buyer (and/or Seller in accordance with the Contract of Sale as applicable) shall (i) cause to issue such endorsements to the mortgagee title insurance policy issued by Stewart Title Guaranty Company, covering the Security Instrument, and in such form as Lender may reasonably require or, alternatively, as Lender may request in its sole discretion, a new mortgagee title insurance policy in form and substance acceptable to Lender (collectively, the “Title Endorsements”), including, without limitation, showing that the Security Documents are the only monetary liens of record against the Property, and (ii) pay the cost of the Title Endorsements, any escrow, filing or recording fees applicable to this transaction, and Lender’s costs and expenses incurred in connection with this Agreement or this transaction including without limitation, Lender’s reasonable attorneys’ fees incurred in connection with this Agreement or this transaction.  In furtherance of the foregoing provisions of this Section, Buyer expressly

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agrees that its assumed obligations under the Loan Documents shall be deemed independent obligations of the Buyer, enforceable against the Buyer without regard to any defenses, waivers, claims or offsets that may be held by Seller, or any fact or circumstance that may render the Loan Documents unenforceable against Seller.

BUYER’S ASSUMPTION OF LOAN; NEW AGREEMENTS AND FINANCING STATEMENTS; GUARANTOR’S EXECUTION OF GUARANTY AND ENVIRONMENTAL INDEMNITY.

Buyer’s Assumption.  Buyer hereby expressly assumes, with recourse, subject to non-recourse provisions set forth in the Loan Documents, the unpaid balance due and owing on the Note, together with interest thereon as provided in the Note, together with all other obligations under the Note, Loan Agreement, Security Instrument and each and every one of the Loan Documents, with the same force and effect as if Buyer had been specifically named therein as the original maker, borrower, grantor, debtor or indemnitor, as applicable, it being specifically agreed by Buyer that to the extent said Note is recourse that Lender’s remedies shall not in any respect or extent be limited solely to the Property or any other collateral securing the obligation.  Buyer further expressly promises to pay all loan installments as they become due and to observe all obligations of the Loan Agreement, Note and Security Instrument.  The foregoing assumption by Buyer is absolute and unconditional, subject to non recourse provisions set forth in the Loan Documents and is not subject to any defenses, waivers, claims or offsets nor may it be affected or impaired by any agreement, condition, statement or representation of Seller or Buyer or any failure to perform the same and that Buyer hereby relinquishes, waives and releases any and all such defenses, claims, offsets, and causes of action.  Buyer expressly agrees that it has read and approved of and will comply with and be bound by all of the terms, conditions, and provisions contained in the Security Instrument, the Note and all other Loan Documents.

New Agreements.  Contemporaneously with the execution of this Agreement, and as a condition precedent to the effectiveness of this Agreement and Lender’s agreements and obligations hereunder, Buyer shall execute and deliver to Lender a Cash Management Agreement, in form and substance satisfactory to Lender.

Buyer hereby authorizes Lender to file one or more UCC-1 and UCC-3 financing statements covering fixtures and personal property and/or other collateral related to the Real Property and covered by any of the Security Documents, without signature of Buyer to the extent permitted by law (the “New Financing Statements”), and Buyer hereby confirms that it grants Lender a security interest in all fixtures, personal property and/or any other collateral described in any of the Security Documents.

Contemporaneously with the execution of this Agreement, and as a condition precedent to the effectiveness of this Agreement and Lender’s agreements and obligations hereunder, Guarantor shall execute and deliver to Lender a Guaranty of Recourse Obligations in form and substance satisfactory to Lender.

Contemporaneously with the execution of this Agreement, and as a condition precedent to the effectiveness of this Agreement and Lender’s agreements and obligations hereunder, Buyer and Guarantor shall execute and deliver to Lender an Environmental Indemnity Agreement in form and substance satisfactory to Lender.

Contemporaneously with the execution of this Agreement, and as a condition precedent to the effectiveness of this Agreement and Lender’s agreements and obligations hereunder, Operating Lessee shall execute and deliver to Lender the Leasehold Deed of Trust.

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LIMITATION OF CONSENT.  Lender’s consent in this Agreement is strictly limited to the conveyance of the Property from Seller to Buyer, and this Agreement shall not constitute a waiver or modification of any requirement of obtaining Lender’s consent to any future transfer of the Property or any portion thereof or interest therein, nor shall it constitute a modification of the terms, provisions, or requirements in the Loan Documents in any respect except as expressly provided herein.  Buyer specifically acknowledges that any transfer of the Property or any portion thereof or interest therein by Buyer shall entitle Lender to accelerate the Note balance and foreclose the Security Instrument.  The Loan Documents are hereby ratified and except as expressly modified in this Agreement, the Note, the Loan Agreement, Security Instrument and other Loan Documents remain unmodified and are in full force and effect.

NO REPRESENTATIONS OF LENDER.  Buyer recognizes and agrees that Lender has made no representations or warranty, either express or implied regarding the Property and has no responsibility whatsoever with respect to the Property, the condition of the Property or the use, occupancy, or status of the Property.  To the extent Buyer has any claims which in any manner relate to the Property, the condition of the Property, or the use, occupancy, or status of the Property, the same shall not be asserted against Lender or its agents, employees, professional consultants, affiliated entities, successors or assigns, or asserted as a defense to any of the Loan Documents.

EFFECT OF AGREEMENT.  This Agreement shall be deemed to form a part of the Loan Documents.  This Agreement shall not prejudice any present or future rights, remedies or powers belonging or accruing to Lender under the Loan Documents, nor impair the lien of the Security Instrument.

NO EFFECT ON LIENS OR PRIORITY.  Nothing in this Agreement shall in any way release, diminish or affect the first position lien of the Security Instrument or any liens created by, or the agreements or covenants contained in, the Loan Documents or the first-lien priority of any such liens.  Buyer agrees that the Note, the Security Instrument and the other Loan Documents shall secure all other sums that may be advanced in the future by Lender to Buyer or any of its successors or assigns or any other owner(s) of the Property pursuant to the terms of the Loan Documents.

INTENTIONALLY DELETED.

SELLER’S REPRESENTATION AND WARRANTIES.  In order to induce Lender to enter into this Agreement, Seller hereby represents and warrants that ee)Seller is the owner of the Property and is duly authorized to execute, deliver and perform this Agreement; ff)any court or third-party approvals necessary for Seller to enter into this Agreement have been obtained; gg)the entities and/or persons executing this Agreement on behalf of Seller are duly authorized to execute and deliver this Agreement; hh)this Agreement and the Loan Documents are in full force and effect and the transactions contemplated therein constitute valid and binding obligations enforceable by Lender in accordance with their terms and have not been modified either orally or in writing; ii)Lender has not waived any requirements of the Loan Documents nor any of Lender’s rights thereunder; jj)no Event of Default (as defined in the Loan Agreement) exists or any event, which, as a result of the passage of time or the expiration of any cure period would constitute a default or an Event of Default; kk)there exists no defenses or claims of set off with respect to any sums owing under the Note; ll)all representations and warranties in the Contract of Sale are true and correct; and mm)all representations and warranties referred to herein shall be true as of the date of this Agreement and Closing and shall survive Closing.

BUYER’S REPRESENTATIONS, WARRANTIES AND COVENANTS.  In order to induce Lender to enter into this Agreement, Buyer hereby represents and warrants that nn)Buyer is duly authorized to execute,

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deliver and perform this Agreement; oo)any court or third-party approvals necessary for Buyer to enter into this Agreement have been obtained; pp)the entities and/or persons executing this Agreement on behalf of Buyer are duly authorized to execute and deliver this Agreement on Buyer’s behalf; qq)this Agreement and the Loan Documents are in full force and effect and the transactions contemplated therein constitute valid and binding obligations of Buyer enforceable by Lender in accordance with their terms and have not been modified either orally or in writing; rr)Buyer’s mailing address for all Lender’s correspondence and notices is set forth below the signature of Buyer on the signature page of this Agreement; ss)to the best of Buyer’s knowledge, there exists no default or Event of Default or any event, which, as a result of the passage of time or the expiration of any cure period, or both, would constitute a default or Event of Default; tt)to the best of Buyer’s knowledge after diligent inquiry and investigation, all representations and warranties of Buyer in the Contract of Sale are true and correct; uu)Buyer covenants and agrees that no liens will attach to the Property as a result of or in any way relating to the consummation of the transaction contemplated by this Agreement other than liens in favor of Lender; vv)Buyer hereby authorizes Lender to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Property without the signature of Buyer where permitted by law, and otherwise agrees to execute same at Lender’s request; ww)the execution, delivery, and performance by Buyer of this Agreement does not contravene any law or contractual restriction binding on or affecting Buyer; xx)no consent, authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any person or entities is required for the due execution, delivery or performance by Buyer of this Agreement; yy)upon the closing of the transactions contemplated herein and the Contract of Sale, Buyer shall have good and marketable title to the Property, subject only to the exceptions to title referred to in the Security Instrument; zz)to the best of Buyer’s knowledge, no amounts are due or claimed to be due by any person or entity for labor performed or materials furnished to any portion or all of the Property: aaa)to the best of Buyer’s knowledge after diligent inquiry and investigation, Buyer is not in default on any obligations to any lienholders with any interest or lien in or to any portion or all of the Property; bbb)Buyer covenants and agrees that it shall not default in any way on any obligations owing to any lienholders (including taxing authorities) with any interest or lien in or to any portion or all of the Property; ccc)to the best of Buyer’s knowledge after diligent inquiry and investigation, Buyer and the Property are in compliance with all applicable zoning ordinances, government regulations and restrictive covenants affecting the Property; ddd)the organizational documents governing Buyer are in full force and effect and have not been amended nor changed, or no proceeding is pending, planned or threatened for the dissolution or annulment of Buyer; eee)Buyer is duly organized and validly existing and in good standing under the laws of the State of Delaware and is qualified to do business in the State of Texas; fff)all licenses, filing fees, income and other taxes due and payable by Buyer have been paid in full and Buyer has all requisite power and governmental certificates of authority, licenses, permits, qualifications and documentation to own, lease and operate the Property and to carry on its business as now being, and as proposed to be, conducted in the State of Texas; ggg)there is no bankruptcy or receivership proceeding pending or threatened against Buyer; hhh)Buyer has no intention as of the date of this Agreement to do any of the following within at least 180 days after said date: i)seek entry of any order for relief as a debtor and a proceeding under the Code (defined below), ii)seek consent to or not contest the appointment of a receiver or trustee for itself or for all or any part of its property, iii)file a petition seeking relief under any bankruptcy, arrangement, reorganization or other debtor relief laws, or iv)make a general assignment for the benefit of its creditors, and Lender is entitled to rely, and has relied, upon this representation and warranty in the execution and delivery of this Agreement and all other documents and instruments executed and delivered by Lender in connection with this Agreement; iii)there are no taxes, assessments, or levies of any type whatsoever that can be imposed upon and collected from the Property arising out of or in connection with the ownership or operation of the Property, or any public improvements in the general vicinity of the Property other than normal and customary real estate taxes that are not yet due or payable; jjj)[Intentionally Deleted]; kkk)all insurance required by the Loan Agreement and Security Documents (the

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“Required Insurance”) is currently maintained on the Property and such policy contains the non-contributory New York Standard Mortgage Clause or its equivalent in favor of Wells Fargo Bank, National Association, as Trustee for Morgan Stanley Capital I Trust 2019-H6, Commercial Mortgage Pass-Through Certificates, Series 2019-H6 its successors and/or assigns, c/o Midland Loan Services, Master Servicer, 10851 Mastin, Suite 300, Overland Park, Kansas 66210, re: Loan Number 03-0316233; lll)all insurance premiums on the Required Insurance have been paid; mmm)the Required Insurance will continue in place after the date the Property is conveyed to Buyer; nnn)there is no pending or, to the best of Buyer’s knowledge after diligent inquiry and investigation, threatened action, suit, claim, litigation, or proceeding by an entity, individual, or governmental agency affecting the Property which would in any way constitute a lien, claim, or obligation of any kind against the Property and, to Buyer’s knowledge after diligent inquiry and investigation, threatened condemnation or similar proceedings or assessments affecting the Property or any part thereof nor, to Buyer’s knowledge, are any such assessments or proceedings contemplated by any governmental authority; ooo)to the best of Buyer’s knowledge after diligent inquiry and investigation, Buyer is not in breach of any law or regulation, or under any order of any court or federal, state, municipal or other governmental department, commission, board, bureau, agency, or instrumentality, wherever located, with respect to the Property or Buyer’s present use or operation of the Property, of which Buyer has received notice or otherwise has knowledge thereof; ppp)all representations and warranties made by Buyer and/or Guarantor herein or otherwise referred to in this Agreement shall be true as of the date of this Agreement and Closing and shall survive Closing; and qqq)Buyer hereby specifically ratifies and affirms that it has complied and will continue to comply with the “Single Purpose Entity” requirements set forth in any of the Loan Documents.  None of the representations, warranties, covenants, agreements and indemnities of Buyer in the Loan Documents or this Agreement shall be affected by any investigation by or on behalf of Lender or by any information Lender may have or obtain with respect thereto.

RELEASE OF SELLER AND ORIGINAL GUARANTOR.  Subject to Seller’s and Original Guarantor’s full performance of all of their respective obligations hereunder, Lender hereby releases Seller and Original Guarantor from all liability and obligations they may now or hereafter have under the Loan Documents accruing on or after the date hereof, except for rrr)any environmental or other damage to the Property accruing, occurring or relating to acts or omissions prior to the Closing; sss)obligations arising from the Contract of Sale; ttt)the payment of taxes accruing prior to the Closing; uuu)fraudulent or tortious conduct including, but not limited to, intentional misrepresentation of financial data presented to Lender; and vvv)any Obligations arising, accruing or relating to any time prior to the date hereof.

FURTHER ASSURANCES.  Buyer agrees to do any act or execute any additional documents requested by Lender as may reasonably be required by Lender to effectuate the purposes of this Agreement or to perfect or retain its perfected security interest in the Property or the first-lien priority of any such security interest.

INUREMENT; NO MODIFICATION OF CONTRACT OF SALE.  Subject to the qualification contained in Section 5 above, the provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors in interest and permitted assigns.  As between Buyer and Seller, the rights and obligations of Buyer and Seller under the Contract of Sale are not modified by this Agreement.

GOVERNING LAW/SEVERABILITY.  This Agreement shall in all respects be governed, construed, applied and enforced in accordance with the internal laws of the State of Texas.  In the event one or more provisions of the Agreement shall be invalid, illegal or unenforceable, the validity or enforceability of the remaining provisions shall not in any way be affected.

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NO LEGAL RESTRICTIONS ON PERFORMANCE.  The execution and delivery of this Agreement and compliance with the provisions hereof will not conflict with, or constitute a breach of or a default under any agreement or other instrument to which Buyer or Seller is a party or by which it is bound.

MODIFICATIONS.  Neither this Agreement, nor any term or provision hereof, may be changed, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of the change, discharge or termination is sought.

RELEASE AND WAIVER OF CLAIMS.  In consideration of Lender’s agreement to enter into this Agreement, Seller, and Buyer hereby agree as follows:

General Release and Waiver of Claims.  Seller, Original Guarantor, Buyer and Guarantor (collectively, the “Releasing Parties”) hereby jointly and severally release and forever discharge Lender and their respective successors, assigns, partners, directors, officers, agents, attorneys, administrators, trustees, subsidiaries, affiliates, beneficiaries, shareholders, representatives, agents, servants and employees from any and all rights, proceedings, agreements, contracts, judgments, debts, costs, expenses, promises, duties, claims, demands, cross-actions, controversies, causes of action, damages, rights, liabilities and obligations, at law or in equity whatsoever, known or unknown, suspected or unsuspected, choate or inchoate, whether past, present or future, now held, owned or possessed by, any Releasing Party, or which any Releasing Party may hereafter hold or claim to hold from the beginning of time to the date of this Agreement under common law or statutory right, known or unknown, arising, directly or indirectly, proximately or remotely, out of the Property, the Loan or any of the Loan Documents or any of the documents, instruments or any other transactions relating thereto or the transactions contemplated thereby including, without limitation, any and all rights, proceedings, agreements, contracts, judgments, debts, expenses, promises, duties, claims, demands, cross-actions, controversies, causes of action, damages, rights, liability and obligations whether based upon tort, fraud, breach of any duty of fair dealing, breach of confidence, undue influence, duress, economic coercion, conflict of interest, negligence, bad faith, intentional or negligent infliction of mental distress, tortuous interference with contractual relations, tortuous interference with corporate governance or prospective business advantage, breach of contract, deceptive trade practices, libel, slander, conspiracy or any claim for wrongfully accelerating the Note or wrongfully attempting to foreclose on any collateral relating to the Note, contract or usury, but only to the extent that the foregoing arise in connection with events which occurred prior to the date of this Agreement (collectively, the “Released Claims”).  Without limiting the generality of the foregoing, this release shall include the following matters:  (a) all aspects of this Agreement, the Note, the Security Instrument, and all other Loan Documents, and the negotiations between or on behalf of Buyer and/or Seller and Lender and the demands and requests by Lender of Seller or Buyer concerning this Agreement and the other Loan Documents, including, but not limited to, all meetings, telephone calls, correspondence and/or other contacts among or on behalf of Buyer and/or Seller and Lender incident to the attempts of said parties to reach an Agreement, or in connection with the Note, the Security Instrument or the other Loan Documents and the attempt(s) of Lender to collect the Note, and (b) the exercise by Lender of its rights under any of the Loan Documents or any of its rights under this Agreement, the Note, the Security Instrument or any other Loan Documents or at law or in equity.

This release is intended to release all liability of any character claimed for damages, of any type or nature, for injunctive or other relief, for attorneys’ fees, interest or any other liability whatsoever, whether statutory, or contractual or tort in character, or of any other nature or character, now or henceforth in any way related to any and all matters and dealings of any nature whatsoever asserted or assertable by or on behalf of any of the Releasing Parties against Lender, including, without limitation, any loss, cost or damage in connection with, or based upon, any breach of fiduciary duty, breach of any duty of fair dealing or good faith, breach of confidence, breach of

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funding commitment, breach of any other duty, breach of any statutory right, fraud, usury, undue influence, duress, economic coercion, conflict of interest, negligence, bad faith, malpractice, violations of the Racketeer Influenced and Corrupt Organizations Act, intentional or negligent infliction of mental distress, tortious interference with corporate or other governance or prospective business advantage, breach of contract, deceptive trade practices, libel, slander, conspiracy or any other cause of action, but only to the extent that the foregoing arise in connection with events which occurred prior to the date of execution hereof.

The Releasing Parties each understand and agree that this is a full, final and complete release and agree that this release may be pleaded as an absolute and final bar to any or all suit or suits pending or which may thereafter be filed or prosecuted by any of the Releasing Parties, or anyone claiming by, through or under and of the Releasing Parties, in respect of any of the matters released hereby, and that no recovery on account of the matters described herein may hereafter be had from anyone whomsoever, and that the consideration given for this release is no admission of liability and that no Releasing Party, nor those claiming under it will ever claim that it is.

Releases Binding on Affiliates of Releasing Parties.  The provisions, waivers and releases set forth are binding upon each Releasing Party and their respective agents, employees, representatives, officers, directors, general partners, limited partners, joint shareholders, beneficiaries, trustees, administrators, subsidiaries, affiliates, employees, servants and attorneys.

NOTICES.  All notices to Lender, Seller, or Buyer in connection with this Agreement shall be in writing and shall be addressed to the intended recipient thereof at its address as set forth below their signature on this Agreement (or at such other address as such party may designate in writing from time to time by notice given to Seller, Buyer or Lender).  Additionally, any addresses for notices to the borrower under any of the Loan Documents is supplemented to include Buyer at its address set forth below its signature on this Agreement.  All notices given to any party hereto shall be given and deemed effective in accordance with the applicable provisions of the Loan Documents.

BUYER’S SPECIFIC RATIFICATION, REAFFIRMATION AND CONFIRMATION OF LOAN DOCUMENTS.  Buyer agrees to perform each and every obligation under the Loan Documents in accordance with their respective terms and conditions, subject to the terms hereof.  It is expressly understood that Lender will hereafter require performance of any and all terms, conditions, or requirements of all documents and agreements executed by Buyer relating to the Loan Documents. Buyer acknowledges and agrees that any performance or non-performance of the Loan Documents prior to the Effective Date does not affect or diminish in any way the requirement of compliance with the Loan Documents.  Buyer further acknowledges and agrees that the validity or priority of the liens and security interests evidenced by any of the Security Documents are not diminished in any way by this Agreement and that the Security Instrument continues to be a first and superior mortgage lien and security interest on the Property.  The agreements and obligations of Buyer under the Loan Documents are hereby ratified, brought forward, renewed and extended until the Loan shall have been fully paid and discharged.  Buyer hereby ratifies, affirms, reaffirms, acknowledges, confirms and agrees that the Loan Documents represent the valid, binding and enforceable obligations of Buyer.  Lender and Buyer hereby agree that this Agreement and the Loan Documents, as applicable are in full force and effect so that nothing contained herein shall be construed as modifying in any manner the Loan Documents, except as expressly set forth herein. Buyer specifically extends the liens and security interests of the Security Documents and agrees that the Security Documents www)shall cover the Loan, and xxx)shall continue to be in full force and effect until the Loan is paid in full and all other obligations under the Loan Documents are fully performed and satisfied.  Buyer hereby agrees that this Agreement in no way acts as a diminishment, impairment, release or relinquishment of the liens, power, title, security interest

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and rights securing or guaranteeing payment of the Loan.  The Loan Agreement and the Security Documents are hereby renewed, extended, ratified, confirmed and carried forward by Buyer in all respects.  Nothing contained herein shall be construed as a waiver of any rights, remedies, or recourses available to Lender with respect to any default by Buyer under this Agreement or any of the Loan Documents, as applicable.  Except as otherwise provided herein, Lender hereby preserves all of its rights against Buyer, and all its collateral, including, without limitation, the Property.

INSURANCE.  Without limiting anything in this Agreement to the contrary, at all times Buyer shall comply with all terms of the Loan Documents, including without limitation, the insurance requirements of the Security Instrument and any other Loan Documents.  Although Lender may accept certain evidence of insurance for purposes of closing the loan assumption transaction contemplated hereby, Lender or its servicer may at any time and from time to time request additional insurance information from Buyer to ensure or monitor Buyer’s compliance with the insurance provisions of the Security Instrument and any other Loan Documents and may request that Buyer provide such coverages as Lender or its servicer may require consistent with the terms of the Loan Documents.  By entering into this Agreement, Lender specifically does not waive or modify any of the insurance requirements under the Loan Documents nor any of the remedies provided therein for failure to secure such required insurance coverage.

NO JURY TRIAL.  TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, SELLER, BUYER, ORIGINAL GUARANTOR, GUARANTOR AND LENDER HEREBY SEVERALLY, VOLUNTARILY, KNOWINGLY AND INTELLIGENTLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING UNDER THE NOTE, SECURITY INSTRUMENT OR ANY OTHER LOAN DOCUMENT OR CONCERNING THE OBLIGATIONS UNDER THE LOAN DOCUMENTS AND/OR WITH REGARD TO THE PROPERTY OR PERTAINING TO ANY TRANSACTION RELATED TO OR CONTEMPLATED IN THE SECURITY INSTRUMENT, REGARDLESS OF WHETHER SUCH ACTION OR PROCEEDING CONCERNS ANY CONTRACTUAL OR TORTIOUS OR OTHER CLAIM, SELLER AND BUYER ACKNOWLEDGE THAT THIS WAIVER OF JURY TRIAL IS A MATERIAL INDUCEMENT TO LENDER IN EXTENDING THE CREDIT DESCRIBED HEREIN, THAT LENDER WOULD NOT HAVE EXTENDED SUCH CREDIT WITHOUT THIS JURY TRIAL WAIVER, AND THE SELLER HAS BEEN REPRESENTED BY AN ATTORNEY OR HAS HAD AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY IN CONNECTION WITH THE SECURITY INSTRUMENT AND UNDERSTANDS THE LEGAL EFFECT OF THIS JURY TRIAL WAIVER.

HEADINGS.  The section headings contained herein are intended for convenience of reference and shall not be deemed to define, limit or describe the scope or intent of the respective provisions of this Agreement.

BANKRUPTCY OF BUYER.  Buyer as a material inducement to Lender to enter into this Agreement, and in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, by its execution hereof, covenants and agrees that in the event Buyer shall yyy)file any petition with any bankruptcy court or be the subject of any petition under the United States Bankruptcy Code (11 U.S.C. §101 et seq., the “Code”), zzz)file or be the subject of any petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future federal or state act or law relating to bankruptcy, insolvency, or other relief for debtors, aaaa)have sought or consented to or acquiesced in the appointment of any trustee, receiver, conservator, or liquidator, or bbbb)be the subject of any order, judgment, or decree entered by any court of competent jurisdiction approving a petition filed against such party for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief

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under any present or future federal or state act or law relating to bankruptcy, insolvency, or relief for debtors, Lender shall thereupon be entitled, and Buyer irrevocably consents, to the entry of an order by a bankruptcy court granting to Lender relief from any automatic stay imposed by Section 362 of the Code, or otherwise, on or against the exercise of the rights and remedies otherwise available to Lender as provided in the Loan Documents, this Agreement or as otherwise provided by law or in equity, and Buyer hereby irrevocably waives its right to object to, attempt to enjoin or otherwise interfere with such relief and the exercise and enforcement by Lender of its rights and remedies following entry of such order.  Without limiting the generality of the immediately preceding sentence, Buyer agrees that Lender will be entitled to and hereby consents to immediate relief from the automatic stay imposed by the Code to allow Lender to take any and all actions necessary, desirable or appropriate to enforce any rights Lender may have under the Loan Documents, including, but not limited to, the right to possession of the Property, collection of rents, and/or the commencement or continuation of an action to foreclose Lender’s liens and security interests.  Buyer further agrees that the filing of any petition for relief under the Code which postpones, prevents, delays, or otherwise hinders Lender’s efforts to collect the amounts due under the Note or to liquidate any of the collateral therefor shall be deemed to have been filed in bad faith and, therefore, shall be subject to prompt dismissal or conversion to a case under Chapter 7 of the Code upon motion therefor by Lender.  Further, Buyer agrees that it will not seek, apply for or cause the entry of any order enjoining, staying, or otherwise prohibiting or interfering with Lender’s obtaining an order granting relief from the automatic stay and enforcement of any rights which Lender may have under the Loan Documents, including, but not limited to, Lender’s right to possession of the Property, collection of rents and/or the commencement or continuation of an action to foreclose Lender’s liens and security interests under the Loan Documents.

COMPLIANCE WITH INTEREST LAW.  It is the intention of Seller, Original Guarantor, Buyer, Guarantor and Lender to conform strictly to the Interest Law (herein defined).  Accordingly, Buyer and Lender agree that any provisions contained in the Note or in any of the other Loan Documents to the contrary notwithstanding, the aggregate of all interest, or consideration constituting interest under the Interest Law, that is taken, reserved, contracted for, charged or received under the Note or under any of the aforesaid documents or otherwise in connection with this loan transaction shall under no circumstances exceed the maximum amount of interest allowed by the Interest Law.  If any excess interest is provided for in the Note or in any of the other Loan Documents, then i)the provisions of this paragraph shall govern and control, ii)neither Buyer nor Buyer’s successors or assigns shall be obligated to pay the amount of such interest to the extent that it is in excess of the maximum amount of interest allowed by the Interest Law, iii)any such excess shall be deemed a mistake and canceled automatically and, if theretofore paid, shall be credited against the Indebtedness (or if the Note shall have been paid in full, refunded to Buyer), and iv)the effective rate of interest shall be automatically subject to reduction to the Maximum Legal Rate of Interest (as hereinafter defined).  To the extent permitted by the Interest Law, all sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the Indebtedness shall be amortized, prorated, allocated and spread throughout the full term of the Note.  For purposes of the Note, “Interest Law” shall mean any present or future law of the State of Texas (meaning the internal laws of said state and not the laws of said state relating to choice of law), the United States of America or any other jurisdiction, which has application to the interest and other charges under the Note or under any of the other Loan Documents and to the classification of Buyer under such law.  For purposes of the Note, the “Maximum Legal Rate of Interest” shall mean the maximum effective contract rate of interest that Lender may from time to time, by agreement with the Buyer, legally charge Buyer and in regard to which Buyer would be prevented from successfully raising the claim or defense of usury under the Interest Law as now or hereafter construed by courts of appropriate jurisdiction.

TERMS GENERALLY.  cccc)Each definition contained in this or any other Article of this Agreement shall apply equally to both the singular and plural form of the term defined.  Each pronoun shall include the

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masculine, the feminine and neuter form, whichever is appropriate to the context.  The words “included”, “includes” and “including” shall each be deemed to be followed by the phrase, “without limitation.”  The words, “herein”, “hereby”, “hereof”, and “hereunder” shall each be deemed to refer to this entire Agreement and not to any particular Article or Section hereof.  Notwithstanding the foregoing, if any law is amended so as to broaden the meaning of any term defined in it, such broader meaning shall apply subsequent to the effective date of such amendment.  Where a defined term derives its meaning from a statutory reference, any regulatory definition is broader than the statutory reference and any reference or citation to a statute or regulation shall be deemed to include any amendments to that statute or regulation and judicial and administrative interpretations of it; and dddd)the following terms shall have the respective meanings ascribed to them in the Uniform Commercial Code as enacted and in force in the State of Texas:

accessions, accounts continuation statement, equipment, financing statement, fixtures, general intangibles, personal property, proceeds, security interest and security agreement.

SECURITIES ACT OF 1933.  Neither the Buyer nor any agent acting for it has offered the Note or any similar obligation of the Buyer for sale to or solicited any offers to buy the Note or any similar obligation of the Buyer from any person or party other than Lender, and neither the Buyer nor any agent acting for it will take any action which would subject the sale of the Note to the provisions of Section 5 of the Securities Act of 1933, as amended.

COMPLIANCE WITH ERISA.  As of the date of this Agreement, the Buyer maintains no employee benefit plans which require compliance with ERISA.  If at any time the Buyer shall institute any employee benefit plans, the Buyer shall at all times comply with the requirements of ERISA.

DOCUMENTATION REQUIREMENTS; SUFFICIENCY OF CONSENTS AND APPROVALS; FURNISHING INFORMATION.  Each written instrument required by this Agreement or any of the other Loan Documents to be furnished to Lender shall be duly executed by the person or party specified (or where no particular person or party is specified, by such person or party as Lender shall require), duly acknowledged where required by Lender and, in the case of affidavits and similar sworn instruments, duly sworn to and subscribed before a notary public duly authorized to act in the premises by governmental authority; shall be furnished to Lender in one or more copies as required by Lender; and shall in all respects be in form and substance reasonably satisfactory to Lender and its legal counsel.  All title policies, endorsements, surveys, appraisals, and other evidence, information or documentation required by Lender shall be in form and substance reasonably satisfactory to Lender and its legal counsel in all respects.  Seller, Original Guarantor, Buyer and Guarantor agree that Lender may furnish any financial or other information concerning any such parties heretofore or hereafter provided by such parties to Lender, to any prospective or actual purchaser of any participation or other interest in the Loan or to any prospective or actual purchaser of any securities issues or to be issued by Lender, or to any rating agencies.

EVIDENTIARY REQUIREMENTS.  Where evidence of the existence or non-existence of any circumstance or condition is required by this Agreement or any of the other Loan Documents to be furnished to Lender, such evidence shall in all respects be in form and substance reasonably satisfactory to Lender, and the duty to furnish such evidence shall not be considered satisfied until Lender shall have acknowledged in writing that it is satisfied therewith.

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NUMBER, ORDER AND CAPTIONS IMMATERIAL.  The numbering, order and captions or headings of the several articles, sections and paragraphs of this Agreement, the Note, the Security Instrument and the other Loan Documents are for convenience of reference only and shall not be considered in construing such instruments.

ENTIRE AGREEMENT.  THIS AGREEMENT AND THE LOAN DOCUMENTS CONTAIN THE ENTIRE AGREEMENT OF THE PARTIES HERETO WITH RESPECT TO THE ASSUMPTION OF THE LOAN BY BUYER AND LENDER’S CONSENT TO THE TRANSFER OF THE PROPERTY TO BUYER, AND SUPERSEDES ANY PRIOR WRITTEN OR ORAL AGREEMENTS BETWEEN THEM CONCERNING SAID SUBJECT MATTER.  THERE ARE NO REPRESENTATIONS, AGREEMENTS, ARRANGEMENTS, OR UNDERSTANDINGS, ORAL OR WRITTEN, BETWEEN AND AMONG THE PARTIES HERETO, RELATING TO THE SUBJECT MATTER CONTAINED IN THE AGREEMENT, WHICH ARE NOT FULLY EXPRESSED HEREIN OR IN THE LOAN DOCUMENTS.  THIS AGREEMENT MAY NOT BE MODIFIED OR AMENDED EXCEPT AS AN INSTRUMENT IN WRITING SIGNED BY ALL THE PARTIES HERETO.  THIS AGREEMENT MAY BE EXECUTED AND ACKNOWLEDGED IN MULTIPLE COUNTERPARTS FOR THE CONVENIENCE OF THE PARTIES, WHICH TOGETHER SHALL CONSTITUTE ONE AGREEMENT, AND THE COUNTERPART SIGNATURE AND ACKNOWLEDGMENT PAGES MAY BE DETACHED FROM THE VARIOUS COUNTERPARTS AND ATTACHED TO ONE COPY OF THIS AGREEMENT TO SIMPLIFY THE RECORDATION OF THIS AGREEMENT.  THE REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THIS AGREEMENT SHALL CONTINUE AND SURVIVE THE TRANSFER OF THE PROPERTY TO BUYER.

SECTION 1031 EXCHANGE.  If Buyer intends to acquire the Property and assume the Loan as part of a transaction which Buyer and Guarantor anticipate will comply with the provisions of Section 1031 of the Internal Revenue Code allowing the deferment of any taxable gain or loss as the exchange of like kind property then this section applies.  Buyer and Guarantor acknowledge that they have not relied on any advice, representations or statements of Lender or Midland Loan Services or their respective employees, attorneys or agents concerning the tax, legal or investment consequences of Buyer’s acquisition of the Property and the assumption of the Loan, including, without limiting the generality of the foregoing, whether the acquisition of the Property and assumption of the Loan will comply with the requirements of Section 1031 of the Internal Revenue Code or whether the Buyer’s and Guarantor’s investment in the Property is suitable for such compliance or for any other purpose, but instead Buyer and Guarantor have obtained such tax, legal and investment advice as to the effect of Buyer’s acquisition of the Property and assumption of the Loan from their own legal and other financial advisors.

CFIUS.  Buyer hereby represents and warrants to Lender that either (a) Borrower’s acquisition of the Property is not a Covered Transaction, or (b) Borrower has obtained CFIUS Approval with respect to Buyer’s acquisition of the Property.

During the term of the Loan, Buyer shall cause the holders of direct and/or indirect, legal and/or beneficial, interests in Buyer to) (a) within five (5) days of receipt of the same, notify Lender, and provide Lender with a copy of, any inquiry received from CFIUS (as defined herein) or any other governmental authority related to Buyer’s acquisition of the Property, (b) make any filing requested by CFIUS related to Buyer’s acquisition of the Property, (c) cooperate with, and fully respond to any inquiries received from, CFIUS or any governmental authority related to CFIUS’s review and/or investigation (the  “CFIUS Review”) related to Buyer’s acquisition of the Property, in each case within the time permitted by CFIUS or such governmental authority, as applicable, and

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(d) subject to the terms and conditions of the Security Instrument and Loan Agreement, take any mitigation measures requested by CFIUS and/or any Governmental Authority in connection with the CFIUS Review.

For purposes of this Section 34,

“CFIUS” shall mean (i) the Committee on Foreign Investment in the United States first established pursuant to Executive Order 11858 of May 7, 1975, and (ii) any replacement or successor thereto, including, without limitation, pursuant to FIRRMA.

“CFIUS Approval” shall mean (a) written confirmation provided by CFIUS that the transaction described in this Section (the “Subject Transaction”) is not a Covered Transaction under the DPA, (b) written confirmation provided by CFIUS that it has completed its review or, if applicable, investigation of the matter in question under the DPA, and determined that there are no unresolved national security concerns with respect to the Subject Transaction or (c) CFIUS shall have sent a report to the President of the United States requesting the President’s decision under the DPA, and the President shall have announced a decision not to take any action to suspend, prohibit or place any limitations on the Subject Transaction.

“CFIUS Review” shall mean CFIUS’s review and/or investigation, including any inquiries received from, CFIUS or any governmental authority related to CFIUS’s review and/or investigation.

“Covered Transaction” shall have the meaning set forth in the DPA.

“DPA” shall mean the Defense Production Act of 1950, 50 U.S.C. § 4565, as amended by FIRRMA, H. R. 5515-538 (as the same may have been or may hereafter be amended, restated, supplemented or otherwise modified), all laws and regulations related thereto and all mandates, requirements, powers and similar requirements imposed or exercised thereunder (including, without limitation, any of the foregoing implemented by and/or otherwise relating to CFIUS), as the foregoing may be amended from time to time, any successor statute or statutes and all rules and regulations from time to time promulgated in connection with the foregoing.

“FIRRMA” shall mean the Foreign Investment Risk Review Modernization Act of 2018.

“Governmental Authority” shall mean any court, board, agency, commission, office or authority of any nature whatsoever or any governmental unit (federal, state, county, district, municipal, city, foreign or otherwise) whether now or hereafter in existence.

“Subject Transaction” shall mean the transaction described in this Section.

OTHER AMENDMENTS.  The Loan Agreement is hereby amended as follows:

Section 1.1 is hereby amended by replacing the reference to “of even date herewith” in the definition of “Cash Management Agreement” with “dated on or about January 8, 2020”;

Section 1.1 is hereby amended by replacing the reference to “dated as of the date hereof” in the definition of “Environmental Indemnity” with “dated on or about January 8, 2020”;

Section 1.1 is hereby amended by replacing the definition of “Franchise Agreement” with “”Franchise Agreement” shall mean that certain Fairfield Inn & Suites By Marriott Relicensing Franchise Agreement, dated on or about January 8, 2020 between LF3 LUBBOCK EXPO TRS, LLC, as

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licensee, and Franchisor, as licensor, and that certain Owner Agreement between Franchisor, LF3 LUBBOCK EXPO, LLC, as modified by the any comfort letter with Franchisor, licensor and Lender, together with any permitted amendment thereto or permitted replacement thereof.”;

Section 1.1 is hereby amended by deleting the definition of “Guarantor” and replacing it with the following: ““Guarantor” shall mean individually and collectively, LODGING FUND REIT III, INC., a Maryland corporation, and LODGING FUND REIT III OP, LP, a Delaware limited partnership.”;

Section 1.1 is hereby amended by replacing the reference to “of even date herewith” in the definition of “Guaranty” with “dated on or about January 8, 2020”;

Section 1.1. is hereby amended by adding the following sentence to the end of the definition of “Lease”: “Notwithstanding the foregoing, the Operating Lease (as defined in Section 4.3) shall be excluded from the definition of “Lease”.”

Section 1.1 is hereby amended by deleting the definition of “Manager” and replacing it with the following: “”Manager” shall mean NHS LLC d/b/a National Hospitality Services, or any other manager approved by Lender and the Rating Agencies in accordance with the terms and conditions of the Loan Documents.”;

Section 3.1.24(dd) is hereby amended by adding the following at the beginning “Except for the Guaranty executed in connection with the Loan,”;

Section 3.1.29 is hereby amended by deleting existing Section 3.1.29 and replacing it with: “3.1.29 Organizational Status.  Borrowers’ exact legal names are LF3 LUBBOCK EXPO LLC and LF3 LUBBOCK EXPO TRS, LLC.  Each Borrower is a Delaware limited liability company.  The organizational ID of LF3 LUBBOCK EXPO LLC is 7639754.  The organizational ID of LF3 LUBBOCK EXPO TRS, LLC is 7639759.”;

Section 3.1.46(p) is hereby amended by adding the following at the beginning “Except tax returns filed with Guarantors, each Borrower,”;

Section 4.1.7(a) is hereby amended by deleting the phrase “and the requirements of Regulation AB,”;

Section 4.1.7(b) is hereby amended by (i) deleting “fifteen (15) days” and replacing it with “thirty (30) days”, and (ii) deleting the phrase “cash basis” and replacing it with “accrual basis”;

Section 4.1.7(d) is hereby amended by deleting the phrase “rent roll” and replacing it with “STAR Report”;

Section 4.1.23 is hereby amended by deleting existing 4.1.23 and replacing it with: “4.1.23 Required Repairs.  Borrower shall perform the repairs and other work at the Property as set forth in the Property Condition Report dated September 12, 2019, from Partner Engineering and Science Inc. delivered by Borrower to Lender in connection with the assumption of the Loan and pertaining to mechanical and electrical systems repairs, site improvements and structural frame repairs totaling approximately $22,110.00 (such repairs and other work referred to as the “Required Repairs”) and Borrower shall complete the Required Repairs on or before April 1, 2020.”;

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Section 6.5.1 is hereby amended by deleting the first sentence of Section 6.5.1 and replacing it with: “Borrower shall deposit with Lender on each Monthly Payment Date, an amount equal to $10,808.06 (as may be readjusted and determined by Lender based on 1/12th of an amount equal to four percent (4%) of the annual Gross Revenue for the Property as determined by Lender) for Capital Expenditures and repair and replacement of the furniture, fixtures and equipment at or in or used in the operation of the Property (the “FF&E Work”) that may be incurred following the date hereof, which amounts shall be transferred into an Account established by or on behalf of Lender to hold such funds (the FF&E Reserve Account”).”; and

Schedule III Organizational Chart is deleted its entirety and replaced with the Organizational Chart provided to Lender in connection with the assumption of the Loan and attached to Lender’s conditional approval;

Anti-Money Laundering/International Trade Law Compliance.  Section 3 of the Loan Agreement is hereby amended by adding new subsection 3.1.47 thereof:

“3.1.47 No Covered Entity is a Sanctioned Person/Anti-Money Laundering.  No Covered Entity, either in its own right or through any third party, (a) has any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person in violation of any Anti-Terrorism Law; (b) does business in or with, or derives any of its income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law; or (c) engages in any dealings or transactions prohibited by any Anti-Terrorism Law. No Covered Entity, either in its own right or through any third party, will (a) have any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person in violation of any Anti-Terrorism Law; (b) do business in or with, or derive any of its income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law; (c) engage in any dealings or transactions prohibited by any Anti-Terrorism Law or (d) use the Loan proceeds to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law.  The funds used to repay the Obligations will not be derived from any unlawful activity.  Each Covered Entity shall comply with all Anti-Terrorism Laws.  Borrower shall promptly notify Lender in writing upon the occurrence of a Reportable Compliance Event.

As used in this Section 3.1.47 the following terms shall have the following meanings:

(i)         “Anti-Terrorism Laws” shall mean any Laws relating to terrorism, trade sanctions programs and embargoes, import/export licensing, money laundering or bribery, and any regulation, order, or directive promulgated, issued or enforced pursuant to such Laws, all as amended, supplemented or replaced from time to time.

(ii)        “Covered Entity” shall mean (i) each Borrower, each of Borrower’s affiliates, the Guarantor and all pledgers of Property and (ii) each Person that, directly or indirectly, is in control of a Person described in clause (i) above.  For purposes of this definition, control of a Person shall mean the direct or indirect (x) ownership of, or power to vote, 25% or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for such Person, or (y) power to direct or cause the direction of the management and policies of such Person whether by ownership of equity interests, contract or otherwise.

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(iii)       “Law”  shall mean any law(s) (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling, order, executive order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award of or any settlement arrangement, by agreement, consent or otherwise, with any Governmental Authority, foreign or domestic.

(iv)       “Reportable Compliance Event” shall mean that any Covered Entity becomes a Sanctioned Person, or is charged by indictment, criminal complaint or similar charging instrument, arraigned, or custodially detained in connection with any Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law, or has knowledge of facts or circumstances to the effect that it is reasonably likely that any aspect of its operations is in actual or probable violation of any Anti-Terrorism Law.

(v)        “Sanctioned Country” shall mean a country subject to a sanctions program maintained under any Anti-Terrorism Law.”

(vi)       “Sanctioned Person” shall mean any individual person, group, regime, entity or thing listed or otherwise recognized as a specially designated, prohibited, sanctioned or debarred person, group, regime, entity or thing, or subject to any limitations or prohibitions (including but not limited to the blocking of property or rejection of transactions), under any Anti-Terrorism Law.”

Operating Lease.  Article 4 of the Loan Agreement is hereby amended by adding the following new Section 4.3 thereof:

“Section 4.3   Operating Lease Covenants.

Borrower represents, covenants and warrants that it is the express intent of Fee Owner and Operating Lessee that the Operating Lease constitute a lease under applicable real property laws and laws governing bankruptcy, insolvency and creditors’ rights generally, and that the sole interest of Operating Lessee in the Property is as tenant under the Operating Lease.  In the event that it shall be determined that the Operating Lease is not a lease under applicable real property laws and laws governing bankruptcy, insolvency and creditors’ rights generally, and that the interest of the Operating Lessee in the Property is other than that of tenant under an Operating Lease, Borrower hereby covenants and agrees that it shall cause Operating Lessee’s interest in the Property, however characterized, to continue to be subject and subordinate to the lien of the Mortgage.

Without Lender’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed), Borrower shall not (a) surrender, terminate or cancel the Operating Lease, (b) reduce or consent to the reduction of the term of the Operating Lease, (c) increase or consent to the increase of the amount of any charges under the Operating Lease, (d) modify, change, supplement, alter or amend the Operating Lease or waive or release any of Borrower’s rights and remedies under the Operating Lease; or (e) waive, excuse, condone or in any way release or discharge the Operating Lessee of or from Operating Lessee’s material obligations, covenants and/or conditions under the Operating Lease.

Borrower shall, from time to time upon written request from Lender, deliver to Lender such certificates of estoppel with respect to compliance by Borrower with the terms of the Operating Lease as may be requested by Lender (which request shall not be made more than once in any twelve (12) month period in any calendar year prior to the occurrence and continuance of an Event of Default).

Borrower hereby assigns to Lender, as further security for the payment and performance of the Debt and observance of the terms, covenants and conditions of the Loan Documents all of the rights, privileges and

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prerogatives of Fee Owner, as landlord and Operating Lessee, as tenant, as applicable, under the Operating Lease following the occurrence and during the continuance of an Event of Default, to surrender the leasehold estate created by the Operating Lease, and any surrender of the leasehold estate created by the Operating Lease or termination, cancellation, modification, change, supplement, alteration or amendment of the Operating Lease not permitted pursuant to the foregoing terms shall be void and of no force or effect.

(i)  If at any time after the occurrence and during the continuance of an Event of Default, Operating Lessee shall default in the performance or observance of any term, covenant or condition of the Operating Lease to be performed or observed by Operating Lessee as tenant thereunder, then, without limiting the generality of the other provisions of this Agreement, and without waiving or releasing Operating Lessee from any of its obligations, Lender shall have the right, but shall be under no obligation, to pay any sums and to perform any act or take any action as may be reasonably appropriate to cause all of the terms, covenants and conditions of the Operating Lease on the part of Operating Lessee, as tenant thereunder, to be performed or observed or to be promptly performed or observed on behalf of Operating Lessee, to the end that the rights of Operating Lessee in, to and under the Operating Lease shall be kept unimpaired and free from default.  If Lender shall make any payment or perform any act or take action in accordance with the preceding sentence, Lender will promptly notify Operating Lessee thereof in writing.  In any such event, upon the occurrence and during the continuance of an Event of Default and subject to the rights of tenants, subtenants and other occupants under the Leases, transient hotel guests and visitors, the Manager under the Management Agreement, Lender and any Person designated by Lender shall have, and are hereby granted, the right to enter upon the Property during normal business hours for the purpose of taking any such action.  If Fee Owner shall deliver to Lender a copy of any written notice of default sent by Fee Owner to Operating Lessee, as tenant under the Operating Lease, such written notice shall constitute full protection to Lender for any action taken or omitted to be taken by Lender, in good faith, in reliance thereon.

(ii)        If at any time after the occurrence and during the continuance of an Event of Default, Fee Owner shall default in the performance or observance of any material term, covenant or condition of the Operating Lease to be performed or observed by Fee Owner, as landlord thereunder, then, without limiting the generality of the other provisions of this Agreement, and without waiving or releasing Fee Owner from any of its obligations, Lender shall have the right, but shall be under no obligation, to pay any sums and to perform any act or take any action as may be appropriate to cause all of the material terms, covenants and conditions of the Operating Lease on the part of Fee Owner, as landlord thereunder, to be performed or observed or to be promptly performed or observed on behalf of Fee Owner, to the end that the rights of Fee Owner in, to and under the Operating Lease shall be kept unimpaired and free from default.  If Lender shall make any payment or perform any act or take action in accordance with the preceding sentence, Lender will promptly notify Fee Owner thereof in writing.  In any such event, upon the occurrence and during the continuance of an Event of Default, subject to the rights of tenants, subtenants and other occupants under the Leases, transient hotel guests and visitors, the Manager under the Management Agreement, Lender and any Person designated by Lender shall have, and are hereby granted, the right to enter upon the Property during normal business hours for the purpose of taking any such action.  If Operating Lessee shall deliver to Lender a copy of any written notice of default sent by Operating Lessee to Fee Owner, as landlord under the Operating Lease, such written notice shall constitute full protection to Lender for any action taken or omitted to be taken by Lender, in good faith, in reliance thereon.

In the event of the bankruptcy, reorganization or insolvency of any Borrower, any attempt by any Borrower to surrender its leasehold estate, or any portion thereof, under the Operating Lease, or any attempt under such circumstances by any Borrower to terminate, cancel or acquiesce in the rejection of the Operating Lease without the consent of Lender shall be null and void.  Borrower hereby expressly releases, assigns, relinquishes and surrenders unto Lender all of its right, power and authority to terminate, cancel, acquiesce in the rejection of,

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modify, change, supplement, alter or amend the Operating Lease in any respect, either orally or in writing, in the event of the bankruptcy, reorganization or insolvency of any Borrower, and any attempt on the part of any Borrower to exercise any such right without the consent of Lender shall be null and void.  Each Borrower hereby irrevocably appoints Lender as its true and lawful attorney-in-fact which power of attorney shall be coupled with an interest, for the purpose of exercising its rights pursuant to Section 365(h) of the Bankruptcy Code or any successor to such Section (i) to obtain for the benefit of each Borrower or Lender a right to possession or statutory term of years derived from or incident to the Operating Lease, or (ii) to treat the Operating Lease as terminated.

Notwithstanding the rejection of the Operating Lease by any Borrower, as debtor in possession, or by a trustee for any Borrower pursuant to Section 365 of the Bankruptcy Code, neither the lien of the Mortgage nor Lender’s rights with respect to the Operating Lease shall be affected or impaired by reason thereof.  In the event that the Operating Lessee shall remain in possession of the Property following a rejection of the Operating Lease, as debtor in possession, or by a trustee for Operating Lessee, Operating Lessee agrees that it shall not exercise any right of offset against the rent payable under the Operating Lease, pursuant to Section 365(h)(2) of the Bankruptcy Code, without the prior consent of Lender thereto.

Without limiting any other provisions contained herein, Operating Lessee hereby agrees that all of its right, title and interest under the Operating Lease (and otherwise with respect to the Property) is subject and subordinate to the Loan and Lender’s security interest in Fee Owner’s right, title and interest in and to the Property.  In connection therewith, Operating Lessee acknowledges and agrees that in the event Lender shall succeed to the interests of Fee Owner under the Operating Lease, Lender shall have the absolute right (without regard to the enforceability or perfection of Lender’s security interest in Operating Lessee’s leasehold estate) to terminate the Operating Lease and in such event (i) the Operating Lease and all of Operating Lessee’s right, title and interest thereunder shall automatically terminate and (ii) Operating Lessee shall not in any way oppose, impede, obstruct, challenge, hinder, frustrate, enjoin or otherwise interfere with Lender’s exercise of any such termination right.  Furthermore, in connection with any termination of the Operating Lease as referenced in this paragraph or otherwise upon the exercise of Lender’s remedies hereunder, Operating Lessee shall reasonably cooperate with Lender to transition the operations of the hotel to Lender.

Fee Owner is the owner and lessor of landlord’s interest in the Operating Lease and Operating Lessee is the owner of the leasehold interest in the Operating Lease.  The Operating Lease is in full force and effect and there are no defaults thereunder by either party and there are no conditions that would constitute defaults thereunder.  There has been no prior sale, transfer or assignment, hypothecation or pledge of the Operating Lease or of the rent thereunder which remains outstanding as of the closing of the Loan.  Neither Fee Owner nor the Operating Lessee has assigned the Operating Lease or sublet all or any portion of the premises demised thereby other than pursuant to a Lease.  Operating Lessee has no right or option pursuant to the Operating Lease or otherwise to purchase all or any part of the leased premises or the building of which the leased premised are a part.

It shall be an Event of Default under Section 10.1 of this Agreement if (A) a default has occurred and continues beyond any applicable cure period under the Operating Lease, (B) the Operating Lease is amended, modified or terminated in violation of the terms of this Agreement or (C) Borrower fails to enforce any of the terms and provisions of the Operating Lease.

As used in this Section 4.3 and throughout this Agreement, including, without limitation Section 8.2(a)(i) of this Agreement, the following terms shall have the following meanings:

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“Fee Owner” shall mean LF3 Lubbock, Expo, LLC, a Delaware limited liability company.

“Operating Lease”  shall mean that certain Lease Agreement between Fee Owner, as landlord, and Operating Lessee, as tenant, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time with Lender’s written consent.

“Operating Lessee” shall mean LF3 Lubbock Expo TRS, LLC, a Delaware limited liability company.

Permitted Transfers.  Section 8.2(a)(i) of the Loan Agreement is hereby amended by adding the following at the end of Section 8.2(a)(i):

“So long as Fee Owner (as defined in Section 4.3) owns the Property, Operating Lessee (as defined in Section 4.3) owns the leasehold interest in the Property pursuant to the Operating Lease (as defined in Section 4.3), and Lodging Fund REIT III, Inc., a Maryland corporation (the "REIT") indirectly owns and indirectly controls Borrower, notwithstanding any provision in any Loan Document to the contrary, the following transfers shall constitute Permitted Transfers (subject only to any conditions set forth below) and shall not require Lender’s consent provided that no Default of Event of Default shall have occurred and remain uncured: the issuance sale, conveyance, transfer or other disposition (each, a "REIT Share Transfer") of any shares of common stock (the "REIT Shares") in the REIT so long as (A) at the time of the REIT Share Transfer, the REIT Shares are issued or traded in substantially the same method and manner as they are currently issued and traded as of the Assumption Effective Date, (B) the REIT Share Transfer does not cause a violation of any federal or state securities laws, (C) the REIT Share Transfer does not result in or cause a Change of Control and (D) to the extent any transferee owns twenty percent (20%) or more of the direct or indirect interest in Borrower immediately following such Transfer (provided such transferee did not own 20% or more of the direct or indirect ownership interest in Borrower as of December 30, 2019, Borrower shall , prior to such Transfer, deliver, at Borrower’s sole cost and expense, customary searches (credit, judgment, lien, etc.,) acceptable to Lender with respect to such transferee; (i) The foregoing shall not constitute and should in no manner be deemed to constitute Lender's consent to the filing of an initial public offering of the REIT Shares under a Form S-11 Registration Statement or otherwise in which the REIT Shares are listed on a nationally recognized stock exchange or are to be traded over the counter and listed in the National Association of Securities Dealers Automatic Quotations (a "Public Offering").  Borrower agrees not to conduct a Public Offering of the REIT Shares or any other securities of the REIT without first obtaining the Lender's prior written consent. For purposes of this Section 8.2(a), in addition to any other changes of Control contemplated by the Loan Documents, (A) a "Change of Control" shall also occur if: (i) the REIT reduces its ownership interest in Lodging Fund REIT III OP, LP (“OP”) and Borrower below 51% or is no longer the sole general partner and in Control of the OP, (ii) the OP is no longer the sole member of Fee Borrower and the sole shareholder of Lodging Fund REIT III TRS, Inc., a Delaware corporation ("TRS"), (iii) TRS is no longer the sole member of Operating Lessee, (iv) the REIT and OP are no longer the Guarantors of the Loan, (v) one Person or group of affiliated Persons acquires more than 49% of the REIT Shares in one or a series of transactions, (vi) Legendary Capital, LLC, a North Dakota limited liability company ("Advisor") is no longer the Advisor to the REIT; and (B) the Assumption Effective Date shall mean the date of the Consent, Amendment and Assumption Agreement between Fee Owner, Operating Lessee, OP, REIT, Lender, and certain other original borrower and original guarantor parties;”

21

It shall be an Event of Default under Section 10.1 of this Agreement if, within 5 business days of the closing of any loan assumption, Borrower fails to deliver to Lender the Franchise Agreement and comfort letter approved by Lender in connection with such loan assumption.

[Signatures and acknowledgments begin on the following page]

22

SELLER:
TREEMONT CAPITAL PARTNERS IV, LP,
a Texas limited partnership
By:	Treemont Capital Partners IV GP, LLC,
	a Texas limited liability company,
	its general partner
By:	/s/ Philip A. McRae
Name:	Philip A. McRae
Title:	Manager

Notice Address:

1415 South Voss #110-94

Houston, Texas  77057

STATE OF TEXAS       )

                                       )   ss.

COUNTY OF HARRIS            )

This instrument was acknowledged before me, the undersigned Notary Public, on         12/26    , 2019 by Philip A. McRae, Manager of Treemont Capital Partners IV GP, LLC, a Texas limited liability company, general partner of Treemont Capital Partners IV, LP, a Texas limited partnership.

/s/ Kay Street

Notary Public, State of Texas

Name: Sharon K. Street

Commission Expires: 12-04-2021

Notary ID 1901703

23

ORIGINAL GUARANTOR:

/s/ Philip A. McRae

PHILIP A. MCRAE, an individual

Notice Address:

1415 South Voss #110-94

Houston, Texas  77057

STATE OF TEXAS               )

)  ss.

COUNTY OF HARRIS          )

This instrument was acknowledged before me, the undersigned Notary Public, on        ___12-26 ____, 2019 by Philip A. McRae, an individual.

/s/ Kay Street

Notary Public, State of Texas

Name: Sharon K. Street

Commission Expires: 12-04-2021

Notary ID 1901703

24

BUYER:

LF3 LUBBOCK EXPO, LLC,

a Delaware limited liability company

By: Lodging Fund REIT III OP, LP, its sole member

By:  Lodging Fund REIT III, Inc.

Its:   general partner

By: /s/ Katie Cox

Name:  Katie Cox

Its:        Chief Financial Officer

Notice Address:

1635 – 43rd Street S, Suite 205

Fargo, ND 58103

Attention:  Katie Cox

STATE OF NORTH DAKOTA         )

)  ss.

COUNTY OF CASS                          )

This instrument was acknowledged before me, the undersigned Notary Public, on December 20 , 20 19 , by Katie Cox, Chief Financial Officer of Lodging Fund REIT III, Inc., the general partner of Lodging Fund REIT III OP, LP, the sole member of LF3 Lubbock Expo, LLC, a Delaware limited liability company.

/s/ Jennifer Moum

Notary Public, State of North Dakota

Name: Jennifer Moum

Commission Expires: April 25, 2022

25

BUYER:

LF3 LUBBOCK EXPO TRS, LLC,

a Delaware limited liability company

By:  Lodging Fund REIT III TRS, Inc.

Its:  Sole Member

By: /s/ Katie Cox

Name:  Katie Cox

Its:       Chief Financial Officer

Notice Address:

1635 – 43rd Street S, Suite 205

Fargo, ND 58103

Attention:  Katie Cox

STATE OF NORTH DAKOTA         )

)  ss.

COUNTY OF CASS                          )

This instrument was acknowledged before me, the undersigned Notary Public, on December 20 , 20 19 , by Katie Cox, Chief Financial Officer of Lodging Fund REIT III TRS, Inc., the sole member of LF3 Lubbock Expo TRS, LLC, a Delaware limited liability company.

/s/ Jennifer Moum

Notary Public, State of North Dakota

Name: Jennifer Moum

Commission Expires: April 25, 2022

26

GUARANTOR:
LODGING FUND REIT III, INC., a Maryland corporation,
By:	/s/ Katie Cox
Name:	Katie Cox
Title:	Chief Financial Officer

Notice Address:

1635 – 43rd Street S, Suite 205

Fargo, ND 58103

Attention:  Katie Cox

STATE OF NORTH DAKOTA         )

)  ss.

COUNTY OF CASS                          )

This instrument was acknowledged before me, the undersigned Notary Public, on December 20 , 20 19  by Katie Cox, Chief Financial Officer of LODGING FUND REIT III, INC., a Maryland corporation.

/s/ Jennifer Moum

Notary Public, State of North Dakota

Name: Jennifer Moum

Commission Expires: April 25, 2022

27

GUARANTOR:
LODGING FUND REIT III OP, LP, a Delaware limited partnership
By:	Lodging Fund REIT III, Inc., its General Partner
By:	/s/ Katie Cox
Name:	Katie Cox
Title:	Chief Financial Officer

Notice Address:

1635 – 43rd Street S, Suite 205

Fargo, ND 58103

Attention:  Katie Cox

STATE OF NORTH DAKOTA         )

)  ss.

COUNTY OF CASS                          )

This instrument was acknowledged before me, the undersigned Notary Public, on December 20 , 20 19  by Katie Cox, Chief Financial Officer of Lodging Fund REIT III, Inc., general partner of LODGING FUND REIT III, OP, LP, a Delaware limited partnership.

/s/ Jennifer Moum

Notary Public, State of North Dakota

Name: Jennifer Moum

Commission Expires: April 25, 2022

28

Article I. LENDER:

WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE FOR MORGAN STANLEY CAPITAL I TRUST 2019-H6, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2019-H6,

By:    Midland Loan Services, a Division of PNC Bank,

National Association, its Attorney-in-Fact

By:  /s/Alan H. Torgler

Name: Alan H. Torgler

Title: Vice President / Servicing Officer

Notice Address:

c/o Midland Loan Services

10851 Mastin, Suite 300

Overland Park, Kansas 66210

Attention:  Tad Janssen

Facsimile:  (913) 253-9001

STATE OF KANSAS             )

 )  ss.

COUNTY OF JOHNSON      )

On this 30th  day of December , 20 19 , before me, a Notary Public in and for the State of Kansas, personally appeared Alan H. Torgler , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed this instrument, on oath stated that s/he was authorized to execute the instrument, and acknowledged that s/he is the      Vice President     of Midland Loan Services, a Division of PNC Bank, National Association, in its capacity as Attorney-in-Fact for Wells Fargo Bank, National Association, as Trustee for Morgan Stanley Capital I Trust 2019-H6, Commercial Mortgage Pass-Through Certificates, Series 2019-H6, to be the free and voluntary act and deed of said company for the uses and purposes mentioned in the instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written.

(seal)	/s/ Virginia L. Umscheid
	NOTARY PUBLIC in and for the
	State of Kansas
	Print Name: Virginia L. Umscheid
	My Commission Expires: 05-07-2020

29

EXHIBIT A

DESCRIPTION OF PROPERTY

30

EX-10.55.2

EXHIBIT 10.55.2

PROMISSORY NOTE

$9,500,000.00 Lubbock, Texas April 4, 2019

FOR  VALUE  RECEIVED,  TREEMONT  CAPITAL  PARTNERS   IV,  LP, a Texas limited partnership, having its principal place of business at 1415 South Voss #110-94, Houston, Texas 77057, as maker ("Borrower"), hereby unconditionally promises to pay to the order of STARWOOD MORTGAGE CAPITAL LLC, a Delaware limited liability company, as lender, having an address at 1601 Washington Avenue, Suite 800, Miami Beach, Florida 33139 (together with its successors and assigns, "Lender"), or at such other place as the holder hereof may from time to time designate in writing, the principal sum of NINE MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($9,500,000.00), or so much thereof as is advanced pursuant to that certain Loan Agreement dated the date hereof between Borrower and Lender (as the same may be amended, modified, supplemented, replaced or otherwise modified from time to time, the "Loan Agreement"), in lawful money of the United States of America, with interest thereon to be computed from the date of this Promissory Note (this "Note") at the Interest Rate (as defined in the Loan Agreement), and to be paid in accordance with the terms of this Note and the Loan Agreement. All capitalized terms not defined herein shall have the respective meanings set forth in the Loan Agreement.

ARTICLE 1: PAYMENT TERMS

Borrower agrees to pay the principal sum of this Note and interest on the unpaid principal sum of this Note and all other amounts due under the Loan Agreement and the other Loan Documents from time to time outstanding, at the rates and at the times specified in the Loan Agreement, and the outstanding balance of the principal sum of this Note and all accrued and unpaid interest thereon and all other amounts due under the Loan Agreement and the other Loan Documents shall be due and payable on the Maturity Date.

ARTICLE 2: DEFAULT AND ACCELERATION

The Debt shall without notice become immediately due and payable at the option of Lender upon the happening of any Event of Default (after expiration of any applicable notice or cure periods expressly set forth in the Loan Documents as part of such Event of Default).

ARTICLE 3: LOAN DOCUMENTS

This Note is secured by the Mortgage and the other Loan Documents. All of the terms, covenants and conditions contained in the Loan Agreement, the Mortgage and the other Loan Documents are hereby made part of this Note to the same extent and with the same force as if they were fully set forth herein. In the event of a conflict or inconsistency between the terms of this Note and the Loan Agreement, the terms and provisions of the Loan Agreement shall govern.

ARTICLE 4: SAVINGS CLAUSE

Notwithstanding anything to the contrary contained herein, (a) all agreements and communications between Borrower and Lender are hereby and shall automatically be limited so that, after taking into account all amounts deemed to constitute interest, the interest contracted for, charged or received by Lender shall never exceed the Maximum Legal Rate, (b) in calculating whether any interest exceeds the Maximum Legal Rate, all such interest shall be amortized, prorated, allocated and spread over the full amount and term of all principal indebtedness of Borrower to Lender, and (c) if through any contingency or event, Lender receives or is deemed to receive interest in excess of the Maximum Legal Rate, any such excess shall be deemed to have been applied toward the payment of the principal of any and all then outstanding indebtedness of Borrower to Lender, or if there is no such indebtedness, shall immediately be returned to Borrower.

ARTICLE 5: NO ORAL CHANGE

This Note may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party(ies) against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

ARTICLE 6:   WAIVERS

Borrower and all others who may become liable for the payment of all or any part of the Debt do hereby jointly and severally waive presentment and demand for payment, notice of dishonor, notice of intention to accelerate, notice of acceleration, protest and notice of protest and non-payment and all other notices of any kind. No release of any security for the Debt or extension of time for payment of this Note or any installment hereof, and no alteration, amendment or waiver of any provision of this Note, the Loan Agreement or the other Loan Documents made by agreement between Lender and any other Person shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Borrower or any other Person who may become liable for the payment of all or any part of the Debt under this Note, the Loan Agreement or the other Loan Documents. No notice to or demand on Borrower shall be deemed to be a waiver of the obligation of Borrower or of the right of Lender to take further action without further notice or demand as provided for in this Note, the Loan Agreement or the other Loan Documents. If Borrower is a partnership or limited liability company, the agreements herein contained shall remain in force and be applicable, notwithstanding any changes in the individuals or entities comprising the partnership or limited liability company, and the term "Borrower," as used herein, shall include any alternate or successor partnership or limited liability company, but any predecessor partnership or limited liability company and its partners or members shall not thereby be released from any liability. If Borrower is  a corporation, the agreements contained herein shall remain in full force and be applicable, notwithstanding any changes in the shareholders comprising, or the officers and  directors relating to, the corporation, and the term "Borrower," as used herein, shall include any  alternative or successor corporation, but any predecessor corporation shall not be relieved of liability hereunder. (Nothing in the foregoing two sentences shall be construed as a consent to,

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or a waiver of, any prohibition or restriction on transfers of interests in such partnership, limited liability company or corporation which may be set forth in the Loan Agreement, the Mortgage or any other Loan Document.)

ARTICLE 7: TRANSFER

Upon the transfer of this Note by Lender, Borrower hereby waiving notice of any such transfer, Lender may deliver all the collateral mortgaged, granted, pledged or assigned pursuant to the Loan Documents, or any part thereof, to the transferee who shall thereupon become vested with all the rights herein or under applicable law given to Lender with respect thereto, and Lender shall thereafter forever be relieved and fully discharged from any liability or responsibility in the matter; but Lender shall retain all rights hereby given to it with respect to any liabilities and the collateral not so transferred.

ARTICLE 8: EXCULPATION

The provisions of Section 11.22 of the Loan Agreement are hereby incorporated by reference into this Note to the same extent and with the same force as if fully set forth herein.

ARTICLE 9: GOVERNING LAW

THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST BORROWER ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OTHER LOAN DOCUMENT MAY BE INSTITUTED IN THE COURTS HAVING JURISDICTION IN THE CITY AND/OR COUNTY IN WHICH THE PROPERTY IS LOCATED, AND BORROWER HEREBY WAIVES ANY OBJECTIONS THAT IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING.

ARTICLE 10:  WAIYER OF JURY TRIAL

BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND FOREVER WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT TUAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST, WITH REGARD TO THIS NOTE, THE MORTGAGE OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIYER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.

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ARTICLE 11: SUCCESSORS AND ASSIGNS

This Note shall be binding upon, and shall inure to the benefit of, Borrower and Lender and their respective successors and permitted assigns. Lender shall have the right to assign or transfer its rights under this Note in connection with any assignment of the Loan and the Loan Documents. Any assignee or transferee of Lender shall be entitled to all the benefits afforded to Lender under this Note. Borrower shall not have the right to assign or transfer its rights or obligations under this Note without the prior written consent of Lender, as provided in the Loan Agreement, and any attempted assignment without such consent shall be null and void.

ARTICLE 12:   NOTICES

All notices or other written communications hereunder shall be delivered m accordance with Section 11.6 of the Loan Agreement.

ARTICLE 13: JOINT AND SEVERAL LIABILITY

If more than one Person has executed this Note as "Borrower," the representations, covenants, warranties and obligations of all such Persons hereunder shall be joint and several.

[NO FURTHER TEXT ON THIS PAGE]

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IN WITNESS WHEREOF, Borrower has duly executed this Note as of the day and year first above written.

BORROWER:
TREEMONT CAPITAL PARTNERS IV, LP, a
Texas limited partnership
By:	Treemont Capital Partners IV GP, LLC, a Texas limited liability company, its general partner
	By:	/s/ Philip A. McRae
		Name: Philip A. McRae
		Title: Manager

Promissory Note (Fairfield Inn & Suites Lubbock)

TEXAS ADDENDUM

The term "Maximum Rate" shall mean the highest lawful rate of interest applicable to this Note. In determining the Maximum Rate, due regard shall be given to all payments, fees, charges, deposits, balances and agreements which may constitute interest or be deducted from principal when calculating interest. If Chapter 303 of the Finance Code, Vernon's Texas Civil Statutes, is applicable to this Note, and applicable state or federal law does not permit a higher interest rate, the "weekly ceiling" (as defined in Chapter 303 of the Finance Code, Vernon's Texas Civil Statutes) shall be the interest rate ceiling applicable to this Note and shall be the basis for determining the Maximum Rate. If applicable state or federal law allows a higher interest rate or federal law preempts the state law limiting the rate of interest, then the foregoing interest rate ceiling shall not be applicable to this Note. If the Maximum Rate is increased by statute or other governmental action subsequent to the date of this Note, then the new Maximum Rate shall be applicable to this Note from the effective date thereof, unless otherwise prohibited by applicable law.25

Interest on the unpaid principal balance of this Note shall be computed on the basis set forth in the first paragraph of the first page of this Note (the "Stated Rate"), but in no event shall the Stated Rate be greater than the Maximum Rate described immediately above.

It is expressly stipulated and agreed to be the intent of the undersigned and holder hereof (the "Noteholder") at all times to comply with applicable law governing the Maximum Rate or amount of interest payable on or in connection with this Note and the Loan (or applicable United States federal law to the extent that it permits the Noteholder to contract for, charge, take, reserve or receive a greater amount of interest than under law of the state in which the Premises is located). If the applicable law is ever judicially interpreted so as to render usurious  any amount called for under this Note or under the Mortgage or any other Loan Document, or contracted for, charged, taken, reserved or received with respect to the Loan, or if acceleration of the maturity of this Note or if any prepayment by the undersigned results in the undersigned having paid any interest in excess of that permitted by law, then it is the undersigned's and the Noteholder's express intent that all excess amounts theretofore collected by the Noteholder be credited on the principal balance of this Note (or, if this Note has been or would thereby be paid in full, refunded to the undersigned), and the provisions of this Note, the Mortgage and the other Loan Documents immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new documents, so as to comply with applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder. The right to accelerate maturity of this Note does not include the right to accelerate any interest which has not otherwise accrued on the date of such acceleration, and the Noteholder does not intend to collect any unearned interest in the event of acceleration. All sums paid or agreed to be paid to the Noteholder for the use, forbearance or detention of the indebtedness evidence hereby shall, to the extent permitted by applicable law be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full so that the rate or amount of interest on account of such indebtedness does not exceed the Maximum Rate. Notwithstanding any provisions contained in this Note, the Mortgage or in any of the other Loan Documents that permit the compounding of interest, including, without limitation, any provision by which any accrued interest is added to

the principal amount of this Note, the total amount of interest that the undersigned is obligated to pay and the Noteholder is entitled to receive with respect to this Note shall not exceed the amount calculated on a simple (i.e., noncompounded) interest basis at the Maximum Rate on principal amounts actually advanced to or for the account of the undersigned, including all current and prior advances and any advances made pursuant to the Mortgage or other Loan Documents (such as for the payment of taxes, insurance premiums, repairs and other expenses or costs).

THE UNDERSIGNED AND ALL OTHER MAKERS, SIGNERS, SURETIES, GUARANTORS AND ENDORSERS OF THIS NOTE (a) WAIVE: (i) DEMAND, (ii) PRESENTMENT, (iii) NOTICE OF DISHONOR, (iv) NOTICE OF INTENT TO DEMAND OR ACCELERATE PAYMENT HEREOF, (v) DILIGENCE IN COLLECTING, (vi) GRACE (EXCEPT AS EXPRESSLY PROVIDED IN THE LOAN DOCUMENTS), (vii) NOTICE AND

(ix) PROTEST AND (b) AGREE TO ONE OF MORE EXTENSIONS FOR ANY PERIOD OR PERIODS OF TIME AND PARTIAL PAYMENTS, BEFORE OR AFTER MATURITY, WITHOUT PREJUDICE TO THE HOLDER HEREOF. IF COLLECTION PROCEDURES ARE EVER COMMENCED, BY ANY MEANS, INCLUDING LEGAL PROCEEDINGS OR THROUGH A PROBATE OR BANKRUPTCY COURT, OR IF THIS NOTE IS PLACED IN THE HANDS OF ANY ATTORNEY FOR COLLECTION AFTER DEFAULT OR MATURITY, THE UNDERSIGNED AGREES TO PAY ALL COSTS OF COLLECTION OR ATTEMPTED COLLECTION, INCLUDING REASONABLE ATTORNEY'S FEES.

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EXHIBIT 10.55.1

TREEMONT CAPITAL PARTNERS IV, LP, a
Texas limited partnership
By:	Treemont Capital Partners IV GP, LLC, a Texas limited liability company, its general partner
	By:	/s/ Philip A. McRae
		Name: Philip A. McRae
		Title: Manager

Addendum to Note (Fairfield Inn & Suites Lubbock)

EX-10.55.3

EXHIBIT 10.55.3

LOAN AGREEMENT

Dated as of April 4, 2019 Between

TREEMONT CAPITAL PARTNERS IV, LP,

as Borrower and

STARWOOD MORTGAGE CAPITAL LLC,

as Lender

TABLE OF CONTENTS

ARTICLE 1 DEFINITIONS; PRINCIPLES OF CONSTRUCTION...........................................................................1

Section 1.1Specific Definitions1

Section 1.2Principles of Construction18

ARTICLE 2 THE LOAN.........................................................................................................................................18

Section 2.1The Loan18

Section 2.2Interest Rate19

Section 2.3Loan Payments20

Section 2.4Prepayments21

Section 2.5Defeasance22

ARTICLE 3 REPRESENTATIONS AND WARRANTIES...................................................................................25

Section 3.1Borrower Representations25

Section 3.2Survival of Representations39

ARTICLE 4 BORROWER COVENANTS.............................................................................................................39

Section 4.1Borrower Affirmative Covenants39

Section 4.2Borrower Negative Covenants49

ARTICLE 5 INSURANCE, CASUALTY AND CONDEMNATION.......................................................................53

Section 5.1Insurance53

Section 5.2Casualty58

Section 5.3Condemnation59

Section 5.4Restoration59

ARTICLE 6 CASH MANAGEMENT AND RESERVE FUNDS...........................................................................64

Section 6.1

Section 6.2

Section 6.3

Section 6.4

Section 6.5

Section 6.6

Section 6.7

Section 6.8

Section 6.9

Section 6.10

Section 6.11

Cash Management Arrangements.............................................................................................64

Required Repairs Funds...........................................................................................................65

Tax Funds.................................................................................................................................65

Insurance Funds.......................................................................................................................66

FF&E Reserve Funds.................................................................................................................66

Intentionally Omitted…………………………………………………...............69

Intentionally Omitted.................................................................................................................69

Intentionally Omitted.................................................................................................................69

Excess Cash Flow Funds.........................................................................................................69

Security Interest in Reserve Funds...........................................................................................69

Property Cash Flow Allocation.................................................................................................70

ARTICLE 7 PROPERTY MANAGEMENT.................................................................................................................71

Section 7.1

Section 7.2

Section 7.3

The Management Agreement.....................................................................................................71

Prohibition Against Termination or Modification...........................................................................72

Replacement of Manager...........................................................................................................72

ARTICLE 8 PERMITTED TRANSFERS.................................................................................................................72

Section 8.1Permitted Transfer of the Property.......................................................................................72

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Section 8.2Permitted Transfers of Interest in Borrower.........................................................................73

Section 8.3Cost and Expenses...............................................................................................................75

ARTICLE 9 SALE AND SECURITIZATION OF MORTGAGE...................................................................................75

Section 9.1

Section 9.2

Section 9.3

Section 9.4

Sale of Mortgage and Securitization...........................................................................................75

Securitization Indemnification.....................................................................................................76

Intentionally Omitted...................................................................................................................78

Severance Documentation.........................................................................................................79

ARTICLE 10 DEFAULTS...........................................................................................................................................79

Section 10.1Events of Default...................................................................................................................79

Section 10.2Remedies.............................................................................................................................83

Section 10.3Lender's Right to Perform.....................................................................................................84

Section 10.4Remedies Cumulative...........................................................................................................84

ARTICLE 11 MISCELLANEOUS...............................................................................................................................85

Section 11.1

Section 11.2

Section 11.3

Section 11.4

Section 11.5

Section 11.6

Section 11.7

Section 11.8

Section 11.9

Section 11.10

Section 11.11

Section 11.12

Section 11.13

Section 11.14

Section 11.15

Section 11.16

Section 11.17

Section 11.18

Section 11.19

Section 11.20

Section 11.21

Section 11.22

Section 11.23

Section 11.24

Section 11.25

Section 11.26

Section 11.27

Section 11.28

Section 11.29

Survival; Successors and Assigns.........................................................................................85

Lender's Discretion.................................................................................................................85

Governing Law.......................................................................................................................85

Modification, Waiver in Writing...............................................................................................85

Delay Not a Waiver.................................................................................................................86

Notices.....................................................................................................................................86

Trial by Jury...........................................................................................................................87

Headings...............................................................................................................................87

Severability.....................................................................................................88

Preferences.....................................................................................................88

Waiver of Notice.....................................................................................................................88

Remedies of Borrower.....................................................................................88

Expenses; Indemnity.......................................................................................88

Schedules Incorporated.........................................................................................................90

Offsets, Counterclaims and Defenses...................................................................................90

No Joint Venture or Partnership; No Third Party Beneficiaries...............................................90

Publicity.....................................................................................................................................91

Waiver of Marshalling of Assets.............................................................................................91

Waiver of Offsets/Defenses/Counterclaims...........................................................................91

Conflict; Construction of Documents; Reliance.....................................................................91

Brokers and Financial Advisors.............................................................................................92

Exculpation.............................................................................................................................92

Prior Agreements...................................................................................................................95

Servicer.....................................................................................................................................96

Joint and Several Liability.......................................................................................................96

Creation of Security Interest...................................................................................................96

Assignments and Participations.............................................................................................96

Counterparts...........................................................................................................................97

Set-Off.....................................................................................................................................97

-11-

LOAN AGREEMENT

THIS LOAN AGREEMENT, dated as of April 4, 2019 (as amended, restated, replaced, supplemented or otherwise modified from time to time, this "Agreement"), between STARWOOD MORTGAGE CAPITAL LLC, a Delaware limited liability company, having an address at 1601 Washington Avenue, Suite 800, Miami Beach, Florida 33139 (together with its successors and assigns, collectively, "Lender"), and TREEMONT CAPITAL PARTNERS IV, LP, a Texas limited partnership, having an address at 1415 South Voss #110-94, Houston, Texas 77057 (together with its permitted successors and assigns, collectively, "Borrower").

All capitalized terms used herein shall have the respective meanings set forth in Article 1 hereof.

WITNESSETH:

WHEREAS, Borrower desires to obtain the Loan from Lender; and

WHEREAS, Lender has advised Borrower that subject to the terms of this Agreement and the documents to be executed in connection herewith, and based upon the representations, warranties, covenants and undertakings of Borrower herein and therein contained, Lender is willing to make the Loan to Borrower on the terms and conditions set forth herein and therein.

NOW, THEREFORE, in consideration of the covenants set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree, represent and warrant as follows:

ARTICLE 1

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

Section 1.1Specific Definitions.

For all purposes of this Agreement, except as otherwise expressly provided:

"Accounts" shall have the meaning set forth in Section 6.1.

"Acquired  Property  Statements"  shall  have  the  meaning  set  forth   m Section 9.l(c)(i).

"Affiliate" shall mean, as to any Person, any other Person that (i) owns directly or indirectly ten percent (10%) or more of all equity interests in such Person, and/or (ii) is in control of, is controlled by or is under common ownership or control with such Person, and/or

(iii) is a director or officer of such Person or of an Affiliate of such Person, and/or (iv) is the spouse, issue or parent of such Person or of an Affiliate of such Person. As used in this definition, the term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of such Person, whether through ownership of voting securities, by contract or otherwise.

the Loan.

"Alteration Threshold" shall mean 2% of the outstanding principal amount of

"Annual Budget"  shall mean the operating and capital budget for the Property

setting forth, on a month-by-month basis, in reasonable detail, each line item of Borrower's good faith estimate of anticipated Operating Income, FF&E Expenses, PIP Work, Operating Expenses and Capital Expenditures for the applicable Fiscal Year.

"Approved Annual Budget" shall have the meaning set forth in Section 4.1.7(g).

"Approved FF&E Expenses" shall mean Capital Expenditure and FF&E Expenses incurred by Borrower and either (i) included in the Approved Annual Budget or (ii) approved by Lender, which approval shall not be unreasonably withheld or delayed.

"Approved Operating Expenses" shall mean Operating Expenses incurred by Borrower which (i) are included in the Approved Annual Budget for the current calendar month,

(ii) are for real estate taxes, insurance premiums, electric, gas, oil, water, sewer or other utility service to the Property, (iii) are for property management fees payable to Manager under the Management  Agreement, such amounts not to exceed 3% of the monthly Operating Income, or

(iv) have been approved by Lender.

"Assignment of Leases" shall mean that certain first priority Assignment of Leases and Rents, dated as of the date hereof, from Borrower, as assignor, to Lender, as assignee, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

"Assignment of Management Agreement" shall mean that certain Assignment of Management Agreement and Subordination of Management Fees dated as of the date hereof among Borrower, Manager and Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

"Award" shall mean any compensation paid by any Governrnental Authority in connection with a Condemnation.

"Bankruptcy Code" shall mean Title 11 of the United States Code entitled "Bankruptcy", as amended from time to time, and any successor statute or statutes and all rules and regulations from time to time promulgated thereunder, and any comparable foreign laws relating to bankruptcy, insolvency or creditors' rights.

"Borrower" shall have the meaning set forth in the introductory paragraph hereto, together with its successors and permitted assigns.

"Borrower Operating Account" shall mean an account specified to Lender by Borrower in writing from time to time as Borrower's operating account.

"Borrower's Recourse Liabilities" shall have the meaning set forth in

Section 11.22.

"Broker" shall have the meaning set forth in Section 11.21.

"Business Day" shall mean any day other than a Saturday, a Sunday or a legal holiday on which national banks are not open for general business in (i) the State of New York,

(ii) the state where the corporate trust office of the Trustee is located, or (iii) the state where the servicing offices of the Servicer are located.

"Capital Expenditures" for any period shall mean amounts expended for replacements and alterations to the Property (excluding tenant improvements) and required to be capitalized according to GAAP.

"Capital Expenditures Work" shall mean any labor performed or materials installed in connection with any Capital Expenditure.

"Cash Management Account" shall have the meaning set forth in Section 6.1.

Lender may in its sole discretion change the Cash Management Account from time to time.

"Cash Management Agreement" shall mean that certain Cash Management Agreement of even date herewith among Lender, Borrower, and Manager.

"Cash Management Bank" shall mean the bank or banks selected by Lender to maintain the Cash Management Account. Lender may in its sole discretion change the Cash Management Bank from time to time.

"Casualty" shall have the meaning set forth in Section 5.2.

"Casualty and Condemnation Account" shall have the meaning set forth in the Cash Management Agreement.

"Casualty Consultant" shall have the meaning set forth in Section 5.4(b(iii).

"Casualty Retainage" shall have the meaning set forth in Section 5.4(b)(iv).

"Certification of Borrower" shall mean that certain Borrower's Closing Certificate dated as of the date hereof made by Borrower to Lender.

"Clearing Account" shall have the meaning set forth in Section 6.1.

"Clearing Account Agreement" shall have the meaning set forth in Section 6.1.

"Clearing Bank" shall have the meaning set forth in Section 6.1.

"Closing Date" shall mean the date of the funding of the Loan.

"Code" shall mean the Internal Revenue Code of 1986, as amended, and as it may be further amended from time to time, any successor statutes thereto, and applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form.

"Condemnation" shall mean a temporary or permanent taking by any Governmental Authority as the result or in lieu or in anticipation of the exercise of the right of condemnation or eminent domain, of all or any part of the Property, or any interest therein or right accruing thereto, including any right of access thereto or any change of grade affecting the Property or any part thereof.

"Control" shall mean, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, through the ownership of voting securities, by contract or otherwise, and the terms Controlled, Controlling and Common Control shall have correlative meanings.

"Covered Rating Agency Information" shall have the meaning set forth in

Section 9.l(f).

"Credit Card Direction Letter" shall have the meaning set forth in Section 6.1.

"Debt" shall mean the Outstanding Principal Balance together with all interest

accrued and unpaid thereon and all other sums (including the Prepayment Fee, if applicable) due to Lender in respect of the Loan under the Note, this Agreement, the Mortgage, the Environmental Indemnity or any other Loan Document.

"Debt Service" shall mean, with respect to any particular period of time, the aggregate amount of scheduled principal and interest payments due and payable under the Note.

"Debt Service Coverage Ratio" shall mean, a ratio, as determined by Lender in its sole discretion for the applicable period in which:

(a) the numerator is the Net Operating Income for such period; and

(b) the denominator is the Debt Service due for such period.

"Default" shall mean the occurrence of any event hereunder or under any other Loan Document which, but for the giving of notice or passage of time, or both, would constitute an Event of Default.

"Default Rate" shall mean, with respect to the Loan, a rate per annum equal to the lesser of (i) the Maximum Legal Rate or (ii) five percent (5%) above the Interest Rate.

"Defeasance Collateral" shall have the meaning set forth in Section 2.5.1(c )(i).

"Defeasance Lockout Expiration Date" shall have the meaning set forth in

Section 2.5.1.Section 2.5.3.

"Defeasance   Rights  and  Obligations"  shall  have  the  meanmg  set  forth  in

"Defeasance   Security   Agreement"   shall   have   the   meanmg   set   forth m

Section 2.5.l(c)(ii).

"Disclosure Document" shall have the meaning set forth in Section 9.2(a).

"DisclosureDocumentDate"shallhavethemeaningsetforthm  Section 9.l(c)(iv).

"Discount Rate" shall mean the rate which, when compounded monthly, is equivalent to the Treasury Rate when compounded semiannually.

"Easements" shall have the meaning set forth in Section 3.1.12.

"Eligible Account" shall mean a separate and identifiable account from all other funds held by the holding institution that is either (i) an account or accounts (or subaccounts thereof) maintained with a federal or state-chartered depository institution or trust company which complies with the definition of Eligible Institution or (ii) a segregated trust account or accounts (or subaccounts thereof) maintained with a federal or state chartered depository institution or trust company acting in its fiduciary capacity which, in the case of a state chartered depository institution or trust company is subject to regulations substantially similar to 12 C.F.R.

§9.1O(b), having in any case a combined capital and surplus of at least Fifty Million and No/100 Dollars ($50,000,000.00) and subject to supervision or examination by federal and state authorities. An Eligible Account will not be evidenced by a certificate of deposit, passbook or other instrument.

"Eligible Institution" shall mean a depository institution or trust company the short term unsecured debt obligations or commercial paper of which are rated at least A-1 by S&P, P-1 by Moody's, and F-1 by Fitch in the case of accounts in which  funds are held for thirty (30) days or less or, in the case of Letters of Credit or accounts in which funds are held for more than thirty (30) days, the long term unsecured debt obligations of which are rated at least "A" by Fitch and S&P and "Aa2" by Moody's.

"Embargoed Person" shall have the meaning set forth in Section 4.2.15.

"Environmental Indemnity" shall mean that certain Environmental Indemnity Agreement dated as of the date hereof executed by Borrower and Guarantor in connection with the Loan for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

"Equipment" shall have the meaning set forth in the granting clause of the

Mortgage.

"ERISA" shall have the meaning set forth in Section 4.2.13.

"Event of Default" shall have the meaning set forth in Section 10.1.

"Excess Cash Flow Account" shall have the meaning set forth in Section 6.9.

"Excess Cash Flow Funds" shall have the meaning set forth in Section 6.9.

"Exchange Act" shall have the meaning set forth in Section 9.2(a).

"Exchange Act Filing" shall have the meaning set forth in Section 9.l{c)(vi).

"Extraordinary Expense" shall have the meaning set forth in Section 4.1.7(g).

"FF&E Expense" for any period shall mean the amount expended for FF&E Work in, at or to the Property.

"FF&E Reserve Account" shall have the meaning set forth in Section 6.5.1.

"FF&E Reserve Funds" shall have the meaning set forth in Section 6.5.1.

"FF&E Work" shall have the meaning set forth in Section 6.5.1.

"Fiscal Year" shall mean each twelve (12) month period commencing on January 1 and ending on December 31 during each year of the Term.

"Fitch" shall mean Fitch, Inc.

"Franchise Agreement" shall mean that certain Fairfield Inn & Suites By Marriott Franchise Agreement, dated April 27, 2016, between Borrower and Franchisor, together with any permitted amendment thereto or permitted replacement thereof.

"Franchise Termination Trigger Event" shall mean any cancellation, termination or expiration of the Franchise Agreement.

"Franchisor" shall mean Marriott International, Inc., together with any permitted replacement franchisor acceptable to Lender.

"FRBNY" shall mean the Federal Reserve Bank of New York.

"Full Replacement Cost" shall have the meaning set forth in Section 5.1.1(a )(i).

"GAAP" shall mean generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), or in such other statements by such entity as may be in general use by significant segments of the U.S. accounting profession.

"Governmental Authority" shall mean any court, board, agency, commission, office or authority of any nature whatsoever or any governmental unit (federal, state, commonwealth, county, district, municipal, city or otherwise) whether now or hereafter in existence.

"Government Lists" shall have the meaning set forth in Section 4.1.l 4(b).

"Gross Revenue" shall mean all revenue derived from the ownership and operation of the Property from whatever source, including Rents and any Insurance Proceeds, but

only if and to the extent Lender elects to treat any such Insurance Proceeds as business or rental interruption Insurance Proceeds pursuant to Section 5.4(e) hereof.

"Guarantor" shall mean Philip A. McRae, an individual.

"Guaranty" shall mean that certain Guaranty of Recourse Obligations of even date herewith from Guarantor for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise amended from time to time.

"Improvements" shall have the meaning set forth in the granting clause of the

Mortgage.

"Indebtedness"   shallmean,for   any   Person,without   duplication:(i) all

indebtedness of such Person for borrowed money, for amounts drawn under a letter of credit, or for the deferred purchase price of property for which such Person or its assets is liable, (ii) all unfunded amounts under a loan agreement, letter of credit, or other credit facility for which such Person would be liable if such amounts were advanced thereunder, (iii) all amounts required to be paid by such Person as a guaranteed payment to partners or a preferred or special dividend, including any mandatory redemption of shares or interests, (iv) all indebtedness guaranteed by such Person, directly or indirectly, (v) all obligations under leases that constitute capital leases for which such Person is liable, (vi) all obligations of such Person under interest rate swaps,  caps, floors, collars and other interest hedge agreements, in each case for which such Person is liable or its assets are liable, whether such Person (or its assets) is liable contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which '·obligations such Person otherwise assures a creditor against loss and (vii) any property-assessed clean energy loans or similar indebtedness including, without limitation, if such loans or indebtedness are made or otherwise provided by any Governmental Authority and/or secured or repaid (directly or indirectly) by any taxes or similar assessments (also known as PACE loans).

"Indemnified Liabilities" shall have the meaning set forth in Section l  l.13(b)."Initial Interest Period" shall have the meaning set forth in Section 2.3.1."Insurance Account" shall have the meaning set forth in Section 6.4.1.  "Insurance Funds" shall have the meaning set forth in Section 6.4.1.  "Insurance Premiums" shall have the meaning set forth in Section 5.1.l(b)."Insurance Proceeds" shall have the meaning set forth in Section 5.4(b).  "Interest Period" shall have the meaning set forth in Section 2.3.3.

"Interest Rate" shall mean a rate of four and ninety-three percent (4.93%) per

annum.

"Lease"   shall   mean  any  lease,   sublease   or  sub-sublease,   letting,  license,

concession  or other agreement  (whether  written or oral and whether  now or hereafter in effect)

pursuant to which any Person is granted a possessory interest in, or right to use or occupy, all or any portion of any space in the Property, and every modification, amendment or other agreement relating to such lease, sublease, sub-sublease or other agreement entered into in connection with such lease, sublease, sub-sublease or other agreement and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto.

"Legal Requirements" shall mean all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, building codes, land laws, judgments, decrees and injunctions of Governmental Authorities affecting the Loan, any Secondary Market Transaction with respect to the Loan, the Borrower or the Property or any part thereof or the construction, use, alteration or operation thereof, or any part thereof, whether now or hereafter enacted and in force, including, without limitation, zoning and land use laws and the Americans with Disabilities Act of 1990, and all permits, licenses and authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Borrower, at any time in force affecting the Property or any part thereof, including any which may (i) require repairs, modifications or alterations in or to the Property or any part thereof, or (ii) in any way limit the use and enjoyment thereof.

"Lender Affiliate" shall have the meaning set forth in Section 9.2{b).

"Lender Group" shall have the meaning set forth in Section 9.2{b).

"Letter of Credit" shall mean an irrevocable, unconditional, transferable (without payment of any transfer fee), clean sight draft letter of credit acceptable to Lender and the Rating Agencies (either an evergreen letter of credit or one which does not expire until at least thirty (30) Business Days after the Stated Maturity Date) in favor of Lender and entitling Lender to draw thereon in New York, New York, issued by a domestic Eligible Institution or the

U.S. agency or branch of a foreign Eligible Institution. If at any time the bank issuing any such Letter of Credit shall cease to be an Eligible Institution, Lender shall have the right immediately to draw down the same in full and hold the proceeds of such draw in accordance with the applicable provisions hereof. If, at any time, any Letter of Credit is due to expire prior to the termination of the event or events that gave rise to the requirement that Borrower deliver such Letter of Credit to Lender, Lender shall have the right to draw down the same in full and hold or apply the proceeds thereof in accordance with the provisions of this Agreement unless Borrower delivers a replacement Letter of Credit from an Eligible Institution within thirty (30) days prior to the expiration date of such Letter of Credit.

"Liabilities" shall have the meaning set forth in Section 9.2{b).

"Lien" shall mean any mortgage, deed of trust, lien (statutory or otherwise), pledge, hypothecation, easement, restrictive covenant, preference, assignment, security interest, or any other encumbrance, charge or transfer of, or any agreement to enter into or create any of the foregoing, on or affecting all or any portion of the Property or any interest therein, or any direct or indirect interest in Borrower, including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the

foregoing, the filing of any financing statement, and mechanic's, materialmen's and other similar liens and encumbrances.

"Loan" shall mean the loan in the original principal amount of Nine Million Five Hundred Thousand and Noll 00 Dollars ($9,500,000.00) made by Lender to Borrower pursuant to this Agreement.

"Loan Documents" shall mean, collectively, this Agreement, the Note, the Mortgage, the Assignment of Leases, the Cash Management Agreement, the Clearing Account Agreement, the Environmental Indemnity, the Assignment of Management Agreement, the Guaranty, the Certificate of Borrower and any other documents, agreements and instruments now or hereafter evidencing, securing or delivered to Lender in connection with the Loan.

"Loan to Value Ratio" shall mean the ratio, as of a particular date, in which the numerator is equal to the Outstanding Principal Balance and the denominator is equal to the appraised value of the Property as determined by Lender in its sole discretion.

"Major Contract" shall mean (i) any management, brokerage or leasing agreement, or (ii) any cleaning, maintenance, service or other contract or agreement of any kind (other than Leases) of a material nature (materiality for these purposes to include, without limitation, contracts which extend beyond one year (unless cancelable on thirty (30) days or less notice without requiring the payment of termination fees or payments of any kind)), in either case relating to the ownership, leasing, management, use, operation, maintenance, repair or restoration of the Property, whether written or oral.

"Major Lease" shall mean any commercial Lease entered into at the Property.

"Management Agreement" shall mean the management agreement entered into by and between Borrower and the Manager, pursuant to which the Manager is to provide management and other services with respect to the Property.

"Manager" shall mean MH Partners, LLC, a Tennessee limited liability company, or any other manager approved by Lender and the Rating Agencies in accordance with the terms and conditions of the Loan Documents.

"Manager Termination Ratio" shall have the meaning set forth in Section 7.3.

"Material Alteration" shall have the meaning set forth in Section 4.1.11.

"Maturity Date" shall mean the date on which the final payment of principal of the Note becomes due and payable as herein and therein provided, whether at the Stated Maturity Date, by declaration of acceleration, extension or otherwise.

"Maximum Legal Rate" shall mean the maximum nonusurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the indebtedness evidenced by the Note and as provided for herein or the other Loan Documents, under the laws of such Governmental Authority whose laws are held by any court of competent jurisdiction to govern the interest rate provisions of the Loan.

"Monthly Debt Service Payment Amount" shall mean a constant monthly payment of $50,592.41.

"Monthly Operating Expense Budgeted Amount" shall mean the monthly amount for Operating Expenses set forth in the Approved Annual Budget for the calendar month in which such Monthly Payment Date occurs.

"Monthly Payment Date" shall mean the sixth (6th₎ day of every calendar month occurring during the Term.

"Moody's" shall mean Moody's Investors Service, Inc.

"Mortgage" shall mean that certain first priority Deed of Trust, Assignment of Leases and Rents and Security Agreement, dated the date hereof, executed and delivered by Borrower as security for the Loan and encumbering the Property, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

"Net Operating Income" shall mean the amount obtained by subtracting Operating Expenses from Operating Income.

"Net Proceeds" shall mean: (i) the net amount of all Insurance Proceeds payable as a result of a Casualty to the Property, after deduction of reasonable costs and expenses (including reasonable attorneys' fees and costs), if any, in collecting such Insurance Proceeds, or

(ii) the net amount of the Award, after deduction of reasonable costs and expenses (including reasonable attorneys' fees and costs), if any, in collecting such Award.

"Net Proceeds Deficiency" shall have the meaning set forth in Section 5.4(b)(vi).

"Note" shall have the meaning set forth in Section 2.1.3.

"Notice" shall have the meaning set forth in Section 11.6.

"Obligations" shall mean, collectively, Borrower's obligations for the payment of the Debt and the performance of the Other Obligations.

"OFAC" shall have the meaning set forth in Section 4.l.14(b).

"Officer's Certificate" shall mean a certificate delivered to Lender by Borrower which is signed by an authorized senior officer of Borrower.

"Open Prepayment Date" shall mean the Monthly Payment Date occurring in December, 2028.

"Operating Agreements" shall mean the REA, and any other covenants, restnctlons, easements, declarations or agreements of record relating to the construction, operation or use of the Property.

"Operating Expenses" shall mean, for any period, without duplication, all expenses actually paid or payable by Borrower during such period in connection with the operation, management, maintenance, repair and use of the Property, determined on an accrual basis, and, except to the extent otherwise provided in this definition, in accordance with GAAP, and the Uniform System of Accounts for Hotels, current edition. Operating Expenses  specifically shall include (i) all expenses incurred in the immediately preceding twelve (12) month period based on quarterly financial statements delivered to Lender in accordance with Section 4.1.7 hereof, (ii) all payments required to be made pursuant to any Operating Agreements, (iii) property management fees in an  amount  equal  to  the  greater  of  three percent (3%) of Operating Income and the management fees actually paid under the  Management Agreement, (iv) administrative, payroll, security and general expenses for the Property, (v) the cost of utilities, inventories and fixed asset supplies consumed in the operation of the Property, (vi) a reasonable reserve for uncollectible accounts, (vii) costs and fees of independent professionals (including, without limitation, legal, accounting, consultants and other professional expenses), technical consultants, operational experts (including quality assurance inspectors) or other third parties retained to perform services required or permitted hereunder,

(viii) cost of attendance by employees at training and manpower development programs,

(ix) association dues, (x) computer processing charges, (xi) operational equipment and  other lease payments as reasonably approved by Lender, (xii) Taxes and Other Charges (other than income taxes or Other Charges in the nature of income taxes) and insurance premiums and

(xiii) all underwritten reserves required by Lender hereunder (without duplication). Notwithstanding the foregoing, Operating Expenses shall not include (1) depreciation or amortization, (2) income taxes or Other Charges in the nature of income taxes, (3) any expenses (including legal, accounting and other professional fees, expenses and disbursements) incurred in connection with the making of the Loan or the sale, exchange, transfer, financing or refinancing of all or any portion of the Property or in connection with the recovery of Insurance Proceeds or Awards which are applied to prepay the Note, (4) intentionally omitted, (5) Debt Service, (6) FF&E Expenses and (7) any item of expense which would otherwise be considered within Operating Expenses pursuant to the provisions above but is paid directly by any Tenant.

"Operating Income" shall mean, for any period, all income of Borrower during such period from the use, ownership or operation of the Property, including:

(a) all amounts payable to Borrower by any Person as Rent and other amounts under Leases or other agreements relating to the Property;

(b) business interruption insurance proceeds allocable to the applicable reporting period; and

(c) all other amounts which in accordance with GAAP, the Uniform System of Accounts for Hotels, current edition, are included in Borrower's annual financial statements as operating income attributable to the Property.

Notwithstanding the foregoing, Operating Income shall not include (a) any Insurance Proceeds (other than business interruption insurance proceeds and only to the extent allocable to the applicable reporting period), (b) any proceeds resulting from the Transfer of all or any portion of the Property, (c) any Rent attributable to a Lease prior to the date in which the

Tenant thereunder has taken occupancy or in which the actual payment of rent is required to commence thereunder, (d) any item of income otherwise included in Operating Income but paid directly by any Tenant to a Person other than Borrower as an offset or deduction against Rent payable by such Tenant, provided such item of income is for payment of an item of expense (such as payments for utilities paid directly to a utility company) and such expense is otherwise excluded from the definition of Operating Expenses pursuant to clause "(6)" of the definition thereof, (e) security deposits received from Tenants until forfeited or applied, and (f) any Rents paid by or on behalf of any Tenant under a Lease which is the subject of any  proceeding or action relating to its bankruptcy, reorganization or other arrangement pursuant to federal bankruptcy law or any similar federal or state law or which has been adjudicated a bankrupt or insolvent unless such Lease has been assumed by the trustee in such proceeding or action. Operating Income shall be calculated on the accrual basis of accounting and, except to the extent otherwise provided in this definition, in accordance with GAAP, the Uniform System of Accounts for Hotels, current edition.

"Other Charges" shall mean all ground rents, maintenance charges, impositions other than Taxes and any other charges, including vault charges and license fees for the use of vaults, chutes and similar areas adjoining the Property, now or hereafter levied or assessed or imposed against the Property or any part thereof.

"Other Obligations" shall mean (a) the performance of all obligations of Borrower contained herein; (b) the performance of each obligation of Borrower contained in any other Loan Document; and (c) the performance of each obligation of Borrower contained in any renewal, extension, amendment, modification, consolidation, change of, or substitution or replacement for, all or any part of this Agreement, the Note or any other Loan Document.

"Outstanding Principal Balance" shall mean, as of any date, the outstanding principal balance of the Loan.

"Patriot Act" shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT ACT) of 2001, as the same may be amended from time to time, and corresponding provisions of future laws.

"Patriot Act Offense" shall have the meaning set forth in Section 4.l.14(b).

"Permitted Encumbrances" shall mean, collectively, (i) the Liens and security interests created by the Loan Documents, (ii) all encumbrances and other matters disclosed in the Title Insurance Policy and otherwise acceptable to Lender in its sole discretion, (iii) Liens, if  any, for Taxes or Other Charges imposed by any Governmental Authority not yet due or delinquent (but excluding any lien securing any property-assessed clean energy loans or similar indebtedness with respect to Borrower and/or the Property, including, without limitation, if such loans or indebtedness are made or otherwise provided by any Governmental Authority and/or secured or repaid (directly or indirectly) by any taxes or similar assessments (also known as PACE loans)), and (iv) such other title and survey exceptions as Lender has approved or may approve in writing in Lender's sole discretion.

"Permitted Indebtedness" shall have the meaning set forth in Section 3.1.24( d).

"Permitted Investments" shall have the meaning set forth in the Cash Management Agreement.

"Permitted Transfer" shall have the meaning set forth in Section 8.2(a).

"Permitted Transferee" shall mean a corporation, partnership or limited liability company (i) acceptable to Lender in its sole discretion, (ii) that qualifies as a single purpose, bankruptcy remote entity under criteria established by the Rating Agencies, and (iii) such entity, together with the direct and indirect owners of such entity and any related guarantor, are reputable Persons of good character, creditworthy and with sufficient financial worth considering the obligations assumed and undertaken, as evidenced by financial statements and other information reasonably requested by Lender.

"Person" shall mean any individual, corporation, partnership, limited liability company, joint venture, estate, trust, unincorporated association, any other entity, any Governmental Authority and any fiduciary acting in such capacity on behalf of any of the foregoing.

"Physical Condition Report" shall mean a report prepared by a company satisfactory to Lender regarding the physical condition of the Property, satisfactory in form and substance to Lender in its sole discretion, which report shall, among other things, (i) confirm that the Property and its use comply, in all material respects, with all applicable Legal Requirements (including zoning, subdivision and building laws), and (ii) include a copy of a final certificate of occupancy with respect to all Improvements.

"PIP Work" shall mean those certain replacements and/or alterations to the Property as may be required by the Franchisor to be completed from time to time.

"Policies" shall have the meaning set forth in Section 5.1.l(b).

"Prepayment Date" shall mean the date of a prepayment of the Loan pursuant to the provisions of Section 2.4 hereof.

"Prepayment Fee" shall mean an amount equal to the greater of (i) the Yield Maintenance Amount, or (ii) five percent (5%) of the unpaid principal balance of the Note as of the Prepayment Date.

"Prepayment Notice" shall mean a prior irrevocable written notice to Lender specifying the proposed Business Day on which a prepayment is to be  made  pursuant  to Section 2.4 hereof, which date must be a Monthly Payment Date and shall be no earlier than thirty (30) days after the date of such Prepayment Notice and no later than sixty (60) days after the date of such Prepayment Notice.

"Property" shall mean the parcel of real property described on Exhibit A attached hereto and made a part hereof, the Improvements now or hereafter erected or installed thereon and all personal property owned by Borrower and encumbered by the Mortgage, together

with all rights pertaining to such property and Improvements, all as more particularly described in the Granting Clauses of the Mortgage.

"Rating Agencies" shall mean, prior to the final Securitization of the Loan, each of S&P, Moody's, Fitch, Morningstar Credit Rating, LLC and DBRS, Inc. or any other nationally-recognized statistical rating agency which has been designated by Lender and, after the final Securitization of the Loan, shall mean any of the foregoing that have rated any of the Securities.

"Rating Agency Confirmation" shall mean a written  affirmation  from each of the Rating Agencies that the credit rating of the Securities by such Rating Agency immediately prior to the occurrence of the event with respect to which such Rating Agency Confirmation is sought will not be qualified, downgraded or withdrawn as a result of the occurrence of such event, which affirmation may be granted or withheld in such Rating Agency's sole and absolute discretion. For the purposes of this Agreement and the other Loan Documents, if any Rating Agency shall waive, decline or refuse to review or otherwise engage any request for a Rating Agency Confirmation hereunder or under the other Loan Documents (hereinafter a "RA Consent"), such RA Consent shall be deemed to eliminate, for such request only, the condition that a Rating Agency Confirmation by such Rating Agency (only) be obtained for purposes of this Agreement or the other Loan Documents, as applicable; provided, however, if Lender does not have a separate and independent approval right with respect to such event set forth herein or in the other Loan Documents, as applicable, then the term "Rating Agency Confirmation" shall be deemed instead to require the approval of Lender based on its good faith determination of whether the applicable Rating Agency would issue a Rating Agency Confirmation for the applicable event. For purposes of clarity, any such waiver, declination or refusal to review or otherwise engage in any request for a Rating Agency Confirmation hereunder or under the other Loan Documents shall not be deemed a waiver, declination or refusal to review or otherwise engage in any subsequent request for a Rating Agency Confirmation hereunder or  under the other Loan Documents, and the condition for Rating Agency Confirmation pursuant to this Agreement and the other Loan Documents for any subsequent request shall apply regardless of any previous waiver, declination or refusal to review or otherwise engage in such prior request.

"REA" shall mean, collectively, as the same may be amended, restated, supplemented or otherwise modified from time to time, any reciprocal easement agreement or similar document affecting the Property now or hereafter of record.

"Registration Statement" shall have the meaning set forth in Section 9.2{b).

"Regulation AB" shall mean Regulation AB under the Securities Act and the Exchange Act, as such Regulation may be amended from time to time.

"Related Loan" shall mean a loan to an Affiliate of Borrower or Guarantor or secured by a Related Property, that is included in a Securitization with the Loan, and any other loan that is cross-collateralized with the Loan.

"Related Party" shall have the meaning set forth in Section 3.l  .46{k).

"Related Property" shall mean a parcel of real property, together with improvements thereon and personal property related thereto, that is "related" within the meaning of the definition of Significant Obligor, to the Property.

"Release Date" shall have the meaning set forth in Section 2.5.l{a).

"Remaining Receipts" shall have the meaning set forth in Section 6.11.1.

"REMIC Trust" shall mean a "real estate mortgage investment conduit" within the meaning of Section 860D of the Code that holds the Note.

"Rents" shall mean all rents, rent equivalents, revenues from the rental of rooms, guest suites, conference and banquet rooms, food and beverage facilities, telephone services, laundry, vending, television and parking, moneys payable as damages (including payments by reason of the rejection of a Lease in a bankruptcy proceeding) or in lieu of rent or rent equivalents, royalties (including all oil and gas or other mineral royalties and bonuses), income, fees, receivables, receipts, revenues, deposits (including security, utility and other deposits), accounts, cash, issues, profits, charges for services rendered, and other payment and consideration of whatever form or nature received by or paid to or for the account of or benefit of Borrower, Manager or any of their respective agents or employees from any and all sources arising from or attributable to the Property and the Improvements, including all receivables, customer obligations, installment payment obligations and other obligations now existing or hereafter arising or created out of the sale, lease, sublease, license, concession or other grant of the right of the use and occupancy of the Property or rendering of services by Borrower, Manager or any of their respective agents or employees, and Insurance Proceeds, if any, from business interruption or other loss of income insurance, but only to the extent Lender elects to treat such Insurance Proceeds as business or rental interruption Insurance Proceeds pursuant to Section 5.4(e) hereof.

"Reporting Failure" shall have the meaning set forth in Section 4.1.7(i).

"Required Financial Item" shall have the meaning set forth in Section 4.l.7(i).

"Required Repairs" shall have the meaning set forth in Section 6.2.1.

"Reserve Funds" shall mean, collectively, all funds deposited by Borrower with Lender or Cash Management Bank pursuant to Article 6 of this Agreement, including, but not limited to, the Insurance Funds, the Tax Funds, the FF&E Reserve Funds, and the Excess Cash Flow Funds.

"Reserve Items" shall have the meaning set forth in Section 6.10.4.

"Restoration" shall mean the repair and restoration of the Property after a Casualty or Condemnation as nearly as possible to the condition the Property was in immediately prior to such Casualty or Condemnation, with such alterations as may be reasonably approved by Lender.

"Restoration DSCR" shall mean, as of any date of determination, the ratio of

(a) the Net Operating Income of the Property, based on rents in place (annualized) and trailing 12-month expenses, to (b) an amount equal to twelve (12) times the Monthly Debt Service Payment Amount.

"Restoration Threshold" shall mean 1% of the outstanding principal amount of

the Loan.

"RICO" shall have the meaning set forth in Section 11.22.

"S&P" shall mean Standard & Poor's Ratings Group, a division of the McGraw-Hill Companies.

"SecondaryMarket   Transaction"   shall   have  the  meanmgset forth m

Section 9.l(a).

"Securities" shall have the meaning set forth in Section 9. l(a).

"Securities Act" shall have the meaning set forth in Section 9.2(a).

"Securitization" shall have the meaning set forth in Section 9.l(a).

"Servicer" shall have the meaning set forth in Section 11.24.

"Servicing Agreement" shall have the meaning set forth in Section 11.24.

"Severed Loan Documents" shall have the meaning set forth in Section 10.2(c).

"Significant Obligor" shall have the meaning set forth in Item l lOl(k) of Regulation AB under the Securities Act.

"Springing Recourse Event" shall have the meaning set forth in Section 11.22.

"Standard Statements" shall have the meaning set forth in Section 9.l(c)(i).

"State" shall mean Texas.

"Stated Maturity Date" shall mean April 6, 2029.

"Successor Borrower" shall have the meaning set forth in Section 2.5.3.

"Survey" shall mean a survey of the Property prepared by a surveyor licensed in the State and satisfactory to Lender and the company or companies issuing the Title Insurance Policy, and containing a certification of such surveyor satisfactory to Lender.

"Sweep Event Period" shall mean a period commencing upon the earlier of (i) the occurrence of an Event of Default, (ii) the Debt Service Coverage Ratio (commencing on the Monthly Payment Date occurring six (6) months from the Closing Date based on the trailing twelve (12) calendar months, as calculated by Lender) being less than 1.25 to 1.00, or (iii) the

occurrence of a Franchise Termination Trigger Event, which such Sweep Event Period shall expire (a) with regard to any Sweep Event Period commenced in connection with clause (i) above, upon the cure (if applicable) of such Event of Default and Lender's acceptance of such cure in its sole and absolute discretion (provided that no other Sweep Event Period has commenced and is continuing), (b) with regard to any Sweep Event Period commenced in connection  with clause (ii) above, the Debt Service Coverage Ratio (based on the trailing twelve

(12) calendar months, as calculated by Lender) is equal to or greater than 1.35 to 1.00 for two (2) consecutive calendar quarters (provided that no other Sweep Event Period has commenced and is continuing), or (c) with regard to any Sweep Event Period commenced in connection with clause

(iii) above, Borrower enters into a franchise extension agreement or a replacement franchise agreement satisfactory to Lender, and delivers to Lender a comfort letter from the replacement franchisor in form and substance satisfactory to Lender (provided that no other Sweep Event Period has commenced and is continuing).

"Tax Account" shall have the meaning set forth in Section 6.3.1.

"Tax Funds" shall have the meaning set forth in Section 6.3.1.

"Taxes" shall mean all real estate and personal property taxes, assessments, water rates or sewer rents, now or hereafter levied or assessed or imposed against the Property or part thereof, together with all interest and penalties thereon.

"Tenant" shall mean any Person obligated by contract or otherwise to pay monies (including a percentage of gross income, revenue or profits) under any Lease now or hereafter affecting all or any part of the Property.

"Term" shall mean the entire term of this Agreement, which shall expire upon repayment in full of the Debt and full performance of each and every obligation to be performed by Borrower pursuant to the Loan Documents.

"Title Insurance Policy" shall mean a TLTA mortgagee title insurance policy in the form acceptable to Lender issued with respect to the Property and insuring the Lien of the Mortgage.

"TLTA" shall mean Texas Land Title Association, or any successor thereto.

"Transfer" shall have the meaning set forth in Section 4.2.1.

"Treasury Rate" shall mean the yield calculated by the linear interpolation of the yields, as reported in Federal Reserve Statistical Release H.15 Selected Interest Rates under the heading U.S. Government Securities/Treasury Constant Maturities for the week ending prior to the Prepayment Date, of U.S. Treasury constant maturities with maturity dates (one longer and one shorter) most nearly approximating the Stated Maturity Date. (In the event Release H.15 is no longer published, Lender shall select a comparable publication to determine the Treasury Rate.)

"Trustee" shall mean any trustee holding the Loan in a Securitization.

"UCC" or "Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect in the State.

"Undenvriter Group" shall have the meaning set forth in Section 9.2(b).

"Updated Information" shall have the meaning set forth in Section 9.l(b)(i).

"U.S. Obligations" shall mean securities evidencing an obligation to timely pay principal and/or interest in a full and timely manner that are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged, (ii) not subject to prepayment, call or early redemption and (iii) "government securities" as defined in the Treasury Regulations Section 1.860G-2(a)(8)(ii).

"U.S. Person" shall mean any Person that is (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized under the laws of the United States or any state, commonwealth or district thereof, or (iii) any estate or trust that is subject to United States federal income taxation, regardless of the source of its income.

"Yield Maintenance Amount" shall mean the present value, as  of  the Prepayment Date, of the remaining scheduled payments of principal and interest from the Prepayment Date through the Stated Maturity Date (including any balloon payment) determined by discounting such payments at the Discount Rate, less the amount of principal being prepaid.

Section 1.2Principles of Construction.

All references to sections and schedules are to sections and schedules in or to this Agreement unless otherwise specified. Unless otherwise specified, the words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement and the word "including" shall mean "including but not limited to". Unless otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to both the singular and plural  forms of the terms so defined.

ARTICLE2

THE LOAN

Section 2.1The Loan.

13.3.1 Agreement to Lend and Borrow. Subject to and upon the terms and conditions set forth herein, Lender shall make the Loan to Borrower and Borrower shall accept the Loan from Lender on the Closing Date.

13.3.2 Single Disbursement to Borrower. Borrower shall receive only one borrowing hereunder in respect of the Loan and any amount borrowed and repaid hereunder in respect of the Loan may not be reborrowed.

13.3.3 The Note. The Loan shall be evidenced by that certain Promissory  Note of even date herewith, in the stated principal amount of Nine Million Five Hundred Thousand and No/100 Dollars ($9,500,000.00) executed by Borrower and payable to the order of Lender in evidence of the Loan (as the same may hereafter be amended, supplemented, restated, increased, extended or consolidated from time to time, the "Note") and shall be repaid in accordance with the terms of this Agreement and the Note.

13.3.4 Use of Proceeds. Borrower shall use proceeds of the Loan to (i) pay and discharge any existing loans relating to the Property, (ii) pay all past-due Taxes, Insurance Premiums and Other Charges, if any, in respect of the Property, (iii) make initial deposits of the Reserve Funds, (iv) pay costs and expenses incurred in connection with the closing of the Loan, and (v) to the extent any proceeds remain after satisfying clauses (i) through (iv) above, for such other general corporate purposes as Borrower shall designate.

Section 2.2Interest Rate.

13.3.1 Interest Rate. Interest on the Outstanding Principal Balance shall accrue throughout the Term at the Interest Rate.

13.3.2 Intentionally Omitted.

13.3.3 Default Rate. In the event that, and for so long as, any Event of Default shall have occurred and be continuing, the Outstanding Principal Balance and, to the extent permitted by law, overdue interest in respect of the Loan, shall accrue interest at the Default Rate, calculated from the date such payment was due without regard to any grace or cure periods contained herein. Interest at the Default Rate shall be paid immediately upon demand, which demand may be made as frequently as Lender shall elect.

13.3.4 Interest Calculation. Interest on the Outstanding Principal Balance  shall be calculated by multiplying (A) the actual number of days elapsed in the period for which the calculation is being made by (B) a daily rate based on a three hundred sixty (360) day year (that is, the Interest Rate or the Default Rate, as then applicable, expressed as an annual rate divided by 360) by (C) the Outstanding Principal Balance. The accrual  period  for calculating interest due on each Monthly Payment Date shall be the Interest Period immediately prior to such Monthly Payment Date.

13.3.5 Usury Savings. This Agreement and the other Loan Documents  are subject to the express condition that at no time shall Borrower be required to pay interest on the principal balance of the Loan at a rate which could subject Lender to either civil or criminal liability as a result of being in excess of the Maximum Legal Rate. If by the terms of this Agreement or the other Loan Documents, Borrower is at any time required or obligated to pay interest on the principal balance due hereunder at a rate in excess of the Maximum Legal Rate, the Interest Rate or the Default Rate, as the case may be, shall be deemed to be immediately reduced to the Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the sums due under the Loan, shall, to the extent permitted by applicable law, be

amortized, prorated, allocated and spread throughout the full stated term of the Loan until payment in full so that the rate or amount of interest on account of the Loan does not exceed the Maximum Legal Rate from time to time in effect and applicable to the Loan for so long as the Loan is outstanding.

Section 2.3Loan Payments.

13.3.1 Payments. Borrower shall pay to Lender (a) on the date hereof, an amount equal to interest only on the Outstanding Principal Balance from the Closing Date up to and including April 5, 2019 (the "Initial Interest Period"), (b) on each Monthly Payment Date thereafter beginning on May 6, 2019 up to and including the Maturity Date, a payment of principal and interest in an amount equal to the Monthly Debt Service Payment Amount, which payments shall be applied first to accrued and unpaid interest and the balance to the Outstanding Principal Balance, and (c) all amounts required in respect of Reserve Funds as set forth in Article 6 hereof. The Monthly Debt Service Payment Amount and any deposits required to be  made with respect to the Reserve Funds due on the first Monthly Payment Date shall be collected by Lender on the Closing Date and shall be applied to the Debt Service and/or to make initial deposits of the Reserve Funds, as applicable, on the first Monthly Payment Date.

13.3.2 Intentionally Omitted.

13.3.3 Payments Generally. After the Initial Interest Period, each interest accrual period thereafter (each, an "Interest Period") shall commence on the sixth (6th)  day of each calendar month during the Term and shall end on and include the fifth (5th)  day of the following calendar month. For purposes of making payments hereunder, but not for purposes  of  calculating interest accrual periods, if the day on which such payment is due is not a Business Day, then amounts due on such date shall be due on the immediately preceding Business Day. Lender shall have the right from time to time, in its sole discretion, upon not less than thirty (30) days' prior written notice to Borrower, to change the Monthly Payment Date to a different calendar day and, if requested by Lender, Borrower shall promptly execute an amendment to this Agreement to evidence such change; provided, however, that if Lender shall have elected to change the Monthly Payment Date as aforesaid, Lender shall have the option, but not the obligation, to adjust the Interest Period accordingly. With respect to payments of principal due  on the Maturity Date, interest shall be payable at the Interest Rate or the Default Rate, as the case may be, through and including the day immediately preceding such Maturity Date. All amounts due pursuant to this Agreement and the other Loan Documents shall be payable without setoff, counterclaim, defense or any other deduction whatsoever.

13.3.4 Payment on Maturity Date. Borrower shall pay to Lender on the Maturity Date the Outstanding Principal Balance, all accrued and unpaid interest and all other amounts due hereunder and under the Note, the Mortgage and the other Loan Documents.

13.3.5 Late Payment Charge.If any principal, interest or any other sum due  under the Loan Documents (other than the Outstanding Principal Balance due and payable on the Maturity Date) is not paid by Borrower on the date on which it is due (taking into account any applicable notice and/or grace period provided pursuant to the terms of the Loan Documents), Borrower shall pay to Lender upon demand an amount equal to the lesser of five percent (5%) of

such unpaid sum or the maximum amount permitted by applicable law in order to defray the expense incurred by Lender in handling and processing such delinquent payment and to compensate Lender for the loss of the use of such delinquent payment. Any such amount  shall be secured by the Mortgage and the other Loan Documents to the extent permitted by law.

13.3.6 Method and Place of Payment.

(a) Except as otherwise specifically provided herein, all payments and prepayments under this Agreement and the Note shall be made to Lender not later than 12:00 noon, New York City time, on the date when due and shall be made in lawful money of the United States of America in immediately available funds at Lender's office or at such other place as Lender shall from time to time designate, and any funds received by Lender after such time shall, for all purposes hereof, be deemed to have been paid on the next succeeding Business Day.

(b) Whenever any payment to be made hereunder or under any other Loan Document shall be stated to be due on a day which is not a Business Day, the due date thereof shall be the immediately preceding Business Day.

(c) All payments required to be made by Borrower hereunder or under the Note or the other Loan Documents shall be made irrespective of, and without deduction for, any setoff, claim or counterclaim and shall be made irrespective of any defense thereto.

Section 2.4Prepayments.

13.3.1 Prepayments. Except as otherwise provided herein, Borrower shall not have the right to prepay the Loan in whole or in part prior to the Stated Maturity Date.

13.3.2 Intentionally Omitted.

13.3.3 Open Prepayment. Notwithstanding anything to the contrary contained herein, provided no Event of Default shall have occurred, and provided that Borrower shall deliver to Lender a Prepayment Notice, Borrower may prepay the entire principal balance of the Note and any other amounts outstanding under the Note, this Agreement, or any of the other Loan Documents (including, without limitation, all amounts pursuant to Section 2.4.6(a) and Section 2.4.6(c) hereof), without payment of the Prepayment Fee or any other prepayment premium or fee, on any Monthly Payment Date on or after the Open Prepayment Date.

13.3.4 Mandatory Prepayments.If Lender is not obligated to make Net Proceeds available to Borrower for Restoration, on the next occurring Monthly Payment Date following the date on which (a) Lender actually receives any Net Proceeds, and (b) Lender has determined that such Net Proceeds shall be applied against the Outstanding Principal Balance, (1) Borrower shall prepay, or authorize Lender to apply Net Proceeds as a prepayment of, the Outstanding Principal Balance in an amount equal to one hundred percent (100%) of such Net Proceeds and

(2) Borrower shall comply with the provisions set forth in Section 2.4.6. Notwithstanding anything herein to the contrary, so long as no Event of Default has occurred and is continuing, no Prepayment Fee shall be due in connection with any prepayment made pursuant to this

Section 2.4.4.Any partial prepayment under this Section 2.4.4 shall be applied to the last payments of principal due under the Loan.

13.3.5 Prepayments After Default.If after the occurrence and during the continuance of an Event of Default, payment of all or any part of the Debt is tendered by Borrower or otherwise recovered by Lender (including through application of any Reserve Funds), such tender or recovery shall be deemed (a) to have been made on the next occurring Monthly Payment Date together with the Monthly Debt Service Payment Amount, and (b) to be a voluntary prepayment by Borrower in violation of the prohibition against prepayment set forth in Section 2.4.1 hereof, and Borrower shall pay, in addition to the Debt, an amount equal to the Prepayment Fee.

13.3.6 Payments in Connection with a Prepayment.

(a) On the date on which a prepayment, voluntary or mandatory, is made under the Note or as required under this Agreement, which date must be a Business Day, Borrower shall pay to Lender all unpaid interest on the portion of the Outstanding Principal Balance prepaid plus, if the Prepayment Date is not a Monthly Payment Date, all interest accruing for the full Interest Period in which the Prepayment Date falls.

(b) On the Prepayment Date, Borrower shall pay to Lender (i) the Prepayment Fee and (ii) all other sums, excluding scheduled interest payments, then due under the Note, this Agreement, the Mortgage, and the other Loan Documents.

(c) Borrower shall pay all costs and expenses of Lender incurred in connection with the prepayment (including without limitation, any costs and expenses associated with a release of the Lien of the Mortgage as set forth in Section 2.4.7 below and reasonable attorneys' fees and expenses).

13.3.7 Release on Payment in Full. Lender shall, upon the written request and at the expense of Borrower, upon payment in full of all principal and interest due on the Loan and all other amounts due and payable under the Loan Documents in accordance with the terms and provisions of the Note and this Agreement, release the Lien of the Mortgage.

Section 2.5Defeasance.

13.3.1 Conditions to Defeasance. Provided no Event of Default has occurred and is continuing, at any time after the date which is the earlier to occur of (A) two (2) years after the "startup day," within the meaning of Section 860G(a)(9) of the Code, of the final "real estate mortgage investment conduit," established within the meaning of Section 860D of the Code, that holds any note that evidences all or any portion of the Loan or (B) three (3) years after the date hereof (the "Defeasance Lockout Expiration Date"), Borrower may cause the release of the Property (in whole but not in part) from the Lien of the Mortgage and the other Loan Documents upon the satisfaction of the following conditions:

(a) not less than sixty (60) days' prior written notice shall be given to Lender specifying a date (the "Release Date") on which the Defeasance Collateral is to be delivered, such Release Date to occur only on a Monthly Payment Date;

(b) all accrued and unpaid interest and all other sums due under the Note and under the other Loan Documents up to the Release Date, including, without limitation, all costs and expenses incurred by Lender or its agents in connection with such release (including, without limitation, the standard and customary fees and expenses incurred by attorneys and accountants in connection with the review of the proposed Defeasance Collateral and the preparation of the Defeasance Security Agreement and related documentation), shall be paid in full on or prior to the Release Date; and

(c) Borrower shall deliver to Lender on or prior to the Release Date:

(i) an amount equal to that which is sufficient to purchase U.S. Obligations that provide for payments (1) on or prior to, but as close as possible to and including, all successive scheduled Monthly Payment Dates after the Release Date through the Stated Maturity Date, and (2) in amounts equal to or greater than the Monthly Debt Service Payment Amount through and including the Stated Maturity Date together with payment in full of the Outstanding Principal Balance as of the Stated Maturity Date (the "Defeasance Collateral"), each of which shall be duly endorsed by the holder thereof as directed by Lender or accompanied by a written instrument of transfer in form and substance wholly satisfactory to Lender (including, without limitation, such instruments as may be required by the depository institution holding such securities to effectuate book-entry transfers and pledges through the book-entry facilities of such institution) in order to create a first priority security interest therein in favor of the Lender in conformity with all applicable state and federal laws governing granting of such security interests;

(ii) a pledge and security agreement, in form and substance satisfactory to Lender in its sole discretion, creating a first priority security interest in favor of Lender in the Defeasance Collateral (the "Defeasance Security Agreement"), which shall provide, among other things, that any payments generated by the Defeasance Collateral shall be paid directly to Lender and applied by Lender in satisfaction of all amounts then due and payable hereunder and any excess received by Lender from the Defeasance Collateral over the amounts payable by Borrower hereunder or under the Note shall be refunded to Borrower promptly after each Monthly Payment Date;

(iii) a certificate of Borrower certifying that all of the requirements set forth in this Section 2.5 have been satisfied;

(iv) an opinion of counsel for Borrower in form and substance and delivered by counsel satisfactory to Lender in its sole discretion stating, among other things, that (1) Lender has a perfected first priority security interest in the Defeasance Collateral and that the Defeasance Security Agreement is enforceable against Borrower in accordance with its terms; and (2) that any REMIC Trust formed pursuant to a Securitization will not fail to maintain its status as a "real estate mortgage investment conduit" within the meaning of Section 860D of the Code as a result of such defeasance;

(v) evidence in writing from the applicable Rating Agencies to the effect that the defeasance of the Loan and collateral substitution will not result in a downgrading, withdrawal or qualification of the respective ratings in effect immediately prior to such defeasance event for any securities issued in connection with the Securitization which are then outstanding;

(vi) a certificate from a firm of independent public accountants acceptable to Lender certifying that the Defeasance Collateral is sufficient to satisfy the provisions of Section 2.5.l(c)(i) above;

(vii) such other certificates, documents or instruments as Lender may reasonably require;

(viii) in  connection  with   the   conditions   set   forth   in Section 2.5.l(c) above, Borrower hereby appoints Lender as its agent and attorney in  fact  for  the  purpose  of  using  the  amounts   delivered   pursuant   to Section 2.5.l(c)(i) above to purchase the Defeasance Collateral; and

(ix) payment of all escrow, closing, recording, legal, appraisal, Rating Agency and other fees, costs and expenses paid or incurred by Lender or its agents in connection with Borrower's exercise of its rights under this Section 2.5, the release of the lien of Mortgage on the Property, the review of the proposed Defeasance Collateral and the preparation of the Defeasance Security Agreement and related documentation.

13.3.2 Release of Property. Upon compliance with the requirements of this Section 2.5, the Property shall be released from the Lien of the Mortgage and the other Loan Documents, and the Defeasance Collateral shall constitute the only collateral which shall secure the Note and all other Obligations. Lender will, at Borrower's expense, execute and deliver any agreements reasonably requested by Borrower to release the Lien of the Mortgage from the Property. Borrower, pursuant to the Defeasance Security Agreement, shall authorize and direct that the payments received from Defeasance Collateral be made directly to Lender and applied to satisfy the Obligations, including payment in full of the Outstanding Principal Balance as of the Stated Maturity Date.

13.3.3 Successor Borrower. Upon the release of the Property in accordance with Section 2.5.2, Borrower shall assign all its Obligations, together with the pledged Defeasance Collateral, to a successor, single purpose, bankruptcy remote entity designated by Lender in its sole discretion or, at the option of Lender, designated by Borrower and approved by Lender (in each case, the "Successor Borrower"). Lender shall have the right to establish or designate the Successor Borrower and to purchase, or cause to be purchased, the Defeasance Collateral (the "Defeasance Rights and Obligations"). Such rights to designate or establish the Successor Borrower as provided above or to purchase, or cause the purchase of, on behalf of Borrower the pledged Defeasance Collateral as provided above may be exercised by Starwood Mortgage Capital LLC in its sole discretion and shall be retained by Starwood Mortgage Capital LLC as  the original Lender herein (and any successor or assign of Starwood Mortgage Capital LLC  under a specific assignment of such retained rights separate and apart from a Secondary Market

Transaction related to all or any portion of the Loan), notwithstanding any Secondary Market Transaction related to all or any portion of the Loan. Such successor entity shall execute an assumption agreement in form and substance satisfactory to Lender in its sole discretion pursuant to which it shall assume Borrower's Obligations and the Defeasance Security Agreement. As conditions to such assignment and assumption, Borrower shall (i) deliver to Lender an opinion of counsel in form and substance and delivered by counsel satisfactory to Lender in its sole discretion stating, among other things, that such assumption agreement is enforceable against Borrower and such successor entity in accordance with its terms and that the Note, the Defeasance Security Agreement and the other Loan Documents, as so assumed, are enforceable against such successor entity in accordance with their respective terms, and (ii) pay all costs and expenses incurred by Lender or its agents in connection with such assignment and assumption (including, without limitation, the review of the proposed transferee and the preparation of the assumption agreement and related documentation). Additionally, Borrower shall pay all costs  and expenses incurred by Successor Borrower, including reasonable attorneys' fees  and expenses, incurred in connection therewith. Upon such assumption, Borrower shall be relieved of its Obligations hereunder, under the other Loan Documents and under the Defeasance Security Agreement other than those Obligations which are specifically intended to survive the termination, satisfaction or assignment of this Agreement or the exercise of Lender's rights and remedies hereunder.

13.3.4 Appointment as Attorney in Fact. In connection with the conditions set forth in this Section 2.5, Borrower hereby appoints Lender as its agent and attorney-in-fact for the purpose of purchasing the Defeasance Collateral with funds provided  by  Borrower. Borrower shall pay any and all expenses incurred in the purchase of the Defeasance Collateral and any revenue, documentary stamp or intangible taxes or any other tax or charge due in connection with the transfer of the Note or otherwise required to accomplish the agreements of this Section 2.5.

ARTICLE3 REPRESENTATIONS AND WARRANTIES

Section 3.1Borrower Representations.

Borrower represents and warrants and, to the extent applicable, covenants:

13.3.1 Organization. Borrower is duly organized, validly existing and in good standing with full power and authority to own its assets and conduct its business, and is duly qualified and in good standing in all jurisdictions in which the ownership or lease of its property or the conduct of its business requires such qualification, and Borrower has taken all necessary action to authorize the execution, delivery and performance of this Agreement and the  other Loan Documents by it, and has the power and authority to execute, deliver and perform under this Agreement, the other Loan Documents and all the transactions contemplated hereby. Borrower possesses all rights, licenses, permits and authorizations, governmental or otherwise, necessary to entitle it to own its properties and to transact the businesses in which it is now engaged, and the sole business of Borrower is the ownership, management and operation of the Property.

13.3.2 Proceedings. This Agreement and the other Loan Documents have been duly authorized, executed and delivered by Borrower and, as applicable, by Guarantor or other obligor thereunder, and constitute a legal, valid and binding obligation of Borrower and, as applicable, by Guarantor or other obligor thereunder, enforceable against such parties in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization or other similar laws affecting the enforcement of creditors' rights generally, and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

13.3.3 No Conflicts. The execution and delivery of this Agreement and the other Loan Documents by Borrower and the performance of its Obligations hereunder and thereunder will not conflict with any provision of any law or regulation to which Borrower is subject, or conflict with, result in a breach of, or constitute a default under, any of the terms, conditions or provisions of any of Borrower's organizational documents or any agreement or instrument to which Borrower is a party or by which it is bound, or any order or decree applicable to Borrower, or result in the creation or imposition of any Lien on any of Borrower's assets or property (other than pursuant to the Loan Documents).

13.3.4 Litigation. There is no action, suit, proceeding or investigation  pending or, to the best of Borrower's knowledge, threatened against Borrower, Guarantor, the Manager or the Property in any court or by or before any other Governmental Authority which, in each case, if adversely determined, could reasonably be expected to materially and adversely affect (a) title to the Property, (b) the validity or enforceability of the Mortgage, (c) Borrower's ability to perform under the Loan Documents, (d) Guarantor's ability to perform under the Guaranty, (e) the use, operation or value of the Property, (f) the principal benefit of the security intended to be provided by the Loan Documents, (g) the current ability of the Property to generate net cash flow sufficient to service the Loan, (h) the current principal use of the Property or (i) the condition (financial or otherwise) or business of Borrower (including the ability of Borrower to carry out the transactions contemplated by this Agreement), Guarantor, or the condition or ownership of the Property.

13.3.5 Agreements. Borrower is not a party to any agreement or instrument or subject to any restriction which could reasonably be expected to materially and adversely affect Borrower or the Property, or Borrower's business, properties or assets, operations or condition, financial or otherwise. Borrower is not in default with respect  to any order or decree  of any court or any order, regulation or demand of any Governmental Authority, which default could reasonably be expected to have consequences that would materially and adversely affect the condition (financial or other) or operations of Borrower or its properties or might have consequences that would adversely affect its performance hereunder. To the best of Borrower's knowledge, Borrower is not in default in any material respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Permitted Encumbrance or any other agreement or instrument to which it is a party or by which it or the Property is bound. Borrower has no material financial obligation (contingent or otherwise) under any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument  to which Borrower is a party or by which Borrower or the Property is otherwise bound, other than

(a) obligations incurred in the ordinary course of the operation of the Property and

(b) obligations under the Loan Documents.

2.3.1 Consents. No consent, approval, authorization or order of any court or Governmental Authority is required for the execution, delivery and performance by Borrower of, or compliance by Borrower with, this Agreement or the other Loan Documents or the consummation of the transactions contemplated hereby, other than those which have been obtained by Borrower.

2.3.2 Title. Borrower has good, marketable and insurable fee simple title to the real property comprising part of the Property and good title to the balance of the Property owned by it, free and clear of all Liens whatsoever except the Permitted Encumbrances. The Mortgage, when properly recorded in the appropriate records, together with any Uniform Commercial Code financing statements required to be filed in connection therewith, will create (i) a legal, valid and enforceable first priority, perfected Lien on Borrower's interest in the Property, subject only to Permitted Encumbrances, and (ii) valid, perfected security interests in and to, and perfected collateral assignments of, all personal property and personalty (including the Leases), all in accordance with the terms thereof, in each case subject only to the Permitted Encumbrances. There are no mechanics', materialman's or other similar Liens, encumbrances or claims which have been filed (and no rights exist which under law could give rise to any such lien or encumbrance) which are or may be Liens prior to, or equal or coordinate with, the Lien of the Mortgage. None of the Permitted Encumbrances, individually or in the aggregate, (a) materially interfere with the benefits of the security intended to be provided by the Mortgage and this Agreement, (b) materially and adversely affect the value of the Property, (c) impair the use or operation of the Property (as currently used), or (d) impair Borrower's ability to pay its Obligations in a timely manner.

2.3.3 No Plan Assets. As of the date hereof and throughout the Term

(i) Borrower does not sponsor, is not obligated to contribute to, and is not itself and will not be an "employee benefit plan," as defined in Section 3(3) of ERISA, subject to Title I of ERISA or Section 4975 of the Code, (ii) none of the assets of Borrower constitutes or will constitute "plan assets" of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101,

(iii) Borrower is not and will not be a "governmental plan" within the meaning of Section 3(3) of ERISA, and (iv) transactions by or with Borrower are not and will not be subject to state statutes regulating investment of, and fiduciary obligations with respect to, governmental  plans within the meaning of Section 3(3) of ERISA which is similar to the provisions of Section 406 of ERISA or Section 4975 of the Code and which prohibit or otherwise restrict the transactions contemplated by this Agreement including, but not limited to, the exercise by Lender of any of its rights under the Loan Documents.

3.3.1 Compliance. Borrower and the Property (including, but not limited to the Improvements) and the use thereof comply in all material respects with all applicable Legal Requirements, including parking, building and zoning and land use laws, ordinances, regulations, rules, covenants, restrictions and codes. Borrower is not in default or violation of any  order,  writ, injunction, decree or demand of any Governmental Authority, the violation of which could reasonably be expected to materially adversely affect the condition (financial or otherwise) or business of Borrower. To the best of Borrower's knowledge, Borrower has not committed any  act which may give any Governmental Authority the right to cause Borrower to forfeit the Property or any part thereof or any monies paid in performance of Borrower's Obligations under any of the Loan Documents. The Property is used exclusively as a hotel and for other

appurtenant and related uses. In the event that all or any part of the Improvements are destroyed or damaged, said Improvements can be legally reconstructed to their condition prior to such damage or destruction, and thereafter exist for the same use without violating any zoning or other ordinances applicable thereto and without the necessity of obtaining any variances or special permits. No legal proceedings are pending or, to the knowledge of Borrower, threatened with respect to the zoning of the Property. Neither the zoning nor any other right to construct, use or operate the Property is in any way dependent upon or related to any property other than the Property. The use being made of the Property is in conformity with the certificate of occupancy issued for the Property and all other restrictions, covenants and conditions affecting the Property.

3.3.2 Financial Information. All financial data, including the statements of cash flow and income and operating expense, that have been delivered to Lender in connection with the Loan (i) are true, complete and correct in all material respects, (ii) accurately represent the financial condition of the Property as of the date of such reports, and (iii) have been prepared in accordance with GAAP or sound accounting principles, consistently applied, throughout the periods covered, except as disclosed therein. Borrower does not have any contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments that are known to Borrower and reasonably likely to have a materially adverse effect on the Property or the operation thereof, except as referred to or reflected in said financial statements. Since the date of the financial statements, there has been no material adverse change in the financial condition, operations or business of Borrower or the Property from that set forth in said financial statements.

3.3.3 Condemnation. No Condemnation or other proceeding has been commenced or, to Borrower's best knowledge, is contemplated with respect to all or any portion of the Property or for the relocation of roadways providing access to the Property.

3.3.4 Easements; Utilities and Public Access. All easements, cross easements, licenses, air rights and rights-of-way or other similar property interests (collectively, "Easements"), if any, necessary for the full utilization of the Improvements for their intended purposes have been obtained, are described in the Title Insurance Policy and are in full force and effect without default thereunder. The Property is located on or adjacent to a public road and has direct legal access to such road, or has access via an irrevocable easement or irrevocable right of way permitting ingress and egress to and from a public road. The Property is served by water, sewer, sanitary sewer and storm drain facilities and all required utilities, each of which is appropriate to service the Property for its intended uses. All public utilities necessary or convenient to the full use and enjoyment of the Property are located in the public right-of-way abutting the Property, and all such utilities are connected so as to serve the Property without passing over other property absent a valid irrevocable easement. All roads necessary for the use of the Property for its current purpose have been completed and dedicated to public use and accepted by all Governmental Authorities.

3.3.5 Separate Lots. The Property is comprised of one (1) or more parcels which constitute separate tax lots and do not constitute a portion of any other tax lot not a part of the Property.

3.3.6 Assessments. There are no pending or proposed special or other assessments for public improvements or otherwise affecting the Property, nor are there any contemplated improvements to the Property that may result in such special or other assessments.

3.3.7 Enforceability. The Loan Documents are not subject to any right of rescission, offset, counterclaim or defense by Borrower or Guarantor including the defense of usury, nor would the operation of any of the terms of the Loan Documents, or the exercise of any right thereunder, render the Loan Documents unenforceable, and none of Borrower or Guarantor have asserted any right of rescission, set-off, counterclaim or defense with respect thereto.

3.3.8 Assignment of Leases. The Assignment of Leases creates a valid, first priority collateral assignment of, or a valid, first priority security interest in, rents and certain rights under the Leases, subject only to a license granted to Borrower to exercise certain rights and to perform certain obligations of the lessor under the Leases, including the right to operate the Property. No Person other than Lender has any interest in or assignment of the Leases or any portion of the Rents due and payable or to become due and payable thereunder.

3.3.9 Insurance. Borrower has obtained and has delivered to Lender original or certified copies of all of the Policies, with all premiums prepaid thereunder, reflecting the insurance coverages, amounts and other requirements set forth in this Agreement. No claims have been made under any of the Policies, and no Person, including Borrower, has done, by act or omission, anything which would impair the coverage of any of the Policies.

3.3.10 Licenses. All certifications, permits, licenses, franchises, consents, approvals and any other applicable governmental authorizations, including, without limitation, certificates of completion and occupancy permits required of Borrower for the legal use, occupancy and operation of the Property as a hotel (collectively, the "Licenses"), have been obtained and are in full force and effect. Borrower shall keep and maintain all  Licenses necessary for the operation of the Property as a hotel. The use being made of the Property is in conformity with the certificate of occupancy issued for the Property.

3.3.11 Flood Zone. None of the Improvements on the Property is located in an area identified by the Federal Emergency Management Agency as a special flood hazard area, or, if so located, the flood insurance required pursuant to Section 5.1.l{a) hereof is in full force and effect with respect to the Property.

3.3.12 Physical Condition. Except as may be expressly set forth in the Physical Condition Report, the Property, including all buildings, improvements, parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection systems, electrical systems, equipment, elevators, exterior sidings and doors, landscaping, irrigation systems and all structural components, are in good condition, order and repair in all material respects; to the best of Borrower's knowledge, there exists no structural or  other material defect or damage in the Property, whether latent or otherwise, and Borrower has not received notice from any insurance company or bonding company of any defects or inadequacies in the Property, or any part thereof, which would adversely affect the insurability of the same or cause the imposition of extraordinary premiums or charges thereon or of any termination or threatened termination of any policy of insurance or bond.

3.3.13 Boundaries. All of the Improvements which were included in determining the appraised value of the Property lie wholly within the boundaries and building restriction lines of the Property, and no improvements on adjoining properties encroach upon the Property, and no easements or other encumbrances affecting the Property encroach upon any of the Improvements, so as to affect the value or marketability or current use of the Property. No improvements on adjoining parcels encroach onto the Property except for encroachments that do not materially and adversely affect the value or current use of the Property. No Improvements encroach upon any easements except for encroachments the removal of which would not materially and adversely affect the value or current use of the Property.

3.3.14 Leases. Other than unwritten agreements with transient hotel guests, as of the Closing Date, there are no Leases in place affecting the Property.

3.3.15 Filing and Recording Taxes. All transfer taxes, deed stamps, intangible taxes or other amounts in the nature of transfer taxes required to be paid under applicable Legal Requirements in connection with the transfer of the Property to Borrower have been paid or are being paid simultaneously herewith. All mortgage, mortgage recording, stamp, intangible or other similar tax required to be paid under applicable Legal Requirements in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Loan Documents, including the Mortgage, have been paid or are being paid simultaneously herewith. All taxes and governmental assessments due and owing in respect of the Property have been paid, or an escrow of funds in an amount sufficient to cover such payments has been established hereunder or are insured against by the Title Insurance Policy.

3.3.16 SinglePurpose. Borrower hereby represents and warrants to, and covenants with, Lender that since the date of its formation and at all times on and after the date hereof and until such time as the Obligations shall be paid and performed in full:

(a) Borrower (i) has been, is, and will be organized solely for the purpose of acquiring, developing, owning, holding, selling, leasing, transferring, exchanging, managing and operating the Property, entering into this Agreement with the Lender, refinancing the Property in connection with a permitted repayment of the Loan, and transacting lawful business that is incident, necessary and appropriate to accomplish the foregoing, and (ii) has not owned, does not own, and will not own any asset or property other than (A) the Property, and (B) incidental personal property necessary for the ownership or operation of the Property.

(b) Borrower has not engaged and will not engage in any business other than the ownership, management and operation of the Property and Borrower will conduct and operate its business as presently conducted and operated.

(c) Borrower has not and will not enter into any contract or agreement with any Affiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair, commercially reasonable, and no less favorable to it than would be available on an arms-length basis with third parties other than any such party.

(d) Borrower has not incurred and will not incur any Indebtedness other than (i) the Debt, and (ii) unsecured trade payables and operational debt not evidenced by a note and in an aggregate amount not exceeding two percent (2%) of the original principal amount of the Loan at any one time; provided that any Indebtedness incurred pursuant to subclause (ii) shall be (A) outstanding not more than sixty (60) days, and (B) incurred in the ordinary course of business (the Indebtedness described in the foregoing clauses (i) and (ii) is referred to herein, collectively, as "Permitted Indebtedness"). No Indebtedness other than the Debt may be secured  (senior, subordinate or pari passu) by the Property.

,  (e) Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and has not and shall not acquire obligations or securities of its Affiliates.

(f) Borrower has been, is, and will remain solvent and Borrower has paid and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall become due.

(g) Borrower has done or caused to be done, and will do, all things necessary to observe organizational formalities and preserve its existence, and Borrower has not and will not, (i) terminate or fail to comply with the provisions of its organizational documents, or (ii) unless (A) Lender has consented and (B) following a Securitization of the Loan, the applicable Rating Agencies have issued a Rating Agency Confirmation in connection therewith, amend, modify or otherwise change its partnership certificate, partnership agreement, articles of incorporation and bylaws, operating agreement, trust or other organizational documents in all material respects.

(h) Borrower has maintained and will maintain all of its books, records, financial statements and bank accounts separate from those of its Affiliates and any other Person. Borrower's assets will not be listed as assets on the financial statement of any other Person, provided, however, that Borrower's assets may be included in a consolidated financial statement of its Affiliates provided that (i) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of Borrower and such Affiliates and to indicate that Borrower's assets and credit are not available to satisfy the debts and other obligations of such Affiliates or any other Person, and (ii) such assets shall be listed on Borrower's own separate balance sheet. Borrower will file its own tax returns (to the extent Borrower is required to file any  such tax returns) and will not file a consolidated federal income tax return with any other Person. Borrower has maintained and shall maintain its books, records, resolutions and agreements as official records.

(i) Borrower has been, will be, and at all times has held and will hold itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent party of Borrower), shall correct any known misunderstanding regarding its status as a separate entity, shall conduct business in its own name, shall not identify itself or any of its Affiliates as a division or

department or part of the other and shall maintain and utilize separate stationery, invoices and checks bearing its own name.

(j)    Borrower has maintained and intends to maintain adequate capital  for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, nothing herein shall require any partners or members of Borrower to make additional capital contributions.

(k)    Neither Borrower nor any constituent party of Borrower has sought or will seek or effect the liquidation, dissolution, winding up, consolidation, asset sale, division (including, without limitation, any "Division" pursuant to Section 18-217 of the Delaware Limited Liability Company Act, 6 Del. C. §18-101, et seq.) or merger, in whole or in part, of Borrower.

(I) Borrower has not and will not commingle the funds and other assets

of Borrower with those of any Affiliate or constituent party or any other Person, and has held and will hold all of its assets in its own name.

(m) Borrower has and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate or constituent party or any other Person.

(n) Borrower has not and will not assume or guarantee or become obligated for the debts of any other Person and does not and will not hold itself out to be responsible for or have its credit available to satisfy the debts or obligations of any other Person.

(o) Intentionally omitted.

(p) The organizational documents of Borrower shall also provide an express acknowledgment that Lender is an intended third-party beneficiary of  the "special purpose" provisions of such organizational documents.

(q) Intentionally omitted.

(r) Intentionally omitted.

(s) Intentionally omitted.

(t) Borrower has not permitted and will not permit any Affiliate or constituent party independent access to its bank accounts.

(u) Borrower has paid and shall pay its own liabilities and expenses, including the salaries of its own employees (if any) from its own funds, and has maintained and shall maintain a sufficient number of employees (if any) in light of its contemplated business operations.

(v) Borrower has compensated and shall compensate each of its consultants and agents from its funds for services provided to it and pay from its own assets all obligations of any kind incurred.

(w) Borrower has not, and without the unanimous consent of all of its directors or members, as applicable, will not (i) file a bankruptcy, insolvency or reorganization petition or otherwise institute insolvency proceedings or otherwise seek any relief under any laws relating to the relief from debts or the protection of debtors generally, (ii) seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar official for such entity or for all or any portion of Borrower's properties, (iii) make any assignment for the benefit of Borrower's creditors, or (iv) take any action that could reasonably be expected to cause Borrower to become insolvent; provided, however, nothing herein shall require any partners or members of Borrower to make additional capital contributions.

(x) Borrower has maintained and will maintain an arm's-length

            relationship with its Affiliates.

(y) Borrower has allocated and will allocate fairly and reasonably any overhead expenses that are shared with any Affiliate, including shared office space.

(z) Except in connection with the Loan, Borrower has not pledged and will not pledge its assets for the benefit of any other Person.

(aa) Borrower has and will have no obligation to indemnify its officers, directors, members or partners, as the case may be, or has such an obligation that is fully subordinated to the Debt and will not constitute a claim against it if cash flow in excess of the amount required to pay the Debt is insufficient to pay such obligation.

(bb) if such Borrower is (i) a limited liability company, has articles of organization, a certificate of formation and/or an operating agreement, as applicable,

(ii) a limited partnership, has a limited partnership agreement, or (iii) a corporation, has a certificate of incorporation or articles that, in each case, provide that such entity will not:

(A) dissolve, merge, divide, liquidate, consolidate; (B) sell, transfer, dispose,  or encumber (except with respect to the Loan Documents) all or substantially all of its assets or acquire all or substantially all of the assets of any Person; or (C) engage in any other business activity, or amend its organizational documents with respect to the matters set forth in this Section 3.1.24 without the consent of the Lender.

(cc) Borrower will consider the interests of Borrower's creditors in connection with all limited liability company actions.

(dd) Borrower has not, does not, and will not have any of its obligations

 guaranteed by any Affiliate.

2.1.1 Tax Filings. To the extent required, Borrower has filed (or has obtained effective extensions for filing) all federal, state, commonwealth, district and local tax returns required to be filed and has paid or made adequate provision for the payment of all federal, state,

commonwealth, district and local taxes, charges and assessments payable by Borrower. Borrower's tax returns (if any) properly reflect the income and taxes of Borrower for the periods covered thereby, subject only to reasonable adjustments required by the Internal Revenue Service or other applicable tax authority upon audit.

2.1.2 Solvency. Borrower (i) has not entered into the Loan transaction or any Loan Document with the actual intent to hinder, delay, or defraud any creditor, and (ii) received reasonably equivalent value in exchange for its Obligations under the Loan Documents. Giving effect to the Loan, the fair saleable value of Borrower's assets exceeds and will, immediately following the making of the Loan, exceed Borrower's total liabilities, including subordinated, unliquidated, disputed and contingent liabilities. The fair saleable value of Borrower's assets is, and immediately following the making of the Loan, will be, greater than Borrower's probable liabilities, including the maximum amount of its contingent liabilities on its debts as such debts become absolute and matured. Borrower's assets do not and, immediately following the making of the Loan will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. Borrower does not intend to, and does not believe that it will, incur Indebtedness and liabilities (including contingent liabilities and other commitments) beyond its ability to pay such Indebtedness and liabilities as they mature (taking into account the timing and amounts of cash to be received by Borrower and the amounts to be payable on or in respect of the obligations of Borrower). No petition in bankruptcy has been filed against Borrower or any constituent Person of Borrower, and neither Borrower nor any constituent Person of Borrower has ever made an assignment for the benefit of creditors or taken advantage of any insolvency act for the benefit of debtors. Neither Borrower nor any of its constituent Persons are contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency laws or the liquidation of all or a major portion of Borrower's assets or properties, and Borrower has no knowledge of any Person contemplating the filing of any such petition against it or such constituent Persons. Neither the Property, nor any portion thereof, is the subject of, and neither Borrower nor Guarantor is a debtor in, state or federal bankruptcy, insolvency or similar proceeding. None of Borrower, any Person owning a direct ownership interest in Borrower of 20% or greater, or Guarantor has ever been in a state or federal bankruptcy or insolvency proceeding or convicted of a felony.

2.1.3 Federal Reserve Regulations. No part of the proceeds of the Loan will be used for the purpose of purchasing or acquiring any "margin stock" within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or for any other purpose which would be inconsistent with such Regulation U or any other Regulations of such Board of Governors, or for any purposes prohibited by Legal Requirements or by the terms and conditions of this Agreement or the other Loan Documents.

2.1.4 Organizational Chart. The organizational chart attached as Schedule III, relating to Borrower and certain Affiliates and other parties, is true, complete and correct on and as of the date hereof and accurately identifies all beneficial controlling owners of Borrower (i.e., managing members, general partners or similar controlling person of Borrower). No Person other than those Persons shown on Schedule Ill have any ownership interest in, or right of control, directly or indirectly, in Borrower and no direct or indirect interest in Borrower is subject to any pledge or other security interest.

2.1.5 Organizational Status. Borrower's exact legal name is: Treemont Capital Partners IV, LP. Borrower is of the following organizational type (e.g., corporation, limited liability company): limited partnership, and the jurisdiction in which Borrower is organized is: Texas. Borrower's Tax I.D. number is 47-5150959 and Borrower's Texas Organizational I.D. number is 802270836.

2.1.6 Bank Holding Company. Borrower is not a "bank holding company" or a direct or indirect subsidiary of a "bank holding company" as defined in the Bank Holding Company Act of 1956, as amended, and Regulation Y thereunder of the Board of Governors of the Federal Reserve System.

2.1.7 No Casualty. The Improvements have suffered no material casualty or damage which has not been fully repaired and the cost thereof fully paid.

2.1.8 Purchase Options. Neither the Property nor any part thereof are subject to any purchase options, rights of first refusal, rights of first offer or other similar rights in favor of third parties.

2.1.9 FIRPTA. Borrower is not a "foreign person" within the meaning of Sections 1445 or 7701 of the Code.

2.1.10 Investment Company Act. Borrower is not (i) an "investment company"  or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or (ii) subject to any other United States federal or state law or regulation which purports to restrict or regulate its ability to borrow money.

2.1.11 Use of Property. The Property consists solely of a hotel and related operations and is used for no other purpose.

2.1.12 Fiscal Year. Each fiscal year of Borrower commences on January 1.

2.1.13 No Other Financing. Borrower has not borrowed any funds which have not heretofore been repaid in full, except for the Loan.

2.1.14 Contracts.

(a) Borrower has not entered into, and is not bound by, any Major Contract which continues in existence, except those previously disclosed in writing to Lender.

(b) Each of the Major Contracts is in full force and effect, there are no monetary or other material defaults by Borrower thereunder and, to the best knowledge of Borrower, there are no monetary or other material defaults thereunder by any other party thereto. None of Borrower, Manager or any other Person acting on Borrower's  behalf  has given or received any notice of default under any of the Major Contracts that remains uncured or in dispute.

(c) Borrower has delivered true, correct and complete copies of the Major Contracts (including all amendments and supplements thereto) to Lender.

(d) No Major Contract has as a party an Affiliate of Borrower. All fees and other compensation for services previously performed under the Management Agreement have been paid in full.

2.1.15 Full and Accurate Disclosure. No statement of fact made by Borrower in this Agreement or in any of the other Loan Documents contains any untrue statement of a material fact or omits to state any material fact necessary to make statements contained herein or therein not misleading. There is no material fact presently known to Borrower which has not been disclosed to Lender which adversely affects, nor as far as Borrower can foresee, could reasonably expected to adversely affect, the Property or the business, operations or condition (financial or otherwise) of Borrower.

2.1.16 Other Obligations and Liabilities. Borrower has no liabilities or other obligations that arose or accrued prior to the date hereof that, either individually or in the aggregate, could have a material adverse effect on Borrower, the Property and/or Borrower's ability to pay the Debt. Borrower has no known contingent liabilities.

2.1.17 Intentionally Omitted.

2.1.18 REA. Each REA is in full force and effect and neither Borrower nor, to Borrower's knowledge, any other party to any REA, is in default thereunder, and to the best of Borrower's knowledge, there are no conditions which, with the passage of time or the giving of notice, or both, would constitute a default thereunder. No REA has been modified, amended or supplemented.

2.1.19 Franchise Agreement. The Franchise Agreement, pursuant to which Borrower has the right to operate the hotel located on the Property under a name and/or hotel system controlled by such Franchisor, is in full force and effect and there is no default, breach or violation existing thereunder by any party thereto and no event has occurred (other than payments due but not yet delinquent) that, with the passage of time or the giving of notice, or both, would constitute a default, breach or violation by any party thereunder. Neither the execution and delivery of the Loan Documents or Borrower's performance thereunder will adversely affect Borrower's rights under the Franchise Agreement. The  "comfort  letter" provided to Lender by Franchisor is enforceable against Franchisor.

2.1.20 Illegal Activity. No portion of the Property has been or will be purchased with proceeds of any illegal activity.

2.1.21 Business Purposes. The Loan is solely for the business purpose of Borrower, and is not for personal, family, household, or agricultural purposes.

2.1.22 Past Activities. Borrower hereby represents and warrants that, from the date of its formation to the date of this Agreement, Borrower:

(a) is and always has been duly formed, validly existing, and in good standing in the state of its incorporation and in all other jurisdictions where it is qualified to do business;

(b)

yet due;

has no judgments or liens of any nature against it except for tax liens not

(c) is in compliance with all laws, regulations, and orders applicable to it and has received all permits necessary for it to operate;

(d) is not involved in any dispute with any taxing authority;

(e) has paid all Taxes that it owes;

(f) has never owned any real property other than the Property and personal property necessary or incidental to its ownership or operation of the Property and has never engaged in any business other than the ownership and operation of the Property;

(g) is not now, nor has ever been, party to any lawsuit, arbitration, summons, or legal proceeding that is still pending or that resulted in a judgment against it that has not been paid in full;

(h) has provided Lender with complete financial statements that reflect a fair and accurate view of the entity's financial condition;

(i) has passed a Phase I environmental audit for the Property;

(j)has no material contingent or actual obligations not related to the Property;

(k) has not entered into any contract or agreement with any of its Affiliates, constituents, or owners, or any guarantors of any of its obligations or any Affiliate of any of the foregoing (each, a "Related Party"), except upon terms and conditions that are commercially reasonable and substantially similar to those available in an arm's-length transaction with an unrelated party;

(1)has paid all of its debts and liabilities from its assets;

(m) has done or caused to be done all things necessary to observe all organizational formalities applicable to it and to preserve its existence;

(n) has maintained all of its books, records, financial statements and bank accounts separate from those of any other Person;

(o) has not had its assets listed as assets on the financial statement of any other Person;

(p)      has filed its own tax returns (except to the extent that it has been a tax-

     disregarded entity not required to file tax returns under applicable law) and, if it is a

     corporation, has not filed a consolidated federal income tax return with any other Person;

(q) has been, and at all times has held itself out to the public as, a legal entity separate and distinct from any other Person (including any Affiliate or other Related Party);

(r) has corrected any known misunderstanding regarding its status as a separate entity;

(s) has conducted all of its business and held all of its assets in its own name;

(t) has not identified itself or any of its Affiliates as a division or part of the

other;

(u)        has maintained and utilized separate stationery, mvo1ces and checks

      bearing its own name;

(v)       has not commingled its assets with those of any other Person and has held

      all of its assets in its own name;

(w) has not guaranteed or become obligated for the debts of any other Person;

(x) has not held itself out as being responsible for the debts or obligations of any other Person;

(y) has allocated fairly and reasonably any overhead expenses that have been shared with an Affiliate, including paying for office space and services performed by any employee of an Affiliate or Related Party;

(z) has not pledged its assets to secure the obligations of any other Person and no such pledge remains outstanding except in connection with the Loan;

(aa) has maintained adequate capital in light of its contemplated business operations;

(bb) has maintained a sufficient number of employees in light of  its contemplated business operations and has paid the salaries of its own employees from its own funds;

(cc)   has not owned any subsidiary or any equity interest in any other entity; (dd) has not incurred any Indebtedness that is still outstanding other than

Indebtedness that is permitted under the Loan Documents;

(ee) has not had any of its obligations guaranteed by an affiliate, except for guarantees that have been either released or discharged (or that will be discharged as a

result of the closing of the Loan) or guarantees that are expressly contemplated by the Loan Documents;

(ff)is not a "Division company" (as such term is defined in Section 18-217 of the Act); and

(gg)     has not leased any portion of the Property to a Tenant that is an Affiliate of Borrower.

Section 3.2Survival of Representations.

The representations and warranties set forth in Section 3.1 and elsewhere in this Agreement and the other Loan Documents shall survive until the Obligations have been paid and performed in full.

ARTICLE4 BORROWER COVENANTS

Section 4.1Borrower Affirmative Covenants.

Borrower hereby covenants and agrees with Lender that throughout the Term:

26.1.1 Paymentand Performance of Obligations. Borrower shall pay and otherwise perform the Obligations in accordance with the terms of this Agreement and the other Loan Documents.

26.1.2 Existence: Compliance with Legal Requirements. Borrower and shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence, rights, licenses, permits ,and franchises and comply with all Legal Requirements applicable to it and the Property. There shall never be committed by Borrower and Borrower shall not permit any other Person in occupancy of or involved with the operation or use of the Property to commit any act or omission affording the federal government or any state or local government the right of forfeiture against the Property or any part thereof or any monies paid in performance of Borrower's obligations under any of the Loan Documents. Borrower hereby covenants and agrees not to commit, permit or suffer to exist any act or omission affording such right of forfeiture. Borrower shall at all times maintain, preserve and protect all franchises and trade names and preserve all the remainder of its property used or useful in the conduct of its business and shall keep the Property in good working order and repair, and from time to time make, or cause to be made, all reasonably necessary repairs, renewals, replacements, betterments and improvements thereto, all as more fully provided in the Mortgage. Borrower shall keep the Property insured at all times by financially sound and reputable insurers, to such extent and against such risks, and maintain liability and such other insurance, as is more fully provided in this Agreement.

26.1.3 Taxes and Other Charges. Borrower shall pay all Taxes and Other Charges now or hereafter levied, assessed or imposed as the same become due and payable, and shall furnish to Lender receipts for the payment of the Taxes and the Other Charges prior to the

date the same shall become delinquent (provided, however, that Borrower need not pay Taxes directly nor furnish such receipts for payment of Taxes to the extent that funds to pay for such Taxes have been deposited into the Tax Account pursuant to Section 6.3). Borrower will deliver to Lender receipts for payment or other evidence satisfactory to Lender that the Taxes and Other Charges have been so paid no later than ten (10) days prior to the date on which the Taxes and/or Other Charges would be delinquent if not paid. Borrower shall not permit or suffer, and shall promptly discharge, any Lien or charge against the Property, and shall promptly  pay for all utility services provided to the Property. After prior notice to Lender, Borrower, at its own expense, may contest by appropriate legal proceeding, conducted in good faith and with due diligence, the amount or validity of any Taxes or Other Charges, provided that (i) no Default or Event of Default has occurred and remains uncured; (ii) such proceeding shall be  permitted under and be conducted in accordance with all applicable statutes, laws and ordinances;

(iii) neither the Property nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, canceled or lost; (iv) Borrower shall promptly upon final determination thereof pay the amount of any such Taxes or Other Charges, together with all costs, interest and penalties which may be payable in connection therewith; (v) such proceeding shall suspend the collection of Taxes or Other Charges from the Property; (vi) Borrower shall deposit with Lender cash, or other security as may be approved by Lender, in an amount equal to one hundred twenty-five percent (125%) of the contested amount, to insure the payment of any such Taxes or Other Charges, together with all interest and penalties thereon, (vii) failure to pay such Taxes or Other Charges will not subject Lender to any civil or criminal liability, (viii) such contest shall not affect the ownership, use or occupancy of the Property, and (ix) Borrower shall, upon request by Lender, give Lender prompt notice of the status of such proceedings and/or confirmation of the continuing satisfaction of the conditions set forth in clauses (i) - (viii) of this Section 4.1.3. Lender may pay over any such cash or other security held by Lender to the claimant entitled thereto at any time when, in the judgment of Lender, the entitlement of such claimant is established or the Property (or any part thereof or interest therein) shall be in danger of being sold, forfeited, terminated canceled or lost or there shall be any danger of the Lien of the Mortgage being primed by any related Lien.

3.1.1 Litigation. Borrower shall give prompt  notice to Lender of any litigation or governmental proceedings pending or threatened against the Property, Borrower, or Guarantor which could reasonably be expected to materially and adversely affect the Property  or Borrower's or Guarantor's condition (financial or otherwise) or business (including Borrower's ability to perform its Obligations hereunder or under the other Loan Documents).

3.1.2 Access to Property. Borrower shall permit agents, representatives, consultants and employees of Lender to inspect the Property or any part thereof at reasonable hours upon reasonable advance notice (which may be given verbally). Lender or its agents, representatives, consultants and employees as part of any inspection may take soil, air, water, building material and other samples from the Property, subject to the rights of Tenants under Leases.

3.1.3 Further Assurances; Supplemental Mortgage Affidavits.  Borrower shall, at Borrower's sole cost and expense:

(a) furnish to Lender all instruments, documents, boundary surveys, footing or foundation surveys, certificates, plans and specifications, appraisals, title and other insurance reports and agreements, and each and every other document, certificate, agreement and instrument required to be furnished by Borrower pursuant to the terms of the Loan Do.cuments or which are reasonably requested by Lender in connection therewith;

(b) execute and deliver to Lender such documents, instruments, certificates, assignments and other writings, and do such other acts necessary  or desirable, to evidence, preserve and/or protect the collateral at any time secunng or intended to secure the Obligations, as Lender may reasonably require; and

(c) do and execute all and such further lawful and reasonable acts, conveyances and assurances for the better and more effective carrying out of the intents and purposes of this Agreement and the other Loan Documents, as Lender shall reasonably require from time to time.

                  4.1.7    Financial Reporting

(a) Borrower shall keep and maintain or will cause to be kept and maintained proper and accurate books and records, in accordance with GAAP, or other sound accounting principles reasonably acceptable to Lender, consistently applied, the Uniform System of Accounts for Hotels, current edition, and the requirements of Regulation AB, reflecting the financial affairs of Borrower and all items of income and expense in connection with the operation of the Property. Lender shall have the right  from time to time during normal business hours upon reasonable notice (which may be given verbally) to Borrower to examine such books and records at the office of Borrower or other Person maintaining such books and records and to make such copies or extracts thereof as Lender shall desire. After an Event of Default, Borrower shall pay any costs incurred by Lender to examine such books, records and accounts, as Lender shall determine to be necessary or appropriate in the protection of Lender's interest.

(b) Not later than forty-five (45) days following the end of each fiscal quarter (and for the first twelve (12) months following the Closing Date, not later than fifteen (15) days following the end of each calendar month), Borrower shall deliver to Lender unaudited operating statements, internally prepared on a cash basis including a balance sheet and profit and loss statement as of the end of such quarter and for the corresponding quarter of the previous year, and a statement of revenues and expenses for the year to date, a statement of Net Operating Income for such quarter and a summary report detailing monthly occupancy, including average daily rate. Such statements for each quarter shall be accompanied by an Officer's Certificate certifying to the best of the signer's knowledge, (A) that such statements fairly represent the financial condition and results of operations of Borrower, (B) that as of the date of such Officer's Certificate, no Default exists under this Agreement, the Note or any other Loan Document or, if so, specifying the nature and status of each such Default and the action then being taken by Borrower or proposed to be taken to remedy such Default, (C) that as of the date of each Officer's Certificate, no litigation exists involving Borrower or the Property in which the

amount involved is $250,000 (in the aggregate) or more or in which all or substantially all of the potential liability is not covered by insurance, or, if so, specifying  such litigation and the actions being taking in relation thereto and (D) the amount by which actual Operating Expenses were greater than or less than the Operating Expenses anticipated in the applicable Annual Budget. Such financial statements shall contain such other information as shall be reasonably requested by Lender for purposes of calculations to be made by Lender pursuant to the terms hereof.

(c) Not later than ninety (90) days after the end of each Fiscal Year of Borrower's

operations, Borrower shall deliver to Lender unaudited financial statements and operation statements, covering the Property, including a balance sheet as of the end of such year, a statement of Net Operating Income for the year and for the fourth quarter thereof and a statement of revenues and expenses for such year, as well as the supplemental schedule of net income or loss presenting the net income or loss for the Property and occupancy statistics for the Property, and copies of all federal income returns to be filed. Such annual financial statements shall also be accompanied by an Officer’s Certificate in the form required pursuant to Section 4.1.7(b) above.  Notwithstanding the foregoing, upon either the occurrence and during the continuance of an Event of Default or if Lender in its good faith believes that the unaudited financial statements and operating statements delivered by Borrower as required by this Section4.1.7(c) are not materially accurate, then, at Lender's request, Borrower shall deliver such financial statements and operating statements required pursuant to this Section 4.1.7(c) audited by an Independent Accountant in accordance with GAAP or such other accounting method reasonably acceptable to Lender, consistently applied, and the requirements of Regulation AB.

(d)        Not later than forty-five (45) days after the end of each fiscal

           quarter of Borrower's operations, Borrower shall deliver to Lender a true and complete rent      

roll for the Property dated as of the last month of such fiscal quarter, showing the percentage of gross leasable area of the Property, if any, leased as of the last day of the preceding calendar quarter, the current annual rent for the Property, the expiration date of each lease, whether to Borrower's knowledge any portion of the Property has been sublet, and if it has, the name of the subtenant, and such rent roll shall be accompanied by an Officer's Certificate certifying that such rent roll is true, correct and complete in all material respects as of its date and stating whether Borrower, within the past three (3) months, has issued a notice of default with respect to any Lease which has not been cured and the nature of such default.

(e) Borrower shall, within ninety (90) days after the end of each calendar year during the term of the Note, deliver to Lender an annual summary of any and all FF&E Expenses made at the Property during the prior twelve (12) month period.

(f) Borrower shall deliver to Lender, within ten (10) Business Days of the receipt thereof by Borrower, a copy of all reports prepared by Manager pursuant to the Management Agreement, including, without limitation, the Annual Budget and any inspection reports.

(g) Borrower shall submit to Lender by November 1 of each year the Annual Budget for the succeeding Fiscal Year. Upon and after the commencement of a Sweep Event Period, Lender shall have the right to approve each Annual Budget (which approval shall not be unreasonably withheld so long as no Event of Default has occurred) and Annual Budgets approved by Lender shall hereinafter be referred to as an "Approved Annual Budget". Upon and after the commencement of a Sweep Event Period, in the event that Borrower incurs an extraordinary operating expense or extraordinary capital expenditure not set forth in the Approved Annual Budget (each an "Extraordinary Expense"), then Borrower shall promptly deliver to Lender a reasonably detailed explanation of such proposed Extraordinary Expense for Lender's approval. Upon and after the commencement of a Sweep Event Period, until such time that any Annual Budget has been approved by Lender, the prior Approved Annual Budget shall apply for all purposes hereunder (with such adjustments as reasonably determined by Lender to reflect actual increases in Taxes, Insurance Premiums and utilities expenses). Neither Borrower nor Manager shall change or modify the Annual Budget that has been approved by Lender without the prior written consent of Lender.

(h) Borrower shall, promptly after written request by Lender or, if a Securitization shall have occurred, the Rating Agencies, furnish or cause to be furnished to Lender, in such manner and in such detail as may be reasonably requested by Lender, such additional information as may be reasonably requested with respect to the Property.

(i) If any financial statements and other items required to be delivered to Lender pursuant to this Section 4.1.7 (each a "Required Financial Item" and collectively, the "Required Financial Items") is not timely delivered ("Reporting Failure"), within 30 days of written notice from Lender, Borrower shall promptly pay to Lender, as a late charge, the sum of Five Hundred and No/100 Dollars ($500.00) per Required Financial Item. In addition, Borrower shall promptly pay to Lender an additional late charge of Two Hundred Fifty and Noll 00 Dollars ($250.00) per Required Financial Item for each full month during which such Reporting Failure continues following written notice from Lender. Borrower acknowledges that Lender will incur additional expenses as a result of any such Reporting Failure, which expenses would be impracticable to quantify, and that Borrower's payments under this Section 4.1.7 are a reasonable estimate of such expenses. Borrower acknowledges further that payment by Borrower of this late charge does not in any manner affect or otherwise impair or waive any rights and remedies Lender may have hereunder, under the Loan Documents or under applicable law for any Event of Default.

9.1.8 Title to the Property. Borrower shall warrant and defend (a) its title to the Property and every part thereof, subject only to Permitted Encumbrances and (b) the validity and priority of the Liens of the Mortgage, the Assignment of Leases and this Agreement on the Property, subject only to Permitted Encumbrances, in each case against the claims of all Persons whomsoever. Borrower shall reimburse Lender for any losses, costs, damages or expenses (including reasonable attorneys' fees and court costs) incurred by Lender if an interest in the Property, other than as permitted hereunder, is claimed by another Person.

9.1.9 Estoppel Statement.

(a) After request by Lender, Borrower shall within five (5) Business Days furnish Lender with a statement, duly acknowledged and certified, stating (i) the Outstanding Principal Balance of the Note, (ii) the Interest Rate, (iii) the date installments of interest and/or principal were last paid, (iv) any offsets or defenses to the payment and performance of the Obligations, if any, and (v) that this Agreement and the other Loan Documents have not been modified or if modified, giving particulars of such modification.

(b) Intentionally Omitted.

(c) Borrower shall deliver to Lender, upon request, an estoppel certificate from each Tenant under any Lease (provided that Borrower shall only be required to use commercially reasonable efforts to obtain an estoppel certificate from any Tenant not required to provide an estoppel certificate under its Lease) in form and substance reasonably satisfactory to Lender; provided, that Borrower shall not  be required to deliver such certificates more frequently than three (3) times in any calendar year.

(d) Borrower shall deliver to Lender, upon request, estoppel certificates from each party under any REA, in form and substance reasonably satisfactory to Lender; provided, that Borrower shall not be required to deliver such certificates more than three (3) times during the Term and not more frequently than once per calendar year (or twice during any calendar year in which a Securitization occurs).

9.1.10 Leases.

(a) Lender acknowledges that no Leases are in effect at the Property as of the Closing Date. All Leases and all renewals of Leases executed after the date hereof shall (i) provide for economic terms, including rental rates, comparable to existing local market rates for similar properties, (ii) be on commercially reasonable terms, (iii) have a term of not less than three (3) years (unless Lender approves in writing a shorter tenn),

(iv) have a term of not more than ten (10) years, including all extensions and renewals (unless Lender approves in writing a longer term), (v) provide that such Lease is subordinate to the Mortgage and the Assignment of Leases and that the  Tenant thereunder will attom to Lender and any purchaser at a foreclosure sale, (vi) be to Tenants that are creditworthy, (vii) be written substantially in accordance with the standard form of Lease which shall have been approved by Lender (subject to any commercially reasonable changes made in the course of negotiations with the applicable Tenant), (viii) not be to an Affiliate of Borrower or Guarantor, and (ix) not contain any option to purchase, any right of first refusal to purchase, any right to terminate (except in the event of the destruction or condemnation of substantially all of the Property), any requirement for a non-disturbance or recognition agreement, or any other terms which would materially adversely affect Lender's rights under the Loan Documents. All Major Leases and all renewals, amendments and modifications thereof executed after the date hereof shall be subject to Lender's prior approval. Borrower shall not permit or consent

to any assignment or sublease of any Major Lease without Lender's prior  written approval (other than assignments or subleases expressly permitted under any Major Lease pursuant to a unilateral right of the Tenant thereunder not requiring the consent of Borrower). Lender, at Borrower's sole cost and  expense, shall execute and deliver its  then standard form of subordination, non-disturbance and attornment agreement to Tenants under any future Major Lease approved by Lender upon request, with such commercially reasonable changes as may be requested by such Tenants and which are acceptable to Lender.

(a) Borrower (i) shall observe and perform the obligations imposed upon the lessor under the Leases in a commercially reasonable manner; (ii) shall enforce the terms, covenants and conditions contained in the Leases upon the part of the Tenants thereunder to be observed or performed in a commercially reasonable manner, provided, however, Borrower shall not terminate or accept a surrender of a Lease without Lender's prior approval; (iii) shall not collect any of the Rents more than one (1) month in advance (other than security deposits); (iv) shall not execute any assignment of lessor's interest in the Leases or the Rents (except as contemplated by the Loan Documents); and (v) shall not alter, modify or change any Lease so as to change the amount of or payment date for rent, change the expiration date, grant any option for additional space or term, materially reduce the obligations of the Tenant or increase the obligations of the lessor. Upon request, Borrower shall furnish Lender with executed copies of all Leases.  Borrower shall promptly send copies to Lender of all written notices of material default which Borrower shall receive under the Leases.

(b) All security deposits of Tenants, whether held in cash or any other form, shall be held in compliance with all Legal Requirements, shall not be commingled with any other funds of Borrower and, if cash, shall be deposited by Borrower at a separately designated account under Borrower's control at the Clearing Bank. After the commencement of a Sweep Event Period, Borrower shall, upon Lender's request, if permitted by applicable Legal Requirements, cause all such security deposits (and any interest theretofore earned thereon) to be transferred into the Cash Management Account (which shall then be held by Cash Management Bank in a separate Account), which shall be held by Cash Management Bank subject to the terms of the Leases. Any bond or other instrument which Borrower is permitted to hold in lieu of cash security deposits under any applicable Legal Requirements (i) shall be maintained in full force and effect in the full amount of such deposits unless replaced by cash deposits as herein above described,

(ii) shall be issued by an institution reasonably satisfactory to Lender, (iii) shall, if permitted pursuant to any Legal Requirements, name Lender as payee or mortgagee thereunder (or at Lender's option, be fully assignable to Lender), and (iv) shall in all respects comply with any applicable Legal Requirements and otherwise be satisfactory to Lender. Borrower shall, upon request, provide Lender with evidence satisfactory to Lender of Borrower's compliance with the foregoing.

(a) Borrower shall have the right, without the consent or approval of Lender, to terminate or accept a surrender of any Lease that is not a Major Lease so long as such termination or surrender is (i) by reason of a tenant default and (ii) in a commercially reasonable manner to preserve and protect the Property.

                       4.1.11 Alterations. Lender's prior approval shall be required in connection with any alterations to any Improvements (i) that may have a material adverse effect on Borrower's financial condition, the value or use of the Property or the ongoing revenues and expenses of the Property, (ii) the cost of which (including any related alteration, improvement or replacement) is reasonably anticipated to exceed the Alteration Threshold, or (iii) that adversely affects any structural component of any Improvements, any utility or HVAC system contained in the Improvements or the exterior of any building constituting a part of any Improvements (any of the foregoing, a "Material Alteration"). If the total unpaid amounts  incurred  and to be incurred with respect to such alterations to the Improvements shall at any time exceed the Alteration Threshold, Borrower shall promptly deliver to Lender as security for the payment of such amounts and as additional security for Borrower's Obligations under the Loan Documents any of the following: (i) cash, (ii) a Letter of Credit, (iii) U.S. Obligations, (iv) other securities acceptable to Lender, provided that Lender shall have received a Rating Agency Confirmation as to the form and issuer of same, or (v) a completion bond, provided that Lender shall have received a Rating Agency Confirmation as to the form and issuer of same. Such security shall be in an amount equal to the excess of the total unpaid amounts incurred and to be incurred with

respect to such alterations to the Improvements (other than such amounts to be paid or reimbursed by Tenants under the Leases) over the Alteration Threshold, and Lender may apply such security from time to time at the option of Lender to pay for such alterations. Upon substantial completion of any Material Alteration, Borrower shall provide evidence satisfactory to Lender that (i) the Material Alteration was constructed in accordance with applicable Legal Requirements, (ii) all contractors, subcontractors, materialmen and professionals who provided work, materials or services in connection with the Material Alteration have been paid in full and have delivered unconditional releases of liens, and (iii) all material licenses and permits necessary for the use, operation and occupancy of the Material Alteration (other than those  which depend on the performance of tenant improvement work) have been issued.

2.1.12 Approval of Major Contracts. Borrower shall be required to obtain Lender's prior written approval of any and all Major Contracts affecting the Property, which approval may be granted or withheld in Lender's sole discretion.

2.1.13 After Acquired Property. Borrower will grant to Lender a first Lien security interest in and to all equipment and other personal property owned by  Borrower, whether or not used in the construction, maintenance and/or operation of the Improvements, immediately upon acquisition of same or any part of same.

2.1.14 Patriot Act Compliance.

(a) Borrower will use its good faith and commercially reasonable efforts to comply with the Patriot Act and all applicable requirements of Governmental Authorities having jurisdiction over Borrower and/or the Property, including those relating to money laundering and terrorism. Lender shall have the right to audit Borrower's compliance with the Patriot Act and all applicable requirements of Governmental Authorities having jurisdiction over Borrower and/or the Property, including those relating to money laundering and terrorism. In the event that Borrower fails to comply with the Patriot Act or any such requirements of Governmental Authorities, then Lender may, at its option, cause Borrower to comply therewith and any

and all costs and expenses incurred by Lender in connection therewith shall be secured by the Mortgage and the other Loan Documents and shall be immediately due and payable.

(b) Neither Borrower nor any owner of a direct or indirect interest in Borrower (i) is listed on any Government Lists, (ii) is a person who has been determined by competent authority to be subject to the prohibitions contained in Presidential Executive Order No. 13224 (Sept. 23, 2001) or any other similar prohibitions  contained in the rules and regulations of OFAC or in any enabling legislation or other Presidential Executive Orders in respect thereof, (iii) has been previously indicted for or convicted of any felony involving a crime or crimes of moral turpitude or for any Patriot Act Offense, or (iv) is currently under investigation by any Governmental Authority for alleged criminal activity. For purposes hereof, the term "Patriot Act Offense" means any violation of the criminal laws of the United States of America or of any of the several states, or that would be a criminal violation if committed within the jurisdiction of the United States of America or any of the several states, relating to terrorism or the laundering of monetary instruments, including any offense under (A) the criminal laws against terrorism, (B) the criminal laws against money laundering, (C) the Bank Secrecy Act, as amended, (D) the Money Laundering Control Act of 1986, as amended, or (E) the Patriot Act. "Patriot Act Offense" also includes the crimes of conspiracy to commit, or aiding and abetting another to commit, a Patriot Act Offense. For purposes hereof, the term "Government Lists" means (1) the Specially Designated Nationals and Blocked Persons Lists maintained by the Office of Foreign Assets Control ("OFAC"), (2) any other list of terrorists, terrorist organizations or narcotics traffickers maintained pursuant to any of the Rules and Regulations of OFAC that Lender notified Borrower in writing is now included in "Government Lists", or (3) any similar lists maintained by the United States Department of State, the United States Department of Commerce or any other Governmental Authority or pursuant to any Executive Order of the President of the United States of America that Lender notified Borrower in writing is now included in "Government Lists".

2.1.15 Personal Property Taxes. Borrower shall timely file and pay all personal property taxes relating to the Property in accordance with all applicable governmental rules and regulations.

follows:

2.1.16

Hotel Covenants.   Borrower further covenants and agrees with  Lender as

(a) Borrower  shall  cause  the  hotel  located  on  the  Property   to  be

operated pursuant to the Franchise Agreement.

(b) Borrower shall (i) promptly perform and/or observe all of the covenants and agreements required to be performed and observed by it under the Franchise Agreement and do all things necessary to preserve and to keep unimpaired its material rights thereunder; (ii) promptly notify Lender of any default by Franchisor under the Franchise Agreement of which it is aware; (iii) promptly notify Lender of the giving of any written notice by the Franchisor to Borrower of any default by Borrower in the performance or observance of any of the terms, covenants or agreements of the Franchise

Agreement on the part of Borrower, as franchisee thereunder, to be performed or observed, and deliver to Lender a true copy of each such notice, (iv) promptly deliver to Lender a copy of each financial statement, business plan, capital expenditures plan, notice, report and estimate received by it under the Franchise Agreement; and

(v) promptly enforce the performance and observance of all of the covenants and agreements required to be performed and/or observed by the Franchisor under the Franchise Agreement.

(c) If Borrower shall enter into any new or amended Franchise Agreement, Lender shall receive within thirty (30) days following the execution of such Franchise Agreement a comfort letter from the Franchisor in which Franchisor shall agree

(i) that Lender shall have the right, but not the obligation, to cure any defaults under the Franchise Agreement, (ii) to give Lender written notice of, and a reasonable time to cure, any default of Borrower under the Franchise Agreement, (iii) not to assert against Lender any defaults which by their nature are personal to Borrower and not curable by Lender;

(iv) to allow Lender to change managers of the hotel operated at the Property; (v) that, if Lender or its Affiliate shall acquire title to the Property, Lender or its affiliate shall have an option to succeed to the interest of Borrower under the Franchise Agreement (or to be granted a new license agreement on the same terms as the Franchise Agreement) without payment of any fees to Franchisor; (vi) that the Franchise Agreement will remain in  effect during any foreclosure proceedings by Lender provided Lender cures all monetary defaults under the Franchise Agreement; (vii) not to modify, cancel, surrender, assign, transfer or otherwise terminate the Franchise Agreement during the Term without the consent of Lender; and (viii) that if Lender or its Affiliate succeeds to Borrower's interest under the Franchise Agreement, Lender may assign its rights therein to any entity which acquires the Property from Lender or its Affiliate (subject to Franchisor's reasonable approval). The foregoing to the contrary notwithstanding, Lender will not unreasonably withhold approval of Franchisor's standard form of "comfort letter" addressing those matters set forth above.

2.1.17 Notice of Default. Borrower shall promptly advise Lender of any material adverse change in Borrower's or Guarantor's condition, financial or otherwise, or of the occurrence of any Default or Event of Default of which Borrower has knowledge.

2.1.18 Cooperate in Legal Proceedings. Borrower shall cooperate fully with Lender with respect to any proceedings before any court, board or other Governmental Authority which may in any way affect the rights of Lender hereunder or any rights obtained by Lender under any of the other Loan Documents and, in connection therewith, permit Lender, at its election, to participate in any such proceedings.

2.1.19 Award and Insurance Benefits. Borrower shall cooperate with Lender in obtaining for Lender the benefits of any Awards or Insurance Proceeds lawfully or equitably payable in connection with the Property (including the payment by Borrower of the expense of an appraisal on behalf of Lender in case of Casualty or Condemnation affecting the Property or any part thereof), and Lender shall be reimbursed for any expenses incurred in connection therewith (including reasonable attorneys' fees and disbursements) out of such Insurance Proceeds and Awards.

2.1.20 Business and Operations. Borrower will continue to engage in the businesses presently conducted by it as and to the extent the same are necessary for the ownership, maintenance, management and operation of the Property. Borrower will qualify to do business and will remain in good standing under the laws of (a) the State and (b) each other jurisdiction as and to the extent the same are required for the ownership, maintenance, management and operation of the Property.

2.1.21 Costs of Enforcement. In the event (a) that the Mortgage is foreclosed in whole or in part or that the Mortgage is put into the hands of an attorney for collection, suit, action or foreclosure, (b) of the foreclosure of any mortgage prior to or subsequent to the Mortgage in which proceeding Lender is made a party, (c) of the bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of Borrower or any of its constituent Persons or an assignment by Borrower or any of its constituent Persons for the benefit of its creditors or

(d) an Event of Default occurs and Lender exercises any of its remedies under the Loan Documents, Borrower, its successors or assigns, shall be chargeable with and agrees to pay all costs of collection and defense (including, without limitation, the taxes, appraisals and legal fees), incurred by Lender or Borrower in connection therewith and in connection with any appellate proceeding or post-judgment action involved therein, together with all required service or use taxes.

2.1.22 Performance by Borrower. Borrower shall in a timely manner observe, perform and fulfill each and every covenant, term and provision of each Loan Document executed and delivered by, or applicable to, Borrower, and shall not enter into or otherwise suffer or permit any amendment, waiver, supplement, termination or other modification of any Loan Document executed and delivered by, or applicable to, Borrower without the prior consent of Lender.

2.1.23 Required Repairs. Borrower shall perform the repairs and other work at the Property as set forth on Schedule II (such repairs and other work hereinafter referred to as "Required Repairs") and shall complete each of the Required Repairs on or before the date that is six (6) months after the Closing Date.

Section 4.2Borrower Negative Covenants.

Borrower covenants and agrees with Lender that throughout the Term:

2.1.1 Due on Sale and Encumbrance; Transfers of Interests. Without the prior written consent of Lender, but, in each instance, subject to the provisions of Article 8, neither Borrower nor any other Person having a direct or indirect ownership or beneficial interest in Borrower shall sell, convey, mortgage, grant, bargain, encumber, pledge, assign or transfer the Property or any part thereof, or any interest, direct or indirect, in Borrower, whether voluntarily or involuntarily (a "Transfer"). A Transfer within the meaning of this Section 4.2.1 shall be deemed to include (i) an installment sales agreement wherein Borrower agrees to sell the Property or any part thereof for a price to be paid in installments; (ii) an agreement by Borrower for the leasing of all or a substantial part of the Property for any purpose other than the actual occupancy by a space tenant thereunder or a sale, assignment or other transfer of, or the grant of a security interest in, Borrower's right, title and interest in and to any Leases or any Rents; (iii) if

Borrower, Guarantor or any general partner, managing member or controlling shareholder of Borrower or Guarantor is a corporation, the voluntary or involuntary sale, conveyance or transfer of such corporation's stock (or the stock of any corporation directly or indirectly controlling such corporation by operation of law or otherwise) or the creation or issuance of new stock; (iv) if Borrower, Guarantor or any general partner, managing member or controlling shareholder of Borrower or Guarantor is a limited or general partnership, joint venture or limited liability company, the change, removal, resignation or addition of a general partner, managing partner, limited partner, joint venturer or member or the transfer of the partnership interest of any general partner, managing partner or limited partner or the transfer of the interest of any joint venturer or member; and (v) any pledge, hypothecation, assignment, transfer or other encumbrance of any direct or indirect ownership interest in Borrower.

2.1.2 Liens. Borrower shall not create, incur, assume or permit to exist any Lien on any direct or indirect interest in Borrower or any portion of the Property, except for the Permitted Encumbrances.

2.1.3 Dissolution. Borrower shall not (i) engage in any dissolution, liquidation or consolidation or merger with or into any other business entity, (ii) engage in any business activity not related to the ownership and operation of the Property, (iii) transfer, lease or sell, in one transaction or any combination of transactions, all or substantially all of the property or assets of Borrower except to the extent expressly permitted by the Loan Documents, in each case without obtaining the prior consent of Lender.

2.1.4 Change in Business. Borrower shall not enter into any line of business other than the ownership and operation of the Property. Borrower shall not change the current use of the Property in any material respect.

2.1.5 Debt Cancellation. Borrower shall not cancel or otherwise forgive or release any claim or debt (other than the termination of Leases in accordance herewith) owed to Borrower by any Person, except for adequate consideration and in the ordinary course of Borrower's business.

2.1.6 Affiliate Transactions. Borrower shall not enter into, or be a party to, any transaction with an Affiliate of Borrower or any of the partners, members or shareholders, as applicable, of Borrower except in the ordinary course of business and on terms which are fully disclosed to Lender in advance and are no less favorable to Borrower or such Affiliate than would be obtained in a comparable arm's-length transaction with an unrelated third party.

2.1.7 Zoning. Borrower shall not initiate or consent to any zoning reclassification of any portion of the Property or seek any variance under any existing zoning ordinance or use or permit the use of any portion of the Property in any manner that could result in such use becoming a non-conforming use under any zoning ordinance or any other applicable land use law, rule or regulation, without the prior consent of Lender.

2.1.8 Assets. Borrower shall not purchase or own any property other than the Property and any property necessary or incidental for the operation of the Property.

2.1.9 No Joint Assessment. Borrower shall not suffer, permit or initiate the joint assessment of the Property (i) with any other real property constituting a tax lot separate from the Property, and (ii) with any portion of the Property which may be deemed to constitute personal property, or any other procedure whereby the Lien of any taxes which may be levied  against such personal property shall be assessed or levied or charged to the Property.

2.1.10 Principal Place of Business. Borrower shall not change its principal place of business from the address set forth on the first page of this Agreement without first giving Lender thirty (30) days' prior written notice.

2.1.11 Change of Name, Identity or Structure. Borrower shall not change Borrower's name, identity (including its trade name or names) or, if not an  individual, Borrower's corporate, partnership or other structure without notifying Lender of such change in writing at least thirty (30) days prior to the effective date of such change and without first obtaining the prior written consent of Lender. Borrower shall execute and deliver to Lender,  prior to or contemporaneously with the effective date of any such change, any financing statement or financing statement change required by Lender to establish or maintain the validity, perfection and priority of the security interest granted herein. At the request  of  Lender, Borrower shall execute a certificate in form satisfactory to Lender listing the trade names under which Borrower intends to operate the Property, and representing and warranting that Borrower does business under no other trade name with respect to the Property.

2.1.12 Special Purpose. Without in any way limiting the provisions of  this Article 4, Borrower shall not take or permit any action that would result in Borrower not being in compliance with the representations, warranties and covenants set forth in Section 3.1.24.

2.1.13 ERISA.

(a) Borrower shall not engage in any transaction which would cause any obligation, or action taken or to be taken, hereunder (or the exercise by Lender of any of its rights under the Note, this Agreement or the other Loan Documents) to be a non-exempt (under a statutory or administrative class exemption) prohibited transaction under the Employee Retirement Income Security Act of 1974, as amended ("ERISA").

(b) Borrower shall deliver to Lender such certifications or other evidence from time to time throughout the Term, as requested by Lender in its sole discretion, that (A) Borrower is not and does not maintain an "employee benefit plan" as defined in Section 3(32) of ERISA, which is subject to Title I of ERISA, or a "governmental plan" within the meaning of Section 3(32) of ERISA; (B) Borrower is not subject to state statutes regulating investments and fiduciary obligations with respect to governmental plans; and (C) one or more of the following circumstances is true:

(i) Equity interests in Borrower are publicly offered securities, within the meaning of29 C.F.R §2510.3-101(b)(2);

(ii) Less than twenty-five percent (25%) of each outstanding class of equity interests in Borrower are held by "benefit plan investors" within the meaning of29 C.F.R §2510.3-101(£)(2);

(iii) Borrower qualifies as an "operating company" or a "real estate operating company" within the meaning of29 C.F.R §2510.3-lOl(c) or(e); or

(iv) The assets of Borrower are not otherwise "plan assets" of one or more "employee benefit plans" (as defined in Section 3(3) of ERISA) subject to Title I ofERISA, within the meaning of29 C.F.R. §2510.3-101.

2.1.14 Intentionally Omitted.

2.1.15 Embargoed Person. At all times throughout the term of the Loan, including after giving effect to any Transfers permitted pursuant to the Loan Documents,

(a) none of the funds or other assets of Borrower or Guarantor shall constitute property of, or shall be beneficially owned, directly or indirectly, by any Person subject to trade restrictions under United States law, including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C.  §§ 1701  et seq.,  The Trading  with  the Enemy  Act, 50 U.S.C. App. 1  et seq., and any Executive Orders or regulations promulgated thereunder, with the result that the investment in Borrower or Guarantor, as applicable (whether directly or indirectly), would be prohibited by law (each, an "Embargoed Person"), or the Loan made by Lender would be in violation of law, (b) no Embargoed Person shall have any interest of any nature whatsoever in Borrower or Guarantor, as applicable, with the result that the investment in Borrower or Guarantor, as applicable (whether directly or indirectly), would be prohibited by law or the Loan would be in violation of law, and (c) none of the funds of Borrower or Guarantor, as applicable, shall be derived from any unlawful activity with the result that the investment in Borrower or Guarantor, as applicable (whether directly or indirectly), would be prohibited by law or the Loan would be in violation oflaw.

2.1.16 Operating Agreements. Borrower shall at all times comply in all material respects with all Operating Agreements. Borrower agrees that without the prior written consent of Lender, Borrower will not amend, modify or terminate any of the Operating Agreements.

2.1.17 Hotel Covenants. Borrower shall not, without Lender's prior written consent (i) surrender, terminate or cancel the Franchise Agreement; (ii) reduce or consent to the reduction of the term of the Franchise Agreement; (iii) increase or consent to the increase of the amount of any charges under the Franchise Agreement; or (iv) otherwise modify, change, supplement, assign, transfer, alter or amend, or waive or release any of its rights and remedies under, the Franchise Agreement.

ARTICLES

INSURANCE, CASUALTY AND CONDEMNATION

Section 5.1Insurance.

2.1.1 Insurance Policies.

(a) Borrower, at its sole cost and expense, shall obtain and maintain during the entire Term, or cause to be maintained, insurance policies for Borrower and the Property providing at least the following coverages:

(i) Property insurance against loss or damage by fire, lightning, riot and civil commotion, vandalism, malicious mischief, burglary and theft, terrorism and such other perils as are normally included in a "special form" policy (formerly known as an "all-risk" policy), (A) in an amount equal to one hundred percent (100%) of the "Full Replacement Cost" of the Property, which for purposes of this Agreement shall mean actual replacement value (exclusive of costs of excavations, foundations, underground utilities and footings) with a waiver of depreciation and a deductible in an amount acceptable to Lender; (B) containing an agreed amount endorsement with respect to the Improvements and personal property at the Property waiving all co-insurance provisions; and

(C) containing an "Ordinance or Law Coverage" or "Enforcement" endorsement if any of the Improvements or the use of the Property shall at any time constitute legal non-conforming structures or uses, and compensating for loss of value or property resulting from operation of law and the cost of demolition and the increased cost of construction in amounts as required by Lender. In addition, Borrower shall obtain: (y) if any portion of the Improvements is currently or at any time in the future located in a federally designated "special flood hazard area", flood insurance in an amount equal to the maximum amount of such insurance available under the National Flood Insurance Program, or such greater amount as Lender shall require; and (z) earthquake insurance in an amount equal to one and one-half times (l .5x) the probable maximum loss of the Property as determined by Lender in its sole discretion and in form and substance satisfactory to Lender in the event the Property is located in an area with a high degree of seismic activity, provided that the insurance pursuant to clauses (y) and (z) hereof shall be on terms consistent with the comprehensive all risk insurance policy required under this subsection (i);

(ii) commercial general liability insurance, including a broad form comprehensive general liability endorsement and coverages against claims for personal injury, bodily injury, death or property damage occurring upon, in or about the Property, such insurance (A) to be on the so-called "occurrence" form and containing minimum limits per occurrence of One Million and No/100 Dollars ($1,000,000.00), with a combined limit per policy year, excluding umbrella coverage, of not less than Two Million and No/100 Dollars ($2,000,000.00); (B) to continue at not less than the aforesaid limit until required

to be changed by Lender by reason of changed economic conditions making such protection inadequate; and (C) to cover at least the following hazards:

(1) premises and operations; (2) products and completed operations on an "if any" basis; (3) independent contractors; (4) blanket contractual liability for all legal contracts; and (5) contractual liability covering the indemnities contained in Article 8 of the Mortgage to the extent the same is available;

(iii) rent loss and/or business interruption insurance (A) with loss payable to Lender; (B) covering all risks required to be covered by the insurance provided for in subsection (i) above and Section 5.1. l{h) below;

(C) covering a period of restoration of twelve (12) months and containing an extended period of indemnity endorsement which provides that after the physical loss to the Improvements and Personal Property has been repaired, the continued loss of income will be insured until such income either returns to the same level it was at prior to the loss, or the expiration of one hundred eighty (180) days from the date that the Property is repaired or replaced and operations are resumed, whichever first occurs, and notwithstanding that the policy may expire prior to the end of such period; (D) in an amount equal to one hundred percent (100%) of the projected Gross Revenue from the Property for a period of twelve (12) months from the date that the Property is repaired or replaced and operations are resumed; and (E) covering the actual loss sustained during the restoration. The amount of such business income insurance shall be determined prior to the date hereof and at least once each year thereafter based on Borrower's reasonable estimate of the Gross Revenue from the Property for the succeeding twelve (12) month period. All proceeds payable to Lender pursuant to this subsection shall be held by Lender and shall be applied to the Obligations secured by the Loan Documents from time to time due and payable hereunder and under the Note; provided, however, that nothing herein contained shall be deemed to relieve Borrower of its Obligations to pay the Debt on the respective dates of payment provided for in the Note and the other Loan Documents except to the extent such amounts are actually paid out of the proceeds of such business income insurance;

(iv) at all times during which structural construction, repairs or alterations are being made with respect to the Improvements, and only if the Property coverage form does not otherwise apply, (A) owner's contingent or protective liability insurance covering claims not covered by or under the terms or provisions of the above-mentioned commercial general liability insurance policy; and (B) the insurance provided for in subsection (i) above written in a so-called builder's risk completed value form (1) on a non-reporting basis, (2) against all risks insured against pursuant to subsection (i) above, (3) including permission to

occ.upy the Prop.er.ty, and (4) with an agreed amount endorsement waiving co-msurance prov1s1ons;

(v) workers' compensation, subject to the statutory limits of  the state in which the Property is located, and employer's liability insurance with limits which are required from time to time by Lender in respect of any work or

operations on or about the Property, or in connection with the Property or its operation (if applicable);

(vi) comprehensive boiler and machinery insurance, if applicable, in amounts as shall be reasonably required by Lender on terms consistent with the commercial property insurance policy required under subsection (i) above;

(vii) umbrella liability insurance in addition to primary coverage in an amount not less than $5,000,000.00 per occurrence on terms consistent with the commercial general liability insurance policy required under subsection (ii) above and (viii) below. However, so long as the underlying General Liability policy is subject to an annual aggregate, or annual cap, shared by other locations, umbrella liability insurance in addition to primary coverage in an amount not less than $25,000,000.00 per occurrence on terms consistent with the commercial general liability insurance policy required under subsection (ii) above and (viii) below; provided, however, that if at any time during the term of the Loan, the amount of such umbrella insurance coverage available under such policy is

$15,000,000.00 or less, Borrower shall, within thirty (30) days of  such occurrence, provide Lender with such additional insurance policies and/or coverage of umbrella liability insurance (in addition to primary coverage and any remaining available umbrella insurance coverage under the policy required in this subsection (vii)) in an amount not less than $10,000,000.00 per occurrence on terms consistent with the commercial general liability insurance policy required under subsection (ii) above and (viii) below and that otherwise satisfies the requirements contained herein;

(viii) motor vehicle liability coverage for all owned and non-owned vehicles, including rented and leased vehicles containing minimum limits per occurrence, including umbrella coverage, with limits which are required from time to time by Lender;

(ix) windstorm insurance in an amount equal one hundred percent (100%) of the Full Replacement Cost of the Property, with a deductible acceptable to Lender;

(x) if applicable, insurance against employee dishonesty in an amount not less than one (1) month of Gross Revenue from the Property and with a deductible not greater than Ten Thousand and No/I 00 Dollars ($10,000.00); and

(xi) upon sixty (60) days' notice, such other reasonable insurance and in such reasonable amounts as Lender from time to time may reasonably request against such other insurable hazards which at the time are commonly insured against for properties similar to the Property located in or around the region in which the Property is located.

(b) All insurance provided for in Section 5.1.l(a) shall be obtained under valid and enforceable policies (collectively, the "Policies" or in the singular, the "Policy") and shall be subject to the approval of Lender as to form and substance, including insurance companies, amounts, deductibles, loss payees and insureds. Not less than ten (10) days prior to the expiration dates of the Policies theretofore furnished to Lender, certificates of insurance evidencing the Policies (and, upon the written request of Lender, copies of such Policies) accompanied by evidence satisfactory to Lender of payment of the premiums then due thereunder (the "Insurance Premiums"), shall be delivered by Borrower to Lender.

(c) Any blanket insurance Policy shall specifically allocate to the Property the amount of coverage from time to time required hereunder and shall otherwise provide the same protection as would a separate Policy insuring only the Property in compliance with the provisions of Section 5.1.l(a).

(d) All Policies of insurance provided  for  or  contemplated  by Section 5.1.l(a). except for the Policy referenced in Section 5.1.l(a)(v), shall name Borrower as the insured and Lender and its successors and/or assigns as the additional insured, as its interests may appear, and in the case of property damage, boiler and machinery, windstorm, flood  and  earthquake  insurance,  shall  contain  a  so-called  New York standard non-contributing mortgagee clause in favor of Lender providing that the loss thereunder shall be payable to Lender. Additionally, if  Borrower  obtains property  insurance  coverage  in  addition  to  or  in  excess  of  that  required   by Section 5.1.l(a){i). then such insurance policies shall also contain a so-called New York standard non-contributing mortgagee clause in favor of Lender providing that the loss thereunder shall be payable to Lender.

(e) All Policies of insurance provided for in Section 5.1.l{a). except for the Policies referenced in Section 5.1.l(a)(v) and (a)(viii). shall contain clauses or endorsements to the effect that:

(i) no act or negligence of Borrower, or anyone acting for Borrower, or of any Tenant or other occupant, or failure to comply with the provisions of any Policy, which could reasonably be expected to otherwise result in a forfeiture of the insurance or any part thereof, shall in any way affect the validity or enforceability of the insurance insofar as Lender is concerned;

(ii) the Policy shall not be canceled or terminated without at least thirty (30) days' written notice to Lender and any other party named therein as an additional insured and shall not be materially changed (other than to  increase the coverage provided thereby) without such a thirty (30) day notice;

(iii) Lender shall not be liable for any Insurance Premiums thereon or subject to any assessments thereunder; and

(iv) the issuers thereof shall give notice to Lender if the Policies have not been renewed fifteen (15) days prior to its expiration; and

(f) If at any time Lender is not in receipt of written evidence that all insurance required hereunder is in full force and effect, Lender shall have the right, without notice to Borrower, to take such action as Lender deems necessary to protect its interest in the Property, including the obtaining of such insurance coverage as Lender in its sole discretion deems appropriate and all premiums incurred by Lender in connection with such action or in obtaining such insurance and keeping it in effect (including, without limitation, reasonable attorney's fees) shall be paid by Borrower to Lender upon demand and until paid shall be secured by the Mortgage and shall bear interest at the Default Rate.

(g) In the event of foreclosure of the Mortgage or other transfer of title to the Property in extinguishment in whole or in part of the Obligations, all right, title and interest of Borrower in and to the Policies that are not blanket Policies then in force concerning the Property and all proceeds payable thereunder shall thereupon vest in the purchaser at such foreclosure or Lender or other transferee in the event of such other transfer of title.

(h) The property insurance and rental loss and/or business interruption insurance required under Sections 5.1.l(a)(i) and (iii) above shall cover perils of terrorism and acts of terrorism and Borrower shall maintain property insurance and rental loss and/or business interruption insurance for loss resulting from perils and acts of terrorism on terms  (including  amounts)  consistent  with  those  required  under Sections 5.1.l(a)(i) and (iii) above at all times during the term of the Loan.

(i) The property and loss of rents/business interruption insurance policies required in this Section 5.1 shall not exclude "Acts of Terrorism" as defined in the Terrorism Risk Insurance Act of 2002, as amended by the Terrorism Risk Insurance Program Reauthorization Act of 2007, as extended and modified by the Terrorism Risk Insurance Program Authorization Act of 2015, as the same may be further modified, amended, or extended.

2.1.2 InsuranceCompany. All Policies required pursuant to Section 5. I. I

(i) shall be issued by companies authorized to do business in the state where the Property is located, with a financial strength and claims paying ability rating of at least (A)  "A-:VIII" from

A.M. Best Company or "A3" (or the equivalent) from Moody's Investors Service, Inc. and (B) "A-" from Standard & Poor's Ratings Service; (ii) shall, with respect to all property insurance policies, name Lender and its successors and/or assigns as their interest may appear as lender and mortgagee; (iii) shall, with respect to all property insurance policies and rental loss and/or business interruption insurance policies, contain a Standard Mortgagee Clause and a Lender's Loss Payable Endorsement, or their equivalents, naming Lender and its successors and/or assigns as the person to whom all payments made by such insurance company shall be paid; (iv) shall, with respect to all liability policies, name Lender and its successors and/or assigns as an additional insured; (v) shall contain a waiver of subrogation against Lender; (vi) shall contain such provisions as Lender deems reasonably necessary or desirable to protect its interest including endorsements providing (A) that neither Borrower, Lender nor any other party shall be a co-insurer under said Policies, (B) that Lender shall receive at least thirty (30) days' prior written notice of any modification, reduction or cancellation, and (C) for a deductible per loss of

an amount not more than that which is customarily maintained by prudent owners of properties with a standard of operation and maintenance comparable to and in the general vicinity of the Property, which amount shall be reasonably acceptable to Lender and in no event, shall be greater than 5% of the Full Replacement Cost; and (vii) shall be satisfactory in form and substance to Lender and shall be approved by Lender as to amounts, form, risk coverage, deductibles, loss payees and insureds. No property or rental loss/business interruption insurance policy required hereunder shall include any so called "terrorist exclusion" or similar exclusion or exception to insurance coverage relating to the acts of terrorist groups or individuals. Certified copies of the Policies shall be delivered to Lender, 1601 Washington Avenue, Suite 800, Miami Beach, Florida 33139, on the date hereof with  respect  to  the current  Policies  and  within thirty (30) days after the effective date thereof with respect to all renewal Policies. Borrower shall pay the Insurance Premiums annually in advance as the same become due and payable and shall furnish to Lender evidence of the renewal of each of the Policies with receipts for the payment of the Insurance Premiums or other evidence of such payment reasonably satisfactory to Lender (provided, however, that Borrower shall not be required to pay such Insurance Premiums nor furnish such evidence of payment to Lender in the event that the amounts required to pay such Insurance Premiums have been deposited into the Insurance  Account  pursuant  to  Section 6.4 hereof). In addition to the insurance coverages described in Section 5.1.1 above, Borrower shall obtain such other insurance as may from time to time be reasonably required by Lender in order to protect its interests. Within thirty (30) days after request by Lender, Borrower shall obtain such increases in the amounts of coverage required hereunder as may be reasonably requested by Lender, taking into consideration changes in the value of money over time, changes in liability laws, changes in prudent customs and practices, and the like.

Section 5.2Casualty.

If the Property shall be damaged or destroyed, in whole or in part, by fire or other casualty (a "Casualty"), Borrower shall give prompt notice of such damage to Lender and shall promptly commence and diligently prosecute the completion of the Restoration of the Property as nearly as possible to the condition the Property was in immediately prior to such Casualty, with such alterations as may be reasonably approved by Lender and otherwise in accordance with Section 5.4. Borrower shall pay all costs of such Restoration whether or not such costs are covered by insurance. Lender may, but shall not be obligated to make proof of loss if not made promptly by Borrower. In addition, Lender may participate in any settlement discussions with any insurance companies (and shall approve any final settlement) with respect to any Casualty in which the Net Proceeds or the costs of completing the Restoration are equal to or greater than the Restoration Threshold and Borrower shall deliver to Lender all instruments required by Lender to permit such participation. Any Insurance Proceeds in connection with any Casualty (whether or not Lender elects to settle and adjust the claim or Borrower settles such claim) shall be due and payable solely to Lender and held by Lender in accordance with the terms of this Agreement. In the event Borrower or any party other than Lender is a payee on any check representing Insurance Proceeds with respect to any Casualty, Borrower shall immediately endorse, and cause all such third parties to endorse, such check payable to the order of Lender. Borrower hereby irrevocably appoints Lender as its attorney-in-fact, coupled with an interest, to endorse any such check payable to the order of Lender. The expenses incurred by Lender in the adjustment and collection of Insurance Proceeds shall become part of the Obligations, shall be secured by the Loan Documents and shall be reimbursed by Borrower to Lender upon demand.

Borrower hereby releases Lender from any and all liability with respect to the settlement and adjustment by Lender of any claims in respect of any Casualty.

Section 5.3Condemnation.

Borrower shall promptly give Lender notice of the actual or threatened commencement of any proceeding for the Condemnation of all or any portion  of the Property and shall deliver to Lender copies of any and all papers served in connection with such proceedings. Lender may participate in any such proceedings, and Borrower shall from time to time deliver to Lender all instruments requested by it to permit such participation. Borrower shall, at its expense, diligently prosecute any such proceedings, and shall consult with Lender, its attorneys and experts, and cooperate with them in the carrying on or defense of any such proceedings. Notwithstanding any taking by any public or quasi-public authority through Condemnation or otherwise (including, but not limited to, any transfer made in lieu of or in anticipation of the exercise of such taking), Borrower shall continue to pay the Debt at the time and in the manner provided for its payment in the Note and in this Agreement and the Debt shall not be reduced until any Award shall have been actually received and applied by Lender, after the deduction of expenses of collection, to the reduction or discharge of the Debt. Lender shall not be limited to the interest paid on the Award by the condemning authority but shall be entitled to receive out of the Award interest at the rate or rates provided herein or in the Note. If the Property or any portion thereof is taken by a condemning authority, Borrower shall promptly commence and diligently prosecute the Restoration of the Property and otherwise comply with the provisions of Section 5.4, whether or not an Award is available. If the Property is sold, through foreclosure or otherwise, prior to the receipt by Lender of the Award, Lender shall have the right, whether or not a deficiency judgment on the Note shall have been sought, recovered or denied, to receive the Award, or a portion thereof sufficient to pay the Debt.

Section 5.4Restoration.

The following provisions shall apply in connection with the Restoration:

(a) If the Net Proceeds shall be less than the Restoration Threshold  and the costs of completing the Restoration shall be less than the Restoration Threshold, the Net Proceeds will be disbursed by Lender to Borrower upon receipt, provided that all of the conditions set forth in Section 5.4{b)(i) are met and Borrower delivers to Lender a written undertaking to expeditiously commence and to satisfactorily complete with due diligence the Restoration in accordance with the terms of this Agreement.

(b) If the Net Proceeds are equal to or greater than the Restoration Threshold or the costs of completing the Restoration is equal to or greater than the Restoration Threshold, the Net Proceeds will be held by Lender and Lender shall make the Net Proceeds available for the Restoration in accordance with the provisions of this Section 5.4. The term "Net Proceeds" for purposes of this Section 5.4 shall mean:

(i) the  net  amount  of  all  insurance  proceeds  received  by  Lender  pursuant   to Section 5.1.1(a)(i), (iv), and (vi) as a result of such damage or destruction, after deduction of its reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same ("Insurance Proceeds"), or (ii) the net amount of the

Award, after deduction of its reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same ("Condemnation Proceeds"), whichever the case may be.

(i) The Net Proceeds shall be made available to Borrower for Restoration upon the approval of Lender in its sole discretion that the following conditions are met:

(A) no Event of Default shall have occurred and be

continuing;

(B) (1) in the event the Net Proceeds are Insurance Proceeds, less than twenty-five percent (25%) of the total floor area of the Improvements on the Property has been damaged, destroyed or rendered unusable as a result of such Casualty or (2) in the event the Net Proceeds are Condemnation Proceeds, less than ten percent (10%) of the land constituting the Property is taken, and such land is located along the perimeter or periphery of the Property, and no portion of the Improvements is located on such land;

(C) Leases demising in the aggregate a percentage amount equal to or greater than seventy-five percent (75%) of the total rentable space in the Property which has been demised under executed and delivered Leases in effect as of the date of the occurrence of such Casualty or Condemnation, whichever the case may be, shall remain in full force and effect during and after the completion of the Restoration without abatement of rent beyond the time required for Restoration, notwithstanding the occurrence of any such Casualty or Condemnation, whichever the case may be, and will make all necessary repairs and restorations thereto at their sole cost and expense;

(D) Borrower shall commence the Restoration (including application of necessary licenses or permits) as soon as reasonably practicable (but in no event later than ninety (90) days after such Casualty or Condemnation, whichever the case may be, occurs) and shall diligently pursue the same to satisfactory completion;

(E) Lender shall be satisfied that any operating deficits, including all scheduled payments of principal and interest under the Note, which will be incurred with respect to the Property as a result of the occurrence of any such Casualty or Condemnation, whichever the case may be, will be covered out of (1) the Net Proceeds, (2) the insurance coverage referred to in Section 5.1.l{a)(iii), if applicable, or (3) by other funds of Borrower;

(F) Lender shall be satisfied that the Restoration will be completed on or before the earliest to occur of (1) the date six (6) months

prior to the Stated Maturity Date, (2) the earliest date required for such completion under the terms of any Lease, if any Leases are in place at the Property, (3) such time as may be required under applicable Legal Requirements or (4) the expiration of the insurance coverage referred to in Section 5.1.1{a){iii);

(G) the Property and the use thereof after the  Restoration will be in compliance with and permitted under all applicable Legal Requirements;

(H) the Restoration shall be done and completed by Borrower in an expeditious and diligent fashion and in compliance with all applicable Legal Requirements;

(I) such Casualty or Condemnation, as applicable, does not result in the loss of access to the Property or the related Improvements;

(J) the Restoration DSCR, after giving effect to the Restoration, shall be equal to or greater than 1.75 to 1.00;

(K) the Loan to Value Ratio after giving effect to the Restoration, shall be equal to or less than sixty-five percent (65%);

(L) Borrower shall deliver, or cause to be delivered, to Lender a signed detailed budget approved in writing by Borrower's architect or engineer stating the entire cost of completing the Restoration, which budget shall be acceptable to Lender; and

(M) the Net Proceeds together with any cash or cash equivalent deposited by Borrower with Lender are sufficient in Lender's discretion to cover the cost of the Restoration.

(ii) The Net Proceeds shall be held by Lender in the Casualty and Condemnation Account and, until disbursed in accordance with  the provisions of this Section 5.4{b), shall constitute additional security for the Debt and other obligations under the Loan Documents. The Net Proceeds shall be disbursed by Lender to, or as directed by, Borrower from time to time during the course of the Restoration, upon receipt of evidence satisfactory to Lender that

(A) all materials installed and work and labor performed (except to the extent that they are to be paid for out of the requested disbursement) in connection with the Restoration have been paid for in full, and (B) there exist no notices of pendency, stop orders, mechanic's or materialman's liens or notices of intention to file same, or any other liens or encumbrances of any nature whatsoever on the Property which have not either been fully bonded to the satisfaction of Lender and discharged of record or in the alternative fully insured to the satisfaction  of Lender by the title company issuing the Title Insurance Policy.

(i) All plans and specifications required in connection with the Restoration shall be subject to the prior approval of Lender and an independent consulting engineer selected by Lender (the "Casualty Consultant"). Lender shall have the use of the plans and specifications and all permits, licenses and approvals required or obtained in connection with the Restoration. The identity of the contractors, subcontractors and materialmen engaged in the Restoration, as well as the contracts under which they have been engaged, shall be subject to the approval of Lender and the Casualty Consultant. All costs and expenses incurred by Lender in connection with recovering, holding and advancing the Net Proceeds for the Restoration including, without limitation, reasonable attorneys' fees and disbursements and the Casualty Consultant's fees and disbursements, shall be paid by Borrower.

(ii) In no event shall Lender be obligated to make disbursements of the Net Proceeds in excess of an amount equal to the costs actually incurred from time to time for work in place as part of the Restoration, as certified by the Casualty Consultant, less the Casualty Retainage. The term "Casualty Retainage" shall mean, as to each contractor, subcontractor or materialman engaged in the Restoration, an amount equal to ten percent (10%) of the costs actually incurred for work in place as part of the Restoration, as certified by the Casualty Consultant, until the Restoration has been completed. The Casualty Retainage shall in no event, and notwithstanding anything to the contrary set forth above in this Section 5.4(b). be less than the amount actually held back by Borrower from contractors, subcontractors and materialmen engaged in the Restoration. The Casualty Retainage shall not be released until the Casualty Consultant certifies to Lender that the Restoration has been completed in accordance with the provisions of this Section 5.4(b) and that all approvals necessary for the re-occupancy and use of the Property have been obtained from all appropriate Governmental Authorities, and Lender receives evidence satisfactory to Lender that the costs of the Restoration have been paid in full or will be paid in full out of the Casualty Retainage; provided, however, that Lender will release the portion of the Casualty Retainage being held with respect to any contractor, subcontractor or materialman engaged in the Restoration as of the date upon which (i) the Casualty Consultant certifies to Lender that such contractor, subcontractor or materialman has satisfactorily completed all work and has supplied all materials in accordance with the provisions of such contractor's, subcontractor's or materialman's contract, (ii) the contractor, subcontractor or materialman delivers the lien waivers and evidence of payment in full of all sums due to the contractor, subcontractor or materialman as may be reasonably requested by Lender or by the title company issuing the Title Insurance Policy, and (iii) Lender receives an endorsement to the Title Insurance Policy insuring the continued priority of the Lien of the Mortgage and evidence of payment of any premium payable for such endorsement. If required by Lender, the release of any such portion of the Casualty Retainage shall be approved by the surety company, if any, which has issued a payment or performance bond with respect to the contractor, subcontractor or materialman.

(iii) Lender shall not be obligated to make disbursements of the Net Proceeds more frequently than once every calendar month.

(iv) If at any time the Net Proceeds or the undisbursed balance thereof shall not, in the opinion of Lender in consultation with the Casualty Consultant, be sufficient to pay in full the balance of the costs which are estimated by the Casualty Consultant to be incurred in connection with the completion of the Restoration, Borrower shall deposit the deficiency (the "Net Proceeds Deficiency") with Lender (for deposit into the Casualty and Condemnation Account) before any further disbursement of the Net Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall be deposited by Lender into the Casualty and Condemnation Account and shall be disbursed for costs actually incurred in connection with the Restoration on the same conditions applicable to the disbursement of the Net Proceeds, and until so disbursed pursuant to this Section 5.4{b) shall constitute additional security for the Obligations.

(v) The excess, if any, of the Net Proceeds and the remaining balance, if any, of the Net Proceeds Deficiency deposited with Lender after the Casualty Consultant certifies to Lender that the Restoration has been completed in accordance with the provisions of this Section 5.4(b), and the receipt by Lender of evidence satisfactory to Lender that all costs incurred in connection with the Restoration have been paid in full, shall be remitted by Lender to Borrower, provided no Event of Default shall have occurred and shall be continuing.

(c) All Net Proceeds not required (i) to be made available for the Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant  to Section 5.4(b){vii), may be retained and applied by  Lender  in  accordance  with Section 2.4.4 hereof toward the payment of the Debt whether or not then due and payable in such order, priority and proportions as Lender in its sole discretion shall deem proper, or, at the discretion of Lender, the same may be paid, either in whole or in part, to Borrower for such purposes as Lender shall approve, in its discretion. Additionally, throughout the term of the Loan, if a Default or an Event of Default has occurred, then the Borrower shall pay to Lender, with respect to any payment of the Debt pursuant to this Section 5.4(c). an additional amount equal to the Prepayment Fee; provided, however, that if a Default or an Event of Default has not occurred, then the Prepayment Fee shall not be payable.

(d) In the event of foreclosure of the Mortgage, or other transfer of title to the Property in extinguishment in whole or in part of the Debt, all right, title and interest of Borrower in and to the Policies that are not blanket Policies then in force concerning the Property, and all proceeds payable thereunder, shall thereupon vest in the purchaser at such foreclosure, or Lender or other transferee in the event of such other transfer of title.

(e) Notwithstanding anything to the contrary contained herein, if in connection with a Casualty any insurance company makes a payment under a property

insurance Policy that Borrower proposes be treated as business or rental interruption insurance, then, notwithstanding any designation (or lack of designation) by the insurance company as to the purpose of such payment, as between Lender and Borrower, such payment shall not be treated as business or rental interruption Insurance Proceeds unless Borrower has demonstrated to Lender's satisfaction that the remaining Net Proceeds that have been received from the property insurance companies are sufficient to pay 100% of the cost of the Restoration or, if such Net Proceeds are to be applied to repay the Obligations in accordance with the terms hereof, that such remaining Net Proceeds will be sufficient to satisfy the Obligations in full.

(f) Notwithstanding the foregoing provisions of this Section 5.4, if the Loan is included in a REMIC Trust and, immediately following a release of any portion of the real property relating to the Property following a Casualty or Condemnation, the ratio of the unpaid principal balance of the Loan to the value of the remaining real property relating to the Property is greater than 125% (such value to be determined, in Lender's sole discretion, by any commercially reasonable method permitted to a REMIC Trust, based solely on real property and excluding personal property and going concern value, if any), Lender shall not be required to release any Net Proceeds for Restoration of the Property, and the principal balance of the Loan  must  be paid  down  by  Borrower by the greater of (A) such amount as may be required such that the Securitization will not fail to maintain its status as a REMIC Trust as a result of the related release of lien or (B) least of the following amounts: (i) the Net Proceeds, (ii) the fair market value of the released Property at the time of the release, or (iii) an amount such that the loan-to-value ratio of the Loan (as so determined by Lender) does not increase after the release.

ARTICLE6

CASH MANAGEMENT AND RESERVE FUNDS

Section 6.1Cash Management Arrangements.

No later than thirty (30) days following the commencement of a Sweep Event Period, Borrower shall (a) establish and maintain for the remainder of the Term, at a local bank selected by Borrower and reasonably approved by Lender (the "Clearing Bank"), a trust account (the "Clearing Account") pursuant to a control agreement by and among Borrower, Lender, Manager and the Clearing Bank in form and substance reasonably satisfactory to Lender (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the "Clearing Account Agreement"), and (b) for the remainder of the Term, cause all Rents and other Gross Revenue to be transmitted by commercial Tenants at the Property and credit card companies as facilitated by Credit Card Direction Letters (but not individual transient hotel guests who are not paying with a credit card) directly into the Clearing Account. If, following a Sweep Event Period, Borrower shall fail to comply with the terms and provisions of this Section 6.1, Borrower hereby expressly authorizes and appoints Lender its attorney-in-fact to establish a Clearing Account, enter into a Clearing Account Agreement and cause all Rents and other Gross Revenue to be transmitted to such Clearing Account (including by delivering Credit Card Direction Letters) in the name, and upon behalf, of Borrower, Borrower ratifying all that its said attorney shall do by virtue thereof, which power of attorney shall be irrevocable and shall be

deemed coupled with an interest. Without in any way limiting the foregoing, if Borrower or Manager receives any Gross Revenue from the Property from and after the commencement of a Sweep Event Period (including amounts paid by transient hotel guests by means other than credit card), then (i) such amounts shall be deemed to be collateral for the Obligations and shall be held in trust for the benefit, and as the property, of Lender, (ii) such amounts shall not be commingled with any other funds or property of Borrower or Manager, and (iii) Borrower or Manager shall deposit such amounts in the Clearing Account within one (1) Business Day of receipt. Funds deposited into the Clearing Account shall be swept by the Clearing Bank on a daily basis into Borrower's operating account at the Clearing Bank, unless a Sweep Event Period is continuing, in which event such funds shall be swept on a daily basis into an Eligible Account at the Cash Management Bank controlled by Lender (the "Cash Management Account") and applied and disbursed in accordance with this Agreement and the Cash Management Agreement. Funds in the Cash Management Account shall be invested in Permitted Investments, as more particularly set forth in the Cash Management Agreement. Lender may also establish subaccounts of the Cash Management Account which shall at all times be Eligible Accounts (and may be ledger or book entry accounts and not actual accounts) (such subaccounts are referred to herein as "Accounts"). The Cash Management Account and all other Accounts will be under the sole control and dominion of Lender, and Borrower shall have no right of withdrawal therefrom. Borrower shall pay for all expenses of opening and maintaining all of the above accounts.

Section 6.2 Intentionally Omitted . Section 6.3 Tax Funds.

1.6.1 Deposits of Tax Funds. Borrower shall deposit with Lender (i) an amount reasonably determined by Lender on the Closing Date, and (ii) on each Monthly Payment Date, an amount equal to one-twelfth of the Taxes that Lender estimates will be payable during the next ensuing twelve (12) months, in order to accumulate sufficient funds to pay all such Taxes at least thirty (30) days prior to their respective due dates, which amounts shall be transferred into an Account established by or on behalf of Lender to hold such funds (the "Tax Account"). Amounts deposited from time to time into the Tax Account pursuant to this Section 6.3.1 are referred to herein as the "Tax Funds". If at any time Lender reasonably determines that the Tax Funds will not be sufficient to pay the Taxes, Lender shall notify Borrower of such determination and the monthly deposits for Taxes shall be increased by the amount that Lender estimates is sufficient to make up the deficiency by the date that is at least thirty (30) days prior to the respective due dates for the Taxes; provided, that if Borrower receives notice of any deficiency after the date that is thirty (30) days prior to the date that Taxes are due, Borrower will deposit with or on behalf of Lender such amount within three (3) Business Day after its receipt of such notice.

1.6.2 Release of Tax Funds. Provided no Event of Default shall exist and remain uncured, Lender shall direct Servicer to apply the Tax Funds in the Tax Account to payments of Taxes, provided Borrower shall furnish Lender with all bills, invoices and statements for the Taxes for which such funds are required at least thirty (30) days prior to the date on which such charges first become payable. In making any payment relating to Taxes, Lender may do so according to any bill, statement or estimate procured from the appropriate public office (with respect to Taxes) without inquiry into the accuracy of such bill, statement or

estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien or title or claim thereof. If the amount of the Tax Funds shall exceed the amounts due for Taxes, Lender shall, in its sole discretion, return any excess to Borrower or credit such excess against future payments to be made to the Tax Funds. Any Tax Funds remaining in the Tax Account after the Obligations have been paid in full shall be returned to Borrower.

Section 6.4Insurance Funds.

1.6.1 Deposits of Insurance Funds. Borrower shall deposit with Lender (i) an amount reasonably determined by Lender on the Closing Date, and (ii) on each  Monthly Payment Date, an amount equal to one-twelfth of the Insurance Premiums that Lender estimates will be payable for the renewal of the coverage afforded by the Policies upon the expiration thereof, in order to accumulate sufficient funds to pay all such Insurance Premiums  at  least thirty (30) days prior to the expiration of the Policies, which amounts shall be transferred into an Account established by or on behalf of Lender to hold such funds (the "Insurance Account"). Amounts deposited from time to time into the Insurance Account pursuant to this Section 6.4.1 are referred to herein as the "Insurance Funds". If at any time Lender reasonably determines  that the Insurance Funds will not be sufficient to pay the Insurance Premiums, Lender shall notify Borrower of such determination and the monthly deposits for Insurance Premiums shall be increased by the amount that Lender estimates is sufficient to make up the deficiency by the date that is at least thirty (30) days prior to the expiration of the Policies; provided, that if Borrower receives notice of any deficiency after the date that is thirty (30) days prior to the expiration of the Policies, Borrower will deposit with or on behalf of Lender such amount within one (1) Business Day after its receipt of such notice.

1.6.2 Release of Insurance Funds. Provided no Event of Default shall exist and remain uncured, Lender shall direct Servicer to apply the Insurance Funds in the Insurance Account to payment of Insurance Premiums, provided Borrower shall furnish Lender with all bills, invoices and statements for the Insurance Premiums for which such funds are required at least thirty (30) days prior to the date on which such charges first become payable. In making any payment relating to Insurance Premiums, Lender may do so according to any bill, statement or estimate procured from the insurer or its agent, without inquiry into the accuracy of such bill, statement or estimate. If the amount of the Insurance Funds shall exceed the amounts due for Insurance Premiums, Lender shall, in its sole discretion, return any excess to Borrower or credit such excess against future payments to be made to the Insurance Funds. Any Insurance Funds remaining in the Insurance Account after the Obligations have been paid in full shall be returned to Borrower.

Section 6.5FF&E Reserve Funds

1.6.1 Deposits of FF&E Reserve Funds. Borrower shall deposit with Lender on each Monthly Payment Date, an amount equal to one-twelfth of an amount equal to (i) from the Closing Date until the Monthly Payment Date in April, 2021, two (2.0%), (ii) from the Monthly Payment Date in May, 2021 through and including the Monthly Payment Date in April, 2022, three percent (3.0%) and (iii) from and after the Monthly Payment Date in May, 2022, four percent (4.0%) of the annual Gross Revenue for the Property as determined by Lender for annual Capital Expenditures and the repair and replacement of the furniture, fixtures and equipment at

or in or used in the operation of the Property (the "FF&E Work") that may be incurred following the date hereof, which amounts shall be transferred into an Account established by or on behalf of Lender to hold such funds (the "FF&E Reserve Account"). Lender may from time to time reassess its estimate of the required monthly amount necessary for the FF&E Work and, upon notice to Borrower, Borrower shall be required to deposit with or on behalf of Lender each month such reassessed amount, which shall be transferred into the FF&E Reserve Account. Amounts deposited from time to time into the FF&E  Reserve  Account  pursuant  to  this Section 6.5.1 are referred to herein as the "FF&E Reserve Funds".

1.6.2 Release ofFF&E Reserve Funds.

(a) Lender shall direct Servicer to disburse the FF&E Reserve Funds to Borrower out of the FF&E Reserve Account upon satisfaction by Borrower of each of the following conditions with respect to each such disbursement: (i) such disbursement is for an Approved FF&E Expense; (ii) Borrower shall submit a request for payment to Lender at least ten (10) days prior to the date on which Borrower requests such payment be made, which request shall specify the Approved FF&E Expenses to be paid; (iii) on the date such request is received by Lender and on the date such payment is to be made, no Event of Default shall exist and remain uncured, and (iv) Lender shall have received

(1) an Officer's Certificate from Borrower (A) stating that the items to be funded by the requested disbursement are Approved FF&E Expenses, and a description thereof,

(B) stating that all Approved FF&E Expenses to be funded by the requested disbursement have been completed in a good and workmanlike manner and in accordance with all applicable Legal Requirements, (C) identifying each Person that supplied materials or labor in connection with the Approved FF&E Expenses to be funded by the requested disbursement, together with invoices for such materials and/or labor, (D) stating that each such Person has been paid in full or will be paid in full upon such disbursement,

(E) stating that the Approved FF&E Expenses to be funded have not been the subject of a previous disbursement, (F) stating that all previous disbursements of FF&E Reserve Funds have been used to pay the previously identified Approved FF&E Expenses, and

(G) stating that all outstanding trade payables (other than those to be paid from the requested disbursement or those constituting Permitted Indebtedness) have been paid in full and (2) with respect to any disbursement greater than $10,000: (I) a copy of any license, permit or other approval required by any Governmental Authority in connection with the Approved FF&E Expenses and not previously delivered to Lender, (II) lien waivers or other evidence of payment satisfactory to Lender, (III) at Lender's option, a title search for the Property indicating that the Property is free from all Liens, claims and other encumbrances not previously approved by Lender, and (IV) such other evidence as Lender shall reasonably request to demonstrate that the Approved FF&E Expenses to be funded by the requested disbursement have been completed and are paid for or will be paid upon such disbursement to Borrower. Lender shall not be required  to disburse FF&E Reserve Funds more frequently than once each calendar month, and Lender shall not be required to make disbursements from the FF&E Reserve Account unless such requested disbursement is in an amount greater than $5,000 (or a lesser amount if  the total amount in the FF&E Reserve Account is less than $5,000, in which case only one disbursement of the amount remaining in the account shall be made).

(a) Nothing in this Section 6.5.2 shall (i) make Lender responsible for performing or completing any FF&E Work; (ii) require Lender to expend funds in addition to the FF&E Reserve Funds to complete any FF&E Work; (iii) obligate Lender to proceed with any FF&E Work; or (iv) obligate Lender to demand from Borrower additional sums to complete any FF&E Work.

(b) Borrower shall permit Lender and Lender's agents and representatives (including Lender's engineer, architect or inspector) or third parties to enter onto the Property during normal business hours (subject to the rights of Tenants under their Leases) to inspect the progress of any FF&E Work and all materials being used in connection therewith and to examine all plans and shop drawings relating to such FF&E Work. Borrower shall cause all contractors and subcontractors to cooperate with Lender or Lender's representatives or such other Persons described above in connection with inspections described in this Section 6.5.2(c).

(c) If a disbursement of FF&E Reserve Funds will exceed $20,000.00, Lender may require an inspection of the Property at Borrower's expense prior to making a disbursement of FF&E Reserve Funds in order to verify completion of the FF&E Work for which reimbursement is sought. Lender may require that such inspection be conducted by an appropriate independent qualified professional selected by Lender and may require a certificate of completion by an independent qualified professional architect acceptable to Lender prior to the disbursement of FF&E Reserve Funds. Borrower shall pay the expense of the inspection as required hereunder, whether such inspection is conducted by Lender or by an independent qualified professional architect.

(d) In addition to any insurance required under the Loan Documents, Borrower shall provide or cause to be provided workmen's compensation insurance, builder's risk insurance, public liability insurance and other insurance to the extent required under applicable law in connection with the FF&E Work. All such policies shall be in form and amount satisfactory to Lender.

Section 6.6 Intentionally Omitted.

Section 6.7 Intentionally Omitted.

Section 6.8 Intentionally Omitted.

Section 6.9 Excess Cash Flow Funds. Borrower shall deposit or cause to be deposited with or on behalf of Lender the funds specified in Section 6.11 hereof, which amounts shall be transferred by Cash Management Bank into an Account established to hold such funds (the "Excess Cash Flow Account") and held as additional collateral and security for the Loan. Amounts deposited from time to time into the Excess Cash Flow Account pursuant to this Section 6.9 and Section 6.11 are referred to herein as the "Excess Cash Flow Funds." Upon a termination, if any, of a Sweep Event Period, provided no other Sweep Event Period is continuing, Lender shall distribute the Excess Cash Flow Funds on deposit in the Excess Cash Flow Account to Borrower.

Section 6.10Security Interest in Reserve Funds.

2.6.1 Grant of Security Interest. Borrower shall be the owner of the Reserve Funds. Borrower hereby pledges, assigns and grants to Lender a first-priority perfected security interest to Lender, as security for the payment and performance of the Obligations, in all of Borrower's right, title and interest in and to the Reserve Funds. The Reserve Funds shall be under the sole dominion and control of Lender. The Reserve Funds shall not constitute a trust fund and may be commingled with other monies held by Lender.

2.6.2 Income Taxes; Interest. Borrower shall report on its federal, state, commonwealth, district and local income tax returns all interest or income accrued on the Reserve Funds. The Reserve Funds shall earn interest at a rate commensurate with the rate of interest paid from time to time on money market accounts at a commercial bank selected by Lender in its sole discretion from time to time, with interest credited monthly to such Reserve Funds (with the exception of the Tax Funds and the Insurance Funds Funds). All earnings or interest on each of the Reserve Funds (with the exception of the Tax Funds and the Insurance Funds) shall be and become part of the respective Reserve Fund and shall be disbursed as provided in the paragraph(s) of this Agreement applicable to each such Reserve Fund. No earnings or interest on the Tax Funds or the Insurance Funds shall be payable to Borrower.

2.6.3 Prohibition Against Further Encumbrance. Borrower shall not, without the prior consent of Lender, further pledge, assign or grant any security interest in the Reserve Funds or permit any Lien or encumbrance to attach thereto or any levy to be made thereon or any UCC-1 financing statements to be filed with respect thereto, except those naming Lender as the secured party.

2.6.4 Lender Remedy for Failure to Perform. In addition to Lender's remedies following an Event of Default, Borrower acknowledges that Lender shall have the right (but not the obligation) to complete or perform the Required Repairs, tenant improvements and FF&E Work (individually and collectively, as the context requires, the "Reserve Items") for which amounts have been reserved under this Loan Agreement (or pay the leasing commissions as applicable) and for such purpose, Borrower hereby appoints Lender its attorney-in-fact with full

power of substitution (and which shall be deemed to be coupled with an interest and irrevocable until the Loan is paid in full and the Mortgage is discharged of record, with Borrower hereby ratifying all that its said attorney shall do by virtue thereof): (i) to complete or undertake such work in the name of Borrower; (ii) to proceed under existing contracts or to terminate existing contracts (even where a termination penalty may be incurred) and employ such contractors, subcontractors, watchman, agents, architects and inspectors as Lender determines necessary or desirable for completion of such work; (iii) to make any additions, changes and corrections to the scope of the work as Lender deems necessary or desirable for timely completion; (iv) to pay, settle or compromise all existing bills and claims which are or may become Liens against the Property or as may be necessary or desirable for completion of such work; (v) to execute all applications and certificates in the name of Borrower which may be required to obtain permits and approvals for such work or completion of such work; (vi) to prosecute and defend all actions or proceedings in connection with the repair or improvements to the Property; and (vii) to do any and every act which Borrower might do in its own behalf to fulfill the terms of Borrower's obligations under this Agreement. Amounts expended by Lender which exceed amounts held in the Accounts shall be added to the Outstanding Principal Balance, shall be immediately due and payable, and shall bear interest at the Default Rate from the date of disbursement by Lender until paid in full. In addition, in order to perform inspections or, following an Event of Default, to complete Reserve Items which Borrower has failed to perform, Borrower hereby grants Lender and its agents the right, from time to time, to enter onto the Property.

Section 6.11Property Cash Flow Allocation.

2.6.1 Order of Priority of Funds in Cash Management Account.

(a) During the continuation of a Sweep Event Period, on each Monthly Payment Date during the Term, except during the continuance of an Event of Default, all funds deposited into the Cash Management Account during the immediately preceding Interest Period shall be applied on such Monthly Payment Date in the following order of priority:

(i) First, to the Tax Account, to make the required payments of Tax Funds as required under Section 6.3;

(ii) Second, to the Insurance Account, to make the required payments of Insurance Funds as required under Section 6.4;

(iii) Third, to Lender, funds sufficient to pay the Monthly Debt Service Payment Amount, applied first to the payment of interest computed at the Interest Rate with the remainder applied to the reduction of the Outstanding Principal Balance;

(iv) Fourth, subject to the terms of the Cash Management Agreement, to the Borrower Operating Account, funds in an amount equal to the Monthly Operating Expense Budgeted Amount payable to third parties unaffiliated with Borrower;

(v) Fifth, to the FF&E Reserve Account, to make the required payments ofFF&E Reserve Funds as required under Section 6.5;

(vi) Sixth, subject to the terms of the Cash Management Agreement, to the Borrower Operating Account, funds in an amount equal to the Monthly Operating Expense Budgeted Amount payable to parties that are not classified as third parties unaffiliated with Borrower;

(vii) Seventh, to Lender, of any other amounts then due and payable under the Loan Documents;

(viii) Eighth, to the Borrower Operating Account, payments for Extraordinary Expenses approved by Lender, if any; and

(ix) Lastly, all amounts remaining after payment of the amounts set forth in clauses (i) through (viii) above (the "Remaining Receipts") to the Excess Cash Flow Account.

2.6.2 Failure to Make Payments. The failure of Borrower to make all of the payments required under clauses (i) through (vii) of Section 6.11.1{a)  in full on each Monthly Payment Date shall constitute an Event of Default under this Agreement; provided, however, if adequate funds are available in the Cash Management Account for such payments, and Borrower is not otherwise in Default hereunder, the failure by the Cash Management Bank to allocate such funds into the appropriate Accounts shall not constitute an Event of Default.

2.6.3 Application After Event of Default. Notwithstanding anything to the contrary contained in this Article 6, upon the occurrence of an Event of Default, Lender, at its option, may withdraw the Reserve Funds and any other funds of Borrower then in the possession of Lender, Servicer or Cash Management Bank (including any Gross Revenue) and apply such funds to the items for which the Reserve Funds were established or to the payment of the Debt in such order, proportion and priority as Lender may determine in its sole discretion. Lender's right to withdraw and apply any of the foregoing funds shall be in addition to all other rights and remedies provided to Lender under the Loan Documents.

ARTICLE7 PROPERTY MANAGEMENT

Section 7.1The Management Agreement.

Borrower shall (i) cause Manager to manage the Property in accordance with the Management Agreement, (ii) diligently perform and observe all of the terms, covenants and conditions of the Management Agreement on the part of Borrower to be performed  and observed, (iii) promptly notify Lender of any default under the Management Agreement of which it is aware, (iv) promptly deliver to Lender a copy of each financial statement, business plan, capital expenditures plan, report and estimate received by it under the Management Agreement, and (v) promptly enforce the performance and observance of all of the covenants required to be performed and observed by Manager under the Management Agreement. If Borrower shall

default in the performance or observance of any material term, covenant or condition of the Management Agreement on the part of Borrower to be performed or observed, then, without limiting Lender's other rights or remedies under this Agreement or the other Loan Documents, and without waiving or releasing Borrower from any of its Obligations hereunder or under the Management Agreement, Lender shall have the right, but shall be under no obligation, to pay any sums and to perform any act as may be appropriate to cause all the material terms, covenants and conditions of the Management Agreement on the part of Borrower to be performed or observed.

Section 7.2Prohibition Against Termination or Modification.

Borrower shall not (i) surrender, terminate, cancel, modify, renew or extend the Management Agreement, (ii) enter into any other agreement relating to the management or operation of the Property with Manager or any other Person, (iii) consent to the assignment by the Manager of its interest under the Management Agreement, or (iv) waive or release any of its rights and remedies under the Management Agreement, in each case without the express consent of Lender, which consent shall not be unreasonably withheld; provided, however, with respect to a new manager such consent may be conditioned upon Borrower delivering a Rating Agency Confirmation as to such new manager and management agreement. If at any time Lender consents to the appointment of a new manager, such new manager and Borrower shall, as a condition of Lender's consent, execute (i) a management agreement in form and substance reasonably acceptable to Lender, and (ii) a subordination of management agreement in a form reasonably acceptable to Lender.

Section 7.3Replacement of Manager.

Lender shall have the right to require Borrower to replace the Manager with a Person chosen by Borrower and approved by Lender (provided, that such approval may be conditioned upon Borrower delivering a Rating Agency Confirmation as to such new manager and management agreement) upon the occurrence of any one or more of the following events:

(i) at any time following the occurrence and during the continuance of an Event of Default, (ii) if at any time the Debt Service Coverage Ratio falls below 1.10 to 1.00 (the "Manager Termination Ratio"), as determined by Lender in its sole discretion, (iii) if Manager shall be in default under the Management Agreement beyond any applicable notice and cure period, (iv) if Manager shall become insolvent or a debtor in any bankruptcy or insolvency proceeding, or (v) if at any time the Manager has engaged in gross negligence, fraud, willful misconduct or misappropriation of funds. Notwithstanding the foregoing, after the occurrence and during the continuance of an Event of Default, Lender may, but shall not be obligated to, select the replacement property manager.

ARTICLES PERMITTED TRANSFERS

Section 8.1Permitted Transfer of the Property.

From and after the date that is one year after the Closing Date, Lender shall not withhold its consent to the conveyance of the Property to a Permitted Transferee provided that

(a) Borrower shall give Lender written notice of such Transfer request not less than sixty (60) days prior to the proposed date of such Transfer and pay to Lender a non-refundable processing fee in the amount of $25,000, (b) Lender has received a Rating Agency Confirmation as to the conveyance of the Property to the Permitted Transferee to the extent required by Lender or required under the applicable pooling and servicing agreement, (c) Lender has received an agreement, acceptable to it in its sole discretion, pursuant to which Permitted Transferee assumes all of Borrower's obligations under the Loan Documents, (d) Lender receives a transfer fee equal to (1) for the first assumption, 0.5% of the then-outstanding amount of the Loan (but in no event less than $15,000) and (2) for any subsequent assumption, 1% of the then-outstanding amount of the Loan (but in no event less than $15,000), (e) Lender shall have received such documents, certificates and legal opinions as it may reasonably request, (f) no Event of Default or event which with the giving of notice or the passage of time or both would constitute an Event of Default shall have occurred and remain uncured; (g) the Permitted Transferee and its property manager shall have sufficient experience in the ownership and management of properties similar to the Property, and Lender shall be provided with reasonable evidence thereof (and Lender reserves the right to approve the Permitted Transferee without approving the substitution of the property manager); (h) the Permitted Transferee shall have executed and delivered to Lender an assumption agreement in form and substance acceptable to Lender, evidencing such Permitted Transferee's agreement to abide and be bound by the terms of the Note, this Agreement and the other Loan Documents and an Affiliate of such Permitted Transferee acceptable to Lender shall execute a recourse guaranty and an environmental indemnity in form and substance identical to the Guaranty and Environmental Indemnity, respectively, with such changes to each of the foregoing as may be reasonably required by Lender, together with such legal opinions and title insurance endorsements as may be reasonably requested by Lender; and (i) prior to any release of the Guarantor, a substitute guarantor acceptable to Lender shall have assumed the Guaranty executed by Guarantor or executed a replacement guaranty reasonably satisfactory to Lender. Notwithstanding the foregoing or anything herein to the contrary, Borrower may not exercise its rights pursuant to this Section 8.1 during the period that commences on the date that is sixty (60) days prior to the date of any intended Securitization of the Loan and ending on the date that is sixty (60) days after the date of such Securitization of the Loan.

Section 8.2Permitted Transfers of Interest in Borrower.

(a) Notwithstanding anything to the contrary contained in Section 4.2.1, the following Transfers ("Permitted Transfers") shall be deemed to be permitted hereunder without the consent of Lender:

(i) provided that no Default or Event of Default shall have occurred and remain uncured, a Transfer (but not a pledge) of a direct or indirect interest in Borrower, provided that (A) such Transfer shall not (y) cause the transferee (together with its Affiliates) to acquire Control of Borrower (if such transferee did not previously Control Borrower), or (z) result in Borrower no longer being Controlled by Guarantor,

(B) without the prior written consent of Lender, after giving effect to such Transfers, no Person shall own, directly or indirectly, 49% or more of the interests in Borrower unless such Person owned 49% or more of the interests in Borrower prior to such Transfers, (C) Borrower shall give Lender notice of such Transfer together with copies of all instruments effecting such Transfer not less than ten (10) days prior to the date of such

Transfer, (D) to the extent any transferee owns twenty percent (20%) or more of the  direct or indirect interests in Borrower immediately following such Transfer (provided such transferee did not own 20% or more of the direct or indirect ownership interests in Borrower as of the Closing Date), Borrower shall, prior to such Transfer, deliver, at Borrower's sole cost and expense, customary searches (credit, judgment, lien, etc.) acceptable to Lender with respect to such transferee, and (E) the legal and financial structure of Borrower and its members or partners, as applicable, and the single purpose nature and bankruptcy remoteness of Borrower and its members or partners,  as applicable, after such Transfer, shall satisfy Lender's then  current  applicable underwriting criteria and requirements;

(ii) provided that no Default or Event of Default shall have occurred and remain uncured, a Transfer (but not a pledge) of an indirect interest in Borrower that occurs by maintenance, devise or bequest or by operation of law upon the death of a natural person that was the holder of such interest to a member of the immediate family  of such interest holder or a trust established for the benefit of such immediate family member, provided that (A) no such Transfer shall result in a change of the day-to-day management of the Property, (B) Borrower shall give Lender notice of such Transfer together with copies of all instruments effecting such Transfer not more than ten (10) days after the date of such Transfer, (C) the legal and financial structure of Borrower and its members or partners, as applicable, and the single purpose nature and bankruptcy remoteness of Borrower and its members or partners, as applicable after such Transfer, shall satisfy Lender's then current applicable underwriting criteria and requirements, (D) to the extent any transferee owns twenty percent (20%) or more of the direct or indirect interests in Borrower immediately following such Transfer (provided such transferee did not own 20% or more of the direct or indirect ownership interests in Borrower as of the Closing Date), Borrower shall deliver, at Borrower's sole cost and expense, customary searches (credit, judgment, lien, etc.) acceptable to Lender with respect to such transferee within thirty (30) days after any such Transfer, (E) if any such Transfer would result in a change of Control of Borrower and occurs prior to Securitization, such Transfer is approved by Lender in writing in its sole and absolute discretion within thirty (30) days after any such Transfer, and (F) if any such Transfer would result in a change of Control of Borrower, Borrower, at Borrower's sole cost and expense, shall, within thirty  (30) days after any such Transfer, (y) deliver (or cause to be delivered) if such Transfer occurs after a Securitization, a Rating Agency Confirmation to Lender, and (z) obtain the written consent of Lender, which shall not be unreasonably withheld.

(b) For purposes of this Section 8.2, (i) a change of "Control" of Borrower shall be deemed to have occurred if (A) there is any change in the identity of any individual or entity or any group of individuals or entities who have the right, by virtue of any partnership agreement, articles of incorporation, by-laws, articles of organization, operating agreement or any other agreement, with or without taking any formative action, to cause Borrower to take some action or to prevent, restrict or impede Borrower from taking some action which, in either case, Borrower could take or could refrain from taking were it not for the rights of such individuals, or (B) the individual or entity or group of individuals or entities that "Control" Borrower as described in clause

(A) ever cease to own at least fifty-one percent (51%) of all equity interests (direct or

indirect) in Borrower; and (ii) an "immediate family member" shall mean a sibling, spouse or a child of any interest holder.

Section 8.3Cost and Expenses.

Borrower shall pay all costs and expenses of Lender in connection with any Transfer, whether or not such Transfer is deemed to be a Permitted Transfer, including, without limitation, all fees and expenses of Lender's counsel, whether internal or outside, and the cost of any required counsel opinions related to REMIC or other securitization or tax issues and any Rating Agency fees.

ARTICLE9

SALE AND SECURITIZATION OF MORTGAGE

Section 9.1Sale of Mortgage and Securitization.

(a) Lender shall have the right (i) to sell or otherwise transfer the Loan or any portion thereof as a whole loan, (ii) to sell participation interests in the Loan, or

(iii) to securitize the Loan or any portion thereof in a single asset securitization or a pooled loan securitization. (The transactions referred to in clauses (i), (ii) and (iii) shall hereinafter be referred to collectively as "Secondary Market Transactions" and the transactions referred to in clause (iii) shall hereinafter be referred to as  a "Securitization". Any certificates, notes or other securities issued in connection with a Securitization are hereinafter referred to as "Securities").

(b) If requested by Lender, Borrower shall assist Lender,  at Borrower's reasonable expense not to exceed $5,000.00, in satisfying the market standards to which Lender customarily adheres or which may be required in the marketplace or by the Rating Agencies or any Governmental Authority in connection with any Secondary Market Transactions, including to:

(i) (A) provide updated financial and other information with respect to the Property, the business operated at the Property, Borrower and the Manager, (B) provide updated budgets relating to the Property, and (C) provide updated appraisals, market studies, environmental reviews and reports (Phase I's and, if appropriate, Phase II's), property condition reports and other due diligence investigations of the Property (the "Updated Information"), together, if customary, with appropriate verification of the Updated Information through letters of auditors or opinions of counsel acceptable to Lender and the Rating Agencies;

(ii) provide opinions of counsel, which may be relied upon by Lender, the Rating Agencies, and their respective counsel, agents and representatives, as to fraudulent conveyance and true sale or any other opinion customary in Secondary Market Transactions or required by the Rating Agencies with respect to the Property and Borrower and its Affiliates, which counsel and opinions shall be satisfactory to Lender and the Rating Agencies;

(iii) provide updated, as of the closing date of the Secondary Market Transaction, representations and warranties made in the Loan Documents and such additional representations and warranties as the Rating Agencies may require; and

(iv) execute amendments to the Loan Documents and Borrower's organizational documents requested by Lender; provided, however, that Borrower shall not be required to modify or amend any Loan Document if such modification or amendment would (A) change the interest rate, the stated maturity or the amortization of principal as set forth herein or in the Note, or (B) modify or amend any other material economic term of the Loan.

(c) Upon request, Borrower shall furnish to Lender from time to time such financial data and financial statements as Lender determines to be necessary, advisable or appropriate for complying with any applicable law (including those applicable to Lender or any Servicer (including, without limitation and to the extent applicable, Regulation AB)) within the timeframes necessary, advisable or appropriate in order to comply with such applicable law.

Section 9.2Securitization Indemnification.

(a) Borrower understands that information provided to Lender by or on behalf of Borrower and its agents, counsel and representatives may be included in disclosure documents in connection with the Securitization, including an  offering circular, a prospectus, prospectus supplement, private placement memorandum or other offering document (each, a  "Disclosure Document") and may also be included in filings with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the "Securities Act"), or the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and may be made .available to investors or prospective investors in the Securities, the Rating Agencies and service providers relating to the Securitization.

(b) In connection with the Disclosure Documents, any filings under the Securities Act and/or any Exchange Act Filings, Borrower shall (i) indemnify Lender (and for purposes of this Section 9.2, Lender hereunder shall include its officers and directors), the Affiliate of Lender ("Lender Affiliate") that has filed the registration statement relating to the Securitization (the "Registration Statement"), each of its directors, each of its officers who have signed the Registration Statement and each Person that controls the Affiliate within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the "Lender Group"), Lender Affiliate, and any other placement agent or underwriter with respect to the Securitization, each of their respective directors and each Person who controls Lender Affiliate or any other placement agent or underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the "Undenvriter Group") for any losses, claims, damages or liabilities (collectively, the "Liabilities") to which Lender, the Lender Group or the Underwriter Group may become subject insofar as the Liabilities arise out of, or are based upon, any untrue statement or alleged untrue statement of any material fact contained in the Disclosure Documents, the omission or alleged omission to state in

the Disclosure Documents a material fact required to be stated in the Disclosure Documents or necessary in order to make the statements in the Disclosure Documents, in light of the circumstances under which they were made, not misleading and (ii) reimburse Lender, the Lender Group and/or the Underwriter Group for any legal or other expenses reasonably incurred by Lender, the Lender Group and/or the Underwriter Group in connection with defending or investigating the Liabilities; provided, however, that Borrower will be liable in any such case under this subsection (b) only to the extent that any such Liability arises out of, or is based upon, any such untrue statement or omission made in the Disclosure Documents in reliance upon, and in conformity with, information furnished to Lender by or on behalf of Borrower and its agents, counsel and representatives in connection with the preparation of the Disclosure Documents or in connection with the underwriting or closing of the Loan, including financial statements of Borrower, operating statements and rent rolls with respect to the Property (the "Provided Information"). This indemnity and reimbursement obligation will be in addition to any liability which Borrower may otherwise have.

(c) If requested by Lender, Borrower shall provide, in connection with each of (i) a preliminary and/or a final private placement memorandum or (ii) a preliminary and/or final prospectus or prospectus supplement, as applicable, a certification addressed to Lender that confirms that Borrower has examined one or more statements proposed by Lender to be included in a Disclosure Document, and that each such proposed statement(s), as it relates to Borrower, Guarantor, Borrower's Affiliates, the Property, Manager and all other aspects of the Loan, does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. For purposes of clarification, the indemnification and reimbursement obligation noted in clause (B) above (and set forth in subsection (b) above) shall be effective whether or not Lender requests that Borrower review any statement proposed to be included in a Disclosure Document, and whether or not the certification described above is provided.

(d) Promptly after receipt by an  indemnified  party  under  this Section 9.2 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party  under  this Section 9.2, notify the indemnifying party in writing of the commencement thereof, but the omission to so notify the indemnifying party will not relieve the indemnifying party from any liability which the indemnifying party may have to any indemnified party hereunder except to the extent that failure to notify causes prejudice to the indemnifying party. In the event that any action is brought against any indemnified party, and  it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled, jointly with any other indemnifying party, to participate therein and, to the extent that it (or they) may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel satisfactory to such indemnified party.  After notice  from the indemnifying party to such indemnified party under this Section 9.2,  such indemnified party shall pay for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of

investigation; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there are any legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party at the cost of the indemnifying party. The indemnifying party shall not be liable for the expenses of more than one separate counsel unless an indemnified party shall have reasonably concluded that there may be legal defenses available to it that are different from or additional to those available to the indemnifying party.

(e) In order to provide for just and equitable contribution in circumstances  in which the indemnity  agreement  provided for in Section 9.2(b) or  is for any reason held to be unenforceable as to an indemnified party in respect of any Liabilities (or action in respect thereof) referred to therein which would otherwise be indemnifiable under Section 9.2(b), the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such Liabilities (or action in respect thereof); provided, however, that no Person guilty of fraudulent misrepresentation (within the meaning of Section l l(f) of the Securities Act) shall be entitled to  contribution from any Person who was not guilty of such fraudulent misrepresentation.  In determining the amount of contribution to which the respective parties are entitled, the following factors shall be considered: (i) Lender Affiliate's and Borrower's relative knowledge and access to information concerning the matter with respect to which the claim was asserted; (ii) the opportunity to correct and prevent any statement or omission; and (iii) any other equitable considerations appropriate in the circumstances. Lender and Borrower hereby agree that it would not be equitable if the amount of such contribution were determined by pro rata or per capita allocation.

(f) Borrower shall jointly and severally indemnify Lender and its officers, directors, partners, employees, representatives, agents and affiliates against any Liabilities to which Lender or its officers, directors, partners, employees, representatives, agents and affiliates, may become subject in connection with any indemnification to the Rating Agencies in connection with issuing, monitoring or maintaining the Securities insofar as the Liabilities arise out of or are based upon any untrue statement of any material fact in any information provided by or on behalf of Borrower to the Rating Agencies (the "Covered Rating Agency Information") or arise out of or are based upon the omission to state a material fact in the Covered Rating Agency Information required to be stated therein or necessary in order to make the statements in the Covered Rating Agency Information, in light of the circumstances under which they were made, not misleading.

(g) The liabilities and obligations of both Borrower and Lender under this Section 9.2 shall survive the termination of this Agreement and the satisfaction and discharge of the Debt.

Section 9.3Intentionally Omitted.

Section 9.4Severance Documentation.

Lender, without in any way limiting Lender's other rights hereunder, in its sole and absolute discretion, shall have the right, at any time (whether prior to or after any sale, participation or Securitization of all or any portion of the Loan), to require the Borrower to execute and deliver "component" notes and/or modify the Loan in order to create one or more senior and subordinate notes (i.e., an A/B or A/B/C structure) and/or one or more additional components of the Note or Notes (including the implementation of a mezzanine loan structure), reduce the number of components of the Note or Notes, revise the interest rate for each component, reallocate the principal balances of the Notes and/or the components, increase or decrease the monthly debt service payments for each component or eliminate the component structure and/or the multiple note structure of the Loan (including the elimination of the related allocations of principal and interest payments), provided that the Outstanding Principal Balance of all components immediately after the effective date of such modification equals the Outstanding Principal Balance immediately prior to such modification and the weighted average of the interest rates for all components immediately after the effective date of such modification equals the interest rate of the original Note immediately prior to such modification. At Lender's election, each note comprising the Loan may be subject to one or more Securitizations. Lender shall have the right to modify the Note and/or Notes and any components in accordance with this Section 9.4 and, provided that such modification shall comply with the terms of this Section 9.4, it shall become immediately effective. If requested by Lender, Borrower shall promptly execute an amendment to the Loan Documents to evidence any such modification. Borrower shall

(1) cooperate with all reasonable requests of Lender in order to establish the "component" notes, and (2) execute and deliver such documents as shall be required by Lender and any Rating Agency in connection therewith, all in form and substance satisfactory to Lender and satisfactory to any Rating Agency, including, without limitation, the severance of security documents if requested. In the event Borrower fails to execute and deliver such documents to Lender within five (5) Business Days following such request by Lender, Borrower hereby absolutely and irrevocably appoints Lender as its true and lawful attorney, coupled with an interest, in its name and stead to make and execute all documents necessary or desirable to effect such transactions, Borrower hereby ratifying all that such attorney shall do by virtue thereof. It shall be an Event of Default under this Agreement, the Note, the Mortgage and the other Loan Documents if Borrower fails to comply with any of the terms, covenants or conditions of this Section 9.4 after expiration often (10) Business Days after notice thereof.

ARTICLE 10 DEFAULTS

Section 10.1    Events of Default

(a) Each of the following events shall constitute an event of default hereunder (an "Event of Default"):

(i) if (A) the Obligations are not paid in full on the Maturity Date, (B) any regularly scheduled monthly payment of interest, and, if applicable, principal due under the Note is not paid in full on or by the applicable Monthly

Payment Date, (C) any prepayment of principal due under this Agreement or the Note is not paid when due, (D) the Prepayment Fee is not paid when due, or (E) any deposit to the Reserve Funds is not made on the required deposit date therefor;

(ii) if any other amount payable pursuant to this Agreement, the Note or any other Loan Document (other than as set forth in the foregoing clause (i)) is not paid in full when due and payable in accordance with the provisions of the applicable Loan Document, with such failure  continuing  for ten (10) Business Days after Lender delivers written notice thereof to Borrower;

(iii) if any of the Taxes or Other Charges are not paid when due (provided that it shall not be an Event of Default if there are sufficient funds in the Tax Account to pay such amounts when due, no other Event of Default is then continuing and Servicer fails to make such payment in violation of this Agreement);

(iv) if the Policies are not (A) delivered to Lender and (B) kept in full force and effect, each in accordance with the terms and conditions hereof;

(v) if Borrower breaches or permits or suffers a breach of the provisions of Section 4.2.1;

(vi) if any certification, representation or warranty made by Borrower or Guarantor herein or in any other Loan Document, or in any report, certificate, financial statement or other instrument, agreement or document furnished to Lender, including but not limited to the Certification of Borrower, shall have been false or misleading in any material respect as of the date such representation or warranty was made;

(vii) if Borrower or Guarantor shall make an assignment for the benefit of creditors;

(viii) if a receiver, liquidator or trustee shall be appointed for Borrower or Guarantor or if Borrower or Guarantor shall be adjudicated a bankrupt or insolvent, or if any petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state law, shall be filed by or against, consented to, or acquiesced in by, Borrower or Guarantor, or if any proceeding for the dissolution or liquidation of Borrower or Guarantor shall be instituted; provided, however, if such appointment, adjudication, petition or proceeding was involuntary and not consented to by Borrower or Guarantor, upon the same not being discharged, stayed or dismissed within thirty (30) days following its filing;

(ix) if Borrower attempts to assign its rights under this Agreement or any of the other Loan Documents or any interest herein or therein in contravention of the Loan Documents;

(x) intentionally omitted;

(xi) if Borrower breaches any. representation, warranty or covenant contained in Section 3.1.24 or Section 3.1.46 hereof;

(xii) if Borrower shall be in default under any mortgage or security agreement covering any part of the Property whether it be superior, pari passu or junior in Lien to the Mortgage;

(xiii) subject to Borrower's right to contest as provided  in Section 3.6 of the Mortgage, if the Property becomes subject to any mechanic's, materialman's or other Lien except a Lien for Taxes not then due and payable;

(xiv) except as expressly permitted herein, the alteration, improvement, demolition or removal of any of the Improvements without the  prior consent of Lender;

(xv) if, without Lender's prior written consent, (i) the Management Agreement is terminated, (ii) the ownership, management or control of Manager is transferred, (iii) there is a material change in the Management Agreement, or (iv) if there shall be a material default by Borrower under the Management Agreement;

(xvi) if Borrower ceases to continuously operate the Property or any material portion thereof as a hotel for any reason whatsoever (other than temporary cessation in connection with any repair or renovation thereof undertaken with the consent of Lender);

(xvii) if Borrower shall continue to be in Default under any of the other terms, covenants or conditions of this Agreement not specified in subsections (i) to (xvi) above or in subsections (xviii) to (xxvi) below, and such Default shall continue for ten (10) days after notice to Borrower from Lender, in the case of any such Default which can be cured by the payment of a sum of money, or for thirty (30) days after notice to Borrower from Lender in the case of any other such Default; provided, however, that if such non-monetary Default is susceptible of cure but cannot reasonably be cured within such 30-day period, and provided further that Borrower shall have commenced to cure such Default within such 30-day period shall and thereafter diligently and expeditiously proceed to cure the same, such 30-day period shall be extended for such time as is reasonably necessary for Borrower in the exercise of due diligence to cure such Default, such additional period not to exceed sixty (60) days;

(xviii) if Borrower or any Person owning a direct or indirect ownership interest in Borrower shall be convicted of a Patriot Act Offense by a court of competent jurisdiction;

(xix) if  Borrower  breaches  any  covenant  contained   m Section 4.1.7 hereof and such failure continues for ten (10) Business Days following written notice from Lender;

(xx) except as expressly permitted pursuant to the Loan Documents, if Borrower or any other Person grants any easement, covenant or restriction (other than the Permitted Encumbrances) over the Property;

(xxi) if Borrower breaches the negative covenant contained in Section 4.2.16 hereof or acts or neglects to act in such a manner as to be considered a default under any of the Operating Agreements;

(xxii) intentionally omitted;

(xxiii) if without Lender's prior consent, there is any material change in the Franchise Agreement (or any successor franchise agreement);

(xxiv) if a default has occurred and continues beyond any applicable cure period under the Franchise Agreement (or any successor franchise agreement) if such default permits the Franchisor to terminate or cancel the Franchise Agreement (or any successor franchise agreement);

(xxv) if Borrower fails to comply with the provisions of Sectionhl hereof or the provisions of the Cash Management Agreement relating to the establishment of a Clearing Account or Cash Management Account, or with the

institution and operation of cash management as provided herein and therein;

(xxvi) if there shall occur any other event which is defined as an Event of Default in this Agreement or in any other Loan Document or if there shall be a default under any of the other Loan Documents beyond any applicable cure periods contained in such Loan Documents, whether as to Borrower, Guarantor or the Property, or if any other such event shall occur or condition shall exist, if the effect of such event or condition is to accelerate the maturity of any portion of the Obligations or to permit Lender to accelerate the maturity of all or any portion of the Obligations; or

(xxvii) Guarantor breaches any of the Financial Covenants (as defined in the Guaranty).

(b) Upon the occurrence of an Event of Default (other than an Event of Default described in clauses (vii), (viii) or (ix) above) and at any time thereafter, Lender may, in addition to any other rights or remedies available to it pursuant to this Agreement and the other Loan Documents or at law or in equity, take such action, without notice or demand, that Lender deems advisable to protect and enforce its rights against Borrower and in and to the Property, including declaring the Obligations to be immediately due and payable, and Lender may enforce or avail itself of any or all rights or remedies provided in the Loan Documents against Borrower and the Property, including all rights or remedies available at law or in equity; and upon any Event of Default described in

clauses (vii), (viii) or (ix) above, the Obligations of Borrower hereunder and under the other Loan Documents shall immediately and automatically become due and payable, without notice or demand, and Borrower hereby expressly waives any such notice or demand, anything contained herein or in any other Loan Document to the contrary notwithstanding.

Section 10.2Remedies.

(a) Upon the occurrence and during the continuance of an Event of Default, all or any one or more of the rights, powers, privileges and other remedies available to Lender against Borrower under this Agreement or any of the other Loan Documents executed and delivered by, or applicable to, Borrower or at law or in equity may be exercised by Lender at any time and from time to time, whether or not all or any of the Obligations shall be declared due and payable, and whether or not Lender shall have commenced any foreclosure proceeding or other action for the enforcement of its rights and remedies under any of the Loan Documents with respect to the Property. Any such actions taken by Lender shall be cumulative and concurrent and may be pursued independently, singly, successively, together or otherwise, at such time and in such order as Lender may determine in its sole discretion, to the fullest extent permitted by law, without impairing or otherwise affecting the other rights and remedies of Lender permitted by law, equity or contract or as set forth herein or in the other  Loan Documents. Without limiting the generality of the foregoing, if an Event of Default is continuing (i) Lender shall not be subject to any "one action" or "election of remedies" law or rule, and (ii) all Liens and other rights, remedies or privileges provided to Lender shall remain in full force and effect until Lender has exhausted all of its remedies against the Property and the Mortgage has been foreclosed, sold and/or otherwise realized upon in satisfaction of the Obligations or the Obligations have been paid in full.

(b) Lender shall have the right from time to time to partially foreclose the Mortgage in any manner and for any amounts secured by the Mortgage then due and payable as determined by Lender in its sole discretion, including the following circumstances: (i) in the event Borrower defaults beyond any applicable grace period in the payment of one or more scheduled payments of principal and interest, Lender may foreclose the Mortgage to recover such delinquent payments, or (ii) in the event Lender elects to accelerate less than the entire Outstanding Principal Balance, Lender may foreclose the Mortgage to recover so much of the principal balance of the Loan as Lender may accelerate and such other sums secured by the Mortgage as Lender may elect. Notwithstanding one or more partial foreclosures, the Property shall remain subject to the Mortgage to secure payment of the sums secured by the Mortgage and not previously recovered.

(c) Lender shall have the right from time to time to sever the Note and the other Loan Documents into one or more separate notes, mortgages and other security documents (the "Severed Loan Documents") in such denominations as Lender shall determine in its sole discretion for purposes of evidencing and enforcing its rights and remedies provided hereunder. Borrower shall execute and deliver to Lender from time to time, promptly after the request of Lender, a severance agreement and such other

documents as Lender shall request in order to effect the severance described in the preceding sentence, all in form and substance reasonably satisfactory to Lender. Borrower hereby absolutely and irrevocably appoints Lender as its true and lawful attorney, coupled with an interest, in its name and stead to make and execute all documents necessary or desirable to effect the aforesaid severance, Borrower ratifying all that its said attorney shall do by virtue thereof; provided, however, Lender shall not make or execute any such documents under such power until three (3) days after notice has been given to Borrower by Lender of Lender's intent to exercise its rights under such power. Except as may be required in connection with a Securitization pursuant to Section 9.1 hereof, (i) Borrower shall not be obligated to pay any costs or expenses incurred in connection with the preparation, execution, recording or filing of the Severed Loan Documents, and (ii) the Severed Loan Documents shall not contain any representations, warranties or covenants not contained in the Loan Documents.

(d) Any amounts recovered from the Property or any other collateral for the Loan after an Event of Default may be applied by Lender toward the payment of any interest and/or principal of the Loan and/or any other amounts due under the Loan Documents, in such order, priority and proportions as Lender in its sole discretion shall determine.

Section 10.3Lender's Right to Perform.

If Borrower fails to perform any covenant or obligation contained herein and such failure shall continue for a period of five (5) Business Days after Borrower's receipt of written notice thereof from Lender, without in any way limiting Lender's right to exercise any of its rights, powers or remedies as provided hereunder, or under any of the other Loan Documents, Lender may, but shall have no obligation to, perform, or cause the performance of, such covenant or obligation, and all costs, expenses, liabilities, penalties and fines of Lender incurred or paid in connection therewith shall be payable by Borrower to Lender upon demand and if not paid shall be added to the Obligations (and to the extent permitted under applicable laws, secured by the Mortgage and the other Loan Documents) and shall bear interest thereafter at the Default Rate. Notwithstanding the foregoing, Lender shall have no obligation to send notice to Borrower of any such failure.

Section 10.4Remedies Cumulative.

The rights, powers and remedies of Lender under this Agreement shall be cumulative and not exclusive of any other right, power or remedy which Lender may have against Borrower pursuant to this Agreement or the other Loan Documents, or existing at law or in equity or otherwise. Lender's rights, powers and remedies may be pursued singly, concurrently or otherwise, at such time and in such order as Lender may determine in Lender's sole discretion. No delay or omission to exercise any remedy, right or power accruing upon an Event of Default shall impair any such remedy, right or power or shall be construed as a waiver thereof, but any such remedy, right or power may be exercised from time to time and as often as may be deemed expedient. A waiver of one Default or Event of Default with respect to Borrower shall not be construed to be a waiver of any subsequent Default or Event of Default by Borrower or to impair any remedy, right or power consequent thereon.

ARTICLE 11 MISCELLANEOUS

Section 11.1Survival; Successors and Assigns.

This Agreement and all covenants, agreements, representations and warranties made herein and in the certificates delivered pursuant hereto shall survive the making by Lender of the Loan and the execution and delivery to Lender of the Note, and shall continue in full force and effect so long as all or any of the Obligations are outstanding and unpaid unless a longer period is expressly set forth herein or in the other Loan Documents. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the legal representatives, successors and assigns of such party. All covenants, promises and agreements in this Agreement, by or on behalf of Borrower, shall inure to the benefit of the legal representatives, successors and assigns of Lender.

Section 11.2Lender's Discretion.

Whenever pursuant to this Agreement Lender exercises any right given to it to approve or disapprove any matter, or any arrangement or term is to be satisfactory to Lender, the decision of Lender to approve or disapprove such matter or to decide whether arrangements or terms are satisfactory or not satisfactory shall (except as is otherwise specifically herein provided) be in the sole discretion of Lender and shall be final and conclusive. Prior to a Securitization, whenever pursuant to this Agreement the Rating Agencies are given any right to approve or disapprove any matter, or any arrangement or term is to be satisfactory to the Rating Agencies, the decision of Lender to approve or disapprove such matter or to decide whether arrangements or terms are satisfactory or not satisfactory, based upon Lender's determination of Rating Agency criteria, shall be substituted therefor.

Section 11.3Governing Law.

THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE INSTITUTED IN THE COURTS HAVING JURISDICTION IN THE CITY AND/OR COUNTY IN WHICH THE PROPERTY IS LOCATED, AND EACH OF LENDER AND BORROWER HEREBY WAIVES ANY OBJECTIONS THAT IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING.

Section 11.4Modification, Waiver in Writing.

No modification, amendment, extension, discharge, termination or waiver of any provision of this Agreement or of any other Loan Document, nor consent to any departure by Borrower therefrom, shall in any event be effective unless the same shall be in a writing signed by the party or parties against whom enforcement is sought, and then such waiver or consent

shall be effective only in the specific instance, and for the purpose, for which given. Except as otherwise expressly provided herein, no notice to, or demand on Borrower, shall entitle Borrower to any other or future notice or demand in the same, similar or other circumstances.

Section 11.5Delay Not a Waiver.

Neither any failure nor any delay on the part of Lender in insisting upon strict performance of any term, condition, covenant or agreement, or exercising any right, power, remedy or privilege hereunder or under any other Loan Document, shall operate as or constitute a waiver thereof, nor shall a single or partial exercise thereof preclude any other future exercise, or the exercise of any other right, power, remedy or privilege. In particular, and not by way of limitation, by accepting payment after the due date of any amount payable under this Agreement or any other Loan Document, Lender shall not be deemed to have waived any right either to require prompt payment when due of all other amounts due under this Agreement or the other Loan Documents, or to declare a default for failure to effect prompt payment of any such other amount. Lender shall have the right to waive or reduce any time periods that Lender is entitled to under the Loan Documents in its sole and absolute discretion.

Section 11.6Notices.

All notices, demands, requests, consents, approvals or other communications (any of the foregoing, a "Notice") required, permitted or desired to be given hereunder shall be in writing and shall be sent by telefax (with answer back acknowledged) or by registered or certified mail, postage prepaid, return receipt requested, or delivered by hand or by reputable overnight courier, addressed to the party to be so notified at its address hereinafter set forth, or to such other address as such party may hereafter specify in accordance with the provisions of this Section 11.6. Any Notice shall be deemed to have been received: (a) three (3) days after the date such Notice is mailed, (b) on the date of sending by telefax if sent during business hours on a Business Day (otherwise on the next Business Day), (c) on the date of delivery by hand if delivered during business hours on a Business Day (otherwise on the next Business Day), and

(d) on the next Business Day if sent by an overnight commercial courier, in each case addressed to the parties as follows:

If to Lender:

with a copy to:

Starwood Mortgage Capital LLC 4064 Colony Road, Suite 410 Charlotte, North Carolina 28211 Attention: Ms. Leslie K. Fairbanks Facsimile No.: (305) 695-5539

Holland & Knight LLP 101 S. Tryon Street Suite 3600

Charlotte, North Carolina 28280 Attention: David Iacuzio

and with a copy to:Wells Fargo Commercial Mortgage Services

440 South Tryon St., 8th Floor MAC D1050-084

Charlotte, North Carolina 28202

Attention: Asset Manager - Starwood Mortgage Capital Facsimile No.: (704) 715-6233

If to Borrower:

with a copy to:

Treemont Capital Partners IV, LP 1415 South Voss #110-94

Houston, Texas 77057 Attention: Philip A. McCrae

Sneed, Vine & Perry, P.C.

900 Congress Avenue, Suite 300

Austin, Texas 78701 Attention: Adam S. Wilk Facsimile No. 512-476-1825

Any party may change the address to which any such Notice is to be delivered  by furnishing ten (10) days written notice of such change to the other parties in accordance with the provisions of this Section 11.6. Notices shall be deemed to have been given on the date as set forth above, even if there is an inability to actually deliver any such Notice because of a changed address of which no Notice was given, or there is a rejection or refusal to accept any Notice offered for delivery. Notice for any party may be given by its respective counsel. Additionally, Notice from Lender may also be given by Servicer and Lender hereby acknowledges and agrees that Borrower shall be entitled to rely on any Notice given by Servicer as if it had been sent by Lender.

Section 11.7Trial by Jury.

BORROWER AND LENDER EACH HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIYER.

Section 11.8Headings.

The Article and/or Section headings and the Table of Contents in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

Section 11.9Severability.

Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

Section 11.10 Preferences.

Lender shall have the continuing and exclusive right to apply or reverse and reapply any and all payments by Borrower to any portion of the Obligations of Borrower hereunder. To the extent Borrower makes a payment or payments to Lender, which payment or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other r>arty under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds received, the Obligations hereunder or part thereof intended to be satisfied shall be revived and continue in full force and effect, as if such payment or proceeds had not been received by Lender.

Section 11.11 Waiver of Notice.

Borrower shall not be entitled to any notices of any nature whatsoever from Lender except with respect to matters for which this Agreement or the other Loan Documents specifically and expressly provide for the giving of notice by Lender to Borrower and except with respect to matters for which Borrower is not, pursuant to applicable Legal Requirements, permitted to waive the giving of notice. Borrower hereby expressly waives the right to receive any notice from Lender with respect to any matter for which this Agreement or the other Loan Documents do not specifically and expressly provide for the giving of notice by Lender to Borrower.

Section 11.12 Remedies of Borrower.

In the event that a claim or adjudication is made that Lender or its agents have acted unreasonably or unreasonably delayed acting in any case where, by law or under this Agreement or the other Loan Documents, Lender or such agent, as the case may be, has an obligation to act reasonably or promptly, neither Lender nor its agents shall be liable for any monetary damages and Borrower's sole remedy shall be limited to commencing an  action seeking injunctive relief or declaratory judgment. Any action or proceeding to  determine whether Lender has acted reasonably shall be determined by an action seeking declaratory judgment.

Section 11.13 Expenses; Indemnity.

(a) Borrower shall pay or, if Borrower fails to pay, reimburse Lender upon receipt of notice from Lender, for all costs and expenses (including reasonable attorneys' fees and disbursements) incurred by Lender in connection with (i) Borrower's ongoing performance of and compliance with Borrower's agreements and covenants

contained in this Agreement and the other Loan Documents on its part to be performed or complied with after the Closing Date, including confirming compliance with environmental and insurance requirements; (ii) Lender's ongoing performance of and compliance with all agreements and covenants contained in this Agreement and the other Loan Documents on its part to be performed or complied with after the Closing Date; provided that Borrower shall not be required to pay any "draw fees" for disbursements of Reserve Funds made in accordance with the terms of this Agreement; (iii) the  negotiation, preparation, execution, delivery and administration of any consents, amendments, waivers or other modifications to this Agreement and the other Loan Documents and any other documents or matters requested by Borrower; (iv) the filing  and recording fees and expenses, title insurance and reasonable fees and expenses of counsel for providing to Lender all required legal opinions, and other similar expenses incurred in creating and perfecting the Liens in favor of Lender pursuant to this Agreement and the other Loan Documents; (v) enforcing or preserving any rights, in response to third party claims or the prosecuting or defending of any action or proceeding or other litigation, in each case against, under or affecting Borrower, this Agreement, the other   Loan   Documents,   the   Property   or  any  other  security   given  for  the   Loan;

(vi) enforcing any Obligations of or collecting any payments due from Borrower under this Agreement, the other Loan Documents or with respect to the Property or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a "work-out" or of any insolvency or bankruptcy proceedings,  including,  but  not  limited  to  any  servicer  or  special  servicer  fees, and

(vii) Borrower's failure to comply with the requirements of Section 4.1.15 or Section 9.1 hereof; provided, however, that Borrower shall not be liable for the payment of any such costs and expenses to the extent the same arise by reason of the active gross negligence, illegal acts, fraud or willful misconduct of Lender. Any costs due and payable to Lender may be paid, at Lender's election in its sole discretion, from any amounts in the Cash Management Account.

(a) Borrower shall indemnify, defend and hold harmless Lender from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for Lender in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not Lender shall be designated a party thereto), that may be imposed on, incurred by, or asserted against Lender in any manner relating to or arising out of (i) any breach by Borrower of its Obligations under, or any material misrepresentation by Borrower contained in, this Agreement or the other Loan Documents, (ii) the use or intended use of the proceeds of the Loan, (iii) any information provided by or on behalf of Borrower, or contained in any documentation approved by Borrower; (iv) ownership of the Mortgage, the Property or any interest therein, or receipt of any Rents; (v) any accident, injury to or death of persons or loss of or damage to property occurring in, on or about the Property or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (vi) any use, nonuse or condition in, on or about the Property or on adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (vii) performance of any labor or services or the furnishing of any materials or other property in respect of the Property; (viii) any

failure of the Property to comply with any Legal Requirement; (ix) any claim by brokers, finders or similar persons claiming to be entitled to a commission in connection with any Lease or other transaction involving the Property or any part thereof, or any liability asserted against Lender with respect thereto; and (x) the claims of any lessee of any portion of the Property or any Person acting through or under any lessee or otherwise arising under or as a consequence of any Lease (collectively, the "Indemnified Liabilities"); provided, however, that Borrower shall not have any obligation to Lender hereunder to the extent that such Indemnified Liabilities arise from the active gross negligence, illegal acts, fraud or willful misconduct of Lender. To the extent that the undertaking to indemnify, defend and hold harmless set forth in the preceding sentence may be unenforceable because it violates any law or public policy, Borrower shall  pay the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by Lender.

Section 11.14 Schedules Incorporated.

The Schedules annexed hereto are hereby incorporated herein as a part of this Agreement with the same effect as if set forth in the body hereof.

Section 11.15  Offsets, Counterclaims and Defenses.

Any assignee of Lender's interest in and to this Agreement and the other Loan Documents shall take the same free and clear of all offsets, counterclaims or defenses which are unrelated to such documents which Borrower may otherwise have against any assignor of such documents, and no such unrelated counterclaim or defense shall be interposed or asserted by Borrower in any action or proceeding brought by any such assignee upon such documents and any such right to interpose or assert any such unrelated offset, counterclaim or defense in any such action or proceeding is hereby expressly waived by Borrower.

Section 11.16 No Joint Venture or Partnership; No Third Party Beneficiaries.

(a) Borrower and Lender intend that the relationships created hereunder and under the other Loan Documents be solely that of borrower and lender. Nothing herein or therein is intended to create a joint venture, partnership, tenancy-in-common or joint tenancy relationship between Borrower and Lender nor to grant Lender any interest in the Property other than that of mortgagee, beneficiary or lender.

(b) This Agreement and the other Loan Documents are solely for the benefit of Lender and nothing contained in this Agreement or the other Loan Documents shall be deemed to confer upon anyone other than Lender any right to insist upon or to enforce the performance or observance of any of the Obligations contained herein or therein. All conditions to the obligations of Lender to make the Loan (and disburse Reserve Funds) hereunder are imposed solely and exclusively for the benefit of Lender and no other Person shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that Lender will refuse to make the Loan (or make any disbursement of Reserve Funds) in the absence of strict compliance

with any or all thereof and no other Person shall under any circumstances be deemed to be a beneficiary of such conditions, any or all of which may be freely waived in whole or in part by Lender if, in Lender's sole discretion, Lender deems it advisable or desirable to do so.

Section 11.17 Publicity.

All news releases, publicity or advertising by Borrower or its Affiliates through any media intended to reach the general public which refers to the Loan Documents or the financing evidenced by the Loan Documents, to Lender, Lender Affiliate or any of their affiliates shall be subject to the prior written approval of Lender. Borrower hereby agrees that Lender and its affiliated entities and its subsidiaries, may publicly identify details of the Loan in their respective advertising and public communications of all kinds, including, but not limited  to, press releases, direct mail, newspapers, magazines, journals, e-mail or internet advertising or communications. Such details may include the name of the Property, the address of the Property, the amount of the Loan, the names of the Borrower and/or Guarantor, the Closing Date, and a description of the size and location of the Property.

Section 11.18 Waiver of Marshalling of Assets.

To the fullest extent permitted by law, Borrower, for itself and its successors and assigns, waives all rights to a marshalling of the assets of Borrower, Borrower's members or partners, as applicable, and others with interests in Borrower, and of the Property, and shall not assert any right under any laws pertaining to the marshalling of assets, the sale in inverse order of alienation, homestead exemption, the administration of estates of decedents, or any other matters whatsoever to defeat, reduce or affect the right of Lender under the Loan Documents to a sale of the Property for the collection of the Obligations without any prior or different resort for collection, or of the right of Lender to the payment of the Obligations out of the net proceeds of the Property in preference to every other claimant whatsoever.

Section 11.19 Waiver of Offsets/Defenses/Counterclaims.

Borrower hereby waives the right to assert a counterclaim, other than a compulsory counterclaim, in any action or proceeding brought against it by Lender or its agents or otherwise to offset any obligations to make the payments required by the Loan Documents. No failure by Lender to perform any of its obligations hereunder shall be a valid defense to, or result in any offset against, any payments which Borrower is obligated to make under any of the Loan Documents.

Section 11.20 Conflict: Construction of Documents: Reliance.

In the event of any conflict between the provisions of this Agreement and any of the other Loan Documents, the provisions of this Agreement shall control. The parties hereto acknowledge that they were represented by competent counsel in connection with the negotiation, drafting and execution of the Loan Documents and that such Loan Documents shall not be subject to the principle of construing their meaning against the party which drafted same. Borrower acknowledges that, with respect to the Loan, Borrower shall rely solely on its own judgment and advisors in entering into the Loan, without relying in any manner on any

statements, representations or recommendations of Lender or any parent, subsidiary or affiliate of Lender. Lender shall not be subject to any limitation whatsoever in the exercise of any rights or remedies available to it under any of the Loan Documents or any other agreements or instruments which govern the Loan by virtue of the ownership by it or any parent, subsidiary or affiliate of Lender of any equity interest any of them may acquire in Borrower, and Borrower hereby irrevocably waives the right to raise any defense or take any action on the basis of the foregoing with respect to Lender's exercise of any such rights or remedies. Borrower acknowledges that Lender engages in the business of real estate financings and other real estate transactions and investments which may be viewed as adverse to or competitive with the business of Borrower or its Affiliates.

Section 11.21 Brokers and Financial Advisors.

Borrower hereby represents that, except for Pinnacle Hotel Finance ("Broker"), it has dealt with no financial advisors, brokers, underwriters, placement agents, agents or finders in connection with the transactions contemplated by this Agreement. Borrower will pay Broker a commission pursuant to a separate agreement. Borrower shall indemnify, defend and  hold Lender harmless from and against any and all claims, liabilities, costs and expenses of any kind (including Lender's reasonable attorneys' fees and expenses) in any way relating to or arising from a claim by any Person (including Broker) that such Person acted on behalf of Borrower or Lender in connection with the transactions contemplated  herein.  The  provisions  of  this Section 11.21 shall survive the expiration and termination of this Agreement and the payment of the Obligations.

Section 11.22 Exculpation.

Subject to the qualifications below, Lender shall not enforce the liability and obligation of Borrower to perform and observe the Obligations contained in the Note, this Agreement, the Mortgage or the other Loan Documents by any action or proceeding wherein a money judgment shall be sought against Borrower, except that Lender may bring a foreclosure action, an action for specific performance or any other appropriate action or proceeding to enable Lender to enforce and realize upon its interest under the Note, this Agreement, the Mortgage and the other Loan Documents, or in the Property, the Gross Revenues or any other collateral given to Lender pursuant to the Loan Documents; provided, however, that, except as specifically provided herein, any judgment in any such action or proceeding shall be enforceable against Borrower only to the extent of Borrower's interest in the Property, in the Gross Revenues and in any other collateral given to Lender, and Lender, by accepting the Note, this Agreement, the Mortgage and the other Loan Documents, shall not sue for, seek or demand any deficiency judgment against Borrower in any such action or proceeding under or by reason of or under or in connection with the Note, this Agreement, the Mortgage or the other Loan Documents. The provisions of this Section 11.22 shall not, however, (a) constitute a waiver, release or impairment of any obligation evidenced or secured by any of the Loan Documents; (b) impair the right of Lender to name Borrower as a party defendant in any action or suit for foreclosure  and sale under the Mortgage; (c) affect the validity or enforceability of any of the Loan Documents or any guaranty made in connection with the Loan or any of the rights and remedies of Lender thereunder; (d) impair the right of Lender to obtain the appointment of a receiver; (e) impair the enforcement of the Assignment of Leases; (f) constitute a prohibition against Lender to seek a

deficiency judgment against Borrower in order to fully realize the security granted by the Mortgage or to commence any other appropriate action or proceeding in order for Lender to exercise its remedies against the Property; or (g) constitute a waiver of the right of Lender to enforce the liability and obligation of Borrower, by money judgment or otherwise, to the extent of any loss, damage, cost, expense, liability, claim or other obligation incurred by Lender (including reasonable attorneys' fees and costs reasonably incurred) arising out of or in connection with the following (all such liability and obligation of Borrower for any or all of the following being referred to herein as "Borrower's Recourse Liabilities"):

(i) fraud, gross negligence, willful misconduct, misrepresentation or failure to disclose a material fact by or on behalf of Borrower, Guarantor, any Affiliate of Borrower or Guarantor, or any of their respective agents or representatives in connection with the Loan;

(ii) the breach of any representation, warranty, covenant or indemnification provision in the Environmental Indemnity or in any other Loan Document concerning environmental laws, hazardous substances and/or asbestos and any indemnification of Lender with respect thereto in either document;

(iii) wrongful removal or destruction of any portion of the Property or damage to the Property caused by willful misconduct or gross negligence;

(iv) any material, physical waste at the Property;

(v) the forfeiture by Borrower of the Property, or any portion thereof, because of the conduct or purported conduct of criminal activity by Borrower or Guarantor or any of their respective agents or representatives in connection therewith, including by reason of any claim under the Racketeer Influenced and Corrupt Organizations Act ("RICO");

(vi) the misapplication, misappropriation or conversion by or on behalf of Borrower (including, without limitation, in connection with the institution or operation of cash management as provided in the Loan Documents) of (A) any Insurance Proceeds actually received by or on behalf of Borrower which were paid by reason of any loss, damage or destruction to the Property,

(B) any Awards or other amounts actually received in connection with the Condemnation of all or a portion of the Property, or (C) any Gross Revenues (including Rents, security deposits, advance deposits or any other deposits) actually received by or on behalf of Borrower;

(i) failure to pay charges for labor or materials or other charges that can create Liens on any portion of the Property;

(ii) any security deposits, advance deposits or any other deposits collected with respect to the Property which are not delivered to Lender in accordance with the provisions of the Loan Documents;

(iii) the failure to pay Taxes (except to the extent (A) there is insufficient cash flow from the Property to pay such Taxes and/or (B) amounts have been deposited with Lender sufficient to pay the Taxes pursuant to the Loan Documents, and the same are not applied toward payment of such Taxes);

(iv) failure to obtain and maintain the fully paid for Policies in accordance with Section 5.1.1 hereof (except to the extent that any such failure is the result of the non-payment of the premiums therefore and (A) there is insufficient cash flow from the Property to pay for such Policies and/or (B) amounts have been deposited with Lender sufficient to pay the Policies pursuant to the Loan Documents, and the same are not applied toward payment of such Policies);

(v) the failure to provide financial information to the extent required by, and in accordance with, the terms and provisions of this Agreement and the Mortgage, and the Guaranty, including any amounts payable pursuant to Section 4.1.7(i) hereof, and such failure continues for thirty (30) days after receipt of written notice from Lender of such failure;

(vi) the failure by Borrower or Guarantor to cooperate with Lender's execution of a Secondary Market Transaction pursuant to the terms and provisions of Section 9.1;

(vii) Borrower's indemnification  of  Lender  set  forth  m Section 9.2 hereof and Sections 8.2 and 8.3 of the Mortgage;

(viii) the failure of Borrower to timely file and pay any personal property taxes as required by governmental authorities;

(ix) the failure of Borrower to complete any PIP Work to the satisfaction of Franchisor or any replacement Franchisor under a new, amended, or replacement franchise agreement and/or

(x) Borrower fails to comply with the provisions of Sections

3.1.24 or 3.1.46 hereof.

Notwithstanding anything to the contrary in this Agreement or any of the other Loan Documents, (A) Lender shall not be deemed to have waived any right which Lender may have under Section 506(a), 506(b), 111 l(b) or any other provisions of the Bankruptcy Code to file a claim for the full amount of the Obligations or to require that all collateral shall continue to secure all of the Obligations owing to Lender in accordance with the Loan Documents, and (B) the Obligations shall be fully recourse to Borrower in the event that any of the following occur (each, a "Springing Recourse Event"): (i) Borrower fails to comply with the provisions of Section 3.1.24 hereof or breaches a representation contained in Section 3.1.46 and such failure or breach is cited as a factor in the substantive consolidation of any of Borrower's assets with the assets of any other Person; (ii) Borrower fails to obtain Lender's prior consent to any subordinate financing   secured   by   the  Property   or  other   voluntary   Lien  encumbering   the   Property;

(iii) Borrower  fails  to obtain  Lender's  prior  consent  to any  Transfer  of  the  Property  or any

interest therein or any Transfer of any direct or indirect interest in Borrower, in either case as required by the Mortgage or this Agreement other than a Permitted Transfer; (iv) Borrower files a voluntary petition under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law; (v) the filing of an involuntary petition against Borrower under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law by any other Person in which Borrower and/or Guarantor colludes with or otherwise assists such Person, and/or Borrower and/or Guarantor solicits or causes to be solicited petitioning creditors for any involuntary petition against Borrower by any Person; (vi) Borrower and/or Guarantor files an answer consenting to, or otherwise acquiescing in, or joining in, any involuntary petition filed against it by any other Person under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law; (vii) Borrower or any Affiliate, officer, director or representative which controls Borrower consents to, or acquiesces in, or joins in, an application for the appointment of a custodian, receiver, trustee or examiner for Borrower or any portion of the Property;

(viii) Borrower and/or Guarantor makes an assignment for the benefit of creditors or admits, in writing or in any legal proceeding, its insolvency or inability to pay its debts as they become due;

(ix) if Guarantor (or any Person comprising Guarantor), Borrower or any Affiliate of any of the foregoing, in connection with any enforcement action or exercise or assertion of any right or remedy by or on behalf of Lender under or in connection with the Guaranty, the Note, the Mortgage or any other Loan Document, seeks a defense, judicial intervention or injunctive or other equitable relief of any kind, or asserts in a pleading filed in connection with a judicial proceeding any defense against Lender or any right in connection with any security for the Loan;

(x) the Franchise Agreement terminates or expires, until such time as (Y) a replacement franchise agreement, which is satisfactory to Lender in Lender's sole discretion, is entered into for the Property and (Z) a satisfactory comfort letter, in Lender's sole discretion, is delivered to Lender; or (xi) if Borrower fails to establish and maintain a Clearing Account pursuant to a Clearing Account Agreement in accordance with the terms and conditions of Section 6.1 hereof; provided there shall be no liability under this clause (xi) (A) for failure to maintain the Clearing Account if Borrower shall establish a new Clearing Account pursuant to a Clearing Account Agreement and deliver replacement Credit Card Direction Letters to all credit card companies within thirty (30) days of the closing of the existing Clearing Account and otherwise satisfying the conditions of Section 6.1 hereof, or (B) if the Clearing Account is terminated by the Clearing Bank as a result of insufficient cash flow from the operation of the Property to maintain the Clearing Account.

Section 11.23 Prior Agreements.

This Agreement and the other Loan Documents contain the entire agreement of the parties hereto and thereto in respect of the transactions contemplated hereby and thereby, and all prior agreements among or between such parties, whether oral or written, including the Loan Application dated February 25, 2019 (as amended) submitted by Guarantor to Lender, are superseded by the terms of this Agreement and the other Loan Documents.  In  addition, Borrower hereby agrees that it is not relying on and has not relied on any representations, warranties or statements, whether written or oral, of the Lender, any Affiliate of the Lender or any other party in connection with its decision to enter into the transaction described in this Agreement and the related Loan Documents and that this Agreement and the related Loan Documents set forth the entire set of representations, warranties and understandings of the Borrower with respect to the transaction described herein and in the Loan Documents.

Section 11.24 Servicer.

At the option of Lender, the Loan may be serviced by a servicer (the "Servicer") selected by Lender and Lender may delegate all or any portion of its responsibilities under this Agreement and the other Loan Documents to the Servicer pursuant to a servicing agreement (the "Servicing Agreement") between Lender and Servicer.

Section 11.25 Joint and Several Liability.

If more than one Person has executed this Agreement as "Borrower," the representations, covenants, warranties and obligations of all such Persons hereunder  shall be joint and several.

Section 11.26 Creation of Security Interest.

Notwithstanding any other provision set forth in this Agreement, the Note, the Mortgage or any of the other Loan Documents, Lender may at any time create a security interest in all or any portion of its rights under this Agreement, the Note, the Mortgage and any other Loan Document (including the advances owing to it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System.

Section 11.27 Assignments and Participations.

(a) Lender may assign, without the consent of Borrower, to one or more Persons all or a portion of its rights and obligations under this Agreement and the other Loan Documents.

(b) Upon such execution and delivery, from and after the effective  date specified in the related assignment and acceptance agreement, the assignee thereunder shall be a party hereto and shall have the rights and obligations of Lender hereunder to the extent of its interest in the Loan.

(c) Lender may sell participations to one or more Persons in or to all or a portion of its rights and obligations under this Agreement; provided, however, that

(i) Lender's obligations under this Agreement shall remain unchanged, (ii) Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) Lender shall remain the holder of any Note for all purposes of this Agreement, and (iv) Borrower shall continue to deal solely and directly with Lender in connection with Lender's rights and obligations under and in respect of this Agreement and the other Loan Documents.

Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 11.27, disclose to the assignee or participant or proposed assignees or participants, as the case may be, any information relating to Borrower or any of its Affiliates or to any aspect of the Loan that has been furnished to Lender by or on behalf of the Borrower or any of its Affiliates.·

Section 11.28 Counterparts.

This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.

Section 11.29 Set-Off.

In addition to any rights and remedies of Lender provided by this Agreement and by law, Lender shall have the right in its sole discretion, without prior notice to Borrower, any such notice being expressly waived by Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by Borrower hereunder (whether at the stated maturity, by acceleration or otherwise), to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by Lender or any Affiliate thereof to or for the credit or the account of Borrower. Lender agrees promptly to notify Borrower after any such set-off and application made by Lender; provided that the failure to give such notice shall not affect the validity of such set-off and application.

[NO FURTHER TEXT ON THIS PAGE]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized representatives, all as of the day and year first above written.

BORROWER:

TREEMONT CAPITAL PARTNERS IV, LP, a

Texas limited partnership

By:Treemont Capital Partners IV GP, LLC, a Texas limited liability company, its general partner

By:  /s/ Philip A. McRae

Name:  Philip A. McRae

Title: Manager

Loan Agreement (Fairfield Inn & Suites Lubbock)

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized representatives, all as of the day and year first above written.

LENDER:

STARWOOD MORTGAGE CAPITAL

LLC, a Delaware limited liability company

By: /s/ Leslie K. Fairbanks

Name: Leslie K. Fairbanks Title: Vice President

Loan Agreement (Fairfield Inn &  Suites Lubbock)

SCHEDULE IRENT ROLL

NIA

SCHEDULE II

REQUIRED REPAIRS

TABLE 1 ·  IMMEDIATE REPAIRS &  DEFERRED MAINTENANCE COST OPINION

64lS SO!h Strttt

I None Noted

3.0 Site Improvements

INone Noted

4.0 Structural Frame and Buildinq Envelope

I

-

I

-

Partner Project No. 19-240146,1

March 19, 2019

II

I

I

I

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at the inte<section -

the ston,, venee, and EIFS and a small (approximately

4.3.1 on,, square foot) patch of da ed EIFS was observed at the southwest comer of the buil<fog. RemOYaland

r emfflt of damaged sealant •nd repair of the damaged EIFS is recommt,nded.

1

LS

S3.SOO

SlSOC

5.0 Mechanical and Electrical S tems

5.5.2 IMod1tv or adiust alarm sensor behind commercial,,

6.0 Interior Elements

!None Noted

7.0 Accessibilitv INone Noted

8.0 Water Intrusion and Microbial Growth

,

.._..,

-""'

Requlatorv Compliance

-

ock, Texas

....

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loulC.OOC

64lS SO!h Strttt

I None Noted

3.0 Site Improvements

INone Noted

4.0 Structural Frame and Buildinq Envelope

I

-

I

-

Partner Project No. 19-240146,1

March 19, 2019

II

I

I

I

I

Damaged sealant was o

at the inte<section -

the ston,, venee, and EIFS and a small (approximately

4.3.1 on,, square foot) patch of da ed EIFS was observed at the southwest comer of the buil<fog. RemOYaland

r emfflt of damaged sealant •nd repair of the damaged EIFS is recommt,nded.

1

LS

S3.SOO

SlSOC

5.0 Mechanical and Electrical S tems

5.5.2 IMod1tv or adiust alarm sensor behind commercial,,

6.0 Interior Elements

!None Noted

7.0 Accessibilitv INone Noted

8.0 Water Intrusion and Microbial Growth

,

.._..,

-""'

Requlatorv Compliance

-

ock, Texas

....

"--

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loulC.OOC

Fairfield Inn and Suites Lubbock

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				TOTALS	4.000

EXHIBIT A

LEGAL DESCRIPTION

See Attached.

A-1

EXHIBIT A

Legal Description

The land referred to is situated in the City of Lubbock, County of Lubbock, State of Texas, and is described as follows:

Parcel A: Fee Simple Estate

Lot Five-A (5-A), a replat of Lot 5, CANYON WEST ADDITION to the City of Lubbock, Lubbock County, Texas, according to the Map, Plat and/or Dedication Deed thereof, recorded in/under Clerk's File No. 2016024991 of the Official Public Records of Lubbock County, Texas, save and except any and all rights, titles and interests previously reserved, conveyed or created with respect to oil, gas, or other minerals in and under the land.

Parcel B: Easement Estate

All right, title and interest as provided in the Declaration of Restrictions and Reciprocal Easement Agreement recorded in/under Volume 10138, Page 14; amended in/under Clerk's File No. 2011012478 and ratified and corrected in/under Clerk's File No. 2013030944 to Lot Five-B (5-B), a replat of Lot 5, CANYON WEST ADDITION to the City of Lubbock, Lubbock County, Texas, according to the Map, Plat and/or Dedication Deed thereof, recorded in/under Clerk's File No. 2016024991 of the Official Public Records of Lubbock County, Texas.

For Information Only: Tax No. R327901

EX-10.55.4

Exhibit 10.55.4

TREEMONT CAPITAL PARTNERS IV, LP, as assignor

(Borrower)

to

STARWOOD MORTGAGE CAPITAL LLC, as assignee

(Lender)

ASSIGNMENT

OF LEASES AND RENTS

Dated:            As of April 4, 2019

Location:       6435 50th Street

Lubbock, Texas

County:         Lubbock

PREPARED BY AND UPON

RECORDATION RETURN TO:

Holland & Knight LLP 101

South Tryon Street

Suite 2000

Charlotte, North Carolina 28280

Attention: David Iacuzio

ASSIGNMENT OF LEASES AND RENTS

THIS ASSIGNMENT OF LEASES AND RENTS (this "Assignment")  is made as of the 4th day of April, 2019 by TREEMONT CAPITAL PARTNERS IV, LP, a Texas limited partnership, having its principal place of business at 1415 South Voss #110-94, Houston, Texas 77057, as assignor ("Borrower"), to STARWOOD MORTGAGE CAPITAL LLC, a Delaware limited liability company, as assignee, having an address at 1601 Washington Avenue, Suite 800, Miami Beach, Florida 33139 (together with its successors and assigns, "Lender").

WI  TN  E S S E TH:

A.         This Assignment is given in connection with a loan in the principal sum of NINE MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($9,500,000.00) (the "Loan") made by Lender to Borrower pursuant to that certain Loan Agreement dated as of the date hereof between Borrower and Lender (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the "Loan Agreement"), and evidenced by that certain Promissory Note dated the date hereof made by Borrower to Lender (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the "Note"). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Loan Agreement.

B.         The Note is secured by that certain Deed of Trust, Assignment of Leases and Rents and Security Agreement dated the date hereof made by Borrower for the benefit of Lender (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the "Mortgage"), encumbering, as a first mortgage lien thereon,  the  land more particularly described on Exhibit A annexed hereto and made a part hereof and the buildings, structures, fixtures, additions, enlargements, extensions, modifications, repairs, replacements and improvements now or hereafter located thereon (collectively, the "Property").

C.         Borrower has agreed to execute and deliver this Assignment to further secure the payment and performance of all of the Obligations under the Note, the Loan Agreement and the other Loan Documents.

D.        This Assignment is given pursuant to the Loan Agreement, and payment, fulfillment, and performance by Borrower of its obligations thereunder and under the other Loan Documents is secured hereby, and each and every term and provision of the Loan Agreement and the Note, including the rights, remedies, obligations, covenants, conditions, agreements, indemnities, representations and warranties therein, are hereby incorporated by reference herein as though set forth in full and shall be considered a part of this Assignment.

NOW THEREFORE, in consideration of the making of the Loan by Lender and the covenants, agreements, representations and warranties set forth in this Assignment:

ARTICLE 1

ASSIGNMENT

Section 1.1        Property      Assigned.           Borrower      hereby      absolutely      and

unconditionally assigns and grants to Lender the following property, rights, interests and estates, now owned or hereafter acquired by Borrower:

(a)         Leases. All leases, subleases or subsubleases, lettings, licenses, concessions or other agreements (whether written or oral and whether now or hereafter in effect) pursuant to which any Person is granted a possessory interest in, or right to use or occupy all or any portion of the Property, and every modification, amendment or other agreement relating to such leases, subleases, subsubleases, or other agreements entered into in connection with such leases, subleases, subsubleases, or other agreements and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto, heretofore or hereafter entered into, whether before or after the filing by or against Borrower of any petition for relief under 11 U.S.C. §101 et seq., as the same may be amended from time to time (the "Bankruptcy Code") (collectively, the "Leases"), together with any extension, renewal or replacement of same. This Assignment of existing and future Leases and other agreements is effective without any further or supplemental assignment documents.

(b)        Rents. All Rents, which term shall include Rents paid or accruing before or after the filing by or against Borrower of any petition for relief under the Bankruptcy Code.

(c)         Bankruptcy Claims. All of Borrower's claims and rights  (the "Bankruptcy Claims") to the payment of damages arising from any rejection by a lessee of any Lease under the Bankruptcy Code.

(d)        Lease Guaranties. All of Borrower's right, title and interest in, and claims under, any and all lease guaranties, letters of credit and any other credit support (individually, a "Lease Guaranty", and collectively, the "Lease Guaranties") given by any guarantor in connection with any of the Leases or leasing commissions (individually, a "Lease Guarantor", and collectively, the "Lease Guarantors") to Borrower.

(e)         Proceeds. All proceeds from the sale or other disposition of the Leases,  the Rents, the Lease Guaranties and/or the Bankruptcy Claims.

(f)         Other. All rights, powers, privileges, options and other benefits of Borrower as the lessor under any of the Leases and the beneficiary under any of the Lease Guaranties, including, without limitation, the immediate and continuing right to make claims for, and to receive, collect and acknowledge receipt for all Rents payable or receivable under the Leases and all sums payable under the Lease Guaranties or pursuant thereto (and to apply the same to the payment of the Debt or the Other Obligations), and to do all other things which Borrower or any lessor is or may become entitled to do under any of the Leases or Lease Guaranties.

(g)        Entry. The right, at Lender's option, upon revocation of  the  license granted herein, to enter upon the Property in person, by agent or by court-appointed receiver, to collect the Rents.

(h)        Power Of Attorney. Borrower's irrevocable power of attorney, coupled with an interest, to take any and all of the actions set forth in Section 3.1 of this Assignment, and any or all other actions designated by Lender for the proper management and preservation of the Property.

(i)         Other Rights And Agreements. Any and all other rights of Borrower in  and to the items set forth in subsections (a) through (h) above, and all amendments, modifications, replacements, renewals and substitutions thereof.

ARTICLE2 TERMS OF ASSIGNMENT

Section 2.1 Present Assignment and License Back.  It is intended  by Borrower that this Assignment constitute a present, absolute assignment of the Leases, Rents, Lease Guaranties and Bankruptcy Claims, and not an assignment for additional security only. Nevertheless, subject to the terms of this Section 2.1 and the terms of the Loan Agreement and the Cash Management Agreement, Lender grants to Borrower a revocable license to collect, receive, use and enjoy the Rents, as well as any sums due under the Lease Guaranties. Borrower shall hold the Rents, as well as all sums received pursuant to any Lease Guaranty, or a portion thereof sufficient to discharge all current sums due on the Obligations, in trust for the benefit of Lender for use in the payment of such sums.

Section 2.2 Notice to Lessees. Borrower hereby authorizes  and  directs  the lessees named in any commercial or retail Leases, any other future lessees or occupants of the Property (but expressly excluding hotel guests) and all Lease Guarantors  to pay over to Lender or to such other party as Lender directs all Rents and all sums due under any Lease Guaranties, upon receipt from Lender of written notice to the effect that Lender is then the holder of this Assignment and that an Event of Default exists, that such Person(s) should thereafter pay over to Lender or to such other party as Lender directs all Rents and all sums due under any Lease Guaranties and to continue so to do until otherwise notified by Lender, and Borrower hereby agrees that such Person(s) may rely upon such written demand from Lender to so pay said Rents and all sums due under the Lease Guaranties without any inquiry into whether there exists an Event of Default or whether Lender is otherwise entitled to said Rents and sums due under the Lease Guaranties.

Section 2.3 Incorporation by Reference. All representations, warranties, covenants, conditions and agreements contained in the Loan Agreement and the other Loan Documents, as the same may be modified, renewed, substituted or extended from time to time, are hereby made a part of this Assignment to the same extent and with the same force as if fully set forth herein.

ARTICLE3

REMEDIES

Section 3.1 Remedies of Lender. Upon or at any time after the occurrence and during the continuance of an Event of Default, the license granted to Borrower in Section 2.1 of this Assignment shall automatically be revoked and Lender shall immediately be entitled to possession of all Rents and all sums due under any Lease Guaranties, whether or not Lender enters upon or takes control of the Property. In addition, Lender may, at its option, without waiving any Event of Default, without regard to the adequacy of the security for the Obligations, either in person or by agent, nominee or attorney, with or without bringing any action or proceeding, or by a receiver appointed by a court, dispossess Borrower and its agents and servants from the Property, without liability for trespass, damages or otherwise and exclude Borrower and its agents or servants wholly therefrom, and take possession of the Property and all books, records and accounts relating thereto, and have, hold, manage, lease and operate the Property on such terms and for such period of time as Lender may deem proper and, either with or without taking possession of the Property, in its own name, demand, sue for or otherwise collect and receive all Rents and all sums due under all Lease Guaranties, including, without limitation, those past due and unpaid, with full power to make from time to time all alterations, renovations, repairs or replacements thereto or thereof as Lender may deem proper, and may apply the Rents and the sums received pursuant to any Lease Guaranties to the payment and performance of the following in such order and proportion as Lender in its sole discretion may determine, any law, custom or use to the contrary notwithstanding: (a) all expenses of managing and securing the Property, including, without being limited thereto, the salaries, fees and wages of a managing agent and such other employees or agents as Lender may deem necessary or desirable, and all expenses of operating and maintaining the Property, including, without being limited thereto, all taxes, charges, claims, assessments, water charges, sewer rents and any other liens, and premiums for all insurance which Lender may deem necessary or desirable, and the cost of all alterations, renovations, repairs or replacements, and all expenses incident to taking and retaining possession of the Property; and (b) the Obligations, together with all costs and reasonable attorneys' fees and costs. In addition, upon the occurrence of an Event of Default, Lender, at its option, may (1) complete any construction on the Property in such manner and form as Lender deems advisable, (2) exercise all rights and powers of Borrower, including, without limitation, the right to negotiate, execute, cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect and receive all Rents from the Property and all sums due under any Lease Guaranties, and/or (3) either (i) require Borrower to pay monthly  in advance to Lender or to any receiver appointed to collect the Rents the fair and reasonable rental value for the use and occupancy of such part of the Property as may be in the possession of Borrower, or (ii) require Borrower to vacate and surrender possession of the Property to Lender or to such receiver and, in default thereof, Borrower may be evicted by summary proceedings or otherwise.

Section 3.2 Other Remedies. Nothing contained in this Assignment and no act done or omitted by Lender pursuant to the power and rights granted to Lender hereunder shall be deemed to be a waiver by Lender of its rights and remedies under the Loan Agreement, the Note, the Mortgage or the other Loan Documents, and this Assignment is made and accepted without prejudice to any of the rights and remedies possessed by Lender under the terms thereof. The right of Lender to collect the Obligations and to enforce any other security therefor held by it

may be exercised by Lender either prior to, simultaneously with, or subsequent to any action taken by it hereunder. Borrower hereby absolutely, unconditionally and irrevocably waives any and all rights to assert any setoff, counterclaim or crossclaim of any nature whatsoever with respect to the Obligations of Borrower under this Assignment, the Loan Agreement,  the Note, the other Loan Documents or otherwise with respect to the Loan in any action or proceeding brought by Lender to collect same, or any portion thereof, or to enforce and realize upon the lien and security interest created by this Assignment, the Loan Agreement, the Note, the Mortgage or any of the other Loan Documents (provided, however, that the foregoing shall not be deemed a waiver of Borrower's right to assert any compulsory counterclaim if such counterclaim is compelled under local law or rule of procedure, nor shall the foregoing be deemed a waiver of Borrower's right to assert any claim which would constitute a defense, setoff, counterclaim or crossclaim of any nature whatsoever against Lender in any separate action or proceeding).

Section 3.3  Other Security.  Lender  may (i) take or release  other security  for  the payment and performance of the Obligations, (ii) release any party primarily or secondarily liable therefor, and/or (iii) apply any other security held by it to the payment and performance of the Obligations, in each instance, without prejudice to any of its rights under this Assignment.

Section 3.4 Non-Waiver. The exercise by Lender of the option granted it in Section 3.1 of this Assignment and the collection of the Rents and the sums due under the Lease Guaranties and the application thereof as herein provided shall not be considered a waiver of any Default or Event of Default by Borrower under the Note, the Loan Agreement, the Mortgage,  this Assignment or the other Loan Documents. The failure of Lender to insist upon strict performance of any term hereof shall not be deemed to be a waiver of any term of this Assignment. Borrower shall not be relieved of Borrower's obligations hereunder by reason of

(a)  the failure of Lender to comply with any request of Borrower or any other party to take any action to enforce any of the provisions hereof or of the Loan Agreement, the Note or the other Loan Documents, (b) the release, regardless of consideration, of the whole or any part of the Property, or (c) any agreement or stipulation by Lender extending the time of payment or otherwise modifying or supplementing the terms of this Assignment, the Loan Agreement, the Note or the other Loan Documents. Lender may resort for the payment and performance of the Obligations to any other security held by Lender in such order and manner as Lender, in its sole discretion, may elect. Lender may take any action to recover the Obligations, or any portion thereof, or to enforce any covenant hereof without prejudice to the right of Lender thereafter to enforce its rights under this Assignment. The rights of Lender under this Assignment shall be separate, distinct and cumulative and none shall be given effect to the exclusion of the others. No act of Lender shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision.

Section 3.5       Bankruptcy.

(a)        Upon or at any time after the occurrence of an Event of Default, Lender shall have the right to proceed in its own name or in the name of Borrower in respect of any claim, suit, action or proceeding relating to the rejection of any Lease, including, without limitation, the right to file and prosecute, to the exclusion of Borrower, any proofs of claim, complaints, motions, applications, notices and other documents, in any case in respect of the lessee under such Lease under the Bankruptcy Code.

(b)       If there shall be filed by or against Borrower a petition under the Bankruptcy Code, and Borrower, as lessor under any Lease, shall determine to reject such Lease pursuant to Section 365(a) of the Bankruptcy Code, then Borrower shall give Lender  not less than ten (10) days' prior notice of the date on which Borrower shall  apply to the bankruptcy  court for authority to reject such Lease. Lender shall have the right, but not the obligation, to serve upon Borrower within such ten (10) day period a notice stating that (i) Lender demands  that Borrower assume and assign the Lease to Lender pursuant to Section 365 of the Bankruptcy Code, and (ii) Lender covenants to cure or provide adequate assurance of future performance under the Lease. If Lender serves upon Borrower the notice described in the preceding sentence, Borrower shall not seek to reject the Lease and shall comply with the demand provided for in clause (i) of the preceding sentence within thirty (30) days after Lender's notice shall have been given, subject to the performance by Lender of the covenant provided for in clause (ii) of the preceding sentence.

ARTICLE4

NO LIABILITY, FURTHER ASSURANCES

Section 4.1 No Liability of Lender. This Assignment  shall not be construed to bind Lender to the performance of any of the covenants, conditions or provisions contained in any Lease or Lease Guaranty or otherwise impose any obligation upon Lender; provided, however, that nothing in this section relieves Lender of any legal obligation to perform obligations under the Leases. Lender shall not be liable for any loss sustained by Borrower resulting from Lender's failure to let the Property after an Event of Default or from any other act or omission of Lender in managing the Property after an Event of Default unless such loss is caused by the willful misconduct or bad faith of Lender. Lender shall not be  obligated  to perform or discharge- any obligation, duty or liability under the Leases or any Lease Guaranties or under or by reason of this Assignment and Borrower shall indemnify Lender for, and hold Lender harmless from, (a) any and all liability, loss or damage which may or might be incurred under the Leases, any Lease Guaranties or under or by reason of this Assignment,  and (b) any and all claims and demands whatsoever, including the defense of any such claims or demands which may be asserted against Lender by reason of any alleged obligations and undertakings on its part to perform or discharge any of the terms, covenants or agreements contained in the  Leases or any Lease Guaranties. Should Lender incur any such liability, the amount thereof, including costs, expenses and reasonable attorneys' fees and costs, shall be secured by this Assignment and by the Mortgage and the other Loan Documents and Borrower shall reimburse Lender therefor immediately upon demand and upon the failure of Borrower so to do Lender may, at its option, declare the Obligations to be immediately due and payable. This Assignment shall not operate to place any obligation or liability for the control, care, management or repair of the Property upon Lender, nor for the carrying out of any of the terms and conditions of the Leases or any Lease Guaranties; nor shall it operate to make Lender responsible or liable for any waste committed on the Property by the tenants or any other parties, or for any dangerous or defective condition of the Property, including, without limitation, the presence of any Hazardous Substances (as defined in the Environmental Indemnity), or for any negligence in the management, upkeep, repair or control of the Property resulting in loss or injury or death to any tenant, licensee, employee or stranger.

Section 4.2 No Mortgagee In Possession. Nothing herein contained shall be construed as constituting Lender a "mortgagee in possession" in the absence of the taking of actual possession of the Property by Lender. In the exercise of the powers herein granted Lender, no liability shall be asserted or enforced against Lender, all such liability being expressly waived and released by Borrower.

Section 4.3 Further Assurances. Borrower will, at the cost of Borrower, and without expense to Lender, do, execute, acknowledge and deliver all and every such further acts, conveyances, assignments, notices of assignments, transfers and assurances as Lender shall, from time to time, require for the better assuring, conveying, assigning, transferring and confirming unto Lender the property and rights hereby assigned or intended now or hereafter so to be, or which Borrower may be or may hereafter become bound to convey or assign to Lender, or for carrying out the intention or facilitating the performance of the terms of this Assignment or for filing, registering or recording this Assignment and, on demand, will execute and deliver, and hereby authorizes Lender to execute in the name of Borrower to the extent Lender may lawfully do so, one or more financing statements, chattel mortgages or comparable security instruments, to evidence more effectively the lien and security interest hereof in and upon the Leases.

ARTICLE 5

MISCELLANEOUS PROVISIONS

Section 5.1  Conflict  of  Terms.  In case of any conflict  between the terms  of this Assignment and the terms of the Loan Agreement, the terms of the Loan Agreement shall prevail.

Section 5.2  No Oral Change.  This Assignment and any provisions hereof may not be modified, amended, waived, extended, changed, discharged or terminated orally, or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party(ies) against whom the enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

Section 5.3 General Definitions.  Unless  the  context  clearly  indicates  a contrary intent or unless otherwise specifically provided herein, words used in this Assignment may be used interchangeably in the singular or plural form and the word "Borrower" shall mean "each Borrower and any subsequent owner or owners of the Property or any part thereof or interest therein," the word "Lender" shall mean "Lender and any subsequent holder of the Note," the word "Note" shall mean "the Note and any other evidence of indebtedness secured by the Loan Agreement," the word "Property" shall include any portion of the Property and any interest therein, and the phrases "attorneys' fees", "legal fees" and "counsel fees" shall include  any and all attorneys', paralegal and law clerk fees and disbursements, including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels, incurred or paid by Lender in protecting its interest in the Property, the Leases and/or the Rents and/or in enforcing its rights hereunder. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms.

Section 5.4 Inapplicable Provisions.  If any  provision  of this  Assignment  is  held to be illegal, invalid or unenforceable under present or future laws effective during the term

of this Assignment, such provision shall be fully severable and this Assignment shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Assignment, and the remaining provisions of this Assignment shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Assignment, unless such continued effectiveness of this Assignment, as modified, would be contrary to the basic understandings and intentions of the parties as expressed herein.

Section 5.5 Governing Law.  THIS ASSIGNMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST BORROWER ARISING OUT OF OR RELATING TO THIS ASSIGNMENT OR ANY OTHER LOAN DOCUMENT MAY BE INSTITUTED IN THE COURTS HAVING JURISDICTION IN THE CITY AND/OR COUNTY IN WHICH THE PROPERTY IS LOCATED, AND BORROWER HEREBY WAIVES ANY OBJECTIONS THAT IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING.

Section 5.6 Termination  of Assignment.  Upon payment  and performance  in  full of the Obligations, this Assignment shall become and be void and of no effect.

Section 5.7 Notices. All  notices or other written  communications hereunder  shall be delivered in accordance with Section 11.6 of the Loan Agreement.

Section 5.8 WAIVER OF TRIAL BY JURY. BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND FOREVER WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST, WITH REGARD TO THIS ASSIGNMENT, THE NOTE, THE MORTGAGE OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE  AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.

Section 5.9 Exculpation. The prov1s1ons of Section 11.22 of the  Loan Agreement are hereby incorporated by reference into this Assignment to the same extent and with the same force as if fully set forth herein.

Section 5.10 Successors and Assigns.  This Assignment shall be binding upon  and shall inure to the benefit of Borrower and Lender and their respective successors and permitted assigns forever. Lender shall have the right, without the consent of Assignor, to assign or transfer its rights under this Assignment in connection with any assignment of the Loan and the Loan Documents. Any assignee or transferee of Lender shall be entitled to all the benefits

afforded to Lender under this Assignment. Borrower shall not have the right to assign or transfer its rights or obligations under this Assignment without the prior written consent of Lender, as provided in the Loan Agreement, and any attempted assignment without such consent shall be null and void.

Section 5.11 Headings, Etc. The headings and  captions  of  the  various paragraphs of this Assignment are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

Section 5.12 Recitals. The recitals hereof are a part hereof, form a basis for this Assignment and shall be considered prima facie evidence of the facts and documents referred to therein.

Section 5.13 Joint and Several Liability.  If more than one Person has executed this Assignment as "Borrower," the representations, covenants, warranties and obligations of all such Persons hereunder shall be joint and several.

[NO FURTHER TEXT ON TIDS PAGE]

IN WITNESS WHEREOF, Borrower has executed this Assignment the day and year first above written.

BORROWER:
TREEMONT CAPITAL PARTNERS IV, LP, a
Texas limited partnership
By:	Treemont Capital Partners IV GP, LLC, a Texas
	limited liability company, its general partner
	By:	/s/ Philip A. McRae
		Name:Philip A. McRae
		Title:Manager

ACKNOWLEDGMENT

STATE OF  TEXAS	§
	§
COUNTY OF HARRIs	§

This  instrument  was  ACKNOWLEDGED  before me on April 2nd, 2019 by Philip A. McRae, the Manager of Treemont Capital  Partners  IV G P, LLC, a  Texas  limited liability company, the general partner of TREEMONT CAPITAL PARTNERS IV, LP, a Texas limited partnership, on behalf of said limited partnership.

[SEAL]	/s/ Kay Street
	Notary Public, State of Texas
	Name: Sharon K. Street
	Commission Expires: 12-04-2021
	Notary ID 1901703
My Commission Expires:

Assignment of Leases and Rents (Fairfield Inn & Suites Lubbock)

EXHIBIT A

Legal Description

The land referred to is situated in the City of Lubbock, County of Lubbock, State of Texas, and is described as follows:

Parcel A: Fee Simple Estate

Lot Five-A (5-A), a replat of Lot 5, CANYON WEST ADDITION to the City of Lubbock, Lubbock County, Texas, according to the Map, Plat and/or Dedication Deed thereof, recorded in/under Clerk's File No. 2016024991 of the Official Public Records of Lubbock County, Texas, save and except any and all rights, titles and interests previously reserved, conveyed or created with respect to oil, gas, or other minerals in and under the land.

Parcel B: Easement Estate

All right, title and interest as provided in the Declaration of Restrictions and Reciprocal Easement Agreement recorded in/under Volume 10138, Page 14; amended in/under Clerk's File No. 2011012478 and ratified and corrected in/under Clerk's File No. 2013030944 to Lot Five-B (5-B), a replat of Lot 5, CANYON WEST ADDITION to the City of Lubbock, Lubbock County, Texas, according to the Map, Plat and/or Dedication Deed thereof, recorded in/under Clerk's File No. 2016024991 of the Official Public Records of Lubbock County, Texas.

For Information Only: Tax No. R327901

FILED AND RECORDED

OFFICIAL PUBLIC RECORDS

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Kelly Pinion, County Clerk Lubbock County, TEXAS 04/05/2019 09:04 AM

Recording Fee: $70.00

2019011814

EX-10.55.5

EXHIBIT 10.55.5

NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU REMOVE OR STRIKE ANY OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S LICENSE NUMBER.

LF3 LUBBOCK EXPO TRS, LLC, as grantor

(Borrower) to

KATHLEEN J. WU

an individual, as trustee (Trustee)

For the benefit of

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee for Morgan Stanley Capital I Trust 2019-H6, Commercial Mortgage Pass-Through Certificates, Series 2019-H6, acting by and through its Master Servicer, Midland Loan Services, a Division of PNC Bank,

National Association, as beneficiary (Lender)

LEASEHOLD DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS AND

SECURITY AGREEMENT

Dated: Location: County:

As of January 2020

6435 50th Street, Lubbock, Texas Lubbock

PREPARED BY AND UPON RECORDATION RETURN TO:

Kathleen J. Wu, Esq.

Hunton Andrews Kurth LLP 1445 Ross Avenue, Suite 3700

Dallas, Texas 75202

LEASEHOLD DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT

THIS LEASEHOLD DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS

AND SECURITY AGREEMENT (this "Deed of Trust") is made as of this lay of January, 2020, by LF3 LUBBOCK EXPO TRS, LLC, a Delaware limited liability company, having its principal place of business at 1635 - 43rd Street S, Suite 205, Fargo, ND 58103, as grantor ("Borrower"), to KATHLEEN J. WU, an individual, having an address at Hunton Andrews Kurth LLP, whose mailing address is 1445 Ross Avenue, Suite 3700 Dallas, Texas 75202, as trustee ("Trustee"), for the benefit of WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee for Morgan Stanley Capital I Trust 2019-H6, Commercial Mortgage Pass-Through Certificates, Series 2019-H6, acting by and through its Master Servicer, Midland Loan Services, a Division of PNC Bank, National Association, having an address at c/o Midland Loan Services 10851 Mastin, Suite 300, Overland Park, Kansas 66210, Attn: Tad Janssen, as beneficiary (together with its successors and assigns, "Lender").

WITNESSETH:

A. This Deed of Trust is given to secure a loan (the "Loan") in the principal sum of NINE MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($9,500,000.00) or so much thereof as may be advanced pursuant to that certain Loan Agreement dated as of April 4, 2019 hereof between TREEMONT CAPITAL PARTNERS IV, LP, a Texas limited partnership ("Original Borrower"), and Starwood Mortgage Capital LLC ("Original Lender") (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the "Loan Agreement"), and evidenced by that certain Promissory Note dated April 4, 2019, made by Original Borrower to Original Lender (such Note, together with all extensions, renewals, replacements, restatements or modifications thereof, being hereinafter referred to as the "Note"). Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Loan Agreement.

B. As security for the Loan, Original Borrower granted to Original Lender a first lien and security interest on certain of its property encumbered by that certain Deed of Trust, Assignment of Leases and Rents and Security Agreement dated April 4, 2019, executed by Original Borrower for the benefit of Original Lender, recorded as Instrument No. 2019011813 in the Real Property Records of Lubbock County, Texas.

C. Lender is the holder of all of Original Lender's right, title and interest in and under the Loan.

D. Original Borrower, Borrower, and LF3 Lubbock Expo, LLC, a Delaware limited liability company ("Fee Owner"), have requested that Lender consent to (i) the sale of the Property from Original Borrower to Fee Owner and (ii) the assignment to, and assumption by, Fee Owner and Borrower of the Loan (collectively, the "Transaction").

E. Fee Owner is an Affiliate of Borrower. Fee Owner, as landlord, and Borrower, as tenant, entered into that certain Lease Agreement dated as of the date hereof with respect to the

operation of a hotel on the Land and Improvements (the "Operating Lease")under and pursuant to such Operating Lease.

F. Pursuant to that certain Consent, Amendment and Assumption Agreement, dated as of the date hereof by and among Borrower, Fee Owner, Original Borrower, Lender, and certain guaranty parties thereto (the "Consent and Assumption Agreement"),Lender is willing to consent to the Transaction provided that Borrower delivers this Deed of Trust.

G. Borrower and Fee Owner desire to secure the payment of the outstanding principal amount of the Loan together with all interest accrued and unpaid thereon and all other sums (including the Prepayment Fee) due to Lender in respect of the Loan and the Loan Documents (the "Debt") and the performance of all of its obligations under the Note, the Loan Agreement and the other Loan Documents.

H. This Deed of Trust is given in connection with the Transaction, and payment, fulfillment and performance by Borrower of its obligations thereunder and under the other Loan Documents are secured hereby, and each and every term and provision of the Loan Agreement, the Consent and Assumption Agreement, the Note, and that certain Assignment of Leases and Rents (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the "Assignment of Leases"), including the rights, remedies, obligations, covenants, conditions, agreements, indemnities, representations and warranties of the parties therein, are hereby incorporated by reference herein as though set forth in full and shall be considered a part of this Deed of Trust.

NOW THEREFORE, in consideration of the making of the Loan by Lender and the covenants, agreements, representations and warranties set forth in this Deed of Trust:

ARTICLE 1 GRANTS OF SECURITY

Section 1.1 Property Conveyed. Borrower does hereby irrevocably grant,

bargain, sell, pledge, assign, warrant, transfer and convey to Trustee and its successors and assigns, in trust, with power of sale for the benefit of Lender as beneficiary in trust, the following property, rights, interests and estates now owned or hereafter acquired by Borrower (collectively, the "Property"):

(a) Land. The real property described in Exhibit A attached hereto and made a part hereof (the "Land");

(b) Additional Land. All additional lands, estates and development rights hereafter acquired by Borrower for use in connection with the Land and the development of the Land and all additional lands and estates therein which may, from time to time, by supplemental mortgage or otherwise be expressly made subject to the lien of this Deed of Trust;

(c) Improvements. The buildings, structures, fixtures, additions, enlargements, extensions, modifications, repairs, replacements and improvements now or hereafter erected or located on the Land (collectively, the "Improvements");

(d) Easements. All easements, rights-of-way or use, rights, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, and all estates, rights, titles, interests, privileges, liberties, servitudes, tenements, hereditaments and appurtenances of any nature whatsoever, in any way now or hereafter belonging, relating or pertaining to the Land and the Improvements and the reversion and reversions, remainder and remainders, and all land lying in the bed of any street, road or avenue, opened or proposed, in front of or adjoining the Land, to the center line thereof and all the estates, rights, titles, interests, dower and rights of dower, curtesy and rights of curtesy, property, possession, claim and demand whatsoever, both at law and in equity, of Borrower of, in and to the Land and the Improvements and every part and parcel thereof, with the appurtenances thereto;

(e) Equipment. All "equipment," as such term is defined in Article 9 of the Uniform Commercial Code (as hereinafter defined), now owned or hereafter acquired by Borrower, which is used at or in connection with the Improvements or the Land or is located thereon or therein (including, but not limited to, all machinery, equipment, furnishings, and electronic data-processing and other office equipment now owned or hereafter acquired by Borrower and any and all additions, substitutions and replacements of any of the foregoing), together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto (collectively, the "Equipment"). Notwithstanding the foregoing, Equipment shall not include any property belonging to Tenants under Leases except to the extent that Borrower shall have any right or interest therein;

(f) Fixtures. All Equipment now owned, or the ownership of which is hereafter acquired, by Borrower which is so related to the Land and Improvements forming part of the Property that it is deemed fixtures or real property under the law of the particular state in which the Equipment is located, including, without limitation, all building or construction materials intended for construction, reconstruction, alteration or repair of or installation on the Property, construction equipment, appliances, machinery, plant equipment, fittings, apparatuses, fixtures and other items now or hereafter attached to, installed in or used in connection with (temporarily or permanently) any of the Improvements or the Land, including, but not limited to, engines, devices for the operation of pumps, pipes, plumbing, cleaning, call and sprinkler systems, fire extinguishing apparatuses and equipment, heating, ventilating, plumbing, laundry, incinerating, electrical, air conditioning and air cooling equipment and systems, gas and electric machinery, appurtenances and equipment, pollution control equipment, security systems, disposals, dishwashers, refrigerators and ranges, recreational equipment and facilities of all kinds, wind driven facilities, solar power facilities and related power infrastructure, cell towers, and water, gas, electrical, storm and sanitary sewer facilities, utility lines and equipment (whether owned individually or jointly with others, and, if owned jointly, to the extent of Borrower's interest therein) and all other utilities whether or not situated in easements, all water tanks, water supply, water power sites, fuel stations, fuel tanks, fuel supply, and all other structures, together with all accessions, appurtenances, additions, replacements, betterments and substitutions for any of the foregoing and the proceeds thereof (collectively, the "Fixtures"). Notwithstanding the foregoing, "Fixtures" shall not include any property which Tenants are entitled to remove pursuant to Leases except to the extent that Borrower shall have any right or interest therein;

(g) Personal Property. All furniture, furnishings, objects of art, machinery, goods, tools, supplies, appliances, general intangibles, contract rights, accounts, accounts

receivable, franchises, licenses, certificates and permits, and all other personal property of any kind or character whatsoever (as defined in and subject to the provisions of the Uniform Commercial Code), other than Fixtures, which are now or hereafter owned by Borrower and which are located within or about the Land and the Improvements, together with all accessories, replacements and substitutions thereto or therefor and the proceeds thereof (collectively, the "Personal Property"), and the right, title and interest of Borrower in and to any of the Personal Property which may be subject to any security interests, as defined in the Uniform Commercial Code, as adopted and enacted by the state or states where any of the Property is located (as amended from time to time, the "Uniform Commercial Code"), superior in lien to the lien of this Deed of Trust, and all proceeds and products of any of the above;

(h) Leases and Rents. All leases, subleases or subsubleases, lettings, licenses, concessions or other agreements (whether written or oral) pursuant to which any Person is granted a possessory interest in, or right to use or occupy all or any portion of the Land (including, without limitation, any subsurface rights) and the Improvements, and every modification, amendment or other agreement relating to such leases, subleases, subsubleases, or other agreements entered into in connection with such leases, subleases, subsubleases, or other agreements· and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto, heretofore or hereafter entered into, whether before or after the filing by or against Borrower of any petition for relief under 11 U.S.C. §101 et seq., as the same may be amended from time to time (the "Bankruptcy Code"), including, without limitation, the Operating Lease (collectively, the "Leases"), and all right, title and interest of Borrower, its successors and assigns, therein and thereunder, including, without limitation, cash or securities deposited thereunder to secure the performance by the lessees of their obligations thereunder and all rents, additional rents, revenues, issues and profits (including all oil and gas or other mineral royalties and bonuses) from the Land and the Improvements, whether paid or accruing before or after the filing by or against Borrower of any petition for relief under the Bankruptcy Code (collectively, the "Rents"), and all proceeds from the sale or other disposition of the Leases and the right to receive and apply the Rents to the payment and performance of the Obligations, including the payment of the Debt;

(i) Condemnation Awards. All awards or payments, including interest thereon, which may heretofore and hereafter be made with respect to the Property, whether from the exercise of the right of eminent domain (including, but not limited to, any transfer made in lieu of or in anticipation of the exercise of such right), or for a change of grade, or for any other injury to or decrease in the value of the Property;

G) Insurance Proceeds. All proceeds in respect of the Property under any insurance policies covering the Property, including, without limitation, the right to receive and apply the proceeds of any insurance, judgments or settlements made in lieu thereof, for damage to the Property;

(k) Tax Certiorari. All refunds, rebates or credits in connection with any reduction in Taxes or Other Charges charged against the Property as a result of tax certiorari proceedings or any other applications or proceedings for reduction;

(1) Rights. The right, in the name and on behalf of Borrower, to appear in and defend any action or proceeding brought with respect to the Property and to commence any action or proceeding to protect the interest of Lender in the Property;

(m) Agreements. All agreements, contracts, certificates, instruments, franchises, permits, licenses, plans, specifications and other documents, now or hereafter entered into, and all rights therein and thereto, respecting or pertaining to the use, occupation, construction, management or operation of the Land and any part thereof and any Improvements or respecting any business or activity conducted on the Land and any part thereof and all right, title and interest of Borrower therein and thereunder, including, without limitation, the right, upon the happening of any default hereunder, to receive and collect any sums payable to Borrower thereunder;

(n) Trademarks. All tradenames, trademarks, service marks, logos, copyrights, goodwill, books and records and all other general intangibles relating to or used in connection with the operation of the Property;

(o) Accounts. All (i) accounts receivable (including, without limitation, any account, fees, charges or other payments arising from the use and occupancy of hotel rooms and/or other hotel or public facilities at the Property), (ii) credit card receivables and debit card receivables, and (iii) reserves, escrows and deposit accounts maintained by Borrower with respect to the Property, including, without limitation, all accounts established or maintained pursuant to the Loan Agreement, the Cash Management Agreement, the Clearing Account Agreement, the Management Agreement, the Operating Lease, or any other Loan Document, together with all deposits or wire transfers made to such accounts, and all cash, checks, drafts, certificates, securities, investment property, financial assets, instruments and other property held therein from time to time, and all proceeds, products, distributions, dividends and/or substitutions thereon and thereof;

(p) Uniform Commercial Code Property. All documents, instruments, chattel paper and intangibles, as the foregoing terms are defined in the Uniform Commercial Code, and general intangibles relating to the Property;

(q) Minerals. All minerals, oil, gas, shale, crops, timber, trees, shrubs, flowers and landscaping features and rights (including, without limitation, extracting rights) now or hereafter located on, under or above Land;

(r) OperatingLease. All right, title and interest and leasehold estate of Borrower as tenant under the Operating Lease and the leasehold estate created thereby in, inter alia, the Land and Improvements, together with all appurtenances thereto and any and all (i) extensions, renewals, modifications and option rights under the Operating Lease, (ii) credits to and deposits of Borrower under the Operating Lease and all other options, privileges and rights granted and demised to Borrower under the Operating Lease, (iii) rights or privileges of Borrower to terminate, cancel, surrender or merge the Operating Lease, and (iv) rights of Borrower in connection with any rejection by the lessor or its bankruptcy trustee of the Operating Lease under Section 365 of the Bankruptcy Code (as defined below) to (A) possession of any statutory term of years derived from or incident to the operation of Section 365(h)(l) of the Bankruptcy Code or (B) elect under Section 365(h)(l) to terminate or treat the Operating Lease as terminated;

(s) Proceeds. All proceeds of any of the foregoing, including, without limitation, proceeds of insurance and condemnation awards, whether in cash or in liquidation or other claims, or otherwise; and

(t) Other Rights. Any and all other rights of Borrower in and to the items set forth in Subsections (a) through (s) above.

AND, without limiting any of the other provisions of this Deed of Trust, to the extent permitted by applicable law, Borrower expressly grants to Lender, as secured party, a security interest in the portion of the Property which is or may be subject to the provisions of the Uniform Commercial Code which are applicable to secured transactions; it being understood and agreed that the Improvements and Fixtures are part and parcel of the Land (the Land, the Improvements and the Fixtures collectively referred to as the "Real Property") appropriated to the use thereof and, whether affixed or annexed to the Land or not, shall for the purposes of this Deed of Trust be deemed conclusively to be real estate and conveyed hereby.

Section 1.2 AssignmentofRents. Borrower hereby absolutely and unconditionally assigns to Lender and Trustee all of Borrower's right, title and interest in and to all current and future Leases and Rents; it being intended by Borrower that this assignment constitutes a present, absolute assignment and not an assignment for additional security only. Nevertheless, subject to the terms of the Assignment of Leases, the Cash Management Agreement, and Section 7.1(h) of this Deed of Trust, Lender grants to Borrower a revocable license to collect, receive, use and enjoy the Rents. Borrower shall hold the Rents, or a portion thereof sufficient to discharge all current sums due on the Debt, for use in the payment of such sums.

Section 1.3  Security Agreement. This Deed of Trust is both a real property deed of trust and a "security agreement" within the meaning of the Uniform Commercial Code. The Property includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Borrower in the Property. By executing and delivering this Deed of Trust, Borrower hereby grants to Lender, as security for the Obligations, a security interest in the Fixtures, the Equipment, the Personal Property and the other property constituting the Property to the full extent that the Fixtures, the Equipment, the Personal Property and such other property may be subject to the Uniform Commercial Code (said portion of the Property so subject to the Uniform Commercial Code being called the "Collateral"). If an Event of Default shall occur and be continuing, Lender, in addition to any other rights and remedies which it may have, shall have and may exercise immediately and without demand, any and all rights and remedies granted to a secured party upon default under the Uniform Commercial Code, including, without limiting the generality of the foregoing, the right to take possession of the Collateral or any part thereof, and to take such other measures as Lender may deem necessary for the care, protection and preservation of the Collateral. Upon request or demand of Lender after the occurrence and during the continuance of an Event of Default, Borrower shall, at its expense, assemble the Collateral and make it available to Lender at a convenient place (at the Land if tangible property) reasonably acceptable to Lender. Borrower shall pay to Lender on demand any and all expenses, including reasonable attorneys' fees and costs, incurred or paid by Lender in protecting its interest in the Collateral and in enforcing its rights hereunder with respect to the Collateral after the occurrence and during the continuance of an Event of Default. Any notice of sale, disposition or other intended action by Lender with respect to the Collateral sent to Borrower in accordance with

the provisions hereof at least ten (1O) Business Days prior to such action, shall, except as otherwise provided by applicable law, constitute reasonable notice to Borrower. The proceeds of any disposition of the Collateral, or any part thereof, may, except as otherwise required by applicable law, be applied by Lender to the payment of the Debt in such priority and proportions as Lender in its discretion shall deem proper. The principal place of business of Borrower (Debtor) is as set forth on page one hereof and the address of Lender (Secured Party) is as set forth on page one hereof.

Section 1.4  Fixture Filing.  Certain of the Property is or will become "fixtures" (as that term is defined in the Uniform Commercial Code) on the Land, described or referred to in this Deed of Trust, and this Deed of Trust, upon being filed for record in the real estate records of the city or county wherein such fixtures are situated, shall operate also as a financing statement naming Borrower as the Debtor and Lender as the Secured Party filed as a fixture filing in accordance with the applicable provisions of said Uniform Commercial Code upon such of the Property that is or may become fixtures. Borrower is the debtor with the address set forth above, Lender is the secured party with the address set forth above and the organizational identification number of Borrower is 7639759.

Section 1.5  Pledges of Monies Held.  Borrower hereby pledges to Lender any  and all monies now or hereafter held by Lender or on behalf of Lender in connection with the Loan, including, without limitation, any sums deposited in the Accounts (as defined in the Cash Management Agreement) and the Net Proceeds, as additional security for the Obligations until expended or applied as provided in this Deed of Trust.

CONDITIONS TO GRANT

TO HAVE AND TO HOLD the above granted and described Property unto and to the use and benefit of Trustee and its successors and assigns, forever;

IN TRUST, WITH POWER OF SALE, to secure payment to Lender of the Obligations at the time and in the manner provided for its payment in the Note and in this Deed of Trust.

PROVIDED, HOWEVER, these presents are upon the express condition that, if Borrower shall well and truly pay and perform the Obligations (including the payment of the Debt) at the time and in the manner provided in this Deed of Trust, the Note, the Loan Agreement and the other Loan Documents, and shall well and truly abide by and comply with each and every covenant and condition set forth herein and in the Note, the Loan Agreement and the other Loan Documents, these presents and the estate hereby granted shall cease, terminate and be void; provided, however, that Borrower's obligation to indemnify and hold harmless Lender pursuant to the provisions hereof shall survive any such payment or release.

ARTICLE2

DEBT AND OBLIGATIONS SECURED

Section 2.1 Obligations. This Deed of Trust and the grants, assignments and transfers made in Article 1 are given for the purpose of securing the Obligations, including, but not limited to, the Debt.

Section 2.2 Other Obligations. This Deed of Trust and the grants, assignments and transfers made in Article 1 are also given for the purpose of securing the following (collectively, the "Other Obligations"):

(a) the performance of all other obligations of Borrower contained herein;

(b) the performance of each obligation of Borrower contained in the Loan Agreement and in each other Loan Document; and

(c) the performance of each obligation of Borrower contained in any renewal, extension, amendment, modification, consolidation, change of, or substitution or replacement for, all or any part of the Note, the Loan Agreement or any other Loan Document.

Section 2.3 Debt and Other Obligations. Borrower's obligations  for  the payment of the Debt and the performance of the Other Obligations shall be referred to collectively herein as the "Obligations."

ARTICLE3 BORROWER COVENANTS

Borrower covenants and agrees that throughout the term of the Loan:

Section 3.1 Payment of Debt. Borrower will pay the Debt at the time and in the manner provided in the Loan Agreement, the Note and this Deed of Trust.

Section 3.2 Incorporationby Reference. All the covenants, conditions and agreements contained in (a) the Loan Agreement, (b) the Note, and (c) all and any of the other Loan Documents, are hereby made a part of this Deed of Trust to the same extent and with the same force as if fully set forth herein.

Section 3.3 Insurance. Borrower shall obtain and maintain, or cause to be maintained, in full force and effect at all times insurance with respect to Borrower and the Property as required pursuant to the Loan Agreement.

Section 3.4 Maintenance of Property. Borrower shall cause the Property to be maintained in a good and safe condition and repair. The Improvements, the Fixtures, the Equipment and the Personal Property shall not be removed, demolished or materially altered (except for normal replacement of the Fixtures, the Equipment or the Personal Property, tenant finish and refurbishment of the Improvements) without the consent of Lender or as otherwise may

be expressly permitted pursuant to the Loan Agreement. Borrower shall promptly repair, replace or rebuild any part of the Property which may be destroyed by any Casualty, or become damaged, worn or dilapidated or which may be affected by any Condemnation, and shall complete and pay for any structure at any time in the process of construction or repair on the Land.

Section 3.5 Waste. Borrower shall not commit or suffer any waste  of the Property, or make any change in the use of the Property which will in any way materially increase the risk of fire or other hazard arising out of the operation of the Property, or take any action that might invalidate or allow the cancellation of any Policy, or do or permit to be done thereon anything that may in any way materially impair the value of the Property or the security of this Deed of Trust. Borrower will not, without the prior written consent of Lender, permit any drilling or exploration for or extraction, removal, or production of any minerals from the surface or the subsurface of the Land, regardless of the depth thereof or the method of mining or extraction thereof.

Section 3.6Payment for Labor and Materials.

(a) Subject to Section 3.6(b) hereof, Borrower (i) will promptly pay when due all bills and costs for labor, materials and specifically fabricated materials ("Labor and Material Costs") incurred in connection with the Property, (ii) never permit to exist beyond the due date thereof in respect of the Property, or any part thereof, any Lien or security interest, even though inferior to the Liens and security interests created hereby and by the other Loan Documents,  and

(iii) never permit to be created or exist in respect of the Property or any part thereof any other or additional Lien or security interest other than the Liens or security interests created hereby and by the other Loan Documents, except for the Permitted Encumbrances.

(b) After prior written notice to Lender, Borrower, at its own expense, may contest by appropriate legal proceeding, promptly initiated and conducted at all times in good faith and with due diligence, the amount or validity or application in whole or in part of any of the Labor and Material Costs, provided that: (i) no Event of Default has occurred and is continuing under the Loan Agreement, the Note, this Deed of Trust or any of the other Loan Documents; (ii) Borrower is permitted to do so under the provisions of any other mortgage, deed of trust or deed to secure debt affecting the Property; (iii) such proceeding shall suspend the collection of the Labor and Material Costs from Borrower and from the Property or Borrower shall have paid all of the Labor and Material Costs under protest; (iv) such proceeding shall be permitted under and be conducted in accordance with the provisions of any other instrument to which Borrower is subject and shall not constitute a default thereunder; (v) neither the Property nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, canceled or lost; (vi) Borrower shall have furnished to Lender either (A) a cash deposit equal to 110% of the amount of such contested Labor and Material Costs, or (B) an indemnity bond satisfactory to Lender with a surety satisfactory to Lender, in the amount of such Labor and Material Costs, plus in either of the foregoing cases a reasonable additional sum to pay all costs, interest and penalties that may be imposed or incurred in connection therewith; (vii) such contest by Borrower shall not materially and adversely affect the ownership, use or occupancy of the Property; and (viii) such contest by Borrower shall not subject Lender or Borrower to civil or criminal liability (other than the civil liability of Borrower for the amount of the Labor and Material Costs in question plus interest).

(c) Notwithstanding the foregoing, it shall not be a default under the terms and conditions of this Section 3.6 if, in respect of a mechanic's or materialman's lien asserted against the Property for Labor and Material Costs (each, a "Mechanic's Lien"): (i) Borrower shall have provided Lender with written notice of such Mechanic's Lien within five (5) days of obtaining knowledge thereof; (ii) within five (5) days of obtaining knowledge of the filing of any Mechanic's Lien, Borrower shall have furnished to Lender either (A) a cash deposit equal to 110% of the amount of the Labor and Material Costs which are the subject of such Mechanic's Lien, or (B) an indemnity bond satisfactory to Lender with a surety satisfactory to Lender, in the amount of the Labor and Material Costs which are the subject of such Mechanic's Lien, plus in each instance a reasonable additional sum to pay all costs, interest and penalties that may be imposed or incurred in connection therewith; (iii) no Event of Default shall have occurred and be continuing under the Loan Agreement, the Note, this Deed of Trust or any of the other Loan Documents; (iv) Borrower shall at all times diligently prosecute the discharge of such Mechanic's Lien, and shall update Lender regarding the status of same from time to time upon Lender's request; (v) neither the Property nor any part thereof nor any interest therein shall be in danger of being sold, forfeited, terminated, canceled or lost; (vi) Borrower shall preclude the collection of, or other realization upon, any contested amount from the Property or any revenues from or interest in the Property;

(vii) such contest by Borrower shall not materially and adversely affect the ownership, use or occupancy of the Property, (viii) such contest by Borrower shall not subject Lender or Borrower to civil or criminal liability (other than the civil liability of Borrower for the amount of the Lien in question plus interest); and (ix) Borrower has not consented to such Mechanic's Lien.

Section 3.7 Performance of Other Agreements. Borrower shall observe and perform each and every term, covenant and provision to be observed or performed by Borrower pursuant to the Loan Agreement, any other Loan Document and any other agreement or recorded instrument affecting or pertaining to the Property, and any amendments, modifications or changes thereto.

ARTICLE4 OBLIGATIONS AND RELIANCES

Section 4.1 Relationship of Borrower and Lender. The relationship between

Borrower and Lender is solely that of debtor and creditor, and Lender has no fiduciary or other special relationship with Borrower, and no term or condition of any of the Loan Agreement, the Note, this Deed of Trust or the other Loan Documents shall be construed so as to deem the relationship between Borrower and Lender to be other than that of debtor and creditor.

Section 4.2 No Reliance on Lender. The general partner of Borrower is experienced in the ownership and operation of properties similar to the Property, and Borrower and Lender are relying solely upon such expertise and business plan in connection with the ownership and operation of the Property. Borrower is not relying on Lender's expertise, business acumen or advice in connection with the Property.

Section 4.3 No Lender Obligations.

(a) Notwithstanding the provisions of Subsections l.l(h) and (m) or Section 1.2, Lender is not undertaking the performance of (i) any obligations under the Leases, or (ii) any obligations with respect to any other agreements, contracts, certificates, instruments, franchises, permits, trademarks, licenses or other documents.

(b) By accepting or approving anything required to be observed, performed or fulfilled or to be given to Lender pursuant to this Deed of Trust, the Loan Agreement, the Note or the other Loan Documents, including, without limitation, any officer's certificate, balance sheet, statement of profit and loss or other financial statement, survey, appraisal or insurance policy, Lender shall not be deemed to have warranted, consented to, or affirmed the sufficiency, legality or effectiveness of same, and such acceptance or approval thereof shall not constitute any warranty or affirmation with respect thereto by Lender.

Section 4.4 Reliance.  Borrower recognizes and acknowledges that in accepting the Loan Agreement, the Note, this Deed of Trust and the other Loan Documents, Lender is expressly and primarily relying on the truth and accuracy of the warranties and representations set forth in Article 3 of the Loan Agreement without any obligation to investigate the Property and notwithstanding any investigation of the Property by Lender; that such reliance existed on the part of Lender prior to the date hereof; that the warranties and representations are a material inducement to Lender in making the Loan; and that Lender would not be willing to make the Loan and accept this Deed of Trust in the absence of the warranties and representations as set forth in Article 3 of the Loan Agreement.

ARTICLES FURTHER ASSURANCES

Section 5.1 Recording of Deed of Trust, Etc. Borrower forthwith upon the

execution and delivery of this Deed of Trust and thereafter, from time to time, will cause this Deed of Trust and any of the other Loan Documents creating a Lien or security interest or evidencing the Lien hereof upon the Property and each instrument of further assurance to be filed, registered or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect and perfect the Lien or security interest hereof upon, and the interest of Lender in, the Property. Borrower will pay all taxes, filing, registration or recording fees, and all expenses incident to the preparation, execution, acknowledgment and/or recording of the Note, this Deed of Trust, the other Loan Documents, any note, deed of trust or mortgage supplemental hereto, any security instrument with respect to the Property and any instrument of further assurance, and any modification or amendment of any of the foregoing documents, and all federal, state, county and municipal taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Deed of Trust, any deed of trust or mortgage supplemental hereto, any security instrument with respect to the Property or any instrument of further assurance, and any modification or amendment of any of the foregoing documents, except where prohibited by law so to do.

Section 5.2 Further Acts, Etc. Borrower will, at the cost  of Borrower,  and without expense to Lender, do, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, deeds of trust, mortgages, assignments, notices of assignments, transfers and

assurances as Lender shall, from time to time, reasonably require, for the better assuring, conveying, assigning, transferring, and confirming unto Lender and Trustee the property and rights hereby deeded, granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and transferred or intended now or hereafter so to be, or which Borrower may be or may hereafter become bound to convey or assign to Trustee or Lender, or for carrying out the intention or facilitating the performance of the terms of this Deed of Trust or for filing, registering or recording this Deed of Trust, or for complying with all Legal Requirements. Borrower, on demand, will execute and deliver, and in the event it shall fail to so execute and deliver, hereby authorizes Lender to execute in the name of Borrower or without the signature of Borrower to the extent Lender may lawfully do so, one or more financing statements to evidence more effectively the security interest of Lender in the Property. Borrower grants to Lender an irrevocable power of attorney coupled with an interest for the purpose of exercising and perfecting any and all rights and remedies available to Lender at law and in equity, including, without limitation, such rights and remedies available to Lender pursuant to this Section 5.2.

Section 5.3Changes in Tax, Debt, Credit and Documentary Stamp Laws.

(a) If any law is enacted or adopted or amended after the date of this Deed of Trust which deducts the Debt from the value of the Property for the purpose of taxation or which imposes a tax, either directly or indirectly, on the Debt or Lender's interest in the Property, Borrower will pay the tax, with interest and penalties thereon, if any. If Lender is advised by counsel chosen by it that the payment of tax by Borrower would be unlawful or taxable to Lender or unenforceable or provide the basis for a defense of usury, then Lender shall have the option by written notice of not less than one hundred twenty (120) days to declare the Debt immediately due and payable.

(b) Borrower will not claim or demand or be entitled to any credit or credits on account of the Debt for any part of the Taxes or Other Charges assessed against the Property, or any part thereof, and no deduction shall otherwise be made or claimed from the assessed value of the Property, or any part thereof, for real estate tax purposes by reason of this Deed of Trust or the Debt. If such claim, credit or deduction shall be required by law, Lender shall have the option, by written notice of not less than one hundred twenty (120) days, to declare the Debt immediately due and payable.

(c) If at any time the United States of America, any State thereof or any subdivision of any such State shall require revenue or other stamps to be affixed to the Note, this Deed of Trust, or any of the other Loan Documents or shall impose any other tax or charge on the same, Borrower will pay for the same, with interest and penalties thereon, if any.

Section 5.4 Splitting of Deed of Trust. This Deed of Trust and the Note may, at any time until the same shall be fully paid and satisfied, at the sole election of Lender, be split or divided into two or more notes and two or more deeds of trust, in such denominations as Lender shall determine in its sole discretion (subject to the following sentence), each of which shall cover all or a portion of the Property to be more particularly described therein. To that end, Borrower, upon written request of Lender, shall execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered by the then owner of the Property, to Lender and/or its designee or designees, substitute notes and deeds of trust in such principal amounts, aggregating not more than

the then unpaid principal amount of the Note, and containing terms, provisions and clauses similar to those contained herein and in the Note, and such other documents and instruments as may be required by Lender.

Section 5.5  Replacement Documents.  Upon receipt of an affidavit of an officer of Lender as to the loss, theft, destruction or mutilation of the Note or any other Loan Document which is not of public record, and, in the case of any such mutilation, upon surrender and cancellation of the Note or such other Loan Document, Borrower will issue, in lieu thereof, a replacement Note or a replacement of such other Loan Document, dated the date of such lost, stolen, destroyed or mutilated Note or other Loan Document in the same principal amount thereof and otherwise of like tenor.

ARTICLE6

DUE ON SALE/ENCUMBRANCE

Section 6.1 LenderReliance.  Borrower  acknowledges  that  Lender  has examined and relied on the experience of Borrower and Fee Owner and their general partners, members, principals and (if Borrower is a trust) beneficial owners in owning and operating properties such as the Property in agreeing to make the Loan, and will continue to rely on Borrower's and Fee Owner's ownership of the Property as a means of maintaining the value of the Property as security for the payment and performance of the Obligations, including the repayment of the Debt. Borrower acknowledges that Lender has a valid interest in maintaining the value of the Property so as to ensure that, should Borrower default in the payment and/or performance of the Obligations, including the repayment of the Debt, Lender can recover the Debt by a sale of the Property.

Section 6.2 No Transfer. Borrower shall not permit or suffer any Transfer to  occur except in accordance with the terms of the Loan Agreement.

ARTICLE7

RIGHTS AND REMEDIES UPON DEFAULT

Section 7.1 Remedies. Upon the occurrence and during the continuance of any Event of Default, Borrower agrees that Lender or Trustee, or both may take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Borrower and in and to the Property, including, but not limited to, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such order as Lender or Trustee may determine, in their sole discretion, without impairing or otherwise affecting the other rights and remedies of Lender or Trustee:

(a) declare the entire unpaid Debt to be immediately due and payable;

(b) institute proceedings, judicial or otherwise, for the complete foreclosure of this Deed of Trust under any applicable provision of law, in which case the Property or any interest therein may be sold for cash or upon credit in one or more parcels or in several interests or portions and in any order or manner;

(c) with or without entry, to the extent permitted and pursuant to the procedures provided by applicable law, institute proceedings for the partial foreclosure of this Deed of Trust for the portion of the Debt then due and payable, subject to the continuing lien and security interest of this Deed of Trust for the balance of the Obligations not then due, unimpaired and without loss of priority;

(d) sell for cash or upon credit the Property or any part thereof and all estate, claim, demand, right, title and interest of Borrower therein and rights of redemption thereof, pursuant to power of sale or otherwise, at one or more sales, as an entirety or in parcels, at such time and place, upon such terms and after such notice thereof, all as may be required or permitted by law; and, without limiting the foregoing:

(i) In connection with any sale or sales hereunder, Lender or the Trustee shall be entitled to elect to treat any of the Property which consists of (x) a right in action, or (y) property that can be severed from the Real Property covered hereby, or (z) any improvements (without causing structural damage thereto), as if the same were personal property, and dispose of the same in accordance with applicable law, separate and apart from the sale of the Real Property. Where the Property consists of Real Property, Personal Property, Equipment or Fixtures, whether or not such Personal Property or Equipment is located on or within the Real Property, Lender and/or the Trustee shall be entitled to elect to exercise its rights and remedies against any or all of the Real Property, Personal Property, Equipment and Fixtures in such order and manner as is now or hereafter permitted by applicable law;

(ii) Lender and/or the Trustee shall be entitled to elect to proceed against any or all of the Real Property, Personal Property, Equipment and Fixtures in any manner permitted under applicable law; and if Lender and/or the Trustee so elects pursuant to applicable law, the power of sale herein granted shall be exercisable with respect to all or any of the Real Property, Personal Property, Equipment and Fixtures covered hereby, as designated by Lender and/or the Trustee and Trustee is hereby authorized and empowered to conduct any such sale of any Real Property, Personal Property, Equipment and Fixtures in accordance with the procedures applicable to Real Property;

(iii) Should Lender and/or the Trustee elect to sell any portion of the Property which is Real Property or which is Personal Property, Equipment or Fixtures that the Lender and/or the Trustee has elected under applicable law to sell together with Real Property in accordance with the laws governing a sale of the Real Property, Lender and/or the Trustee shall give such notice of the occurrence of an Event of Default, if any, and election to sell such Property, each as may then be required by law. Thereafter, upon the expiration of such time and the giving of such notice of sale as may then be required by law, subject to the terms hereof and of the other Loan Documents, and without the necessity of any demand on Borrower, Lender and/or the Trustee at the time and place specified in the notice of sale, shall sell such Real Property or part thereof at public auction to the highest bidder for cash in lawful money of the United States. Lender or the Trustee may from time to time postpone any sale hereunder by public announcement thereof at the time and place noticed for any such sale; and

(iv) If the Property consists of several lots, parcels or items of property, Lender or the Trustee shall, subject to applicable law, (A) designate the order in which such lots, parcels or items shall be offered for sale or sold, or (B) elect to sell such lots, parcels or items through a single sale, or through two or more successive sales, or in any other manner Lender or the Trustee designates. Any Person, other than the Trustee, including Borrower or Lender, may purchase at any sale hereunder. Should Lender or the Trustee desire that more than one sale or other disposition of the Property be conducted, Lender or the Trustee shall, subject to applicable law, cause such sales or dispositions to be conducted simultaneously, or successively, on the same day, or at such different days or times and in such order as Lender or the Trustee may designate, and no such sale shall terminate or otherwise affect the Lien of this Deed of Trust on any part of the Property not sold until all the Obligations have been satisfied in full. In the event Lender or the Trustee elects to dispose of the Property through more than one sale, except as otherwise provided by applicable law, Borrower agrees to pay the costs and expenses of each such sale and of any judicial proceedings wherein such sale may be made;

(e) institute an action, suit or proceeding in equity for the specific performance of any covenant, condition or agreement contained herein, in the Note, in the Loan Agreement or in the other Loan Documents;

(f) recover judgment on the Note either before, during or after any proceedings for the enforcement of this Deed of Trust or the other Loan Documents;

(g) apply for the appointment of a receiver, trustee, liquidator or conservator of the Property, without notice and without regard for the adequacy of the security for the Debt and without regard for the solvency of Borrower, any guarantor or indemnitor with respect to the Loan or any Person otherwise liable for the payment of the Debt or any part thereof;

(h) the license granted to Borrower under Section 1.2 hereof shall automatically be revoked and Lender may enter into or upon the Property, either personally or by its agents, nominees or attorneys and dispossess Borrower and its agents and servants therefrom, without liability for trespass, damages or otherwise and exclude Borrower and its agents or servants wholly therefrom, and take possession of all books, records and accounts relating thereto and Borrower agrees to surrender possession of the Property and of such books, records and accounts to Lender upon demand, and thereupon Lender may (i) use, operate, manage, control, insure, maintain, repair, restore and otherwise deal with all and every part of the Property and conduct the business thereat; (ii) complete any construction on the Property in such manner and form as Lender deems advisable; (iii) make alterations, additions, renewals, replacements and improvements to or on the Property; (iv) exercise all rights and powers of Borrower with respect to the Property, whether in the name of Borrower or otherwise, including, without limitation, the right to make, cancel, enforce or modify Leases, obtain and evict tenants and demand, sue for, collect and receive all Rents of the Property and every part thereof; require Borrower to pay monthly in advance to Lender, or any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupation of such part of the Property as may be occupied by Borrower; (vi) require Borrower to vacate and surrender possession of the Property to Lender or to such receiver and, in default thereof, Borrower may be evicted by summary proceedings or otherwise; and (vii) apply the receipts from the Property to the payment and performance of the Obligations (including, without

limitation, the payment of the Debt), in such order, priority and proportions as Lender shall deem appropriate in its sole discretion after deducting therefrom all expenses (including reasonable attorneys' fees and costs) incurred in connection with the aforesaid operations and all amounts necessary to pay the Taxes, Other Charges, Insurance Premiums and other expenses in connection with the Property, as well as just and reasonable compensation for the services of Lender, its counsel, agents and employees;

(i) exercise any and all rights and remedies granted to a secured party upon default under the Uniform Commercial Code, including, without limiting the generality of the foregoing: (i) the right to take possession of the Fixtures, the Equipment and/or the Personal Property, or any part thereof, and to take such other measures as Lender may deem necessary for the care, protection and preservation of the Fixtures, the Equipment and the Personal Property, and

(ii) request Borrower, at its sole cost and expense, to assemble the Fixtures, the Equipment and/or the Personal Property and make it available to Lender at a convenient place acceptable to Lender. Any notice of sale, disposition or other intended action by Lender with respect to the Fixtures, the Equipment and/or the Personal Property sent to Borrower in accordance with the provisions hereof at least five (5) days prior to such action, shall constitute commercially reasonable notice to Borrower;

G) apply any sums then deposited or held in escrow or otherwise by or on behalf of Lender in accordance with the terms of the Loan Agreement, this Deed of Trust or any other Loan Document to the payment of the following items in any order in its sole discretion:

(i) Taxes and Other Charges;

(ii) Insurance Premiums;

(iii) Interest on the unpaid principal balance of the Note;

(iv) Amortization of the unpaid principal balance of the Note; and/or

(v) All other sums payable pursuant to the Note, the Loan Agreement, this Deed of Trust and the other Loan Documents, including, without limitation, the Prepayment Fee, if applicable, and advances made by Lender pursuant to the terms of this Deed of Trust;

(k) pursue such other remedies as Lender may have under applicable law;

and/or

(1) apply the undisbursed balance of any Net Proceeds Deficiency deposit,

together with interest thereon, to the payment of the Debt in such order, priority and proportions as Lender shall deem to be appropriate in its sole discretion.

In the event of a sale, by foreclosure, power of sale or otherwise, of less than all of Property, this Deed of Trust shall continue as a Lien and security interest on the remaining portion of the Property unimpaired and without loss of priority.

Section 7.2   Application of Proceeds. The purchase money proceeds and avails of any disposition of the Property or any part thereof, or any other sums collected by Lender pursuant to the Note, this Deed of Trust or the other Loan Documents, may be applied by Lender to the payment of the Obligations in such priority and proportions as Lender in its discretion shall deem proper, to the extent consistent with law.

Section 7.3 Right to Cure Defaults. Upon the occurrence and during the continuance of any Event of Default or if Borrower fails to make any payment or to do any act as herein provided, Lender may, but without any obligation to do so and without notice to or demand on Borrower, and without releasing Borrower from any obligation hereunder, make or do the same in such manner and to such extent as Lender may deem necessary to protect the security hereof. Lender is authorized to enter upon the Property for such purposes, or appear in, defend or bring any action or proceeding to protect its interest in the Property or to foreclose this Deed of Trust or to collect the Debt, and the cost and expense thereof (including reasonable attorneys' fees and expenses, to the extent permitted by law), with interest as provided in this Section 7.3, shall constitute a portion of the Debt and shall be due and payable to Lender upon demand. All such costs and expenses incurred by Lender in remedying any Default or Event of Default or such failed payment or act or in appearing in, defending or bringing any such action or proceeding, as hereinabove provided, shall bear interest at the Default Rate, for the period beginning on the first day after notice from Lender that such cost or expense was incurred and continuing until the date of payment to Lender. All such costs and expenses incurred by Lender together with interest thereon calculated at the Default Rate shall be deemed to constitute a portion of the Debt and to be secured by this Deed of Trust and the other Loan Documents and shall be immediately due and payable upon demand by Lender therefor.

Section 7.4 Actions and Proceedings. Lender or Trustee shall have the right to appear in and defend any action or proceeding brought with respect to the Property and to bring any action or proceeding, in the name and on behalf of Borrower, which Lender, in its sole discretion, decides should be brought to protect its interest in the Property.

Section 7.5 Recovery of Sums Required to be Paid. Lender shall have the right from time to time to take action to recover any sum or sums which constitute a part of the Debt as the same become due, without regard to whether or not the balance of the Debt shall be due, and without prejudice to the right of Lender or Trustee thereafter to bring an action of foreclosure, or any other action, for any Default or Event of Default by Borrower existing at the time such earlier action was commenced.

Section 7.6 Examination of Books and Records. At reasonable times and upon reasonable notice (which may be given verbally), Lender, its agents, accountants and attorneys, shall have the right to examine the records, books and management and other papers of Borrower which reflect upon its financial condition, either at the Property or at any office regularly maintained by Borrower where such books and records are located. Lender and its agents shall have the right to make copies and extracts from the foregoing records and other papers. In addition, at reasonable times and upon reasonable notice (which may be given verbally), Lender, its agents, accountants and attorneys shall have the right to examine and audit the books and records of Borrower pertaining to the income, expenses and operation of the Property during reasonable business hours at any office of Borrower where the books and records are located. This Section

11.6 shall apply throughout the term of the Note and without regard to whether an Event of Default has occurred or is continuing.

Section 7.7Other Rights, Etc.

(a) The failure of Lender or Trustee to insist upon strict performance of any term hereof shall not be deemed to be a waiver of any term of this Deed of Trust. Borrower shall not be relieved of Borrower's obligations hereunder by reason of (i) the failure of Lender to comply with any request of Borrower or any guarantor or indemnitor with respect to the Loan to take any action to foreclose this Deed of Trust or otherwise enforce any of the provisions hereof or of the Note or the other Loan Documents, (ii) the release, regardless of consideration, of the whole or any part of the Property, or of any Person liable for the Obligations or any portion thereof, or (iii) any agreement or stipulation by Lender extending the time of payment or otherwise modifying or supplementing the terms of the Note, this Deed of Trust or the other Loan Documents.

(b) It is agreed that the risk of loss or damage to the Property is on Borrower, and Lender shall have no liability whatsoever for any decline in value of the Property, for failure to maintain the Policies, or for failure to determine whether insurance in force is adequate as to the amount of risks insured. Possession by Lender shall not be deemed an election of judicial relief, if any such possession is requested or obtained, with respect to any Property or collateral not in Lender's possession.

(c) Lender may resort for the payment and performance of the Obligations (including, but not limited to, the payment of the Debt) to any other security held by Lender in such order and manner as Lender, in its discretion, may elect. Lender or Trustee may take action to recover the Debt, or any portion thereof, or to enforce the Other Obligations or any covenant hereof, without prejudice to the right of Lender or Trustee thereafter to foreclose this Deed of Trust. The rights of Lender or Trustee under this Deed of Trust shall be separate, distinct and cumulative and none shall be given effect to the exclusion of the others. No act of Lender or Trustee shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision. Neither Lender nor Trustee shall be limited exclusively to the rights and remedies herein stated but shall be entitled to every right and remedy now or hereafter afforded at law or in equity.

Section 7.8 Right to Release Any Portion of the Property. Lender may release any portion of the Property for such consideration as Lender may require without, as to the remainder of the Property, in any way impairing or affecting the Lien or priority of this Deed of Trust, or improving the position of any subordinate lienholder with respect thereto, except to the extent that the Debt shall have been reduced by the actual monetary consideration, if any, received by Lender for such release, and Lender may accept by assignment, pledge or otherwise any other property in place thereof as Lender may require without being accountable for so doing to any other lienholder. This Deed of Trust shall continue as a Lien and security interest in the remaining portion of the Property.

Section 7.9 Violation of Laws. If the Property is not in full compliance with all Legal Requirements, Lender may impose additional requirements upon Borrower in connection herewith, including, without limitation, monetary reserves or financial equivalents.

Section 7.10Recourse  and  Choice of Remedies.Notwithstanding any other provision  of this Deed  of Trust  or the Loan Agreement,  including,  without limitation,  Section

11.22 of the Loan Agreement, Lender and the other Indemnified Parties (as hereinafter defined) are entitled to enforce the obligations of Borrower and any guarantor or indemnitor of the Loan contained in Sections 8.1, 8.2 and 8.3 herein and Section 9.2 of the Loan Agreement without first resorting to or exhausting any security or collateral and without first having recourse to the Note or any of the Property, through foreclosure, exercise of a power of sale or acceptance of a deed in lieu of foreclosure or otherwise, and in the event Lender commences a foreclosure action against the Property, or exercises the power of sale pursuant to this Deed of Trust, Lender shall be entitled to pursue a deficiency judgment with respect to such obligations against Borrower and any guarantor or indemnitor with respect to the Loan. The provisions of Sections 8.1, 8.2 and ,U herein and Section 9.2 of the Loan Agreement are exceptions to any non-recourse or exculpation provisions in the Loan Agreement, the Note, this Deed of Trust and/or the other Loan Documents, and Borrower and any guarantor or indemnitor with respect to the Loan are fully and personally liable for the Obligations set forth in said Sections 8.1, 8.2 and 8.3 herein and Section 9.2 of the Loan Agreement. The liability of Borrower and any guarantor or indemnitor with respect to the Obligations set forth in Sections 8.1, 8.2 and 8.3 herein and Section 9.2 of the Loan Agreement is not limited to the original principal amount of the Note. Notwithstanding the foregoing, nothing herein shall inhibit or prevent Lender from foreclosing or exercising a power of sale pursuant to this Deed of Trust or exercising any other rights and remedies pursuant to the Loan Agreement, the Note, this Deed of Trust and/or the other Loan Documents, whether simultaneously with foreclosure proceedings or in any other sequence. A separate action or actions may be brought and prosecuted against Borrower with respect to the Obligations set forth in Sections 8.1, 8.2 and

8.3 herein and Section 9.2 of the Loan Agreement, whether or not an action is brought against any

other Person and whether or not any other Person is joined in such action or actions. In addition, Lender shall have the right but not the obligation to join and participate in, as a party if it so elects, any administrative or judicial proceedings or actions initiated in connection with any matter addressed in the Environmental Indemnity.

Section 7.11 Right of Entry. Upon reasonable notice (which may be given verbally) to Borrower, Lender and its agents shall have the right to enter and inspect the Property at all reasonable times.

ARTICLES INDEMNIFICATION

Section 8.1 General Indemnification. Borrower shall, at its sole cost and

expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all claims, suits, liabilities (including, without limitation, strict liabilities), actions, proceedings, obligations, debts, damages, losses, costs, expenses, diminutions in value, fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in settlement, punitive damages, foreseeable and unforeseeable consequential damages, of whatever kind or nature (including, but not limited to, reasonable attorneys' fees and other costs of defense) (collectively, the "Losses"), imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any one or more of the following:

(a) ownership of this Deed of Trust, the Property or any interest therein or receipt of any Rents;

(b) any amendment to, or restructuring of, the Obligations (including, but not limited to, the Debt) and the Note, the Loan Agreement, this Deed of Trust and/or any other Loan Document; (c) any and all lawful action that may be taken by Lender in connection with the enforcement of the provisions of this Deed of Trust or the Loan Agreement or the Note or any of the other Loan Documents, whether or not suit is filed in connection with same, or in connection with Borrower, any guarantor or indemnitor and/or any partner, member, joint venturer or shareholder thereof becoming a party to a voluntary or involuntary federal or state bankruptcy, insolvency or similar proceeding; (d) any accident, injury to or death of persons or loss of or damage to property occurring in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (e) any use, non-use or condition in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (f) any failure on the part of Borrower to perform or to be in compliance with any of the terms of this Deed of Trust; (g) performance of any labor or services or the furnishing of any materials or other property in respect of the Property or any part thereof; (h) the failure of any Person to file timely with the Internal Revenue Service an accurate Form 1099-B, Statement for Recipients of Proceeds from Real Estate, Broker and Barter Exchange Transactions, which may be required in connection with this Deed of Trust, or to supply a copy thereof in a timely fashion to the recipient of the proceeds of the transaction in connection with which this Deed of Trust is made; (i) any failure of the Property to be in compliance with any

Legal  Requirements;  G) the enforcement  by any  of the Indemnified  Parties  of the   provisions  of

this Article 8; (k) any and all claims and demands whatsoever which may be asserted against Lender by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants or agreements contained in any Lease; (1) the payment of any commission, charge or brokerage fee to anyone claiming through Borrower (or any affiliate thereof) which may be payable in connection with the funding of the Loan; or (m) any misrepresentation made by Borrower in this Deed of Trust or in any other Loan Document; provided, however, that Borrower shall not be liable for the payment of such Losses to the extent that the same are the result of the gross negligence or willful misconduct of Lender.. Any amounts payable to Lender by reason of the application of this Section 8.1 shall become immediately due and payable and shall bear interest at the Default Rate from the date any Loss is sustained by Lender until such amounts and any applicable interest are paid. For purposes of this Article 8, the term "Indemnified Parties" means (A) Lender and any Person who is or will have been involved in the origination of the Loan, (B) any Person who is or will have been involved in the servicing of the Loan secured hereby, (C) any Person in whose name the encumbrance created by this Deed of Trust is or will have been recorded, (D) Persons who may hold or acquire or will have held a full or partial interest in the Loan (including, but not limited to, investors or prospective investors in the Securities, as well as custodians, trustees and other fiduciaries who hold, have held or may hold a full or partial interest in the Loan secured hereby for the benefit of third parties), and (E) the respective directors, officers, shareholders, partners, members, employees, agents, servants, representatives, contractors, subcontractors, affiliates, subsidiaries, participants, successors and assigns of any and all of the foregoing (including, but not limited to, any other Person who holds or acquires or will have held a participation or other full or partial interest in the Loan, whether during the term of the Loan or as a part of or following a foreclosure of the Loan, and including, but not limited to, any successors by merger, consolidation or acquisition of all or a substantial portion of Lender's assets and business).

Section 8.2 Deed of Trust and/or Intangible Tax. Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all Losses imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any tax on the making and/or recording of this Deed of Trust, the Note or any of the other Loan Documents, but excluding any income, franchise or other similar taxes.

Section 8.3 ERISA Indemnification. Borrower shall, at its sole  cost  and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all Losses (including, without limitation, reasonable attorneys' fees and costs incurred in the investigation, defense and/or settlement of Losses incurred in correcting any prohibited transaction or in the sale of a prohibited loan, and in obtaining arty individual prohibited transaction exemption under ERISA that may be required, in Lender's sole discretion) that Lender may incur, directly or indirectly, as a result of a default under Section 4.2.13 of the Loan Agreement.

Section 8.4 Duty to Defend; Attorneys' Fees and Other Fees  and Expenses. Upon written request by any Indemnified Party, Borrower shall defend such Indemnified Party (if requested by any Indemnified Party, in the name of the Indemnified Party) by attorneys and other professionals approved by the Indemnified Parties. Notwithstanding the foregoing, if the defendants in any such claim or proceeding include both Borrower and any Indemnified Party and Borrower and such Indemnified Party shall have reasonably concluded that there are any legal defenses available to it and/or other Indemnified Parties that are different from or in addition to those available to Borrower, such Indemnified Party shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such Indemnified Party. Upon demand, Borrower shall pay or, in the sole and absolute discretion of the Indemnified Parties, reimburse, the Indemnified Parties for the payment of the reasonable fees and disbursements of attorneys, engineers, environmental consultants, laboratories and other professionals in connection therewith.

ARTICLE9 WAIVERS

Section 9.1 Waiver of Counterclaim. To the extent permitted by applicable law,

Borrower hereby waives the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against it by Lender arising out of or in any way connected with this Deed of Trust, the Loan Agreement, the Note, any of the other Loan Documents or the Obligations.

Section 9.2 Marshallingand Other Matters. To the extent permitted  by applicable law, Borrower hereby waives the benefit of all appraisement, valuation, stay, extension, reinstatement and redemption laws now or hereafter in force and all rights of marshalling in the event of any sale hereunder of the Property or any part thereof or any interest therein. Further, to the extent permitted by applicable law, Borrower hereby expressly waives any and all rights of redemption from sale under any order or decree of foreclosure of this Deed of Trust on behalf of

Borrower, and on behalf of each and every Person acquiring any interest in or title to the Property subsequent to the date of this Deed of Trust.

Section 9.3 Waiver of Notice. To the extent permitted by applicable law, Borrower shall not be entitled to any notices of any nature whatsoever from Lender or Trustee, except with respect to matters for which this Deed of Trust or the Loan Documents specifically and expressly provide for the giving of notice by Lender or Trustee to Borrower, and except with respect to matters for which Lender or Trustee is required by applicable law to give notice, and Borrower hereby expressly waives the right to receive any notice from Lender or Trustee with respect to any matter for which this Deed of Trust does not specifically and expressly provide for the giving of notice by Lender or Trustee to Borrower.

Section 9.4 Waiver of Statute of Limitations. To the extent permitted by applicable law, Borrower hereby expressly waives and releases its right to plead any statute of limitations as a defense to the payment and performance of the Obligations (including, without limitation, the payment of the Debt).

Section 9.5 Waiver of Jury Trial. BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND FOREVER WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST, WITH REGARD TO THE NOTE, THIS DEED OF TRUST OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. TIDS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.

Section 9.6 Survival.  The indemnifications made pursuant  to Article  8 herein and the representations and warranties, covenants, and other obligations arising under the Environmental Indemnity, shall continue indefinitely in full force and effect and shall survive and shall in no way be impaired by (a) any satisfaction, release or other termination of this Deed of Trust or any other Loan Document, (b) any assignment or other transfer of all or any portion of this Deed of Trust or any other Loan Document or Lender's interest in the Property (but, in such case, such indemnifications shall benefit both the Indemnified Parties and any such assignee or transferee), (c) any exercise of Lender's rights and remedies pursuant hereto, including, but not limited to, foreclosure • or acceptance of a deed in lieu of foreclosure, any exercise of any rights and remedies pursuant to the Loan Agreement, the Note or any of the other Loan Documents, any transfer of all or any portion of the Property (whether by Borrower or by Lender following foreclosure or acceptance of a deed in lieu of foreclosure or at any other time), (d) any amendment to this Deed of Trust, the Loan Agreement, the Note or any other Loan Document, and/or (e) any act or omission that might otherwise be construed as a release or discharge of Borrower from the Obligations or any portion thereof.

ARTICLE 10 EXCULPATION

The provisions of Section 11.22 of the Loan Agreement are hereby incorporated by

reference into this Deed of Trust to the same extent and with the same force as if fully set forth herein.

ARTICLE 11 NOTICES

All notices or other written communications hereunder shall be delivered in

accordance with Section 11.6 of the Loan Agreement and the following:

If to Trustee:Kathleen J. Wu, Esq.

Hunton Andrews Kurth LLP 1445 Ross Avenue, Suite 3700

Dallas, Texas 75202

ARTICLE 12 APPLICABLE LAW

Section 12.1 GoverningLaw. THIS DEED OF TRUST SHALL BE

GOVERNED BY THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST BORROWER ARISING OUT OF OR RELATING TO THIS DEED OF TRUST OR ANY OTHER LOAN DOCUMENT MAY BE INSTITUTED IN THE COURTS HAVING JURISDICTION IN THE CITY AND/OR COUNTY IN WHICH THE PROPERTY IS LOCATED, AND BORROWER HEREBY WAIVES ANY OBJECTIONS THAT IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING.

Section 12.2 Usury Laws. Notwithstanding anything to the contrary, (a) all agreements and communications between Borrower and Lender are hereby and shall automatically be limited so that, after taking into account all amounts deemed to constitute interest, the interest contracted for, charged or received by Lender shall never exceed the Maximum Legal Rate, (b) in calculating whether any interest exceeds the Maximum Legal Rate, all such interest shall be amortized, prorated, allocated and spread over the full amount and term of all principal indebtedness of Borrower to Lender, and (c) if through any contingency or event, Lender receives or is deemed to receive interest in excess of the Maximum Legal Rate, any such excess shall be deemed to have been applied toward payment of the principal of any and all then outstanding indebtedness of Borrower to Lender, or if there is no such indebtedness, shall immediately be returned to Borrower.

Section 12.3 Provisions Subject to Applicable Law. All rights, powers and remedies provided in this Deed of Trust may be exercised only to the extent that the exercise

thereof does not violate any applicable provisions of law and are intended to be limited to the extent necessary so that they will not render this Deed of Trust invalid, unenforceable or not entitled to be recorded, registered or filed under the provisions of any applicable law. If any term of this Deed of Trust or any application thereof shall be invalid or unenforceable, the remainder of this Deed of Trust and any other application of the term shall not be affected thereby.

ARTICLE 13 DEFINITIONS

Unless the context clearly indicates a contrary intent or unless otherwise

specifically provided herein, words used in this Deed of Trust may be used interchangeably in the singular or plural form and the word "Borrower" shall mean "each Borrower and any subsequent owner or owners of the Property or any part thereof or any interest therein," the word "Lender" shall mean "Lender and any subsequent holder of the Note," the word "Note" shall mean "the Note and any other evidence of indebtedness secured by this Deed of Trust," the word "Property" shall include any portion of the Property and any interest therein, and the phrases "attorneys' fees", "legal fees" and "counsel fees" shall include any and all attorneys', paralegal and law clerk fees and disbursements, including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels, incurred or paid by Lender in protecting its interest in the Property, the Leases and/or the Rents and/or in enforcing its rights hereunder. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms.

ARTICLE 14 MISCELLANEOUS PROVISIONS

Section 14.1 No Oral Change. This Deed of Trust, and any provisions hereof,

may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party(ies) against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

Section 14.2 Successors and Assigns. This Deed of Trust shall be binding upon, and shall inure to the benefit of, Borrower and Lender and their respective successors and permitted assigns, as set forth in the Loan Agreement. Lender shall have the right, without the consent of Borrower, to assign or transfer its rights under this Deed of Trust in connection with any assignment of the Loan and the Loan Documents. Any assignee or transferee of Lender shall be entitled to all the benefits afforded to Lender under this Deed of Trust. Borrower shall not have the right to assign or transfer its rights or obligations under this Deed of Trust without the prior written consent of Lender, as provided in the Loan Agreement, and any attempted assignment without such consent shall be null and void.

Section 14.3 Inapplicable Provisions.If  any provision of this Deed of Trust is  held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Deed of Trust, such provision shall be fully severable and this Deed of Trust shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised

a part of this Deed of Trust, and the remaining provisions of this Deed of Trust shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Deed of Trust, unless such continued effectiveness of this Deed of Trust, as modified, would be contrary to the basic understandings and intentions of the parties as expressed herein.

Section 14.4 Headings, Etc.  The headings and captions of the various Sections of this Deed of Trust are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

Section 14.5 Subrogation.If any or all of the proceeds of the Note have  been used to extinguish, extend or renew any indebtedness heretofore existing against the Property, then, to the extent of the funds so used, Lender shall be subrogated to all of the rights, claims, liens, titles and interests existing against the Property heretofore held by, or in favor of, the holder of such indebtedness and such former rights, claims, liens, titles and interests, if any, are not waived, but rather are continued in full force and effect in favor of Lender and are merged with the Lien and security interest created herein as cumulative security for the payment, performance and discharge of the Obligations (including, but not limited to, the payment of the Debt).

Section 14.6 Entire Agreement. The Note, the Loan Agreement, the Consent and Assumption Agreement, this Deed of Trust and the other Loan Documents constitute the entire understanding and agreement between Borrower and Lender with respect to the transactions arising in connection with the Obligations and supersede all prior written or oral understandings and agreements between Borrower and Lender with respect thereto. Borrower hereby acknowledges that, except as incorporated in writing in the Note, the Loan Agreement, this Deed of Trust and the other Loan Documents, there are not, and were not, and no Persons are or were authorized by Lender to make, any representations, understandings, stipulations, agreements or promises, oral or written, with respect to the transaction which is the subject of the Note, the Loan Agreement, this Deed of Trust and the other Loan Documents.

Section 14.7 Limitation on Lender's  Responsibility.  No provision of this Deed of Trust shall operate to place any obligation or liability for the control, care, management or repair of the Property upon Lender, nor shall it operate to make Lender responsible or liable for any waste committed on the Property by the Tenants or any other Person, or for any dangerous or defective condition of the Property, or for any negligence in the management, upkeep, repair or control of the Property resulting in loss or injury or death to any Tenant, licensee, employee or stranger. Nothing herein contained shall be construed as constituting Lender a "mortgagee in possession."

Section 14.8 Recitals. The recitals hereof are a part hereof, form a basis for this Deed of Trust and shall be considered prima facie evidence of the facts and documents referred to therein.

Section 14.9 Joint and Several Liability.If more than one Person has executed this Deed of Trust as "Borrower," the representations, covenants, warranties and obligations of all such Persons hereunder shall be joint and several.

ARTICLE 15

DEED OF TRUST PROVISIONS

Section 15.1 Concerning the Trustee. Trustee shall be under no duty to take any action hereunder except as expressly required hereunder or by law, or to perform any act which would involve Trustee in any expense or liability or to institute or defend any suit in respect hereof, unless properly indemnified to Trustee's reasonable satisfaction. Trustee, by acceptance of this Deed of Trust, covenants to perform and fulfill the trusts herein created, being liable, however, only for willful negligence or misconduct, and hereby waives any statutory fee and agrees to accept reasonable compensation, in lieu thereof, for any services rendered by Trustee in accordance with the terms hereof. Trustee may resign at any time upon giving thirty (30) days' notice to Borrower and to Lender. Lender may remove Trustee at any time or from time to time and select a successor trustee. In the event of the death, removal, resignation, refusal to act, or inability to act of Trustee, or in its sole discretion for any reason whatsoever Lender may, without notice and without specifying any reason therefor and without applying to any court, select and appoint a successor trustee, by an instrument recorded wherever this Deed of Trust is recorded and all powers, rights, duties and authority of Trustee, as aforesaid, shall thereupon become vested in such successor. Such substitute trustee shall not be required to give bond for the faithful performance of the duties of Trustee hereunder unless required by Lender. The procedure provided for in this paragraph for substitution of Trustee shall be in addition to and not in exclusion of any other provisions for substitution, by law or otherwise.

Section 15.2 Trustee's Fees. Borrower shall pay all reasonable costs, fees and expenses incurred by Trustee and Trustee's agents and counsel in connection with the performance by Trustee of Trustee's duties hereunder and all such costs, fees and expenses shall be secured by this Deed of Trust.

Section 15.3 Certain Rights. With the approval of Lender, Trustee shall have the right to take any and all of the following actions: (i) to select, employ, and advise with counsel (who may be, but need not be, counsel for Lender) upon any matters arising hereunder, including the preparation, execution, and interpretation of the Loan Agreement, the Note, this Deed of Trust or the other Loan Documents, and shall be fully protected in relying as to legal matters on the advice of counsel, (ii) to execute any of the trusts and powers hereof and to perform any duty hereunder either directly or through his agents or attorneys, (iii) to select and employ, in and about the execution of his duties hereunder, suitable accountants, engineers and other experts, agents and attorneys-in-fact, either corporate or individual, not regularly in the employ of Trustee, and Trustee shall not be answerable for any act, default, negligence, or misconduct of any such accountant, engineer or other expert, agent or attorney-in-fact, if selected with reasonable care, or for any error of judgment or act done by Trustee in good faith, or be otherwise responsible or accountable under any circumstances whatsoever, except for Trustee's gross negligence or bad faith, and (iv) any and all other lawful action as Lender may instruct Trustee to take to protect or enforce Lender's rights hereunder. Trustee shall not be personally liable in case of entry by Trustee, or anyone entering by virtue of the powers herein granted to Trustee, upon the Property for debts contracted for or liability or damages incurred in the management or operation of the Property. Trustee shall have the right to rely on any instrument, document, or signature authorizing or supporting an action taken or proposed to be taken by Trustee hereunder, believed by Trustee in good faith to be

genuine. Trustee shall be entitled to reimbursement for actual expenses incurred by Trustee in the performance of Trustee's duties hereunder and to reasonable compensation for such of Trustee's services hereunder as shall be rendered.

Section 15.4 Retention of Money. All moneys received by Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by applicable law) and Trustee shall be under no liability for interest on any moneys received by Trustee hereunder.

Section 15.5 Perfection of Appointment. Should any deed, conveyance, or instrument of any nature be required from Borrower by any Trustee or substitute trustee to more fully and certainly vest in and confirm to the Trustee or substitute trustee such estates rights, powers, and duties, then, upon request by the Trustee or substitute trustee, any and all such deeds, conveyances and instruments shall be made, executed, acknowledged, and delivered and shall be caused to be recorded and/or filed by Borrower.

Section 15.6 Succession Instruments. Any substitute trustee appointed pursuant to any of the provisions hereof shall, without any further act, deed, or conveyance, become vested with all the estates, properties, rights, powers, and trusts of its or his predecessor in the rights hereunder with like effect as if originally named as Trustee herein; but nevertheless, upon the written request of Lender or of the substitute trustee, the Trustee ceasing to act shall execute and deliver any instrument transferring to such substitute trustee, upon the trusts herein expressed, all the estates, properties, rights, powers, and trusts of the Trustee so ceasing to act, and shall duly assign, transfer and deliver any of the property and moneys held by such Trustee to the substitute trustee so appointed in the Trustee's place.

ARTICLE 16

STATE-SPECIFIC PROVISIONS

Section 16.1 Principles of Construction.In the event of any inconsistencies between the terms and conditions of this Article 16 and the other terms and conditions of this Deed of Trust, the terms and conditions of this Article 16 shall control and be binding.

Section 16.2 Instrument. This Deed of Trust shall be deemed to be and shall be enforceable as a deed of trust, leasehold deed of trust, and financing statement.

Section 16.3Assignment of Rents.

(a) Definitions. As used in this Deed of Trust, the following terms shall have the meanings set forth below:

"Act": Chapter 64 of the Texas Property Code, as amended from time to time. "Notice of Enforcement":   A notice in  substantially  the form set forth in Section

64.056 of the Act sent by Lender or Trustee to a lessee demanding payment by the

lessee to Lender of all unpaid accrued Rents and all unaccrued Rents as they accrue.

"Rent Demand": Written notice from Lender or the Trustee to Borrower instructing Borrower to deliver to Lender all accruing Rents and all Rents that have accrued but are unpaid.

(b) Assignment of Rents. Section 1.2 hereof shall be deleted in its entirety and replaced with the following in lieu thereof:

Assignment of Rents. Borrower hereby presently and unconditionally assigns to Lender and Trustee a security interest in all of Borrower's right, title and interest in and to all current and future Leases and Rents; whether now owned by Borrower or hereafter acquired and whether now existing or hereafter coming into existence, as security for repayment of the Debt and performance of the Obligations and to provide a source of future payment of the Debt, it being intended by Borrower that this assignment constitutes a present, unconditional assignment that is immediately effective.

(c) No License. The phrase in the first sentence of Section 7.1(h) of this Deed of Trust that reads "the license granted to Borrower under Section 1.2 hereof shall automatically be revoked and" shall be deleted in its entirety.

(d) Collection of Rent. At any time during which Borrower is receiving Rents directly from any of the lessees, Borrower shall, upon receipt of written direction from Lender or Trustee, make demand and/or sue for all Rents due and payable under one or more Leases, as directed by Lender, as it becomes due and payable, including Rents that are past due and unpaid. If Borrower fails to take such action, or at any time during which Borrower is not receiving Rents directly from lessees, Lender may, without obligation, demand, collect, and sue for, in its own name or in the name of Borrower, all Rents due and payable under the Leases, as they become due and payable, including Rents that are past due and unpaid.

(e) Rights Relating to Rents. Lender may (in its sole discretion), upon the occurrence of an Event of Default deliver a Rent Demand to Borrower or deliver a Notice of Enforcement to the lessees. Borrower agrees that pursuant to Section 64.002(a)(3) of the Act, any Rent Demand sent by Lender may be sent to Borrower in any manner and to any address described in the Loan Agreement. As described in Section 64.060 of the Act, Borrower shall, within ten days after its receipt of a Rent Demand, deliver to Lender such Rents as are described in the Rent Demand. Notwithstanding the provisions of Section 64.058 of the Act, Borrower agrees that Rents so received or collected by Lender or Trustee for any period prior to foreclosure under this Deed of Trust or acceptance of a deed in lieu of such foreclosure may be applied by Lender to the payment of the following (in such order and priority as Lender shall determine): (a) all operating expenses of the Property; (b) all expenses incident to taking and retaining possession of the Property and/or collecting Rent as it becomes due and payable; and (c) the Debt. If the costs, expenses, and attorneys' fees shall exceed the amount of Rents collected, the excess shall be added to the Debt, shall bear interest at the Default Rate, and shall be immediately due and payable. Borrower further acknowledges that Lender shall have no obligation to apply any Rents received by Lender toward the expenses of protecting or maintaining the Property.

Section 16.4 Foreclosure. Upon the occurrence of any Event of Default, Lender may request Trustee to proceed with foreclosure under the power of sale which is hereby conferred, such foreclosure to be accomplished in accordance with the following provisions:

(a) Public Sale. Trustee is hereby authorized and empowered, and it shall be Trustee's special duty, upon such request of Lender, to sell the Property, or any part thereof, at public auction to the highest bidder for cash, with or without having taken possession of same. Any such sale (including notice thereof) shall comply with the applicable requirements, at the time of the sale, of Section 51.002 of the Texas Property Code or, if and to the extent such statute is not then in force, with the applicable requirements, at the time of the sale, of the successor statute or statutes, if any, governing sales of Texas real property under powers of sale conferred by deeds of trust. If there is no statute in force at the time of the sale governing sales of Texas real property under powers of sale conferred by deeds of trust, such sale shall comply with applicable law, at the time of the sale, governing sales of Texas real property under powers of sale conferred by deeds of trust. Trustee or his successor or substitute may appoint or delegate any one or more persons as agent to perform any act or acts necessary or incident to any sale held by Trustee, including the posting of notices, and the conduct of sale, but in the name and on behalf of Trustee, his successor or substitute.

(b) Right to Require Proof of Financial Ability and/or Cash Bid. At any time during the bidding, the Trustee may require a bidding party (A) to disclose its full name, state and city of residence, occupation, and specific business office location, and the name and address of the principal the bidding party is representing (if applicable), and (B) to demonstrate reasonable evidence of the bidding party's financial ability (or, if applicable, the financial ability of the principal of such bidding party), as a condition to the bidding party submitting bids at the foreclosure sale. If any such bidding party (the "Questioned Bidder") declines to comply with the Trustee's requirement in this regard, or if such Questioned Bidder does respond but the Trustee, in Trustee's sole and absolute discretion, deems the information or the evidence of the financial ability of the Questioned Bidder (or, if applicable, the principal of such bidding party) to be inadequate, then the Trustee may continue the bidding with reservation; and in such event (1) the Trustee shall be authorized to caution the Questioned Bidder concerning the legal obligations to be incurred in submitting bids, and (2) if the Questioned Bidder is not the highest bidder at the sale, or if having been the highest bidder the Questioned Bidder fails to deliver the cash purchase price payment promptly to the Trustee, all bids by the Questioned Bidder shall be null and void. The Trustee may, in Trustee's sole and absolute discretion, determine that a credit bid may be in the best interest of the Borrower and Lender, and elect to sell the Property for credit or for a combination of cash and credit; provided, however, that the Trustee shall have no obligation to accept any bid except an all cash bid. In the event the Trustee requires a cash bid and cash is not delivered within a reasonable time after conclusion of the bidding process, as specified by the Trustee, but in no event later than 3:45 p.m. local time on the day of sale, then said contingent sale shall be null and void, the bidding process may be recommenced, and any subsequent bids or sale shall be made as if no prior bids were made or accepted.

(c) Sale Subject to Unmatured Debt. In addition to the rights and powers of sale granted under the preceding provisions of this subsection, if default is made in the payment of any installment of the Debt, Lender may, at Lender's option, at once or at any time thereafter while any matured installment remains unpaid, without declaring the entire Debt to be due and

payable, orally or in writing direct Trustee to enforce this Deed of Trust and to sell the Property subject to such unmatured Debt and to the rights, powers, liens, security interests, and assignments securing or providing recourse for payment of such unmatured Debt, in the same manner, all as provided in the preceding provisions of this subsection. Sales made without maturing the Debt may be made hereunder whenever there is a default in the payment of any installment of the Debt, without exhausting the power of sale granted hereby, and without affecting in any way the power of sale granted under this subsection, the unmatured balance of the Debt or the rights, powers, liens, security interests, and assignments securing or providing recourse for payment of the Debt.

(d) Partial Foreclosure. Sale of a part of the Property shall not exhaust the power of sale, but sales may be made from time to time until the Debt is paid in full. It is intended by each of the foregoing provisions of this subsection that Trustee may, after any request or direction by Lender, sell not only the Land and the Improvements, but also the Personal Property and other interests constituting a part of the Property or any part thereof, along with the Land and the Improvements or any part thereof, as a unit and as a part of a single sale, or may sell at any time or from time to time any part or parts of the Property separately from the remainder of the Property. It shall not be necessary to have present or to exhibit at any sale any of the Property. Any sale of personal property made hereunder shall be deemed to have been a public sale conducted in a commercially reasonable manner if held contemporaneously with, or as part of, and upon the same notice as required for the sale of real property under the power of sale granted herein.

(e) Trustee's Deeds. After any sale under this subsection, Trustee shall make good and sufficient deeds, assignments, and other conveyances to the purchaser or purchasers thereunder in the name of Grantor, conveying the Property or any part thereof so sold to the purchaser or purchasers with general warranty of title by Borrower. It is agreed that in any deeds, assignments or other conveyances given by Trustee, any and all statements of fact or other recitals therein made as to the identity of Lender, the occurrence or existence of any Event of Default, the notice of intention to accelerate, or acceleration of, the maturity of the Debt, the request to sell, notice of sale, time, place, terms and manner of sale, and receipt, distribution, and application of the money realized therefrom, the due and proper appointment of a substitute trustee, and without being limited by the foregoing, any other act or thing having been duly done by or on behalf of Lender or by or on behalf of Trustee, shall be taken by all courts of law and equity as prima facie evidence that such statements or recitals state true, correct, and complete facts and are without further question to be so accepted, and Borrower does hereby ratify and confirm any and all acts that Trustee may lawfully do in the premises by virtue hereof.

Section 16.5 Receiver. Lender, as a matter of right and without regard to the sufficiency of the security for repayment of the Debt and performance and discharge of the obligations hereunder, without notice to Borrower and without any showing of insolvency, fraud, or mismanagement on the part of Borrower, and without the necessity of filing any judicial or other proceeding other than the proceeding for appointment of a receiver, shall be entitled to the appointment of a receiver or receivers of the Property or any part thereof, and of the Rents, and Borrower hereby irrevocably consents to the appointment of a receiver or receivers. Any receiver appointed pursuant to the provisions of this subsection shall have the usual powers and duties of receivers in such matters.

Section 16.6 Inapplicability of Finance Code.In no event shall the provisions of Chapter 346, Texas Finance Code (which regulates certain revolving credit loan accounts and revolving triparty accounts) apply to the loan evidenced by the Loan Documents and/or secured hereby.

Section 16.7 ENTIRE AGREEMENT. THIS DEED OF TRUST AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDER-STANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.

Section 16.8 Maturity Date. The maturity date of the Note secured hereby is the 6th day of April, 2029.

Section 16.9    NOTICEOFINDEMNIFICATION.BORROWER ACKNOWLEDGES THAT THIS DEED OF TRUST PROVIDES FOR INDEMNIFICATION OF LENDER BY BORROWER.

IN WITNESS WHEREOF, THIS DEED OF TRUST has been executed by Borrower as of the day and year first above written.

BORROWER:

LF3 LUBBOCK EXPO TRS, LLC,

a Delaware limited liability company

By: Lodging Fund REIT III TRS, Inc. Its: Sole Member

By: /s/ Katie Cox

Name: Katie Cox

Its:Chief Financial Officer

Notice Address:

1635 - 43rd Street S, Suite 205 Fargo, ND 58103

Attention: Katie Cox

STATE OF North Dakota )

)  ss.

COUNTY OFCass)

This instrument was acknowledged before me, the undersigned Notary Public, on December 20,2019.  by Katie Cox, Chief Financial   Officer of Lodging Fund REIT III TRS, Inc., the sole member of LF3 Lubbock Expo TRS, LLC, a Delaware limited liability

company.

/s/ Jennifer Moum

Jennifer Moum

Notary Public, State of North Dakota

Commission Expires: April 25, 2022

Deed of Trust (Fairfield Inn & Suites Lubbock)

EXHIBIT A

Legal Description

The land referred to is situated in the City of Lubbock, County of Lubbock, State of Texas, and is described as follows:

Parcel A: Fee Simple Estate

Lot Five-A (5-A), a replat of Lot 5, CANYON WEST ADDITION to the City of Lubbock, Lubbock County, Texas, according to the Map, Plat and/or Dedication Deed thereof, recorded in/under Clerk's File No. 2016024991 of the Official Public Records of Lubbock County, Texas, save and except any and all rights, titles and interests previously reserved, conveyed or created with respect to oil, gas, or other minerals in and under the land.

Parcel B: Easement Estate

All right, title and interest as provided in the Declaration of Restrictions and Reciprocal Easement Agreement recorded in/under Volume 10138, Page 14; amended in/under Clerk's File No. 2011012478 and ratified and corrected in/under Clerk's File No. 2013030944 to Lot Five-B (5-B), a replat of Lot 5, CANYON WEST ADDITION to the City of Lubbock, Lubbock County, Texas, according to the Map, Plat and/or Dedication Deed thereof, recorded in/under Clerk's File No. 2016024991 of the Official Public Records of Lubbock County, Texas.

1

EX-10.55.6

EXHIBIT 10.55.6

GUARANTY OF RECOURSE OBLIGATIONS

This GUARANTY OF RECOURSE OBLIGATIONS (this "Guaranty") is executed as of January 8, 2020 by LODGING FUND REIT III, INC., a Maryland corporation, and LODGING FUND REIT III OP, LP, a Delaware limited partnership (individually "Guarantor" and collectively "Guarantors"), for the benefit of WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee for Morgan Stanley Capital I Trust 2019-H6, Commercial Mortgage Pass-Through Certificates, Series 2019-H6, acting by and through its Master Servicer, Midland Loan Services, a Division of PNC Bank, National Association (collectively referred to herein as "Lender") (together with its successors and assigns, "Lender").

W I TN  E S S E T H:

A.         Pursuant to that certain Promissory Note, dated April 4, 2019, executed by TREEMONT CAPITAL PARTNERS IV, LP, a Texas limited partnership ("Original Borrower") and payable to the order of Starwood Mortgage Capital LLC ("Original Lender") in the original principal amount of NINE MILLION FIVE HUNDRED THOUSAND and No/100 Dollars ($9,500,000.00) (together with all renewals, modifications, increases and extensions thereof, the "Note"), Original Borrower became indebted, and may from time to time be further indebted, to Original Lender with respect to a loan (the "Loan") which is made pursuant to that certain Loan Agreement, dated of even date therewith, between Borrower and Lender (as the same may be amended, modified, supplemented, replaced or otherwise modified from time to time, the "Loan Agreement"). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Loan Agreement.

B.         Lender is the holder of all of Original Lender's right, title and interest in and under the Loan.

C.         Original Borrower and LF3 LUBBOCK EXPO LLC, a Delaware limited liability company and LF3 LUBBOCK EXPO TRS, LLC, a Delaware limited liability company (each individually and collectively, jointly and severally, "Borrower") have requested that Lender consent to (i) the sale of the Property from Original Borrower to Borrower and (ii) the assignment to, and assumption by, Borrower of the Loan (collectively, the "Transaction").

D.         Lender is not willing to consent the Transaction, or otherwise extend credit, to Borrower unless Guarantor unconditionally guarantees payment and performance to Lender of the Guaranteed Obligations (as herein defined);

B. Guarantors are the owners of direct or indirect interests in Borrower, and  each Guarantor will directly benefit from Lender's making the Loan to Borrower.

NOW, THEREFORE, as an inducement to Lender to make the Loan to Borrower and to extend such additional credit as Lender may from time to time agree to extend under the Loan Documents, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:

ARTICLE 1

NATURE AND SCOPE OF GUARANTY

Section 1.1       Guaranty of Obligation.

(a)        Each Guarantor hereby irrevocably and unconditionally guarantees to Lender and its successors and assigns the payment and performance of the Guaranteed Obligations (as defined below) as and when the same shall be due and payable, whether by lapse of time, by acceleration of maturity or otherwise. Each Guarantor hereby irrevocably and unconditionally covenants and agrees that it is liable for the Guaranteed Obligations as a primary obligor.

(b)        As used herein, the term "Guaranteed Obligations" means (i) Borrower's Recourse Liabilities and (ii) from and after the date that any Springing Recourse Event occurs, payment of all of the Obligations.

(c)        Notwithstanding anything to the contrary in this Guaranty or in any of the other Loan Documents, Lender shall not be deemed to have waived any right which Lender may have under Section 506(a), 506(b), 111l(b) or any other provisions of the Bankruptcy Code to file a claim for the full amount of the Obligations or to require that all collateral shall continue to secure all of the Obligations owing to Lender in accordance with the Loan Documents.

Section 1.2 Nature of Guaranty. This Guaranty is an irrevocable, absolute, continuing guaranty of payment and performance and not a guaranty of collection.  This Guaranty may not be revoked by any Guarantor and shall continue to be effective with respect to any Guaranteed Obligations arising or created after any attempted revocation by any Guarantor and after (if such Guarantor is a natural person) such Guarantor's death (in which event this Guaranty shall be binding upon such Guarantor's estate and such Guarantor's legal representatives and heirs). The fact that at any time or from time to time the Guaranteed Obligations may be increased or reduced shall not release or discharge the obligation of any Guarantor to Lender with respect to the Guaranteed Obligations. This Guaranty may be enforced by Lender and any subsequent holder of the Note and shall not be discharged by the assignment or negotiation of all or part of the Note.

Section 1.3 Guaranteed Obligations Not Reduced by Offset. The Guaranteed Obligations and the liabilities and obligations of Guarantors to Lender hereunder shall not be reduced, discharged or released because or by reason of any existing or future offset, claim or defense of Borrower or any other party against Lender or against payment of the Guaranteed Obligations, whether such offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

Section 1.4 Payment By Guarantors. If all or any part of the Guaranteed Obligations shall not be punctually paid when due, whether at demand, maturity, acceleration or otherwise, Guarantors shall, within ten (10) days after written demand by Lender and without presentment, protest, notice of protest, notice of non-payment, notice of intention to accelerate the maturity, notice of acceleration of the maturity or any other notice whatsoever, all such

notices being hereby waived by Guarantors, pay in lawful money of the United States of America, the amount due on the Guaranteed Obligations to Lender at Lender's address as set forth herein. Such demand(s) may be made at any time coincident with or after the time for payment of all or part of the Guaranteed Obligations and may be made from time to time with respect to the same or different items of Guaranteed Obligations. Such demand shall be deemed made, given and received in accordance with the notice provisions hereof.

Section 1.5 No Duty To Pursue Others.  It shall not be necessary  for Lender (and each Guarantor hereby waives any rights which such Guarantor may have to require Lender), in order to enforce the obligations of Guarantors hereunder, first to (i) institute suit or exhaust its remedies against Borrower or others liable on the Loan or the Guaranteed Obligations or any other Person, (ii) enforce Lender's rights against any collateral which shall ever have been given to secure the Loan, (iii) enforce Lender's rights against any other guarantors of the Guaranteed Obligations, (iv) join Borrower or any others liable on the Guaranteed Obligations in any action seeking to enforce this Guaranty, (v) exhaust any remedies available to Lender against any collateral which shall ever have been given to secure the Loan, or (vi) resort to any other means of obtaining payment of the Guaranteed Obligations. Lender shall not be required to mitigate damages or take any other action to reduce, collect or enforce the Guaranteed Obligations.

Section 1.6 Waivers. Each Guarantor agrees to the provisions of the Loan Documents and hereby waives notice of (i) any loans or advances made by Lender to Borrower, (ii)  acceptance of this Guaranty, (iii) any amendment or extension of the Note, the Mortgage, the Loan Agreement or any other Loan Document, (iv) the execution and delivery by Borrower and Lender of any other loan or credit agreement or of Borrower's execution and delivery of any promissory note or other document arising under the Loan Documents or in connection with the Property, (v) the occurrence of (A) any breach by Borrower of any of the terms or conditions of the Loan Agreement or any of the other Loan Documents, or (B) an Event of Default, (vi) Lender's transfer or disposition of the Guaranteed Obligations, or any part thereof, (vii) the sale or foreclosure (or the posting or advertising for the sale or foreclosure) of any collateral for the Guaranteed Obligations, (viii) protest, proof of non-payment or default by Borrower, or (ix) any other action at any time taken or omitted by Lender and, generally, all demands and notices of every kind in connection with this Guaranty, the Loan Documents, any documents or agreements evidencing, securing or relating to any of the Guaranteed Obligations and/or the obligations hereby guaranteed.

Section 1.7 Payment of Expenses.  In the event that any Guarantor shall breach or fail to timely perform any provisions of this Guaranty, Guarantors shall, immediately upon demand by Lender, pay Lender all costs and expenses (including court costs and reasonable attorneys' fees) incurred by Lender in the enforcement hereof or the preservation of Lender's rights hereunder, together with interest thereon at the Default Rate from the date requested by Lender until the date of payment to Lender. The covenant contained in this Section shall survive the payment and performance of the Guaranteed Obligations.

Section 1.8 Effect of Bankruptcy. In the event that pursuant to any insolvency, bankruptcy, reorganization, receivership or other debtor relief law or any judgment, order or decision thereunder, Lender must rescind or restore any payment or any part thereof received by

Lender in satisfaction of the Guaranteed Obligations, as set forth herein, any prior release or discharge from the terms of this Guaranty given to Guarantors by Lender shall be without effect and this Guaranty shall remain (or shall be reinstated to be) in full force and effect. It is the intention of Borrower and Guarantors that Guarantors' obligations hereunder shall not be discharged except by Guarantors' performance of such obligations and then only to the extent of such performance.

Section 1.9 Waiver of Subrogation, Reimbursement and Contribution. Notwithstanding anything to the contrary contained in this Guaranty, each Guarantor hereby unconditionally and irrevocably waives, releases and abrogates any and all rights it may now or hereafter have under any agreement, at law or in equity (including, without limitation, any law subrogating Guarantors to the rights of Lender), to assert any claim against or seek contribution, indemnification or any other form of reimbursement from Borrower or any other party liable for the payment of any or all of the Guaranteed Obligations for any payment made by Guarantors under or in connection with this Guaranty or otherwise.

ARTICLE2

EVENTS AND CIRCUMSTANCES NOT REDUCING OR DISCHARGING GUARANTORS' OBLIGATIONS

Each Guarantor hereby consents and agrees to each of the following and agrees that such Guarantor's obligations under this Guaranty shall not be released, diminished,  impaired, reduced or adversely affected by any of the following and waives any common law, equitable, statutory or other rights (including, without limitation, rights to notice) which such Guarantor might otherwise have as a result of or in connection with any of the following:

Section 2.1 Modifications. Any renewal, extension, increase, modification, alteration or rearrangement of all or any part of the Guaranteed Obligations, the Note, the Mortgage, the Loan Agreement, the other Loan Documents or any other document, instrument, contract or understanding between Borrower and Lender or any other parties pertaining to the Guaranteed Obligations or any failure of Lender to notify Guarantors of any such action.

Section 2.2 Adjustment. Any adjustment, indulgence,  forbearance  or compromise that might be granted or given by Lender to Borrower or any Guarantor.

Section 2.3  Condition  of  Borrower  or  Guarantors.  The  insolvency, bankruptcy, arrangement, adjustment, composition, liquidation, disability, dissolution or lack of power of Borrower, any Guarantor or any other Person at any time liable for the payment of all or part of the Guaranteed Obligations; or any dissolution of Borrower or any Guarantor or any sale, lease or transfer of any or all of the assets of Borrower or any Guarantor or any changes in the direct or indirect shareholders, partners or members, as applicable, of Borrower or any Guarantor; or any reorganization of Borrower or any Guarantor.

Section 2.4 Invalidity of Guaranteed Obligations. The invalidity, illegality or unenforceability of all or any part of the Guaranteed Obligations or any document or agreement executed in connection with the Guaranteed Obligations for any reason whatsoever, including,

without limitation, the fact that (i) the Guaranteed Obligations or any part thereof exceeds the amount permitted by law, (ii) the act of creating the Guaranteed Obligations or any part thereof is ultra vires, (iii) the officers or representatives executing the Note, the Mortgage, the Loan Agreement or the other Loan Documents or otherwise creating the Guaranteed Obligations acted in excess of their authority, (iv) the Guaranteed Obligations violate applicable usury laws, (v) the Borrower has valid defenses, claims or offsets (whether at law, in equity or by agreement) which render the Guaranteed Obligations wholly or partially uncollectible from Borrower, (vi) the creation, performance or repayment of the Guaranteed Obligations (or the execution, delivery and performance of any document or instrument representing part of the Guaranteed Obligations or executed in connection with the Guaranteed Obligations or given to secure the repayment of the Guaranteed Obligations) is illegal, uncollectible or unenforceable, or (vii) the Note, the Mortgage, the Loan Agreement or any of the other Loan Documents have been forged or otherwise are irregular or not genuine or authentic, it being agreed that Guarantors shall remain liable hereon regardless of whether Borrower or any other Person be found not liable on the Guaranteed Obligations or any part thereof for any reason.

Section 2.5 Release of Obligors. Any full or partial release of the liability of Borrower for the Guaranteed Obligations or any part thereof: or of any co-guarantors, or of any other Person now or hereafter liable, whether directly or indirectly, jointly, severally, or jointly and severally, to pay, perform, guarantee or assure the payment of the Guaranteed  Obligations, or any part thereof, it being recognized, acknowledged and agreed by each Guarantor that such Guarantor may be required to pay the Guaranteed Obligations in full without assistance or supp01i from any other Person, and no Guarantor has been induced to enter into this Guaranty on the basis of a contemplation, belief, understanding or agreement that other Persons (including Borrower) will be liable to pay or perform the Guaranteed Obligations or that Lender will look to other Persons (including Borrower) to pay or perf01m the Guaranteed Obligations.

Section 2.6 Other Collateral. The taking or accepting of any other security, collateral or guaranty, or other assurance of payment, for all or any part of the Guaranteed Obligations.

Section 2.7 Release of Collateral. Any release, surrender, exchange, subordination, deterioration, waste, loss or impairment (including, without limitation, negligent, willful, unreasonable or unjustifiable impairment) of any collateral, prope1iy or security at any time existing in connection with, or assuring or securing payment of, all or any part of the Guaranteed Obligations.

Section 2.8 Care and Diligence. The failure of Lender or any other party to exercise diligence or reasonable care in the preservation, protection, enforcement, sale or other handling or treatment of all or any part of any collateral, property or security, including, but not limited to, any neglect, delay, omission, failure or refusal of Lender (i) to take or prosecute any action for the collection of any of the Guaranteed Obligations, or (ii) to foreclose, or initiate any action to foreclose, or, once commenced, prosecute to completion any action to foreclose upon any security therefor, or (iii) to take or prosecute any action in connection with any instrument or agreement evidencing or securing all or any part of the Guaranteed Obligations.

Section 2.9 Unenforceability. The fact that any collateral, security, security interest or lien contemplated or intended to be given, created or granted as security for the repayment of the Guaranteed Obligations, or any part thereof, shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other security interest or lien, it being recognized and agreed by each Guarantor that such Guarantor is not entering into this Guaranty in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectability or value of any of the collateral for the Guaranteed Obligations.

Section 2.10 Offset. Any existing or future right of offset, claim or defense of Borrower against Lender, or any other party, or against payment of the Guaranteed Obligations, whether  such  right  of  offset,  claim  or  defense  arises  in  connection with  the  Guaranteed obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

Section 2.11 Merger. The reorganization, merger or consolidation of Borrower or any Guarantor into or with any other Person.

Section 2.12 Preference. Any payment by Borrower to Lender is held to constitute a preference under bankruptcy laws or for any reason Lender is required to refund such payment or pay such amount to Borrower or to any other Person.

Section 2.13 Other Actions Taken or Omitted. Any other action  taken  or omitted to be taken with respect to the Loan Documents, the Guaranteed Obligations or the security and collateral therefor, whether or not such action or omission prejudices Guarantors or increases the likelihood that Guarantors will be required to pay the Guaranteed Obligations pursuant to the terms hereof, it being the unambiguous and unequivocal intention of Guarantors that such Guarantors shall be obligated to pay the Guaranteed Obligations when due, notwithstanding any occurrence, circumstance, event, action or omission whatsoever, whether contemplated or uncontemplated, and whether or not otherwise or particularly described herein, which obligation shall be deemed satisfied only upon the full and final payment and satisfaction of the Guaranteed Obligations.

ARTICLE3

REPRESENTATIONS AND WARRANTIES

To induce Lender to enter into the Loan Documents and to extend credit to Borrower, each Guarantor represents and warrants to Lender as follows:

Section 3.1 Benefit.  Each Guarantor is an Affiliate of Borrower, is the owner   of a direct or indirect interest in Borrower and has received, or will receive, direct or indirect benefit from the making of this Guaranty with respect to the Guaranteed Obligations.

Section 3.2 Familiarity and Reliance. Each Guarantor is familiar with, and has independently reviewed books and records regarding, the financial condition of Borrower and is familiar with the value of any and all collateral intended to be created as security for the payment of the Note or Guaranteed Obligations; however, such Guarantor is not relying on such financial condition or the collateral as an inducement to enter into this Guaranty.

Section 3.3 No Representation By Lender.  Neither Lender nor any other party has made any representation, warranty or statement to any Guarantor in order to induce such Guarantor to execute this Guaranty.

Section 3.4 Each Guarantor's Financial Condition.  As of the date hereof, and  after g1vmg effect to this Guaranty and the contingent obligation evidenced hereby, each Guarantor (a) is and will be solvent, (b) has and will have assets which, fairly valued, exceed its obligations, liabilities (including contingent liabilities) and debts, and (c) has and will have property and assets sufficient to satisfy and repay its obligations and liabilities, including the Guaranteed Obligations.

Section 3.5 Legality. The execution, delivery and performance  by  each Guarantor of this Guaranty and the consummation of the transactions contemplated hereunder do not and will not contravene or conflict with any law, statute or regulation whatsoever to which such Guarantor is subject, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the breach of, any indenture, mortgage, charge, lien, contract, agreement or other instrument to which such Guarantor is a party or which may be applicable to such Guarantor. This Guaranty is a legal and binding obligation of each Guarantor and is enforceable against such Guarantor in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors' rights.

Section 3.6 Survival. All representations and warranties  made  by  each Guarantor herein shall survive the execution hereof.

ARTICLE4

SUBORDINATION OF CERTAIN INDEBTEDNESS

Section 4.1 Subordination of All Guarantor Claims. As used herein, the term "Guarantor Claims" shall mean all debts and liabilities of Borrower to Guarantors, whether such debts and liabilities now exist or are hereafter incurred or arise, and whether the obligations of Borrower thereon be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such debts or liabilities be evidenced by note, contract, open account, or otherwise, and irrespective of the Person or Persons in whose favor such debts or liabilities may, at their inception, have been, or may hereafter be, created, or the manner in which they have been, or may hereafter be, acquired by Guarantors. The Guarantor Claims shall include, without limitation, all rights and claims of Guarantors against Borrower (arising as a result of subrogation or otherwise) as a result of Guarantors' payment of all or a portion of the Guaranteed Obligations. So long as any portion of the Obligations or the  Guaranteed Obligations remain outstanding, no Guarantor shall receive or collect, directly or indirectly, from Borrower or any other Person any amount upon the Guarantor Claims.

Section 4.2 Claims in Bankruptcy. In  the  event  of  any  receivership, bankruptcy, reorganization, arrangement, debtor's relief or other insolvency proceeding involving any Guarantor as a debtor, Lender shall have the right to prove its claim in any such proceeding so as to establish its rights hereunder and receive directly from the receiver, trustee or

other court custodian dividends and payments which would otherwise be payable upon Guarantor Claims. Each Guarantor hereby assigns such dividends and payments to Lender. Should Lender receive, for application against the Guaranteed Obligations, any dividend or payment which is otherwise payable to any Guarantor and which, as between Borrower and Guarantors, shall constitute a credit against the Guarantor Claims, then, upon payment to Lender in full of the Obligations and the Guaranteed Obligations, such Guarantor shall become subrogated to the rights of Lender to the extent that such payments to Lender on the Guarantor Claims have contributed toward the liquidation of the Guaranteed Obligations, and such subrogation shall be with respect to that proportion of the Guaranteed Obligations which would have been unpaid if Lender had not received dividends or payments upon the Guarantor Claims.

Section 4.3 Payments Held in Trust. Notwithstanding anything to the contrary contained in this Guaranty, in the event that any Guarantor should receive any funds, payments, claims and/or distributions which are prohibited by this Guaranty, such Guarantor agrees to hold in trust for Lender an amount equal to the amount of all funds, payments, claims and/or distributions so received, and agrees that it shall have absolutely no dominion over the amount of such funds, payments, claims and/or distributions so received except to pay such funds, payments, claims and/or distributions promptly to Lender, and such Guarantor covenants promptly to pay the same to Lender.

Section 4.4 Liens Subordinate. Each Guarantor agrees that any liens, security interests, judgment liens, charges or other encumbrances upon Borrower's assets securing payment of the Guarantor Claims shall be and remain inferior and subordinate to any liens, security interests, judgment liens, charges or other encumbrances upon Borrower's assets securing payment of the Guaranteed Obligations, regardless of whether such encumbrances in favor of Guarantors or Lender presently exist or are hereafter created or attach.  Without  the prior written consent of Lender, no Guarantor shall (i) exercise or enforce any creditor's rights it may have against Borrower, or (ii) foreclose, repossess, sequester or otherwise take steps or institute any action or proceedings Judicial or otherwise, including, without limitation, the commencement of, or the joinder in, any liquidation, bankruptcy, rearrangement, debtor's relief or insolvency proceeding) to enforce any liens, mortgages, deeds of trust, security interests, collateral rights, judgments or other encumbrances on the assets of Borrower held by any Guarantor. The foregoing shall in no manner vitiate or amend, nor be deemed to vitiate or amend, any prohibition in the Loan Documents against Borrower granting liens or security interests in any of its assets to any Person other than Lender.

ARTICLES

COVENANTS

Section 5.1       Definitions.   As used in this Article 5, the following terms shall have the respective meanings set forth below:

(a)        "GAAP" shall mean generally accepted accounting principles, consistently applied.

(b)        "Liquid Asset" shall mean any of the following, but only to the extent owned individually, free of all security interests, liens, pledges, charges or any other encumbrance: (a) cash, (b) certificates of deposit (with a maturity of two years or less) issued by, or savings account with, any bank or other financial institution reasonably acceptable to Lender or (c) marketable securities listed on a national or international exchange reasonably acceptable to Lender, marked to market.

(c)        "Net Worth" shall mean, as of a given date, (i) a Guarantor's total assets as of such date less (ii) such Guarantor's total liabilities as of such date, determined in accordance with GAAP.

(d)        "Financial Covenants" shall mean the covenants set forth in Section 5.2 below.

Section 5.2        Covenants.      Until all of the Obligations and the Guaranteed Obligations have been paid in full, Guarantor (i) shall maintain in the aggregate (excluding from such calculation any amount related to the Property, the Operating Lease or any income thereof), (x) a Net Worth of not less than $9,500,000.00 and (y) Liquid  Assets  of  not  less  than $950,000.00; (ii) shall not sell, pledge, mortgage or otherwise transfer any of its assets, or any interest therein, on terms materially less favorable than would be obtained in an arms-length transaction, (iii) within ninety (90) days following the end of each calendar year, shall deliver to Lender a complete copy of such Guarantor's annual financial statements prepared and reviewed by an independent certified public accountant acceptable to Lender prepared in accordance with GAAP or such other accounting method reasonably acceptable to Lender, consistently applied, including statements of income and expense and cash flow and a balance sheet for such Guarantor, together with a certificate from such Guarantor (A) setting forth in reasonable detail such Guarantor's Net Worth and Liquid Assets as of the end of such prior calendar year and based on such annual financial statements, and (B) certifying that such annual financial statements are true, correct, accurate and complete and fairly present the financial condition and results of the operations of such Guarantor. Notwithstanding the foregoing, upon (i) the occurrence and during the continuance of an Event of Default, (ii) Lender in its good faith having the belief that the unaudited annual financial statements delivered by Guarantor as required by this Section 5.2 are not materially accurate or (iii) any period for which any claim is pending under this Guaranty, then, at Lender's request, Guarantor shall deliver such annual financial statements required pursuant to this Section 5.2 audited by an Independent Accountant in accordance with GAAP or such other accounting method reasonably acceptable to Lender, consistently applied.

Section 5.3 Prohibited Transactions. No Guarantor shall, at any time while a default in the payment of the Guaranteed Obligations has occurred and is continuing, either enter into or effectuate any transaction with any Affiliate which would reduce the Net Worth of such Guarantor, including, without limitation, the payment of any dividend or distribution to a shareholder, partner or member as applicable, or the redemption, retirement, purchase or other acquisition for consideration of any stock or other ownership interest in such Guarantor, or sell, pledge, mortgage or otherwise transfer to any Person any of such Guarantor's assets, or any interest therein.

ARTICLE6

MISCELLANEOUS

Section 6.1 Waiver. No failure to exercise, and no delay in exercising, on the part of Lender, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right. The rights of Lender hereunder shall be in addition to all other rights provided by law. No modification or waiver of any provision of this Guaranty, nor any consent to any departure therefrom, shall be effective unless in writing and no such consent or waiver shall extend beyond the particular case and purpose involved. No notice or demand given in any case shall constitute a waiver of the right to take other action in the same, similar or other instances without such notice or demand.

Section 6.2 Notices. All notices, demands, requests, consents,  approvals  or other communications (any of the foregoing, a "Notice") required, permitted or desired to be given hereunder shall be in writing and shall be sent by telefax (with answer back acknowledged) or by registered or certified mail, postage prepaid, return receipt requested, or delivered by hand or by reputable overnight courier, addressed to the party to be so notified at its address hereinafter set forth, or to such other address as such party may hereafter specify in accordance with the provisions of this Section 6.2. Any Notice shall be deemed to have been received: (a) three (3) days after the date such Notice is mailed, (b) on the date of sending by telefax if sent during business hours on a Business Day (otherwise on the next Business Day), (c) on the date of delivery by hand if delivered during business hours on a Business Day (otherwise on the next Business Day), and (d) on the next Business Day if sent by an overnight commercial courier, in each case addressed to the parties as follows:

If to Lender:                 Wells Fargo Bank, National Association

c/o Midland Loan Services

10851 Mastin, Suite 300

Overland Park, Kansas 66210

Attention: Tad Janssen

with a copy to:              Hunton Andrews Kurth LLP

1445 Ross Avenue, Suite 3700

Dallas, Texas 75202

Attention: Kathleen J. Wu,

Esq. Facsimile No.: (214) 659-4620

If to Guarantors:            c/o Legendary Capital

1635 - 43rd Street S, Suite 205 Fargo, ND 58103

Attention: Legal Department

with a copy to:              McShane & Bowie PLLC

99 Monroe Ave NW, Ste 1100

Grand Rapids, Michigan 49503

Attention: John Faris

Facsimile No. 616-732-5099

Any party may change the address to which any such Notice is to be delivered by furnishing ten (10) days' written notice of such change to the other parties in accordance with the provisions of this Section 6.2. Notices shall be deemed to have been given on the date set forth above, even if there is an inability to actually deliver any Notice because of a changed address of which no Notice was given or there is a rejection or refusal to accept any Notice offered for delivery. Notice for any party may be given by its respective counsel. Additionally, Notice from Lender may also be given by Servicer.

Section 6.3 Governing Law.  THIS  GUARANTY  SHALL  BE GOVERNED BY THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER, GUARANTOR OR BORROWER ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT MAY BE INSTITUTED IN THE COURTS HAVING JURISDICTION IN THE CITY AND/OR COUNTY IN WHICH THE PROPERTY IS LOCATED, AND EACH OF LENDER, GUARANTOR AND BORROWER HEREBY WAIVES ANY OBJECTIONS THAT IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING.

Section 6.4 Invalid Provisions. If any provision of this Guaranty is held to be illegal, invalid, or unenforceable under present or future laws effective during the term of this Guaranty, such provision shall be fully severable and this Guaranty shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Guaranty, and the remaining provisions of this Guaranty shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Guaranty, unless such continued effectiveness of this Guaranty, as modified, would be contrary to the basic understandings and intentions of the parties as expressed herein.

Section 6.5 Amendments. This Guaranty may be amended  only  by  an instrument in writing executed by the party(ies) against whom such amendment is sought to be enforced.

Section 6.6  Parties Bound; Assignment.  This Guaranty shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, permitted assigns, heirs and legal representatives. Lender shall have the right to assign or transfer its rights under this Guaranty in connection with any assignment of the Loan and the Loan Documents. Any assignee or transferee of Lender shall be entitled to all the benefits afforded to Lender under this Guaranty. No Guarantor shall have the right to assign or transfer its rights or obligations under this Guaranty without the prior written consent of Lender, and any attempted assignment without such consent shall be null and void.

Section 6.7 Headings.  Section headings are for convenience of reference only and shall in no way affect the interpretation of this Guaranty.

Section 6.8 Recitals. The recitals and introductory paragraphs hereof are a part hereof, form a basis for this Guaranty and shall be considered prima facie evidence of the facts and documents referred to therein.

Section 6.9 Counterparts. To facilitate execution, this Guaranty  may  be  executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single instrument. It shall not be necessary in making proof of this Guaranty to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages.

Section 6.10 Rights and Remedies. If any Guarantor becomes liable for any indebtedness owing by Borrower to Lender, by endorsement or otherwise, other than under this Guaranty, such liability shall not be in any manner impaired or affected hereby and the rights of Lender hereunder shall be cumulative of any and all other rights that Lender may ever have against Guarantor. The exercise by Lender of any right or remedy hereunder or under any other instrument, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any other right or remedy.

Section 6.11 Entirety. THIS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT OF GUARANTORS AND LENDER WITH RESPECT TO GUARANTORS' GUARANTY OF THE GUARANTEED OBLIGATIONS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY  IS INTENDED BY GUARANTORS AND LENDER AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY, AND NO COURSE OF DEALING BETWEEN GUARANTORS AND LENDER, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTORS AND LENDER.

Section 6.12 Waiver of Right To Trial By Jury. EACH GUARANTOR HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS GUARANTY, THE NOTE, THE MORTGAGE, THE LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH GUARANTOR AND IS INTENDED TO ENCOMPASS

INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIYER BY GUARANTORS.

Section 6.13 Cooperation. Each Guarantor acknowledges that Lender and its successors and assigns may (i) sell this Guaranty, the Note and the other Loan Documents to one or more investors as a whole loan, (ii) participate the Loan secured by this Guaranty to one or more investors, (iii) deposit this Guaranty, the Note and the other Loan Documents with a trust, which trust may sell certificates to investors evidencing an ownership interest in the trust assets, or (iv) otherwise sell the Loan or one or more interests therein to investors (the transactions referred to in clauses (i) through (iv) are hereinafter each referred to as "Secondary Market Transaction"). Each Guarantor shall cooperate with Lender in effecting any such Secondary Market Transaction and shall cooperate to implement all requirements imposed by any of the Rating Agencies involved in any Secondary Market Transaction. Each Guarantor shall provide such information and documents relating to such Guarantor, Borrower, the Property and any tenants of the Property as Lender may reasonably request in connection with such Secondary Market Transaction. In addition, each Guarantor shall make available to Lender all information concerning its business and operations that Lender may reasonably request. Lender shall be permitted to share all such information with the investment banking films, Rating Agencies, accounting foms, law firms and other third-party advisory firms involved with the Loan and the Loan Documents or the applicable Secondary Market Transaction. It is understood that the information provided by Guarantors to Lender, including any and all financial statements provided to Lender pursuant to Section 5.2 hereof, may ultimately be incorporated into the offering documents for the Secondary Market Transaction and thus various investors and potential investors may also see some or all of the info1mation. Lender and all of the aforesaid third-party advisors and professional firms shall be entitled to rely on the information supplied by, or on behalf of, Guarantors in the form as provided by Guarantors. Lender may publicize the existence of the Loan in connection with its marketing for a Secondary Market Transaction or otherwise as paii of its business development.

Section 6.14 Reinstatement in Certain Circumstances.  If at any time  any payment of the principal of or interest under the Note or any other amount payable by Borrower under the Loan Documents is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, Guarantors' obligations hereunder with respect to such payment shall be reinstated as though such payment had been due but not made at such time.

Section 6.15 Gender; Number; General Definitions. Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, (a) words used in this Guaranty may be used interchangeably in the singular or plural form, (b) any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, (c) the word "Borrower" shall mean "each Borrower and any subsequent owner or owners of the Property or any part thereof or interest therein", (d) the word "Lender" shall mean "Lender and any subsequent holder of the Note", (e) the word "Note" shall mean "the Note and any other evidence of indebtedness secured by the Loan Agreement", (f) the word "Property" shall include any portion of the Property and any interest therein, and (g) the phrases "attorneys' fees", "legal

fees" and "counsel fees" shall include any and all attorneys', paralegal and law clerk fees and disbursements, including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels, incurred or paid by Lender in protecting its interest in the Property, the Leases and/or the Rents and/or in enforcing its rights hereunder.

Section 6.16 Replacement Guarantor. To the extent that any Guarantor is a natural person, the death or incompetency of such Guarantor shall be an Event of Default hereunder unless such Guarantor is replaced in accordance with this Section 6.16. Borrower shall be permitted to substitute a replacement guarantor and no Event of Default shall be deemed to have occurred hereunder, provided that (a) no other Event of Default hereunder or under any of the other Loan Documents has occurred and is then continuing; (b) each of the following terms and conditions are satisfied (i) within 30 days after the occurrence of such death or incompetency, Borrower delivers Lender written notice of its intent to substitute the guarantor, (ii) the replacement guarantor is  a  Satisfactory  Replacement  Guarantor  (as  defined  below), within 30 days after delivery of the written notice described in the preceding subclause (i), such Satisfactory Replacement Guarantor assumes the obligations  of  Guarantor  hereunder  and  under the other Loan Documents in a manner acceptable to Lender  in its sole  discretion,  concurrently with such assumption, (A) such  Satisfactory  Replacement  Guarantor  delivers  to  Lender  a Spousal Consent (as defined below), as and  to the extent  applicable  and  (B)  each of Borrower  and such Satisfactory Replacement Guarantor affirms  each of their  respective  obligations  under the Loan Documents in a mam1er acceptable to Lender in its sole discretion, and (v) prior to or concurrently with such assumption, as applicable, Lender  receives  such  information, documentation and opinions as may be required by Lender  in its sole  discretion  in  connection  with such assumption and the foregoing (including, without limitation, opinions  relating  to REMIC); and (c) such substitution is pe1mitted by  then  applicable  REMIC  Requirements.  As used herein, the term "Satisfactory Replacement Guarantor" shall  mean  a  replacement guarantor that (1) is acceptable  to Lender  and the Rating  Agencies,  (2) acceptable  to Lender  in  its sole discretion exercised in good faith, and (3) Controls  Borrower  and  the  day-to-day operations of the Property.

Section 6.17 Joint and Several. The obligations  of each Guarantor  hereunder are joint and several.

[NO FURTHER TEXT ON THIS PAGE]

IN WITNESS WHEREOF, each Guarantor has executed this Guaranty as of the day and year first above written.

GUARANTOR:
LODGING FUND REIT III, INC., a Maryland corporation,
By:	/s/ Katie Cox
Name:	Katie Cox
Title:	Chief Financial Officer
LODGING FUND REIT III OP, LP, a Delaware
limited partnership
By:	Lodging Fund REIT III, Inc., its General
	Partner
By:	/s/ Katie Cox
Name:	Katie Cox
Title:	Chief Financial Officer

Guaranty of Recourse Obligations (Fairfield Inn & Suites Lubbock)

1

EX-10.55.7

Exhibit 10.55.7

ENVIRONMENTAL INDEMNITY AGREEMENT

THIS ENVIRONMENTAL INDEMNITY AGREEMENT (this "Agreement") is

made as of January 8, 2020, by LF3 LUBBOCK EXPO, LLC, a Delaware limited liability company, and LF3 LUBBOCK EXPO TRS, LLC, a Delaware limited liability company (each individually and collectively, jointly and severally, "Borrower"), LODGING FUND REIT Ill, INC., a Maryland corporation, and LODGING FUND REIT III OP, LP, a Delaware limited partnership (each individually a "Non-Borrower Indemnitor", and collectively, "Non Borrower Indemnitors"; and together with Borrower, each an "Indemnitor" and collectively, "Indemnitors"), in favor of WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee for Morgan Stanley Capital I Trust 2019-H6, Commercial Mortgage Pass-Through Certificates, Series 2019-H6, acting by and through its Master Servicer, Midland Loan Services, a Division of PNC Bank, National Association (together with its successors and assigns, "Indemnitee") and the other Indemnified Parties (defined below).

RECITALS

A.         Indemnitee is prepared to consent to Borrower's assumption of a loan (the "Loan") made to TREEMONT CAPITAL PARTNERS IV, LP, a Texas limited partnership ("Original Borrower"), in the principal amount of $9,500,000,00 pursuant to a Loan Agreement dated April 4, 2019, between Original Borrower and Starwood Mortgage Capital LLC ("Original Lender") (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the "Loan Agreement"), and a certain Deed of Trust, Assignment of Leases and Rents and Security Agreement of dated as of April 14, 2019, from Original Borrower for the benefit of Original Lender (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the "Mortgage"), encumbering certain real property (the "Property") more particularly described therein. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Loan Agreement.

B.         Indemnitee is the holder of all of Original Lender's right, title and interest in and under the Loan.

C.         Original Borrower and Borrower have requested that Indemnitee consent to (i) the sale of the Property from Original Borrower to Borrower and (ii) the assignment to, and assumption by, Borrower of the Loan (collectively, the "Transaction").

D.          Indemnitee is unwilling to consent to the Transaction unless Indemnitor agrees to provide the indemnification, representations, warranties, covenants, agreements, and other matters described in this Agreement for the benefit of the Indemnified Parties.

E.          Each Indemnitor acknowledges receipt and approval of copies of the Loan

Documents.

F.          Each Non-Borrower Indemnitor acknowledges that it owns, either directly or indirectly, a beneficial interest in Borrower and, as a result of such beneficial interest, will receive substantial economic and other benefits from Indemnitee making the Loan to Borrower.

G.         Indemnitee is unwilling to make the Loan unless Indemnitors agree to provide the indemnification, representations, warranties, covenants and other matters described in this Agreement for the benefit of the Indemnified Parties.

H.         Indemnitors are entering into this Agreement to induce Indemnitee to make the Loan.

AGREEMENT

NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Indemnitors hereby represent, warrant, covenant and agree for the benefit of the Indemnified Parties as follows:

1.          Environmental Representations and Warranties. Except as otherwise disclosed by that certain Phase I environmental report (or Phase II environmental report, if required by Indemnitee) with respect to the Property delivered to Indemnitee by Indemnitors in connection with the origination of the Loan (hereinafter referred to as the "Environmental Report(s)"), (a) to the best of Borrower's knowledge, there are no Hazardous Substances (defined below) or underground storage tanks in, on or under the Property or have been handled, manufactured, generated, stored, processed, or disposed of on or released or discharged from the Property, except those that are both (i) commonly used in the operation and maintenance of properties of kind and nature similar to those of the Property in compliance with all Environmental Laws (defined below) and in a manner that does not result in contamination of the Property or in a material adverse effect on the value, use or operations of the Property and (ii) fully disclosed to Indemnitee in writing pursuant to the Environmental Report(s); (b) to the best of Borrower's knowledge, there are no past, present or threatened Releases (defined below) of Hazardous Substances in, on, under or from the Property which have not been fully remediated in accordance with Environmental Law; (c) to the best of Borrower's knowledge, there is no threat of any Release of Hazardous Substances migrating to the Property; (d) to the best of Borrower's knowledge, there is no past or present non-compliance with Environmental Laws, or with permits issued pursuant thereto, in connection with the Property which has not been fully remediated in accordance with Environmental Law; (e) none of Indemnitors know of, or have received, any written or oral notice or other communication from any Person (including, but not limited to, any Governmental Authority) relating to Hazardous Substances or Remediation (defined below) thereof, of possible liability of any Person pursuant to any Environmental Law, any other environmental conditions in connection with the Property, or any actual or potential administrative or judicial proceedings in connection with any of the foregoing; (0 to the best of Borrower's knowledge, no Mold (as defined below) is present in the indoor air of the Property at concentrations exceeding ambient air levels and no visible Mold is present on any building materials or surfaces at the Property for which any Legal Requirement applicable to the Property recommends or requires removal thereof by remediation professionals, and Indemnitors are not aware of any conditions at the Property that are likely to result in the presence of Mold in the indoor air at concentrations that exceed ambient air levels or on building materials or surfaces that would require such removal; and (g) Indemnitors have truthfully and fully provided to Indemnitee, in writing, any and all information relating to conditions in, on, under or from the Property that is known to any Indemnitor and that is contained in the files and records of any

Indemnitor, including, but not limited, to any reports relating to Hazardous Substances in, on, under or from the Property and/or to the environmental condition of the Property. As used in this Agreement, the term "Mold" means fungi that reproduces through the release of spores or the splitting of cells or other means, including, but not limited to, mold, mildew, fungi, fungal spores, fragments and metabolites such as mycotoxins and microbial volatile organic compounds.

2.          Environmental Covenants. Indemnitors covenant and agree that: (a) all uses and operations on or of the Property by Indemnitors shall be in compliance with all Environmental Laws and permits issued pursuant thereto and Indemnitors shall require and use commercially reasonable efforts to cause any other Person that uses or operates the Property to cause all uses and operations on or of the Property by such Person to be in compliance with all Environmental Laws and permits issued pursuant thereto; (b) there shall be no Releases of Hazardous Substances by Indemnitors (and Indemnitors will use commercially reasonable efforts to prohibit other users of the Property from causing a Release of Hazardous Substances) in, on, under or from the Property; (c) there shall be no Hazardous Substances in, on or under the Property, except those that are both (i) in compliance with all Environmental Laws and with permits issued pursuant thereto and (ii) fully disclosed to Indemnitee in writing; (d) Indemnitors shall keep the Property free and clear of all liens and other encumbrances imposed pursuant to any Environmental Law, whether due to any act or omission of any of the Indemnitors or any other Person (the "Environmental Liens"); (e) Indemnitors shall, at their sole cost and expense, fully and expeditiously cooperate in all activities pursuant to Paragraph 3 of this Agreement, including, but not limited to, providing all relevant information and making knowledgeable Persons available for interviews; (f) Indemnitors shall, at their sole cost and expense, perform any environmental site assessment or other investigation of environmental conditions in connection with the Property, pursuant to any reasonable written request of Indemnitee (including, but not limited to, sampling, testing and analysis of soil, water, air, building materials and other materials and substances whether solid, liquid or gas), and share with Indemnitee the reports and other results thereof, and Indemnitee and the other Indemnified Parties shall be entitled to rely on such reports and other results thereof; (g) Indemnitors shall, at their sole cost and expense, comply with all reasonable written requests of Indemnitee to (i) effectuate Remediation of any condition (including, but not limited to, a Release of a Hazardous Substance) in, on, under or from the Property; (ii) comply with any Environmental Law; (iii) comply with any directive from any Governmental Authority; and/or (iv) take any other reasonable action necessary or appropriate for protection of human health or the environment; (h) none of the Indemnitors shall do or allow any tenant or other user of the Property to do any act that materially increases the dangers to human health or the environment, poses an unreasonable risk of harm to any Person (whether on or off the Prope1ty), impairs or may impair the value of the Property, is contrary to any requirement of any insurer, constitutes a public or private nuisance, constitutes waste or violates any covenant, condition, agreement or easement applicable to the Property; (i) if prior to the date hereof, it was determined that the Property contains paint containing more than 0.5% lead by dry weight ("Lead Based Paint"), Borrower had prepared an assessment report describing the location and condition of the Lead Based Paint (a "Lead Based Paint Report"), or if at any time hereafter, Lead Based Paint is suspected of being present on the Property,  Indemnitors  agree,  at  their  sole  cost  and  expense  and  within  twenty (20) days thereafter, to cause to be prepared a Lead Based Paint Report prepared by an expe11, and in form, scope and substance, acceptable to Indemnitee; G) if prior to the date hereof, it was determined

that the Property contains asbestos or asbestos-containing material ("Asbestos"), Borrower had prepared an assessment rep01i describing the location and condition of the Asbestos (an "Asbestos Report"), or if at any time hereafter, Asbestos is suspected of being present on the Property, Indemnitors agree, at their sole cost and expense and within twenty (20) days thereafter, to cause to be prepared an Asbestos Report prepared by an expert, and in form, scope and substance, acceptable to Indemnitee; (k) if it has been, or if at any time hereafter it is, determined that the Property contains Lead Based Paint or Asbestos, on or before thirty (30) days following (i) the date hereof, if such determination was made prior to the date hereof, or (ii) the date of such determination, if such determination is hereafter made, as applicable, Indemnitors shall, at their sole cost and expense, develop and implement, and thereafter diligently and continuously carry out (or cause to be developed and implemented and thereafter diligently and continually to be carried out), an operations, abatement and maintenance plan for the Lead Based Paint and/or Asbestos, as applicable, on the Property, which plan shall be prepared by an expert, and be in form, scope and substance, acceptable to Indemnitee (together with any Lead Based Paint Report and/or Asbestos Report, as applicable, the "O&M Plan"), and if an O&M Plan has been prepared prior to the date hereof, Indemnitors agree to diligently and continually carry out (or cause to be carried out) the provisions thereof, it being understood and agreed that compliance with the O&M Plan shall require or be deemed to require, without limitation, the proper preparation and maintenance of all records, papers and forms required under the Environmental Laws; (I) in the event that any inspection or audit reveals the presence of Mold in the indoor air of the Property at concentrations exceeding ambient air levels or visible Mold on any building materials or surfaces at the Property for which any Legal Requirement applicable to the Property recommends or requires removal thereof by remediation professionals, Indemnitors shall immediately remediate the Mold and perform post-remedial clearance sampling in accordance with said Legal Requirement, following which abatement of the Mold, Indemnitors shall prepare and implement an Operations and Maintenance Plan for Mold and Moisture acceptable to Indemnitee and in accordance with the guidelines issued by the National Multi Housing Council; and (m) Indemnitors shall immediately notify Indemnitee in writing of (A) any presence or Release or threatened Release of Hazardous Substances in, on, under, from or migrating towards the Property; (B) any non-compliance with any Environmental Laws related in any way to the Property; (C) any actual or potential Environmental Lien; (D) any required or proposed Remediation of environmental conditions relating to the Property; and/or (E) any written or oral notice or other communication of which any Indemnitor becomes aware from any source whatsoever (including, but not limited to, any Governmental Authority) relating in any way to Hazardous Substances or Remediation thereof, possible liability of any Person pursuant to any Environmental Law, other environmental conditions in connection with the Property or any actual or potential administrative or judicial proceedings in connection with anything referred to in this Agreement.

3.          Indemnified Rights/Cooperation and Access. In the event the Indemnified Parties have reason to believe that an environmental hazard exists on the Property that does not, in the sole discretion of the Indemnified Parties, (a) endanger any tenants or other occupants of the Property or their guests or the general public, or (b) materially and adversely affect the value of the Property, upon reasonable notice from the Indemnitee, Indemnitors shall, at Indemnitors' sole cost and expense, promptly cause an engineer or consultant satisfactory to the Indemnified Parties to conduct any environmental assessment or audit (the scope of which shall be determined in the sole and absolute discretion of the Indemnified Parties) and take any samples

of soil, groundwater or other water, air or building materials or any other invasive testing requested by Indemnitee and promptly deliver to Indemnitee the results of any such assessment, audit, sampling or other testing; provided, however, if such results are not delivered to Indemnitee within a reasonable period or if the Indemnified Parties have reason to believe that an environmental hazard exists on the Property that, in the sole judgment of the Indemnified Parties, endangers any tenant or other occupant of the Property or their guests or the general public or may materially and adversely affect the value of the Property, upon reasonable notice to Indemnitors (which may be given verbally), the Indemnified Parties and any other Person designated by the Indemnified Parties, including, but not limited to, any receiver, any representative of any Governmental Authority and/or any environmental consultant, shall have the right, but not the obligation, to enter upon the Property at all reasonable times to assess any and all aspects of the environmental condition of the Property and its use, including, but not limited to, conducting any environmental assessment or audit (the scope of which shall be determined in the sole and absolute discretion of the Indemnified Parties) and taking samples of soil, groundwater or other water, air or building materials and reasonably conducting other invasive testing. Indemnitors shall cooperate with and provide the Indemnified Parties and any such Person designated by the Indemnified Parties with access to the Property.

4.          Indemnification. Indemnitors covenant and agree, at their sole cost and expense, to protect, defend, indemnify, release and hold Indemnified Parties harmless from and against any and all Losses (defined below) imposed upon, or incurred by, or asserted against, any Indemnified Parties and directly or indirectly arising out of or in any way relating to any one or more of the following: (a) any presence of any Hazardous Substances in, on, above or under the Property; (b) any past, present or threatened Release of Hazardous Substances in, on, above, under or from the Property; (c) any activity by any of the Indemnitors, any Person affiliated with any of the Indemnitors and/or any tenant or other user of the Property in connection with any actual, proposed or threatened use, treatment, storage, holding, existence, disposition or other Release, generation, production, manufacturing, processing, refining, control, management, abatement, removal, handling, transfer or transportation to or from the Property of any Hazardous Substances at any time located in, under, on or above the Property; (d) any activity by any of the Indemnitors, any Person affiliated with any of the Indemnitors and/or any tenant or other user of the Property in connection with any actual or proposed Remediation of any Hazardous Substances at any time located in, under, on or above the Property, whether or not such Remediation is voluntary or pursuant to court or administrative order, including, but not limited to, any removal, remedial or corrective action; (e) any past or present non-compliance or violation of any Environmental Law (or of any permit issued pursuant to any Environmental Law) in connection with the Property or operations thereon, including, but not limited to, any failure by any of the Indemnitors, any Person affiliated with any of the Indemnitors and/or any tenant or other user of the Property to comply with any order of any Governmental Authority in connection with any Environmental Laws; (f) the imposition, recording or filing or the threatened imposition, recording or filing of any Environmental Lien encumbering the Property; (g) any administrative processes or proceedings  or judicial  proceedings  in any way connected with any matter addressed in this Agreement; (h) any past or present injury to, destruction of or loss of natural resources in any way connected with the Property, including, but not limited to, costs to investigate and assess such injury, destruction or loss; (i) any acts of any of the Indemnitors, any Person affiliated with any of the Indemnitors and/or any tenant or other user of the Property  in arranging  for  the  disposal  or  treatment,  or arranging  with a  transporter  for

transport for the disposal or treatment, of Hazardous Substances at any facility or incineration vessel containing such or similar Hazardous Substances; G) any acts of any of the Indemnitors, any Person affiliated with any of the Indemnitors and/or any tenant or other user of the Property in accepting any Hazardous Substances for transport to disposal or treatment facilities, incineration vessels or sites from which there is a Release or a threatened Release of any Hazardous Substance which causes the incurrence of costs for Remediation; (k) any personal injury, wrongful death or property or other damage arising under any statutory or common law or tort law theory, including, but not limited to, damages assessed for private or public nuisance or for the conducting of an abnormally dangerous activity on or near the Property; and (1) any misrepresentation or inaccuracy in any representation or warranty or material breach or failure to perform any covenants or other obligations pursuant to this Agreement, the Loan Agreement or the Mortgage. Notwithstanding the foregoing, Indemnitor shall not have any indemnification obligations or liabilities to Indemnitee under this Agreement with respect to any claim, loss, damage, cost, expense or liability that has been adjudicated as final (and is not subject to appeal) to arise solely out of, or that Indemnitor can prove to the satisfaction of Indemnitee (determined in Indemnitee's sole and absolute discretion) arose solely out of, Hazardous Substances in, on, under or about the Property that were both (a) due to Indemnitee's willful misconduct or gross negligence, and (b) not the result of any act or negligence of Indemnitor or any of Indemnitor' s affiliates, agents or contractors.

5.         Duty to Defend and Attorneys' and Other Fees and Expenses. Upon written request by any Indemnified Party, Indemnitors shall defend such Indemnified Party(ies) against any claim for which indemnification is required hereunder (if requested by any Indemnified Party, in the name of the Indemnified Party), by attorneys and other professionals approved by the Indemnified Parties. Notwithstanding the foregoing, any Indemnified Parties may, in their sole and absolute discretion, engage their own attorneys and other professionals to defend or assist them, and, at the option of Indemnified Parties, their attorneys shall control the resolution of any claim or proceeding, provided that no compromise or settlement shall be entered without Indemnitors' consent, which consent shall not be unreasonably withheld. Upon demand, Indemnitors shall pay or, in the sole and absolute discretion of the Indemnified Parties, reimburse, the Indemnified Parties for the payment of the reasonable fees and disbursements of attorneys, engineers, environmental consultants, laboratories and other professionals in connection therewith.

6.          Definitions. As used in this Agreement, the following terms shall have the following meanings: The term "Environmental Laws" means any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law, relating to protection of human health or the environment, relating to Hazardous Substances and/or relating to liability for or costs of other actual or threatened danger to human health or the environment. The term "Environmental Laws" includes, but is not limited to, the following statutes, as amended, any successor thereto, and any regulations promulgated pursuant thereto, and any state or local statutes, ordinances, rules, regulations and the like addressing similar issues: the Comprehensive Environmental Response, Compensation and Liability Act; the Emergency Planning and Community Right-to-Know Act; the Hazardous Substances Transportation Act; the Resource Conservation and Recovery Act (including, but not limited to, Subtitle I relating to underground storage tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking Water Act; the

Occupational Safety and Health Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the National Environmental Policy Act; the River and Harbors Appropriation Act; and those relating to Lead Based Paint. The term "Environmental Laws" also includes, but is not limited  to, any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law, conditioning transfer of property upon a negative declaration or other approval of a Governmental Authority of the environmental condition of the Property; requiring notification or disclosure of Releases of Hazardous Substances or other environmental condition of a property to any Governmental Authority or other Person, whether or not in connection with any transfer of title to or interest in such property; imposing conditions or requirements in connection with permits or other authorization for lawful activity; relating to nuisance, trespass or other causes of action related to the Property; and relating to wrongful death, personal injury or property or other damage in connection with any physical condition or use of the Property.

The term "Hazardous Substances" includes, but is not limited to, any and all substances (whether solid, liquid or gas) defined, listed or otherwise classified as pollutants, hazardous wastes, hazardous substances, hazardous materials, extremely hazardous wastes or words of similar meaning or regulatory effect under any present or future Environmental Laws or that may have a negative impact on human health or the environment, including, but not limited to, petroleum and petroleum products, asbestos and asbestos-containing materials, polychlorinated biphenyls, lead, radon, radioactive materials, flammables and explosives, Lead Based Paint and Mold, but excluding substances of kinds and in amounts ordinarily and customarily used or stored in similar properties for the purposes of cleaning or other maintenance or operations and otherwise in compliance with all Environmental Laws.

The term "Indemnified Parties" includes Indemnitee, any Person who is or will have been involved in the origination of the Loan, any Person who is or will have been involved with the servicing of the Loan, any Person in whose name the encumbrance created by the Mortgage is or will have been recorded, Persons who may hold or acquire or will have held a full or partial interest in the Loan (including, but not limited to, Investors (as hereinafter defined) and/or prospective Investors, as well as custodians, trustees and other fiduciaries who hold or have held a full or partial interest in the Loan for the benefit of third parties), as well as the respective directors, officers, shareholders, partners, members, employees, agents, servants, representatives, contractors, subcontractors, affiliates, subsidiaries, participants, successors and assigns of any and all of the foregoing (including, but not limited to, any other Person who holds or acquires or will have held a participation or other full or partial interest in the Loan or the Property, whether during the term of the Loan or as a part of, or following a foreclosure of, the Loan and including, but not limited to, any successors by merger, consolidation or acquisition of all or a substantial portion of Indemnitee's assets and business).

The term "Legal Action" means any claim, suit or proceeding, whether administrative or judicial in nature.

The term "Losses" includes any losses, damages, costs, fees, expenses, claims, suits, judgments, awards, liabilities (including, but not limited to, strict liabilities), obligations, debts, diminutions in value, fines, penalties, charges, costs of Remediation (whether or not performed voluntarily), amounts paid in settlement, foreseeable and unforeseeable consequential

damages, litigation costs, fees of attorneys, engineers and environmental consultants and investigation costs (including, but not limited to, costs for sampling, testing and analysis of soil, water, air, building materials and other materials and substances, whether solid, liquid or gas), of whatever kind or nature, and whether or not incurred in connection with any judicial or administrative proceedings, actions, claims, suits, judgments or awards.

The term "Release" with respect to any Hazardous Substance includes, but is not limited to, any release, deposit, discharge, emission, leaking, leaching, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing or other movement of Hazardous Substances.

The term "Remediation" includes, but is not limited to, any response, remedial, removal, or corrective action; any activity to clean up, detoxify, decontaminate, contain or otherwise remediate any Hazardous Substance; any actions to prevent, cure or mitigate any Release of any Hazardous Substance; any action to comply with any Environmental Laws or with any permits issued pursuant thereto; any inspection, investigation, study, monitoring, assessment, audit, sampling and testing or laboratory or other analysis or evaluation relating to any Hazardous Substances or to anything referred to herein.

7.          Unimpaired Liability. The liability of Indemnitors under this Agreement shall in no way be limited or impaired by, and each Indemnitor hereby consents to and agrees to be bound by, any amendment or modification of the provisions of the Note, the Loan Agreement, the Mortgage or any other Loan Document to or with Indemnitee by Borrower or any Person who succeeds Borrower or any Person as owner of the Property. In addition, the liability of Indemnitors under this Agreement shall in no way be limited or impaired by (i) any extensions of time for performance required by the Note, the Loan Agreement, the Mortgage or any of the other Loan Documents, (ii) any sale or transfer of all or part of the Property, or any sale or other assignment by any Non-Borrower Indemnitor of its direct or indirect ownership interests in Borrower, (iii) except as provided herein, any exculpatory provision in the Note, the Loan Agreement, the Mortgage or any of the other Loan Documents limiting Indemnitee's recourse to the Property or to any other security for the Note, or limiting Indemnitee's rights to a deficiency judgment against any of the Indemnitors, (iv) the accuracy or inaccuracy of the representations and warranties made by Borrower under the Note, the Loan Agreement, the Mortgage or any of the other Loan Documents or herein, (v) the release of any of the Indemnitors (including, if applicable, Borrower) or any other Person from performance or observance of any of the agreements, covenants, terms or conditions contained in any of the other Loan Documents, by operation of law, Indemnitee's voluntary act, or otherwise, (vi) the release or substitution in whole or in part of any security for the Note, or (vii) Indemnitee's failure to record the Mortgage or file any UCC financing statements (or Indemnitee's improper recording or filing of any thereof) or to otherwise perfect, protect, secure or insure any security interest or lien given as security for the Note; and, in any such case, whether with or without notice to any of the Indemnitors and with or without consideration.

8.          Enforcement. The Indemnified Parties may enforce the obligations of Indemnitors without first resorting to or exhausting any security or collateral or without first having recourse to the Note, the Loan Agreement, the Mortgage or any other Loan Documents or any of the Property, through foreclosure proceedings or otherwise, provided, however, that

nothing herein shall inhibit or prevent Indemnitee from suing on the Note, foreclosing or exercising any power of sale under the Mortgage or exercising any other rights and remedies thereunder. This Agreement is not collateral or security for the Obligations of  Borrower pursuant to the Loan Agreement, unless Indemnitee expressly elects in writing to make this Agreement additional collateral or security for such Obligations of Borrower pursuant to the Loan Agreement, which Indemnitee is entitled to do in its sole and absolute discretion. It is not necessary for an Event of Default to have occurred pursuant to and as defined in the Mortgage or the Loan Agreement for Indemnified Parties to exercise their rights pursuant to this Agreement. Notwithstanding any provision of the Loan Agreement to the contrary, the obligations of each Indemnitor pursuant to this Agreement are exceptions to any non-recourse or exculpation provision of the Loan Agreement; and each Indemnitor expressly acknowledges and agrees that it is fully and personally liable for such obligations, and such liability is not limited to the original or amortized principal balance of the Loan or the value of the Property.

9.          Survival. The obligations and liabilities of each Indemnitor under this Agreement shall fully survive indefinitely, notwithstanding any termination, satisfaction, assignment, entry of a judgment of foreclosure, exercise of any power of sale or delivery of a deed in lieu of foreclosure of the Mortgage.

10.        Interest. Any amounts payable to any Indemnified Parties under this Agreement shall become immediately due and payable on demand and, if not paid within five (5) days of such demand therefor, shall bear interest at the Default Rate.

11.        Waivers.

(a)        Each Indemnitor hereby waives and relinquishes (i) any right or claim of right to cause a marshaling of any Indemnitor' s assets or to cause Indemnitee or any other Indemnified Party to proceed against any of the security for the Loan before proceeding under this Agreement against any Indemnitor; (ii) all rights and remedies accorded by applicable law to indemnitors or guarantors generally, including any rights of subrogation which any Indemnitor may have, provided that the indemnity provided for hereunder shall neither be contingent upon the existence of any such rights of subrogation nor subject to any claims or defenses whatsoever which may be asserted in connection with the enforcement or attempted enforcement of such subrogation rights, including, without limitation, any claim that such subrogation rights were abrogated by any acts of Indemnitee or any other Indemnified Party; (iii) the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against or by Indemnitee or any other Indemnified Party; (iv) notice of  acceptance hereof and of any action taken or omitted in reliance hereon; (v) presentment for payment, demand of payment, protest or notice of nonpayment or failure to perform or observe, or other proof, or notice or demand; and (vi) all homestead exemption rights against the obligations hereunder and the benefits of any statutes of limitations or repose. Notwithstanding anything to the contrary contained herein, each Indemnitor hereby agrees to postpone the exercise of any rights of subrogation with respect to any collateral securing the Obligations until the Obligations shall have been paid in full.

(b)        EACH INDEMNITOR HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND FOREVER

WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST, WITH REGARD TO THIS AGREEMENT, THE NOTE, THE MORTGAGE OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH INDEMNITOR AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. THE INDEMNIFIED PARTIES ARE HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY EACH INDEMNITOR.

12.       Subrogation. Each Indemnitor hereby agrees that it shall take any and all reasonable actions, including the institution of legal action against third parties, necessary or appropriate to obtain reimbursement, payment or compensation from such Persons responsible for the presence of any Hazardous Substances at, in, on, under or near the Property or otherwise obligated by law to bear the cost. The Indemnified Parties shall be and hereby are subrogated to all of each Indemnitor' s rights now or hereafter in such claims.

13.       Indemnitors' Representations and Warranties. Each Indemnitor represents and warrants that:

(a)        it has the full power and authority to execute and deliver this Agreement and to perform its obligations hereunder; the execution, delivery and performance of this Agreement by such Indemnitor has been duly and validly authorized; and all requisite action has been taken by such Indemnitor to make this Agreement valid and binding upon such Indemnitor, enforceable in accordance with its terms;

(b)        its execution of, and compliance with, this Agreement is in the ordinary course of business of such Indemnitor and will not result in the breach of any term or provision of the charter, by-laws, partnership, operating or trust agreement or other governing instrument of such Indemnitor or result in the breach of any term or provision of, or conflict with or constitute a default under, or result in the acceleration of any obligation under, any agreement, indenture or loan or credit agreement or other instrument to which such Indemnitor or the Property is subject, or result in the violation of any law, rule, regulation, order, judgment or decree to which such Indemnitor or the Property is subject;

(c)        to the best of such Indemnitor' s knowledge, there is no action, suit, proceeding or investigation pending or threatened against it which, either in any one instance or in the aggregate, may result in any material adverse change in the business, operations, financial condition, properties or assets of such Indemnitor, or in any material impairment of the right or ability of such Indemnitor to carry on its business substantially as now conducted, or in any material liability on the part of such Indemnitor, or which would draw into question the validity of this Agreement or of any action taken or to be taken in connection with the obligations of such Indemnitor contemplated herein, or which would be likely to impair materially the ability of such Indemnitor to perform under the terms of this Agreement;

(d)        it does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in this Agreement;

(e)        to the best of such Indemnitor's knowledge, no approval, authorization, order, license or consent of, or registration or filing with, any Governmental Authority or other Person, and no approval, authorization or consent of any other Person, is required in connection with this Agreement; and

(f)         this Agreement constitutes a valid, legal and binding obligation of such Indemnitor, enforceable against it in accordance with the terms hereof

14.       No Waiver. No delay by any Indemnified Party in exercising any right, power or privilege under this Agreement shall operate as a waiver of any such privilege, power or right.

15.       Notice of Legal Actions. Each party hereto shall, within five (5) Business Days of receipt thereof, give written notice to the other parties hereto of (i) any notice, advice or other communication from any Governmental Authority or any source whatsoever with respect to Hazardous Substances on, from or affecting the Property, and (ii) any legal action brought against such party or related to the Property, with respect to which Indemnitors may have liability under this Agreement. Such notice shall comply with the provisions of Section 19 hereof.

16.       Examination of Books and Records. The Indemnified Parties and their accountants and other representatives shall have the right to examine the records, books and management and other papers of each Indemnitor which reflect upon its financial condition, at the Property or at the office regularly maintained by such Indemnitor where the books and records are located. The Indemnified Parties and their accountants and other  representatives shall have the right to make copies and extracts from the foregoing records and other papers. In addition, at reasonable times and upon reasonable notice (which may be given verbally), the Indemnified Parties and their accountants and other representatives shall have the right to examine and audit the books and records of each Indemnitor pertaining to the income, expenses and operation of the Property during reasonable business hours at the office of such Indemnitor where the books and records are located.

17.        Transfer of Loan.

(a)        Indemnitee may, at any time, sell, transfer or assign the Note, the Loan Agreement, the Mortgage, this Agreement and the other Loan Documents, and any or all servicing rights with respect thereto, or grant participations therein or issue mortgage pass through certificates or other securities evidencing a beneficial interest in a rated or unrated public offering or private placement (the "Securities"). Indemnitee may forward to each purchaser, transferee, assignee, servicer, participant or investor in such Securities or any credit rating agency rating such Securities (each of the foregoing entities hereinafter referred to as an "Investor") and each prospective Investor all documents and information which Indemnitee now has or may hereafter acquire relating to each Indemnitor and the Property, whether furnished by any Indemnitor or otherwise, as Indemnitee determines necessary or desirable. Each Indemnitor

agrees to cooperate with Indemnitee in connection with any transfer made or any Securities created pursuant to this Section, including, without limitation, the delivery of an estoppel certificate required in accordance with the Loan Agreement and such other documents as may be reasonably requested by Indemnitee. Each Indemnitor shall also furnish, and each Indemnitor hereby consents to Indemnitee furnishing, to such Investors or such prospective Investors, any and all information concerning the financial condition of such Indemnitor and any and all information concerning the Property and the Leases as may be requested by Indemnitee, any Investor or any prospective Investor in connection with any sale, transfer or  participation interest.

(b)        Upon any transfer or proposed transfer contemplated above and by Section

9.1 of the Loan Agreement, at Indemnitee' s request, each Indemnitor shall provide an estoppel certificate to any Investor or any prospective Investor in such form, substance and detail as Indemnitee, such Investor or such prospective Investor may require.

18.       Taxes. Each Indemnitor has filed all federal, state, county, municipal and city income and other tax returns required to have been filed by it and has paid all taxes and related liabilities which have become due pursuant to such returns or pursuant to any assessments received by it. No Indemnitor has any knowledge of any basis for any additional assessment in respect of any such taxes and related liabilities for prior years.

19.       Notices. All notices, demands, requests, consents, approvals or other communications (any of the foregoing, a "Notice") required, permitted or desired to be given hereunder shall be in writing and shall be sent by telefax (with answer back acknowledged) or by registered or certified mail, postage prepaid, return receipt requested, or delivered by hand or by reputable overnight courier, addressed to the party to be so notified at its address hereinafter set forth, or to such other address as such party may hereafter specify in accordance with the provisions of this Section 19. Any Notice shall be deemed to have been received: (a) three (3) days after the date such Notice is mailed, (b) on the date of sending by telefax if sent during business hours on a Business Day (otherwise on the next Business Day), (c) on the date of delivery by hand if delivered during business hours on a Business Day (otherwise on the next Business Day), and (d) on the next Business Day if sent by an overnight commercial courier, in each case addressed to the parties as follows:

If to Indemnitee:
	Wells Fargo Bank, National Association
	c/o Midland Loan Services
	10851 Mastin, Suite 300
	Overland Park, Kansas 66210
	Attention: Tad Janssen
with a copy to:	Hunton Andrews Kurth LLP
	1445 Ross Avenue, Suite 3700
	Dallas, Texas 75202
	Attention: Kathleen J. Wu, Esq.
	Facsimile No.: (214) 659-4620

If to Indemnitors:
	c/o Legendary Capital
	644 Lovett Ave.
	SE Grand Rapids, MI 49506
	Attention: Legal Department
with a copy to:	McShane & Bowie PLLC
	99 Monroe Ave NW, Ste 1100
	Grand Rapids, Michigan 49503
	Attention: John Faris
	Facsimile No. 616-732-5099

Any party may change the address to which any such Notice is to be delivered by furnishing ten

(10) days' written notice of such change to the other parties in accordance with the provisions of this Section 19. Notices shall be deemed to have been given on the date set forth above, even if there is an inability to actually deliver any Notice because of a changed address of which no Notice was given or there is a rejection or refusal to accept any Notice offered for delivery. Notice for any party may be given by its respective counsel. Additionally, Notice from Indemnitee may also be given by Servicer.

20.        Duplicate Originals; Counterparts. This Agreement may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Agreement may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Agreement. The failure of any party hereto to execute this Agreement, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

21.        No Oral Change. This Agreement, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of any Indemnitor or any Indemnified Party, but only by an agreement in writing signed by the party or parties against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

22.        Headings, Etc. The headings and captions of various paragraphs of this Agreement are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

23.        Number and Gender/Successors and Assigns. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the Person or Persons referred to may require. Without limiting the effect of specific references in any provision of this Agreement, the term "Indemnitor" shall be deemed to refer to each and every Person constituting an Indemnitor from time to time, as the sense of a particular provision may require, and to include the heirs, executors, administrators, legal representatives, successors and permitted assigns of each Indemnitor, all of whom shall be bound by the provisions of this Agreement. Each reference herein to Indemnitee shall be deemed to include its successors and assigns. This Agreement shall inure to the benefit of the Indemnified

Parties and their respective successors, permitted assigns, heirs and legal representatives forever. The Indemnified Parties shall have the right to assign or transfer their rights under this Agreement in connection with any assignment of the Loan and the Loan Documents. Any assignee or transferee of Indemnitee (and the other Indemnified Parties) shall be entitled to all the benefits afforded to Indemnitee (and the other Indemnified Parties) under this Agreement.  No Indemnitor shall have the right to assign or transfer its rights or obligations under this Agreement without the prior written consent of Indemnitee, as provided in the Loan Agreement, and any attempted assignment without such consent shall be null and void.

24.        Release of Liability. Any one or more parties liable upon or in respect of this Agreement may be released without affecting the liability of any party not so released.

25.        Rights Cumulative. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies which Indemnitee has under the Note, the Mortgage, the Loan Agreement or the other Loan Documents or would otherwise have at law or in equity.

26.        Inapplicable Provisions. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement, and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement, unless such continued effectiveness of this Agreement, as modified, would be contrary to the basic understandings and intentions of the parties as expressed herein.

27.        Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR ANY INDEMNITOR ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE INSTITUTED IN THE COURTS HAVING JURISDICTION IN THE CITY AND/OR COUNTY IN WHICH THE PROPERTY IS LOCATED, AND LENDER AND EACH INDEMNITOR HEREBY WAIVES ANY OBJECTIONS THAT IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING.

28.        Miscellaneous.

(a)        Wherever pursuant to this Agreement (i) Indemnitee (or any other Indemnified Party) exercises any right given to it to approve or disapprove any matter, (ii) any arrangement or term is to be satisfactory to Indemnitee (or any other Indemnified Party), or (iii) any other decision or determination is to be made by Indemnitee (or any other Indemnified Party), the decision of Indemnitee (or such other Indemnified Party) to approve or disapprove such matter, all decisions that arrangements or terms are satisfactory or not satisfactory to Indemnitee (or such other Indemnified Party) and all other decisions and determinations made by Indemnitee (or such other Indemnified Party), shall be in the sole and absolute discretion of

Indemnitee (or such other Indemnified Party) and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein.

(b)        Wherever pursuant to this Agreement it is provided that any Indemnitor pay any costs and expenses, such costs and expenses shall include, but not be limited to, legal fees and disbursements of Indemnitee and the other Indemnified Parties, whether incurred by retained outside law firms, or as reimbursements for the expenses of in-house legal staff, or otherwise.

29.        Joint and Several Liability. The obligations and liabilities of the Indemnitors hereunder are joint and several.

30.       Recitals. The recitals hereof are a part hereof, form a basis for this Agreement and shall be considered prima facie evidence of the facts and documents referred to therein.

[NO FURTHER TEXT ON THIS PAGE]

IN WITNESS WHEREOF, this Agreement has been executed by Indemnitors and is effective as of the day and year first above written.

INDEMNITORS:

LF3 LUBBOCK EXPO, LLC,

a Delaware limited liability company

By: Lodging Fund REIT III OP, LP, its sole member

By: Lodging Fund REIT III, Inc., its general partner

By: /s/ Katie Cox

Name: Katie Cox

Its:        Chief Financial Officer

LF3 LUBBOCK EXPO TRS, LLC,

a Delaware limited liability company

By: Lodging Fund REIT III TRS, Inc. Its: Sole Member

By: /s/ Katie Cox

Name: Katie Cox

Its:        Chief Financial Officer

LODGING FUND REIT III, INC., a Maryland corporation,

By: /s/ Katie Cox

Name: Katie Cox

Title:      Chief Financial Officer

LODGING FUND REIT III OP, LP, a Delaware

limited partnership

By: Lodging Fund REIT III, Inc., its General Partner

By: /s/ Katie Cox

Name: Katie Cox

Title:       Chief Financial Officer

Environmental Indemnity Agreement (Fairfield Inn & Suites Lubbock)

EX-10.55.8

Exhibit 10.55.8

ACKNOWLEDGMENT OF PROPERTY MANAGER AND BORROWER

THIS ACKNOWLEDGMENT OF PROPERTY MANAGER AND BORROWER is entered into as of January 8, 2020, by NHS LLC, a North Dakota limited liability company (the "Property Manager"), with an address at 1635 - 43rd St. South, Suite 305, Fargo, ND 58103, and LF3 LUBBOCK EXPO, LLC, a Delaware limited liability company ("Fee Owner") and LF3 LUBBOCK EXPO TRS, LLC, a Delaware limited liability company ("Operating Lessee"; each, individually, and collectively with Fee Owner, "Borrower") to and for the benefit of WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee for Morgan Stanley Capital I Trust 2019-H6, Commercial Mortgage Pass-Through Certificates, Series 2019-H6, acting by and through its Master Servicer, Midland Loan Services, a Division of PNC Bank, National Association (collectively referred to herein as "Lender").

A.   Pursuant to a Consent, Amendment and Assumption Agreement (the "Assumption Agreement") by and among TREEMONT CAPITAL PARTNERS IV, LP, a Texas limited partnership ("Original Borrower"), Borrower, Lender, and certain other parties named therein, Borrower has assumed all of Original Borrower's obligations in connection with a loan (the "Loan") evidenced by, among other things, (i) that certain Promissory Note dated April 4, 2019, executed by Original Borrower, payable to the order of Starwood Mortgage Capital LLC ("Original Lender"), in the original principal amount of $9,500,000.00 (collectively with all amendments and modifications thereto, the "Note"), (ii) that certain Deed of Trust, Assignment of Leases and Rents and Security Agreement dated April 4, 2019 and that certain Leasehold Deed of Trust, Assignment of Leases and Rents and Security Agreement dated as of the date hereof (collectively with all amendments and modifications thereto, the "Mortgage") securing the Note and covering, among other things, the property encumbered thereby and certain property located at 435 50th Street, Lubbock, Texas, commonly known as Fairfield Inn & Suites Lubbock, as more particularly described therein (the "Property"), and (iii) all other documents, instruments and agreements executed by Original Borrower in connection with the Loan. The Loan is further evidenced by that certain Loan Agreement dated April 4, 2019, executed by Original Lender and Original Borrower (the "Loan Agreement"). Capitalized terms used herein and not otherwise defined, shall have the meaning given to them in the Loan Agreement.

B.      The Property Manager has entered into a Management Agreement (the "Contract") with Operating Lessee, a true, correct and complete copy of which is attached hereto as Exhibit A, providing for the performance by Property Manager of certain management obligations more particularly described therein with respect to the management and operation of the Property.

C.      The Property Manager has entered into a Fairfield Inn & Suites By Marriott Lubbock Southwest Alcohol Temporary Concession Agreement (together will all modifications, extensions and replacement thereof, (the "Concession Agreement") with Fee Owner and Original Borrower, a true, correct and complete copy of which is attached hereto as Exhibit B, providing for the performance by Property Manager of certain management obligations more particularly described therein with respect to the management and operation of the Property.

D.        Pursuant to the Loan Documents, Borrower has collaterally transferred to Lender all of Borrower's right, title and interests under the Contract and Concession Agreement.

E.         Lender has requested, and Property Manager has agreed, to subordinate any rights to payment under the Contract and Concession Agreement to Lender's liens more particularly described in the Mortgage and the Loan Documents (as that term is defined in the Assumption Agreement).

NOW, THEREFORE, in consideration of Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Property Manager hereby represents, warrants and agrees with Lender as follows:

1.         Property Manager and Borrower hereby agree that the Contract and the Concession Agreement all payment obligations of Borrower to Property Manager for services rendered by Property Manager for the management and operation of the Property, as such services are more particularly described in the Contract and Concession Agreement, are hereby subordinated to the Mortgage and all rights of Lender to receive payment from Borrower under the Note and all other amounts which may be due Lender under the Loan Documents. Property Manager recognizes and agrees that so long as the Note is being paid in strict accordance with its terms and all other requirements of the Loan Documents are being satisfied, Property Manager shall be entitled to receive payments provided for under the Concession Agreement and Contract in accordance with the terms thereof. Property Manager hereby releases, discharges and waives any and all liens, claims or demands, of any kind or nature, against the Property, either now or in the future, arising from the services provided by Property Manager for the management and operation of the Property but in no event waives any claim or demand against the Borrower.

2.         As additional collateral security for the Loan, and subject to the terms and conditions of this Agreement, Borrower hereby assigns its rights and interest under the Contract and Concessions Agreement said assignment to automatically become a present, unconditional assignment, at Lender's option, upon the occurrence and continuance of an Event of Default under the Loan Agreement, provided, that prior to an Event of Default, Borrower shall have the right to exercise all of its rights under such Agreements in accordance with the Loan Documents. Property Manager hereby consents to such conditional assignment and agrees that if Lender or its designee takes possession of the Property or any portion thereof, then Property Manager and Lender shall recognize each other as "manager" and "owner," respectively, under the Concessions Agreement and Contract for the remainder of the term thereof, subject to any termination rights described therein and Lender's termination rights under Section 4 hereof.

3.         In the event that Borrower defaults under the terms of the Contract or Concession Agreement, Property Manager agrees that before exercising any rights or remedies with respect thereto, it will notify Lender of such default. Upon Lender's request, Property Manager will continue to perform under the Contract and Concession Agreement (as applicable), subject to being paid in accordance with the Contract and Concession Agreement (as applicable) for the work performed. In such event, Property Manager recognizes that the maximum amount that shall be due and payable under the Contract is the amount stated therein (such amount being adequate to complete the services called for in the Contract), and that Property Manager will not

claim any incidental, consequential, or exemplary damages of any nature as a condition to completing its performance under the Contract.

4.          Without limiting the foregoing, in the event Lender forecloses or otherwise succeeds to the rights of Borrower with respect to the Property, Lender shall have the option upon written notice to Property Manager delivered within thirty (30) days following foreclosure by Lender or other acquisition of the Property by Lender, either to (a) terminate the Contract or Concession Agreement without any obligation or liability of Lender to pay any of the termination fees set forth in the Contract or Concession Agreement; or (b) continue the Contract or Concession Agreement in effect upon all of the terms and provisions provided in the Contract or Concession Agreement, except that Lender shall have no obligation to pay any sums due and owing under the Contract or Concession Agreement as of the date of foreclosure or other acquisition of the Property, and Lender shall have the right after it elects to continue the Contract or Concession Agreement under subparagraph (b) hereof to terminate the Contract or Concession Agreement without cause upon thirty (30) days written notice to Property Manager without any obligation or liability of Lender to pay any of the termination fees set forth in the Contract or Concession Agreement. Property Manager acknowledges and agrees with Lender that Lender has not assumed any obligations or liabilities of Borrower to Property Manager under the Contract or Concession Agreement. If Lender chooses not to continue the Contract or Concession Agreement following a foreclosure or other acquisition of the Property, the only compensation from Lender for which Property Manager shall be entitled under the Contract or Concession Agreement shall be (i) for the period commencing with the date of such foreclosure or other acquisition and ending upon the subsequent termination by Lender of the Contract or Concession Agreement, and (ii) for any period covered by paragraph 2 above.

5.          Property Manager agrees (a) not to resign as property manager without thirty (30) days prior written notice to Lender, and (b) not to amend the Contract or Concession Agreement in any way that would have a material economic effect on the rights, duties, obligations and/or liabilities of either Property Manager or Borrower thereunder without Lender's prior written approval.

6.          Property Manager acknowledges and agrees that any and all rents, profits or other sums (collectively herein called "Property Proceeds") collected or received by Property Manager from the Property are subject to a security interest of Lender pursuant to the Loan Documents, and shall be collected and held by Property Manager in trust for the benefit of Borrower and Lender. If a Sweep Event Period exists under the Loan Agreement, amounts on deposit in the Clearing Account are to be transferred to the Cash Management Account and applied in accordance with the Cash Management Agreement and Loan Agreement. Property Manager hereby disclaims any and all interests in such account and in any of the Property Proceeds. Upon written notice from Lender that (a) an Event of Default has occurred under the Note and/or other Loan Documents, and (b) as a result of such Event of Default, Lender has revoked Borrower's license to collect the Property Proceeds pursuant to the terms of the Mortgage, Property Manager agrees (i) not to pay any of the Property Proceeds to Borrower without the prior written approval of Lender, (ii) to pay the Property Proceeds in payment of the Secured Obligations (as such term is defined in the Mortgage) or to otherwise pay such Property Proceeds as instructed by Lender, and, as applicable, (iii) to cooperate in the establishment of a lockbox or cash management

account for the deposit of all Property Proceeds for the benefit of Lender, if so instructed by Lender.

7.          Upon the full payment of the Indebtedness and the performance by Borrower of all obligations under the Loan Agreement or other satisfaction of the Loan accepted by Lender in writing, this Acknowledgment and Lender's rights hereunder shall terminate.

[SIGNATURE PAGE TO FOLLOW]

EXECUTED as of the date first set out above.
PROPERTY MANAGER:			NHS LLC,
a North Dakota limited liability company
By:	/s/ Norman H. Leslie
Name:		Norman H. Leslie
Title:				Sole Member

BORROWER:
LF3 LUBBOCK EXPO, LLC,
a Delaware limited liability company
By:		Lodging Fund REIT III OP, LP, its sole member
By:		Lodging Fund REIT III, Inc., its general partner
By:		s/ Katie Cox
Name:			Katie Cox
Its:				Chief Financial Officer
LF3 LUBBOCK EXPO TRS, LLC,
a Delaware limited liability company
By:	Lodging Fund REIT III TRS, Inc. Its: Sole Member
By:		/s/ Katie Cox
Name:			Katie Cox
Its:				Chief Financial Officer

EXHIBIT A

Copy of Executed Property Management Agreement (See Attached)

MANAGEMENT AGREEMENT

BY AND BETWEEN

LF3 LUBBOCK EXPO TRS, LLC AND

NHS LLC dba NATIONAL HOSPITALITY SERVICES

LOCATION: Fairfield Inn & Suites by Marriott – Lubbock Southwest 6430 – 50th Street

Lubbock, Texas 79407

DATE:                 January  8 ,2020

MANAGEMENT AGREEMENT

THIS AGREEMENT, is made on January   8 , 2020, to be effective as of the Effective Date, as that term is defined below, by and between LF3 Lubbock Expo TRS, LLC, a Delaware limited liability company, ("Owner"), having a registered office at 1635- 43rd St. South, Suite  205,  Fargo,    ND  58103,    and    NHS    LLC    dba    NATIONAL    HOSPITALITYSERVICES (the "Operator") or its assignee, having its principal offices at 1635 - 43rd St.  South, Suite 305, Fargo, ND 58103.

WITNESSETH: RECITALS

A.       Owner is the owner of certain personal property and business operations and lessee of the real estate located 6430 – 50th Street, Lubbock, Texas 79407 (the "Hotel"), which Hotel has 101 rooms and approximately 324 square feet of conference/banquet space. Owner is the tenant of LF3 Lubbock Expo, LLC, a Delaware limited liability company (the "Land Owner"), which is the lessor of the real estate.

B.         Operator, together with its affiliates, has been engaged in the operation of hotels and inns for many years.

C.         Owner desires to utilize the services and experience of Operator in connection with the operation of the Hotel.

D.        All prior management agreements are terminated and longer in effect. This agreement reinstates all terms under the mutual understanding agreed to herein.

NOW, THEREFORE, Owner and Operator agree:

ARTICLE 1 DEFINITIONS

1.01     Definitions.    As used herein, the following terms shall have the respective meanings indicated below:

(a)      “Affiliates” means any corporation, partnership, or other entity that directly or indirectly controls, is controlled by, or is under common control with Operator.

(b)      “Annual Plan” is defined in Section 3.01(a) below.

(c)      “Budget” is defined in Section 3.01(b) below.

(d)      “Business” means the management and operation of the Hotel by Operator.

(e)     “Capital Improvements” means any alteration of, addition to, or renovation of, the Real Property, the cost of which is not expensed as repairs and maintenance under Generally Accepted Accounting Principles.

(f)      “Compensation” means the direct salaries and wages paid to any executive or other employee of the Business, together with all fringe benefits to which such employee is entitled, including: employer’s F.I.C.A contribution; payment for unemployment benefits; employment taxes; pension fund contributions; Worker’s Compensation premiums; group life and accident insurance premiums; health insurance premiums; and employee benefit programs including, but not limited to, profit sharing, retirement, disability and similar benefits.

(g)     “Effective Date” means January  8 , 2020.

(h)     “Executive Staff” means the general manager, sales manager, controller, and food and beverage manager of the Business.

(i)       “Franchise” means the license under which the Business is operated.

(j)      “Furnishings and Operating Equipment” means all furniture, furnishings and equipment, other than fixtures attached to and forming part of the building, which are required for the operation of a hotel, including, without limitation, guest room furniture, office furniture, safes, computers, cash registers, duplication and communication machines, maintenance equipment (including tools), kitchen equipment, laundries, dry-cleaning facilities, bars and cocktail lounges, special lighting, chinaware, glassware, linens, silverware, uniforms and all specialized hotel equipment and personal property needed for such purpose.

(k)     “General Account” means a banking account in Owner’s name with Owner and Owner-approved representatives of Operator as authorized signatories.

(l)      “Group Services” means services provided by Operator or its Affiliates that are also provided to two or more hotels and inns operated by Operator that are designed to provide cost savings or efficiency, or both, and include, without limitation services for (i) group advertising and business promotion and publicity, (ii) central purchasing and procuring, (iii) credit card association, (iv) central accounting, (v) advice and consulting in connection with the design, planning, and construction of the Hotel and the organization, licensing, and operation of the Business, provided through specialists regularly employed or retained by Operator and its Affiliates, and (vi) any other services now or hereafter furnished by Operator to two or more hotels and inns operated by Operator. Operator shall have sole discretion over all phases of promotion and publicity with respect to the Group Services.

(m)    “Hotel” means the Real Property and the Furnishings and Operating Equipment used in the Business.

(n)     “Hotel Accounts” means the General Account and Owner’s Depository Account.

(o)       Reserved

(p)     “Impositions” means all taxes, assessments, water, sewer or other rents, rates and charges, levies, license fees, permit fees, inspection fees and any other fees and charges, which at any time may be assessed, levied, confirmed, or imposed on the Business by a governmental or quasi-governmental authority or utility, but excluding income taxes payable by Owner resulting from operations.

(q)     “Insurance Requirements” means all terms of each insurance policy required to be carried hereunder, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to the Business but does not include recommendations of the insurance carriers.

(r)      “Leased Land” means the parcel or parcels of real property legally described in Schedule 1 attached and Owner’s interest therein, whether in a fee or leasehold estate, together with all entrances, exits, rights of ingress and egress, easements and appurtenances.

(s)      “Legal Requirements” means all laws, statutes, ordinances, orders, rules, regulations, permits, licenses, authorizations, directions, and requirements of all governmental authorities, that now or hereafter apply or are asserted to apply to the Business, but not to Owner’s federal, state, and local tax returns.

(t)      “License Agreements” means the existing Franchise, if any, described in Schedule 2 attached and any other license or franchise agreement selected by Owner in its sole discretion, that grants to Owner a franchise or license to use the distinctive trademarks, trade names, signs, emblems, color schemes and other readily recognizable symbols of a national or international lodging chain and providing such additional benefits as access to a national reservations system.

(u)      “Mortgage” means any mortgage, deed of trust, reciprocal operating agreement, security agreement, equipment or chattel lease, or other agreement now or hereafter securing an obligation of Owner with assets of the Hotel.

(v)     “Mortgagee” means the holders of any obligation secured by a Mortgage.

(w)     “Operator” means NHS LLC dba NATIONAL HOSPITALITY SERVICES, or its permitted designees, which may include Affiliates.

(x)     “Operating Supplies” means food and beverages and other immediately consumable items used in the operation of the Business such as fuel, soap, cleaning supplies, stationery and similar items.

(y)     “Operating Year” means the 12-month period commencing on January 1, except that the “first Operating Year” means the period beginning on the Effective Date and ending on December 31 of that year.

(z)     “Operator Hotels and Inns” means all other hotels and inns within the United States owned, leased, or managed, directly or indirectly, by Operator or its Affiliates.

(aa) “Owner” means the person or entity named in the preamble, its successors and assigns.

(bb) “Owner’s Depository Account” means an account designated by Owner in which  the funds are at the disposal in Owner’s discretion.

(cc) “Owner Hotels and Inns” means all other hotels and inns within the United States owned, leased, or managed, directly or indirectly, by Owner.

(dd) “Permitted Encumbrances” means (i) all Mortgages, (ii) liens for Impositions not delinquent, (iii) undetermined or inchoate liens or charges for labor or materials which have not at the time been filed or recorded pursuant to law, and (iv) easements, restrictions on use, zoning laws and ordinances, rights of way and other encumbrances and minor irregularities in title, that have been identified to Operator and do not individually or in the aggregate impair the operation of the Business.

(ee) “Real Property” means the Leased Land and all buildings, structures and improvements now or hereafter located on the Leased Land.

(ff) “Service Contracts” is as defined in Section 9.02 below.

(gg) “Tax Returns” means federal, state and local income or other business tax returns, real property and personal property tax returns, and occupancy tax returns.

(hh) “Term” means the period beginning with the Effective Date and ending upon the expiration or earlier termination of this Agreement.

(ii) “Uniform System of Accounts for Hotels” means the Ninth Revised Edition of that publication and is referred to in Section 5.05.

ARTICLE 2 ENGAGEMENT, TERM AND RENEWAL

2.01     Engagement of Operator. Owner hereby engages Operator to be the sole and exclusive person to supervise and direct the day-to-day Business in accordance with the terms and provisions of this Management Agreement. Operator agrees that it will supervise and direct the day-to-day Business as a top-rated hotel comparable to other hotels of the same class, condition and franchise. Operator and Owner shall endeavor to jointly determine operating policy, standards of operation, quality of service and any other policy matters affecting customer relations or the Business. In the event that Operator and Owner cannot reach a joint decision on operating policy, Operator’s decision on policy shall control, subject to adherence to the Budget.

2.02     The Term. The term of this Agreement shall commence on the Effective Date and shall expire at midnight on December 31 of the fifth (5th) full calendar year after the Effective Date if not earlier terminated under Article 6. If not terminated, this Agreement will automatically renew under for successive periods of five (5) years each unless either party gives to the other written notice of non-renewal at least sixty (60) days before the end of the Term or any renewal term.

ARTICLE 3 HOTEL OPERATION

3.01     Budget; Reports. Operator will provide a budget before the start of Owner’s fiscal year, for each consecutive year after the Effective Date; if the effective day is on any date other that the start of the fiscal year, then the Operator will provide a budget within 60 days of the Effective Date. Operator will prepare:

(a)        A business plan (the “Annual Plan”) setting forth Operator’s estimates of the following fiscal year’s operations, based upon the most recent and reliable information then available taking into account the location of the Hotel and Operator’s experience in other comparable Operator Hotels and Inns. Annual Plans will be in such detail as is necessary for Owner to effectively review the Annual Plan. Operator may update and revise any Annual Plan from time to time to reflect variables and events not reasonably foreseeable by or within the control of Operator at the time of preparation of the Annual Plan. Operator does not guarantee the performance of the Hotel.

(b)        A budget estimating income and expense and cash flow, in reasonable detail, for the following Operating Year (the “Budget”), including among other things (i) a schedule of Hotel room rentals (and cabana rental, if applicable), (ii) occupancy levels and average room rate, (iii) complimentary accommodations and services,

(iv) categories of income, (v) operating expenses, detailed by type, and (vi) anticipated cash flow available for distribution to Owner’ Depository Account. The Budget will be subject to the approval of Owner and, if applicable or requested, Mortgagee(s). Owner shall be responsible to obtain Mortgagee approval of the Budget, if required. Owner shall approve reasonable expenses in the Budget for the cost of employing the Executive Staff. Operator shall make the information utilized

in preparing the Budget available to Owner upon Owner’s request. In the event of a disagreement with regard to a proposed Budget, and pending settlement thereof, Operator may continue to operate the Hotel in accordance with the standards herein set forth at levels of expenditure not exceeding those of the preceding year. Operator may make such expenditures from General Account as Operator deems necessary for such continued operations.

(c)        If requested by Owner, Operator shall prepare the Budget to estimate the ensuing year expenditures for (i) repairs and maintenance, (ii) the purchase of Furnishings and Operating Equipment, (iii) Capital Improvements, and (iv) separate advertising, business promotion and personnel programs of the Hotels (as distinct from the programs included in Group Services).

(d)        If requested by Owner, but not more often than quarterly, a narrative overview of all revenue and expense levels in the Budget and an analysis of the year over year actual results, with an explanation of any differences between the Budgets and the results and a reconciliation thereof.

(e)       Operator shall comply with the applicable Budgets in all material respects unless modified verbally or in writing by Owner and Operator. Operator shall be entitled to make additional expenditures not included in a Budget in case of emergencies arising out of fire or any other casualty or other unforeseen circumstance or in order to comply with any applicable Legal or Insurance Requirements.

3.02     Group Services. During the Term, Operator will furnish to the Hotel the Group Services furnished to other Operator Hotels and Inns and suggest preventative maintenance programs known to Operator which it deems suitable for the Hotel. With respect to credit services, Owner agrees that the Hotel’s policy regarding association with any credit card system shall be in conformity with Operator’s general policy at the time in effect. Operator will provide, as needed, supervisory and control services to the Hotel’s front office, food and beverage, personnel, and other operating departments. Operator shall have sole discretion over Group Services promotion and publicity.

3.03     Personnel.

(a)        Employment. In conformity with the approved Annual Plans, Operator shall, at the expense of the Business, employ, train, pay, supervise, promote and discharge all employees and personnel for the operation of the Hotel including the Executive Staff. Operator shall use due care to select qualified, competent and trustworthy employees and personnel. Each person so hired shall be an employee only of Owner or Owner’s designee(s). Owner or Owner’s designee(s) shall at all times employ a sufficient number of employees to enable Operator to properly, adequately, safely, and economically manage, operate and maintain the Hotel. All personnel employed in the Business shall be the employees of Owner. At no time shall the employees of Owner, Owner’s designee(s), any independent contractor(s), or employee(s) of

independent contractors be considered employees of Operator. Owner and Owner’s designee(s) shall comply in all respects with all federal, state and local Legal Requirements governing its employees, including, without limitation, workers' compensation, social security, unemployment insurance, hours of labor, wages, working conditions and other employer requirements. Owner shall have the right to review and approve Executive Staff candidates before being hired. In the event that Owner disapproves of three candidates selected by Operator for any Executive Staff position, Operator shall have the right to employ any other candidate for that Executive Staff position without Owner’s approval.

(b)       Unions. Operator shall have the authority and responsibility to negotiate with any labor union(s) representing or attempting to represent employees at the Hotel but shall not, except when a Legal Requirement exists, enter into negotiations with any labor union regarding wages and working conditions without the prior written consent of Owner. Operator shall consult with Owner, unless Owner gives written waiver of this right, during the course of any negotiations as to terms acceptable to Owner, and shall conduct such negotiations within parameters agreed to by Owner. Operator shall use diligent efforts to settle and compromise all controversies and disputes arising under any labor union contracts affecting the employees of the Hotel upon such terms and conditions as Operator may deem to be in Owner's best interests. Nothing in this Agreement shall require Owner to employ persons belonging to labor unions.

(c)       Forms. Operator shall prepare and be responsible for the execution and filing of all employment related forms, reports, and returns required by Legal Requirements in connection with unemployment insurance, workers' compensation, disability benefits, job safety, Immigration and Naturalization Service compliance and reporting, tax withholding, Social Security, pension, profit-sharing and other employee benefit plans. If any violations of such Legal Requirements shall occur as a result of any act or omission by Operator, all costs, fines and penalties resulting therefrom, if any, shall be paid by Operator without reimbursement by Owner. Operator shall provide Owner with all information that is (i) available to Operator, and (ii) necessary for the completion of Tax Returns required to be filed by Owner in connection with the ownership or operation of the Hotel. Owner shall prepare and file all such returns.

(d)       Room and Board. On Site If Operator deems it advisable, the general manager, resident manager, and/or the housekeeper will reside at the Hotel at no cost. In such a case, they will receive the maintenance (e.g., room, board and laundry) customarily provided for such employees of a hotel or inn. Operator and Owner shall jointly approve the rooms in the Hotel that may be occupied by the general manager, resident manager, and housekeeper. The reasonable business expenses of the general manager and sales manager, including travel and business entertainment expenses, shall be paid or reimbursed by the Hotel.

3.04     Additional Responsibilities of Operator. Operator will, either in its own name or as an authorized agent of Owner, perform or cause to be performed, the following:

(a)       with the approval of Owner, make arrangements with concessionaires, licensees, tenants, or other intended users of the facilities of the Hotel;

(b)       enter into such contracts for the furnishings of utilities and maintenance and other services to the Hotel;

(c)       in accordance with the Annual Plans, make all repairs, decorations, alterations and improvements to the Hotel for the proper maintenance thereof in good order, condition and repair;

(d)       submit to Owner recommendations for preventative maintenance programs and perform such preventative maintenance as shall be in the Annual Plans or approved by Owner in writing;

(e)        purchase such Operating Supplies as Operator deems necessary or advisable for the operation of the Hotel;

(f)        cooperate with Owner to apply for, obtain, and maintain all licenses and permits required of Owner or Operator in connection with the Business; provided that Owner shall execute and deliver any and all applications and other documents and otherwise fully cooperate with Operator in applying for, obtaining, and maintaining such licenses and permits; further provided that a liquor license, if any, shall be in the name of an entity designated by Owner and all related fees, costs, and expenses shall be paid by Owner before they become delinquent.

(g)        do or cause to be done, all acts and things in and about the Business as shall be necessary to comply with all Legal Requirements and Insurance Requirements; provided that Owner is responsible for compliance with Legal Requirements that relate to the sale of alcoholic beverages by, through, or at the Hotel.

(h)        to discharge any lien, encumbrance or charge on or with respect to the Business, other than Permitted Encumbrances;

(j)         pay all Impositions;

 (i)  use its best efforts to cause the Hotel to comply with the License Agreements (if  any);

(k)        institute any and all legal actions or proceedings to (i) collect charges, rent or other income due to the Business, (ii) dispossess guests, tenants or other persons in possession therefrom, or (iii) cancel or terminate any lease, license or concession agreement for default thereunder by the tenant, licensee, or concessionaire;

provided, however, that without the consent of Owner, Operator shall not institute any proceedings to terminate any lease, license or concession agreement having a then unexpired term of one (1) year or more without the written consent of Owner.

When any of the foregoing responsibilities require payment by or on behalf of the Business, payment will be made from the General Account, provided that there are sufficient funds to do so. In the event that there are not sufficient funds in the General Account, Owner shall provide the necessary funds to make timely payments. For expenditures greater than $10,000.00 in any one expense category which are not within or anticipated in the Annual Plan, Operator shall be required to obtain written consent from Owner. It is agreed that utilities, payroll, taxes, food & beverage costs greater than $10,000.00 are approved and anticipated in the Annual Plans.

The individuals identified on the attached Schedule 3 are the only persons authorized to bind Owner and Operator respectively, then only to the extent of the limits set forth opposite their respective names and within the limits specified elsewhere in this Agreement.

3.05     Management Fee. Owner shall pay to Operator the management fee computed and payable as provided in the Management Fee Rider attached hereto (“Management Fee”).

3.06     Reimbursements to Operator. In addition to the Management Fee, Operator and its Affiliates shall be entitled to be reimbursed for the following costs and expenses:

(a)        upon Owner election and approval prior to any services being rendered, the Operator is entitled to all fees or expenses of Group Services that are separate and distinct from the Ancillary Fee described in the Fee Rider attached hereto;

(b)       all costs and expenses of any separate advertising and business promotion programs of the Business alone, separate and distinct from other Operator Hotels and Inns;

(c)        all costs, expenses, salaries, wages and other compensation limited to the attached fee rider, for all officers and employees of Operator and its Affiliates while such officers and employees are working in an operational role at and for the benefit of the Hotel; and

(d)        reasonable travel and entertainment expenses for all officers and employees of Operator and its Affiliates incurred in connection with the Business, provided the same is consistent with the Annual Plan.

3.07     Standard of Performance. Operator shall operate, manage and maintain the Hotel and all of its facilities and activities (a) in a diligent, careful and vigilant manner in accordance with the requirements of this Agreement and the standards imposed by the Franchise Agreement, if any, (b) that maintain the condition and character of the Hotel, (c) with the primary goal of generating short-term and long-term profitability, and (d) in a manner that

takes reasonable and prudent measures to provide for the security of the Hotel and its guests. Operator shall provide such facilities and services at the Hotel as are normally provided by operators of similar commercial hotels, within the limitation of the Hotel's facilities. Operator shall act in accordance with the high standards of hotel and motel managers in the area serviced by the Hotel and apply prudent and reasonable business practices in Owner's best interests in the conduct of the Business (e.g., practices which include granting complimentary rooms, food and beverage). Operator shall use all reasonable and prudent efforts to promote profitable trade, commerce and business for the Hotel and shall bring to Owner’s attention opportunities to obtain and increase profits.

3.08     Contest of Impositions. Operator shall review the appropriateness of all Impositions and shall advise Owner of any that, in Operator’s opinion, should be challenged and recommend action to obtain a reduction of such Impositions. Owner shall notify Operator if Owner intends to contest any Imposition or lien upon the Hotel. At Owner’s request, Operator shall institute protests or challenges to any Imposition or lien. All expenses incurred in contesting or seeking a reduction or elimination thereof including legal, appraisal and accounting fees, if required, shall be borne by Owner. Operator shall not pay any contested Imposition or lien under protest or otherwise without Owner’s consent. Operator shall set aside the amount necessary to pay any Imposition or lien under protest, plus interest and penalties, in an interest-bearing reserve account (or shall deposit such amount with a third party if so directed by Owner). In the event that there are not sufficient funds in the General Account for Operator to make required payments, Operator shall notify Owner in writing and Owner shall promptly pay the amount of the Imposition shortfall into the General Account. Operator shall promptly reimburse Owner for any interest or penalty payment imposed on Owner by reason of the failure of Operator to make payment of uncontested Impositions when the funds therefor in the Budget were available.

3.09     Mortgage Payments. Owner shall provide Operator with a copy of any Mortgages on the Hotel. At Owner’s request and if monies in the General Account are available, Operator shall make payments due under the Mortgage on or before their due date. Owner shall be solely responsible for payment of any late fees or interest resulting from a late payment due under the Mortgage if monies are not available in the General Account sufficient to make payments on or before their due date. Operator shall endeavor to comply with all covenants under any Mortgage within the authority granted to Operator under this Agreement.

3.10     Payments under License Agreements. Owner shall provide Operator with a copy of the License Agreements. At Owner’s request, and if monies in the General Account are available, Operator shall make payments due under License Agreements on or before their due date. If notified by Operator that monies are not available in the General Account to may such payments, Owner shall deposit monies sufficient to make such payments before the payments are due. If resources are available under this Agreement, Operator shall (a) perform all covenants required by Owner to be performed under the License Agreements,

(b) generally operate the Business in accordance with the terms and conditions of the License Agreements and do nothing to cause or permit anything to be done which would

constitute a violation of the License Agreements, and (c) at Owner’s request, represent Owner in submissions, correspondence, at conferences, and during negotiations with the current franchisor under the existing License Agreements and with potential new franchisors.

ARTICLE 4 INSURANCE

4.01     Business Insurance. During the Term, Operator shall obtain, keep in force, and maintain at all times Minimum Insurance Amounts that (a) is property damage coverage for the Hotel on an “open perils” basis (including builder’s risk during any period or periods of time that construction or remodeling is being performed), (b) includes, without limitation, the perils of fire, vandalism, and malicious mischief, flood, seepage and back-up of sewers and drains, sinkhole, loss or damage from sprinklers and from leakage or explosion or cracking of boilers carrying steam, water or gas, pressure vessels or similar apparatus, (c) is in an amount equal to 100% of the full replacement cost of all improvements to the Hotel, (d) has a deductible of no more than Ten Thousand Dollars ($10,000.00), and (e) includes business interruption for at least 12 months. Owner, and Mortgagee(s) if applicable, shall be added as loss payees as their interests may appear. The policy or policies of such insurance shall contain or include waiver of subrogation clauses or endorsements acceptable in all respects to Owner and Mortgagee(s) and as required by any leases. If Owner objects to the insurance obtained by Operator, Owner shall thereafter be responsible for obtaining and keeping in force, the Minimum Insurance Amounts with Operator named an additional insured.

4.02     Operator’s Insurance. Operator shall carry, keep and maintain at all times during the term of this Agreement insurance of the types and in the minimum amounts set forth below. Upon written request, Operator shall provide Owner and Mortgagees with certificates of insurance and copies of insurance policies evidencing the insurance required by this Section 4.02. Operator shall deliver to Owner and Mortgagees renewal policies and certificates not less than thirty (30) days prior to the expiration of any such insurance. Owner and Mortgagees shall be named as additional named insureds on each insurance policy required by this Section 4.02 and the Business shall pay any costs associated therewith. Operator hereby expressly waives all rights against Owner and Mortgagees, their respective affiliates and their respective officers, directors, employees, agents and Operators for and in connection with all claims, losses and/or damages covered by any insurance required by this Section 4.02.

(a)        All of the policies of insurance required by this Section 4.02 shall:

 (i)         be issued by financially responsible insurance carriers or companies;

 (ii)       be in a form acceptable in all respects to Operator, Owner, and

Mortgagees;

(iii)      include all standard construction industry clauses and endorsements and such other clauses and/or endorsements as Owner or Mortgagees may from time to time require;

(iv)       provide that such policies shall not be canceled, terminated or the terms thereof modified or amended without at least thirty (30) days’ prior written notice to Owner and Mortgagees;

(v)        include waiver of subrogation clauses or endorsements acceptable in all respects to Owner and Mortgagees;

(vi)       be on an occurrence basis; and

(vii)     be written as primary policies, not contributing with, and not in excess of, any insurance coverage that Owner or Mortgagees and/or their respective successors, assigns, parent companies, subsidiaries and/or affiliates may carry against same hazards.

(b)        Minimum Amounts. Only as it pertains to the Operator, and the Operator’s employee’s, the Operator shall carry, keep and maintain, with no deductible, at all times the following types of insurance in the minimum amounts set forth below:

(i)         Workers' Compensation in an amount not less than the applicable statutory minimum requirement. Operator shall also maintain employer's liability insurance in an amount not less than Five Hundred Thousand Dollars ($500,000.00).

(ii)       The following insurance coverage to protect against claims that may arise out of or result from operations away from the Hotel that are connected with Operator’s performance of this Agreement: Comprehensive Commercial General Liability (including blanket personal contractual and innkeeper’s and liquor liability, products completed operations, independent Operators and broad form property damage) in an amount not less than One Million Dollars ($1,000,000.00) per occurrence and Two Million Dollars ($2,000,000.00) aggregate for bodily injury and One Million Dollars ($1,000,000.00) per occurrence and Two Million Dollars ($2,000,000.00) aggregate for property damage.

(iii)      Comprehensive Automobile Liability (including owned, non- owned, leased and hired car coverage) in an amount not less than One Million Dollars ($1,000,000.00) per occurrence for bodily injury and One Million Dollars ($1,000,000.00) per occurrence for

property damage. This insurance shall apply to all operations of Operator both at and away from the site of the Hotel.

(iv)       Umbrella/Excess Liability in an amount not less than Twenty-Five Million Dollars ($25,000,000.00) per occurrence and Twenty-Five Million Dollars ($25,000,000.00) aggregate.

(v)        Employment insurance, including Employee Dishonesty Fidelity and Forgery Insurance, in amounts anticipated to be sufficient to protect the Business from any claims covered thereby.

4.03     Payment of Insurance and Deductibles. Operator shall be responsible for the payment of insurance premiums and any and all deductibles in connection with any insurance policy described in Section 4.02. Operator will proportionally invoice the Hotel, for the attributable amount insurance coverage contracted for by Operator. No payment therefor shall be made through the General Account except that the costs associated with adding Owner and Mortgagees as additional insureds on Operator’s commercial general liability policy and all deductibles required under laws, rules, and regulations applicable to a liquor license issued with respect to the Business shall be paid from the General Account.

4.04     Operator Cooperation. Operator will cooperate with Owner as follows:

(a)        Notice of Loss. In the event of any loss, damage or injury at the Hotel, Operator shall:

(i)         notify Owner, Mortgagee and the insurance carrier as soon as possible but no later than forty-eight (48) hours after Operator receives notice of any such loss, damage or injury;

(ii)       take no action that could be construed as an admission of liability or that might otherwise bar Owner or Mortgagee from obtaining any protection afforded insurance or which might prejudice Owner or Mortgagee in its defense to any claim for an insured loss, damage or injury;

(iii)      upon request of Owner, agree that Owner or Mortgagee shall have the exclusive right to conduct the defense to any claim, demand or suit within limits prescribed by the policy or policies of insurance; and

(iv)       defend any claim if requested by Owner.

(b)       Claim Information. Operator shall furnish information that is requested by Owner or Mortgagees for the purpose of establishing the appropriate

insurance coverages and shall cooperate in every reasonable way with respect to such insurance and any loss thereunder.

(c)        Potential Risks. Operator shall give Owner and Mortgagees written notice of any facts of which Operator is aware that might cause an increase in the risk of a casualty loss or a claim of liability in connection with the Business. Such notice shall be given promptly after Operator, or any member of the Executive Staff, has actual knowledge of such facts.

(d)        Prompt Investigation. Operator shall promptly investigate and make a full timely written report to the insurance company as to all accidents, claims for damages relating to the Business, any damage or destruction and the estimated cost of repair thereof, and Operator shall prepare any and all reports required by any insurance company in connection therewith. Operator shall file all such reports in a timely manner with the appropriate insurance company as required under the terms of the relevant insurance policy.

(e)        Blanket Policies. Owner agrees that the insurance Operator is required to obtain and maintain may be provided in one or more blanket policies, provided that Operator and Owner, and if required by the Mortgage, the Mortgagees, are named insureds thereunder and the fairly allocated cost associated therewith is paid out of the General Account.

4.05     Standard Coverage. The specific insurance requirements set forth above in this Article are in addition to and not in limitation of the basic or standard insurance coverages afforded by (a) the policies of insurance required above and (b) the policies of insurance otherwise maintained by Owner or Mortgagees in the course of their business.

4.06     Construction Contractors, Subcontractors, and Vendors Insurance.

(a)        If engaged by Operator, Operator shall require that all Contractors, Subcontractors, and Vendors that engage in construction activities for the Business have insurance coverage at the expense of each, respectively, and evidence of such insurance shall be demonstrated at the time of contract. With respect to any Contractors, Subcontractors and Vendors engaged to provide construction activities that were previously engaged by Owner or any other party for work that is ongoing and not insured to the level required in this section 4.06, Operator shall have a period of thirty (30) days from the date of this Agreement to endeavor to bind the required insurance coverage. Operator shall require that all construction Contractors, Subcontractors and Vendors it hires are licensed in the state where the Hotel is located for all such activities that require licensing.

(b)       Contractors, Subcontractors, and Vendors shall have coverage in the following minimum amounts:

(i)         Worker's compensation - Statutory Amount;

(ii)       Employer's Liability - Statutory Minimum;

(iii)      Commercial General Liability - $1,000,000 per occurrence and $3,000,000 aggregate; and

(iv)       Auto Liability Policy - Including owned, non-owned, leased or hired and used in their business in the amount of $1,000,000 combined single limit.

(c)        Proof of Coverage. A certificate of insurance showing proof of this coverage must be obtained and received by Operator before any work, service, or sale shall occur. Owner and Mortgagees shall be named as additional insureds, and such policy shall not be modified, amended, or canceled without prior written notice to Owner and Mortgagees.

(d)        Waiver of Insurance Requirements. Operator must obtain Owner’s and Mortgagees’ permission to waive any of the requirements of this Section 4.06. Higher amounts may be required if the work to be performed is deemed hazardous. Operator shall keep on file the Certificates of Insurance it is required to obtain.

ARTICLE 5

ACCOUNTS; WORKING FUNDS; RECORDS AND REPORTS

5.01     Hotel Accounts. Operator shall establish a General Account or assume control of an existing General Account, and Owner will deliver to Operator for deposit into the General Account, a sum agreed by both parties, to be maintained at all times, and funded by Owner from time to time at Operator’s request. All monies received by Operator in connection with the Business, or derived from claims, insurance or otherwise, shall be received by Operator for the benefit of Owner and promptly deposited by Operator into the General Account.

5.02     No Co-Mingling of Funds. The Hotel Accounts shall be used in connection with the operation of the Business and the performance of the terms and conditions of this Agreement. Operator agrees to segregate from other revenues all receipts, accounts and records pertaining to the Business. Operator may not co-mingle the monies of the Business with the monies of any other business of Operator.

5.03     Expenditures. Operator is hereby authorized to pay from the General Account (or if appropriate, from available house banks or petty cash funds) to the extent consistent with

the Annual Plans such amounts and at such times as are required in connection with the Business, including without limitation the following:

(a)        salaries and expenses of employees at the Business, including the Executive Staff, in accordance with Section 3.03;

(b)        all expenditures and reimbursements for which Operator or its subsidiaries are entitled to under any provisions of this Agreement;

(c)        the Management Fee, computed in accordance with the provisions of the Management Fee Rider;

(d)        deposits in Owner’s Depository Account and moneys in excess of those required for the General Account; and

(e)        all costs and expenditures incurred or made in connection with the items to which Operator or its subsidiaries and Affiliates are permitted or required to make under this Agreement.

5.04     Expenses to be Borne by Operator. Operator shall be solely responsible for the following expenses:

(a)        All costs, expenses, salaries, wages and other compensation of officers and employees of Operator and its Affiliates, subject to the reimbursements from Owner to Operator pursuant to Section 3.06(c);

(b)        Expenses of Operator’s principal and branch offices;

(c)        Expenses for advertising or promotional materials that feature Operator’s name or activities;

(d)        Operator’s capital expenditures;

 (e)       Operator’s overhead or general expenses, including but not limited to telephone, telex, duplicating, stationery and postage expenses, excluding postage expenses for overnight or special delivery charges incurred at Operator’s principal and branch offices, and except as may be expressly those of the Business or assumed by Owner under this Agreement;

(f)        Any travel expenses of Operator’s central office employees in excess of the expenses permitted under Section 3.06(d) or the Annual Plans;

(g)       Any interest or penalty with respect to an Imposition or Lien upon the Hotel imposed on Owner by reason of (i) the failure of Operator to make a payment required to be made by Operator under this Agreement when the funds authorized

therefor were available, or (ii) funds therefor were not available and Operator failed to provide a funding request to Owner for the same reasonably in advance of their due date;

(h)        The cost of the insurance described in Section 4.03 of this Agreement; and

(i)         Accounting fees paid or incurred by Operator for its own operations.

5.05     Books and Records. Operator shall keep full and adequate books of account and such other records as are necessary to reflect the results of the operation of the Business. Such books and records shall be kept in all material aspects in accordance with the Uniform System of Accounts for Hotels.

5.06     Reports to Owner.

(a)      Monthly Reports. Operator will deliver or cause to be delivered to Owner on or before the twentieth (20th) day of each calendar month, a detailed profit and loss statement for operation of the Hotel during the previous calendar month and the year-to-date (“Monthly Report”). The statement must list or describe any material variances to the Annual Plans and must include a comparison to the same month and year-to-date period from the preceding year, a comparison of calendar month and year-to date to the applicable Annual Plan, trial balance, and balance sheet and related statement of profit and loss, which must include all supporting departmental schedules of revenues, and expenses.

(b)       Annual Report. Within forty-five (45) days after the end of each calendar year, Operator will deliver a final balance sheet, a profit and loss statement, accounts payable aging report, accounts receivable aging report, general ledger trial balance, and a detailed general ledger (“Annual Report”). If and when an audit or other report is requested by Owner or a Mortgagee, the cost of the audit and any other reports, including all labor and operating costs of Operator incurred in connection with the audit and preparation of other reports, will be an operating expense of the Business. Owner will determine the scope and content of the audit and other reports.

 (c)       Preparation Costs. All costs and expenses included in the Budget that are incurred in connection with the preparation of any statements, schedules, computations and other reports required under this Section 5.06 (a), (b), or (c) shall be operating expenses of the Business.

5.07     Owner’s Right of Inspection and Review. Operator shall accord to Owner, its accountants, attorneys and agents, the right to enter the Hotel on reasonable notice during normal business hours during the term of this Agreement for the purposes of examining or inspecting and making extracts of the books and records of the Business or for any purpose which Owner, in its discretion, shall deem necessary or advisable. Entry for such purposes shall be accomplished with as little disruption to the Business as practicable. Books and

records of the Hotel shall be kept at the Hotel or at such other place as the parties may agree. In the event such books and records are not kept at the Hotel, Operator shall accord Owner, its accountants, attorneys and agents the same access rights to such books and records as if kept at the Hotel. Operator shall cooperate fully with Owner, its accountants, attorneys and agents and shall make available to them any and all information concerning the Business.

ARTICLE 6 TERMINATION RIGHTS

6.01     Termination at Will. This Agreement may be terminated at will, by any reason or no reason, by either party, upon providing sixty (60) day written notice. If either party elects to exercise its right of termination, then the non-terminating party may pursue damages as afforded by law.

ARTICLE 7 TITLE MATTERS

7.01     Title to Hotel. Owner covenants that, as of the Effective Date, Land Owner is the fee owner of the Hotel and will, on request, provide evidence thereof to the reasonable satisfaction of Operator.

7.02     Assignment by Operator. Operator, in its sole discretion, shall have the right to assign this Agreement to any Affiliate of Operator or to any successor or assignee of Operator resulting from any merger, consolidation or reorganization, or to another corporation which shall acquire all or substantially all of the business and assets of Operator. Operator will give prompt notice to Owner of any such assignment. Operator may, with the consent of Owner not to be unreasonable delayed or withheld, assign this Agreement to any non- Affiliate. Except in the case of an assignment to an Affiliate of Operator, Operator shall be released of all of its covenants and liabilities hereunder, other than liabilities that have accrued prior to the date of the delivery of notice to Owner.

7.03     Mortgages. Land Owner reserves the right to grant a mortgage, deed of trust, or similar security document encumbering all or any part of the properties of the Business to secure indebtedness of Land Owner. Land Owner agrees to provide written notice to Operator of any Mortgage including the name and address of the Mortgagees (or beneficiary) under such Mortgages. Operator agrees that so long as the Real Property are subject to any Mortgage:

(a)        that simultaneously with the giving of any notice of default or termination to Owner and Land Owner, it will concurrently send a copy of such notice by certified mail to the Mortgagees, and no notice to Owner or Land Owner of any default or termination hereunder shall be effective unless a copy of such notice shall have been sent as herein provided;

(b)        that Operator will not exercise its right of termination hereunder with respect to a default under clauses (a) or (b) of Section 6.01 during the period of grace provided for therein, if any of the Mortgagees shall give Operator notice of its intention to cure such default and proceeds diligently to do so;

(c)        that upon the request of any Mortgagee and consent of Owner, Operator will furnish to such Mortgagee, copies of the Annual Plans described in Section 3.01, and the unaudited monthly and audited annual financial reports described in Section 5.06(a), (b), and (c) concurrently with the furnishing of the same to Owner; and

(d)        Operator shall accord to the Land Owner, Mortgagees, their accountants, attorneys and agents, the right to enter upon the Hotel on reasonable notice during normal business hours during the Term of this Agreement for the purpose of examining or inspecting and making extracts of the books and records of the Business for any purpose permitted under the Mortgage.

7.04     Successors and Assigns. Subject to the foregoing, this Agreement shall inure to the benefit of and be binding upon the parties hereto, their respective heirs, legal representatives, successors and assigns, and with respect to Owner, the phrase “successors and assigns” shall include purchasers of Owner’s interest in the Business.

7.05     Remedies. Any assignment by either party of this Agreement in violation of the provisions of this Article 7 shall be null and void. In addition to any other remedies available to the parties, the provisions of this Article 7 shall be enforceable by injunctive proceeding or by a suit for specific performance.

ARTICLE 8

DAMAGE OR DESTRUCTION; EMINENT DOMAIN

8.01     Damage or Destruction. If the Hotel shall be substantially damaged by fire or other casualty so that restoration of operations cannot reasonably be expected to be completed within 15 days after the occurrence of the event, then Owner or Operator shall each have the right to terminate this Agreement and neither party shall have any further obligation to the other party hereunder, except with respect to those that are stated to survive termination. Written notice of termination due to damage or destruction must be given to the other party within sixty (60) days after the occurrence of such event.

8.02     Eminent Domain. In the event of any condemnation or similar proceeding the entire award for damages shall belong solely to Owner. The foregoing shall not limit Operator's right to seek a separate condemnation award relating to its loss of fees and the proceeds, costs or damages permitted by applicable law.

ARTICLE 9

GENERAL PROVISIONS

9.01     Purchases.

(a)       Group Services. Operator will offer Group Services to Owner and recommend firms or sources for the purchase of Furnishings and Operating Equipment and Operating Supplies for the Business. Owner shall not be obligated to purchase from the recommended sources. However, prior to purchasing from other sources, Owner shall submit to Operator such samples and other information with respect to the proposed purchases as shall be necessary to assure Operator that the quality of such items is at least equal to those available from the sources recommended by Operator and the design conforms to the type and class of Hotel.

(b)        Benefit of Group Services. In connection with any purchases made by Operator and its Affiliates for the account of Owner, Operator and its Affiliates may perform services as a representative of the source to secure the benefits of lower costs, and that all savings resulting therefrom shall be passed on to Owner. In addition, all trade discounts, rebates and refunds, and all returns from the sale of Furnishings and Operating Equipment and Operating Supplies shall accrue to the benefit of Owner.

9.02     Service Contracts.

(a)       Procurement. Consistent with the Annual Plan, Operator shall endeavor to procure competitive proposals for, negotiate, enter into, administer, pay (as an Operating Expense), and enforce contracts for services required in the ordinary course of the Business ("Service Contracts"). Service Contracts include, without limitation, contracts for water, electricity, gas, telephone, detective agency protection, vermin extermination, cleaning, elevator and boiler maintenance, air conditioning maintenance, laundry service, dry cleaning service, trash removal, landscape maintenance, snow removal, window cleaning and all other services which are provided in hotels of a similar class. All Service Contracts shall be signed by Operator on behalf of Owner. Operator shall diligently seek to obtain a waiver of liens with respect to any Service Contract providing labor or materials for the Hotel. Available rebates, commissions, discounts, and allowances for Service Contracts shall accrue to the benefit of Owner.

(b)       Conflict of Interest. Operator shall disclose to Owner in writing any proposed Service Contracts or proposed purchases of supplies, equipment or other property that will benefit Operator and its Affiliates. By proposing such contract or purchase, Operator represents and warrants that Operator and its Affiliates will perform the service or sell the property for the best price and terms offered to any party by Operator and that the price and terms are fair, competitive, and reasonable.

9.03     Reserved.

9.04     Indemnification by Owner. Except for the extent covered by insurance, Owner indemnifies and agrees to defend and hold Operator free and harmless from and against all claims, costs, expenses, demands, attorneys’ fees and disbursements, suits, liabilities, judgments and damages caused by the negligent acts, omissions, misconduct, or the failure to perform or exercise any of the duties, obligations, powers or authorities of Owner or Owner’s employees which may be suffered by Operator as a result of any occurrence or event happening in or about the Hotel unless such event stems from a fraudulent activity or from gross negligence of Operator. Owner agrees to reimburse Operator upon demand for any monies (including reasonable attorneys’ fees and disbursements) which Operator is required to pay for any items which are the responsibility of Owner pursuant to the terms of this Section 9.04. The provisions of this Section 9.04 shall survive the termination of this Agreement.

9.05     Indemnification by Operator. Except to the extent covered by insurance, Operator indemnifies and agrees to defend and hold Owner free and harmless from and against all claims, costs, expenses, demands, attorneys’ fees and disbursements, suits, liabilities, judgments and damages caused by the grossly negligent acts, omissions, misconduct, or the failure to perform or exercise any of the duties, obligations, powers or authorities of Operator or Operator’s employees which may be suffered by Owner as a result of any occurrence or event happening in or about the Hotel unless such event stems from a fraudulent activity or from gross negligence of Owner. The provisions of this Section 9.05 shall survive the termination of this Agreement.

9.06     Trade Name. During the Term, the Hotel (excepting space subject to commercial lease(s)) shall be known by such trade name and accompanying phraseology as may from time to time be mutually approved by Operator and Owner. The initial name approved is Home2 Suites by Hilton.

9.07     License Agreement. Owner reserves the right to amend, modify, cancel or terminate any License Agreement with respect to the Hotel. Owner further reserves the right to enter into a new or replacement License Agreement for the Hotel. Owner shall deliver written notice to Operator of any new or substituted License Agreement or of any amendment, modification, cancellation, or termination of a License Agreement. If Operator reasonably believes that the change in a License Agreement will adversely affect Operator’s ability to perform its services under this Agreement, it may terminate this Agreement.

9.08     Notices. All notices, requests, demands or other communications hereunder shall be in writing and deemed sent and received on the earliest of the date received or 3 business days after mailed or the next business day if sent by overnight delivery. Faxes shall be deemed received on the date sent if received by the recipient prior to 4:00 p.m. on a business day and otherwise the next business day. Notices should be sent as follows:

If to Owner:                                 LF3 Lubbock Expo TRS, LLC

1635 43rd St. South, Suite 205

Fargo, ND 58103 Attn: Corey Maple

Telephone No.: 701-630-6500

Telecopy No.: 701-532-3369

And Copy to:                               David R. Durell

Chief Acquisition Officer and General Counsel 644 Lovett SE, Suite A

Grand Rapids, MI 49506 Telephone No.: 616-264-3840

Telecopy No.: 616-264-3841

If to Operator:                             NHS LLC dba NATIONAL HOSPITALITY SERVICES

1635 43rd St. South, Suite 305

Fargo, ND 58103

Attn: Norman H. Leslie Telephone No.: 701-281-7122

Telecopy No.: 701-281-7145

Or to such other address as the parties may from time to time designate by notice in writing to the other parties.

9.09     No Partnership or Joint Venture. Nothing contained in this Agreement shall constitute or be construed to be or create a partnership or joint venture between Owner, its successors or assigns, on the one part, and Operator, its successors or assigns, on the other part.

9.10     Modification and Changes. This Agreement cannot be changed or modified except by an agreement in writing signed by both parties of this Agreement.

9.11     Understandings and Agreements. This Agreement, and the Management Fee Rider attached hereto, constitute all of the understandings and agreements of whatsoever nature or kind existing between the parties with respect to Operator’s management of the Hotel.

9.12     Headings. The Article and Section headings contained herein are for convenience of reference only and are not intended to define, limit or describe the scope or intent of any provision of this Agreement.

9.13     Third Parties. Except for the provisions of Section 7.03 which are for the benefit of the Mortgagees, none of the obligations hereunder of either party shall run to or be enforceable by any party other than the other party to this Agreement or by a party deriving rights hereunder as a result of an assignment permitted pursuant to the terms hereof.

9.14     Non-Recourse.  In  no  event  and  under  no  circumstances  shall  Owner  or  any officer,

director, employee or shareholder have any personal obligation or liability to perform any of Owner’s obligations hereunder, and the sole remedy of Operator in the event of default by Owner hereunder shall be to proceed against Owner’s interest in the Hotel.

9.15     Estoppel Certificate. Operator agrees that from time to time upon not less than ten (10) days’ prior request by Owner, Operator will deliver to Owner a statement in recordable form certifying (a) that this Agreement is unmodified and in full force and effect (or if there have been modifications that the Agreement as modified is in full force and effect and stating the modifications); (b) the dates to which the Management Fees and other charges have been paid; (c) that Owner is not in default under any provision of this Agreement, or if in default, the nature thereof in detail; and (d) such other items as Owner may reasonably request.

9.16     Attorneys’ Fees. In the event either party hereto institutes legal action against the other party to interpret or enforce this Agreement or to obtain damages for any alleged breach hereof, the prevailing party in such action shall be entitled to an award of reasonable attorneys’ fees incurred at all levels (including, without limitation, appellate levels).

9.17     Interpretation. In interpreting this Agreement, the provisions in this Agreement shall not be construed against or in favor of either party on the basis of which party drafted this Agreement.

9.18     Governing Law. This Agreement shall be governed and construed in accordance with the laws of the state in which the Hotel is located.

9.19     Non-solicitation by Owner. Unless otherwise waived by Operator in writing, Owner shall not, during the term of this Agreement and for twelve (12) months thereafter, solicit or hire any employee of Operator that was directly or indirectly employed by Operator during any period of this Agreement. In the event Operator has not waived this provision and Owner does hire any said employee of Operator, Owner agrees to pay Operator, as damages/fees, the amount of three (3) times said employees contractual annual salary for one year due immediately upon hiring. For purposes of this section, employee of Operator shall be an employee of Operator or an employee of Owner on the payroll of the Business. For the sake of clarity, if the Business is sold to third party (“New Buyer”), the staff of the Hotel will be permitted to be employed by the New Buyer with no fee to Operator.

9.20     Counterparts; Electronic Signatures. This Agreement may be signed in any number of counterparts, each of which shall be deemed an original, and all counterparts, when taken together, will constitute one and the same agreement. The parties agree that this Agreement may be delivered by facsimile, email, or other form of electronic means in lieu of an original signature, and the parties agree to treat such electronic signatures as originals.

SIGNATURES ON FOLLOWING PAGE

IN WI1NESS WHEREOF, the parties hereto have executed or caused this Agreement to be executed, all as of the day and year first above written.

OWNER: LF3Lubbock Expo TRS, LLC a Delaware limited liability company
By:	Lodging Fund REIT III TRS, Inc. Its: Sole Member
/s/ Samuel C. Montgomery
By:		Samuel C. Montgomery
Its:		Chief Operating Officer
OPERATOR: NHS LLC DBA NATIONAL
HOSPITALITY SERVICES
/s/ Norman H. Leslie
By:	Norman H. Leslie
Its:	President

CONSENT OF LAND OWNER TO MANAGEMENT AGREEMENT

By signing below, Land Owner consents to the Owner and Operator entering into this Management Agreement.

LF3 Lubbock Expo, LLC
a Delaware limited liability company
BY:	Lodging Fund REIT III OP, LP ITS: Sole Member
By:	Lodging Fund REIT III, Inc. Its: General Partner
/s/ Samuel C. Montgomery
By: Samuel C. Montgomery Its: Chief Operating Officer

MANAGEMENT FEE RIDER TO MANAGEMENT AGREEMENT BETWEEN LF3 LUBBOCK EXPO TRS, LLC

AND

NHS LLC DBA NATIONAL HOSPITALITY SERVICES

Dated:  January   8   , 2020

MANAGEMENT FEE RIDER

Management Fee. As compensation for Operator’s services during the Operating Period, Owner shall pay monthly to Operator a management fee equal to four percent (4.00%) of the Gross Revenue from the operation of the Hotel in each Operating Year (herein called the “Management Fee”). For the purpose of determining the Management Fee, the term “Gross Revenue” shall be as determined by the Uniform System of Accounts for Hotels as published by the American Hotel and Lodging Association, as it may be in effect from time to time. The Management Fee shall be payable in estimated monthly installments concurrently with the delivery to Owner of the Monthly Report. Owner shall pay any underpayment or Operator shall reimburse any overpayment of the Management Fee within fifteen (15) days of Operator giving the Annual Report to Owner.

Onboarding Fee. Owner shall pay Operator’s additional out of pocket, which includes any hourly rate charges for labor costs, non-recurring start-up costs, which may not exceed $10,000.00 without Owner’s written consent. In the event that Operator determines that start-up costs in excess of $10,000.00 are reasonable in Operator’s sole opinion, and Owner does not consent to the additional start-up costs, then Operator shall have the right to terminate this Agreement and Operator will have earned and be paid the Onboarding Fee. If the Hotel is sold within six (6) months of onboarding, Operator will be paid for training and support costs.

Accounting Fee. Operator will assign for quality enhancement, and the monthly accounting fee for service shall be $14.00 per room (“Accounting Fee”). The Accounting Fee shall be the sole and entire amount for accounting fees for which Owner shall be responsible to pay Operator. Owner shall be responsible for payment of charges for third party reports, audits, and tax returns. No deduction or disbursement in excess of the Accounting Fee amount may be made from the General Account or any other account of Owner for the accounting services provided by Operator. The Accounting Fee may be adjusted annually at the discretion of Operator, but in no case shall such adjustment exceed the annual increase in the National Consumer Price Index (CPI), as published by the Bureau of Labor Statistics.

Operator’s Employees. Employees from other properties managed by Operator or from within the Operator’s staff - that are required to fill day to day operational duties of the Hotel shall be billed at 1.20 multiplied by the total hourly cost of such employee, which hourly cost includes the hourly wage plus taxes, fringe benefits, and workers compensation insurance. Payroll records will be made available to Owner on request.

Ancillary Services Fee. Operator will charge 0.60% of Gross Revenue for all of Operator’s internally furnished services relating to Operators human resources, technology and purchasing

fee associated with Operating the Business. This fee will be evaluated each year, for any market conditions that may vary.

Off Boarding Fee. Upon the sale or disposition of the Hotel, Operator will receive an Off Board/Transition fee equal to two months of the average of T12 billing plus all out of pocket expense. This is not to exceed the contract maturity. This fee is waivable if a Buyer appoints Operator as its Management Company for at least a six-month time post-closing. Any and all travel or out of pocket expense relating to the transitions or terminations will be paid as billed within 60 days upon receipt.

Guarantee of Payment; Security Agreement. The individual(s) signing on behalf of Owner, by affixing their signature(s) below, do hereby guarantee payment of all fees due to Operator under the Agreement and this Management Fee Rider. By signing the Agreement, Owner, and the individual(s) signing on its behalf, hereby agree that the Agreement constitutes a Security Agreement permitting Operator to file a financing statement securing the payments due Operator with the assets of Owner and Hotel. Owner consents to such financing statements and agrees to cooperate with Operator to sign any documentation that is necessary or helpful in connection with such financing statements. Owner agrees to provide Operator with twenty (20) days advance written notice of Owner's intent to change its name, change its address, dispose of assets, sell the Hotel, sell the entity of Owner, or merge Owner with any third party.

New Services or Fees. If requested by Owner, all new services provided by Operator and fees associated are subject to review and approval prior to implementation.

SCM Owner NHL Operator

SCHEDULE 1 TO MANAGEMENT AGREEMENT

(Legal Description)

Parcel A: Fee Simple Estate

Lot Five-A (5-A), a replat of Lot 5, CANYON WEST ADDITION to the City of Lubbock, Lubbock County, Texas, according to the Map, Plat and/or Dedication Deed thereof, recorded in/under Clerk's File No. 2016024991 of the Official Public Records of Lubbock County, Texas, save and except any and all rights, titles and interests previously reserved, conveyed or created with respect to oil, gas, or to other minerals in and under the land.

Parcel B: Easement Estate

All right, title and interest as provided in the Declaration of Restrictions and Reciprocal Easement Agreement recorded in/under Volume 10138, Page 14; amended in/under Clerk's File No. 2011012478, and ratified and corrected in/under Clerk's File No. 2013030944 to Lot Five-B (5-B), a replat of Lot 5, CANYON WEST ADDITION to the City of Lubbock, Lubbock County, Texas, according to the Map, Plat and/or Dedication Deed thereof, recorded in/under Clerk's File No. 2016024991 of the Official Public Records of Lubbock County, Texas.

SCHEDULE 2 TO MANAGEMENT AGREEMENT

(License Agreement)

SCHEDULE 3

AUTHORIZED SIGNERS AND LIMITATIONS ON SPENDING AUTHORITY

AMOUNT	VENDOR EMPLOYEE/AGENT
Up to $5,000	NHS Regional Director
Up to $10,000	NHS Vice President of Operations
Up to $15,000	NHS Executive Vice President
	NHS Chief Development Officer
All Levels and Any Amounts	NHS President

Exhibit B Concession Agreement

[Attached]

FAIRFIELD INN & SUITES BY MARRIOTT-LUBBOCK SOUTHWEST ALCOHOL TEMPORARY CONCESSION AGREEMENT

This Temporary Concession Agreement (this “Agreement”) is made and entered into effective as of , 2019 (“Effective Date”), between LF3 Lubbock Expo TRS, LLC, a Delaware limited liability company, (“Licensor”), Treemont Capital Partners IV GP, LLC, a Texas limited liability company (hereinafter called “Permittee”), and NHS LLC dba ND NHS, LLC, a North Dakota limited liability company, (“Manager”).

WHEREAS, as of the Effective Date Licensor has the rights to possess, occupy, and use the real property and improvements as related, directly or indirectly to the Fairfield Inn & Suites Marriott – Lubbock Southwest hotel located at 6435 50th Street, Lubbock, Texas 79407 which has personal property assets and rights including personal property, fixtures and equipment located thereon (collectively, the “Premises”), and desires that Permittee sell alcoholic beverages, beer and/or wine, to patrons at the Premises only under this Agreement (the “Beverage Business”);

WHEREAS, Permittee presently maintains the permits described on Exhibit A attached hereto (the “Permits”), issued by the Texas Alcoholic Beverage Commission (“TABC”) in favor of Permittee, to sell alcoholic beverages, as applicable, at the Premises, but no longer has rights to possession of said Premises;

WHEREAS, Manager or an affiliate of Manager intends to obtain appropriate permits from the TABC for the sale of alcoholic beverages, as applicable, at the Premises, under its own licenses;

WHEREAS, Permittee has agreed to sell alcoholic beverages, as applicable, to patrons at the Premises, upon the terms and conditions and for the consideration set forth herein, prior to the time when Manager or an affiliate of Manager has obtained appropriate permits from the TABC for the sale of alcoholic beverages, as applicable, at the Premises, a time period estimated to be about 120 days.

NOW THEREFORE, in consideration of the foregoing, the mutual promises of the parties set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties agree as follows:

1.         Recitals Adopted. The parties hereby adopt and confirm the foregoing recitals.

2.         Temporary Concession Arrangement. Permittee, Licensor, and Manager have entered into this Agreement in order for the patrons at the Premises to be able to purchase and consume alcoholic beverages, on a basis that creates no loss or liability to Permittee, with Permittee owning and controlling the business of sale, service and storage of alcoholic beverages, as applicable, at the Premises. The intention of this arrangement is to provide for the sale and service of alcoholic beverages, as applicable, to patrons at the Premises on a temporary basis such that Permittee shall be protected against any loss, cost and expense in the conduct of its Beverage Business at the Premises and Manager shall perform duties such as purchasing inventory and remitting taxes and other costs and obligations on behalf of Permittee at Permittee’s direction in accordance with the terms and conditions of this Agreement. Manager, as agent for and on behalf of Permittee, will receive all revenues and remit payment of all expenses of Permittee relating to

the Premises as provided in this Agreement. The parties agree that a bank account under control of the Permittee and in its name, but with co-signature privileges by Manager as Permittee’s agent, will be utilized wherein all cash and credit card receipts and all other alcoholic beverage revenue from the Premises will be deposited (the “Beverage Account”). Permittee agrees to direct its credit card company to deposit all credit card revenue into this separate account or take such other measures as may be necessary in order to ensure these revenues are deposited into the Beverage Account in a timely manner.

3.         Description of Licensed Space and Concession.

(a)        Licensor hereby grants to Permittee, and Permittee hereby obtains from Licensor, a license and right to operate its Beverage Business only and strictly according to this Agreement. The license granted by this Agreement includes only the bar areas and other areas of the Premises in which alcoholic beverages are stored, prepared and served, including all such available floor space, storage space, shelving and refrigerated space and all fixtures, equipment, supplies (other than inventory of alcoholic beverages and other than consumable supplies or supplies which cannot be reused) and furniture ("Operating Supplies") necessary for Permittee to store, prepare, serve and sell alcoholic beverages and for patrons to be served and consume such beverages, and Permittee’s rights as to Premises and Operating Supplies shall be strictly limited to use for such purposes and further subject to the terms and conditions of this Agreement. Such license and grant of rights shall not entitle Permittee to exclusive possession or use of any of the Premises other than those areas where and when alcoholic beverages are stored, prepared or served, which shall be subject to the exclusive control of Permittee.

(b)        Licensor and Manager shall bear all risk of loss, damage or destruction of (i) the Premises and (ii) the Operating Supplies. Permittee shall bear all risk of loss, damage or destruction of the inventory of alcoholic beverages, consumable supplies related to service of alcoholic beverages and supplies related to service of alcoholic beverages which cannot be reused (“Inventories”) which shall be limited to the proceeds of the Beverage Account, to the extent such funds actually exist. At the end of the term of this Agreement, Permittee shall assign to Manager on a quitclaim basis all of its right, title and interest in and to the unopened portion of alcoholic beverage Inventories on hand at the Premises as of the last day of the term. At the end of the term of this Agreement, Permittee shall release and surrender the space, the Premises and non-alcoholic Operating Supplies licensed to Permittee under this Agreement to Manager and Licensor in its then current condition, and after termination of this Agreement.

4.         Conduct of Permittee’s Operations. During the term of this Agreement, Permittee shall conduct the operations of the Beverage Business on the Premises in a manner substantially similar to the manner in which it conducted such Beverage Business prior to the Effective Date and shall comply with all governmental laws, ordinances and regulations and shall obtain and maintain any and all governmental licenses and permits necessary for the sale of alcoholic beverages at the Premises, including, but not limited to, any permit or authorization required to be obtained from the TABC in order to sell and serve alcoholic beverages at the Premises. Manager shall record, maintain and deliver to Permittee accurate, true and complete records of all operations of the Beverage Business at the Premises including revenue reports, expense reports, tax reports

and depository reports and purchase orders, invoices and receipts or other back-up materials or evidence of the foregoing on a monthly basis or as more frequently if and as requested by Permittee. Manager shall have a right to be a required signatory on the Beverage Account, and Permittee shall take such action promptly upon Manager’s request to be added to such Beverage Account.

5.         Termination.

(a)        Permittee, Manager, and Licensor agree that this Agreement shall terminate automatically and immediately, without cost or obligation to either party (other than remitting to Permittee any monies received by Manager as agent for Permittee and other than any fees or expense reimbursements due by Permittee to Manager and/or Licensor) and without any notice from any party to the other, upon the earlier to occur of: (i) the expiration of 120 days from the Effective Date of this Agreement, (ii) delivery of written notice of termination by Licensor to Permittee and Manager, or (iii) the day on which Manager or an affiliate of Manager obtains permits from the TABC to sell alcoholic beverages, as applicable, at the Premises. This term may be extended by agreement of Manager, Licensor, and Permittee for up to two additional thirty (30) day periods upon showing by Manager or its affiliate that it has been duly diligent in seeking to obtain its or its affiliates’ permits from the Texas Alcoholic Beverage Commission. Such agreement may not be unreasonably withheld by Licensor or Permittee. The indemnification obligations of Manager and Permittee set forth in this Agreement shall survive such termination.

(b)        Manager and Permittee agree that upon the termination of this Agreement, a complete and full accounting shall be made of such Beverage Account by Manager and Permittee. A copy of such accounting will promptly be delivered to Licensor. All concession and license fees owing by Permittee pursuant to this Agreement shall be paid to Manager and Licensor, respectively, out of said Beverage Account.

6.         Damage to the Premises. If the Premises are damaged or destroyed by fire or other casualty during the term of this Agreement so that Permittee’s occupancy is interrupted or substantially interfered with, the operations of Permittee under this Agreement shall be abated during the entire period of such interruption or substantial interference, provided any and all due and payable fees, and costs will remain due and payable and will be paid and delivered as provided in this Agreement. If the Premises are so damaged that the continuing operation of the Beverage Business is reasonably expected not to continue for a period of at least sixty (60) days, as reasonably determined by Licensor, then this Agreement may be terminated by any party upon delivery of at least ten (10) days advance written notice of termination to all other parties.

7.         Appointment of Manager to Perform Management and Other Services. Permittee hereby designates and appoints Manager as its sole and exclusive agent to perform the management and other services and provide the Operating Supplies necessary in connection with the service and sale of alcoholic beverages at the Premises for on-premise consumption, and Manager hereby accepts such designation and appointment, which designation and acceptance shall conform with and are subject to the terms of this Agreement and further subject to the exclusive direction and control of Permittee.

(a)        In connection with the operation of Permittee’s Beverage Business at the Premises, Manager shall have the following duties:

(i)         carry out directions of Permittee, its officers, directors, partners and employees, in connection with the purchase, storage, service and sale of alcoholic beverages in the Premises and perform all such duties with due diligence in accordance with standards maintained in comparable Premises located in the municipality in which the Premises are located and within all of the terms and provisions of the Texas Alcoholic Beverage Code (the “Code”), and all other applicable laws, rules and regulations promulgated by the TABC (the “Rules”);

(ii)       maintain the Premises and all fixtures and equipment therein in good, clean, operating and serviceable appearance and condition;

(iii)      supply such bartenders, servers, janitors and other personnel as may be necessary for the efficient handling, sale and service of beer, wine, and/or alcoholic beverages, all of which personnel shall be paid by Manager, provided all such bartenders and servers shall be qualified, trained and certified under seller/service training courses approved by the TABC;

(iv)       comply with all applicable provisions of the Code and the Rules of the TABC to ensure Permittee is at all times in full compliance with the requirements thereof, so as to obtain the benefits afforded by Section 106.14(a) of the Code;

(v)        for the account, and at the direction, of Permittee, manage the inventory, storage, pricing, sale and service of beer, wine, and/or alcoholic beverages at the Premises and accept on behalf of Permittee deliveries of inventory of beer, wine, and/or alcoholic beverages at the Premises, it being expressly understood that all expenses arising out of or related to purchases of beer, wine, and/or alcoholic beverages shall be borne solely by Manager using its own funds and shall be paid from the Beverage Account;

(vi)       maintain separate, complete, true and accurate books and records showing the gross receipts from the sale of beer, wine, and/or alcoholic beverages on a daily basis during each calendar month in which this Agreement shall be in effect, and the amount of taxes or charges levied in respect of such sales, such books and records shall be subject to inspection and/or copying by Licensor or Permittee at any time and from time to time;

(vii)     perform all of its obligations under this Agreement in compliance with all applicable federal, state, or local laws relating to the service and sale of beer, wine, and/or alcoholic beverages including, but not limited to, the Code and the Rules of the TABC;

(viii)    submit to Permittee promptly after the end of each fiscal month during the term of this Agreement a complete and accurate statement showing the

gross sales of beer, wine, and/or alcoholic beverages by Permittee during such month in form and content reasonably acceptable to Permittee or Licensor and any other information required to be submitted to the TABC or the Texas Comptroller of Public Accounts or as requested by Permittee or Licensor;

(ix)       deliver to Permittee no later than the tenth (10th) calendar day of each month, funds equal to the sales tax due from the sale of alcoholic beverages and use tax due from the service of complimentary beer, wine, and/or alcoholic beverages during said month (which obligations shall survive the expiration or termination of this Agreement); and

(x)        maintain all records required of alcoholic beverages licensees by the TABC and otherwise cooperate with Permittee and Licensor in assuring compliance with the Code and Rules.

(b)        Manager will collect from patrons at the Premises and shall receive and hold in trust as the sole property of Permittee, all charges and revenue received for the sale of beer, wine, and/or alcoholic beverages and all taxes levied or charged in respect of such sales. Manager shall remit to Permittee, by deposit in the Beverage Account as soon as practicable, but no less than once a week, an amount equal to all receipts and charges received by it on behalf of Permittee from sales of beer, wine, and/or alcoholic beverages to Permittee’s customers at the Premises, and said monies and income shall not be deemed to be comingled with the funds of Manager. Manager will be solely responsible for payment of all purchases of Inventories of beer, wine, and/or alcoholic beverages, other taxes relating to the sales of beer, wine, and/or alcoholic beverages at the Premises and all other expenses of the Beverage Business. Manager shall look solely to its own funds for the payment of all such expenses, which shall not be paid using any funds in the Beverage Account except as otherwise described and authorized in accordance with Section 7 (a)(v) of this Agreement, and Permittee shall have no liability for any such expenses. Permittee will be responsible solely for payments due by Permittee to Manager and/or Licensor pursuant to this Agreement, which shall be paid by Permittee to Manager and/or Licensor solely out of Permittee’s funds remitted to it by Manager and not by retention or offset of any funds by Manager.

8.         Compensation.

(a)        Manager shall be entitled to receive as a fee for the license granted by this Agreement and as compensation for its services under this Agreement the sum equal to four percent (4%) of the monthly gross sales derived by Permittee from the sale of all beer, wine, and/or alcoholic beverages at the Premises, payable in arrears on or before such date as shall be mutually agreed upon by Manager and Permittee. Manager and Permittee agree that said compensation shall be due solely from the proceeds of the Beverage Account, to the extent such funds actually exist.

(b)        Licensor shall be entitled to receive as a fee for the license granted by this Agreement and as compensation for its services under this Agreement the sum equal to forty one percent (41%) of the monthly gross sales derived by Permittee from the sale of

all alcoholic beverages at the Premises, payable in arrears on or before such date as shall be mutually agreed upon by Licensor and Permittee. Manager and Permittee agree that said compensation shall be due solely from the proceeds of the Beverage Account, to the extent such funds actually exist. Said compensation may be increased or decreased from time to time as agreed upon by Licensor and Permittee, without the necessity of a formal amendment to this Agreement.

9.         Accounting. Manager agrees to supply accounting and bookkeeping services for the Beverage Business for Permittee. Manager will make available accounting data to Permittee and/or Licensor whenever requested and at least on a monthly basis before the 15th of each subsequent calendar month hereunder. Manager will report accounting data for the Beverage Business on an entirely separate set of books, and will provide summaries of all purchases, sales and other accounting data, including any records regarding complimentary beverages served on the licensed premises. Manager will provide all accounting functions including, but not limited to, the preparation of such reports as Permittee or Licensor may reasonably request and as may be required by the TABC and/or any other governmental authority using such method of accounting as may be agreed by Permittee and Manager or as reasonably designated by Licensor, which will control. Permittee and Licensor shall have the right to inspect such books and records at all reasonable business hours and to conduct reviews, make copies and conduct audits at any time at its sole expense. Except as otherwise provided under Section 7(a)(viii) and (ix) of this Agreement, Permittee will retain all responsibility for the preparation and filing of sales and other tax returns and reports relating to its Beverage Business and for payment of all income taxes due by it. The accounting described above will take place on the first day of each calendar month during the term of this Agreement unless otherwise agreed to by the parties.

10.       Manager’s Expenses. The following expenses incurred in connection with the operation of the Beverage Business on the Premises shall be borne solely by Manager using its own funds:

(a)        payment of all purchases of Inventories of beer, wine, and/or alcoholic beverages, and taxes relating to the sales of beer, wine, and/or alcoholic beverages at the Premises, and any and all other expenses, of any kind or character whatsoever, arising out of or related to the Beverage Business, including, but not limited to the maintenance of liquor liability/Dram Shop insurance on the Premises with such policy listing the Permittee and Licensor as insured parties;

(b)        telephone expenses and office supplies;

(c)        accounting expenses incurred in the preparation of reports required to be made to Permittee and/or filed with the TABC and/or any other governmental authority and expenses of preparation of any other documents necessary to the operations of Manager under this Agreement;

(d)        all expenses incurred by Manager in connection with the operation of the Beverage Business for the Premises and the sale by it of food, non-perishable items, beverages other than beer, wine, and/or alcoholic beverages and any other items which are not alcoholic beverages;

(e)        direct and indirect payroll expenses for Manager’s personnel engaged in the performance of services for Permittee under this Agreement; and

(f)        all other expenses which Manager may incur in the performance of its duties as outlined in this Agreement, including, but not limited to, expenses for equipment, supplies, and insurance.

11.       Expenses of Permittee. The following expenses incurred in connection with the operation of the Beverage Business on the Premises shall be borne solely by Permittee using its own funds, unless otherwise expressly stated herein:

(a)        all fees required to be paid to the TABC and any county or city authority in connection with obtaining any permits required under the Code and in connection with the renewal of any such permits during the term of this Agreement; and

(b)        accounting and legal expenses incurred in connection with obtaining and maintaining any permits required under the Code during the term of this Agreement.

12.       Expenses of Licensor. The following expenses incurred in connection with the operation of the Beverage Business on the Premises shall be borne solely by Licensor using its own funds:

(a)        expenses for equipment, furniture and fixture maintenance, repairs or replacement; and

(b)        fire and general liability insurance.

13.       Insurance.

(a)        Throughout the term of this Agreement, Manager will maintain policies of liquor liability/Dram Shop liability insurance on the Premises listing Permittee and Licensor as an insured or additional insured (with contractual indemnity) with the premiums thereon fully paid in advance, issued by and binding upon an insurance company authorized to transact business in the State of Texas and of good financial standing with a general policyholders rating of not less than “A-VII” as related in the most current available Best’s Key Rating Guide, such insurance to afford minimum protection of not less than $1,000,000 combined single limit for each occurrence and $2,000,000 for the aggregate of all occurrences within each policy year, with excess/umbrella coverage written on a follow- form basis with limits of not less than $10,000,000 per each occurrence and $10,000,000 in the aggregate. The cost of said insurance policies shall be the responsibility of and at the sole cost and expense of the Manager.

(b)       The policies of insurance to be maintained by Manager shall only be cancelable following at least thirty (30) days written notice to Permittee and Licensor. Manager shall furnish evidence of such insurance concurrently with the execution of this Agreement.

(c)        All policies shall be specifically endorsed to provide that (1) the coverages obtained by virtue of this Agreement will be primary and (2) any insurance carried by Permittee or its affiliates if any, shall be excess and non-contributory. All policies shall be specifically endorsed to provide that such coverage shall not be cancelled or materially reduced without at least thirty (30) days prior written notice to Permittee and Licensor. Manager, upon twenty-four (24) hours’ notice by Permittee and/or Licensor, shall deliver certificates of insurance and any renewals thereof to Permittee and Licensor, which evidences the required coverages. Prior to execution of this Agreement, a certificate of insurance evidencing the required insurance and additional insured endorsements shall be tendered to Permittee.

14.       Responsibility for Obligations. No party hereunder shall contract or incur any indebtedness or obligation in the name of the other. All sales at the Premises shall belong to, and shall be accounted for as belonging to, Permittee, and each party shall promptly make payment of any taxes, assessments and other charges attributable to its operations as they may become due in accordance with the terms and conditions of this Agreement, and shall not allow any lien or other encumbrance to be fixed upon the property of either party hereto, without the prior written consent of the other party. Nothing in this Agreement is intended to create, or shall be interpreted as creating, any partnership or joint venture by, between, or among Permittee, Manager and/or Licensor.

15.       Security Refunds. Permittee shall retain all rights it presently has to a refund of any cash or other form of security posted with any governmental agency in connection with the Permits.

16.       Indemnification.

(a)        Manager and Licensor hereby agree to indemnify, defend and hold harmless Permittee and its officers, directors, partners, shareholders and employees (collectively, the “Permittee Indemnified Persons”) from and against any and all demands, losses, damages, fines, penalties, causes of action, claims, liabilities (specifically including, without limitation, dram shop liability), obligations, judgments, costs and expenses (including, without limitation, reasonable attorneys’ fees and court costs, and all expenses of litigation) arising on or after the date hereof (all of the foregoing being referred to collectively or individually as “Claim”) which are claimed against, incurred, suffered or sustained by any of the Permittee Indemnified Persons and which arise out of or are caused by, incident to, or in any manner connected with any of the following:

(i) the use or occupancy of the Premises or any activity conducted in or about any of the Premises;

(ii) the sale of beer, wine, and/or alcoholic beverages at the Premises and consumption of any beer, wine, and/or alcoholic beverages sold at the Premises; (iii) any violation of the Code or the Rules of the TABC at the Premises by any employee or agent of Manager or Licensor, and (iv) any breach by Manager or Licensor of this Agreement. This Section 16 shall survive the expiration or earlier termination of this Agreement.

(b)        (b) Permittee hereby agrees to indemnify, defend and hold harmless Licensor and Manager and their respective officers, directors, shareholders and employees (collectively, the “Licensor/Manager Indemnified Persons”) from and against any and all Claims which are claimed against, incurred, suffered or sustained by any of the Licensor/Manager

Indemnified Persons and which arise out of or are caused by, incident to or in any manner connected with any violation of the Code or the Rules of the TABC by Permittee or any of its employees, agents or affiliates, whether relating to any of the Premises or otherwise, except to the extent such violation arises out of and is caused by, incident to or in any manner connected with any act of negligence or willful misconduct on the part of Licensor and/or Manager or any of their respective employees, agents or affiliates.

17.       Status of Existing Permits. Permittee acknowledges to Manager and Licensor that

(a) the Permits are all held in the name of Permittee, do not expire until the dates specified on Exhibit A, have not been revoked (nor is there any current proceeding to revoke such permits) and are in good standing, and (b) there is not now pending any administrative or enforcement case or action by the TABC or any other governmental authority which alleges any violation by Permittee of any provision of the Code or of the Rules of the TABC. Permittee will promptly notify Manager, and vice versa, of any administrative or enforcement case or action, of any investigation by the TABC of which Permittee or Manager has notice from the TABC relating in any way to any of the Permits, and of any proposed or actual suspension, revocation or denial of renewal of any of such permits. Manager shall reimburse Permittee for all fines, penalties, costs and expenses incurred by Permittee relating to conduct of business by Manager at the Premises after the date of this Agreement. Permittee will take all necessary actions to maintain the Permits in good standing. If any of the Permits is due for renewal prior to Manager or its affiliate obtaining its own permits from the TABC at the Premises, Permittee will renew such Permits. Any out-of-pocket costs or expenses incurred by Permittee in complying with this Section 17 shall be paid in advance by Manager and/or Licensor.

18.       Inventory. The parties shall arrange for and agree to have a complete inventory taken of all beer, wine, and/or alcoholic beverages, as applicable, located at the Premises on the date of this Agreement. The parties shall arrange for and agree to have an additional complete inventory taken of all beer, wine, and/or alcoholic beverage products located at the Premises on the date Manager obtains the necessary permits from the TABC to sell alcoholic beverages at the Premises or the date that this Agreement terminates (the “Transfer Date Inventory”). The Transfer Date Inventory shall be sworn to as required by law and a duplicate original thereof promptly filed with the TABC on the certain forms required by the TABC.

19.       Physical Surrender of Permit Documents. When required to do so by the TABC in connection with the process of application for and issuance of necessary permits to Manager or an affiliate by the TABC, Permittee shall promptly surrender all of the Permits to the TABC and obtain “Letters of Authority” from that agency allowing it to continue to sell alcoholic beverages at the Premises. Such Letters of Authority shall be posted in the Premises.

20.       No Sublicense or Sublease. Permittee may not sublicense or sublet the Premises or any part of the Premises.

21.       Authority. Each of the parties executing this Agreement acknowledges that it has the respective authority to act for and bind the entity for which such party is executing this Agreement.

22.       Survival. Unless expressly stated to the contrary, all obligations for any payment or reimbursement by one party to the other shall survive the end of the term of this Agreement. The provisions of Section 16 of this Agreement shall survive the end of the term.

23.       Notices. All notices, demands, requests or other communications that may be or are required to be given, served or sent by any party to any other party pursuant to this Agreement shall be in writing and shall be (a) mailed by first-class, registered or certified mail, return receipt requested, postage prepaid, (b) transmitted by a reputable overnight courier service or by hand delivery, or (c) delivered by email, if confirmed by either of the methods described in (a) or (b) on the business day immediately following the date of transmission, addressed as follows:

If to Permittee:                                        Treemont Capital Partners IV GP LLC

1415 S Voss #110-94

Houston, TX 77057 Attn: Philip McRae

Email: pmcrae@treemontpartners.com

If to Manager:                                         NHS LLC dba ND NHS LLC

1635 – 43rd Street S, Suite 305 Fargo, ND 58103

Attention: Norman H. Leslie Email: nhleslie@nhshotels.com

If to Licensor:                                         LF3 Lubbock Expo TRS, LLC

1635 – 43rd Street S, Suite 305 Fargo, ND 58103

Attention: Sam Montgomery

Email: smontgomery@lodgingfund.com

Each party may designate by notice in writing a new address to which any notice, demand, request or communication may thereafter be so given, served or sent. Each notice, demand, request or communication that is mailed, delivered or transmitted in the manner described above shall be deemed sufficiently given, served, sent and received for all purposes at such time as it is delivered to the addressee (with the return receipt, being deemed conclusive evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation.

24.       Miscellaneous. The laws of the State of Texas shall govern the validity or enforceability and the interpretation or construction of all provisions of this Agreement and all issues hereunder and the venue for any action arising out this Agreement shall be in the state or federal courts sitting in Lubbock County, Texas. Any mediation or arbitration hearing arising out of this Agreement shall take place in Lubbock, Texas. The unenforceability or invalidity, as determined by a court of competent jurisdiction, of any provision of this Agreement shall not render unenforceable or invalid any other provision of this Agreement. Except as expressly stated herein, no change or modification of this Agreement shall be valid or binding upon the parties hereto unless such change or modification shall be in writing and signed by all the parties hereto. The provisions of this Agreement shall be binding upon and inure to the benefit of all parties and their respective legal representatives, successors and assigns. Nothing in this Agreement shall

create or be deemed to create the relationship of partners, joint venturers, employer-employee, or principal-agent between the parties, except as expressly provided. In the event of any litigation, mediation, or arbitration in connection with or with respect to this Agreement, the prevailing party shall be awarded all costs, including, without limitation, reasonable attorney’s fees. This Agreement is and shall a valid, legally binding obligation of and enforceable against Permittee, Manager and Licensor in accordance with its terms, subject only to applicable laws affecting or limiting the rights of contracting parties generally. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same agreement.

(Signature page(s) follow(s)).

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date and year first above written.

PERMITTEE:
Treemont Capital Partners IV GP LLC a Texas limited liability company
By:	/s/ Philip A McRae
		Name: Philip A. McRae
		Title: President
Fairfield Inn & Suites Marriott- Lubbock Southwest
Alcohol Temporary Concession Agreement			Page 12 of 15

MANAGER:
NHS LLC dba ND NHS, LLC
By:	/s/ Noman H. Leslie
Noman H. Leslie, Sole Member
Fairfield Inn & Suites Marriott- Lubbock Southwest
Alcohol Temporary Concession Agreement		Page 13 of 15

LICENSOR:
LF3 Lubbock Expo TRS, LLC
By:		Lodging Fund REIT III TRS, Inc. Its: Sole Member
By:		/s/ Katie Cox
	Katie Cox, CFO

EXHIBIT A

License #:	BG987264
Trade Name:	FAIRFIELD INN & SUITES BY MARRIOT-LUBBOCK SOUTHWEST
Owner:	TREEMONT CAPITAL PARTNERS IV GP LLC
Location Address:	Mailing Address:		1415 S VOSS #110-
	6435 50TH STREET		94
	LUBBOCK , TX 79407		HOUSTON , TX 77057
County:	Lubbock	Orig. Issue Date:	7/5/2017
Status:	Current	Exp. Date:	7/4/2021
		Wine Percent:	17
Location Phone No.:	832-790-7772
Subordinates:
Related To:		Gun Sign:	RED

EX-10.56.1

EXHIBIT 10.56.1

Principal$5,858,134.26	Loan Date03-05-2019	Maturity03-01-2024	Loan No	Call / Coll8100	Account	Officer403	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

THIS BUSINESS LOAN AGREEMENT dated March 5, 2019, is made and executed between LF3 Cedar Rapids, LLC; and LF3 Cedar Rapids TRS, LLC ("Borrower") and Western State Bank ("Lender") on the following terms and conditions. Borrower has received prior commercial loans from Lender or has applied to Lender for a commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or schedule attached to this Agreement. Borrower understands and agrees that: (A) in granting, renewing, or extending any Loan, Lender is relying upon Borrower's representations, warranties, and agreements as set forth in this Agreement; (B) the granting, renewing, or extending of any Loan by Lender at all times shall be subject to Lender's sole judgment and discretion; and (C) all such Loans shall be and remain subject to the terms and conditions of this Agreement.

TERM. This Agreement shall be effective as of March 5, 2019, and shall continue in full force and effect until such time as all of Borrower's Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys' fees, and other fees and charges, or until such time as the parties may agree in writing to terminate this Agreement.

LINE OF CREDIT. The Indebtedness contemplates multiple loan advances. Advances under the Indebtedness, as well as directions for payment from Borrower's accounts, may be requested only in writing by Borrower. Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person as described in the "Advance Authority" section below or (B) credited to any of Borrower's accounts with Lender.

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial Advance and each subsequent Advance under this Agreement shall be subject to the fulfillment to Lender's satisfaction of all of the conditions set forth in this Agreement and in the Related Documents.

Loan Documents. Borrower shall provide to Lender the following documents for the Loan: (1) the Note; (2)  Security Agreements granting to Lender security interests in the Collateral; (3) financing statements and all other documents perfecting Lender's Security Interests; (4) evidence of insurance as required below; (5) guaranties; (6) together with all such Related Documents as Lender may require for the Loan; all in form and substance satisfactory to Lender and Lender's counsel.

Borrower's Authorization. Borrower shall have provided in form and substance satisfactory to Lender properly certified resolutions, duly authorizing the execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such other resolutions, authorizations, documents and instruments as Lender or its counsel, may require.

Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payable as specified in this Agreement or any Related Document.

Representations and Warranties. The representations and warranties set forth in this Agreement, in the Related Documents, and in any document or certificate delivered to Lender under this Agreement are true and correct.

No Event of Default. There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement or under any Related Document.

MULTIPLE BORROWERS. This Agreement has been executed by multiple obligors who are referred to in this Agreement individually, collectively and interchangeably as "Borrower." Unless specifically stated to the contrary, the word "Borrower" as used in this Agreement, including without limitation all representations, warranties and covenants, shall include all Borrowers. Borrower understands and agrees that, with or without notice to any one Borrower, Lender may (A) make one or more additional secured or unsecured loans or otherwise extend additional credit with respect to any other Borrower; (B) with respect to any other Borrower 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) release, substitute, agree not to sue, or deal with any one or more of Borrower's or any other Borrower's sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; (E) determine how, when and what application of payments and credits shall be made on any indebtedness; (F) apply such security and direct the order or manner of sale of any Collateral, including without limitation, any non-judicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine; (G)  sell, transfer, assign or grant participations in all or any part of the Loan;  (H)  exercise or refrain from exercising any rights against Borrower or others, or otherwise act or refrain from acting; (I)  settle or compromise any indebtedness; and  (J)  subordinate the payment of all or any part of any of Borrower's indebtedness to Lender to the payment of any liabilities which may be due Lender or others.

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists:

Organization. LF3 Cedar Rapids, LLC is a limited liability company which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Delaware.  LF3 Cedar Rapids, LLC is duly authorized to transact business in all other states in which LF3 Cedar Rapids, LLC is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which LF3 Cedar Rapids, LLC is doing business. Specifically, LF3 Cedar Rapids, LLC is, and at all times shall be, duly qualified as a foreign limited liability company in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition.  LF3 Cedar Rapids, LLC has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. LF3 Cedar Rapids, LLC maintains an office at 1635 43rd Street South, Suite 205, Fargo, ND 58103. Unless LF3 Cedar Rapids, LLC has designated otherwise in writing, the principal office is the office at which LF3 Cedar Rapids, LLC keeps its books and records including its records concerning the Collateral. LF3 Cedar Rapids, LLC will notify Lender prior to any change in the location of LF3 Cedar Rapids, LLC's state of organization or any change in LF3 Cedar Rapids, LLC's name. LF3 Cedar Rapids, LLC shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to LF3 Cedar Rapids, LLC and LF3 Cedar Rapids, LLC's business activities.

LF3 Cedar Rapids TRS, LLC is a limited liability company which is, and at all times shall be, duly organized, validly existing, and in good

standing under and by virtue of the laws of the State of Delaware. LF3 Cedar Rapids TRS, LLC is duly authorized to transact business in all other states in which LF3 Cedar Rapids TRS, LLC is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which LF3 Cedar Rapids TRS, LLC is doing business. Specifically, LF3 Cedar Rapids TRS, LLC is, and at all times shall be, duly qualified as a foreign limited liability company in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition.  LF3 Cedar Rapids TRS, LLC has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage.  LF3 Cedar Rapids TRS, LLC maintains an office at 1635 43rd Street South, Suite 205, Fargo, ND 58103. Unless LF3 Cedar Rapids TRS, LLC has designated otherwise in writing, the principal office is the office at which LF3 Cedar Rapids TRS, LLC keeps its books and records including its records concerning the Collateral. LF3 Cedar Rapids TRS, LLC will notify Lender prior to any change in the location of LF3 Cedar Rapids TRS, LLC's state of organization or any change in LF3 Cedar Rapids TRS, LLC's name. LF3 Cedar Rapids TRS, LLC shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to LF3 Cedar Rapids TRS, LLC and LF3 Cedar Rapids TRS, LLC's business activities.

Assumed Business Names. Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used by Borrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business: None.

Authorization. Borrower's execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision of (a) Borrower's articles of organization or membership agreements, or (b) any agreement or other instrument binding upon Borrower or  (2)  any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower's properties.

Financial Information. Each of Borrower's financial statements supplied to Lender truly and completely disclosed Borrower's financial condition as of the date of the statement, and there has been no material adverse change in Borrower's financial condition subsequent to the date of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed in such financial statements.

Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms.

Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower's financial statements or in writing to Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower's properties free and clear of all Security Interests, and has not executed any security documents or financing statements relating to such properties. All of Borrower's properties are titled in Borrower's legal name, and Borrower has not used or filed a financing statement under any other name for at least the last five (5) years.

Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that: (1)  During the period of Borrower's ownership of the Collateral, 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 any of the Collateral. (2) Borrower has no knowledge of, or reason to believe that there has been (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 Collateral by any prior owners or occupants of any of the Collateral; or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the Collateral shall use, generate, manufacture, store, treat, dispose of or release  any Hazardous  Substance on,  under, about or from  any of  the Collateral; and 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. Borrower authorizes Lender and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower's expense and for Lender's purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Borrower or to any other person. The representations and warranties contained herein are based on Borrower's due diligence in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Borrower 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 Agreement or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of the Agreement, including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and  the  termination,  expiration  or satisfaction of this Agreement and shall not be affected by Lender's acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise.

Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower's financial condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in writing.

Taxes. To the best of Borrower's knowledge, all of Borrower's tax returns and reports that are or were required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided.

Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or  granted  any  Security Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment of Borrower's Loan and Note, that would be prior or that may in any way be superior to Lender's Security Interests and rights in and to such Collateral.

Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms.

AFFIRMATIVE COVENANTS.  Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will:

Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse changes in Borrower's financial condition, and (2)  all existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor.

Financial Records. Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine and audit Borrower's books and records at all reasonable times.

Financial Statements. Furnish Lender with the following:

Interim Statements.  As soon as available, but in no event later than sixty (60) days after the end of each fiscal quarter, Borrower's balance sheet and profit and loss statement for the period ended, compiled by a certified public accountant satisfactory to Lender.

Tax Returns.  As soon as available, but in no event later than sixty (60) days after the applicable filing date for the tax reporting period ended, Borrower's Federal and other governmental tax returns, prepared by a certified public accountant satisfactory to Lender.

Additional Requirements.  Borrower will be required to submit Annual Consolidated Audited Financial Statements of Lodging Fund REIT III, Inc.

Borrower will be required to submit Annual Consolidated Debt Schedule of Lodging Fund REIT III, Inc. (if not included in audited statements).

Borrower will be required to submit Annual Tax Returns, including all K-1 Schedules, of Lodging Fund REIT III OP, LP and Lodging Fund REIT III TRS, Inc.

Borrower will be required to submit Quarterly Smith Travel Accommodations Report (STAR) for LF3 Cedar Rapids TRS, LLC.

All financial reports required to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Borrower as being true and correct.

Additional Information. Furnish such additional information and statements, as Lender may request from time to time.

Additional Requirements. Monthly draw requests including invoices to be paid will be submitted with each draw. Lien waivers will be required on all draws and must be obtained prior to any additional loan advances. The lien waiver and disbursement process will be handled by the Bank. The Bank will have three (3) business days to review and approve the monthly draw request and will make payment of the draw request within such three (3) business day period.

Construction progress inspections will be completed by a third party and completed no more than once per month.

Insurance. Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower's properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least thirty  (30) days prior written notice to Lender. 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 Borrower or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest for the Loans, Borrower will provide Lender with such lender's loss payable or other endorsements as Lender may require.

Insurance Reports. Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender may reasonably request, including without limitation the following: (1)  the name of the insurer;  (2)  the risks insured;  (3)  the amount of the policy; (4) the properties insured;  (5)  the then current property values on the basis of which insurance has been obtained, and the manner of determining those values; and (6) the expiration date of the policy. In addition, upon request of Lender (however not more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost of any Collateral.  The cost of such appraisal shall be paid by Borrower.

Guaranties. Prior to disbursement of any Loan proceeds, furnish executed guaranties of the Loans in favor of Lender, executed by the guarantors named below, on Lender's forms, and in the amounts and under the conditions set forth in those guaranties.

Names of GuarantorsAmounts

Lodging Fund REIT III OP, LP                                                                      Unlimited

Lodging Fund REIT III TRS, Inc.                                                                                  Unlimited

Other Agreements. Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party and notify Lender immediately in writing of any default in connection with any other such agreements.

Loan Proceeds. Use all Loan proceeds solely for Borrower's business operations, unless specifically consented to the contrary by Lender in writing.

Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower's properties, income, or profits. Provided however, Borrower will not be required to pay and discharge any such assessment, tax, charge, levy, lien or claim so long as (1) the legality of the same shall be contested in good faith by appropriate proceedings, and (2)  Borrower shall have established on Borrower's books adequate reserves with respect to such contested assessment, tax, charge, levy, lien, or claim in accordance with GAAP.

Performance. Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the Related Documents, and in all other instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of any default in connection with any agreement.

Operations. Maintain executive and management personnel with substantially the same qualifications and experience as the present executive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a reasonable and prudent manner.

Environmental Studies. Promptly conduct and complete, at Borrower's expense, all such investigations, studies, samplings and testings as may be requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or directive, at or affecting any property or any facility owned, leased or used by Borrower.

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

Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower's other properties and to examine or audit Borrower's books, accounts, and records and to make copies and memoranda of Borrower's books, accounts, and records. If Borrower now or at any time hereafter maintains any records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower's expense.

Compliance Certificates. Unless waived in writing by Lender, provide Lender at least annually, with a certificate executed by Borrower's chief financial officer, or other officer or person acceptable to Lender, certifying that the representations and warranties set forth in this Agreement are true and correct as of the date of the certificate and further certifying that, as of the date of the certificate, no Event of Default exists under this Agreement.

Environmental Compliance and Reports. Borrower shall comply in all respects with any and all Environmental Laws; not cause or permit to exist, as a result of an intentional or unintentional action or omission on Borrower's part or on the part of any third party, on property owned and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptly and in any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or  instrumentality concerning any intentional or unintentional action or omission on Borrower's part in connection with any environmental activity whether or not there is damage to the environment and/or other natural resources.

Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans and to perfect all Security Interests.

LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower's failure to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender on Borrower'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 any Collateral and paying all costs for insuring, maintaining and preserving any Collateral. 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 Borrower.  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.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written consent of Lender:

Indebtedness and Liens. (1) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated by this Agreement, create, incur or assume indebtedness for borrowed money, including capital leases, (2) sell, transfer, mortgage, assign, pledge, lease, grant a security interest in, or encumber any of Borrower's assets (except as allowed as Permitted Liens), or (3) sell with recourse any of Borrower's accounts, except to Lender.

Continuity of Operations.  (1)  Engage in any business activities substantially different than those in which Borrower is presently engaged,

(2) cease operations, liquidate, merge or restructure as a legal entity (whether by division or otherwise), consolidate with or acquire any other entity, change its name, convert to another type of entity or redomesticate, dissolve or transfer or sell Collateral out of the ordinary course of business, or  (3)  make any distribution with respect to any capital account, whether by reduction of capital or otherwise.

Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets to any other person, enterprise or entity, (2) purchase, create or acquire any interest in any other enterprise or entity, or (3)  incur any obligation as surety or guarantor other than in the ordinary course of business.

Agreements. Enter into any agreement containing any provisions which would be violated or breached by the performance of Borrower's obligations under this Agreement or in connection herewith.

CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender;  (B)  Borrower or any Guarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse change in Borrower's financial condition, in the financial condition of any Guarantor, or in the value of any Collateral securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any other loan with Lender; or (E) Lender in good faith deems itself insecure, even though no Event of Default shall have occurred.

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.

DEFAULT.  Each of the following shall constitute an Event of Default under this Agreement:

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

Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement 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 or any Grantor's property or Borrower's or any Grantor's ability to repay the Loans or perform their respective obligations under this Agreement 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

Agreement 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.

Defective Collateralization. This Agreement 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.

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.

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

Insecurity. Lender in good faith believes itself insecure.

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents, all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including any obligation to make further Loan Advances or disbursements), and, at Lender's option, all Indebtedness immediately will become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the "Insolvency" subsection above, such acceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Related Documents or available at law, in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender's rights and remedies shall be cumulative and may be exercised singularly or concurrently. 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 Borrower or of any Grantor shall not affect Lender's right to declare a default and to exercise its rights and remedies.

JUNIOR OR SUBORDINATE LIENS. LF3 Cedar Rapids, LLC and LF3 Cedar Rapids TRS, LLC will not be permitted to place any junior or subordinate liens on the subject property without the prior written approval of the Bank.

PRIMARY CHECKING ACCOUNT. LF3 Cedar Rapids, LLC and LF3 Cedar Rapids TRS, LLC will be required to maintain its primary checking account at the Bank.

DEBT SERVICE COVERAGE RATIO. LF3 Cedar Rapids, LLC and LF3 Cedar Rapids TRS, LLC will maintain a minimum annual post-net cash distribution Debt Service Coverage Ratio (DSCR) of 1.25x as measured at each fiscal year end. DSCR is defined as the combined Net Operating Income (NOI) of divided by the combined Annual Debt Service Requirements for both LF3 Cedar Rapids, LLC and LF3 Cedar Rapids TRS, LLC. NOI is defined as Net Income, plus any current fiscal year’s Depreciation, Amortization, Interest Expense, One-Time Acquisition / Partnership Expense and any other non-cash expenses. Distribution is defined as any cash dividends or owner withdrawals. .

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.

ADDITIONAL REPORTING REQUIREMENTS PROVISION. Borrower will be required to submit any other information deemed necessary by the Bank.

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

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

Expenses. If Lender institutes any suit or action to enforce any of the terms of this Agreement, 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), appeals, and any anticipated post-judgment collection services, to the extent permitted by applicable law. Borrower also will pay any court costs, in addition to all other sums provided by law.

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

Consent to Loan Participation. Borrower agrees and consents to Lender's sale or transfer, whether now or later, of one or more participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters.  Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such interests in the Loan and will have all the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower's obligation under the Loan irrespective of the failure or insolvency of any holder of any interest in the Loan. Borrower further agrees that  the purchaser  of any  such participation  interests may  enforce its  interests irrespective  of any  personal claims  or

defenses that Borrower may have against Lender.

Governing Law. This Agreement 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 Agreement 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.

Joint and Several Liability. All obligations of Borrower under this Agreement shall be joint and several, and all references to Borrower shall mean each and every Borrower. This means that each Borrower signing below is responsible for all obligations in this Agreement. 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 Agreement.

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement 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 Agreement 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 Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender's rights or of any of Borrower's or any Grantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, 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.

Notices. Any notice required to be given under this Agreement 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 Agreement. Any party may change its address for notices under this Agreement 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, Borrower agrees to keep Lender informed at all times of Borrower's current address. Unless otherwise provided or required by law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to all Borrowers.

Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any person or circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other person or 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 Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.

Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate, including without limitation any representation, warranty or covenant, the word "Borrower" as used in this Agreement shall include all of Borrower's subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any of Borrower's subsidiaries or affiliates.

Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents shall bind Borrower's successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right to  assign Borrower's rights under this Agreement or any interest therein, without the prior written consent of Lender.

Survival of Representations and Warranties. Borrower understands and agrees that in making the Loan, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive the making of the Loan and delivery to Lender of the Related Documents, 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, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur.

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

Waive Jury. All parties to this Agreement hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by any party against any other party.

DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. 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 Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement:

Advance.  The word "Advance" means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower's behalf on a line of credit or multiple advance basis under the terms and conditions of this Agreement.

Agreement. The word "Agreement" means this Business Loan Agreement, as this Business Loan Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Business Loan Agreement from time to time.

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.

Collateral. The word "Collateral" means all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise.

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 Agreement in the default section of this Agreement.

GAAP.  The word "GAAP" means generally accepted accounting principles.

Grantor. The word "Grantor" means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, including without limitation all Borrowers granting such a Security Interest.

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

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.

Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents.

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

Loan. The word "Loan" means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, and however evidenced, including without limitation those loans and financial accommodations described herein or described on any exhibit or schedule attached to this Agreement from time to time.

Note. The word "Note" means the Note dated March 5, 2019 and executed by LF3 Cedar Rapids, LLC; and LF3 Cedar Rapids TRS, LLC in the principal amount of $5,858,134.26, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement.

Permitted Liens.  The words "Permitted Liens" mean  (1)  liens and security interests securing Indebtedness owed by Borrower to Lender;

liens for taxes, assessments, or similar charges either not yet due or being contested in good faith; (3) liens of materialmen, mechanics, warehousemen, or carriers, or other like liens arising in the ordinary course of business and securing obligations which are not yet delinquent; (4) purchase money liens or purchase money security interests upon or in any property acquired or held by Borrower in the ordinary course of business to secure indebtedness outstanding on the date of this Agreement or permitted to be incurred under the paragraph of this Agreement titled "Indebtedness and Liens"; (5) liens and security interests which, as of the date of this Agreement, have been disclosed to and approved by the Lender in writing; and  (6)  those liens and security interests which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of Borrower's assets.

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 Loan.

Security Agreement. The words "Security Agreement" mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security Interest.

Security Interest. The words "Security Interest" mean, without limitation, any and all types of collateral security, present and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust,  factor's lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law, contract, or otherwise.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS.  THIS BUSINESS LOAN AGREEMENT IS DATED MARCH 5, 2019.

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\C40.FC  TR-3523  PR-

Principal$9,444,500.00	Loan Date06-19-2019	Maturity07-01-2024	Loan No	Call / Coll8100	Account	Officer403	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

THIS BUSINESS LOAN  AGREEMENT dated June 19, 2019, is made and executed between LF3 Eagan, LLC; and LF3 Eagan TRS, LLC ("Borrower") and Western State Bank ("Lender") on the following terms and conditions. Borrower has received prior commercial loans from Lender or has applied to Lender for a commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or schedule attached to this Agreement.  Borrower understands and agrees that: (A) in granting, renewing, or extending any Loan, Lender is relying upon Borrower's representations, warranties, and agreements as set forth in this Agreement; (B) the granting, renewing, or extending of any Loan by Lender at all times shall be subject to Lender's sole judgment and discretion; and (C) all such Loans shall be and remain subject to the terms and conditions of this Agreement.

TERM. This Agreement shall be effective as of June 19, 2019, and shall continue in full force and effect until such time as all of Borrower's Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys' fees, and other fees and charges, or until such time as the parties may agree in writing to terminate this Agreement. Advances under the Indebtedness, as well as directions for payment from Borrower's accounts, may be requested only in writing by Borrower. Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person as described in the "Advance Authority" section below or (B) credited to any of Borrower's accounts with Lender.

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial Advance and each subsequent Advance under this Agreement shall be subject to the fulfillment to Lender's satisfaction of all of the conditions set forth in this Agreement and in the Related Documents.

Loan Documents. Borrower shall provide to Lender the following documents for the Loan: (1) the Note; (2)  Security Agreements granting to Lender security interests in the Collateral; (3) financing statements and all other documents perfecting Lender's Security Interests; (4) evidence of insurance as required below; (5) guaranties; (6) together with all such Related Documents as Lender may require for the Loan; all in form and substance satisfactory to Lender and Lender's counsel.

Borrower's Authorization. Borrower shall have provided in form and substance satisfactory to Lender properly certified resolutions, duly authorizing the execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such other resolutions, authorizations, documents and instruments as Lender or its counsel, may require.

Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payable as specified in this Agreement or any Related Document.

Representations and Warranties. The representations and warranties set forth in this Agreement, in the Related Documents, and in any document or certificate delivered to Lender under this Agreement are true and correct.

No Event of Default. There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement or under any Related Document.

MULTIPLE BORROWERS. This Agreement has been executed by multiple obligors who are referred to in this Agreement individually, collectively and interchangeably as "Borrower." Unless specifically stated to the contrary, the word "Borrower" as used in this Agreement, including without limitation all representations, warranties and covenants, shall include all Borrowers. Borrower understands and agrees that, with or without notice to any one Borrower, Lender may (A) make one or more additional secured or unsecured loans or otherwise extend additional credit with respect to any other Borrower; (B) with respect to any other Borrower 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) release, substitute, agree not to sue, or deal with any one or more of Borrower's or any other Borrower's sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; (E) determine how, when and what application of payments and credits shall be made on any indebtedness; (F) apply such security and direct the order or manner of sale of any Collateral, including without limitation, any non-judicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine; (G)  sell, transfer, assign or grant participations in all or any part of the Loan;  (H)  exercise or refrain from exercising any rights against Borrower or others, or otherwise act or refrain from acting; (I)  settle or compromise any indebtedness; and  (J)  subordinate the payment of all or any part of any of Borrower's indebtedness to Lender to the payment of any liabilities which may be due Lender or others.

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists:

Organization. LF3 Eagan, LLC is a limited liability company which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Delaware. LF3 Eagan, LLC is duly authorized to transact business in all other states in which LF3 Eagan, LLC is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which LF3 Eagan, LLC is doing business. Specifically, LF3 Eagan, LLC is, and at all times shall be, duly qualified as a foreign limited liability company in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. LF3 Eagan, LLC has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. LF3 Eagan, LLC maintains an office at 1635 43rd Street South, Suite 205, Fargo, ND 58103. Unless LF3 Eagan, LLC has designated otherwise in writing, the principal office is the office at which LF3 Eagan, LLC keeps its books and records including its records concerning the Collateral. LF3 Eagan, LLC will notify Lender prior to any change in the location of LF3 Eagan, LLC's state of organization or any change in LF3 Eagan, LLC's name. LF3 Eagan, LLC shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to LF3 Eagan, LLC and LF3 Eagan, LLC's business activities.

LF3 Eagan TRS, LLC is a limited liability company which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Delaware. LF3 Eagan TRS, LLC is duly authorized to transact business in all other states in which LF3 Eagan TRS, LLC is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which LF3 Eagan TRS, LLC is doing business.  Specifically, LF3 Eagan TRS, LLC is, and at all times shall be, duly qualified as a foreign

limited liability company in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. LF3 Eagan TRS, LLC has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. LF3 Eagan TRS, LLC maintains an office at 1635 43rd Street South, Suite 205, Fargo, ND 58103. Unless LF3 Eagan TRS, LLC has designated otherwise in writing, the principal office is the office at which LF3 Eagan TRS, LLC keeps its books and records including its records concerning the Collateral. LF3 Eagan TRS, LLC will notify Lender prior to any change in the location of LF3 Eagan TRS, LLC's state of organization or any change in LF3 Eagan TRS, LLC's name. LF3 Eagan TRS, LLC shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to LF3 Eagan TRS, LLC and LF3 Eagan TRS, LLC's business activities.

Assumed Business Names. Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used by Borrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business:

Borrower	Assumed Business Name	Filing Location	Date
LF3 Eagan TRS, LLC	Hampton Inn Minneapolis/Eagan	MN Secretary of State	05-02-2019

Authorization. Borrower's execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision of (a) Borrower's articles of organization or membership agreements, or (b) any agreement or other instrument binding upon Borrower or  (2)  any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower's properties.

Financial Information. Each of Borrower's financial statements supplied to Lender truly and completely disclosed Borrower's financial condition as of the date of the statement, and there has been no material adverse change in Borrower's financial condition subsequent to the date of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed in such financial statements.

Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms.

Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower's financial statements or in writing to Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower's properties free and clear of all Security Interests, and has not executed any security documents or financing statements relating to such properties. All of Borrower's properties are titled in Borrower's legal name, and Borrower has not used or filed a financing statement under any other name for at least the last five (5) years.

Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that: (1)  During the period of Borrower's ownership of the Collateral, 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 any of the Collateral. (2) Borrower has no knowledge of, or reason to believe that there has been (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 Collateral by any prior owners or occupants of any of the Collateral; or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the Collateral shall use, generate, manufacture, store, treat, dispose of or release  any Hazardous  Substance on,  under, about or from  any of  the Collateral; and 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. Borrower authorizes Lender and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower's expense and for Lender's purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Borrower or to any other person. The representations and warranties contained herein are based on Borrower's due diligence in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Borrower 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 Agreement or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of the Agreement, including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and  the  termination,  expiration  or satisfaction of this Agreement and shall not be affected by Lender's acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise.

Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower's financial condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in writing.

Taxes. To the best of Borrower's knowledge, all of Borrower's tax returns and reports that are or were required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided.

Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or  granted  any  Security Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment of Borrower's Loan and Note, that would be prior or that may in any way be superior to Lender's Security Interests and rights in and to such Collateral.

Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms.

AFFIRMATIVE COVENANTS.  Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will:

Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse changes in Borrower's financial condition, and (2)  all existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor.

Financial Records.  Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine

and audit Borrower's books and records at all reasonable times.

Financial Statements. Furnish Lender with the following:

Interim Statements.  As soon as available, but in no event later than 45 days after the end of each fiscal quarter, Borrower's balance sheet and profit and loss statement for the period ended, prepared by Borrower.

Additional Requirements.  Borrower will be required to submit Annual Consolidated Audited Financial Statements of Lodging Fund REIT III, Inc.

Borrower will be required to submit Annual Consolidated Debt Schedule of Lodging Fund REIT III, Inc. (if not included in audited statements).

Borrower will be required to submit Annual Tax Returns, including all K-1 Schedules, of Lodging Fund REIT III OP, LP and Lodging Fund REIT III TRS, Inc.

Borrower will be required to submit Quarterly Smith Travel Accommodations Report (STAR) for LF3 Eagan TRS, LLC.

All financial reports required to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Borrower as being true and correct.

Additional Information. Furnish such additional information and statements, as Lender may request from time to time.

Additional Requirements. Monthly draw requests including invoices to be paid will be submitted with each draw. Lien waivers will be required on all dras and must be obtained prior to any additional loan advances. The lien waiver and disbursement process will be handled by the Bank. The Bank will have three (3) business days to review and approve the monthly draw request and will make payment of the draw request within such three (3) business day period.

Insurance. Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower's properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least thirty  (30) days prior written notice to Lender. 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 Borrower or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest for the Loans, Borrower will provide Lender with such lender's loss payable or other endorsements as Lender may require.

Insurance Reports. Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender may reasonably request, including without limitation the following: (1)  the name of the insurer;  (2)  the risks insured;  (3)  the amount of the policy; (4) the properties insured;  (5)  the then current property values on the basis of which insurance has been obtained, and the manner of determining those values; and (6) the expiration date of the policy. In addition, upon request of Lender (however not more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost of any Collateral.  The cost of such appraisal shall be paid by Borrower.

Guaranties. Prior to disbursement of any Loan proceeds, furnish executed guaranties of the Loans in favor of Lender, executed by the guarantors named below, on Lender's forms, and in the amounts and under the conditions set forth in those guaranties.

Names of GuarantorsAmounts

Lodging Fund REIT III OP, LP                                                                      Unlimited

Lodging Fund REIT III TRS, Inc.                                                                                  Unlimited

Other Agreements. Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party and notify Lender immediately in writing of any default in connection with any other such agreements.

Loan Proceeds. Use all Loan proceeds solely for Borrower's business operations, unless specifically consented to the contrary by Lender in writing.

Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower's properties, income, or profits. Provided however, Borrower will not be required to pay and discharge any such assessment, tax, charge, levy, lien or claim so long as (1) the legality of the same shall be contested in good faith by appropriate proceedings, and (2)  Borrower shall have established on Borrower's books adequate reserves with respect to such contested assessment, tax, charge, levy, lien, or claim in accordance with GAAP.

Performance. Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the Related Documents, and in all other instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of any default in connection with any agreement.

Operations. Maintain executive and management personnel with substantially the same qualifications and experience as the present executive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a reasonable and prudent manner.

Environmental Studies. Promptly conduct and complete, at Borrower's expense, all such investigations, studies, samplings and testings as may be requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or directive, at or affecting any property or any facility owned, leased or used by Borrower.

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

Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower's other properties and to examine or audit Borrower's books, accounts, and records and to make copies and memoranda of Borrower's books, accounts, and records. If Borrower now or at any time hereafter maintains any records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party,

Borrower, upon request of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower's expense.

Compliance Certificates. Unless waived in writing by Lender, provide Lender at least annually, with a certificate executed by Borrower's chief financial officer, or other officer or person acceptable to Lender, certifying that the representations and warranties set forth in this Agreement are true and correct as of the date of the certificate and further certifying that, as of the date of the certificate, no Event of Default exists under this Agreement.

Environmental Compliance and Reports. Borrower shall comply in all respects with any and all Environmental Laws; not cause or permit to exist, as a result of an intentional or unintentional action or omission on Borrower's part or on the part of any third party, on property owned and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptly and in any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or  instrumentality concerning any intentional or unintentional action or omission on Borrower's part in connection with any environmental activity whether or not there is damage to the environment and/or other natural resources.

Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans and to perfect all Security Interests.

LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower's failure to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender on Borrower'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 any Collateral and paying all costs for insuring, maintaining and preserving any Collateral. 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 Borrower.  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.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written consent of Lender:

Indebtedness and Liens. (1) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated by this Agreement, create, incur or assume indebtedness for borrowed money, including capital leases, (2) sell, transfer, mortgage, assign, pledge, lease, grant a security interest in, or encumber any of Borrower's assets (except as allowed as Permitted Liens), or (3) sell with recourse any of Borrower's accounts, except to Lender.

Continuity of Operations.  (1)  Engage in any business activities substantially different than those in which Borrower is presently engaged,

(2) cease operations, liquidate, merge or restructure as a legal entity (whether by division or otherwise), consolidate with or acquire any other entity, change its name, convert to another type of entity or redomesticate, dissolve or transfer or sell Collateral out of the ordinary course of business, or  (3)  make any distribution with respect to any capital account, whether by reduction of capital or otherwise.

Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets to any other person, enterprise or entity, (2) purchase, create or acquire any interest in any other enterprise or entity, or (3)  incur any obligation as surety or guarantor other than in the ordinary course of business.

Agreements. Enter into any agreement containing any provisions which would be violated or breached by the performance of Borrower's obligations under this Agreement or in connection herewith.

CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender;  (B)  Borrower or any Guarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse change in Borrower's financial condition, in the financial condition of any Guarantor, or in the value of any Collateral securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any other loan with Lender; or (E) Lender in good faith deems itself insecure, even though no Event of Default shall have occurred.

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.

DEFAULT.  Each of the following shall constitute an Event of Default under this Agreement:

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

Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement 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 or any Grantor's property or Borrower's or any Grantor's ability to repay the Loans or perform their respective obligations under this Agreement 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 Agreement 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.

Defective Collateralization. This Agreement 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.

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.

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

Insecurity. Lender in good faith believes itself insecure.

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents, all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including any obligation to make further Loan Advances or disbursements), and, at Lender's option, all Indebtedness immediately will become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the "Insolvency" subsection above, such acceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Related Documents or available at law, in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender's rights and remedies shall be cumulative and may be exercised singularly or concurrently. 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 Borrower or of any Grantor shall not affect Lender's right to declare a default and to exercise its rights and remedies.

JUNIOR OR SUBORDINATE LIENS. LF3 Eagan, LLC and LF3 Eagan TRS, LLC will not be permitted to place any junior or subordinate liens on the subject property without the prior written approval of the Bank.

PRIMARY CHECKING ACCOUNT. LF3 Eagan, LLC and LF3 Eagan TRS, LLC will be required to maintain its primary checking account at the Bank.

DEBT SERVICE COVERAGE RATIO. LF3 Eagan, LLC and LF3 Eagan TRS, LLC will maintain a minimum annual Debt Service Coverage Ratio (DSCR ) of 1.25x as measured at each fiscal year end. DSCR is defined as the combined net operating income for both LF3 Eagan, LLC and LF3 Eagan TRS, LLC divided by the Annual Debt Service Requirements for both LF3 Eagan, LLC and LF3 Eagan TRS, LLC. NOI is defined as Net income, plus any current fiscal year's Depreciation, Amortization, Interest Expense, One-Time Acquisition Expense, one-time expenses, and any other non-cash expenses. Annual Debt Service Requirements is defined as annual principal and interest debt service requirements of LF3 Eagan, LLC and LF3 Eagan TRS, LLC for the fiscal year of the net operating income calculation.

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.

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

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

Expenses. If Lender institutes any suit or action to enforce any of the terms of this Agreement, 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), appeals, and any anticipated post-judgment collection services, to the extent permitted by applicable law. Borrower also will pay any court costs, in addition to all other sums provided by law.

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

Consent to Loan Participation. Borrower agrees and consents to Lender's sale or transfer, whether now or later, of one or more participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters.  Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such interests in the Loan and will have all the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower's obligation under the Loan irrespective of the failure or insolvency of any holder of any interest in the Loan. Borrower further agrees that the purchaser of any such participation interests may  enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender.

Governing Law. This Agreement 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 Agreement 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.

Joint and Several Liability. All obligations of Borrower under this Agreement shall be joint and several, and all references to Borrower shall mean each and every Borrower. This means that each Borrower signing below is responsible for all obligations in this Agreement. 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 Agreement.

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement 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 Agreement 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 Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender's rights or of any of Borrower's or any Grantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, 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.

Notices. Any notice required to be given under this Agreement 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 Agreement. Any party may change its address for notices under this Agreement 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, Borrower agrees to keep Lender informed at all times of Borrower's current address. Unless otherwise provided or required by law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to all Borrowers.

Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any person or circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other person or 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 Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.

Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate, including without limitation any representation, warranty or covenant, the word "Borrower" as used in this Agreement shall include all of Borrower's subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any of Borrower's subsidiaries or affiliates.

Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents shall bind Borrower's successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right to  assign Borrower's rights under this Agreement or any interest therein, without the prior written consent of Lender.

Survival of Representations and Warranties. Borrower understands and agrees that in making the Loan, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive the making of the Loan and delivery to Lender of the Related Documents, 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, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur.

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

Waive Jury. All parties to this Agreement hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by any party against any other party.

DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. 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 Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement:

Advance.  The word "Advance" means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower's behalf on a line of credit or multiple advance basis under the terms and conditions of this Agreement.

Agreement. The word "Agreement" means this Business Loan Agreement, as this Business Loan Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Business Loan Agreement from time to time.

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

Collateral. The word "Collateral" means all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise.

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

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

Agreement.

GAAP.  The word "GAAP" means generally accepted accounting principles.

Grantor. The word "Grantor" means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, including without limitation all Borrowers granting such a Security Interest.

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

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.

Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents.

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

Loan. The word "Loan" means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, and however evidenced, including without limitation those loans and financial accommodations described herein or described on any exhibit or schedule attached to this Agreement from time to time.

Note. The word "Note" means the Note dated June 19, 2019 and executed by LF3 Eagan, LLC; and LF3 Eagan TRS, LLC in the principal amount of $9,444,500.00, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of,  and substitutions for the note or credit agreement.

Permitted Liens.  The words "Permitted Liens" mean  (1)  liens and security interests securing Indebtedness owed by Borrower to Lender;

(2) liens for taxes, assessments, or similar charges either not yet due or being contested in good faith; (3) liens of materialmen, mechanics, warehousemen, or carriers, or other like liens arising in the ordinary course of business and securing obligations which are not yet delinquent; (4) purchase money liens or purchase money security interests upon or in any property acquired or held by Borrower in the ordinary course of business to secure indebtedness outstanding on the date of this Agreement or permitted to be incurred under the paragraph of this Agreement titled "Indebtedness and Liens"; (5) liens and security interests which, as of the date of this Agreement, have been disclosed to and approved by the Lender in writing; and  (6)  those liens and security interests which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of Borrower's assets.

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 Loan.

Security Agreement. The words "Security Agreement" mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security Interest.

Security Interest. The words "Security Interest" mean, without limitation, any and all types of collateral security, present and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust,  factor's lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law, contract, or otherwise.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS.  THIS BUSINESS LOAN AGREEMENT IS DATED JUNE 19, 2019.

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\C40.FC  TR-3942  PR-8

EX-10.56.2

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-8

EX-10.56.3

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

)

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

1

EX-10.56.4

EXHIBIT 10.56.4

MORTGAGE

RECORDATION REQUESTED BY:

Western State Bank

West Fargo

P.O. Box 617 755 13th Ave E

West Fargo, ND  58078

WHEN RECORDED MAIL TO:

Western State Bank West Fargo

P.O. Box 617

West Fargo, ND  58078

SEND TAX NOTICES TO:

LF3 Eagan, LLC

1635 43rd Street South, Suite 205

Fargo, ND  58103

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

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

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

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

Parcel 1:

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

Parcel 2:

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

Parcel 3:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Insecurity. Lender in good faith believes itself insecure.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LF3 EAGAN, LLC

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

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

By: /s/ Katie Cox

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

This Mortgage was drafted by:
	Kim Almer, Business Banking Assistant - Team Lead Western
	State Bank
	P.O. Box 617
	West Fargo, ND 58078

LIMITED LIABILITY COMPANY ACKNOWLEDGMENT

EX-10.56.5

EXHIBIT 10.56.5

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

ASSIGNMENT OF RENTS

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

THIS ASSIGNMENT OF RENTS 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").

ASSIGNMENT. For valuable consideration, Grantor hereby assigns, grants a continuing security interest in, and conveys to Lender all of Grantor's right, title, and interest in and to the Rents from the following described 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 Property or its address is commonly known as 1230 Collins Road NE, Cedar Rapids, IA 52402. The Real Property parcel identification number is 140325200500000.

FUTURE ADVANCES. In addition to the Note, this Assignment secures all future advances made by Lender to Borrower whether or not the advances are made pursuant to a commitment.   Specifically,

without limitation, this Assignment 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 ASSIGNMENT IS GIVEN TO SECURE (1) PAYMENT OF THE INDEBTEDNESS AND (2) PERFORMANCE OF ANY AND ALL OBLIGATIONS OF BORROWER AND GRANTOR UNDER THE NOTE, THIS ASSIGNMENT, AND THE RELATED DOCUMENTS. THIS ASSIGNMENT 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.

BORROWER'S WAIVERS AND RESPONSIBILITIES. Lender need not tell Borrower about any action or inaction Lender takes in connection with this Assignment. Borrower assumes the responsibility for being and keeping informed about the Property.  Borrower waives any defenses that may arise because of any action or inaction of Lender, including without limitation any failure of Lender to realize upon the Property, or any delay by Lender in realizing upon the Property. Borrower agrees to remain liable under the Note with Lender no matter what action Lender takes or fails to take under this Assignment.

PAYMENT AND PERFORMANCE. Except as otherwise provided in this Assignment or any Related Documents, Grantor shall pay to Lender all amounts secured by this Assignment as they become due, and shall strictly perform all of Grantor's obligations under this Assignment. Unless and until Lender exercises its right to collect the Rents as provided below and so long as there is no default under this Assignment, Grantor may remain in possession and control of and operate and manage the Property and collect the Rents, provided that the granting of the right to collect the Rents shall not constitute Lender's consent to the use of cash collateral in a bankruptcy proceeding.

GRANTOR'S REPRESENTATIONS AND WARRANTIES.  Grantor warrants that:

Ownership. Grantor is entitled to receive the Rents free and clear of all rights, loans, liens, encumbrances, and claims except as disclosed to and accepted by Lender in writing.

Right to Assign.  Grantor has the full right, power and authority to enter into this Assignment and to assign and convey the Rents to Lender.

No Prior Assignment. Grantor has not previously assigned or conveyed the Rents to any other person by any instrument now in force.

No Further Transfer. Grantor will not sell, assign, encumber, or otherwise dispose of any of Grantor's rights in the Rents except as provided in this Assignment.

LENDER'S RIGHT TO RECEIVE AND COLLECT RENTS. Lender shall have the right at any time, and even though no default shall have  occurred under this  Assignment, to  collect and  receive  the Rents. For this purpose, Lender is hereby given and granted the following rights, powers and authority:

Notice to Tenants. Lender may send notices to any and all tenants of the Property advising them of this Assignment and directing all Rents to be paid directly to Lender or Lender's agent.

Enter the Property. Lender may enter upon and take possession of the Property; demand, collect and receive from the tenants or from any other persons liable therefor, all of the Rents; institute and carry on all legal proceedings necessary for the protection of the Property, including such proceedings as may be necessary to recover possession of the Property; collect the Rents and remove any tenant or tenants or other persons from the Property.

Maintain the Property. Lender may enter upon the Property to maintain the Property and keep the same in repair; to  pay the costs thereof and of all services of all employees, including their equipment, and of all continuing costs and expenses of maintaining the Property in proper repair and condition, and also to pay all taxes, assessments and water utilities, and the premiums on fire and other insurance effected by Lender on the Property.

Compliance with Laws. Lender may do any and all things to execute and comply with the laws of the State of Iowa and also all other laws, rules, orders, ordinances and requirements of all other governmental agencies affecting the Property.

Lease the Property. Lender may rent or lease the whole or any part of the Property for such term or terms and on such conditions as Lender may deem appropriate.

Employ Agents. Lender may engage such agent or agents as Lender may deem appropriate, either in Lender's name or in Grantor's name, to rent and manage the Property, including the collection and application of Rents.

Other Acts. Lender may do all such other things and acts with respect to the Property as Lender may deem appropriate and may act exclusively and solely in the place and stead of Grantor and to have all of the powers of Grantor for the purposes stated above.

No Requirement to Act. Lender shall not be required to do any of the foregoing acts or things, and the fact that Lender shall have performed one or more of the foregoing acts or things shall not require Lender to do any other specific act or thing.

APPLICATION OF RENTS. All costs and expenses incurred by Lender in connection with the Property shall be for Grantor's account and Lender may pay such costs and expenses from the Rents. Lender, in its sole discretion, shall determine the application of any and all Rents received by it; however, any such Rents received by Lender which are not applied to such costs and expenses shall be applied to the Indebtedness. All expenditures made by Lender under this Assignment and not reimbursed from the Rents shall become a part of the Indebtedness secured by this Assignment, and shall be payable on demand, with interest at the Note rate from date of expenditure until paid.

FULL PERFORMANCE. If Grantor pays all of the Indebtedness when due and otherwise performs all the obligations imposed upon Grantor under this Assignment, the Note, and the Related Documents, Lender shall execute and deliver to Grantor a suitable satisfaction of this Assignment and suitable statements of termination of any financing statement on file evidencing Lender's security interest in the Rents and the Property. Any termination fee required by law shall be paid by Grantor, if permitted by applicable law.

NO OBLIGATION OF LENDER. The assignment and security interest granted in this Assignment shall not be deemed or construed to constitute Lender as a mortgagee or trustee in possession of the Property, to obligate Lender to lease the Property or to attempt to do so, or to take any action, incur any expense or perform or discharge any obligation, duty or liability whatsoever under any of the leases or otherwise.

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 Assignment 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 Assignment 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 Rents or 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 Assignment 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.

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

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

Other Defaults. Borrower or Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Assignment 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 on Other Payments. Failure of Grantor within the time required by this Assignment to make any payment for taxes or insurance, or any other payment necessary to prevent filing of or to effect discharge of any lien.

Default in Favor of Third Parties. Borrower, any guarantor or 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, any guarantor's or Grantor's property or ability to perform their respective obligations under this Assignment 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 Assignment 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 Assignment 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 the Rents or 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.

Property Damage or Loss. The Property is lost, stolen, substantially damaged, sold, or borrowed against.

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 any Event of Default and at any time thereafter, Lender 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.

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 shall have all the rights provided for in the Lender's Right to Receive and Collect Rents Section, above. 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.

Other Remedies. Lender shall have all other rights and remedies provided in this Assignment or the Note or 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 Assignment, after Grantor's failure to perform, shall not affect Lender's right to declare a default and exercise its remedies.

Expenses. If Lender institutes any suit or action to enforce any of the terms of this Assignment, 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, title insurance, and fees for the Trustee, to the extent permitted by applicable law. Grantor also will pay any court costs, in addition to all other sums provided by law.

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

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

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

Governing Law. With respect to procedural matters related to the perfection and enforcement of Lender's rights against the Property, this Assignment 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 Assignment 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 Assignment 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 Assignment 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 Assignment 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 Assignment.  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 Assignment.

Merger. There shall be no merger of the interest or estate created by this Assignment 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.

Interpretation. (1) In all cases where there is more than one Borrower or Grantor, then all words used in this Assignment in the singular shall be deemed to have been used in the plural where the context and construction so require. (2) If more than one person signs this Assignment as "Grantor," the obligations of each Grantor are joint and several. This means that if Lender brings a lawsuit, Lender may sue any one or more of the Grantors. If Borrower and Grantor are not the same person, Lender need not sue Borrower first, and that Borrower need not be joined in any lawsuit.  (3)    The names given to paragraphs or sections in this Assignment are for convenience

purposes only. They are not to be used to interpret or define the provisions of this Assignment.

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Assignment 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 Assignment 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 Assignment. 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 Assignment, 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.

Merger. There shall be no merger of the interest or estate created by this Assignment 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.

Notices. Any notice required to be given under this Assignment 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 Assignment. Any party may change its address for notices under this Assignment 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.

Powers of Attorney. The various agencies and powers of attorney conveyed on Lender under this Assignment are granted for purposes of security and may not be revoked by Grantor until such time as the same are renounced by Lender.

Severability. If a court of competent jurisdiction finds any provision of this Assignment 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 Assignment. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Assignment shall not affect the legality, validity or enforceability of any other provision of this Assignment.

Successors and Assigns. Subject to any limitations stated in this Assignment on transfer of Grantor's interest, this Assignment 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 Assignment and the Indebtedness by way of forbearance or extension  without  releasing Grantor from the obligations of this Assignment or liability under the Indebtedness.

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

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.

Waiver of Right of Redemption. NOTWITHSTANDING ANY OF THE PROVISIONS TO THE CONTRARY CONTAINED IN THIS ASSIGNMENT, GRANTOR HEREBY WAIVES ANY AND ALL RIGHTS OF REDEMPTION FROM SALE UNDER ANY ORDER OR JUDGMENT OF FORECLOSURE ON GRANTOR'S BEHALF AND ON BEHALF OF EACH AND EVERY PERSON, EXCEPT JUDGMENT CREDITORS OF GRANTOR, ACQUIRING ANY INTEREST IN OR TITLE TO THE PROPERTY SUBSEQUENT TO THE DATE OF THIS ASSIGNMENT.

DEFINITIONS.  The following capitalized words and terms shall have the following meanings when used in this Assignment. 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 Assignment shall have the meanings attributed to such terms in the Uniform Commercial Code:

Assignment. The word "Assignment" means this ASSIGNMENT OF RENTS, as this ASSIGNMENT OF RENTS may be amended or modified from time to time, together with all exhibits and schedules attached to this ASSIGNMENT OF RENTS from time to time.

Borrower.  The word "Borrower" means LF3 Cedar Rapids, LLC; and LF3 Cedar Rapids TRS, LLC.

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

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.

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 Assignment, together with interest on such amounts as provided in this Assignment. Specifically,  without limitation, Indebtedness includes the future advances set forth in the Future Advances provision of this Assignment, together with all interest thereon.

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

Mortgage. The word "Mortgage" means this ASSIGNMENT OF  RENTS  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.

Property. The word "Property" means all of Grantor's right, title and interest in and to all the Property as described in the "Assignment" section of this Assignment.

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 of Grantor's present and future rights, title and interest in, to and under any and all present and future leases, including, without limitation, all rents, revenue, income, issues, royalties, bonuses, accounts receivable, cash or security deposits, advance rentals, profits and proceeds from the Property, and other payments and benefits derived or to be derived from such leases of every kind and nature, whether due now or later, including without limitation Grantor's right to enforce such leases and to receive and collect payment and proceeds thereunder.

THE UNDERSIGNED ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS ASSIGNMENT, AND NOT PERSONALLY BUT AS AN AUTHORIZED SIGNER, HAS CAUSED THIS ASSIGNMENT TO BE SIGNED AND EXECUTED ON BEHALF OF GRANTOR ON MARCH 5, 2019.

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.

1

EX-10.56.6

EXHIBIT 10.56.6

ASSIGNMENT OF RENTS

RECORDATION REQUESTED BY:

Western State Bank West Fargo

P.O. Box 617 755 13th Ave E

West Fargo, ND  58078

WHEN RECORDED MAIL TO:

Western State Bank West Fargo

P.O. Box 617

West Fargo, ND  58078

SEND TAX NOTICES TO:

LF3 Eagan, LLC

1635 43rd Street South, Suite 205

Fargo, ND  58103

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

ASSIGNMENT. For valuable consideration, Grantor hereby assigns, grants a continuing security interest in, and conveys to Lender all of Grantor's right, title, and interest in and to the Rents from the following described Property located in Dakota County, State of Minnesota:

Parcel 1:

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

Parcel 2:

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

Parcel 3:

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

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

FUTURE ADVANCES. In addition to the Note, this Assignment secures all future advances made by Lender to Borrower whether or not the advances are made pursuant to a commitment. Specifically, without limitation, this  Assignment 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 ASSIGNMENT IS GIVEN  TO SECURE     (1) PAYMENT OF THE  INDEBTEDNESS  AND   (2) PERFORMANCE OF    ANY AND ALL

OBLIGATIONS OF BORROWER AND GRANTOR UNDER THE NOTE, THIS ASSIGNMENT, AND THE RELATED DOCUMENTS. THIS ASSIGNMENT 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.

BORROWER'S WAIVERS AND RESPONSIBILITIES. Lender need not tell Borrower about any action or inaction Lender takes in connection with this Assignment. Borrower assumes the responsibility for being and keeping informed about the Property. Borrower waives any defenses that may arise because of any action or inaction of Lender, including without limitation any failure of Lender to realize upon the Property, or any delay by Lender in realizing upon the Property. Borrower agrees to remain liable under the Note with Lender no matter what action Lender takes or fails to take under this Assignment.

PAYMENT AND PERFORMANCE. Except as otherwise provided in this Assignment or any Related Documents, Grantor shall pay to Lender all amounts secured by this Assignment as they become due, and shall strictly perform all of Grantor's obligations under this Assignment. Unless and until Lender exercises its right to collect the Rents as provided below and so long as there is no default under this Assignment, Grantor may remain in possession and control of and operate and manage the Property and collect the Rents, provided that the granting of the right to collect the Rents shall not constitute Lender's consent to the use of cash collateral in a bankruptcy proceeding.

GRANTOR'S REPRESENTATIONS AND WARRANTIES.  Grantor warrants that:

Ownership. Grantor is entitled to receive the Rents free and clear of all rights, loans, liens, encumbrances, and claims except as disclosed to and accepted by Lender in writing.

Right to Assign. Grantor has the full right, power and authority to enter into this Assignment and to assign and convey the Rents to Lender.

No Prior Assignment.  Grantor has not previously assigned or conveyed the Rents to any other person by any instrument now in force.

No Further Transfer. Grantor will not sell, assign, encumber, or otherwise dispose of any of Grantor's rights in the Rents except as provided in this Assignment.

LENDER'S RIGHT TO RECEIVE AND COLLECT RENTS. This Assignment shall constitute an actual and present assignment, provided that the Grantor shall have a license to collect, but not prior to accrual, all of the Rents and to retain, use and enjoy the same unless and until an Event of Default as defined herein has occurred. For this purpose, Lender is hereby given and granted the following rights, powers and authority upon an Event of Default:

Notice to Tenants. Lender may send notices to any and all tenants of the Property advising them of this Assignment and directing all Rents to be paid directly to Lender or Lender's agent.

Enter the Property. Lender may enter upon and take possession of the Property; demand, collect and receive from the tenants or from any other persons liable therefor, all of the Rents; institute and carry on all legal proceedings necessary for the protection of the Property, including such proceedings as may be necessary to recover possession of the Property; collect the Rents and remove any tenant or tenants or other persons from the Property.

Maintain the Property. Lender may enter upon the Property to maintain the Property and keep the same in repair; to pay the costs thereof and of all services of all employees, including their equipment, and of all continuing costs and expenses of maintaining the Property in proper repair and condition, and also to pay all taxes, assessments and water utilities, and the premiums on fire and other insurance effected by Lender on the Property.

Compliance with Laws. Lender may do any and all things to execute and comply with the laws of the State of Minnesota and also all other laws, rules, orders, ordinances and requirements of all other governmental agencies affecting the Property.

Lease the Property. Lender may rent or lease the whole or any part of the Property for such term or terms and on such conditions as Lender may deem appropriate.

Employ Agents. Lender may engage such agent or agents as Lender may deem appropriate, either in Lender's name or in Grantor's name, to rent and manage the Property, including the collection and application of Rents.

Other Acts. Lender may do all such other things and acts with respect to the Property as Lender may deem appropriate and may act exclusively and solely in the place and stead of Grantor and to have all of the powers of Grantor for the purposes stated above.

No Requirement to Act. Lender shall not be required to do any of the foregoing acts or things, and the fact that Lender shall have performed one or more of the foregoing acts or things shall not require Lender to do any other specific act or thing.

APPLICATION OF RENTS.  Lender will first apply any Rents Lender receives in the order prescribed by Minn. Stat. Section 576.25, Subd. 2, as amended, including expenses for the Property's normal maintenance, and then, at Lender's sole discretion, to the Indebtedness and any other costs of managing, protecting and preserving the Property. All costs and expenses incurred by Lender in connection with the Property shall be for Grantor's account and Lender may pay such costs and expenses from the Rents. Lender, in its sole discretion, shall determine the application of any and all Rents received by it after payment of the foregoing expenses. All expenditures made by Lender under this Assignment and not reimbursed from the Rents shall become a part of the Indebtedness secured by this Assignment, and shall be payable on demand, with interest at the interest rate set forth in the Note from date of expenditure until paid.

FULL PERFORMANCE. If Grantor pays all of the Indebtedness when due and otherwise performs all the obligations imposed upon Grantor under this Assignment, the Note, and the Related Documents, Lender shall execute and deliver to Grantor a suitable satisfaction of this Assignment and suitable statements of termination of any financing statement on file evidencing Lender's security interest in the Rents and the Property.  Any termination fee required by law shall be paid by Grantor, if permitted by applicable law.

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 Assignment 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 Assignment 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 Rents or 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 Assignment 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.

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

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

Other Defaults. Borrower or Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Assignment 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 on Other Payments. Failure of Grantor within the time required by this Assignment to make any payment for taxes or insurance, or any other payment necessary to prevent filing of or to effect discharge of any lien.

Default in Favor of Third Parties. Borrower, any guarantor or 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, any guarantor's or Grantor's property or ability to perform their respective obligations under this Assignment 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 Assignment 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 Assignment 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 the Rents or 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.

Property Damage or Loss. The Property is lost, stolen, substantially damaged, sold, or borrowed against.

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 any Event of Default and at any time thereafter, Lender may exercise any one or more of the following rights and remedies, in addition to any other rights or remedies provided by law:

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

Collect Rents. Lender shall have the right to take possession of the Property and to collect and apply Rents, including amounts past due and unpaid, in accordance with applicable law and this Assignment, including during the entire redemption period after foreclosure of any related mortgage.  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, to the maximum extent permitted by law, shall be entitled, as a matter of right, to the appointment of a receiver of the Property, without notice or demand, and without regard to the adequacy of the security for the Indebtedness or the solvency of the Grantor, by an action separate from any foreclosure of any related mortgage pursuant to Minnesota Statutes Chapter 580 or pursuant to Minnesota Statutes Chapter 581, or as a part of the foreclosure action under said Chapter 581 (it being agreed that the existence of a foreclosure pursuant to said Chapter 580 or a foreclosure action pursuant to said Chapter 581 is not a prerequisite to any action for a receiver hereunder). The receiver, who shall be an experienced property manager, shall collect (until the Indebtedness is fully paid and satisfied and, in the case of a foreclosure sale, during the entire redemption period) the Rents, and

shall manage the Property, execute leases within or beyond the period of the receivership if approved by the court and apply all rents, profits and other income collected by him in the order specified below. Notwithstanding the appointment of any receiver, Lender shall be entitled as pledgee to the possession and control of any cash, deposits or instruments at the time held by or payable or deliverable under the terms of any Related Documents to Lender. Lender shall have the right, at any time and without limitation, as provided in Minnesota Statutes, Section 582.03, to advance money to the receiver to pay any part or all of the items which the receiver should otherwise pay if cash were available from the Property and sums so advanced, with interest at the highest default rate set forth in the Note, shall be secured hereby, or if advanced during the period of redemption shall be part of the sum required to be paid to redeem from the sale. Any Rents received by the receiver hereunder shall be applied in the order prescribed by Minn. Stat. Section 576.25, Subd. 2, as amended, including but not limited to expenses for the Property's normal maintenance and reasonable receivership fees, and then against the Indebtedness if received prior to the commencement of a foreclosure, to be in such order as Lender may elect, and if received after the commencement of a foreclosure, to be applied to the amount required to be paid to effect a reinstatement prior to foreclosure sale, or, after a foreclosure sale to any deficiency and thereafter to the amount required to be paid to effect a redemption, all pursuant to Minnesota Statutes, Sections 580.30, 580.23 and 581.10, with any excess to be paid to Grantor. Provided, that if any related mortgage is not reinstated nor the Property redeemed as provided by said Sections 580.30, 580.23 or 581.10, the entire amount paid to Lender pursuant hereto shall be the property of Lender together with all or any part of the Property acquired through foreclosure.

Other Remedies.  Lender shall have all other rights and remedies provided in this Assignment or the Note or 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 Assignment, after Grantor's failure to perform, shall not affect Lender's right to declare a default and exercise its remedies.

Expenses. If Lender institutes any suit or action to enforce any of the terms of this Assignment, 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, title insurance, and fees for the Trustee, to the extent permitted by applicable law.  Grantor also will pay any court costs, in addition to all other sums provided by law.

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

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

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

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

Merger. There shall be no merger of the interest or estate created by this Assignment 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.

Interpretation. (1) In all cases where there is more than one Borrower or Grantor, then all words used in this Assignment in the singular shall be deemed to have been used in the plural where the context and construction so require. (2) If more than one person signs this Assignment as "Grantor," the obligations of each Grantor are joint and several. This means that if Lender brings a lawsuit, Lender may sue any one or more of the Grantors. If Borrower and Grantor are not the same person, Lender need not sue Borrower first, and that Borrower need not be joined in any lawsuit. (3) The names given to paragraphs or sections in this Assignment are for convenience purposes only. They are not to be used to interpret or define the provisions of this Assignment.

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Assignment 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 Assignment 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 Assignment. 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 Assignment, 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.

Notices. Any notice required to be given under this Assignment 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 Assignment. Any party may change its address for notices under this Assignment 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.

Powers of Attorney. The various agencies and powers of attorney conveyed on Lender under this Assignment are granted for purposes of security and may not be revoked by Grantor until such time as the same are renounced by Lender.

Severability. If a court of competent jurisdiction finds any provision of this Assignment 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 Assignment. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Assignment shall not affect the legality, validity or enforceability of any other provision of this Assignment.

Successors and Assigns.  Subject to any limitations stated in this Assignment on transfer of Grantor's interest, this Assignment 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 Assignment and the Indebtedness by way of forbearance or extension without releasing Grantor from the obligations of this Assignment or liability under the Indebtedness.

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

Waiver of Right of Redemption. NOTWITHSTANDING ANY OF THE PROVISIONS TO THE CONTRARY CONTAINED IN THIS ASSIGNMENT, GRANTOR HEREBY WAIVES ANY AND ALL RIGHTS OF REDEMPTION FROM SALE UNDER ANY ORDER OR JUDGMENT OF FORECLOSURE ON GRANTOR'S BEHALF AND ON BEHALF OF EACH AND EVERY PERSON, EXCEPT JUDGMENT CREDITORS OF GRANTOR, ACQUIRING ANY INTEREST IN OR TITLE TO THE PROPERTY SUBSEQUENT TO THE DATE OF THIS ASSIGNMENT.

DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Assignment. 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 Assignment shall have the meanings attributed to such terms in the Uniform Commercial Code:

Assignment. The word "Assignment" means this ASSIGNMENT OF RENTS, as this ASSIGNMENT OF RENTS may be amended or modified from time to time, together with all exhibits and schedules attached to this ASSIGNMENT OF RENTS from time to time.

Borrower.  The word "Borrower" means LF3 Eagan, LLC; and LF3 Eagan TRS, LLC.

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

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

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

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

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

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

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

$9,444,500.00 from  Borrower  to  Lender,  together  with  all  renewals  of,  extensions  of,  modifications  of,  refinancings  of,

consolidations of, and substitutions for the promissory note or agreement.

Property. The word "Property" means all of Grantor's right, title and interest in and to all the  Property  as  described  in  the "Assignment" section of this Assignment.

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 of Grantor's present and future rights, title and interest in, to and under any and all present and future leases, including, without limitation, all rents, revenue, income, issues, royalties, bonuses, accounts receivable, cash or security deposits, advance rentals, profits and proceeds from the Property, and other payments and benefits derived or to be derived from such leases of every kind and nature, whether due now or later, including without limitation Grantor's right to enforce such leases and to

receive and collect payment and proceeds thereunder.

THE UNDERSIGNED ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS ASSIGNMENT, AND NOT PERSONALLY BUT AS AN AUTHORIZED SIGNER, HAS CAUSED THIS ASSIGNMENT TO BE SIGNED AND EXECUTED ON BEHALF OF GRANTOR ON JUNE 19, 2019.

GRANTOR:

LF3 EAGAN, LLC

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

LODGING FUND REIT III, INC., General Partner of Lodging Fund REIT III OP, LP
By:	/s/ Katie Cox
Katie Cox, Chief Financial Officer of Lodging Fund REIT III, Inc.

This ASSIGNMENT OF RENTS was drafted by:
	Kim Almer, Business Banking Assistant - Team Lead Western State Bank
	P.O. Box 617
	West Fargo, ND 58078

LIMITED LIABILITY COMPANY ACKNOWLEDGMENT

STATE OF NORTH DAKOTA	)
	) SS
COUNTY OF CASS	)

This instrument was acknowledged before me on June 19, 2019 by Katie Cox, Chief financial Officer of Lodging Fund REIT III, Inc., General Partner of Lodging Fund REIT III OP, LP, Sole Member of LF3 Eagan, LLC.
	/s/ Kim Almer
	Signature of Notarial Officer
	State of North Dakota
	My Commission Expires April 11, 2020

EX-10.56.7

Exhibit 10.56.7

COMMERCIAL SECURITY AGREEMENT

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.

Grantor:	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

THIS COMMERCIAL SECURITY AGREEMENT dated March 5, 2019, is made and executed between LF3 Cedar Rapids, LLC; and LF3 Cedar Rapids TRS, LLC ("Grantor") and Western State Bank ("Lender").

GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender a security interest in the Collateral to secure the Indebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender may have by law.

COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means the following described property, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located, in which Grantor is giving to Lender a security interest for the payment of the Indebtedness and performance of all other obligations under the Note and this Agreement:

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

In addition, the word "Collateral" also includes all the following, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located:

(A)All accessions, attachments, accessories, tools, parts, supplies, replacements of and additions to any of the collateral described herein, whether added now or later.

(B)All products and produce of any of the property described in this Collateral section.

(C)All accounts, general intangibles, instruments, rents, monies, payments, and all other rights, arising out of a sale, lease, consignment or other disposition of any of the property described in this Collateral section.

(D)All proceeds (including insurance proceeds) from the sale, destruction, loss, or other disposition of any of the property described in this Collateral section, and sums due from a third party who has damaged or destroyed the Collateral or from that party's insurer, whether due to judgment, settlement or other process.

(E)All records and data relating to any of the property described in this Collateral section, whether in the form of a writing, photograph, microfilm, microfiche, or electronic media, together with all of Grantor's right, title, and interest in and to all computer software required to utilize, create, maintain, and process any such records or data on electronic media.

CROSS-COLLATERALIZATION. In addition to the  Note, this Agreement secures all  obligations, debts  and  liabilities,  plus interest thereon,  of Grantor to Lender, or any one or more of them, as well as all claims by Lender against Grantor  or  any  one or  more of  them, whether  now existing or hereafter arising, whether related or unrelated to the purpose of the Note, whether voluntary or otherwise, whether due or not due, direct or indirect, determined or undetermined,  absolute or  contingent,  liquidated or  unliquidated,  whether Grantor  may  be liable individually  or jointly with  others,  whether  obligated  as  guarantor,  surety,  accommodation  party  or  otherwise,  and  whether  recovery  upon  such  amounts  may be or hereafter may become barred by any statute of limitations, and whether the obligation to repay such amounts may be or hereafter may become  otherwise  unenforceable.

FUTURE ADVANCES. In addition to the Note, this Agreement secures all future advances made by Lender to Grantor regardless of whether the advances are made a) pursuant to a commitment or b) for the same purposes.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Grantor's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Grantor holds jointly with someone else and all accounts Grantor 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. Grantor 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.

GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With respect to the Collateral, Grantor represents and promises to Lender that:

Perfection of Security Interest. Grantor agrees to take whatever actions are requested by Lender to perfect and continue Lender's security interest in the Collateral. Upon request of Lender, Grantor will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Grantor will note Lender's interest upon any and all chattel paper and instruments if not delivered to Lender for possession by Lender. This is a continuing Security Agreement and will continue in effect even though all or any part of the Indebtedness is paid in full and even though for a period of time Grantor may not be indebted to Lender.

Notices to Lender. Grantor will promptly notify Lender in writing at Lender's address shown above (or such other addresses as Lender may designate from time to time) prior to any  (1)  change in Grantor's name;  (2)  change in Grantor's assumed business name(s);  (3)  change in the management or in the members or managers of the limited liability company Grantor; (4) change in the authorized signer(s); (5) change in Grantor's principal office address; (6) change in Grantor's state of organization;  (7)  conversion of Grantor to a new or different type of business entity; or (8) change in any other aspect of

Grantor that directly or indirectly relates to any agreements between Grantor and Lender.  No change in Grantor's name or state of organization will take effect until after Lender has received notice.

No Violation.  The execution and delivery of this Agreement will not violate any law or agreement governing Grantor or to which Grantor is a party, and its membership agreement does not prohibit any term or condition of this Agreement.

Enforceability of Collateral. To the extent the Collateral consists of accounts, chattel paper, or general intangibles, as defined by the Uniform Commercial Code, the Collateral is enforceable in accordance with its terms, is genuine, and fully complies with all applicable laws and regulations concerning form, content and manner of preparation and execution, and all persons appearing to be obligated on the Collateral have authority and capacity to contract and are in fact obligated as they appear to be on the Collateral.  There shall be no setoffs or counterclaims against any of the Collateral, and no agreement shall have been made under which any deductions or discounts may be claimed concerning the Collateral except those disclosed to Lender in writing.

Location of the Collateral. Except in the ordinary course of Grantor's business, Grantor agrees to keep the Collateral at Grantor's address shown above or at such other locations as are acceptable to Lender. Upon Lender's request, Grantor will deliver to Lender in form satisfactory to Lender a schedule of real properties and Collateral locations relating to Grantor's operations, including without limitation the following: (1) all real property Grantor owns or is purchasing; (2) all real property Grantor is renting or leasing; (3) all storage facilities Grantor owns, rents, leases, or uses; and  (4)  all other properties where Collateral is or may be located.

Removal of the Collateral. Except in the ordinary course of Grantor's business, Grantor shall not remove the Collateral from its existing location without Lender's prior written consent.  Grantor shall, whenever requested, advise Lender of the exact location of the Collateral.

Transactions Involving Collateral. Except for inventory sold or accounts collected in the ordinary course of Grantor's business, or as otherwise provided for in this Agreement, Grantor shall not sell, offer to sell, or otherwise transfer or dispose of the Collateral. Grantor shall not pledge, mortgage, encumber or otherwise permit the Collateral to be subject to any lien, security interest, encumbrance, or charge, other than the security interest provided for in this Agreement, without the prior written consent of Lender. This includes security interests even if junior in right to the security interests granted under this Agreement. Unless waived by Lender, all proceeds from any disposition of the Collateral (for whatever reason) shall be held in trust for Lender and shall not be commingled with any other funds; provided however, this requirement shall not constitute consent by Lender to any sale or other disposition. Upon receipt, Grantor shall immediately deliver any such proceeds to Lender.

Title. Grantor represents and warrants to Lender that Grantor holds good and marketable title to the Collateral, free and clear of all liens and encumbrances except for the lien of this Agreement. 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 attorney 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. No financing statement covering any of the Collateral is on file in any public office other than those which reflect the security interest created by this Agreement or to which Lender has specifically consented. Grantor shall defend Lender's rights in the Collateral against the claims and demands of all other persons.

Repairs and Maintenance. Grantor agrees to keep and maintain, and to cause others to keep and maintain, the Collateral in good order, repair and condition at all times while this Agreement remains in effect. Grantor further agrees to pay when due all claims for work done on, or services rendered or material furnished in connection with the Collateral so that no lien or encumbrance may ever attach to or be filed against the Collateral.

Inspection of Collateral. Lender and Lender's designated representatives and agents shall have the right at all reasonable times to examine and inspect the Collateral wherever located.

Taxes, Assessments and Liens. Grantor will pay when due all taxes, assessments and liens upon the Collateral, its use or operation, upon this Agreement, upon any promissory note or notes evidencing the Indebtedness, or upon any of the other Related Documents. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender's interest in the Collateral is not jeopardized in Lender's sole opinion. If the Collateral is subjected to a lien which is not discharged within fifteen (15) days, Grantor shall deposit with Lender cash, a sufficient corporate surety bond or other security satisfactory to Lender in an amount adequate to provide for the discharge of the lien plus any interest, costs, permissible fees or other charges that could accrue as a result of foreclosure or sale of the Collateral. In any contest Grantor shall defend itself and Lender and shall satisfy any final adverse judgment before enforcement against the Collateral. Grantor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings. Grantor further agrees to furnish Lender with evidence that such taxes, assessments, and governmental and other charges have been paid in full and in a timely manner. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender's interest in the Collateral is not jeopardized.

Compliance with Governmental Requirements. Grantor shall comply promptly with all laws, ordinances, rules and regulations of all governmental authorities, now or hereafter in effect, applicable to the ownership, production, disposition, or use of the Collateral, including all laws or regulations relating to the undue erosion of highly-erodible land or relating to the conversion of wetlands for the production of an agricultural product or commodity. Grantor may contest in good faith any such law, ordinance or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Lender's interest in the Collateral, in Lender's opinion, is not jeopardized.

Hazardous Substances. Grantor represents and warrants that the Collateral never has been, and never will be so long as this Agreement remains a lien on the Collateral, used in violation of any Environmental Laws or for the generation, manufacture, storage, transportation, treatment, disposal, release or threatened release of any Hazardous Substance. The representations and warranties contained herein are based on Grantor's due diligence in investigating the Collateral 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 Environmental Laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims and losses resulting from a breach of this provision of this Agreement. This obligation to indemnify and defend shall survive the payment of the Indebtedness and the satisfaction of this Agreement.

Maintenance of Casualty Insurance. Grantor shall procure and maintain all risks insurance, including without limitation fire, theft and liability coverage together with such other insurance as Lender may require with respect to the Collateral, in form, amounts, coverages and basis reasonably acceptable to Lender and issued by a company or companies reasonably acceptable to Lender. Grantor, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least thirty (30) days' prior written notice to Lender and not including any disclaimer of the insurer's liability for failure to give such a 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. In connection with all policies covering assets in which Lender holds or is offered a security interest, Grantor will provide Lender with such loss payable or other endorsements as Lender may require. If Grantor at any time fails to obtain or maintain any insurance as required under this Agreement, Lender may (but shall not be obligated to) obtain such insurance as Lender deems appropriate, including if Lender so chooses "single interest insurance," which will cover only Lender's interest in the Collateral.

Application of Insurance Proceeds. Grantor shall promptly notify Lender of any loss or damage to the Collateral, whether or not such casualty or loss is covered by insurance.  Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty. All proceeds of any insurance on the Collateral, including accrued proceeds thereon, shall be held by Lender as part of the Collateral. If Lender consents to repair or replacement of the damaged or destroyed Collateral, Lender shall, upon satisfactory proof of expenditure,  pay or reimburse Grantor from the proceeds for the reasonable cost of repair or restoration.  If Lender does not consent to repair or replacement of the Collateral, Lender shall retain a sufficient amount of the proceeds to pay all of the Indebtedness, and shall pay the balance to Grantor.  Any proceeds which have not been disbursed within six (6) months after their receipt and which Grantor has not committed to the repair or restoration of the Collateral shall be used to prepay the Indebtedness.

Insurance Reserves.  Lender may require Grantor to maintain with Lender reserves for payment of insurance premiums, which reserves shall be created by monthly payments from Grantor of a sum estimated by Lender to be sufficient to produce, at least fifteen (15) days before the premium due date, amounts at least equal to the insurance premiums to be paid. If fifteen (15) days before payment is due, the reserve funds are insufficient, Grantor shall upon demand pay any deficiency to Lender. The reserve funds shall be held by Lender as a general deposit and shall constitute a non-interest-bearing account which Lender may satisfy by payment of the insurance premiums required to be paid by Grantor as they become due.  Lender does not hold the reserve funds in trust for Grantor, and Lender is not the agent of Grantor for payment of the insurance premiums required to be paid by Grantor. The responsibility for the payment of premiums shall remain Grantor's sole responsibility.

Insurance Reports. Grantor, upon request of Lender, shall furnish to Lender reports on each existing policy of insurance showing such information as Lender may reasonably request including the following:  (1)  the name of the insurer;  (2)  the risks insured;  (3)  the amount of the policy; (4) the property insured; (5) the then current value on the basis of which insurance has been obtained and the manner of determining that value; and (6) the expiration date of the policy. In addition, Grantor shall upon request by Lender (however not more often than annually) have an independent appraiser satisfactory to Lender determine, as applicable, the cash value or replacement cost of the Collateral.

Financing Statements. Grantor authorizes Lender to file a UCC financing statement, or alternatively, a copy of this Agreement to perfect Lender's security interest. At Lender's request, Grantor additionally agrees to sign all other documents that are necessary to perfect, protect, and continue Lender's security interest in the Property. This includes making sure Lender is shown as the first and only security interest holder on the title covering the Property. Grantor will pay all filing fees, title transfer fees, and other fees and costs involved unless prohibited by law or unless Lender is required by law to pay such fees and costs. Grantor irrevocably appoints Lender to execute documents necessary to transfer title if there is a default. Lender may file a copy of this Agreement as a financing statement.

GRANTOR'S RIGHT TO POSSESSION. Until default, Grantor may have possession of the tangible personal property and beneficial use of all the Collateral and may use it in any lawful manner not inconsistent with this Agreement or the Related Documents, provided that Grantor's right to possession and beneficial use shall not apply to any Collateral where possession of the Collateral by Lender is required by law to perfect Lender's security interest in such Collateral. If Lender at any time has possession of any Collateral, whether before or after an Event of Default, Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral if Lender takes such action for that purpose as Grantor shall request or as Lender, in Lender's sole discretion, shall deem appropriate under the circumstances, but failure to honor any request by Grantor shall not of itself be deemed to be a failure to exercise reasonable care. Lender shall not be required to take any steps necessary to preserve any rights in the Collateral against prior parties, nor to protect, preserve or maintain any security interest given to secure the Indebtedness.

LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Grantor fails to comply with any provision of this Agreement 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 Agreement 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 Collateral and paying all costs for insuring, maintaining and preserving the Collateral. 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 Agreement 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.

DEFAULT.  Each of the following shall constitute an Event of Default under this Agreement:

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

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

Default in Favor of Third Parties. Any guarantor or 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 any guarantor's or Grantor's property or ability to perform their respective obligations under this Agreement or any of the Related Documents.

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

Insolvency. The dissolution of Grantor (regardless of whether election to continue is made), any member withdraws from the limited liability company, or any other termination of Grantor's existence as a going business or the death of any member, the insolvency of Grantor, the appointment of a receiver for any part of 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 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 Grantor or by any governmental agency against any collateral securing  the Indebtedness. This includes a garnishment of any of Grantor's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Grantor as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if 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.

Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or 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. If an Event of Default occurs under this Agreement, at any time thereafter, Lender shall have all the rights of a secured party under the Iowa Uniform Commercial Code. In addition and without limitation, Lender may exercise any one or more of the following rights and remedies:

Accelerate Indebtedness.  Lender may declare the entire Indebtedness, including any prepayment penalty which Grantor would be required to pay, immediately due and payable, without notice of any kind to Grantor.

Assemble Collateral. Lender may require Grantor to deliver to Lender all or any portion of the Collateral and any and all certificates of title and other documents relating to the Collateral. Lender may require Grantor to assemble the Collateral and make it available to Lender at a place to be designated by Lender. Lender also shall have full power to enter upon the property of Grantor to take possession of and remove the Collateral. If the Collateral contains other goods not covered by this Agreement at the time of repossession, Grantor agrees Lender may take such other goods, provided that Lender makes reasonable efforts to return them to Grantor after repossession.

Sell the Collateral. Lender shall have full power to sell, lease, transfer, or otherwise deal with the Collateral or proceeds thereof in Lender's own name or that of Grantor. Lender may sell the Collateral at public auction or private sale. Unless the Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender will give Grantor, and other persons as required by law, reasonable notice of the time and place of any public sale, or the time after which any private sale or any other disposition of the Collateral is to be made. However, no notice need be provided to any person who, after Event of Default occurs, enters into and authenticates an agreement waiving that person's right to notification of sale. The requirements of reasonable notice shall be met if such notice is given at least ten (10) days before the time of the sale or disposition. All expenses relating to the disposition of the Collateral, including without limitation the expenses of retaking, holding, insuring, preparing for sale and selling the Collateral, shall become a part of the Indebtedness secured by this Agreement and shall be payable on demand, with interest at the Note rate from date of expenditure until repaid.

Appoint Receiver. Lender shall have the right to have a receiver appointed to take possession of all or any part of the Collateral, with the power to protect and preserve the Collateral, to operate the Collateral preceding foreclosure or sale, and to collect the rents from the Collateral 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 Collateral exceeds the Indebtedness by a substantial amount.  Employment by Lender shall not disqualify a person from serving as a receiver.

Collect Revenues, Apply Accounts. Lender, either itself or through a receiver, may collect the payments, rents, income, and revenues from the Collateral. Lender may at any time in Lender's discretion transfer any Collateral into Lender's own name or that of Lender's nominee and receive the payments, rents, income, and revenues therefrom and hold the same as security for the Indebtedness or apply it to payment of the Indebtedness in such order of preference as Lender may determine. Insofar as the Collateral consists of accounts, general intangibles, insurance policies, instruments, chattel paper, choses in action, or similar property, Lender may demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as Lender may determine, whether or not Indebtedness or Collateral is then due. For these purposes, Lender may, on behalf of and in the name of Grantor, receive, open and dispose of mail addressed to Grantor; change any address to which mail and payments are to be sent; and endorse notes, checks, drafts, money orders, documents of title, instruments and items pertaining to payment, shipment, or storage of any Collateral. To facilitate collection, Lender may notify account debtors and obligors on any Collateral to make payments directly to Lender.

Obtain Deficiency. If Lender chooses to sell any or all of the Collateral, Lender may obtain a judgment against Grantor for any deficiency remaining on the Indebtedness due to Lender after application of all amounts received from the exercise of the rights provided in this Agreement. Grantor shall be liable for a deficiency even if the transaction described in this subsection is a sale of accounts or chattel paper.

Other Rights and Remedies. Lender shall have all the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, as may be amended from time to time. In addition, Lender shall have and may exercise any or all other rights and remedies it may have available at law, in equity, or otherwise.

Election of Remedies. Except as may be prohibited by applicable law, all of Lender's rights and remedies, whether evidenced by this Agreement, the Related Documents, or by any other writing, shall be cumulative and may be exercised singularly or concurrently.  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 Agreement, after Grantor's failure to perform, shall not affect Lender's right to declare a default and exercise its remedies.

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

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

Expenses. If Lender institutes any suit or action to enforce any of the terms of this Agreement, 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, to the extent permitted by applicable law. Grantor also will pay any court costs, in addition to all other sums provided by law.

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

Governing Law. With respect to procedural matters related to the perfection and enforcement of Lender's rights against the Collateral, this Agreement 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 Agreement 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 Agreement 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 Agreement 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 Grantor under this Agreement shall be joint and several, and all references to Grantor shall mean each and every Grantor. This means that each Grantor signing below is responsible for all obligations in this Agreement. 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 Agreement.

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement 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 Agreement 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 Agreement. 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 Agreement, 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.

Notices. Any notice required to be given under this Agreement 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 Agreement. Any party may change its address for notices under this Agreement 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.

Power of Attorney. Grantor hereby appoints Lender as Grantor's irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect, amend, or to continue the security interest granted in this Agreement or to demand termination of filings of other secured parties. Lender may at any time, and without further authorization from Grantor, file a carbon, photographic or other reproduction of any financing statement or of this Agreement for use as a financing statement. Grantor will reimburse Lender for all expenses for the perfection and the continuation of the perfection of Lender's security interest in the Collateral.

Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any person or circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other person or 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 Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.

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

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

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

DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. 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 Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code:

Agreement.  The word "Agreement" means this Commercial Security Agreement, as this Commercial Security Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Commercial Security Agreement from time to time.

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.

Collateral. The word "Collateral" means all of Grantor's right, title and interest in and to all the Collateral as described in the Collateral Description section of this Agreement.

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 Agreement in the default section of this Agreement.

Grantor.  The word "Grantor" means LF3 Cedar Rapids, LLC; and LF3 Cedar Rapids TRS, 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.

Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Grantor is responsible under this Agreement or under any of the Related Documents. Specifically, without limitation, Indebtedness includes the future advances set forth in the Future Advances provision, together with all interest thereon and all amounts that may be indirectly secured by the Cross-Collateralization provision of this Agreement.

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

Note. The word "Note" means the Note dated March 5, 2019 and executed by LF3 Cedar Rapids, LLC; and LF3 Cedar Rapids TRS, LLC in the principal amount of $5,858,134.26, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement.

Property. The word "Property" means all of Grantor's right, title and interest in and to all the Property as described in the "Collateral Description" section of this Agreement.

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.

GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED MARCH 5, 2019.

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.

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.   - IA/ND  C:\LASERPRO\CFI\LPL\E40.FC  TR-3523  PR-8

COMMERCIAL SECURITY AGREEMENT

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.

Grantor:	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

THIS COMMERCIAL SECURITY AGREEMENT dated March 5, 2019, is made and executed between LF3 Cedar Rapids, LLC; and LF3 Cedar Rapids TRS, LLC ("Grantor") and Western State Bank ("Lender").

GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender a security interest in the Collateral to secure the Indebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender may have by law.

COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means the following described property, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located, in which Grantor is giving to Lender a security interest for the payment of the Indebtedness and performance of all other obligations under the Note and this Agreement:

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 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.

In addition, the word "Collateral" also includes all the following, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located:

(A)All accessions, attachments, accessories, tools, parts, supplies, replacements of and additions to any of the collateral described herein, whether added now or later.

(B)All products and produce of any of the property described in this Collateral section.

(C)All accounts, general intangibles, instruments, rents, monies, payments, and all other rights, arising out of a sale, lease, consignment or other disposition of any of the property described in this Collateral section.

(D)All proceeds (including insurance proceeds) from the sale, destruction, loss, or other disposition of any of the property described in this Collateral section, and sums due from a third party who has damaged or destroyed the Collateral or from that party's insurer, whether due to judgment, settlement or other process.

(E)All records and data relating to any of the property described in this Collateral section, whether in the form of a writing, photograph, microfilm, microfiche, or electronic media, together with all of Grantor's right, title, and interest in and to all computer software required to utilize, create, maintain, and process any such records or data on electronic media.

CROSS-COLLATERALIZATION. In addition to the  Note, this Agreement secures all  obligations, debts  and  liabilities,  plus interest thereon,  of Grantor to Lender, or any one or more of them, as well as all claims by Lender against Grantor  or  any  one or  more of  them, whether  now existing or hereafter arising, whether related or unrelated to the purpose of the Note, whether voluntary or otherwise, whether due or not due, direct or indirect, determined or undetermined,  absolute or  contingent,  liquidated or  unliquidated,  whether Grantor  may  be liable individually  or jointly with  others,  whether  obligated  as  guarantor,  surety,  accommodation  party  or  otherwise,  and  whether  recovery  upon  such  amounts  may be or hereafter may become barred by any statute of limitations, and whether the obligation to repay such amounts may be or hereafter may become  otherwise  unenforceable.

FUTURE ADVANCES. In addition to the Note, this Agreement secures all future advances made by Lender to Grantor regardless of whether the advances are made a) pursuant to a commitment or b) for the same purposes.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Grantor's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Grantor holds jointly with someone else and all accounts Grantor 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. Grantor 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.

GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With respect to the Collateral, Grantor represents and promises to Lender that:

Perfection of Security Interest. Grantor agrees to take whatever actions are requested by Lender to perfect and continue Lender's security interest in the Collateral. Upon request of Lender, Grantor will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Grantor will note Lender's interest upon any and all chattel paper and instruments if not delivered to Lender for possession by Lender. This is a continuing Security Agreement and will continue in effect even though all or any part of the Indebtedness is paid in full and even though for a period of time Grantor may not be indebted to Lender.

Notices to Lender. Grantor will promptly notify Lender in writing at Lender's address shown above (or such other addresses as Lender may designate from time to time) prior to any  (1)  change in Grantor's name;  (2)  change in Grantor's assumed business name(s);  (3)  change in the management or in the members or managers of the limited liability company Grantor;  (4)  change in the authorized signer(s);   (5) change in Grantor's principal office address; (6) change in Grantor's state of organization;  (7)  conversion of Grantor to a new or different type of business entity; or (8) change in any other aspect of Grantor that directly or indirectly relates to any agreements between Grantor and Lender.  No change in Grantor's name or state of organization will take effect until after Lender has received notice.

No Violation.  The execution and delivery of this Agreement will not violate any law or agreement governing Grantor or to which Grantor is a party, and its membership agreement does not prohibit any term or condition of this Agreement.

Enforceability of Collateral. To the extent the Collateral consists of accounts, chattel paper, or general intangibles, as defined by the Uniform Commercial Code, the Collateral is enforceable in accordance with its terms, is genuine, and fully complies with all applicable laws and regulations concerning form, content and manner of preparation and execution, and all persons appearing to be obligated on the Collateral have authority and capacity to contract and are in fact obligated as they appear to be on the Collateral. At the time any account becomes subject to a security interest in favor of Lender, the account shall be a good and valid account representing an undisputed, bona fide indebtedness incurred by the account debtor, for merchandise held subject to delivery instructions or previously shipped or delivered pursuant to a contract of sale, or for services previously performed by Grantor with or for the account debtor. So long as this Agreement remains in effect, Grantor shall not, without Lender's prior written consent, compromise, settle, adjust, or extend payment under or with regard to any such Accounts. There shall be no setoffs or counterclaims against any of the Collateral, and no agreement shall have been made under which any deductions or discounts may be claimed concerning the Collateral except those disclosed to Lender in writing.

Location of the Collateral. Except in the ordinary course of Grantor's business, Grantor agrees to keep the Collateral (or to the extent the Collateral consists of intangible  property such as accounts or general  intangibles, the records concerning the Collateral) at Grantor's address shown above or at such other locations as are acceptable to Lender. Upon Lender's request, Grantor will deliver to Lender in form satisfactory to Lender a schedule of real properties and Collateral locations relating to Grantor's operations, including without limitation the following: (1) all real property Grantor owns or is purchasing; (2) all real property Grantor is renting or leasing; (3) all storage facilities Grantor owns, rents, leases, or uses; and  (4)  all other properties where Collateral is or may be located.

Removal of the Collateral. Except in the ordinary course of Grantor's business, including the sales of inventory, Grantor shall not remove the Collateral from its existing location without Lender's prior written consent. To the extent that the Collateral consists of vehicles, or other titled property, Grantor shall not take or permit any action which would require application for certificates of title for the vehicles outside the State of Delaware, without Lender's prior written consent. Grantor shall, whenever requested, advise Lender of the exact location of the Collateral.

Transactions Involving Collateral. Except for inventory sold or accounts collected in the ordinary course of Grantor's business, or as otherwise provided for in this Agreement, Grantor shall not sell, offer to sell, or otherwise transfer or dispose of the Collateral. While Grantor is not in default under this Agreement, Grantor may sell inventory, but only in the ordinary course of its business and only to buyers who qualify as a buyer in the ordinary course of business. A sale in the ordinary course of Grantor's business does not include a transfer in partial or total satisfaction of a debt or any bulk sale.  Grantor shall not pledge, mortgage, encumber or otherwise permit the Collateral to be subject to any lien, security interest, encumbrance, or charge, other than the security interest provided for in this Agreement, without the prior written consent of Lender. This includes security interests even if junior in right to the security interests granted under this Agreement. Unless waived by Lender, all proceeds from any disposition of the Collateral (for whatever reason) shall be held in trust for Lender and shall not be commingled with any other funds; provided however, this requirement shall not constitute consent by Lender to any sale or other disposition.  Upon receipt, Grantor shall immediately deliver any such proceeds to Lender.

Title. Grantor represents and warrants to Lender that Grantor holds good and marketable title to the Collateral, free and clear of all liens and encumbrances except for the lien of this Agreement. No financing statement covering any of the Collateral is on file in any public office other than those  which reflect  the security interest created by this  Agreement or  to which Lender has  specifically consented. Grantor shall defend Lender's rights in the Collateral against the claims and demands of all other persons.

Repairs and Maintenance. Grantor agrees to keep and maintain, and to cause others to keep and maintain, the Collateral in good order, repair and condition at all times while this Agreement remains in effect. Grantor further agrees to pay when due all claims for work done on, or services rendered or material furnished in connection with the Collateral so that no lien or encumbrance may ever attach to or be filed against the Collateral.

Inspection of Collateral. Lender and Lender's designated representatives and agents shall have the right at all reasonable times to examine and inspect the Collateral wherever located.

Taxes, Assessments and Liens. Grantor will pay when due all taxes, assessments and liens upon the Collateral, its use or operation, upon this Agreement, upon any promissory note or notes evidencing the Indebtedness, or upon any of the other Related Documents. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender's interest in the Collateral is not jeopardized in Lender's sole opinion. If the Collateral is subjected to a lien which is not discharged within fifteen (15) days, Grantor shall deposit with Lender cash, a sufficient corporate surety bond or other security satisfactory to Lender in an amount adequate to provide for the discharge of the lien plus any interest, costs, permissible fees or other charges that could accrue as a result of foreclosure or sale of the Collateral. In any contest Grantor shall defend itself and Lender and shall satisfy any final adverse judgment before enforcement against the Collateral. Grantor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings. Grantor further agrees to furnish Lender with evidence that such taxes, assessments, and governmental and other charges have been paid in full and in a timely manner. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender's interest in the Collateral is not jeopardized.

Compliance with Governmental Requirements. Grantor shall comply promptly with all laws, ordinances, rules and regulations of all governmental authorities, now or hereafter in effect, applicable to the ownership, production, disposition, or use of the Collateral, including all laws or regulations relating to the undue erosion of highly-erodible land or relating to the conversion of wetlands for the production of an agricultural product or commodity. Grantor may contest in good faith any such law, ordinance or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Lender's interest in the Collateral, in Lender's opinion, is not jeopardized.

Hazardous Substances. Grantor represents and warrants that the Collateral never has been, and never will be so long as this Agreement remains a lien on the Collateral, used in violation of any Environmental Laws or for the generation, manufacture, storage, transportation, treatment, disposal, release or threatened release of any Hazardous Substance. The representations and warranties contained herein are based on Grantor's due diligence in investigating the Collateral 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 Environmental Laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims and losses resulting from a breach of this provision of this Agreement. This obligation to indemnify and defend shall survive the payment of the Indebtedness and the satisfaction of this Agreement.

Maintenance of Casualty Insurance.   Grantor shall procure and maintain all risks insurance, including without limitation fire, theft and liability coverage together with such other insurance as Lender may require with respect to the Collateral, in form, amounts, coverages and basis reasonably acceptable to Lender and issued by a company or companies reasonably acceptable to Lender. Grantor, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least thirty (30) days' prior written notice to Lender and not including any disclaimer of the insurer's liability for failure to give such a 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. In connection with all policies covering assets in which Lender holds or is offered a security interest, Grantor will provide Lender with such loss payable or other endorsements as Lender may require. If Grantor at any time fails to obtain or maintain any insurance as required under this Agreement, Lender may (but shall not be obligated to) obtain such insurance as Lender deems appropriate, including if Lender so chooses "single interest insurance," which will cover only Lender's interest in the Collateral.

Application of Insurance Proceeds. Grantor shall promptly notify Lender of any loss or damage to the Collateral, whether or not such casualty or loss is covered by insurance.  Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty. All proceeds of any insurance on the Collateral, including accrued proceeds thereon, shall be held by Lender as part of the Collateral. If Lender consents to repair or replacement of the damaged or destroyed Collateral, Lender shall, upon satisfactory proof of expenditure,  pay or reimburse Grantor from the proceeds for the reasonable cost of repair or restoration.  If Lender does not consent to repair or replacement of the Collateral, Lender shall retain a sufficient amount of the proceeds to pay all of the Indebtedness, and shall pay the balance to Grantor.  Any proceeds which have not been disbursed within six (6) months after their receipt and which Grantor has not committed to the repair or restoration of the Collateral shall be used to prepay the Indebtedness.

Insurance Reserves.  Lender may require Grantor to maintain with Lender reserves for payment of insurance premiums, which reserves shall be created by monthly payments from Grantor of a sum estimated by Lender to be sufficient to produce, at least fifteen (15) days before the premium due date, amounts at least equal to the insurance premiums to be paid. If fifteen (15) days before payment is due, the reserve funds are insufficient, Grantor shall upon demand pay any deficiency to Lender. The reserve funds shall be held by Lender as a general deposit and shall constitute a non-interest-bearing account which Lender may satisfy by payment of the insurance premiums required to be paid by Grantor as they become due.  Lender does not hold the reserve funds in trust for Grantor, and Lender is not the agent of Grantor for payment of the insurance premiums required to be paid by Grantor. The responsibility for the payment of premiums shall remain Grantor's sole responsibility.

Insurance Reports. Grantor, upon request of Lender, shall furnish to Lender reports on each existing policy of insurance showing such information as Lender may reasonably request including the following:  (1)  the name of the insurer;  (2)  the risks insured;  (3)  the amount of the policy; (4) the property insured; (5) the then current value on the basis of which insurance has been obtained and the manner of determining that value; and (6) the expiration date of the policy. In addition, Grantor shall upon request by Lender (however not more often than annually) have an independent appraiser satisfactory to Lender determine, as applicable, the cash value or replacement cost of the Collateral.

Financing Statements. Grantor authorizes Lender to file a UCC financing statement, or alternatively, a copy of this Agreement to perfect Lender's security interest. At Lender's request, Grantor additionally agrees to sign all other documents that are necessary to perfect, protect, and continue Lender's security interest in the Property. This includes making sure Lender is shown as the first and only security interest holder on the title covering the Property. Grantor will pay all filing fees, title transfer fees, and other fees and costs involved unless prohibited by law or unless Lender is required by law to pay such fees and costs. Grantor irrevocably appoints Lender to execute documents necessary to transfer title if there is a default. Lender may file a copy of this Agreement as a financing statement.

GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except as otherwise provided below with respect to accounts, Grantor may have possession of the tangible personal property and beneficial use of all the Collateral and may use it in any lawful manner not inconsistent with this Agreement or the Related Documents, provided that Grantor's right to possession and beneficial use shall not apply to any Collateral where possession of the Collateral by Lender is required by law to perfect Lender's security interest in such Collateral. Until otherwise notified by Lender, Grantor may collect any of the Collateral consisting of accounts. At any time and even though no Event of Default exists, Lender may exercise its rights to collect the accounts and to notify account debtors to make payments directly to Lender for application to the Indebtedness. If Lender at any time has possession of any Collateral, whether before or after an Event of Default, Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral if Lender takes such action for that purpose as Grantor shall request or as Lender, in Lender's sole discretion, shall deem appropriate under the circumstances, but failure to honor any request by Grantor shall not of itself be deemed to be a failure to exercise reasonable care. Lender shall not be required to take any steps necessary to preserve any rights in the Collateral against prior parties, nor to protect, preserve or maintain any security interest given to secure the Indebtedness.

LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Grantor fails to comply with any provision of this Agreement 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 Agreement 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 Collateral and paying all costs for insuring, maintaining and preserving the Collateral. 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 Agreement 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.

DEFAULT.  Each of the following shall constitute an Event of Default under this Agreement:

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

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

Default in Favor of Third Parties. Any guarantor or 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 any guarantor's or Grantor's property or ability to perform their respective obligations under this Agreement or any of the Related Documents.

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

Insolvency. The dissolution of Grantor (regardless of whether election to continue is made), any member withdraws from the limited liability company, or any other termination of Grantor's existence as a going business or the death of any member, the insolvency of Grantor, the appointment of a receiver for any part of 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 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 Grantor or by any governmental agency against any collateral securing  the Indebtedness. This includes a garnishment of any of Grantor's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Grantor as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if 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.

Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or 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. If an Event of Default occurs under this Agreement, at any time thereafter, Lender shall have all the rights of a secured party under the Delaware Uniform Commercial Code. In addition and without limitation, Lender may exercise any one or more of the following rights and remedies:

Accelerate Indebtedness.  Lender may declare the entire Indebtedness, including any prepayment penalty which Grantor would be required to pay, immediately due and payable, without notice of any kind to Grantor.

Assemble Collateral. Lender may require Grantor to deliver to Lender all or any portion of the Collateral and any and all certificates of title and other documents relating to the Collateral. Lender may require Grantor to assemble the Collateral and make it available to Lender at a place to be designated by Lender. Lender also shall have full power to enter upon the property of Grantor to take possession of and remove the Collateral. If the Collateral contains other goods not covered by this Agreement at the time of repossession, Grantor agrees Lender may take such other goods, provided that Lender makes reasonable efforts to return them to Grantor after repossession.

Sell the Collateral. Lender shall have full power to sell, lease, transfer, or otherwise deal with the Collateral or proceeds thereof in Lender's own name or that of Grantor. Lender may sell the Collateral at public auction or private sale. Unless the Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender will give Grantor, and other persons as required by law, reasonable notice of the time and place of any public sale, or the time after which any private sale or any other disposition of the Collateral is to be made. However, no notice need be provided to any person who, after Event of Default occurs, enters into and authenticates an agreement waiving that person's right to notification of sale. The requirements of reasonable notice shall be met if such notice is given at least ten (10) days before the time of the sale or disposition. All expenses relating to the disposition of the Collateral, including without limitation the expenses of retaking, holding, insuring, preparing for sale and selling the Collateral, shall become a part of the Indebtedness secured by this Agreement and shall be payable on demand, with interest at the Note rate from date of expenditure until repaid.

Appoint Receiver. Lender shall have the right to have a receiver appointed to take possession of all or any part of the Collateral, with the power to protect and preserve the Collateral, to operate the Collateral preceding foreclosure or sale, and to collect the rents from the Collateral 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 Collateral exceeds the Indebtedness by a substantial amount.  Employment by Lender shall not disqualify a person from serving as a receiver.

Collect Revenues, Apply Accounts. Lender, either itself or through a receiver, may collect the payments, rents, income, and revenues from the Collateral. Lender may at any time in Lender's discretion transfer any Collateral into Lender's own name or that of Lender's nominee and receive the payments, rents, income, and revenues therefrom and hold the same as security for the Indebtedness or apply it to payment of the Indebtedness in such order of preference as Lender may determine. Insofar as the Collateral consists of accounts, general intangibles, insurance policies, instruments, chattel paper, choses in action, or similar property, Lender may demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as Lender may determine, whether or not Indebtedness or Collateral is then due. For these purposes, Lender may, on behalf of and in the name of Grantor, receive, open and dispose of mail addressed to Grantor; change any address to which mail and payments are to be sent; and endorse notes, checks, drafts, money orders, documents of title, instruments and items pertaining to payment, shipment, or storage of any Collateral. To facilitate collection, Lender may notify account debtors and obligors on any Collateral to make payments directly to Lender.

Obtain Deficiency. If Lender chooses to sell any or all of the Collateral, Lender may obtain a judgment against Grantor for any deficiency remaining on the Indebtedness due to Lender after application of all amounts received from the exercise of the rights provided in this Agreement. Grantor shall be liable for a deficiency even if the transaction described in this subsection is a sale of accounts or chattel paper.

Other Rights and Remedies. Lender shall have all the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, as may be amended from time to time. In addition, Lender shall have and may exercise any or all other rights and remedies it may have available at law, in equity, or otherwise.

Election of Remedies. Except as may be prohibited by applicable law, all of Lender's rights and remedies, whether evidenced by this Agreement, the Related Documents, or by any other writing, shall be cumulative and may be exercised singularly or concurrently.  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 Agreement, after Grantor's failure to perform, shall not affect Lender's right to declare a default and exercise its remedies.

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

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

Expenses. If Lender institutes any suit or action to enforce any of the terms of this Agreement, 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, to the extent permitted by applicable law. Grantor also will pay any court costs, in addition to all other sums provided by law.

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

Governing Law. With respect to procedural matters related to the perfection and enforcement of Lender's rights against the Collateral, this Agreement will be governed by federal law applicable to Lender and to the extent not preempted by federal law, the laws of the State of Delaware. In all other respects, this Agreement 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 Agreement 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 Agreement 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 Grantor under this Agreement shall be joint and several, and all references to Grantor shall mean each and every Grantor. This means that each Grantor signing below is responsible for all obligations in this Agreement. 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 Agreement.

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement 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 Agreement 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 Agreement. 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 Agreement, 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.

Notices. Any notice required to be given under this Agreement 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 Agreement. Any party may change its address for notices under this Agreement 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.

Power of Attorney. Grantor hereby appoints Lender as Grantor's irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect, amend, or to continue the security interest granted in this Agreement or to demand termination of filings of other secured parties. Lender may at any time, and without further authorization from Grantor, file a carbon, photographic or other reproduction of any financing statement or of this Agreement for use as a financing statement. Grantor will reimburse Lender for all expenses for the perfection and the continuation of the perfection of Lender's security interest in the Collateral.

Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any person or circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other person or 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 Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.

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

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

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

DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. 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 Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code:

Agreement.  The word "Agreement" means this Commercial Security Agreement, as this Commercial Security Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Commercial Security Agreement from time to time.

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.

Collateral. The word "Collateral" means all of Grantor's right, title and interest in and to all the Collateral as described in the Collateral Description section of this Agreement.

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 Agreement in the default section of this Agreement.

Grantor.  The word "Grantor" means LF3 Cedar Rapids, LLC; and LF3 Cedar Rapids TRS, 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.

Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Grantor is responsible under this Agreement or under any of the Related Documents. Specifically, without limitation, Indebtedness includes the future advances set forth in the Future Advances provision, together with all interest thereon and all amounts that may be indirectly secured by the Cross-Collateralization provision of this Agreement.

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

Note. The word "Note" means the Note dated March 5, 2019 and executed by LF3 Cedar Rapids, LLC; and LF3 Cedar Rapids TRS, LLC in the principal amount of $5,858,134.26, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement.

Property. The word "Property" means all of Grantor's right, title and interest in and to all the Property as described in the "Collateral Description" section of this Agreement.

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.

GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED MARCH 5, 2019.

THIS AGREEMENT IS DELIVERED UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.

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(Seal)

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(Seal)

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.   - DE/ND  C:\LASERPRO\CFI\LPL\E40.FC  TR-3523  PR-8

COMMERCIAL SECURITY AGREEMENT

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

Grantor:LF3 Cedar Rapids TRS, LLC

1635 43rd Street South, Suite 205

Fargo, ND  58103

THIS COMMERCIAL SECURITY AGREEMENT dated March 5, 2019, is made and executed among LF3 Cedar Rapids TRS, LLC ("Grantor"); LF3 Cedar Rapids, LLC; and LF3 Cedar Rapids TRS, LLC ("Borrower"); and Western State Bank ("Lender").

GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender a security interest in the Collateral to secure the Indebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender may have by law.

COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means the following described property, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located, in which Grantor is giving to Lender a security interest for the payment of the Indebtedness and performance of all other obligations under the Note and this Agreement:

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

In addition, the word "Collateral" also includes all the following, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located:

(A)All accessions, attachments, accessories, replacements of and additions to any of the collateral described herein, whether added now or later.

(B)All products and produce of any of the property described in this Collateral section.

(C)All accounts, general intangibles, instruments, rents, monies, payments, and all other rights, arising out of a sale, lease, consignment or other disposition of any of the property described in this Collateral section.

(D)All proceeds (including insurance proceeds) from the sale, destruction, loss, or other disposition of any of the property described in this Collateral section, and sums due from a third party who has damaged or destroyed the Collateral or from that party's insurer, whether due to judgment, settlement or other process.

(E)All records and data relating to any of the property described in this Collateral section, whether in the form of a writing, photograph, microfilm, microfiche, or electronic media, together with all of Grantor's right, title, and interest in and to all computer software required to utilize, create, maintain, and process any such records or data on electronic media.

CROSS-COLLATERALIZATION. In addition  to the  Note, this  Agreement  secures all  obligations, debts  and  liabilities,  plus interest thereon,  of either Grantor or Borrower to Lender, or any one or more of them, as well as all claims by Lender against Borrower and Grantor or any one or more of them, whether now existing or hereafter arising, whether related or  unrelated  to  the  purpose  of  the  Note,  whether  voluntary  or otherwise, whether due or not due, direct or indirect, determined  or  undetermined,  absolute  or  contingent,  liquidated  or  unliquidated,  whether Borrower or Grantor may be liable individually or jointly with others, whether obligated as guarantor, surety, accommodation party or otherwise, and whether recovery upon such amounts may be or hereafter may become barred by any statute of limitations, and whether the obligation to repay such amounts may be or hereafter may become otherwise unenforceable.

FUTURE ADVANCES. In addition to the Note, this Agreement secures all future advances made by Lender to Borrower regardless of whether the advances are made a) pursuant to a commitment or b) for the same purposes.

BORROWER'S WAIVERS AND RESPONSIBILITIES. Except as otherwise required under this Agreement or by applicable law, (A) Borrower agrees that Lender need not tell Borrower about any action or inaction Lender takes in connection with this Agreement; (B)  Borrower assumes the responsibility for being and keeping informed about the Collateral; and (C) Borrower waives any defenses that may arise because of any action or inaction of Lender, including without limitation any failure of Lender to realize upon the Collateral or any delay by Lender in realizing upon the Collateral; and Borrower agrees to remain liable under the Note no matter what action Lender takes or fails to take under this Agreement.

GRANTOR'S REPRESENTATIONS AND WARRANTIES.  Grantor warrants that:  (A)  this Agreement is executed at Borrower's request and not at the request of Lender;  (B)  Grantor has the full right, power and authority to enter into this Agreement and to pledge the Collateral to Lender;

(C) Grantor has established adequate means of obtaining from Borrower on a continuing basis information about Borrower's financial condition; and  (D)  Lender has made no representation to Grantor about Borrower or Borrower's creditworthiness.

GRANTOR'S WAIVERS.  Grantor waives all requirements of presentment, protest, demand, and notice of dishonor or non-payment to Borrower or Grantor, or any other party to the Indebtedness or the Collateral. Lender may do any of the following with respect to any obligation of any Borrower, without first obtaining the consent of Grantor: (A)  grant any extension of time for any payment,  (B)  grant any renewal,  (C)  permit any modification of payment terms

or other terms, or (D) exchange or release any Collateral or other security.  No such act or failure to act shall affect Lender's rights against Grantor or the Collateral.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Grantor's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Grantor holds jointly with someone else and all accounts Grantor 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. Grantor 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.

GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL.  With respect to the Collateral, Grantor represents and promises to Lender that:

Perfection of Security Interest. Grantor agrees to take whatever actions are requested by Lender to perfect and continue Lender's security interest in the Collateral. Upon request of Lender, Grantor will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Grantor will note Lender's interest upon any and all chattel paper and instruments if not delivered to Lender for possession by Lender. This is a continuing Security Agreement and will continue in effect even though all or any part of the Indebtedness is paid in full and even though for a period of time Borrower may not be indebted to Lender.

Notices to Lender. Grantor will promptly notify Lender in writing at Lender's address shown above (or such other addresses as Lender may designate from time to time) prior to any  (1)  change in Grantor's name;  (2)  change in Grantor's assumed business name(s);  (3)  change in the management or in the members or managers of the limited liability company Grantor; (4) change in the authorized signer(s); (5) change in Grantor's principal office address; (6) change in Grantor's state of organization;  (7)  conversion of Grantor to a new or different type of business entity; or (8) change in any other aspect of Grantor that directly or indirectly relates to any agreements between Grantor and Lender.  No change in Grantor's name or state of organization will take effect until after Lender has received notice.

No Violation.  The execution and delivery of this Agreement will not violate any law or agreement governing Grantor or to which Grantor is a party, and its membership agreement does not prohibit any term or condition of this Agreement.

Enforceability of Collateral. To the extent the Collateral consists of accounts, chattel paper, or general intangibles, as defined by the Uniform Commercial Code, the Collateral is enforceable in accordance with its terms, is genuine, and fully complies with all applicable laws and regulations concerning form, content and manner of preparation and execution, and all persons appearing to be obligated on the Collateral have authority and capacity to contract and are in fact obligated as they appear to be on the Collateral.  There shall be no setoffs or counterclaims against any of the Collateral, and no agreement shall have been made under which any deductions or discounts may be claimed concerning the Collateral except those disclosed to Lender in writing.

Location of the Collateral. Except in the ordinary course of Grantor's business, Grantor agrees to keep the Collateral at Grantor's address shown above or at such other locations as are acceptable to Lender. Upon Lender's request, Grantor will deliver to Lender in form satisfactory to Lender a schedule of real properties and Collateral locations relating to Grantor's operations, including without limitation the following: (1) all real property Grantor owns or is purchasing; (2) all real property Grantor is renting or leasing; (3) all storage facilities Grantor owns, rents, leases, or uses; and  (4)  all other properties where Collateral is or may be located.

Removal of the Collateral. Except in the ordinary course of Grantor's business, Grantor shall not remove the Collateral from its existing location without Lender's prior written consent.  Grantor shall, whenever requested, advise Lender of the exact location of the Collateral.

Transactions Involving Collateral. Except for inventory sold or accounts collected in the ordinary course of Grantor's business, or as otherwise provided for in this Agreement, Grantor shall not sell, offer to sell, or otherwise transfer or dispose of the Collateral. Grantor shall not pledge, mortgage, encumber or otherwise permit the Collateral to be subject to any lien, security interest, encumbrance, or charge, other than the security interest provided for in this Agreement, without the prior written consent of Lender. This includes security interests even if junior in right to the security interests granted under this Agreement. Unless waived by Lender, all proceeds from any disposition of the Collateral (for whatever reason) shall be held in trust for Lender and shall not be commingled with any other funds; provided however, this requirement shall not constitute consent by Lender to any sale or other disposition. Upon receipt, Grantor shall immediately deliver any such proceeds to Lender.

Title. Grantor represents and warrants to Lender that Grantor holds good and marketable title to the Collateral, free and clear of all liens and encumbrances except for the lien of this Agreement. No financing statement covering any of the Collateral is on file in any public office other than those  which reflect  the security interest created by this  Agreement or  to which Lender has  specifically consented. Grantor shall defend Lender's rights in the Collateral against the claims and demands of all other persons.

Repairs and Maintenance. Grantor agrees to keep and maintain, and to cause others to keep and maintain, the Collateral in good order, repair and condition at all times while this Agreement remains in effect. Grantor further agrees to pay when due all claims for work done on, or services rendered or material furnished in connection with the Collateral so that no lien or encumbrance may ever attach to or be filed against the Collateral.

Inspection of Collateral. Lender and Lender's designated representatives and agents shall have the right at all reasonable times to examine and inspect the Collateral wherever located.

Taxes, Assessments and Liens. Grantor will pay when due all taxes, assessments and liens upon the Collateral, its use or operation, upon this Agreement, upon any promissory note or notes evidencing the Indebtedness, or upon any of the other Related Documents. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender's interest in the Collateral is not jeopardized in Lender's sole opinion. If the Collateral is subjected to a lien which is not discharged within fifteen (15) days, Grantor shall deposit with Lender cash, a sufficient corporate surety bond or other security satisfactory to Lender in an amount adequate to provide for the discharge of the lien plus any interest, costs, permissible fees or other charges that could accrue as a result of foreclosure or sale of the Collateral. In any contest Grantor shall defend itself and Lender and shall satisfy any final adverse judgment before enforcement against the Collateral. Grantor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings. Grantor further agrees to furnish Lender with evidence that such taxes, assessments, and governmental and other charges have been paid in full and in a timely manner. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender's interest in the Collateral is not jeopardized.

Compliance with Governmental Requirements. Grantor shall comply promptly with all laws, ordinances, rules and regulations of all governmental authorities, now or hereafter in effect, applicable to the ownership, production, disposition, or use of the Collateral, including all laws or regulations relating to the undue erosion of highly-erodible land or relating to the conversion of wetlands for the production of an agricultural product or commodity. Grantor may contest in good faith any such law, ordinance or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Lender's interest in the Collateral, in Lender's opinion, is not jeopardized.

Hazardous Substances. Grantor represents and warrants that the Collateral never has been, and never will be so long as this Agreement remains a lien on the Collateral, used in violation of any Environmental Laws or for the generation, manufacture, storage, transportation, treatment, disposal, release or threatened release of any Hazardous Substance. The representations and warranties contained herein are based on Grantor's due diligence in investigating the Collateral 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 Environmental Laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims and losses resulting from a breach of this provision of this Agreement.  This obligation to indemnify and defend shall survive the payment of the Indebtedness and the satisfaction of this Agreement.

Maintenance of Casualty Insurance. Grantor shall procure and maintain all risks insurance, including without limitation fire, theft and liability coverage together with such other insurance as Lender may require with respect to the Collateral, in form, amounts, coverages and basis reasonably acceptable to Lender and issued by a company or companies reasonably acceptable to Lender. Grantor, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least thirty (30) days' prior written notice to Lender and not including any disclaimer of the insurer's liability for failure to give such a 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. In connection with all policies covering assets in which Lender holds or is offered a security interest, Grantor will provide Lender with such loss payable or other endorsements as Lender may require. If Grantor at any time fails to obtain or maintain any insurance as required under this Agreement, Lender may (but shall not be obligated to) obtain such insurance as Lender deems appropriate, including if Lender so chooses "single interest insurance," which will cover only Lender's interest in the Collateral.

Application of Insurance Proceeds. Grantor shall promptly notify Lender of any loss or damage to the Collateral, whether or not such casualty or loss is covered by insurance.  Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty. All proceeds of any insurance on the Collateral, including accrued proceeds thereon, shall be held by Lender as part of the Collateral. If Lender consents to repair or replacement of the damaged or destroyed Collateral, Lender shall, upon satisfactory proof of expenditure,  pay or reimburse Grantor from the proceeds for the reasonable cost of repair or restoration.  If Lender does not consent to repair or replacement of the Collateral, Lender shall retain a sufficient amount of the proceeds to pay all of the Indebtedness, and shall pay the balance to Grantor.  Any proceeds which have not been disbursed within six (6) months after their receipt and which Grantor has not committed to the repair or restoration of the Collateral shall be used to prepay the Indebtedness.

Insurance Reserves.  Lender may require Grantor to maintain with Lender reserves for payment of insurance premiums, which reserves shall be created by monthly payments from Grantor of a sum estimated by Lender to be sufficient to produce, at least fifteen (15) days before the premium due date, amounts at least equal to the insurance premiums to be paid. If fifteen (15) days before payment is due, the reserve funds are insufficient, Grantor shall upon demand pay any deficiency to Lender. The reserve funds shall be held by Lender as a general deposit and shall constitute a non-interest-bearing account which Lender may satisfy by payment of the insurance premiums required to be paid by Grantor as they become due.  Lender does not hold the reserve funds in trust for Grantor, and Lender is not the agent of Grantor for payment of the insurance premiums required to be paid by Grantor. The responsibility for the payment of premiums shall remain Grantor's sole responsibility.

Insurance Reports. Grantor, upon request of Lender, shall furnish to Lender reports on each existing policy of insurance showing such information as Lender may reasonably request including the following:  (1)  the name of the insurer;  (2)  the risks insured;  (3)  the amount of the policy; (4) the property insured; (5) the then current value on the basis of which insurance has been obtained and the manner of determining that value; and (6) the expiration date of the policy. In addition, Grantor shall upon request by Lender (however not more often than annually) have an independent appraiser satisfactory to Lender determine, as applicable, the cash value or replacement cost of the Collateral.

Financing Statements. Grantor authorizes Lender to file a UCC financing statement, or alternatively, a copy of this Agreement to perfect Lender's security interest. At Lender's request, Grantor additionally agrees to sign all other documents that are necessary to perfect, protect, and continue Lender's security interest in the Property. This includes making sure Lender is shown as the first and only security interest holder on the title covering the Property. Grantor will pay all filing fees, title transfer fees, and other fees and costs involved unless prohibited by law or unless Lender is required by law to pay such fees and costs. Grantor irrevocably appoints Lender to execute documents necessary to transfer title if there is a default. Lender may file a copy of this Agreement as a financing statement.

GRANTOR'S RIGHT TO POSSESSION. Until default, Grantor may have possession of the tangible personal property and beneficial use of all the Collateral and may use it in any lawful manner not inconsistent with this Agreement or the Related Documents, provided that Grantor's right to possession and beneficial use shall not apply to any Collateral where possession of the Collateral by Lender is required by law to perfect Lender's security interest in such Collateral. If Lender at any time has possession of any Collateral, whether before or after an Event of Default, Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral if Lender takes such action for that purpose as Grantor shall request or as Lender, in Lender's sole discretion, shall deem appropriate under the circumstances, but failure to honor any request by Grantor shall not of itself be deemed to be a failure to exercise reasonable care. Lender shall not be required to take any steps necessary to preserve any rights in the Collateral against prior parties, nor to protect, preserve or maintain any security interest given to secure the Indebtedness.

LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Grantor fails to comply with any provision of this Agreement 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 Agreement 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 Collateral and paying all costs for insuring, maintaining and preserving the Collateral. 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 Agreement 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.

DEFAULT.  Each of the following shall constitute an Event of Default under this Agreement:

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

Other Defaults. Borrower or Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement 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. Borrower, any guarantor or 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, any guarantor's or Grantor's property or ability to perform their respective obligations under this Agreement 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 Agreement 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 Agreement 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.

Insolvency. The dissolution of Grantor (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 collateral 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.

Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or 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 Borrower's or 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. If an Event of Default occurs under this Agreement, at any time thereafter, Lender shall have all the rights of a secured party under the Delaware Uniform Commercial Code. In addition and without limitation, Lender may exercise any one or more of the following rights and remedies:

Accelerate Indebtedness.  Lender may declare the entire Indebtedness, including any prepayment penalty which Borrower would be required to pay, immediately due and payable, without notice of any kind to Borrower or Grantor.

Assemble Collateral. Lender may require Grantor to deliver to Lender all or any portion of the Collateral and any and all certificates of title and other documents relating to the Collateral. Lender may require Grantor to assemble the Collateral and make it available to Lender at a place to be designated by Lender. Lender also shall have full power to enter upon the property of Grantor to take possession of and remove the Collateral. If the Collateral contains other goods not covered by this Agreement at the time of repossession, Grantor agrees Lender may take such other goods, provided that Lender makes reasonable efforts to return them to Grantor after repossession.

Sell the Collateral. Lender shall have full power to sell, lease, transfer, or otherwise deal with the Collateral or proceeds thereof in Lender's own name or that of Grantor. Lender may sell the Collateral at public auction or private sale. Unless the Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender will give Grantor, and other persons as required by law, reasonable notice of the time and place of any public sale, or the time after which any private sale or any other disposition of the Collateral is to be made. However, no notice need be provided to any person who, after Event of Default occurs, enters into and authenticates an agreement waiving that person's right to notification of sale. The requirements of reasonable notice shall be met if such notice is given at least ten (10) days before the time of the sale or disposition. All expenses relating to the disposition of the Collateral, including without limitation the expenses of retaking, holding, insuring, preparing for sale and selling the Collateral, shall become a part of the Indebtedness secured by this Agreement and shall be payable on demand, with interest at the Note rate from date of expenditure until repaid.

Appoint Receiver. Lender shall have the right to have a receiver appointed to take possession of all or any part of the Collateral, with the power to protect and preserve the Collateral, to operate the Collateral preceding foreclosure or sale, and to collect the rents from the Collateral 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 Collateral exceeds the Indebtedness by a substantial amount.  Employment by Lender shall not disqualify a person from serving as a receiver.

Collect Revenues, Apply Accounts. Lender, either itself or through a receiver, may collect the payments, rents, income, and revenues from the Collateral. Lender may at any time in Lender's discretion transfer any Collateral into Lender's own name or that of Lender's nominee and receive the payments, rents, income, and revenues therefrom and hold the same as security for the Indebtedness or apply it to payment of the Indebtedness in such order of preference as Lender may determine. Insofar as the Collateral consists of accounts, general intangibles, insurance policies, instruments, chattel paper, choses in action, or similar property, Lender may demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as Lender may determine, whether or not Indebtedness or Collateral is then due. For these purposes, Lender may, on behalf of and in the name of Grantor, receive, open and dispose of mail addressed to Grantor; change any address to which mail and payments are to be sent; and endorse notes, checks, drafts, money orders, documents of title, instruments and items pertaining to payment, shipment, or storage of any Collateral. To facilitate collection, Lender may notify account debtors and obligors on any Collateral to make payments directly to Lender.

Obtain Deficiency. If Lender chooses to sell any or all of the Collateral, Lender may obtain a judgment against Borrower for any deficiency remaining on the Indebtedness due to Lender after application of all amounts received from the exercise of the rights provided in this Agreement. Borrower shall be liable for a deficiency even if the transaction described in this subsection is a sale of accounts or chattel paper.

Other Rights and Remedies. Lender shall have all the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, as may be amended from time to time. In addition, Lender shall have and may exercise any or all other rights and remedies it may have available at law, in equity, or otherwise.

Election of Remedies. Except as may be prohibited by applicable law, all of Lender's rights and remedies, whether evidenced by this Agreement, the Related Documents, or by any other writing, shall be cumulative and may be exercised singularly or concurrently.  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 Agreement, after Grantor's failure to perform, shall not affect Lender's right to declare a default and exercise its remedies.

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

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

Expenses. If Lender institutes any suit or action to enforce any of the terms of this Agreement, 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, to the extent permitted by applicable law. Grantor also will pay any court costs, in addition to all other sums provided by law.

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

Governing Law. With respect to procedural matters related to the perfection and enforcement of Lender's rights against the Collateral, this Agreement will be governed by federal law applicable to Lender and to the extent not preempted by federal law, the laws of the State of Delaware. In all other respects, this Agreement 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 Agreement 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 Agreement 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 Agreement 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 Borrower and Grantor signing below is responsible for all obligations in this Agreement. 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 Agreement.

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement 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 Agreement 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 Agreement. 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 Agreement, 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.

Notices. Any notice required to be given under this Agreement 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 Agreement. Any party may change its address for notices under this Agreement 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.

Power of Attorney. Grantor hereby appoints Lender as Grantor's irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect, amend, or to continue the security interest granted in this Agreement or to demand termination of filings of other secured parties. Lender may at any time, and without further authorization from Grantor, file a carbon, photographic or other reproduction of any financing statement or of this Agreement for use as a financing statement. Grantor will reimburse Lender for all expenses for the perfection and the continuation of the perfection of Lender's security interest in the Collateral.

Severability. If a court of competent jurisdiction finds any provision of this Agreement 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 Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.

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

Survival of Representations and Warranties. All representations, warranties, and agreements made by Grantor in this Agreement shall survive the execution and delivery of this Agreement, 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.

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

DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. 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 Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code:

Agreement.  The word "Agreement" means this Commercial Security Agreement, as this Commercial Security Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Commercial Security Agreement from time to time.

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.

Collateral. The word "Collateral" means all of Grantor's right, title and interest in and to all the Collateral as described in the Collateral Description section of this Agreement.

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 Agreement in the default section of this Agreement.

Grantor.  The word "Grantor" means LF3 Cedar Rapids TRS, 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.

Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents. Specifically, without limitation, Indebtedness includes the future advances set forth in the Future Advances provision, together with all interest thereon and all amounts that may be indirectly secured by the Cross-Collateralization provision of this Agreement.

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

Note. The word "Note" means the Note dated March 5, 2019 and executed by LF3 Cedar Rapids, LLC; and LF3 Cedar Rapids TRS, LLC in the principal amount of $5,858,134.26, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement.

Property. The word "Property" means all of Grantor's right, title and interest in and to all the Property as described in the "Collateral Description" section of this Agreement.

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.

BORROWER AND GRANTOR HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY AGREEMENT AND AGREE TO ITS TERMS. THIS AGREEMENT IS DATED MARCH 5, 2019.

THIS AGREEMENT IS DELIVERED UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.

GRANTOR:

LF3 CEDAR RAPIDS TRS, LLC

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

By: /s/ Corey R. Maple(Seal)

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

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 (Seal)

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 (Seal)

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.   - DE/ND  C:\LASERPRO\CFI\LPL\E40.FC  TR-3523  PR-8

EX-10.56.8

EXHIBIT 10.56.8

COMMERCIAL SECURITY AGREEMENT

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

Grantor:                 LF3 Eagan TRS, LLC

1635 43rd Street South, Suite 205

Fargo, ND  58103

THIS COMMERCIAL SECURITY AGREEMENT dated June 19, 2019, is made and executed among LF3 Eagan TRS, LLC ("Grantor"); LF3 Eagan, LLC; and LF3 Eagan TRS, LLC ("Borrower"); and Western State Bank ("Lender").

GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender a security interest in the Collateral to secure the Indebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender may have by law.

COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means the following described property, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located, in which Grantor is giving to Lender a security interest for the payment of the Indebtedness and performance of all other obligations under the Note and this Agreement:

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.

In addition, the word "Collateral" also includes all the following, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located:

(A)   All accessions, attachments, accessories, replacements of and additions to any of the collateral described herein, whether added now or later.

(B)   All products and produce of any of the property described in this Collateral section.

(C)   All accounts, general intangibles, instruments, rents, monies, payments, and all other rights, arising out of a sale, lease, consignment or other disposition of any of the property described in this Collateral section.

(D)   All proceeds (including insurance proceeds) from the sale, destruction, loss, or other disposition of any of the property described in this Collateral section, and sums due from a third party who has damaged or destroyed the Collateral or from that party's insurer, whether due to judgment, settlement or other process.

(E)   All records and data relating to any of the property described in this Collateral section, whether in the form of a writing, photograph, microfilm, microfiche, or electronic media, together with all of Grantor's right, title, and interest in and to all computer software required to utilize, create, maintain, and process any such records or data on electronic media.

CROSS-COLLATERALIZATION. In addition  to the  Note, this  Agreement  secures all  obligations, debts  and  liabilities,  plus interest thereon,  of either Grantor or Borrower to Lender, or any one or more of them, as well as all claims by Lender against Borrower and Grantor or any one or more of them, whether now existing or hereafter arising, whether related or  unrelated  to  the  purpose  of  the  Note,  whether  voluntary  or otherwise, whether due or not due, direct or indirect, determined  or  undetermined,  absolute  or  contingent,  liquidated  or  unliquidated,  whether Borrower or Grantor may be liable individually or jointly with others, whether obligated as guarantor, surety, accommodation party or otherwise, and whether recovery upon such amounts may be or hereafter may become barred by any statute of limitations, and whether the obligation to repay such amounts may be or hereafter may become otherwise unenforceable.

FUTURE ADVANCES. In addition to the Note, this Agreement secures all future advances made by Lender to Borrower regardless of whether the advances are made a) pursuant to a commitment or b) for the same purposes.

BORROWER'S WAIVERS AND RESPONSIBILITIES. Except as otherwise required under this Agreement or by applicable law, (A) Borrower agrees that Lender need not tell Borrower about any action or inaction Lender takes in connection with this Agreement; (B)  Borrower assumes the responsibility for being and keeping informed about the Collateral; and (C) Borrower waives any defenses that may arise because of any action or inaction of Lender, including without limitation any failure of Lender to realize upon the Collateral or any delay by Lender in realizing upon the Collateral; and Borrower agrees to remain liable under the Note no matter what action Lender takes or fails to take under this Agreement.

GRANTOR'S REPRESENTATIONS AND WARRANTIES.  Grantor warrants that:  (A)  this Agreement is executed at Borrower's request and not at the request of Lender;  (B)  Grantor has the full right, power and authority to enter into this Agreement and to pledge the Collateral to Lender;

(C) Grantor has established adequate means of obtaining from Borrower on a continuing basis information about Borrower's financial condition; and  (D)  Lender has made no representation to Grantor about Borrower or Borrower's creditworthiness.

GRANTOR'S WAIVERS.  Grantor waives all requirements of presentment, protest, demand, and notice of dishonor or non-payment to Borrower or Grantor, or any other party to the Indebtedness or the Collateral. Lender may do any of the following with respect to any obligation of any Borrower, without first obtaining the consent of Grantor: (A)  grant any extension of time for any payment,  (B)  grant any renewal,  (C)  permit any modification of payment terms or other terms, or (D) exchange or release any Collateral or other security.  No such act or failure to act shall affect Lender's rights against Grantor or the Collateral.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Grantor's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Grantor holds jointly with someone else and all accounts Grantor 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. Grantor 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.

GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL.  With respect to the Collateral, Grantor represents and promises to Lender that:

Perfection of Security Interest. Grantor agrees to take whatever actions are requested by Lender to perfect and continue Lender's security interest in the Collateral. Upon request of Lender, Grantor will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Grantor will note Lender's interest upon any and all chattel paper and instruments if not delivered to Lender for possession by Lender. This is a continuing Security Agreement and will continue in effect even though all or any part of the Indebtedness is paid in full and even though for a period of time Borrower may not be indebted to Lender.

Notices to Lender. Grantor will promptly notify Lender in writing at Lender's address shown above (or such other addresses as Lender may designate from time to time) prior to any  (1)  change in Grantor's name;  (2)  change in Grantor's assumed business name(s);  (3)  change in the management or in the members or managers of the limited liability company Grantor; (4) change in the authorized signer(s); (5) change in Grantor's principal office address; (6) change in Grantor's state of organization;  (7)  conversion of Grantor to a new or different type of business entity; or (8) change in any other aspect of Grantor that directly or indirectly relates to any agreements between Grantor and Lender.  No change in Grantor's name or state of organization will take effect until after Lender has received notice.

No Violation.  The execution and delivery of this Agreement will not violate any law or agreement governing Grantor or to which Grantor is a party, and its membership agreement does not prohibit any term or condition of this Agreement.

Enforceability of Collateral. To the extent the Collateral consists of accounts, chattel paper, or general intangibles, as defined by the Uniform Commercial Code, the Collateral is enforceable in accordance with its terms, is genuine, and fully complies with all applicable laws and regulations concerning form, content and manner of preparation and execution, and all persons appearing to be obligated on the Collateral have authority and capacity to contract and are in fact obligated as they appear to be on the Collateral.  There shall be no setoffs or counterclaims against any of the Collateral, and no agreement shall have been made under which any deductions or discounts may be claimed concerning the Collateral except those disclosed to Lender in writing.

Location of the Collateral. Except in the ordinary course of Grantor's business, Grantor agrees to keep the Collateral at Grantor's address shown above or at such other locations as are acceptable to Lender. Upon Lender's request, Grantor will deliver to Lender in form satisfactory to Lender a schedule of real properties and Collateral locations relating to Grantor's operations, including without limitation the following: (1) all real property Grantor owns or is purchasing; (2) all real property Grantor is renting or leasing; (3) all storage facilities Grantor owns, rents, leases, or uses; and  (4)  all other properties where Collateral is or may be located.

Removal of the Collateral. Except in the ordinary course of Grantor's business, Grantor shall not remove the Collateral from its existing location without Lender's prior written consent.  Grantor shall, whenever requested, advise Lender of the exact location of the Collateral.

Transactions Involving Collateral. Except for inventory sold or accounts collected in the ordinary course of Grantor's business, or as otherwise provided for in this Agreement, Grantor shall not sell, offer to sell, or otherwise transfer or dispose of the Collateral. Grantor shall not pledge, mortgage, encumber or otherwise permit the Collateral to be subject to any lien, security interest, encumbrance, or charge, other than the security interest provided for in this Agreement, without the prior written consent of Lender. This includes security interests even if junior in right to the security interests granted under this Agreement. Unless waived by Lender, all proceeds from any disposition of the Collateral (for whatever reason) shall be held in trust for Lender and shall not be commingled with any other funds; provided however, this requirement shall not constitute consent by Lender to any sale or other disposition. Upon receipt, Grantor shall immediately deliver any such proceeds to Lender.

Title. Grantor represents and warrants to Lender that Grantor holds good and marketable title to the Collateral, free and clear of all liens and encumbrances except for the lien of this Agreement. No financing statement covering any of the Collateral is on file in any public office other than those  which reflect  the security interest created by this  Agreement or  to which Lender has  specifically consented. Grantor shall defend Lender's rights in the Collateral against the claims and demands of all other persons.

Repairs and Maintenance. Grantor agrees to keep and maintain, and to cause others to keep and maintain, the Collateral in good order, repair and condition at all times while this Agreement remains in effect. Grantor further agrees to pay when due all claims for work done on, or services rendered or material furnished in connection with the Collateral so that no lien or encumbrance may ever attach to or be filed against the Collateral.

Inspection of Collateral. Lender and Lender's designated representatives and agents shall have the right at all reasonable times to examine and inspect the Collateral wherever located.

Taxes, Assessments and Liens. Grantor will pay when due all taxes, assessments and liens upon the Collateral, its use or operation, upon this Agreement, upon any promissory note or notes evidencing the Indebtedness, or upon any of the other Related Documents. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender's interest in the Collateral is not jeopardized in Lender's sole opinion. If the Collateral is subjected to a lien which is not discharged within fifteen (15) days, Grantor shall deposit with Lender cash, a sufficient corporate surety bond or other security satisfactory to Lender in an amount adequate to provide for the discharge of the lien plus any interest, costs, permissible fees or other charges that could accrue as a result of foreclosure or sale of the Collateral. In any contest Grantor shall defend itself and Lender and shall satisfy any final adverse judgment before enforcement against the Collateral. Grantor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings. Grantor further agrees to furnish Lender with evidence that such taxes, assessments, and governmental and other charges have been paid in full and in a timely manner. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender's interest in the Collateral is not jeopardized.

Compliance with Governmental Requirements. Grantor shall comply promptly with all laws, ordinances, rules and regulations of all governmental authorities, now or hereafter in effect, applicable to the ownership, production, disposition, or use of the Collateral, including all laws or regulations relating to the undue erosion of highly-erodible land or relating to the conversion of wetlands for the production of an agricultural product or commodity. Grantor may contest in good faith any such law, ordinance or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Lender's interest in the Collateral, in Lender's opinion, is not jeopardized.

Hazardous Substances. Grantor represents and warrants that the Collateral never has been, and never will be so long as this Agreement remains a lien on the Collateral, used in violation of any Environmental Laws or for the generation, manufacture, storage, transportation, treatment, disposal, release or threatened release of any Hazardous Substance. The representations and warranties contained herein are based on Grantor's due diligence in investigating the Collateral 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 Environmental Laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims and losses resulting from a breach of this provision of this Agreement.  This obligation to indemnify and defend shall survive the payment of the Indebtedness and the

satisfaction of this Agreement.

Maintenance of Casualty Insurance. Grantor shall procure and maintain all risks insurance, including without limitation fire, theft and liability coverage together with such other insurance as Lender may require with respect to the Collateral, in form, amounts, coverages and basis reasonably acceptable to Lender and issued by a company or companies reasonably acceptable to Lender. Grantor, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least thirty (30) days' prior written notice to Lender and not including any disclaimer of the insurer's liability for failure to give such a 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. In connection with all policies covering assets in which Lender holds or is offered a security interest, Grantor will provide Lender with such loss payable or other endorsements as Lender may require. If Grantor at any time fails to obtain or maintain any insurance as required under this Agreement, Lender may (but shall not be obligated to) obtain such insurance as Lender deems appropriate, including if Lender so chooses "single interest insurance," which will cover only Lender's interest in the Collateral.

Application of Insurance Proceeds. Grantor shall promptly notify Lender of any loss or damage to the Collateral, whether or not such casualty or loss is covered by insurance.  Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty. All proceeds of any insurance on the Collateral, including accrued proceeds thereon, shall be held by Lender as part of the Collateral. If Lender consents to repair or replacement of the damaged or destroyed Collateral, Lender shall, upon satisfactory proof of expenditure,  pay or reimburse Grantor from the proceeds for the reasonable cost of repair or restoration.  If Lender does not consent to repair or replacement of the Collateral, Lender shall retain a sufficient amount of the proceeds to pay all of the Indebtedness, and shall pay the balance to Grantor.  Any proceeds which have not been disbursed within six (6) months after their receipt and which Grantor has not committed to the repair or restoration of the Collateral shall be used to prepay the Indebtedness.

Insurance Reserves.  Lender may require Grantor to maintain with Lender reserves for payment of insurance premiums, which reserves shall be created by monthly payments from Grantor of a sum estimated by Lender to be sufficient to produce, at least fifteen (15) days before the premium due date, amounts at least equal to the insurance premiums to be paid. If fifteen (15) days before payment is due, the reserve funds are insufficient, Grantor shall upon demand pay any deficiency to Lender. The reserve funds shall be held by Lender as a general deposit and shall constitute a non-interest-bearing account which Lender may satisfy by payment of the insurance premiums required to be paid by Grantor as they become due.  Lender does not hold the reserve funds in trust for Grantor, and Lender is not the agent of Grantor for payment of the insurance premiums required to be paid by Grantor. The responsibility for the payment of premiums shall remain Grantor's sole responsibility.

Insurance Reports. Grantor, upon request of Lender, shall furnish to Lender reports on each existing policy of insurance showing such information as Lender may reasonably request including the following:  (1)  the name of the insurer;  (2)  the risks insured;  (3)  the amount of the policy; (4) the property insured; (5) the then current value on the basis of which insurance has been obtained and the manner of determining that value; and (6) the expiration date of the policy. In addition, Grantor shall upon request by Lender (however not more often than annually) have an independent appraiser satisfactory to Lender determine, as applicable, the cash value or replacement cost of the Collateral.

Financing Statements. Grantor authorizes Lender to file a UCC financing statement, or alternatively, a copy of this Agreement to perfect Lender's security interest. At Lender's request, Grantor additionally agrees to sign all other documents that are necessary to perfect, protect, and continue Lender's security interest in the Property. This includes making sure Lender is shown as the first and only security interest holder on the title covering the Property. Grantor will pay all filing fees, title transfer fees, and other fees and costs involved unless prohibited by law or unless Lender is required by law to pay such fees and costs. Grantor irrevocably appoints Lender to execute documents necessary to transfer title if there is a default. Lender may file a copy of this Agreement as a financing statement.

GRANTOR'S RIGHT TO POSSESSION. Until default, Grantor may have possession of the tangible personal property and beneficial use of all the Collateral and may use it in any lawful manner not inconsistent with this Agreement or the Related Documents, provided that Grantor's right to possession and beneficial use shall not apply to any Collateral where possession of the Collateral by Lender is required by law to perfect Lender's security interest in such Collateral. If Lender at any time has possession of any Collateral, whether before or after an Event of Default, Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral if Lender takes such action for that purpose as Grantor shall request or as Lender, in Lender's sole discretion, shall deem appropriate under the circumstances, but failure to honor any request by Grantor shall not of itself be deemed to be a failure to exercise reasonable care. Lender shall not be required to take any steps necessary to preserve any rights in the Collateral against prior parties, nor to protect, preserve or maintain any security interest given to secure the Indebtedness.

LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Grantor fails to comply with any provision of this Agreement 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 Agreement 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 Collateral and paying all costs for insuring, maintaining and preserving the Collateral. 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 Agreement 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.

DEFAULT.  Each of the following shall constitute an Event of Default under this Agreement:

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

Other Defaults. Borrower or Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement 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. Borrower, any guarantor or 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, any guarantor's or Grantor's property or ability to perform their respective obligations under this Agreement 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 Agreement 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 Agreement 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.

Insolvency. The dissolution of Grantor (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 collateral 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.

Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or 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 Borrower's or 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. If an Event of Default occurs under this Agreement, at any time thereafter, Lender shall have all the rights of a secured party under the Delaware Uniform Commercial Code. In addition and without limitation, Lender may exercise any one or more of the following rights and remedies:

Accelerate Indebtedness.  Lender may declare the entire Indebtedness, including any prepayment penalty which Borrower would be required to pay, immediately due and payable, without notice of any kind to Borrower or Grantor.

Assemble Collateral. Lender may require Grantor to deliver to Lender all or any portion of the Collateral and any and all certificates of title and other documents relating to the Collateral. Lender may require Grantor to assemble the Collateral and make it available to Lender at a place to be designated by Lender. Lender also shall have full power to enter upon the property of Grantor to take possession of and remove the Collateral. If the Collateral contains other goods not covered by this Agreement at the time of repossession, Grantor agrees Lender may take such other goods, provided that Lender makes reasonable efforts to return them to Grantor after repossession.

Sell the Collateral. Lender shall have full power to sell, lease, transfer, or otherwise deal with the Collateral or proceeds thereof in Lender's own name or that of Grantor. Lender may sell the Collateral at public auction or private sale. Unless the Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender will give Grantor, and other persons as required by law, reasonable notice of the time and place of any public sale, or the time after which any private sale or any other disposition of the Collateral is to be made. However, no notice need be provided to any person who, after Event of Default occurs, enters into and authenticates an agreement waiving that person's right to notification of sale. The requirements of reasonable notice shall be met if such notice is given at least ten (10) days before the time of the sale or disposition. All expenses relating to the disposition of the Collateral, including without limitation the expenses of retaking, holding, insuring, preparing for sale and selling the Collateral, shall become a part of the Indebtedness secured by this Agreement and shall be payable on demand, with interest at the Note rate from date of expenditure until repaid.

Appoint Receiver. Lender shall have the right to have a receiver appointed to take possession of all or any part of the Collateral, with the power to protect and preserve the Collateral, to operate the Collateral preceding foreclosure or sale, and to collect the rents from the Collateral 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 Collateral exceeds the Indebtedness by a substantial amount.  Employment by Lender shall not disqualify a person from serving as a receiver.

Collect Revenues, Apply Accounts. Lender, either itself or through a receiver, may collect the payments, rents, income, and revenues from the Collateral. Lender may at any time in Lender's discretion transfer any Collateral into Lender's own name or that of Lender's nominee and receive the payments, rents, income, and revenues therefrom and hold the same as security for the Indebtedness or apply it to payment of the Indebtedness in such order of preference as Lender may determine. Insofar as the Collateral consists of accounts, general intangibles, insurance policies, instruments, chattel paper, choses in action, or similar property, Lender may demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as Lender may determine, whether or not Indebtedness or Collateral is then due. For these purposes, Lender may, on behalf of and in the name of Grantor, receive, open and dispose of mail addressed to Grantor; change any address to which mail and payments are to be sent; and endorse notes, checks, drafts, money orders, documents of title, instruments and items pertaining to payment, shipment, or storage of any Collateral. To facilitate collection, Lender may notify account debtors and obligors on any Collateral to make payments directly to Lender.

Obtain Deficiency. If Lender chooses to sell any or all of the Collateral, Lender may obtain a judgment against Borrower for any deficiency remaining on the Indebtedness due to Lender after application of all amounts received from the exercise of the rights provided in this Agreement. Borrower shall be liable for a deficiency even if the transaction described in this subsection is a sale of accounts or chattel paper.

Other Rights and Remedies. Lender shall have all the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, as may be amended from time to time. In addition, Lender shall have and may exercise any or all other rights and remedies it may have available at law, in equity, or otherwise.

Election of Remedies. Except as may be prohibited by applicable law, all of Lender's rights and remedies, whether evidenced by this Agreement, the Related Documents, or by any other writing, shall be cumulative and may be exercised singularly or concurrently.  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 Agreement, after Grantor's failure to perform, shall not affect Lender's right to declare a default and exercise its remedies.

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

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

Expenses. If Lender institutes any suit or action to enforce any of the terms of this Agreement, 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, to the extent permitted by applicable law. Grantor also will pay any court costs, in addition to all other sums provided by law.

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

Governing Law. With respect to procedural matters related to the perfection and enforcement of Lender's rights against the Collateral, this Agreement will be governed by federal law applicable to Lender and to the extent not preempted by federal law, the laws of the State of Delaware. In all other respects, this Agreement 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 Agreement 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 Agreement 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 Agreement 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 Borrower and Grantor signing below is responsible for all obligations in this Agreement. 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 Agreement.

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement 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 Agreement 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 Agreement. 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 Agreement, 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.

Notices. Any notice required to be given under this Agreement 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 Agreement. Any party may change its address for notices under this Agreement 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.

Power of Attorney. Grantor hereby appoints Lender as Grantor's irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect, amend, or to continue the security interest granted in this Agreement or to demand termination of filings of other secured parties. Lender may at any time, and without further authorization from Grantor, file a carbon, photographic or other reproduction of any financing statement or of this Agreement for use as a financing statement. Grantor will reimburse Lender for all expenses for the perfection and the continuation of the perfection of Lender's security interest in the Collateral.

Severability. If a court of competent jurisdiction finds any provision of this Agreement 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 Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.

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

Survival of Representations and Warranties. All representations, warranties, and agreements made by Grantor in this Agreement shall survive the execution and delivery of this Agreement, 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.

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

DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. 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 Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code:

Agreement.  The word "Agreement" means this Commercial Security Agreement, as this Commercial Security Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Commercial Security Agreement from time to time.

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

Collateral. The word "Collateral" means all of Grantor's right, title and interest in and to all the Collateral as described in the Collateral Description section of this Agreement.

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 Agreement in the default section of this Agreement.

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

Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents. Specifically, without limitation, Indebtedness includes the future advances set forth in the Future Advances provision, together with all interest thereon and all amounts that may be indirectly secured by the Cross-Collateralization provision of this Agreement.

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

Note. The word "Note" means the Note dated June 19, 2019 and executed by LF3 Eagan, LLC; and LF3 Eagan TRS, LLC in the principal amount of $9,444,500.00, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of,  and substitutions for the note or credit agreement.

Property. The word "Property" means all of Grantor's right, title and interest in and to all the Property as described in the "Collateral Description" section of this Agreement.

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.

BORROWER AND GRANTOR HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY AGREEMENT AND AGREE TO ITS TERMS. THIS AGREEMENT IS DATED JUNE 19, 2019.

THIS AGREEMENT IS DELIVERED UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.

GRANTOR:

LF3 EAGAN TRS, LLC

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

By:  /s/ Katie Cox                                                                                                     (Seal)

Katie Cox, Chief Financial Officer of Lodging Fund

REIT III TRS, Inc.

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                                                                                                     (Seal)

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                                                                                                     (Seal)

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.   - DE/ND  C:\LASERPRO\CFI\LPL\E40.FC  TR-3942  PR-8

COMMERCIAL SECURITY AGREEMENT

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.

Grantor:                 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

THIS COMMERCIAL SECURITY AGREEMENT dated June 19, 2019, is made and executed between LF3 Eagan, LLC; and LF3 Eagan TRS, LLC ("Grantor") and Western State Bank ("Lender").

GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender a security interest in the Collateral to secure the Indebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender may have by law.

COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means the following described property, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located, in which Grantor is giving to Lender a security interest for the payment of the Indebtedness and performance of all other obligations under the Note and this Agreement:

All Fixtures at 3000 Eagandale Place, Eagan, MN  55121

In addition, the word "Collateral" also includes all the following, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located:

(A)   All accessions, attachments, accessories, tools, parts, supplies, replacements of and additions to any of the collateral described herein, whether added now or later.

(B)   All products and produce of any of the property described in this Collateral section.

(C)   All accounts, general intangibles, instruments, rents, monies, payments, and all other rights, arising out of a sale, lease, consignment or other disposition of any of the property described in this Collateral section.

(D)   All proceeds (including insurance proceeds) from the sale, destruction, loss, or other disposition of any of the property described in this Collateral section, and sums due from a third party who has damaged or destroyed the Collateral or from that party's insurer, whether due to judgment, settlement or other process.

(E)   All records and data relating to any of the property described in this Collateral section, whether in the form of a writing, photograph, microfilm, microfiche, or electronic media, together with all of Grantor's right, title, and interest in and to all computer software required to utilize, create, maintain, and process any such records or data on electronic media.

CROSS-COLLATERALIZATION. In addition to the  Note, this Agreement secures all  obligations, debts  and  liabilities,  plus interest thereon,  of Grantor to Lender, or any one or more of them, as well as all claims by Lender against Grantor  or  any  one or  more of  them, whether  now existing or hereafter arising, whether related or unrelated to the purpose of the Note, whether voluntary or otherwise, whether due or not due, direct or indirect, determined or undetermined,  absolute or  contingent,  liquidated or  unliquidated,  whether Grantor  may  be liable individually  or jointly with  others,  whether  obligated  as  guarantor,  surety,  accommodation  party  or  otherwise,  and  whether  recovery  upon  such  amounts  may be or hereafter may become barred by any statute of limitations, and whether the obligation to repay such amounts may be or hereafter may become  otherwise  unenforceable.

FUTURE ADVANCES. In addition to the Note, this Agreement secures all future advances made by Lender to Grantor regardless of whether the advances are made a) pursuant to a commitment or b) for the same purposes.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Grantor's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Grantor holds jointly with someone else and all accounts Grantor 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. Grantor 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.

GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With respect to the Collateral, Grantor represents and promises to Lender that:

Perfection of Security Interest. Grantor agrees to take whatever actions are requested by Lender to perfect and continue Lender's security interest in the Collateral. Upon request of Lender, Grantor will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Grantor will note Lender's interest upon any and all chattel paper and instruments if not delivered to Lender for possession by Lender. This is a continuing Security Agreement and will continue in effect even though all or any part of the Indebtedness is paid in full and even though for a period of time Grantor may not be indebted to Lender.

Notices to Lender. Grantor will promptly notify Lender in writing at Lender's address shown above (or such other addresses as Lender may designate from time to time) prior to any  (1)  change in Grantor's name;  (2)  change in Grantor's assumed business name(s);  (3)  change in the management or in the members or managers of the limited liability company Grantor; (4) change in the authorized signer(s); (5) change in Grantor's principal office address; (6) change in Grantor's state of organization;  (7)  conversion of Grantor to a new or different type of business entity; or (8) change in any other aspect of Grantor that directly or indirectly relates to any agreements between Grantor and Lender.  No change in Grantor's name or state of organization will take effect until after Lender has received notice.

No Violation.  The execution and delivery of this Agreement will not violate any law or agreement governing Grantor or to which Grantor is a party, and its membership agreement does not prohibit any term or condition of this Agreement.

Enforceability of Collateral. To the extent the Collateral consists of accounts, chattel paper, or general intangibles, as defined by the Uniform Commercial Code, the Collateral is enforceable in accordance with its terms, is genuine, and fully complies with all applicable laws and regulations concerning form, content and manner of preparation and execution, and all persons appearing to be obligated on the Collateral have authority and capacity to contract and are in fact obligated as they appear to be on the Collateral.  There shall be no setoffs

or counterclaims against any of the Collateral, and no agreement shall have been made under which any deductions or discounts may be claimed concerning the Collateral except those disclosed to Lender in writing.

Location of the Collateral. Except in the ordinary course of Grantor's business, Grantor agrees to keep the Collateral at Grantor's address shown above or at such other locations as are acceptable to Lender. Upon Lender's request, Grantor will deliver to Lender in form satisfactory to Lender a schedule of real properties and Collateral locations relating to Grantor's operations, including without limitation the following: (1) all real property Grantor owns or is purchasing; (2) all real property Grantor is renting or leasing; (3) all storage facilities Grantor owns, rents, leases, or uses; and  (4)  all other properties where Collateral is or may be located.

Removal of the Collateral. Except in the ordinary course of Grantor's business, Grantor shall not remove the Collateral from its existing location without Lender's prior written consent.  Grantor shall, whenever requested, advise Lender of the exact location of the Collateral.

Transactions Involving Collateral. Except for inventory sold or accounts collected in the ordinary course of Grantor's business, or as otherwise provided for in this Agreement, Grantor shall not sell, offer to sell, or otherwise transfer or dispose of the Collateral. Grantor shall not pledge, mortgage, encumber or otherwise permit the Collateral to be subject to any lien, security interest, encumbrance, or charge, other than the security interest provided for in this Agreement, without the prior written consent of Lender. This includes security interests even if junior in right to the security interests granted under this Agreement. Unless waived by Lender, all proceeds from any disposition of the Collateral (for whatever reason) shall be held in trust for Lender and shall not be commingled with any other funds; provided however, this requirement shall not constitute consent by Lender to any sale or other disposition. Upon receipt, Grantor shall immediately deliver any such proceeds to Lender.

Title. Grantor represents and warrants to Lender that Grantor holds good and marketable title to the Collateral, free and clear of all liens and encumbrances except for the lien of this Agreement. No financing statement covering any of the Collateral is on file in any public office other than those  which reflect  the security interest created by this  Agreement or  to which Lender has  specifically consented. Grantor shall defend Lender's rights in the Collateral against the claims and demands of all other persons.

Repairs and Maintenance. Grantor agrees to keep and maintain, and to cause others to keep and maintain, the Collateral in good order, repair and condition at all times while this Agreement remains in effect. Grantor further agrees to pay when due all claims for work done on, or services rendered or material furnished in connection with the Collateral so that no lien or encumbrance may ever attach to or be filed against the Collateral.

Inspection of Collateral. Lender and Lender's designated representatives and agents shall have the right at all reasonable times to examine and inspect the Collateral wherever located.

Taxes, Assessments and Liens. Grantor will pay when due all taxes, assessments and liens upon the Collateral, its use or operation, upon this Agreement, upon any promissory note or notes evidencing the Indebtedness, or upon any of the other Related Documents. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender's interest in the Collateral is not jeopardized in Lender's sole opinion. If the Collateral is subjected to a lien which is not discharged within fifteen (15) days, Grantor shall deposit with Lender cash, a sufficient corporate surety bond or other security satisfactory to Lender in an amount adequate to provide for the discharge of the lien plus any interest, costs, permissible fees or other charges that could accrue as a result of foreclosure or sale of the Collateral. In any contest Grantor shall defend itself and Lender and shall satisfy any final adverse judgment before enforcement against the Collateral. Grantor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings. Grantor further agrees to furnish Lender with evidence that such taxes, assessments, and governmental and other charges have been paid in full and in a timely manner. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender's interest in the Collateral is not jeopardized.

Compliance with Governmental Requirements. Grantor shall comply promptly with all laws, ordinances, rules and regulations of all governmental authorities, now or hereafter in effect, applicable to the ownership, production, disposition, or use of the Collateral, including all laws or regulations relating to the undue erosion of highly-erodible land or relating to the conversion of wetlands for the production of an agricultural product or commodity. Grantor may contest in good faith any such law, ordinance or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Lender's interest in the Collateral, in Lender's opinion, is not jeopardized.

Hazardous Substances. Grantor represents and warrants that the Collateral never has been, and never will be so long as this Agreement remains a lien on the Collateral, used in violation of any Environmental Laws or for the generation, manufacture, storage, transportation, treatment, disposal, release or threatened release of any Hazardous Substance. The representations and warranties contained herein are based on Grantor's due diligence in investigating the Collateral 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 Environmental Laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims and losses resulting from a breach of this provision of this Agreement. This obligation to indemnify and defend shall survive the payment of the Indebtedness and the satisfaction of this Agreement.

Maintenance of Casualty Insurance. Grantor shall procure and maintain all risks insurance, including without limitation fire, theft and liability coverage together with such other insurance as Lender may require with respect to the Collateral, in form, amounts, coverages and basis reasonably acceptable to Lender and issued by a company or companies reasonably acceptable to Lender. Grantor, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least thirty (30) days' prior written notice to Lender and not including any disclaimer of the insurer's liability for failure to give such a 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. In connection with all policies covering assets in which Lender holds or is offered a security interest, Grantor will provide Lender with such loss payable or other endorsements as Lender may require. If Grantor at any time fails to obtain or maintain any insurance as required under this Agreement, Lender may (but shall not be obligated to) obtain such insurance as Lender deems appropriate, including if Lender so chooses "single interest insurance," which will cover only Lender's interest in the Collateral.

Application of Insurance Proceeds. Grantor shall promptly notify Lender of any loss or damage to the Collateral, whether or not such casualty or loss is covered by insurance.  Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty. All proceeds of any insurance on the Collateral, including accrued proceeds thereon, shall be held by Lender as part of the Collateral. If Lender consents to repair or replacement of the damaged or destroyed Collateral, Lender shall, upon satisfactory proof of expenditure,  pay or reimburse Grantor from the proceeds for the reasonable cost of repair or restoration.  If Lender does not consent to repair or replacement of the Collateral, Lender shall retain a sufficient amount of the proceeds to pay all of the Indebtedness, and shall pay the balance to Grantor.  Any proceeds which have not been disbursed within six (6) months after their receipt and which Grantor has not committed to the repair or restoration of the Collateral shall be used to prepay the Indebtedness.

Insurance Reserves.  Lender may require Grantor to maintain with Lender reserves for payment of insurance premiums, which reserves shall

be created by monthly payments from Grantor of a sum estimated by Lender to be sufficient to produce, at least fifteen (15) days before the premium due date, amounts at least equal to the insurance premiums to be paid. If fifteen (15) days before payment is due, the reserve funds are insufficient, Grantor shall upon demand pay any deficiency to Lender. The reserve funds shall be held by Lender as a general deposit and shall constitute a non-interest-bearing account which Lender may satisfy by payment of the insurance premiums required to be paid by Grantor as they become due.  Lender does not hold the reserve funds in trust for Grantor, and Lender is not the agent of Grantor for payment of the insurance premiums required to be paid by Grantor. The responsibility for the payment of premiums shall remain Grantor's sole responsibility.

Insurance Reports. Grantor, upon request of Lender, shall furnish to Lender reports on each existing policy of insurance showing such information as Lender may reasonably request including the following:  (1)  the name of the insurer;  (2)  the risks insured;  (3)  the amount of the policy; (4) the property insured; (5) the then current value on the basis of which insurance has been obtained and the manner of determining that value; and (6) the expiration date of the policy. In addition, Grantor shall upon request by Lender (however not more often than annually) have an independent appraiser satisfactory to Lender determine, as applicable, the cash value or replacement cost of the Collateral.

Financing Statements. Grantor authorizes Lender to file a UCC financing statement, or alternatively, a copy of this Agreement to perfect Lender's security interest. At Lender's request, Grantor additionally agrees to sign all other documents that are necessary to perfect, protect, and continue Lender's security interest in the Property. This includes making sure Lender is shown as the first and only security interest holder on the title covering the Property. Grantor will pay all filing fees, title transfer fees, and other fees and costs involved unless prohibited by law or unless Lender is required by law to pay such fees and costs. Grantor irrevocably appoints Lender to execute documents necessary to transfer title if there is a default. Lender may file a copy of this Agreement as a financing statement.

GRANTOR'S RIGHT TO POSSESSION. Until default, Grantor may have possession of the tangible personal property and beneficial use of all the Collateral and may use it in any lawful manner not inconsistent with this Agreement or the Related Documents, provided that Grantor's right to possession and beneficial use shall not apply to any Collateral where possession of the Collateral by Lender is required by law to perfect Lender's security interest in such Collateral. If Lender at any time has possession of any Collateral, whether before or after an Event of Default, Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral if Lender takes such action for that purpose as Grantor shall request or as Lender, in Lender's sole discretion, shall deem appropriate under the circumstances, but failure to honor any request by Grantor shall not of itself be deemed to be a failure to exercise reasonable care. Lender shall not be required to take any steps necessary to preserve any rights in the Collateral against prior parties, nor to protect, preserve or maintain any security interest given to secure the Indebtedness.

LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Grantor fails to comply with any provision of this Agreement 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 Agreement 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 Collateral and paying all costs for insuring, maintaining and preserving the Collateral. 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 Agreement 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.

DEFAULT.  Each of the following shall constitute an Event of Default under this Agreement:

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

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

Default in Favor of Third Parties. Any guarantor or 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 any guarantor's or Grantor's property or ability to perform their respective obligations under this Agreement or any of the Related Documents.

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

Insolvency. The dissolution of Grantor (regardless of whether election to continue is made), any member withdraws from the limited liability company, or any other termination of Grantor's existence as a going business or the death of any member, the insolvency of Grantor, the appointment of a receiver for any part of 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 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 Grantor or by any governmental agency against any collateral securing  the Indebtedness. This includes a garnishment of any of Grantor's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Grantor as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if 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.

Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or 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.  If an Event of Default occurs under this Agreement, at any time thereafter, Lender shall have all the

rights of a secured party under the Minnesota Uniform Commercial Code.   In addition and without limitation, Lender may exercise any one or more of the following rights and remedies:

Accelerate Indebtedness.  Lender may declare the entire Indebtedness, including any prepayment penalty which Grantor would be required to pay, immediately due and payable, without notice of any kind to Grantor.

Assemble Collateral. Lender may require Grantor to deliver to Lender all or any portion of the Collateral and any and all certificates of title and other documents relating to the Collateral. Lender may require Grantor to assemble the Collateral and make it available to Lender at a place to be designated by Lender. Lender also shall have full power to enter upon the property of Grantor to take possession of and remove the Collateral. If the Collateral contains other goods not covered by this Agreement at the time of repossession, Grantor agrees Lender may take such other goods, provided that Lender makes reasonable efforts to return them to Grantor after repossession.

Sell the Collateral. Lender shall have full power to sell, lease, transfer, or otherwise deal with the Collateral or proceeds thereof in Lender's own name or that of Grantor. Lender may sell the Collateral at public auction or private sale. Unless the Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender will give Grantor, and other persons as required by law, reasonable notice of the time and place of any public sale, or the time after which any private sale or any other disposition of the Collateral is to be made. However, no notice need be provided to any person who, after Event of Default occurs, enters into and authenticates an agreement waiving that person's right to notification of sale. The requirements of reasonable notice shall be met if such notice is given at least ten (10) days before the time of the sale or disposition. All expenses relating to the disposition of the Collateral, including without limitation the expenses of retaking, holding, insuring, preparing for sale and selling the Collateral, shall become a part of the Indebtedness secured by this Agreement and shall be payable on demand, with interest at the Note rate from date of expenditure until repaid.

Appoint Receiver. Lender shall have the right to have a receiver appointed to take possession of all or any part of the Collateral, with the power to protect and preserve the Collateral, to operate the Collateral preceding foreclosure or sale, and to collect the rents from the Collateral 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 Collateral exceeds the Indebtedness by a substantial amount.  Employment by Lender shall not disqualify a person from serving as a receiver.

Collect Revenues, Apply Accounts. Lender, either itself or through a receiver, may collect the payments, rents, income, and revenues from the Collateral. Lender may at any time in Lender's discretion transfer any Collateral into Lender's own name or that of Lender's nominee and receive the payments, rents, income, and revenues therefrom and hold the same as security for the Indebtedness or apply it to payment of the Indebtedness in such order of preference as Lender may determine. Insofar as the Collateral consists of accounts, general intangibles, insurance policies, instruments, chattel paper, choses in action, or similar property, Lender may demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as Lender may determine, whether or not Indebtedness or Collateral is then due. For these purposes, Lender may, on behalf of and in the name of Grantor, receive, open and dispose of mail addressed to Grantor; change any address to which mail and payments are to be sent; and endorse notes, checks, drafts, money orders, documents of title, instruments and items pertaining to payment, shipment, or storage of any Collateral. To facilitate collection, Lender may notify account debtors and obligors on any Collateral to make payments directly to Lender.

Obtain Deficiency. If Lender chooses to sell any or all of the Collateral, Lender may obtain a judgment against Grantor for any deficiency remaining on the Indebtedness due to Lender after application of all amounts received from the exercise of the rights provided in this Agreement. Grantor shall be liable for a deficiency even if the transaction described in this subsection is a sale of accounts or chattel paper.

Other Rights and Remedies. Lender shall have all the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, as may be amended from time to time. In addition, Lender shall have and may exercise any or all other rights and remedies it may have available at law, in equity, or otherwise.

Election of Remedies. Except as may be prohibited by applicable law, all of Lender's rights and remedies, whether evidenced by this Agreement, the Related Documents, or by any other writing, shall be cumulative and may be exercised singularly or concurrently.  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 Agreement, after Grantor's failure to perform, shall not affect Lender's right to declare a default and exercise its remedies.

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

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

Expenses. If Lender institutes any suit or action to enforce any of the terms of this Agreement, 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, to the extent permitted by applicable law. Grantor also will pay any court costs, in addition to all other sums provided by law.

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

Governing Law. With respect to procedural matters related to the perfection and enforcement of Lender's rights against the Collateral, this Agreement will be governed by federal law applicable to Lender and to the extent not preempted by federal law, the laws of the State of Minnesota. In all other respects, this Agreement 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 Agreement 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 Agreement 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 Grantor under this Agreement shall be joint and several, and all references to Grantor shall mean each and every Grantor.  This means that each Grantor signing below is responsible for all obligations in this Agreement.  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 Agreement.

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement 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 Agreement 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 Agreement. 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 Agreement, 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.

Notices. Any notice required to be given under this Agreement 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 Agreement. Any party may change its address for notices under this Agreement 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.

Power of Attorney. Grantor hereby appoints Lender as Grantor's irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect, amend, or to continue the security interest granted in this Agreement or to demand termination of filings of other secured parties. Lender may at any time, and without further authorization from Grantor, file a carbon, photographic or other reproduction of any financing statement or of this Agreement for use as a financing statement. Grantor will reimburse Lender for all expenses for the perfection and the continuation of the perfection of Lender's security interest in the Collateral.

Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any person or circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other person or 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 Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.

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

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

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

DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. 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 Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code:

Agreement.  The word "Agreement" means this Commercial Security Agreement, as this Commercial Security Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Commercial Security Agreement from time to time.

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

Collateral. The word "Collateral" means all of Grantor's right, title and interest in and to all the Collateral as described in the Collateral Description section of this Agreement.

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

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

Grantor.  The word "Grantor" means LF3 Eagan, LLC; and LF3 Eagan TRS, 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.

Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Grantor is responsible under this Agreement or under any of

the Related Documents. Specifically, without limitation, Indebtedness includes the future advances set forth in the Future Advances provision, together with all interest thereon and all amounts that may be indirectly secured by the Cross-Collateralization provision of this Agreement.

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

Note. The word "Note" means the Note dated June 19, 2019 and executed by LF3 Eagan, LLC; and LF3 Eagan TRS, LLC in the principal amount of $9,444,500.00, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of,  and substitutions for the note or credit agreement.

Property. The word "Property" means all of Grantor's right, title and interest in and to all the Property as described in the "Collateral Description" section of this Agreement.

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.

GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED JUNE 19, 2019.

GRANTOR:

LF3 EAGAN, LLC

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

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

By: /s/ Katie Cox                                                                                                      

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

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.   - MN/ND  C:\LASERPRO\CFI\LPL\E40.FC  TR-3942  PR-8

COMMERCIAL SECURITY AGREEMENT

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.

Grantor:                 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

THIS COMMERCIAL SECURITY AGREEMENT dated June 19, 2019, is made and executed between LF3 Eagan, LLC; and LF3 Eagan TRS, LLC ("Grantor") and Western State Bank ("Lender").

GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender a security interest in the Collateral to secure the Indebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender may have by law.

COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means the following described property, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located, in which Grantor is giving to Lender a security interest for the payment of the Indebtedness and performance of all other obligations under the Note and this Agreement:

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 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.

In addition, the word "Collateral" also includes all the following, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located:

(A)   All accessions, attachments, accessories, tools, parts, supplies, replacements of and additions to any of the collateral described herein, whether added now or later.

(B)   All products and produce of any of the property described in this Collateral section.

(C)   All accounts, general intangibles, instruments, rents, monies, payments, and all other rights, arising out of a sale, lease, consignment or other disposition of any of the property described in this Collateral section.

(D)   All proceeds (including insurance proceeds) from the sale, destruction, loss, or other disposition of any of the property described in this Collateral section, and sums due from a third party who has damaged or destroyed the Collateral or from that party's insurer, whether due to judgment, settlement or other process.

(E)   All records and data relating to any of the property described in this Collateral section, whether in the form of a writing, photograph, microfilm, microfiche, or electronic media, together with all of Grantor's right, title, and interest in and to all computer software required to utilize, create, maintain, and process any such records or data on electronic media.

CROSS-COLLATERALIZATION. In addition to the  Note, this Agreement secures all  obligations, debts  and  liabilities,  plus interest thereon,  of Grantor to Lender, or any one or more of them, as well as all claims by Lender against Grantor  or  any  one or  more of  them, whether  now existing or hereafter arising, whether related or unrelated to the purpose of the Note, whether voluntary or otherwise, whether due or not due, direct or indirect, determined or undetermined,  absolute or  contingent,  liquidated or  unliquidated,  whether Grantor  may  be liable individually  or jointly with  others,  whether  obligated  as  guarantor,  surety,  accommodation  party  or  otherwise,  and  whether  recovery  upon  such  amounts  may be or hereafter may become barred by any statute of limitations, and whether the obligation to repay such amounts may be or hereafter may become  otherwise  unenforceable.

FUTURE ADVANCES. In addition to the Note, this Agreement secures all future advances made by Lender to Grantor regardless of whether the advances are made a) pursuant to a commitment or b) for the same purposes.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Grantor's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Grantor holds jointly with someone else and all accounts Grantor 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. Grantor 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.

GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With respect to the Collateral, Grantor represents and promises to Lender that:

Perfection of Security Interest. Grantor agrees to take whatever actions are requested by Lender to perfect and continue Lender's security interest in the Collateral. Upon request of Lender, Grantor will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Grantor will note Lender's interest upon any and all chattel paper and instruments if not delivered to Lender for possession by Lender. This is a continuing Security Agreement and will continue in effect even though all or any part of the Indebtedness is paid in full and even though for a period of time Grantor may not be indebted to Lender.

Notices to Lender. Grantor will promptly notify Lender in writing at Lender's address shown above (or such other addresses as Lender may designate from time to time) prior to any  (1)  change in Grantor's name;  (2)  change in Grantor's assumed business name(s);  (3)  change in the management or in the members or managers of the limited liability company Grantor;  (4)  change in the authorized signer(s);   (5)

change in Grantor's principal office address; (6) change in Grantor's state of organization;  (7)  conversion of Grantor to a new or different type of business entity; or (8) change in any other aspect of Grantor that directly or indirectly relates to any agreements between Grantor and Lender.  No change in Grantor's name or state of organization will take effect until after Lender has received notice.

No Violation.  The execution and delivery of this Agreement will not violate any law or agreement governing Grantor or to which Grantor is a party, and its membership agreement does not prohibit any term or condition of this Agreement.

Enforceability of Collateral. To the extent the Collateral consists of accounts, chattel paper, or general intangibles, as defined by the Uniform Commercial Code, the Collateral is enforceable in accordance with its terms, is genuine, and fully complies with all applicable laws and regulations concerning form, content and manner of preparation and execution, and all persons appearing to be obligated on the Collateral have authority and capacity to contract and are in fact obligated as they appear to be on the Collateral. At the time any account becomes subject to a security interest in favor of Lender, the account shall be a good and valid account representing an undisputed, bona fide indebtedness incurred by the account debtor, for merchandise held subject to delivery instructions or previously shipped or delivered pursuant to a contract of sale, or for services previously performed by Grantor with or for the account debtor. So long as this Agreement remains in effect, Grantor shall not, without Lender's prior written consent, compromise, settle, adjust, or extend payment under or with regard to any such Accounts. There shall be no setoffs or counterclaims against any of the Collateral, and no agreement shall have been made under which any deductions or discounts may be claimed concerning the Collateral except those disclosed to Lender in writing.

Location of the Collateral. Except in the ordinary course of Grantor's business, Grantor agrees to keep the Collateral (or to the extent the Collateral consists of intangible  property such as accounts or general  intangibles, the records concerning the Collateral) at Grantor's address shown above or at such other locations as are acceptable to Lender. Upon Lender's request, Grantor will deliver to Lender in form satisfactory to Lender a schedule of real properties and Collateral locations relating to Grantor's operations, including without limitation the following: (1) all real property Grantor owns or is purchasing; (2) all real property Grantor is renting or leasing; (3) all storage facilities Grantor owns, rents, leases, or uses; and  (4)  all other properties where Collateral is or may be located.

Removal of the Collateral. Except in the ordinary course of Grantor's business, including the sales of inventory, Grantor shall not remove the Collateral from its existing location without Lender's prior written consent. To the extent that the Collateral consists of vehicles, or other titled property, Grantor shall not take or permit any action which would require application for certificates of title for the vehicles outside the State of Delaware, without Lender's prior written consent. Grantor shall, whenever requested, advise Lender of the exact location of the Collateral.

Transactions Involving Collateral. Except for inventory sold or accounts collected in the ordinary course of Grantor's business, or as otherwise provided for in this Agreement, Grantor shall not sell, offer to sell, or otherwise transfer or dispose of the Collateral. While Grantor is not in default under this Agreement, Grantor may sell inventory, but only in the ordinary course of its business and only to buyers who qualify as a buyer in the ordinary course of business. A sale in the ordinary course of Grantor's business does not include a transfer in partial or total satisfaction of a debt or any bulk sale.  Grantor shall not pledge, mortgage, encumber or otherwise permit the Collateral to be subject to any lien, security interest, encumbrance, or charge, other than the security interest provided for in this Agreement, without the prior written consent of Lender. This includes security interests even if junior in right to the security interests granted under this Agreement. Unless waived by Lender, all proceeds from any disposition of the Collateral (for whatever reason) shall be held in trust for Lender and shall not be commingled with any other funds; provided however, this requirement shall not constitute consent by Lender to any sale or other disposition.  Upon receipt, Grantor shall immediately deliver any such proceeds to Lender.

Title. Grantor represents and warrants to Lender that Grantor holds good and marketable title to the Collateral, free and clear of all liens and encumbrances except for the lien of this Agreement. No financing statement covering any of the Collateral is on file in any public office other than those  which reflect  the security interest created by this  Agreement or  to which Lender has  specifically consented. Grantor shall defend Lender's rights in the Collateral against the claims and demands of all other persons.

Repairs and Maintenance. Grantor agrees to keep and maintain, and to cause others to keep and maintain, the Collateral in good order, repair and condition at all times while this Agreement remains in effect. Grantor further agrees to pay when due all claims for work done on, or services rendered or material furnished in connection with the Collateral so that no lien or encumbrance may ever attach to or be filed against the Collateral.

Inspection of Collateral. Lender and Lender's designated representatives and agents shall have the right at all reasonable times to examine and inspect the Collateral wherever located.

Taxes, Assessments and Liens. Grantor will pay when due all taxes, assessments and liens upon the Collateral, its use or operation, upon this Agreement, upon any promissory note or notes evidencing the Indebtedness, or upon any of the other Related Documents. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender's interest in the Collateral is not jeopardized in Lender's sole opinion. If the Collateral is subjected to a lien which is not discharged within fifteen (15) days, Grantor shall deposit with Lender cash, a sufficient corporate surety bond or other security satisfactory to Lender in an amount adequate to provide for the discharge of the lien plus any interest, costs, permissible fees or other charges that could accrue as a result of foreclosure or sale of the Collateral. In any contest Grantor shall defend itself and Lender and shall satisfy any final adverse judgment before enforcement against the Collateral. Grantor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings. Grantor further agrees to furnish Lender with evidence that such taxes, assessments, and governmental and other charges have been paid in full and in a timely manner. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender's interest in the Collateral is not jeopardized.

Compliance with Governmental Requirements. Grantor shall comply promptly with all laws, ordinances, rules and regulations of all governmental authorities, now or hereafter in effect, applicable to the ownership, production, disposition, or use of the Collateral, including all laws or regulations relating to the undue erosion of highly-erodible land or relating to the conversion of wetlands for the production of an agricultural product or commodity. Grantor may contest in good faith any such law, ordinance or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Lender's interest in the Collateral, in Lender's opinion, is not jeopardized.

Hazardous Substances. Grantor represents and warrants that the Collateral never has been, and never will be so long as this Agreement remains a lien on the Collateral, used in violation of any Environmental Laws or for the generation, manufacture, storage, transportation, treatment, disposal, release or threatened release of any Hazardous Substance. The representations and warranties contained herein are based on Grantor's due diligence in investigating the Collateral 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 Environmental Laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims and losses resulting from a breach of this provision of this Agreement. This obligation to indemnify and defend shall survive the payment of the Indebtedness and the satisfaction of this Agreement.

Maintenance of Casualty Insurance.   Grantor shall procure and maintain all risks insurance, including without limitation fire, theft and

liability coverage together with such other insurance as Lender may require with respect to the Collateral, in form, amounts, coverages and basis reasonably acceptable to Lender and issued by a company or companies reasonably acceptable to Lender. Grantor, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least thirty (30) days' prior written notice to Lender and not including any disclaimer of the insurer's liability for failure to give such a 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. In connection with all policies covering assets in which Lender holds or is offered a security interest, Grantor will provide Lender with such loss payable or other endorsements as Lender may require. If Grantor at any time fails to obtain or maintain any insurance as required under this Agreement, Lender may (but shall not be obligated to) obtain such insurance as Lender deems appropriate, including if Lender so chooses "single interest insurance," which will cover only Lender's interest in the Collateral.

Application of Insurance Proceeds. Grantor shall promptly notify Lender of any loss or damage to the Collateral, whether or not such casualty or loss is covered by insurance.  Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty. All proceeds of any insurance on the Collateral, including accrued proceeds thereon, shall be held by Lender as part of the Collateral. If Lender consents to repair or replacement of the damaged or destroyed Collateral, Lender shall, upon satisfactory proof of expenditure,  pay or reimburse Grantor from the proceeds for the reasonable cost of repair or restoration.  If Lender does not consent to repair or replacement of the Collateral, Lender shall retain a sufficient amount of the proceeds to pay all of the Indebtedness, and shall pay the balance to Grantor.  Any proceeds which have not been disbursed within six (6) months after their receipt and which Grantor has not committed to the repair or restoration of the Collateral shall be used to prepay the Indebtedness.

Insurance Reserves.  Lender may require Grantor to maintain with Lender reserves for payment of insurance premiums, which reserves shall be created by monthly payments from Grantor of a sum estimated by Lender to be sufficient to produce, at least fifteen (15) days before the premium due date, amounts at least equal to the insurance premiums to be paid. If fifteen (15) days before payment is due, the reserve funds are insufficient, Grantor shall upon demand pay any deficiency to Lender. The reserve funds shall be held by Lender as a general deposit and shall constitute a non-interest-bearing account which Lender may satisfy by payment of the insurance premiums required to be paid by Grantor as they become due.  Lender does not hold the reserve funds in trust for Grantor, and Lender is not the agent of Grantor for payment of the insurance premiums required to be paid by Grantor. The responsibility for the payment of premiums shall remain Grantor's sole responsibility.

Insurance Reports. Grantor, upon request of Lender, shall furnish to Lender reports on each existing policy of insurance showing such information as Lender may reasonably request including the following:  (1)  the name of the insurer;  (2)  the risks insured;  (3)  the amount of the policy; (4) the property insured; (5) the then current value on the basis of which insurance has been obtained and the manner of determining that value; and (6) the expiration date of the policy. In addition, Grantor shall upon request by Lender (however not more often than annually) have an independent appraiser satisfactory to Lender determine, as applicable, the cash value or replacement cost of the Collateral.

Financing Statements. Grantor authorizes Lender to file a UCC financing statement, or alternatively, a copy of this Agreement to perfect Lender's security interest. At Lender's request, Grantor additionally agrees to sign all other documents that are necessary to perfect, protect, and continue Lender's security interest in the Property. This includes making sure Lender is shown as the first and only security interest holder on the title covering the Property. Grantor will pay all filing fees, title transfer fees, and other fees and costs involved unless prohibited by law or unless Lender is required by law to pay such fees and costs. Grantor irrevocably appoints Lender to execute documents necessary to transfer title if there is a default. Lender may file a copy of this Agreement as a financing statement.

GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except as otherwise provided below with respect to accounts, Grantor may have possession of the tangible personal property and beneficial use of all the Collateral and may use it in any lawful manner not inconsistent with this Agreement or the Related Documents, provided that Grantor's right to possession and beneficial use shall not apply to any Collateral where possession of the Collateral by Lender is required by law to perfect Lender's security interest in such Collateral. Until otherwise notified by Lender, Grantor may collect any of the Collateral consisting of accounts. At any time and even though no Event of Default exists, Lender may exercise its rights to collect the accounts and to notify account debtors to make payments directly to Lender for application to the Indebtedness. If Lender at any time has possession of any Collateral, whether before or after an Event of Default, Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral if Lender takes such action for that purpose as Grantor shall request or as Lender, in Lender's sole discretion, shall deem appropriate under the circumstances, but failure to honor any request by Grantor shall not of itself be deemed to be a failure to exercise reasonable care. Lender shall not be required to take any steps necessary to preserve any rights in the Collateral against prior parties, nor to protect, preserve or maintain any security interest given to secure the Indebtedness.

LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Grantor fails to comply with any provision of this Agreement 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 Agreement 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 Collateral and paying all costs for insuring, maintaining and preserving the Collateral. 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 Agreement 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.

DEFAULT.  Each of the following shall constitute an Event of Default under this Agreement:

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

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

Default in Favor of Third Parties. Any guarantor or 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 any guarantor's or Grantor's property or ability to perform their respective obligations under this Agreement or any of the Related Documents.

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

Insolvency. The dissolution of Grantor (regardless of whether election to continue is made), any member withdraws from the limited liability company, or any other termination of Grantor's existence as a going business or the death of any member, the insolvency of Grantor, the appointment of a receiver for any part of 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 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 Grantor or by any governmental agency against any collateral securing  the Indebtedness. This includes a garnishment of any of Grantor's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Grantor as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if 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.

Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or 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. If an Event of Default occurs under this Agreement, at any time thereafter, Lender shall have all the rights of a secured party under the Delaware Uniform Commercial Code. In addition and without limitation, Lender may exercise any one or more of the following rights and remedies:

Accelerate Indebtedness.  Lender may declare the entire Indebtedness, including any prepayment penalty which Grantor would be required to pay, immediately due and payable, without notice of any kind to Grantor.

Assemble Collateral. Lender may require Grantor to deliver to Lender all or any portion of the Collateral and any and all certificates of title and other documents relating to the Collateral. Lender may require Grantor to assemble the Collateral and make it available to Lender at a place to be designated by Lender. Lender also shall have full power to enter upon the property of Grantor to take possession of and remove the Collateral. If the Collateral contains other goods not covered by this Agreement at the time of repossession, Grantor agrees Lender may take such other goods, provided that Lender makes reasonable efforts to return them to Grantor after repossession.

Sell the Collateral. Lender shall have full power to sell, lease, transfer, or otherwise deal with the Collateral or proceeds thereof in Lender's own name or that of Grantor. Lender may sell the Collateral at public auction or private sale. Unless the Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender will give Grantor, and other persons as required by law, reasonable notice of the time and place of any public sale, or the time after which any private sale or any other disposition of the Collateral is to be made. However, no notice need be provided to any person who, after Event of Default occurs, enters into and authenticates an agreement waiving that person's right to notification of sale. The requirements of reasonable notice shall be met if such notice is given at least ten (10) days before the time of the sale or disposition. All expenses relating to the disposition of the Collateral, including without limitation the expenses of retaking, holding, insuring, preparing for sale and selling the Collateral, shall become a part of the Indebtedness secured by this Agreement and shall be payable on demand, with interest at the Note rate from date of expenditure until repaid.

Appoint Receiver. Lender shall have the right to have a receiver appointed to take possession of all or any part of the Collateral, with the power to protect and preserve the Collateral, to operate the Collateral preceding foreclosure or sale, and to collect the rents from the Collateral 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 Collateral exceeds the Indebtedness by a substantial amount.  Employment by Lender shall not disqualify a person from serving as a receiver.

Collect Revenues, Apply Accounts. Lender, either itself or through a receiver, may collect the payments, rents, income, and revenues from the Collateral. Lender may at any time in Lender's discretion transfer any Collateral into Lender's own name or that of Lender's nominee and receive the payments, rents, income, and revenues therefrom and hold the same as security for the Indebtedness or apply it to payment of the Indebtedness in such order of preference as Lender may determine. Insofar as the Collateral consists of accounts, general intangibles, insurance policies, instruments, chattel paper, choses in action, or similar property, Lender may demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as Lender may determine, whether or not Indebtedness or Collateral is then due. For these purposes, Lender may, on behalf of and in the name of Grantor, receive, open and dispose of mail addressed to Grantor; change any address to which mail and payments are to be sent; and endorse notes, checks, drafts, money orders, documents of title, instruments and items pertaining to payment, shipment, or storage of any Collateral. To facilitate collection, Lender may notify account debtors and obligors on any Collateral to make payments directly to Lender.

Obtain Deficiency. If Lender chooses to sell any or all of the Collateral, Lender may obtain a judgment against Grantor for any deficiency remaining on the Indebtedness due to Lender after application of all amounts received from the exercise of the rights provided in this Agreement. Grantor shall be liable for a deficiency even if the transaction described in this subsection is a sale of accounts or chattel paper.

Other Rights and Remedies. Lender shall have all the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, as may be amended from time to time. In addition, Lender shall have and may exercise any or all other rights and remedies it may have available at law, in equity, or otherwise.

Election of Remedies. Except as may be prohibited by applicable law, all of Lender's rights and remedies, whether evidenced by this Agreement, the Related Documents, or by any other writing, shall be cumulative and may be exercised singularly or concurrently.  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 Agreement, after Grantor's failure to perform, shall not affect Lender's right to declare a default and exercise its remedies.

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

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

Expenses. If Lender institutes any suit or action to enforce any of the terms of this Agreement, 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, to the extent permitted by applicable law. Grantor also will pay any court costs, in addition to all other sums provided by law.

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

Governing Law. With respect to procedural matters related to the perfection and enforcement of Lender's rights against the Collateral, this Agreement will be governed by federal law applicable to Lender and to the extent not preempted by federal law, the laws of the State of Delaware. In all other respects, this Agreement 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 Agreement 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 Agreement 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 Grantor under this Agreement shall be joint and several, and all references to Grantor shall mean each and every Grantor. This means that each Grantor signing below is responsible for all obligations in this Agreement. 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 Agreement.

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement 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 Agreement 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 Agreement. 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 Agreement, 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.

Notices. Any notice required to be given under this Agreement 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 Agreement. Any party may change its address for notices under this Agreement 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.

Power of Attorney. Grantor hereby appoints Lender as Grantor's irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect, amend, or to continue the security interest granted in this Agreement or to demand termination of filings of other secured parties. Lender may at any time, and without further authorization from Grantor, file a carbon, photographic or other reproduction of any financing statement or of this Agreement for use as a financing statement. Grantor will reimburse Lender for all expenses for the perfection and the continuation of the perfection of Lender's security interest in the Collateral.

Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any person or circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other person or 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 Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.

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

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

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

DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. 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 Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code:

Agreement.  The word "Agreement" means this Commercial Security Agreement, as this Commercial Security Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Commercial Security Agreement from time to time.

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

Collateral. The word "Collateral" means all of Grantor's right, title and interest in and to all the Collateral as described in the Collateral Description section of this Agreement.

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 Agreement in the default section of this Agreement.

Grantor.  The word "Grantor" means LF3 Eagan, LLC; and LF3 Eagan TRS, 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.

Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Grantor is responsible under this Agreement or under any of the Related Documents. Specifically, without limitation, Indebtedness includes the future advances set forth in the Future Advances provision, together with all interest thereon and all amounts that may be indirectly secured by the Cross-Collateralization provision of this Agreement.

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

Note. The word "Note" means the Note dated June 19, 2019 and executed by LF3 Eagan, LLC; and LF3 Eagan TRS, LLC in the principal amount of $9,444,500.00, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of,  and substitutions for the note or credit agreement.

Property. The word "Property" means all of Grantor's right, title and interest in and to all the Property as described in the "Collateral Description" section of this Agreement.

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.

GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED JUNE 19, 2019.

THIS AGREEMENT IS DELIVERED UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.

GRANTOR:

LF3 EAGAN, LLC

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

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

By: /s/ Katie Cox                                                                                                     (Seal)

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                                                                                                     (Seal)

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.   - DE/ND  C:\LASERPRO\CFI\LPL\E40.FC  TR-3942  PR-8

1

EX-10.56.10

EXHIBIT 10.56.10

COMMERCIAL GUARANTY

Borrower:     LF3 Cedar Rapids, LLC LF3 Cedar Rapids TRS, LLC 1635 43rd Street South, Suite 205 Fargo, ND  58103	Lender:     Western State Bank West Fargo P.O. Box 617 755 13th Ave E West Fargo, ND  58078
Guarantor:     Lodging Fund REIT III OP, LP 1635 43rd Street South, Suite 205 Fargo, ND  58103

CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and unconditionally guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower, or any one or more of them, to Lender, and the performance and discharge of all Borrower's obligations under the Note and the Related Documents. This is a guaranty of payment and performance and not of collection, so Lender can enforce this Guaranty against Guarantor even when Lender has not exhausted Lender's remedies against anyone else obligated to pay the Indebtedness or against any collateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor will make any payments to Lender or its order, on demand, in legal tender of the United States of America, in same-day funds, without set-off or deduction or counterclaim, and will otherwise perform Borrower's obligations under the Note and Related Documents.  Under this Guaranty, Guarantor's liability is unlimited and Guarantor's obligations are continuing.

INDEBTEDNESS. The word "Indebtedness" as used in this Guaranty means all of the principal amount outstanding from time to time and at any one or more times, accrued unpaid interest thereon and all collection costs and legal expenses related thereto permitted by law, permissible fees, arising from any and all debts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired, that Borrower individually or collectively or interchangeably with others, owes or will owe Lender. "Indebtedness" includes, without limitation, loans, advances, debts, overdraft indebtedness, credit card indebtedness, lease obligations, liabilities and obligations under any interest rate protection agreements or foreign currency exchange agreements or commodity price protection agreements, other obligations, and liabilities of Borrower, or any one or more of them, and any present or future judgments against Borrower, or any one or more of them, future advances, loans or transactions that  renew,  extend, modify, refinance, consolidate or  substitute  these debts, liabilities and  obligations whether:  voluntarily or involuntarily incurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined; direct or indirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several or joint and several; evidenced by a negotiable or non-negotiable instrument or writing; originated by Lender or another or others; barred or unenforceable against Borrower for any reason whatsoever; for any transactions that may be voidable for any reason (such as infancy, insanity, ultra vires or otherwise); and originated then reduced or extinguished and then afterwards increased or reinstated.

If Lender presently holds one or more guaranties, or hereafter receives additional guaranties from Guarantor, Lender's rights under all guaranties shall be cumulative. This Guaranty shall not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties. Guarantor's liability will be Guarantor's aggregate liability under the terms of this Guaranty and any such other unterminated guaranties.

CONTINUING GUARANTY. THIS IS A "CONTINUING GUARANTY" UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL AND PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER, OR ANY ONE OR MORE OF THEM, TO LENDER, NOW EXISTING OR HEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTOR'S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTY FOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE A ZERO BALANCE FROM TIME TO TIME.

DURATION OF GUARANTY. This Guaranty will take effect when received by Lender without the necessity of any acceptance by Lender, or any notice to Guarantor or to Borrower, and will continue in full force until all the Indebtedness incurred or contracted before receipt by Lender of any notice of revocation shall have been fully and finally paid and satisfied and all of Guarantor's other obligations under this Guaranty shall have been performed in full. If Guarantor elects to revoke this  Guaranty, Guarantor may only do so in writing. Guarantor's written notice of revocation must be mailed to Lender, by certified mail, at Lender's address listed above or such other place as Lender may designate in writing. Written revocation of this Guaranty will apply only to new Indebtedness created after actual receipt by Lender of Guarantor's written revocation. For this purpose and  without limitation, the term "new Indebtedness" does not include the Indebtedness which at the  time of  notice  of revocation is contingent, unliquidated, undetermined or not due and which later becomes absolute, liquidated, determined or due. For this purpose and without limitation, "new Indebtedness" does not include all or part of the Indebtedness that is: incurred by Borrower prior to revocation; incurred under a commitment that became binding before revocation; any renewals, extensions, substitutions, and modifications of the Indebtedness. This Guaranty shall bind Guarantor's estate as to the Indebtedness created both before and after Guarantor's death or incapacity, regardless of Lender's actual notice of Guarantor's death. Subject to the foregoing, Guarantor's executor or administrator or other legal representative may terminate this Guaranty in the same manner in which Guarantor might have terminated it and with the same effect. Release of any other guarantor or termination of any other guaranty of the Indebtedness shall not affect the liability of Guarantor under this Guaranty. A revocation Lender receives from any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. It is anticipated that fluctuations may occur in the aggregate amount of the Indebtedness covered by this Guaranty, and Guarantor specifically acknowledges and agrees that reductions in the amount of the Indebtedness, even to zero dollars ($0.00), shall not constitute a termination of this Guaranty. This Guaranty is binding upon Guarantor and Guarantor's heirs, successors and assigns so long as any of the Indebtedness remains unpaid and even though the Indebtedness may from time to time be zero dollars ($0.00).

GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before or after any revocation hereof, without notice or demand and without lessening Guarantor's liability under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make one or more additional secured or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend additional credit to Borrower;  (B)  to alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of the Indebtedness or any part of the Indebtedness, including increases and decreases of the rate  of  interest  on  the Indebtedness; extensions may be repeated and may be for longer than the original loan term; (C)  to take and hold security for the payment of this Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any such security, with or without the substitution of new collateral; (D) to 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; (E) to determine how, when and what application of payments and credits shall be made on the Indebtedness; (F) to apply such security and direct the order or manner of sale thereof, including without limitation, any nonjudicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine; (G) to sell, transfer, assign or grant participations in all or any part of the Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part.

GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or agreements of any kind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty; (B) this Guaranty is executed at Borrower's request and not at the request of Lender;  (C)  Guarantor has full power, right and authority to enter into this Guaranty;

(D) the provisions of this Guaranty do not conflict with or result in a default under any agreement or other instrument binding upon Guarantor and do not result in a violation of any law, regulation, court decree or order applicable to Guarantor; (E)  Guarantor has not and will not, without the prior written consent of Lender, sell,  lease, assign, encumber, hypothecate, transfer, or otherwise dispose of all or substantially all  of Guarantor's assets, or any interest therein; (F) upon Lender's request, Guarantor will provide to Lender financial and credit information in form acceptable to Lender, and all such financial information which currently has been, and all future financial information which will be provided to Lender is and will be true and correct in all material respects and fairly present Guarantor's financial condition as of the dates the financial information is provided; (G) no material adverse change has occurred in Guarantor's financial condition since the date of the most recent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor's financial condition;   (H) no litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending or threatened; (I) Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has established adequate means of obtaining from Borrower on a continuing basis information regarding Borrower's financial condition. Guarantor agrees to keep adequately informed from such means of any facts, events, or circumstances which might in any way affect Guarantor's risks under this Guaranty, and Guarantor further agrees that, absent a request for information, Lender shall have no obligation to disclose to Guarantor any information or documents acquired by Lender in the course of  its relationship with Borrower.

GUARANTOR'S FINANCIAL STATEMENTS. Guarantor agrees to furnish Lender with the following:

Tax Returns. As soon as available, but in no event later than sixty (60) days after the applicable filing date for the tax reporting period ended, Guarantor's Federal and other governmental tax returns, prepared by a professional accountant satisfactory to Lender.

All financial reports required to be provided under this Guaranty shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Guarantor as being true and correct.

GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender (A) to continue lending money or to extend other credit to Borrower; (B) to make any presentment, protest, demand, or notice of any kind, including notice of any nonpayment of the Indebtedness or of any nonpayment related to any collateral, or notice of any action or nonaction on the part of Borrower, Lender, any surety, endorser, or other guarantor in connection with the Indebtedness or in connection with the creation of new or additional loans or obligations;  (C)  to resort for payment or to proceed directly or at once against any person, including Borrower or any other guarantor;

(D) to proceed directly against or exhaust any collateral held by Lender from Borrower, any other guarantor, or any other person; (E) to give notice of the terms, time, and place of any public or private sale of personal property security held by Lender from Borrower or to comply with any other applicable provisions of the Uniform Commercial Code; (F) to pursue any other remedy within Lender's power; or (G) to commit any act or omission of any kind, or at any time, with respect to any matter whatsoever.

Guarantor also waives any and all rights or defenses based on suretyship or impairment of collateral including, but not limited to, any rights or defenses arising by reason of (A) any "one action" or "anti-deficiency" law or any other law which may prevent Lender from bringing any action, including a claim for deficiency, against Guarantor, before or after Lender's commencement or completion of any foreclosure action, either judicially or by exercise of a power of sale; (B) any election of remedies by Lender which destroys or otherwise adversely affects Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower for reimbursement, including without limitation, any loss of rights Guarantor may suffer by reason of any law limiting, qualifying, or discharging the Indebtedness; (C) any disability or other defense of Borrower, of any other guarantor, or of any other person, or by reason of the cessation of Borrower's liability from any cause whatsoever, other than payment in full in legal tender, of the Indebtedness; (D) any right to claim discharge of the Indebtedness on the basis of unjustified impairment of any collateral for the Indebtedness; (E) any statute of limitations, if at any time any action or suit brought by Lender against Guarantor is commenced, there is outstanding Indebtedness which is not barred by any applicable statute of limitations; or (F) any defenses given to guarantors at law or in equity other than actual payment and performance of the Indebtedness. If payment is made by Borrower, whether voluntarily or otherwise, or by any third party, on the Indebtedness and thereafter Lender is forced to remit the amount of that payment to Borrower's trustee in bankruptcy or to any similar person under any federal or state bankruptcy law or law for the relief of debtors, the Indebtedness shall be considered unpaid for the purpose of the enforcement of this Guaranty.

Guarantor further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any claim of setoff, counterclaim, counter demand, recoupment or similar right, whether such claim, demand or right may be asserted by the Borrower, the Guarantor, or both.

GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees that each of the waivers set forth above is made with Guarantor's full knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law. If any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the extent permitted by law or public policy.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Guarantor's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Guarantor holds jointly with someone else and all accounts Guarantor 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. Guarantor authorizes Lender, to the extent permitted by applicable law, to hold these funds if there is a default, and Lender may apply the funds in these accounts to pay what Guarantor owes under the terms of this Guaranty.

SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the Indebtedness, whether now existing or hereafter created, shall be superior to any claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby expressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Lender may now or hereafter have against Borrower. In the event of insolvency and consequent liquidation of the assets of Borrower, through bankruptcy, by an assignment for the benefit of creditors, by voluntary liquidation, or otherwise, the assets of Borrower applicable to the payment of the claims of both Lender and Guarantor shall be paid to Lender and shall be first applied by Lender to the Indebtedness. Guarantor does hereby assign to Lender all claims which it may have or acquire against Borrower or against any assignee or trustee in bankruptcy of Borrower; provided however, that such assignment shall be effective only for the purpose of assuring to Lender full payment in legal tender of the Indebtedness. If Lender so requests, any notes or credit agreements now or hereafter evidencing any debts or obligations of Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to file financing statements and continuation statements and to execute documents and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights under this Guaranty.

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

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

Expenses. If Lender institutes any suit or action to enforce any of the terms of this Guaranty, Lender shall be entitled to recover such sum

COMMERCIAL GUARANTY

(Continued) Page 3

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, to the extent permitted by applicable law. Guarantor also will pay any court costs, in addition to all other sums provided by law.

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

Governing Law. This Guaranty 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.

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

Integration. Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the opportunity to be advised by Guarantor's attorney with respect to this Guaranty; the Guaranty fully reflects Guarantor's intentions and parol evidence is not required to interpret the terms of this Guaranty. Guarantor hereby indemnifies and holds Lender harmless from all losses, claims, damages, and costs (including Lender's attorneys' fees) suffered or incurred by Lender as a result of any breach by Guarantor of the warranties, representations and agreements of this paragraph.

Interpretation. In all cases where there is more than one Borrower or Guarantor, then all words used in this Guaranty in the singular shall be deemed to have been used in the plural where the context and construction so require; and where there is more than one Borrower named in this Guaranty or when this Guaranty is executed by more than one Guarantor, the  words  "Borrower"  and  "Guarantor" respectively shall mean all and any one or more of them. The words "Guarantor," "Borrower," and "Lender" include the heirs, successors, assigns, and transferees of each of them. If a court finds that any provision of this Guaranty is not valid or should not be enforced, that fact by itself will not mean that the rest of this Guaranty will not be valid or enforced. Therefore, a court will enforce the rest of the provisions of this Guaranty even if a provision of this Guaranty may be found to be invalid or unenforceable. If any one or more of Borrower or Guarantor are corporations, partnerships, limited liability companies, or similar entities, it is not necessary for Lender to inquire into the powers of Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on their behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Guaranty.

Notices. Any notice required to be given under this Guaranty shall be given in writing, and, except for revocation notices by Guarantor, 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 Guaranty. All revocation notices by Guarantor shall be in writing and shall be effective upon delivery to Lender as provided in the section of this Guaranty entitled "DURATION OF GUARANTY." Any party may change its address for notices under this Guaranty 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, Guarantor agrees to keep Lender informed at all times of Guarantor's current address.  Unless otherwise provided or required by law, if there is more than one Guarantor, any notice given by Lender to any Guarantor is deemed to be notice given to all Guarantors.

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Guaranty 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 Guaranty 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 Guaranty. No prior waiver by Lender, nor any course of dealing between Lender and Guarantor, shall constitute a waiver of any of Lender's rights or of any of Guarantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Guaranty, 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.

Successors and Assigns. Subject to any limitations stated in this Guaranty on transfer of Guarantor's interest, this Guaranty shall be binding upon and inure to the benefit of the parties, their successors and assigns.

Waive Jury. Lender and Guarantor hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Guarantor against the other.

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

GAAP.  The word "GAAP" means generally accepted accounting principles.

Guarantor. The word "Guarantor" means everyone signing this Guaranty, including without limitation Lodging Fund REIT III OP, LP, and in each case, any signer's successors and assigns.

Guaranty.  The word "Guaranty" means this guaranty from Guarantor to Lender.

Indebtedness.  The word "Indebtedness" means Borrower's indebtedness to Lender as more particularly described in this Guaranty.

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

Note. The word "Note" means and includes without limitation all of Borrower's promissory notes and/or credit agreements evidencing Borrower's loan obligations in favor of Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of and substitutions for promissory notes or credit agreements.

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.

EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY". NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE.  THIS GUARANTY IS DATED MARCH 5, 2019.

GUARANTOR:

LODGING FUND REIT III OP, LP

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.

LaserPro, Ver. 19.4.10.036  Copr. Finastra USA Corporation 1997, 2020.   All Rights Reserved.   - ND  C:\LASERPRO\CFI\LPL\E20.FC  TR-3523  PR-8

COMMERCIAL GUARANTY

Borrower:     LF3 Cedar Rapids, LLC LF3 Cedar Rapids TRS, LLC 1635 43rd Street South, Suite 205 Fargo, ND  58103	Lender:     Western State Bank West Fargo P.O. Box 617 755 13th Ave E West Fargo, ND  58078
Guarantor:     Lodging Fund REIT III TRS, Inc. 1635 43rd Street South, Suite 205 Fargo, ND  58103

CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and unconditionally guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower, or any one or more of them, to Lender, and the performance and discharge of all Borrower's obligations under the Note and the Related Documents. This is a guaranty of payment and performance and not of collection, so Lender can enforce this Guaranty against Guarantor even when Lender has not exhausted Lender's remedies against anyone else obligated to pay the Indebtedness or against any collateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor will make any payments to Lender or its order, on demand, in legal tender of the United States of America, in same-day funds, without set-off or deduction or counterclaim, and will otherwise perform Borrower's obligations under the Note and Related Documents.  Under this Guaranty, Guarantor's liability is unlimited and Guarantor's obligations are continuing.

INDEBTEDNESS. The word "Indebtedness" as used in this Guaranty means all of the principal amount outstanding from time to time and at any one or more times, accrued unpaid interest thereon and all collection costs and legal expenses related thereto permitted by law, permissible fees, arising from any and all debts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired, that Borrower individually or collectively or interchangeably with others, owes or will owe Lender. "Indebtedness" includes, without limitation, loans, advances, debts, overdraft indebtedness, credit card indebtedness, lease obligations, liabilities and obligations under any interest rate protection agreements or foreign currency exchange agreements or commodity price protection agreements, other obligations, and liabilities of Borrower, or any one or more of them, and any present or future judgments against Borrower, or any one or more of them, future advances, loans or transactions that  renew,  extend, modify, refinance, consolidate or  substitute  these debts, liabilities and  obligations whether:  voluntarily or involuntarily incurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined; direct or indirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several or joint and several; evidenced by a negotiable or non-negotiable instrument or writing; originated by Lender or another or others; barred or unenforceable against Borrower for any reason whatsoever; for any transactions that may be voidable for any reason (such as infancy, insanity, ultra vires or otherwise); and originated then reduced or extinguished and then afterwards increased or reinstated.

If Lender presently holds one or more guaranties, or hereafter receives additional guaranties from Guarantor, Lender's rights under all guaranties shall be cumulative. This Guaranty shall not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties. Guarantor's liability will be Guarantor's aggregate liability under the terms of this Guaranty and any such other unterminated guaranties.

CONTINUING GUARANTY. THIS IS A "CONTINUING GUARANTY" UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL AND PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER, OR ANY ONE OR MORE OF THEM, TO LENDER, NOW EXISTING OR HEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTOR'S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTY FOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE A ZERO BALANCE FROM TIME TO TIME.

DURATION OF GUARANTY. This Guaranty will take effect when received by Lender without the necessity of any acceptance by Lender, or any notice to Guarantor or to Borrower, and will continue in full force until all the Indebtedness incurred or contracted before receipt by Lender of any notice of revocation shall have been fully and finally paid and satisfied and all of Guarantor's other obligations under this Guaranty shall have been performed in full. If Guarantor elects to revoke this  Guaranty, Guarantor may only do so in writing. Guarantor's written notice of revocation must be mailed to Lender, by certified mail, at Lender's address listed above or such other place as Lender may designate in writing. Written revocation of this Guaranty will apply only to new Indebtedness created after actual receipt by Lender of Guarantor's written revocation. For this purpose and  without limitation, the term "new Indebtedness" does not include the Indebtedness which at the  time of  notice  of revocation is contingent, unliquidated, undetermined or not due and which later becomes absolute, liquidated, determined or due. For this purpose and without limitation, "new Indebtedness" does not include all or part of the Indebtedness that is: incurred by Borrower prior to revocation; incurred under a commitment that became binding before revocation; any renewals, extensions, substitutions, and modifications of the Indebtedness. This Guaranty shall bind Guarantor's estate as to the Indebtedness created both before and after Guarantor's death or incapacity, regardless of Lender's actual notice of Guarantor's death. Subject to the foregoing, Guarantor's executor or administrator or other legal representative may terminate this Guaranty in the same manner in which Guarantor might have terminated it and with the same effect. Release of any other guarantor or termination of any other guaranty of the Indebtedness shall not affect the liability of Guarantor under this Guaranty. A revocation Lender receives from any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. It is anticipated that fluctuations may occur in the aggregate amount of the Indebtedness covered by this Guaranty, and Guarantor specifically acknowledges and agrees that reductions in the amount of the Indebtedness, even to zero dollars ($0.00), shall not constitute a termination of this Guaranty. This Guaranty is binding upon Guarantor and Guarantor's heirs, successors and assigns so long as any of the Indebtedness remains unpaid and even though the Indebtedness may from time to time be zero dollars ($0.00).

GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before or after any revocation hereof, without notice or demand and without lessening Guarantor's liability under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make one or more additional secured or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend additional credit to Borrower;  (B)  to alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of the Indebtedness or any part of the Indebtedness, including increases and decreases of the rate  of  interest  on  the Indebtedness; extensions may be repeated and may be for longer than the original loan term; (C)  to take and hold security for the payment of this Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any such security, with or without the substitution of new collateral; (D) to 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; (E) to determine how, when and what application of payments and credits shall be made on the Indebtedness; (F) to apply such security and direct the order or manner of sale thereof, including without limitation, any nonjudicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine; (G) to sell, transfer, assign or grant participations in all or any part of the Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part.

GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or agreements of any kind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty; (B) this Guaranty is executed at Borrower's request and not at the request of Lender;  (C)  Guarantor has full power, right and authority to enter into this Guaranty;

(D) the provisions of this Guaranty do not conflict with or result in a default under any agreement or other instrument binding upon Guarantor and do not result in a violation of any law, regulation, court decree or order applicable to Guarantor; (E)  Guarantor has not and will not, without the prior written consent of Lender, sell,  lease, assign, encumber, hypothecate, transfer, or otherwise dispose of all or substantially all  of Guarantor's assets, or any interest therein; (F) upon Lender's request, Guarantor will provide to Lender financial and credit information in form acceptable to Lender, and all such financial information which currently has been, and all future financial information which will be provided to Lender is and will be true and correct in all material respects and fairly present Guarantor's financial condition as of the dates the financial information is provided; (G) no material adverse change has occurred in Guarantor's financial condition since the date of the most recent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor's financial condition;   (H) no litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending or threatened; (I) Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has established adequate means of obtaining from Borrower on a continuing basis information regarding Borrower's financial condition. Guarantor agrees to keep adequately informed from such means of any facts, events, or circumstances which might in any way affect Guarantor's risks under this Guaranty, and Guarantor further agrees that, absent a request for information, Lender shall have no obligation to disclose to Guarantor any information or documents acquired by Lender in the course of  its relationship with Borrower.

GUARANTOR'S FINANCIAL STATEMENTS. Guarantor agrees to furnish Lender with the following:

Tax Returns. As soon as available, but in no event later than sixty (60) days after the applicable filing date for the tax reporting period ended, Guarantor's Federal and other governmental tax returns, prepared by a professional accountant satisfactory to Lender.

All financial reports required to be provided under this Guaranty shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Guarantor as being true and correct.

GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender (A) to continue lending money or to extend other credit to Borrower; (B) to make any presentment, protest, demand, or notice of any kind, including notice of any nonpayment of the Indebtedness or of any nonpayment related to any collateral, or notice of any action or nonaction on the part of Borrower, Lender, any surety, endorser, or other guarantor in connection with the Indebtedness or in connection with the creation of new or additional loans or obligations;  (C)  to resort for payment or to proceed directly or at once against any person, including Borrower or any other guarantor;

(D)to proceed directly against or exhaust any collateral held by Lender from Borrower, any other guarantor, or any other person; (E) to give notice of the terms, time, and place of any public or private sale of personal property security held by Lender from Borrower or to comply with any other applicable provisions of the Uniform Commercial Code; (F) to pursue any other remedy within Lender's power; or (G) to commit any act or omission of any kind, or at any time, with respect to any matter whatsoever.

Guarantor also waives any and all rights or defenses based on suretyship or impairment of collateral including, but not limited to, any rights or defenses arising by reason of (A) any "one action" or "anti-deficiency" law or any other law which may prevent Lender from bringing any action, including a claim for deficiency, against Guarantor, before or after Lender's commencement or completion of any foreclosure action, either judicially or by exercise of a power of sale; (B) any election of remedies by Lender which destroys or otherwise adversely affects Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower for reimbursement, including without limitation, any loss of rights Guarantor may suffer by reason of any law limiting, qualifying, or discharging the Indebtedness; (C) any disability or other defense of Borrower, of any other guarantor, or of any other person, or by reason of the cessation of Borrower's liability from any cause whatsoever, other than payment in full in legal tender, of the Indebtedness; (D) any right to claim discharge of the Indebtedness on the basis of unjustified impairment of any collateral for the Indebtedness; (E) any statute of limitations, if at any time any action or suit brought by Lender against Guarantor is commenced, there is outstanding Indebtedness which is not barred by any applicable statute of limitations; or (F) any defenses given to guarantors at law or in equity other than actual payment and performance of the Indebtedness. If payment is made by Borrower, whether voluntarily or otherwise, or by any third party, on the Indebtedness and thereafter Lender is forced to remit the amount of that payment to Borrower's trustee in bankruptcy or to any similar person under any federal or state bankruptcy law or law for the relief of debtors, the Indebtedness shall be considered unpaid for the purpose of the enforcement of this Guaranty.

Guarantor further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any claim of setoff, counterclaim, counter demand, recoupment or similar right, whether such claim, demand or right may be asserted by the Borrower, the Guarantor, or both.

GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees that each of the waivers set forth above is made with Guarantor's full knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law. If any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the extent permitted by law or public policy.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Guarantor's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Guarantor holds jointly with someone else and all accounts Guarantor 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. Guarantor authorizes Lender, to the extent permitted by applicable law, to hold these funds if there is a default, and Lender may apply the funds in these accounts to pay what Guarantor owes under the terms of this Guaranty.

SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the Indebtedness, whether now existing or hereafter created, shall be superior to any claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby expressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Lender may now or hereafter have against Borrower. In the event of insolvency and consequent liquidation of the assets of Borrower, through bankruptcy, by an assignment for the benefit of creditors, by voluntary liquidation, or otherwise, the assets of Borrower applicable to the payment of the claims of both Lender and Guarantor shall be paid to Lender and shall be first applied by Lender to the Indebtedness. Guarantor does hereby assign to Lender all claims which it may have or acquire against Borrower or against any assignee or trustee in bankruptcy of Borrower; provided however, that such assignment shall be effective only for the purpose of assuring to Lender full payment in legal tender of the Indebtedness. If Lender so requests, any notes or credit agreements now or hereafter evidencing any debts or obligations of Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to file financing statements and continuation statements and to execute documents and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights under this Guaranty.

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

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

Expenses. If Lender institutes any suit or action to enforce any of the terms of this Guaranty, Lender shall be entitled to recover such sum

COMMERCIAL  GUARANTY

(Continued) Page 3

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, to the extent permitted by applicable law. Guarantor also will pay any court costs, in addition to all other sums provided by law.

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

Governing Law. This Guaranty 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.

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

Integration. Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the opportunity to be advised by Guarantor's attorney with respect to this Guaranty; the Guaranty fully reflects Guarantor's intentions and parol evidence is not required to interpret the terms of this Guaranty. Guarantor hereby indemnifies and holds Lender harmless from all losses, claims, damages, and costs (including Lender's attorneys' fees) suffered or incurred by Lender as a result of any breach by Guarantor of the warranties, representations and agreements of this paragraph.

Interpretation. In all cases where there is more than one Borrower or Guarantor, then all words used in this Guaranty in the singular shall be deemed to have been used in the plural where the context and construction so require; and where there is more than one Borrower named in this Guaranty or when this Guaranty is executed by more than one Guarantor, the  words  "Borrower"  and  "Guarantor" respectively shall mean all and any one or more of them. The words "Guarantor," "Borrower," and "Lender" include the heirs, successors, assigns, and transferees of each of them. If a court finds that any provision of this Guaranty is not valid or should not be enforced, that fact by itself will not mean that the rest of this Guaranty will not be valid or enforced. Therefore, a court will enforce the rest of the provisions of this Guaranty even if a provision of this Guaranty may be found to be invalid or unenforceable. If any one or more of Borrower or Guarantor are corporations, partnerships, limited liability companies, or similar entities, it is not necessary for Lender to inquire into the powers of Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on their behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Guaranty.

Notices. Any notice required to be given under this Guaranty shall be given in writing, and, except for revocation notices by Guarantor, 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 Guaranty. All revocation notices by Guarantor shall be in writing and shall be effective upon delivery to Lender as provided in the section of this Guaranty entitled "DURATION OF GUARANTY." Any party may change its address for notices under this Guaranty 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, Guarantor agrees to keep Lender informed at all times of Guarantor's current address.  Unless otherwise provided or required by law, if there is more than one Guarantor, any notice given by Lender to any Guarantor is deemed to be notice given to all Guarantors.

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Guaranty 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 Guaranty 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 Guaranty. No prior waiver by Lender, nor any course of dealing between Lender and Guarantor, shall constitute a waiver of any of Lender's rights or of any of Guarantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Guaranty, 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.

Successors and Assigns. Subject to any limitations stated in this Guaranty on transfer of Guarantor's interest, this Guaranty shall be binding upon and inure to the benefit of the parties, their successors and assigns.

Waive Jury. Lender and Guarantor hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Guarantor against the other.

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

GAAP.  The word "GAAP" means generally accepted accounting principles.

Guarantor.  The word "Guarantor" means everyone signing this Guaranty, including without limitation Lodging Fund REIT III TRS, Inc., and in each case, any signer's successors and assigns.

Guaranty.  The word "Guaranty" means this guaranty from Guarantor to Lender.

Indebtedness.  The word "Indebtedness" means Borrower's indebtedness to Lender as more particularly described in this Guaranty.

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

Note. The word "Note" means and includes without limitation all of Borrower's promissory notes and/or credit agreements evidencing Borrower's loan obligations in favor of Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of and substitutions for promissory notes or credit agreements.

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.

EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY". NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE.  THIS GUARANTY IS DATED MARCH 5, 2019.

GUARANTOR:

LODGING FUND REIT III TRS, INC.

By: /s/ Corey R. Maple

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

LaserPro, Ver. 19.4.10.036  Copr. Finastra USA Corporation 1997, 2020.   All Rights Reserved.   - ND  C:\LASERPRO\CFI\LPL\E20.FC  TR-3523  PR-8

EX-10.56.11

Exhibit 10.56.11

COMMERCIAL GUARANTY

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
Guarantor:	Lodging Fund REIT III TRS, Inc.
1635 43rd Street South, Suite 205
Fargo, ND  58103

CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and unconditionally guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower, or any one or more of them, to Lender, and the performance and discharge of all Borrower's obligations under the Note and the Related Documents. This is a guaranty of payment and performance and not of collection, so Lender can enforce this Guaranty against Guarantor even when Lender has not exhausted Lender's remedies against anyone else obligated to pay the Indebtedness or against any collateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor will make any payments to Lender or its order, on demand, in legal tender of the United States of America, in same-day funds, without set-off or deduction or counterclaim, and will otherwise perform Borrower's obligations under the Note and Related Documents.  Under this Guaranty, Guarantor's liability is unlimited and Guarantor's obligations are continuing.

INDEBTEDNESS. The word "Indebtedness" as used in this Guaranty means all of the principal amount outstanding from time to time and at any one or more times, accrued unpaid interest thereon and all collection costs and legal expenses related thereto permitted by law, permissible fees, arising from any and all debts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired, that Borrower individually or collectively or interchangeably with others, owes or will owe Lender. "Indebtedness" includes, without limitation, loans, advances, debts, overdraft indebtedness, credit card indebtedness, lease obligations, liabilities and obligations under any interest rate protection agreements or foreign currency exchange agreements or commodity price protection agreements, other obligations, and liabilities of Borrower, or any one or more of them, and any present or future judgments against Borrower, or any one or more of them, future advances, loans or transactions that  renew,  extend, modify, refinance, consolidate or  substitute  these debts, liabilities and  obligations whether:  voluntarily or involuntarily incurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined; direct or indirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several or joint and several; evidenced by a negotiable or non-negotiable instrument or writing; originated by Lender or another or others; barred or unenforceable against Borrower for any reason whatsoever; for any transactions that may be voidable for any reason (such as infancy, insanity, ultra vires or otherwise); and originated then reduced or extinguished and then afterwards increased or reinstated.

If Lender presently holds one or more guaranties, or hereafter receives additional guaranties from Guarantor, Lender's rights under all guaranties shall be cumulative. This Guaranty shall not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties. Guarantor's liability will be Guarantor's aggregate liability under the terms of this Guaranty and any such other unterminated guaranties.

CONTINUING GUARANTY. THIS IS A "CONTINUING GUARANTY" UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL AND PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER, OR ANY ONE OR MORE OF THEM, TO LENDER, NOW EXISTING OR HEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTOR'S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTY FOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE A ZERO BALANCE FROM TIME TO TIME.

DURATION OF GUARANTY. This Guaranty will take effect when received by Lender without the necessity of any acceptance by Lender, or any notice to Guarantor or to Borrower, and will continue in full force until all the Indebtedness incurred or contracted before receipt by Lender of any notice of revocation shall have been fully and finally paid and satisfied and all of Guarantor's other obligations under this Guaranty shall have been performed in full. If Guarantor elects to revoke this  Guaranty, Guarantor may only do so in writing. Guarantor's written notice of revocation must be mailed to Lender, by certified mail, at Lender's address listed above or such other place as Lender may designate in writing. Written revocation of this Guaranty will apply only to new Indebtedness created after actual receipt by Lender of Guarantor's written revocation. For this purpose and  without limitation, the term "new Indebtedness" does not include the Indebtedness which at the  time of  notice  of revocation is contingent, unliquidated, undetermined or not due and which later becomes absolute, liquidated, determined or due. For this purpose and without limitation, "new Indebtedness" does not include all or part of the Indebtedness that is: incurred by Borrower prior to revocation; incurred under a commitment that became binding before revocation; any renewals, extensions, substitutions, and modifications of the Indebtedness. This Guaranty shall bind Guarantor's estate as to the Indebtedness created both before and after Guarantor's death or incapacity, regardless of Lender's actual notice of Guarantor's death. Subject to the foregoing, Guarantor's executor or administrator or other legal representative may terminate this Guaranty in the same manner in which Guarantor might have terminated it and with the same effect. Release of any other guarantor or termination of any other guaranty of the Indebtedness shall not affect the liability of Guarantor under this Guaranty. A revocation Lender receives from any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. It is anticipated that fluctuations may occur in the aggregate amount of the Indebtedness covered by this Guaranty, and Guarantor specifically acknowledges and agrees that reductions in the amount of the Indebtedness, even to zero dollars ($0.00), shall not constitute a termination of this Guaranty. This Guaranty is binding upon Guarantor and Guarantor's heirs, successors and assigns so long as any of the Indebtedness remains unpaid and even though the Indebtedness may from time to time be zero dollars ($0.00).

GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before or after any revocation hereof, without notice or demand and without lessening Guarantor's liability under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make one or more additional secured or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend additional credit to Borrower;  (B)  to alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of the Indebtedness or any part of the Indebtedness, including increases and decreases of the rate  of  interest  on  the Indebtedness; extensions may be repeated and may be for longer than the original loan term; (C)  to take and hold security for the payment of this Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any such security, with or without the substitution of new collateral; (D) to 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; (E) to determine how, when and what application of payments and credits shall be made on the Indebtedness; (F) to apply such security and direct the order or manner of sale thereof, including without limitation, any nonjudicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine; (G) to sell, transfer, assign or grant participations in all or any part of the Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part.

GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or agreements of any kind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty; (B) this Guaranty is executed at Borrower's request and not at the request of Lender;  (C)  Guarantor has full power, right and authority to enter into this Guaranty;

(D) the provisions of this Guaranty do not conflict with or result in a default under any agreement or other instrument binding upon Guarantor and do not result in a violation of any law, regulation, court decree or order applicable to Guarantor; (E)  Guarantor has not and will not, without the prior written consent of Lender, sell,  lease, assign, encumber, hypothecate, transfer, or otherwise dispose of all or substantially all  of Guarantor's assets, or any interest therein; (F) upon Lender's request, Guarantor will provide to Lender financial and credit information in form acceptable to Lender, and all such financial information which currently has been, and all future financial information which will be provided to Lender is and will be true and correct in all material respects and fairly present Guarantor's financial condition as of the dates the financial information is provided; (G) no material adverse change has occurred in Guarantor's financial condition since the date of the most recent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor's financial condition;   (H) no litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending or threatened; (I) Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has established adequate means of obtaining from Borrower on a continuing basis information regarding Borrower's financial condition. Guarantor agrees to keep adequately informed from such means of any facts, events, or circumstances which might in any way affect Guarantor's risks under this Guaranty, and Guarantor further agrees that, absent a request for information, Lender shall have no obligation to disclose to Guarantor any information or documents acquired by Lender in the course of  its relationship with Borrower.

GUARANTOR'S FINANCIAL STATEMENTS. Guarantor agrees to furnish Lender with the following:

Tax Returns. As soon as available, but in no event later than sixty (60) days after the applicable filing date for the tax reporting period ended, Guarantor's Federal and other governmental tax returns, prepared by a professional accountant satisfactory to Lender.

All financial reports required to be provided under this Guaranty shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Guarantor as being true and correct.

GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender (A) to continue lending money or to extend other credit to Borrower; (B) to make any presentment, protest, demand, or notice of any kind, including notice of any nonpayment of the Indebtedness or of any nonpayment related to any collateral, or notice of any action or nonaction on the part of Borrower, Lender, any surety, endorser, or other guarantor in connection with the Indebtedness or in connection with the creation of new or additional loans or obligations;  (C)  to resort for payment or to proceed directly or at once against any person, including Borrower or any other guarantor;

(D) to proceed directly against or exhaust any collateral held by Lender from Borrower, any other guarantor, or any other person; (E) to give notice of the terms, time, and place of any public or private sale of personal property security held by Lender from Borrower or to comply with any other applicable provisions of the Uniform Commercial Code; (F) to pursue any other remedy within Lender's power; or (G) to commit any act or omission of any kind, or at any time, with respect to any matter whatsoever.

Guarantor also waives any and all rights or defenses based on suretyship or impairment of collateral including, but not limited to, any rights or defenses arising by reason of (A) any "one action" or "anti-deficiency" law or any other law which may prevent Lender from bringing any action, including a claim for deficiency, against Guarantor, before or after Lender's commencement or completion of any foreclosure action, either judicially or by exercise of a power of sale; (B) any election of remedies by Lender which destroys or otherwise adversely affects Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower for reimbursement, including without limitation, any loss of rights Guarantor may suffer by reason of any law limiting, qualifying, or discharging the Indebtedness; (C) any disability or other defense of Borrower, of any other guarantor, or of any other person, or by reason of the cessation of Borrower's liability from any cause whatsoever, other than payment in full in legal tender, of the Indebtedness; (D) any right to claim discharge of the Indebtedness on the basis of unjustified impairment of any collateral for the Indebtedness; (E) any statute of limitations, if at any time any action or suit brought by Lender against Guarantor is commenced, there is outstanding Indebtedness which is not barred by any applicable statute of limitations; or (F) any defenses given to guarantors at law or in equity other than actual payment and performance of the Indebtedness. If payment is made by Borrower, whether voluntarily or otherwise, or by any third party, on the Indebtedness and thereafter Lender is forced to remit the amount of that payment to Borrower's trustee in bankruptcy or to any similar person under any federal or state bankruptcy law or law for the relief of debtors, the Indebtedness shall be considered unpaid for the purpose of the enforcement of this Guaranty.

Guarantor further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any claim of setoff, counterclaim, counter demand, recoupment or similar right, whether such claim, demand or right may be asserted by the Borrower, the Guarantor, or both.

GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees that each of the waivers set forth above is made with Guarantor's full knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law. If any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the extent permitted by law or public policy.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Guarantor's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Guarantor holds jointly with someone else and all accounts Guarantor 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. Guarantor authorizes Lender, to the extent permitted by applicable law, to hold these funds if there is a default, and Lender may apply the funds in these accounts to pay what Guarantor owes under the terms of this Guaranty.

SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the Indebtedness, whether now existing or hereafter created, shall be superior to any claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby expressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Lender may now or hereafter have against Borrower. In the event of insolvency and consequent liquidation of the assets of Borrower, through bankruptcy, by an assignment for the benefit of creditors, by voluntary liquidation, or otherwise, the assets of Borrower applicable to the payment of the claims of both Lender and Guarantor shall be paid to Lender and shall be first applied by Lender to the Indebtedness. Guarantor does hereby assign to Lender all claims which it may have or acquire against Borrower or against any assignee or trustee in bankruptcy of Borrower; provided however, that such assignment shall be effective only for the purpose of assuring to Lender full payment in legal tender of the Indebtedness. If Lender so requests, any notes or credit agreements now or hereafter evidencing any debts or obligations of Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to file financing statements and continuation statements and to execute documents and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights under this Guaranty.

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

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

Expenses. If Lender institutes any suit or action to enforce any of the terms of this Guaranty, Lender shall be entitled to recover such sum

COMMERCIAL GUARANTY

(Continued) Page 3

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, to the extent permitted by applicable law. Guarantor also will pay any court costs, in addition to all other sums provided by law.

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

Governing Law. This Guaranty 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.

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

Integration. Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the opportunity to be advised by Guarantor's attorney with respect to this Guaranty; the Guaranty fully reflects Guarantor's intentions and parol evidence is not required to interpret the terms of this Guaranty. Guarantor hereby indemnifies and holds Lender harmless from all losses, claims, damages, and costs (including Lender's attorneys' fees) suffered or incurred by Lender as a result of any breach by Guarantor of the warranties, representations and agreements of this paragraph.

Interpretation. In all cases where there is more than one Borrower or Guarantor, then all words used in this Guaranty in the singular shall be deemed to have been used in the plural where the context and construction so require; and where there is more than one Borrower named in this Guaranty or when this Guaranty is executed by more than one Guarantor, the  words  "Borrower"  and  "Guarantor" respectively shall mean all and any one or more of them. The words "Guarantor," "Borrower," and "Lender" include the heirs, successors, assigns, and transferees of each of them. If a court finds that any provision of this Guaranty is not valid or should not be enforced, that fact by itself will not mean that the rest of this Guaranty will not be valid or enforced. Therefore, a court will enforce the rest of the provisions of this Guaranty even if a provision of this Guaranty may be found to be invalid or unenforceable. If any one or more of Borrower or Guarantor are corporations, partnerships, limited liability companies, or similar entities, it is not necessary for Lender to inquire into the powers of Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on their behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Guaranty.

Notices. Any notice required to be given under this Guaranty shall be given in writing, and, except for revocation notices by Guarantor, 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 Guaranty. All revocation notices by Guarantor shall be in writing and shall be effective upon delivery to Lender as provided in the section of this Guaranty entitled "DURATION OF GUARANTY." Any party may change its address for notices under this Guaranty 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, Guarantor agrees to keep Lender informed at all times of Guarantor's current address.  Unless otherwise provided or required by law, if there is more than one Guarantor, any notice given by Lender to any Guarantor is deemed to be notice given to all Guarantors.

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Guaranty 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 Guaranty 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 Guaranty. No prior waiver by Lender, nor any course of dealing between Lender and Guarantor, shall constitute a waiver of any of Lender's rights or of any of Guarantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Guaranty, 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.

Successors and Assigns. Subject to any limitations stated in this Guaranty on transfer of Guarantor's interest, this Guaranty shall be binding upon and inure to the benefit of the parties, their successors and assigns.

Waive Jury. Lender and Guarantor hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Guarantor against the other.

DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Guaranty. 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 Guaranty shall have the meanings attributed to such terms in the Uniform Commercial Code:

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

GAAP.  The word "GAAP" means generally accepted accounting principles.

Guarantor.  The word "Guarantor" means everyone signing this Guaranty, including without limitation Lodging Fund REIT III TRS, Inc., and in each case, any signer's successors and assigns.

Guaranty.  The word "Guaranty" means this guaranty from Guarantor to Lender.

Indebtedness.  The word "Indebtedness" means Borrower's indebtedness to Lender as more particularly described in this Guaranty.

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

Note. The word "Note" means and includes without limitation all of Borrower's promissory notes and/or credit agreements evidencing Borrower's loan obligations in favor of Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of and substitutions for promissory notes or credit agreements.

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.

EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY". NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE.  THIS GUARANTY IS DATED JUNE 19, 2019.

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

LaserPro, Ver. 19.4.10.036  Copr. Finastra USA Corporation 1997, 2020.   All Rights Reserved.   - ND  C:\LASERPRO\CFI\LPL\E20.FC  TR-3942  PR-8

COMMERCIAL GUARANTY

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
Guarantor:	Lodging Fund REIT III OP, LP
1635 43rd Street South, Suite 205
Fargo, ND  58103

CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and unconditionally guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower, or any one or more of them, to Lender, and the performance and discharge of all Borrower's obligations under the Note and the Related Documents. This is a guaranty of payment and performance and not of collection, so Lender can enforce this Guaranty against Guarantor even when Lender has not exhausted Lender's remedies against anyone else obligated to pay the Indebtedness or against any collateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor will make any payments to Lender or its order, on demand, in legal tender of the United States of America, in same-day funds, without set-off or deduction or counterclaim, and will otherwise perform Borrower's obligations under the Note and Related Documents.  Under this Guaranty, Guarantor's liability is unlimited and Guarantor's obligations are continuing.

INDEBTEDNESS. The word "Indebtedness" as used in this Guaranty means all of the principal amount outstanding from time to time and at any one or more times, accrued unpaid interest thereon and all collection costs and legal expenses related thereto permitted by law, permissible fees, arising from any and all debts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired, that Borrower individually or collectively or interchangeably with others, owes or will owe Lender. "Indebtedness" includes, without limitation, loans, advances, debts, overdraft indebtedness, credit card indebtedness, lease obligations, liabilities and obligations under any interest rate protection agreements or foreign currency exchange agreements or commodity price protection agreements, other obligations, and liabilities of Borrower, or any one or more of them, and any present or future judgments against Borrower, or any one or more of them, future advances, loans or transactions that  renew,  extend, modify, refinance, consolidate or  substitute  these debts, liabilities and  obligations whether:  voluntarily or involuntarily incurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined; direct or indirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several or joint and several; evidenced by a negotiable or non-negotiable instrument or writing; originated by Lender or another or others; barred or unenforceable against Borrower for any reason whatsoever; for any transactions that may be voidable for any reason (such as infancy, insanity, ultra vires or otherwise); and originated then reduced or extinguished and then afterwards increased or reinstated.

If Lender presently holds one or more guaranties, or hereafter receives additional guaranties from Guarantor, Lender's rights under all guaranties shall be cumulative. This Guaranty shall not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties. Guarantor's liability will be Guarantor's aggregate liability under the terms of this Guaranty and any such other unterminated guaranties.

CONTINUING GUARANTY. THIS IS A "CONTINUING GUARANTY" UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL AND PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER, OR ANY ONE OR MORE OF THEM, TO LENDER, NOW EXISTING OR HEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTOR'S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTY FOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE A ZERO BALANCE FROM TIME TO TIME.

DURATION OF GUARANTY. This Guaranty will take effect when received by Lender without the necessity of any acceptance by Lender, or any notice to Guarantor or to Borrower, and will continue in full force until all the Indebtedness incurred or contracted before receipt by Lender of any notice of revocation shall have been fully and finally paid and satisfied and all of Guarantor's other obligations under this Guaranty shall have been performed in full. If Guarantor elects to revoke this  Guaranty, Guarantor may only do so in writing. Guarantor's written notice of revocation must be mailed to Lender, by certified mail, at Lender's address listed above or such other place as Lender may designate in writing. Written revocation of this Guaranty will apply only to new Indebtedness created after actual receipt by Lender of Guarantor's written revocation. For this purpose and  without limitation, the term "new Indebtedness" does not include the Indebtedness which at the  time of  notice  of revocation is contingent, unliquidated, undetermined or not due and which later becomes absolute, liquidated, determined or due. For this purpose and without limitation, "new Indebtedness" does not include all or part of the Indebtedness that is: incurred by Borrower prior to revocation; incurred under a commitment that became binding before revocation; any renewals, extensions, substitutions, and modifications of the Indebtedness. This Guaranty shall bind Guarantor's estate as to the Indebtedness created both before and after Guarantor's death or incapacity, regardless of Lender's actual notice of Guarantor's death. Subject to the foregoing, Guarantor's executor or administrator or other legal representative may terminate this Guaranty in the same manner in which Guarantor might have terminated it and with the same effect. Release of any other guarantor or termination of any other guaranty of the Indebtedness shall not affect the liability of Guarantor under this Guaranty. A revocation Lender receives from any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. It is anticipated that fluctuations may occur in the aggregate amount of the Indebtedness covered by this Guaranty, and Guarantor specifically acknowledges and agrees that reductions in the amount of the Indebtedness, even to zero dollars ($0.00), shall not constitute a termination of this Guaranty. This Guaranty is binding upon Guarantor and Guarantor's heirs, successors and assigns so long as any of the Indebtedness remains unpaid and even though the Indebtedness may from time to time be zero dollars ($0.00).

GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before or after any revocation hereof, without notice or demand and without lessening Guarantor's liability under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make one or more additional secured or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend additional credit to Borrower;  (B)  to alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of the Indebtedness or any part of the Indebtedness, including increases and decreases of the rate  of  interest  on  the Indebtedness; extensions may be repeated and may be for longer than the original loan term; (C)  to take and hold security for the payment of this Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any such security, with or without the substitution of new collateral; (D) to 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; (E) to determine how, when and what application of payments and credits shall be made on the Indebtedness; (F) to apply such security and direct the order or manner of sale thereof, including without limitation, any nonjudicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine; (G) to sell, transfer, assign or grant participations in all or any part of the Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part.

GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or agreements of any kind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty; (B) this Guaranty is executed at Borrower's request and not at the request of Lender;  (C)  Guarantor has full power, right and authority to enter into this Guaranty;

(D) the provisions of this Guaranty do not conflict with or result in a default under any agreement or other instrument binding upon Guarantor and do not result in a violation of any law, regulation, court decree or order applicable to Guarantor; (E)  Guarantor has not and will not, without the prior written consent of Lender, sell,  lease, assign, encumber, hypothecate, transfer, or otherwise dispose of all or substantially all  of Guarantor's assets, or any interest therein; (F) upon Lender's request, Guarantor will provide to Lender financial and credit information in form acceptable to Lender, and all such financial information which currently has been, and all future financial information which will be provided to Lender is and will be true and correct in all material respects and fairly present Guarantor's financial condition as of the dates the financial information is provided; (G) no material adverse change has occurred in Guarantor's financial condition since the date of the most recent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor's financial condition;   (H) no litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending or threatened; (I) Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has established adequate means of obtaining from Borrower on a continuing basis information regarding Borrower's financial condition. Guarantor agrees to keep adequately informed from such means of any facts, events, or circumstances which might in any way affect Guarantor's risks under this Guaranty, and Guarantor further agrees that, absent a request for information, Lender shall have no obligation to disclose to Guarantor any information or documents acquired by Lender in the course of  its relationship with Borrower.

GUARANTOR'S FINANCIAL STATEMENTS. Guarantor agrees to furnish Lender with the following:

Tax Returns. As soon as available, but in no event later than sixty (60) days after the applicable filing date for the tax reporting period ended, Guarantor's Federal and other governmental tax returns, prepared by a professional accountant satisfactory to Lender.

All financial reports required to be provided under this Guaranty shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Guarantor as being true and correct.

GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender (A) to continue lending money or to extend other credit to Borrower; (B) to make any presentment, protest, demand, or notice of any kind, including notice of any nonpayment of the Indebtedness or of any nonpayment related to any collateral, or notice of any action or nonaction on the part of Borrower, Lender, any surety, endorser, or other guarantor in connection with the Indebtedness or in connection with the creation of new or additional loans or obligations;  (C)  to resort for payment or to proceed directly or at once against any person, including Borrower or any other guarantor;

(D)     to proceed directly against or exhaust any collateral held by Lender from Borrower, any other guarantor, or any other person; (E) to give notice of the terms, time, and place of any public or private sale of personal property security held by Lender from Borrower or to comply with any other applicable provisions of the Uniform Commercial Code; (F) to pursue any other remedy within Lender's power; or (G) to commit any act or omission of any kind, or at any time, with respect to any matter whatsoever.

Guarantor also waives any and all rights or defenses based on suretyship or impairment of collateral including, but not limited to, any rights or defenses arising by reason of (A) any "one action" or "anti-deficiency" law or any other law which may prevent Lender from bringing any action, including a claim for deficiency, against Guarantor, before or after Lender's commencement or completion of any foreclosure action, either judicially or by exercise of a power of sale; (B) any election of remedies by Lender which destroys or otherwise adversely affects Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower for reimbursement, including without limitation, any loss of rights Guarantor may suffer by reason of any law limiting, qualifying, or discharging the Indebtedness; (C) any disability or other defense of Borrower, of any other guarantor, or of any other person, or by reason of the cessation of Borrower's liability from any cause whatsoever, other than payment in full in legal tender, of the Indebtedness; (D) any right to claim discharge of the Indebtedness on the basis of unjustified impairment of any collateral for the Indebtedness; (E) any statute of limitations, if at any time any action or suit brought by Lender against Guarantor is commenced, there is outstanding Indebtedness which is not barred by any applicable statute of limitations; or (F) any defenses given to guarantors at law or in equity other than actual payment and performance of the Indebtedness. If payment is made by Borrower, whether voluntarily or otherwise, or by any third party, on the Indebtedness and thereafter Lender is forced to remit the amount of that payment to Borrower's trustee in bankruptcy or to any similar person under any federal or state bankruptcy law or law for the relief of debtors, the Indebtedness shall be considered unpaid for the purpose of the enforcement of this Guaranty.

Guarantor further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any claim of setoff, counterclaim, counter demand, recoupment or similar right, whether such claim, demand or right may be asserted by the Borrower, the Guarantor, or both.

GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees that each of the waivers set forth above is made with Guarantor's full knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law. If any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the extent permitted by law or public policy.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Guarantor's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Guarantor holds jointly with someone else and all accounts Guarantor 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. Guarantor authorizes Lender, to the extent permitted by applicable law, to hold these funds if there is a default, and Lender may apply the funds in these accounts to pay what Guarantor owes under the terms of this Guaranty.

SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the Indebtedness, whether now existing or hereafter created, shall be superior to any claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby expressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Lender may now or hereafter have against Borrower. In the event of insolvency and consequent liquidation of the assets of Borrower, through bankruptcy, by an assignment for the benefit of creditors, by voluntary liquidation, or otherwise, the assets of Borrower applicable to the payment of the claims of both Lender and Guarantor shall be paid to Lender and shall be first applied by Lender to the Indebtedness. Guarantor does hereby assign to Lender all claims which it may have or acquire against Borrower or against any assignee or trustee in bankruptcy of Borrower; provided however, that such assignment shall be effective only for the purpose of assuring to Lender full payment in legal tender of the Indebtedness. If Lender so requests, any notes or credit agreements now or hereafter evidencing any debts or obligations of Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to file financing statements and continuation statements and to execute documents and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights under this Guaranty.

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

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

Expenses. If Lender institutes any suit or action to enforce any of the terms of this Guaranty, Lender shall be entitled to recover such sum

COMMERCIAL GUARANTY

(Continued) Page 3

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, to the extent permitted by applicable law. Guarantor also will pay any court costs, in addition to all other sums provided by law.

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

Governing Law. This Guaranty 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.

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

Integration. Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the opportunity to be advised by Guarantor's attorney with respect to this Guaranty; the Guaranty fully reflects Guarantor's intentions and parol evidence is not required to interpret the terms of this Guaranty. Guarantor hereby indemnifies and holds Lender harmless from all losses, claims, damages, and costs (including Lender's attorneys' fees) suffered or incurred by Lender as a result of any breach by Guarantor of the warranties, representations and agreements of this paragraph.

Interpretation. In all cases where there is more than one Borrower or Guarantor, then all words used in this Guaranty in the singular shall be deemed to have been used in the plural where the context and construction so require; and where there is more than one Borrower named in this Guaranty or when this Guaranty is executed by more than one Guarantor, the  words  "Borrower"  and  "Guarantor" respectively shall mean all and any one or more of them. The words "Guarantor," "Borrower," and "Lender" include the heirs, successors, assigns, and transferees of each of them. If a court finds that any provision of this Guaranty is not valid or should not be enforced, that fact by itself will not mean that the rest of this Guaranty will not be valid or enforced. Therefore, a court will enforce the rest of the provisions of this Guaranty even if a provision of this Guaranty may be found to be invalid or unenforceable. If any one or more of Borrower or Guarantor are corporations, partnerships, limited liability companies, or similar entities, it is not necessary for Lender to inquire into the powers of Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on their behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Guaranty.

Notices. Any notice required to be given under this Guaranty shall be given in writing, and, except for revocation notices by Guarantor, 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 Guaranty. All revocation notices by Guarantor shall be in writing and shall be effective upon delivery to Lender as provided in the section of this Guaranty entitled "DURATION OF GUARANTY." Any party may change its address for notices under this Guaranty 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, Guarantor agrees to keep Lender informed at all times of Guarantor's current address.  Unless otherwise provided or required by law, if there is more than one Guarantor, any notice given by Lender to any Guarantor is deemed to be notice given to all Guarantors.

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Guaranty 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 Guaranty 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 Guaranty. No prior waiver by Lender, nor any course of dealing between Lender and Guarantor, shall constitute a waiver of any of Lender's rights or of any of Guarantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Guaranty, 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.

Successors and Assigns. Subject to any limitations stated in this Guaranty on transfer of Guarantor's interest, this Guaranty shall be binding upon and inure to the benefit of the parties, their successors and assigns.

Waive Jury. Lender and Guarantor hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Guarantor against the other.

DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Guaranty. 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 Guaranty shall have the meanings attributed to such terms in the Uniform Commercial Code:

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

GAAP.  The word "GAAP" means generally accepted accounting principles.

Guarantor. The word "Guarantor" means everyone signing this Guaranty, including without limitation Lodging Fund REIT III OP, LP, and in each case, any signer's successors and assigns.

Guaranty.  The word "Guaranty" means this guaranty from Guarantor to Lender.

Indebtedness.  The word "Indebtedness" means Borrower's indebtedness to Lender as more particularly described in this Guaranty.

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

Note. The word "Note" means and includes without limitation all of Borrower's promissory notes and/or credit agreements evidencing Borrower's loan obligations in favor of Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of and substitutions for promissory notes or credit agreements.

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.

EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY". NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE.  THIS GUARANTY IS DATED JUNE 19, 2019.

GUARANTOR:
LODGING FUND REIT III OP, LP
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.

LaserPro, Ver. 19.4.10.036  Copr. Finastra USA Corporation 1997, 2020.   All Rights Reserved.   - ND  C:\LASERPRO\CFI\LPL\E20.FC  TR-3942  PR-8

EX-10.56.13

Ex_10.56.13

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

Grantor:                  LF3 Eagan TRS, LLC

1635 43rd Street South, Suite 205

Fargo, ND  58103

INSURANCE REQUIREMENTS. Grantor, LF3 Eagan TRS, LLC ("Grantor"), understands that insurance coverage is required in connection with the extending of a loan or the providing of other financial accommodations to LF3 Eagan, LLC; and LF3 Eagan TRS, LLC ("Borrower") by Lender. These requirements are set forth in the security documents for the loan. The following minimum insurance coverages must be provided on the following described collateral (the "Collateral"):

Collateral: 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..

Type:  All risks, including fire, theft and liability.

Amount:  Full Insurable Value.

Basis: Replacement value.

Endorsements:   Lender loss payable  clause with stipulation that coverage will not be  cancelled or diminished without a minimum of 30 days prior written notice to Lender.

Latest Delivery Date: By the loan closing date.

INSURANCE COMPANY. Grantor may obtain insurance from any insurance company Grantor may choose that is reasonably acceptable to Lender.  Grantor understands that credit may not be denied solely because insurance was not purchased through Lender.

FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Lender, on the latest delivery date stated above, proof of the required insurance as provided above, with an effective date of June 19, 2019, or earlier. Grantor acknowledges and agrees that if Grantor fails to provide any required insurance or fails to continue such insurance in force, Lender may do so at Grantor's expense as provided in the applicable security document. The cost of any such insurance, at the option of Lender, shall be added to the indebtedness as provided in the security document. GRANTOR ACKNOWLEDGES THAT IF LENDER SO PURCHASES ANY SUCH INSURANCE, THE INSURANCE WILL PROVIDE LIMITED PROTECTION AGAINST PHYSICAL DAMAGE TO THE COLLATERAL, UP TO AN AMOUNT EQUAL TO THE LESSER OF (1) THE UNPAID BALANCE OF THE DEBT, EXCLUDING ANY UNEARNED FINANCE CHARGES, OR (2) THE VALUE OF THE COLLATERAL; HOWEVER, GRANTOR'S EQUITY IN THE COLLATERAL MAY NOT BE INSURED. IN ADDITION, THE INSURANCE MAY NOT PROVIDE ANY PUBLIC LIABILITY OR PROPERTY DAMAGE INDEMNIFICATION AND MAY NOT MEET THE REQUIREMENTS OF ANY FINANCIAL RESPONSIBILITY LAWS.

AUTHORIZATION. For purposes of insurance coverage on the Collateral, Grantor authorizes Lender to provide to any person (including any insurance agent or company) all information Lender deems appropriate, whether regarding the Collateral, the loan or other financial accommodations, or both.

GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO PROVIDE INSURANCE AND AGREES TO ITS TERMS.  THIS AGREEMENT IS DATED JUNE 19, 2019.

GRANTOR:

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.

FOR LENDER USE ONLY

INSURANCE VERIFICATION

PHONE  (952) 941-9418

DATE:

AGENT'S NAME: Laura Sutherland

AGENCY: Ross Nesbit Agencies, Inc.

ADDRESS: 5900 Rowland Road, Minnetonka, MN 55343

INSURANCE COMPANY:

POLICY NUMBER:

EFFECTIVE DATES:

COMMENTS:

LaserPro, Ver. 19.4.10.036  Copr. Finastra USA Corporation 1997, 2020.     All Rights Reserved.   - ND  C:\LASERPRO\CFI\LPL\I10.FC  TR-3942  PR-8

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

Grantor:                  LF3 Eagan, LLC

1635 43rd Street South, Suite 205

Fargo, ND  58103

INSURANCE REQUIREMENTS. Grantor, LF3 Eagan, LLC ("Grantor"), understands that insurance coverage is required in connection with the extending of a loan or the providing of other financial accommodations to LF3 Eagan, LLC; and LF3 Eagan TRS, LLC ("Borrower") by Lender. These requirements are set forth in the security documents for the loan. The following minimum insurance coverages must be provided on the following described collateral (the "Collateral"):

Collateral:     3000 Eagandale Place, Eagan, MN  55121.

Type:  Fire and extended coverage.

Amount:  Full Insurable Value.

Basis: Replacement value.

Endorsements: Standard mortgagee's clause with stipulation that coverage will not be cancelled or diminished without a minimum of 30 days prior written notice to Lender, and without disclaimer of the insurer's liability for failure to give such notice.

Latest Delivery Date: By the loan closing date.

INSURANCE COMPANY. Grantor may obtain insurance from any insurance company Grantor may choose that is reasonably acceptable to Lender.  Grantor understands that credit may not be denied solely because insurance was not purchased through Lender.

FLOOD INSURANCE. Flood Insurance for the Collateral securing this loan is described as follows:

Real Estate at 3000 Eagandale Place, Eagan, MN  55121.

Should the Collateral at any time be deemed to 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.

FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Lender, on the latest delivery date stated above, evidence of the required insurance as provided above, with an effective date of June 19, 2019, or earlier. Grantor acknowledges and agrees that if Grantor fails to provide any required insurance or fails to continue such insurance in force, Lender may do so at Grantor's expense as provided in the applicable security document. The cost of any such insurance, at the option of Lender, shall be added to the indebtedness as provided in the security document. GRANTOR ACKNOWLEDGES THAT IF LENDER SO PURCHASES ANY SUCH INSURANCE, THE INSURANCE WILL PROVIDE LIMITED PROTECTION AGAINST PHYSICAL DAMAGE TO THE COLLATERAL, UP TO AN AMOUNT EQUAL TO THE LESSER OF (1) THE UNPAID BALANCE OF THE DEBT, EXCLUDING ANY UNEARNED FINANCE CHARGES, OR (2) THE VALUE OF THE COLLATERAL; HOWEVER, GRANTOR'S EQUITY IN THE COLLATERAL MAY NOT BE INSURED. IN ADDITION, THE INSURANCE MAY NOT PROVIDE ANY PUBLIC LIABILITY OR PROPERTY DAMAGE INDEMNIFICATION AND MAY NOT MEET THE REQUIREMENTS OF ANY FINANCIAL RESPONSIBILITY LAWS.

AUTHORIZATION. For purposes of insurance coverage on the Collateral, Grantor authorizes Lender to provide to any person (including any insurance agent or company) all information Lender deems appropriate, whether regarding the Collateral, the loan or other financial accommodations, or both.

GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO PROVIDE INSURANCE AND AGREES TO ITS TERMS.  THIS AGREEMENT IS DATED JUNE 19, 2019.

GRANTOR:

LF3 EAGAN, LLC

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

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

By: /s/ Katie Cox

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

FOR LENDER USE ONLY

INSURANCE VERIFICATION

PHONE  (952) 941-9418

DATE:

AGENT'S NAME: Laura Sutherland

AGENCY: Ross Nesbit Agencies, Inc.

ADDRESS: 5900 Rowland Road, Minnetonka, MN 55343

INSURANCE COMPANY:

POLICY NUMBER:

EFFECTIVE DATES:

COMMENTS:

LaserPro, Ver. 19.4.10.036  Copr. Finastra USA Corporation 1997, 2020.   All Rights Reserved.   - ND  C:\LASERPRO\CFI\LPL\I10.FC  TR-3942  PR-8

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.

Grantor:                  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

INSURANCE REQUIREMENTS. Grantor, LF3 Eagan, LLC; and LF3 Eagan TRS, LLC ("Grantor"), understands that insurance coverage is required in connection with the extending of a loan or the providing of other financial accommodations to Grantor by Lender. These requirements are set forth in the security documents for the loan. The following minimum insurance coverages must be provided on the following described collateral (the  "Collateral"):

Collateral:     All Fixtures at 3000 Eagandale Place, Eagan, MN  55121.

Type:  All risks, including fire, theft and liability.

Amount:  Full Insurable Value.

Basis: Replacement value.

Endorsements:   Lender loss payable  clause with stipulation that coverage will not be  cancelled or diminished without a minimum of 30 days prior written notice to Lender.

Latest Delivery Date: By the loan closing date.

Collateral:     All Inventory, Equipment, Timber and Minerals, Oil and Gas.

Type:  All risks, including fire, theft and liability.

Amount:  Full Insurable Value.

Basis: Replacement value.

Endorsements:   Lender loss payable  clause with stipulation that coverage will not be  cancelled or diminished without a minimum of 30 days prior written notice to Lender.

Latest Delivery Date: By the loan closing date.

INSURANCE COMPANY. Grantor may obtain insurance from any insurance company Grantor may choose that is reasonably acceptable to Lender.  Grantor understands that credit may not be denied solely because insurance was not purchased through Lender.

FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Lender, on the latest delivery date stated above, proof of the required insurance as provided above, with an effective date of June 19, 2019, or earlier. Grantor acknowledges and agrees that if Grantor fails to provide any required insurance or fails to continue such insurance in force, Lender may do so at Grantor's expense as provided in the applicable security document. The cost of any such insurance, at the option of Lender, shall be added to the indebtedness as provided in the security document. GRANTOR ACKNOWLEDGES THAT IF LENDER SO PURCHASES ANY SUCH INSURANCE, THE INSURANCE WILL PROVIDE LIMITED PROTECTION AGAINST PHYSICAL DAMAGE TO THE COLLATERAL, UP TO AN AMOUNT EQUAL TO THE LESSER OF (1) THE UNPAID BALANCE OF THE DEBT, EXCLUDING ANY UNEARNED FINANCE CHARGES, OR (2) THE VALUE OF THE COLLATERAL; HOWEVER, GRANTOR'S EQUITY IN THE COLLATERAL MAY NOT BE INSURED. IN ADDITION, THE INSURANCE MAY NOT PROVIDE ANY PUBLIC LIABILITY OR PROPERTY DAMAGE INDEMNIFICATION AND MAY NOT MEET THE REQUIREMENTS OF ANY FINANCIAL RESPONSIBILITY LAWS.

AUTHORIZATION. For purposes of insurance coverage on the Collateral, Grantor authorizes Lender to provide to any person (including any insurance agent or company) all information Lender deems appropriate, whether regarding the Collateral, the loan or other financial accommodations, or both.

GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO PROVIDE INSURANCE AND AGREES TO ITS TERMS.  THIS AGREEMENT IS DATED JUNE 19, 2019.

GRANTOR:

LF3 EAGAN, LLC

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

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

By: /s/ Katie Cox

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

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.

FOR LENDER USE ONLY INSURANCE VERIFICATION
DATE:	PHONE  (952) 941-9418
AGENT'S NAME: Laura Sutherland
AGENCY: Ross Nesbit Agencies, Inc.
ADDRESS: 5900 Rowland Road, Minnetonka, MN 55343
INSURANCE COMPANY:
POLICY NUMBER:
EFFECTIVE DATES:
COMMENTS:

FOR LENDER USE ONLY INSURANCE VERIFICATION
DATE:	PHONE  (952) 941-9418
AGENT'S NAME: Laura Sutherland
AGENCY: Ross Nesbit Agencies, Inc.
ADDRESS: 5900 Rowland Road, Minnetonka, MN 55343
INSURANCE COMPANY:
POLICY NUMBER:
EFFECTIVE DATES:
COMMENTS:

LaserPro, Ver. 19.4.10.036  Copr. Finastra USA Corporation 1997, 2020.   All Rights Reserved.   - ND  C:\LASERPRO\CFI\LPL\I10.FC  TR-3942  PR-8

Principal	Loan Date 06-19-2019	Maturity	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

Grantor:                  LF3 Eagan, LLC

1635 43rd Street South, Suite 205

Fargo, ND  58103

TO:

DATE:  June 19, 2019

Ross Nesbit Agencies, Inc.

ATTN: Laura Sutherland 5900

Rowland Road

Minnetonka, MN  55343

RE:                          Policy Number(s):

Insurance Companies/Company:

Dear Laura Sutherland:

LF3 Eagan, LLC; and LF3 Eagan TRS, LLC ("Borrower"), are obtaining a loan from Western State Bank. Please send appropriate evidence of insurance to Western State Bank, together with the requested endorsements, on the following property, which Grantor, LF3 Eagan, LLC ("Grantor") is giving as security for the loan.

Collateral:      3000 Eagandale Place, Eagan, MN  55121.

Type:  Fire and extended coverage.

Amount:  Full Insurable Value.

Basis: Replacement value.

Endorsements: Standard mortgagee's clause with stipulation that coverage will not be cancelled or diminished without a minimum of 30 days prior written notice to Lender, and without disclaimer of the insurer's liability for failure to give such notice.

Latest Delivery Date: By the loan closing date.

GRANTOR:

LF3 EAGAN, LLC

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

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

By: /s/ Katie Cox

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

RETURN TO:

West Fargo

P.O. Box 617 755

13th Ave E

West Fargo, ND  58078

LaserPro,   Ver.   19.4.10.036       Copr.   Finastra   USA   Corporation   1997,   2020.                                                                                                                                                                                                                                                                                                                                                                                                                  All   Rights  Reserved. -   ND C:\LASERPRO\CFI\LPL\I11.FC TR-3942 PR-8

Principal	Loan Date 06-19-2019	Maturity	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.

Grantor:                  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

TO:

DATE:  June 19, 2019

Ross Nesbit Agencies, Inc.

ATTN: Laura Sutherland 5900

Rowland Road

Minnetonka, MN  55343

RE:                          Policy Number(s):

Insurance Companies/Company:

Dear Laura Sutherland:

Grantor, LF3 Eagan, LLC; and LF3 Eagan TRS, LLC ("Grantor") is obtaining a loan from Western State Bank.  Please send appropriate evidence of insurance to Western State Bank, together with the requested endorsements, on the following property, which Grantor is giving as security for the loan.

Collateral:     All Fixtures at 3000 Eagandale Place, Eagan, MN  55121.

Type:  All risks, including fire, theft and liability.

Amount:  Full Insurable Value.

Basis: Replacement value.

Endorsements:   Lender loss payable  clause with stipulation that coverage will not be  cancelled or diminished without a minimum of 30 days prior written notice to Lender.

Latest Delivery Date: By the loan closing date.

RETURN TO:

West Fargo

P.O. Box 617 755

13th Ave E

West Fargo, ND  58078

LaserPro,   Ver.   19.4.10.036       Copr.   Finastra   USA   Corporation   1997,   2020.                                                                                                                                                                                                                                                                                                                                                                                                                  All   Rights  Reserved. -   ND C:\LASERPRO\CFI\LPL\I11.FC TR-3942 PR-8

NOTICE OF INSURANCE REQUIREMENTS

(Continued)

GRANTOR:

LF3 EAGAN, LLC

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

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

By: /s/ Katie Cox

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

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.

Principal	Loan Date 06-19-2019	Maturity	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

Grantor:                  LF3 Eagan TRS, LLC

1635 43rd Street South, Suite 205

Fargo, ND  58103

DATE:  June 19, 2019

TO:

Ross Nesbit Agencies, Inc.

ATTN: Laura Sutherland 5900

Rowland Road

Minnetonka, MN  55343

RE:                          Policy Number(s):

Insurance Companies/Company:

Dear Laura Sutherland:

LF3 Eagan, LLC; and LF3 Eagan TRS, LLC ("Borrower"), are obtaining a loan from Western State Bank. Please send appropriate evidence of insurance to Western State Bank, together with the requested endorsements, on the following property, which Grantor, LF3 Eagan TRS, LLC ("Grantor") is giving as security for the loan.

Collateral: 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..

Type:  All risks, including fire, theft and liability.

Amount:  Full Insurable Value.

Basis: Replacement value.

Endorsements:   Lender loss payable  clause with stipulation that coverage will not be  cancelled or diminished without a minimum of 30 days prior written notice to Lender.

Latest Delivery Date: By the loan closing date.

GRANTOR:

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.

RETURN TO:

West Fargo

P.O. Box 617 755

13th Ave E

West Fargo, ND  58078

LaserPro,   Ver.   19.4.10.036       Copr.   Finastra   USA   Corporation   1997,   2020.                                                                                                                                                                                                                                                                                                                                                                                                                  All   Rights  Reserved. -   ND C:\LASERPRO\CFI\LPL\I11.FC TR-3942 PR-8

NOTICE OF INSURANCE REQUIREMENTS

Principal	Loan Date 06-19-2019	Maturity	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.

Grantor:                  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

TO:

DATE:  June 19, 2019

Ross Nesbit Agencies, Inc.

ATTN: Laura Sutherland 5900

Rowland Road

Minnetonka, MN  55343

RE:                          Policy Number(s):

Insurance Companies/Company:

Dear Laura Sutherland:

Grantor, LF3 Eagan, LLC; and LF3 Eagan TRS, LLC ("Grantor") is obtaining a loan from Western State Bank.  Please send appropriate evidence of insurance to Western State Bank, together with the requested endorsements, on the following property, which Grantor is giving as security for the loan.

Collateral:     All Inventory, Equipment, Timber and Minerals, Oil and Gas.

Type:  All risks, including fire, theft and liability.

Amount:  Full Insurable Value.

Basis: Replacement value.

Endorsements:   Lender loss payable  clause with stipulation that coverage will not be  cancelled or diminished without a minimum of 30 days prior written notice to Lender.

Latest Delivery Date: By the loan closing date.

RETURN TO:

West Fargo

P.O. Box 617 755

13th Ave E

West Fargo, ND  58078

LaserPro,   Ver.   19.4.10.036       Copr.   Finastra   USA   Corporation   1997,   2020.                                                                                                                                                                                                                                                                                                                                                                                                                  All   Rights  Reserved. -   ND C:\LASERPRO\CFI\LPL\I11.FC TR-3942 PR-8

NOTICE OF INSURANCE REQUIREMENTS

(Continued)

P

GRANTOR:

LF3 EAGAN, LLC

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

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

By: /s/ Katie Cox

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

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.

1

EX-10.57.1

Exhibit 10.57.1

AGREEMENT OF PURCHASE AND SALE

Among

CENTRAL PA EQUITIES 17, LLC, CENTRAL PA EQUITIES 19, LLC, and, SPRINGWOOD - FHP LP,

collectively, SELLER

and

Lodging Fund REIT III OP, LP, BUYER

Dated as of November 22, 2019

Hampton Inn York South 2159 S. Queen St.

York, PA 17402

Home2 Suites York 212 Pauline

York, PA 17402

Fairfield Inn & Suites Hershey Chocolate Avenue 651 W. Areba Avenue

Hershey, PA 17033

TABLE OF CONTENTS

		Page
AGREEMENT OF PURCHASE AND SALE		1
ARTICLE I DEFINITIONS		1
SECTION 1.1.	Defined Terms	1
ARTICLE II SALE, PURCHASE PRICE AND CLOSING		9
SECTION 2.1.	Sale of the Assets	9
SECTION 2.2.	Purchase Price	12
SECTION 2.3.	Deposit	13
SECTION 2.4.	The Closing	13
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER		14
SECTION 3.1.	General  Seller Representations and Warranties	14
SECTION 3.2.	Representations and Warranties of Seller as to the Assets	15
SECTION 3.3.	Amendments to Schedules and Limitations on Representations (a) and Warranties of Seller	17
SECTION 3.4.	Covenants of Seller Prior to Closing	17
ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER (a)		18
SECTION 4. l.	Representations and  Warranties of Buyer	20
SECTION 4.2.	Covenants of Buyer Prior to Closing	20
SECTION 4.3.	Employee Matters	20
SECTION 4.4.	Bookings	20
SECTION 4.5.	Franchise Agreements	20
SECTION 4.6.	New Management Agreements	21
ARTICLE V CONDITIONS  PRECEDENT TO CLOSING		22
SECTION 5.1.	Conditions  Precedent to Seller's Obligations	22
SECTION 5.2.	Conditions  to Buyer's Obligations	23
SECTION 5.3.	Waiver of Conditions Precedent	23
SECTION 5.4.	Frustration  of Closing Conditions	23
ARTICLE  VI CLOSING DELIVERIES		24
SECTION 6.1.	Buyer Closing Deliveries	24
SECTION 6.2.	Seller Closing Deliveries	24

TABLE OF CONTENTS

(continued)

		Page
ARTICLE  VII INSPECTIONS AND RELEASE		25
SECTION 7.1.	Right of Inspection	25
SECTION 7.2.	Examination  and No Contingencies	27
SECTION 7.3.	Release	29
SECTION 7.4.	DISCLAIMER	30
ARTICLE VIII TITLE AND PERMITTED EXCEPTIONS		31
SECTION 8.1.	Title Insurance and Survey	31
SECTION 8.2.	Title Commitment and Survey	31
SECTION 8.3.	Delivery of Title	32
SECTION 8.4.	Cooperation	33
ARTICLE  IX TRANSACTION COSTS AND RISK OF LOSS		33
SECTION 9.1.	Transaction Costs	33
SECTION 9.2.	Risk of Loss	34
ART ICLE X  ADJUSTMENTS		35
SECTION 10.1.	Adjustments	35
SECTION 10.2.	Re-Adjustment	37
SECTION 10.3.	Accounts Receivable	37
SECTION 10.4.	Survival	38
ARTICLE XI INDEMNIFICATION		38
SECTION 11.1.	Indemnification by Seller	38
SECTION 11.2.	Indemnification by Buyer	38
SECTION 11.3.	Limitations on Indemnification	39
SECTION 11.4.	Survival	39
SECTION 11. 5.	Indemnification as Sole Remedy	39
ARTICLE XII DEFAULT  AND TERMfNA TION		39
SECTION 12.1.	Seller's Termination	40
SECTION 12.2.	Buyer's Termination	42
ARTICLE  XIII REAL PROPERTY TAX REDUCTION PROCEEDINGS		42
SECTION 13.1.	Prosecution  and Settlement of Proceedings	42
SECTION 13.2.	Application  of Refunds or Savings	42
SECTION 13.3.	Survival

ii

TABLE OF CONTENTS

(continued)

		Page
ARTICLE XIV MISCELLANEOUS		43
SECTION 14.1.	Use of Springwood Hospitality Name	43
SECTION 14.2.	Exculpation of Seller	43
SECTION 14.3.	Brokers	43
SECTION 14.4.	Confidentiality, Press Release and IRS Reporting Requirements	44
SECTION 14.5.	Escrow Provisions	45
SECTION 14.6.	Successors and Assigns and No Third-Party Beneficiaries	45
SECTION 14 .7.	Assignment	46
SECTION 14.8.	Further Assurances	46
SECTION 14.9.	Notices	46
SECTION  14.10.	Entire Agreement	47
SECTION 14.11.	Amendments	48
SECTION  14.12.	No Waiver	48
SECTION  14 .13.	Governing Law	48
SECTION  14.14.	Submission to Jurisdiction	48
SECTION 14.15.	Severability	48
SECTION  14.16.	Section Headings	48
SECTION 14.17.	Counterparts	48
SECTION 14 .18.	Acceptance of Deed	48
SECTION 14.19.	Construction	48
SECTION 14.20.	Recordation	49
SECTION 14.21.	WAIVER OF JURY TRIAL	49
SECTION  14.22.	Time is of the Essence	49
SECTION  14.23.	Intentionally Omitted	49
SECTION  14.24.	Prevailing Party	49
SECTION  14 .25.	Anti-Terrorism Law	49
SECTION  14.26.	Calculation of Time Periods	50

iii

Schedules Schedule A Schedule A-1 Schedule A-2 Schedule A-3 Schedule A-4 Schedule 2.1(c) Schedule 3.2(a) Schedule 3.2(b) Schedule 3.2(c) Schedule 3.2(e) Schedule 3.5

Legal Descriptions

Hotel Facilities and Other Improvements Intentionally Omitted

Existing Management Agreements and Franchise Agreements Purchase Price Allocation

Excluded Fixtures, Personal Property or Equipment Operating Agreements

List of Equipment Leases List of Leases

Litigation 3-05 Audit

Exhibits Exhibit A ExhibitB Exhibit C Exhibit D Exhibit E

Form of Assignment of Contracts and Leases Form of Deed

Form of Bill of Sale

Form of Assignment of Intangibles Form of FIRPTA

IV

AGREEMENT OF PURCHASE AND SALE

This AGREEMENT OF PURCHASE AND SALE (this "Agreement") is made as of the 22nd day of November,_2019 (the "Effective Date") by and among CENTRAL PA EQUITIES 17, LLC, a Pennsylvania limited liability company ("HJS York South eller"), CENTRAL PA EQUITIES 19, LLC, a Pennsylvania limited liability company ("H2S York Seller"), SPRINGWOOD - FHP LP, a Pennsylvania limited partnership ("FIS Hershey Seller" and collectively with HIS York South Seller and H2S York Seller herein referred to collectively and individually, as the context so requires, as "Seller"), and Lodging Fund REIT Ill OP, LP, a Delaware limited partnership (the "Buyer").

BACKGROUND

A.HIS York South Seller is the owner of a parcel of land located in York, Pennsylvania (the "HJ   York South Land"), H2S York Seller is the owner of a parcel of land located in York, Pennsylvania (the "H2S York Land"), and FIS Hershey Seller is the owner of a parcel of land located in Hershey, Pennsylvania (the "FIS Hershey Land"), in each instance as more particularly described on Schedule A (the HIS York South Land, the H2S York Land, and the FIS Hershey Land shall sometimes be referred to collectively as the "Land"). Each Seller also owns hotel facilities and other Improvements (as defined below) on its respective Land with the common addresses and names as set forth on Schedule A-1. HIS York South Seller's interest in the HIS York South Land together with the hotel facility and other Improvements located thereon is referred to as the "H1S York South Hotel", H2S York Seller's interest in the H2S York Land together with the hotel facility and other Improvements located thereon is referred to as the "H2S York Hotel", and FIS Hershey Seller's interest in the FIS Hershey Land together with the hotel facility and other Improvements located thereon is referred to as the "FIS Hershey Hotel". The HIS York South Hotel, the H2S York Hotel, and the FIS Hershey Hotel shall sometimes be referred to collectively and individually, as the context so requires, as the "Hotel" or "Hotels." The Hotels and the Asset Related Property (as defined below) shall be referred to collectively and individually, as the context so requires, as the "Asset" or "Assets."

B.Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the Assets on the terms and conditions hereinafter set forth.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, intending to be legally bound, the parties hereby agree as follows:

ARTICLE I DEFINITIONS

SECTION 1.1. Defined Terms. The capitalized terms used herein will have the following meanings.

"Accounts Receivable" shall mean all amounts which Seller is entitled to receive from the operation of the Hotels, but are not paid as of the Closing (including, without limitation, charges for the use or occupancy of any guest, conference, meeting or banquet rooms or other facilities at the Hotels, or any other goods or services provided by or on behalf of Seller at the Hotels, but expressly excluding any credit card charges and checks which Seller has submitted for payment as of the Closing).

"Additional Deposit" shall have the meaning assigned thereto in Section 2.3.

"Affiliate" shall mean any Person (as defined below) that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, another Person. The term "control" shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and shall in any event include the ownership or power to vote fifty percent (50%) or more of the outstanding equity or voting interests, respectively, of such other Person.

"Agreement" shall mean this Agreement of Purchase and Sale, together with the exhibits and schedules attached hereto, as the same may be amended, restated, supplemented or otherwise modified.

"Anti-Money Laundering and Anti-Terrorism Laws" shall have the meaning assigned thereto in subsection 3.2(g)(i).

"Applicable Law" shall mean all statutes, laws, common law, rules, regulations, ordinances, codes or other legal requirements of any Governmental Authority, board of fire underwriters and similar quasi-governmental agencies or entities, and any judgment, injunction, order, directive, decree or other judicial or regulatory requirement of any Governmental Authority of competent jurisdiction affecting or relating to the Person or property in question.

"Asset" or "Assets" shall have the meaning assigned thereto in "Background"

paragraph A.

"Asset File" shall mean the materials with respect to the Assets (i) previously delivered to Buyer or its representatives by or on behalf of Seller, whether written or orally, (ii) made available to Buyer at the Hotels or at the offices of Broker, each of which may be orally or written, or (iii) on the data room web site created by Broker.

"A set-Related Prope1ty" shall have the meaning assigned thereto in subsection 2.1(b).

"Assigned Accounts Receivable" shall have the meaning assigned thereto in subsection l 0.3(b)(i).

"Assignment of Contracts and Leases" shall have the meaning assigned thereto in subsection 6.1(a)(i).

"Assignment of Intangibles" shall have the meaning assigned thereto in subsection 6.1(a)(ii).

"Assumed Obligations" shall mean any and all liability and obligations for any outstanding bonds, letters of credit, or other similar instruments either required by or entered into by Seller for the benefit of any Governmental Authority.

"Basket Limitation" shall mean an amount equal to Fifty Thousand and no/I 00 Dollars ($50,000.00) for each Hotel.

"Bill of Sale" shall have the meaning assigned thereto in subsection 6.2(a)(ii).

"Bookings" shall  have the meaning assigned  thereto  in  subsection  2.1(b)(vii ).

"Broker" shall mean Avison Young.

"Business Day" shall mean any day other than a Saturday, Sunday or other day on which banks are authorized or required by law to be closed in York, Pennsylvania.

"Buyer" shall have the meaning assigned thereto in the Preamble to this Agreement.

"Buy  r-  R  lat  ed  Ent iti es   '  shall have the meaning assigned thereto in Section 11.1.

" Buyer Waived Breach" shall have the meaning assigned thereto in Section 11.3.

"B uyer'  Knowledge" shall mean, collectively, (i) the actual knowledge of Buyer based upon the actual knowledge of Corey R. Maple, without any duty on the part of such Person to conduct any independent investigation or make any inquiry of any Person, (ii) any and all information contained in the Asset File, and (iv) from any of Buyer's reports, inspections, surveys and/or studies. The named individuals shall have no personal liability by virtue of their inclusion in this definition.

"Buyer's Vendors" shall have the meaning assigned thereto in subsection 7.1(a).

"Cap Limitation" shall mean an amount equal to Four Hundred Fifty Thousand and no/I 00 Dollars ($450,000.00) for each Hotel.

"Claims" shall have the meaning assigned thereto in Section 7.3.

"Closing" shall have the meaning assigned thereto in subsection 2.4(a).

"Closing Date" shall have the meaning assigned thereto in subsection 2.4(a).

"  losing  D  cum nts" shall mean any certificate ,  assignment, instrument or other document delivered pursuant to this Agreement.

"Code" shall mean the Internal Revenue Code of 1 986,  as amended from time to time, or any successor statute.  Any reference herein to a particular provision of the Code shall mean, where appropriate, the corresponding provision in any successor statute.

"Condition of   the   Assets"   shall have   the   meaning   assigned thereto in subsection 7.2(b).

"Cut-Off Time" shall have the meaning assigned thereto in subsection 10.1.

" Deed" shall have the meaning assigned thereto in subsection 6.2(a)(i).

"Deposit" shall have the meaning assigned thereto in Section 2.3.

"Due Diligence Items" shall have the meaning assigned thereto m subsection 7. l(a).

"Due Diligence Period"shall have the meaning assigned thereto m subsection 7.l(a).

"Effective Date" shall have the meaning assigned thereto in the Preamble to this

Agreement.

"Employees" shall mean, at any time, all employees who are employed by Manager (whether on a full-time or part-time basis) at the Hotels at the time in quest ion.

"Environmental Laws" shall have the meaning assigned thereto In subsection 3.2(f).

"Equipment Lease" shall have the meaningassigned thereto in subsection 2. l(b)(vi). 

amended.

"ERISA" shall mean The Employee Retirement Income Security Act of 1974, as

"Escrow Account" shall have the meaning assigned thereto in subsection 14.5(a).

"Escrow Agent" shall have the meaning assigned thereto in Section 2.3.

"Executive Order" shall have the meaning assigned thereto in subsection 3.2(g)(i).

"  Existing Management Agreement s" shall mean those certain management agreements listed on Schedule A-3 attached hereto.

"FF&E" shall have the meaning assigned thereto in subsection 2. l(b)(ii).

"Financing ommitment" shall mean a written commitment  from  Buyer's  lender for financing Buyer's acquisition of the Assets.

"FlHershey Hotel Franch is  or" shall have the meaning assigned thereto on

Schedule A-3 attached hereto.

"  FIS Hershey Hotel" shall have the meaning assigned thereto in "Background"paragraph A.

"FIS Hershey Land" shall have the meaning assigned thereto in "Background"

paragraph A.

"FIS Hershey Seller" shall have the meaning assigned thereto in the Preamble to this Agreement.

"ranchie  Agreement" shall mean those certain franchise agreements listed on

Schedule A-3 attached hereto.

" Franchise Dis  c los ure Agreement" shall mean a "Franchise Disclosure Document" related to the Franchisor (or an  Affiliate thereof) and  the subject Franchise of the respective  Hotel  as required by the United States Federal Trade Commission's "Franchise Rule".

"Franchisor" shall mean, collectively, H2S York Hotel Franchisor, HIS York South Hotel Franchisor, and FIS Hershey Hotel Franchisor.

'  0 ve  rnme nl List" shall have the meaning assigned thereto in Section 14.25.

"  Gove  rnrn ntal  Authority ' shall mean any federal, state or local government or other political subdivision thereof, including, without limitation, any agency or entity exercising executive, legislative, judicial, regulatory or administrative governmental powers or functions, in each case to the extent the same has jurisdiction over the Person or property in question.

"Guest Ledger" shall mean any and all charges accrued to the open accounts of any guests or customers at the Hotels as of the Cut-Off Time for the use and occupancy of any guest, conference, meeting or banquet rooms or other facilities at the Hotels, any restaurant, bar or banquet services, or any other goods or services provided by or on behalf of Seller.

"H2S York Hotel Franchisor" shall have the meaning assigned thereto on Schedule A-3 attached hereto.

"H2S York Hotel" shall have the meaning assigned thereto in "Background"

paragraph A.

"H2S York Land" shall have the meaning assigned thereto in "Background"

paragraph A.

"H2S York Seller" shall have the meaning assigned thereto in the Preamble to this

Agreement.

"  Hazardo us Materils" shall have the meaning assigned thereto m subsection 7.2(6)(i).

"HIS York South Hotel Franchisor" shall have the meaning assigned thereto on

Schedule A-3 attached hereto .

"HIS York South Hotel" shall have the meaning assigned thereto in "Background"

paragraph A.

"HIS York South Land" shall have the meaning assigned thereto in "Background"

paragraph A.

"HIS York South Seller" shall have the meaning assigned thereto in the Preamble to this Agreement.

"Hotels" shall have the meaning assigned thereto in "Background" paragraph A.

"Improvements" shall mean the buildings, structures, fixtures and other improvements on the Land, including, without limitation, any and all hotel rooms, meeting facilities, conference rooms, parking facilities, restaurants, spa and pool facilities and other recreational amenities.

"lndependent Consideralion" shall mean One Hundred and no/I 00 Dollars

($100.00).

"lndividual Allocation " shall have the meaning assigned thereto m subsection 2.2(c).

"Initial Depo it" shall have the meaning assigned thereto in Section 2.3.

"1ntangible Property" shall have the meaning assigned thereto in subsection 2.1(b)(xii).

"Interim Period" shall have the meaning assigned thereto in Section 14.23.

"Inventories" shall have the meaning assigned thereto in subsection 2.1(b)(x).

"IRS" shall mean the Internal Revenue Service.

"lRS Repo  rting Requirements" shall have the meaning assigned thereto m subsection 14.4(c).

"Land" shall have the meaning assigned thereto in "Background" paragraph A.

"Leases" shall have the meaning assigned thereto in subsection 3.2(c).

"LicensesandPermits" shall have the meaning assigned thereto m subsection 2.l(b)(iii).

"Losses" shall have the meaning assigned thereto in Section 11.1.

"Manager" shall mean Springwood Hospitality, LLC, a Pennsylvania limited liability company.

"Mater ia l  Casua lt y" shall have the meaning assigned thereto in subsection 9.2(b).

"MaterialCondemnation" shall have the meaning assigned thereto in subsection 9.2(b).

"Operating Agreements" shall mean all maintenance, service and supply contracts, management agreements, credit card service agreements, booking and reservation agreements, and all other contracts and agreements which are held by Seller in connection with the operation of the Hotels, other than the Franchise Agreements, the Existing Management Agreements, the Equipment Leases, the Leases and the Licenses and Permits.

"Permitted Exceptions" shall mean (i) any matters set forth in the Title Commitment and/or on the Survey that Seller does not remove or cause to be removed pursuant to Section 8.2, (ii) the Franchise Agreements, the Equipment Leases, the Leases, the Licenses and Permits and the Operating Agreements, (iii) liens for real estate taxes and assessments which are not yet due and payable, (iv) standard exceptions and provisions contained in forms of title insurance policies, (v) discrepancies, conflicts in boundary lines, shortages in area, encroachments and any state of facts which a survey of the Land would disclose, (vi) subject to the adjustments provided for herein, any service, installation, connection or maintenance charge, and charges for sewer, water, electricity, telephone, cable television, or gas due after the Cut-Off Time, and (vii) any title exception which is waived by Buyer pursuant to subsection 8.3(b).

"Person" shall mean a natural person, partnership, limited partnership, limited liability company, corporation, trust, estate, association,  unincorporated association or other entity.

"PIP" shall mean Product Improvement Plan(s) from Franchisor.

" Post  Effe_ct  i ve  Date  Mon etary  Encum bra  nc  "  shall  have  the  meaning  assigned thereto in subsection 8.3(c).

"Post Effective Date Seller Encumbrance" shall have the meaning assigned thereto in subsection 8.3(a).

" Property  andEqu ipment"shallhave the meaning assigned thereto m

subsection 2.1(b)(ix).

"Purchase Price" shall have the meaning assigned thereto in subsection 2.2(a).

"Reconc iliatio n Date" shall have the meaning assigned thereto in subsection

10.2(b).

"Releasees" shall have the meaning assigned thereto in Section 7.3.

"Replac ement Franc  h ise Agreement" shall have the meaning assigned thereto in

Section 4.5.

"Re  po  rting  Per on" shall have the meaning assigned thereto in subsection 14.4(c).

"RetailMerchandise" shall have the meaning assigned thereto m subsection 2.1(b)(xi).

"Seller" shall have the meaning assigned thereto in the Preamble to this Agreement.

"Seller-Related Entities" shall have the meaning assigned thereto in Section 11.2.

"Selle r'  s  Knowledge" shall mean the actual knowledge of Seller based upon the actual knowledge of Justin Shelton with respect to the Assets, without any duty on the part of such Person to conduct any independent investigation or make any inquiry of any Person. The named individual shall have no personal liability by virtue of his inclusion in this definition.

"Seller Response Notice" shall have the meaning assigned thereto in Section 8.2.

"Termination Notice" shall have the meaning assigned thereto in subsection 7.1(a).

"Title Company" shall mean Beverly Carlson (bevcarlson@firstam.com), as agent for First American Title Insurance Company.

"Title Policy" shall mean an ALTA owner's title insurance policy or title insurance policies (as applicable) without endorsements or extended coverage issued by Title Company insuring Buyer's title to the Hotels, subject only to the Permitted Exceptions, in a total amount equal to the Purchase Price as allocated among the Properties in accordance with Schedule A-4 attached hereto.

8.2.

"Title Report Objection Date" shall have the meaning assigned thereto in Section "Title Report Objection Notice" shall have the meaning assigned thereto in Section

"Trade Payables' shall have the meaning assigned thereto in subsection 10.1(k).

"UCC" shall mean the Uniform Commercial Code.

"Uniform System of Accounts" shall have the meaning assigned thereto m subsection 2.1(b)(ix).

"WARN Act" shall mean the Worker's Adjustment and Retraining Notification Act of 1988, 29 U.S.C. § 210 I, et seq., and/or any similar Applicable Law, as amended from time to time, and any regulations, rules and guidance issued pursuant thereto.

ARTICLE II

E  AND CLOSrNG

SECTION 2.1.Sale of the Assets.

(a)Sale of Assets. On the Closing Date and pursuant to the terms and subject to the conditions set forth in this Agreement, Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Assets.

(b)Sale of A  set- Re lated Property. The transfer of the Assets to Buyer shall include the transfer of all Asset-Related Property. For purposes of this Agreement, subject to subsection 2. l(c), "Asset-Related Property" shall mean all of Seller's right, title and interest in and to the following:

(i)all easements, covenants and other rights appurtenant to the Land and all right, title and interest of Seller, if any, in and to any land lying in the bed of any street, road, avenue or alley, open or closed, in front of or adjoining the Land and to the center I ine thereof;

(ii)all furniture, furnishings, fixtures, rugs, vehicles, mats, carpeting, appliances, devices, engines, telephone and other communications equipment, televisions and other video equipment, plumbing fixtures and other equipment, and all other equipment and other personal property which are now, or may hereafter prior to the Closing Date may be, placed in or attached to the Hotels and are used in connection with the operation of the Hotels (but not including items which are either leased by Seller or Manager or excluded from property being conveyed under this Agreement as provided in subsection 2.l(c)(ii) below) (the "FF&E");

(iii)to the extent they may be transferred under Applicable Law, all licenses, permits and authorizations presently issued in connection with the operation of all or any part of the Hotels as they are presently being operated (the 'Licenses and Permits");

(iv)to the extent assignable, all warranties, if any, issued to Seller by any manufacturer or contractor in connection with construction or installation of equipment or any component of the improvements included as part of the Hotels;

(v)all Operating Agreements; provided, however, if any such Operating Agreement requires consent of the vendor party, Buyer shall use good faith efforts to obtain such consent as of the Closing (in any event, Buyer shall assume all Operating Agreements, even if such consent has not been obtained);

(vi)to extent Buyer desires to assume, all leases and purchase money security agreements for any equipment, machinery, vehicles, furniture or other personal property located at the Hotels and used in the operation of the Hotels which are held by or on behalf of Seller (the "Eguipm nt Leas s"),  together with  all deposits made thereunder; provided, however, if such Equipment Leases require

consent of the vendor party, Buyer shall use good faith efforts to obtain such consent as of Closing (in any event, Buyer shall assume all Equipment Leases and provide replacement guarantees to Seller in the event Seller or any Affiliate thereof has therefore executed a guarantee in connection therewith, even if such consent has not been obtained);

(vii)all bookings and reservations for guest, conference, meeting and banquet rooms or other facilities at the Hotels for dates from and after the Closing Date (the "Bookings"), together with all deposits held by Seller with respect thereto;

(viii)all Assigned Accounts Receivable as set forth in Section 10.3;

(ix)all items included within the definition of "Property and Equipment" under the Uniform System of Accounts for the Lodging Industry, Eleventh Revised Edition,   as  published   by  the   Hotel  Association   of  New  York  City,   Inc.  (the " Un iform Syste  m  of Account ") and used in the operation of the Hotels (including, without limitation, linen (in no event will linen  be  less than  two and  a half (2  ½) par, china, glassware, tableware, uniforms and similar items, subject to  such  depletion prior to the Closing Date as shall occur in the ordinary course of business) (the "Property and qu ipment");

(x)all "Inventories" as defined in the Uniform System of Accounts and used in the operation of the Hotels, such as provisions in storerooms, refrigerators, pantries, and kitchens, beverages in wine cellars and bars, other merchandise intended for sale or resale, fuel, mechanical supplies, stationery, guest supplies, maintenance and housekeeping supplies and other expensed supplies and similar items and including all food and beverages which are located at the Hotels, or ordered for future use at the Hotels as of the Closing, but expressly excluding any alcoholic beverages to the extent the sale or transfer of the same is not permitted under Applicable Law (the "Inventories");

(xi)all merchandise located at the Hotels and held for sale to guests and customers of the Hotels, or ordered for future sale at the Hotels as of the Cut-Off Time, but not including any such merchandise owned by any tenant at the Hotels or by Manager (" Re  ta il Merchand is e");

(xii)to the extent Seller's rights and interests therein are assignable and subject to any consents required thereunder, all names, tradenames, trademarks, service marks, logos, telephone and fax numbers,  domain  names,  website  names, and other similar proprietary rights and all registrations or  applications  for registration  of  such   rights   used   by  Seller  in  the  operation   of  the  Hotels  (the " Intan gib le  Property"); provided, however, Seller makes no representations or warranties with respect to its rights or interests in such Intangible Property; and

(xiii)to the extent in Seller's possession or control, all surveys, architectural, engineering blueprints, and plans and specifications, if any, related to

the Hotels, all current books and records, if any, related to the Hotels, and any goodwill of Seller related to the Hote ls ;  provided, however,  that Seller may retain a copy of all books and records.

(xiv)All assets located off site from the location of the Hotels or in the possession of others, but used solely in connection with the operations of one or all of the Hotels (collectively, the "Remote Assets"). The situs of the Remote Assets and the person or entity in possession or control thereof shall be delivered by Seller to Buyer at the Closing;

(c)Exclud ed Propc11 y. Notwithstanding anything to the contrary in subsections 2.1(a) and (b), the property,  assets,  rights  and  interests  set  forth  in  this subsection 2.1(c) are expressly excluded from the Assets:

(i)Cash. All cash on hand or on deposit in any house bank, operating account or other account maintained in connection with the ownership of the Hotels;

(ii)Third Party Prop 1'ly.  Any fixtures ,  personal property or equipment owned by (A) the lessor under any Equipment Leases  or  any  Leases,  (B) the supplier or vendor under any other Operating Agreements ,  (C) any Employees,

(D) Manager, (E) Franchisor, (F) the tenant under any Lease or similar agreement, or (G) any guests or customers of the Hotels, incl udin g,  without limitation, those items set forth on Schedule 2.l(c) attached hereto;

(iii)Brand Name  or  L go. Any FF&E, Property and Equipment, Inventories, Retail Merchandise, or Intangible Property bearing the brand name or logo of either Manager or Franchisor;

(iv)Insurance Claims.   Any insurance claims or proceeds arising out of or relating to events that occur prior to the Closing Date (subject to the terms of subsection 9.2(a));

(v)Aclditi  nal Reserved ell er  Assets. Any proprietary or confidential materials (inc lu ding,  without limitation, any materials relating to the background or financial condition of a present or prior direct or indirect partner or member of Seller), the internal books and records of Seller relating, for examp le,  to contributions and distributions prior to the Closing,  any software not used exclusively in the day-to-day operation of the building, the names "Springwood Hospitality", "Springwood" and any derivations thereof, and any trademarks, service marks, trade names, brand marks, brand names, domain names, social media sites (such as Facebook or Twitter),  trade dress or logos relating thereto, any development bonds, letters of credit or other collateral held by or posted with any Governmental Authority or other third party with respect to any improvement, subdivision or development obligations concerning the Hotels or any other real property, insurance policies (subject to Section 9.2), claims or other rights against any present or prior partner, member, employee, agent, manager, officer or director

of Seller or its direct or indirect partners, members, shareholders or affiliates, all contracts between Seller and any law firm, accounting firm, property manager, leasing agent, broker, engineers, surveyors, environmental consultants and other consultants or appraisers entered into prior to the Closing, organizational documents of any subsidiary of Seller, contracts for construction that is not ongoing as of the Effective Date or the Closing Date, and any intangible property that is not used exclusively in connection with the Assets; and

SECTION 2.2.Purchase Price.

(b)Considerat ion. The consideration for the purchase of the Assets shall be Forty-Six Million Eight Hundred Thousand and no/100 Dollars ($46,800,000.00) (the "Purchase Price"). No later than 12:00 PM (Eastern Standard Time) on the Closing Date, Buyer shall deposit with Escrow Agent, by wire transfer of immediately available funds to such account or accounts that Seller shall designate to Buyer, an amount equal to (A) the Purchase Price (subject to adjustments and credits as described in Article X below), minus (B) the Deposit. In the event that Buyer assumes HIS York South Seller's existing financing on the HIS York South Hotel (the "HIS Y  rk ,  outh Financing") on and after Closing and, in connection therewith, obtains for the benefit of HIS York South Seller a full release of all obligations and liabilities for such HIS York South Financing, then the Purchase Price (as allocated directly to the HIS York South Hotel) shall be reduced by the amount of Two Hundred Fifty Thousand and no/100 Dollars ($250,000.00). Seller will provide Buyer the HIS York South Financing loan documents no later than five (5) Business Days following the Effective Date.

(c)No Adjustment. No adjustment shall be made to the Purchase Price except as explicitly set forth in this Agreement.

(d)Purchase Price Allocation. Seller and Buyer agree that the Purchase  Price shall be allocated among the Assets as set forth on Schedule  A-4 attached  hereto  (in  connection with an individual Asset, an "Asset Allocation", or, collectively, the "Asset Allocations"). Buyer shall, within IO days after the Effective Date, prepare and deliver to Seller for its review  and comment a schedule allocating the applicable portion of the Purchase Price (as determined by the Asset Allocations) among the applicable Asset (each schedule, an "Individual Allocation", or collectively, the "Individual Allocations"), and Buyer and Seller shall endeavor in  good  faith  to reach an agreement on  the  Individual Allocations  prior to the Closing  for federal,  state and  local tax purposes in accordance with Section I  060 of the Code. Seller shall review such Individual Allocations and provide any objections to Buyer within IO days after the receipt thereof. If Seller raises any objection to the Individual Allocations, the parties hereto will negotiate in good faith to resolve such objection(s). Upon reaching an agreement on the Individual Allocation(s), Buyer and Seller shall (i) cooperate in the filing of any  forms  (including  Form  8594  under  Section  1060 of the Code, but excluding any declaration of goodwill as defined under  Section  I  060  of the Code) with respect to the Individual Allocation(s) as finally resolved, including any amendments to such forms required pursuant to this Agreement with respect to  any  adjustment  to  the  Purchase  Price and (ii) shall file all federal, state and local tax returns and related tax documents  consistent  with  such Individual Allocation(s), as the same may be adjusted pursuant to Section 10. I  or any other provisions of this Agreement. Notwithstanding the  foregoing,  if,  after  negotiating  in  good  faith, the parties hereto are unable to agree on a mutually satisfactory Individual Allocation(s), each of

Buyer and Seller shall use its own allocation(s) for purposes of this subsection 2.2(c); provided that, for purposes of determining any documentary stamp tax or other tax (as applicable) to be paid with respect to the Deed(s), such allocation(s) shall be determined by Seller in its sole but reasonable discretion.

SECTION 2.3.Deposit. Two (2) Business Days following the date hereof, Buyer shall deposit with Title Company, as escrow agent (in such capacity, "Escrow Agent"), Seven Hundred Fifty Thousand and no/100 Dollars ($750,000.00) (such cash deposit, together with all accrued interest thereon, shall be referred to as the "Initial Deposit") in immediately available funds by wire to such account as Escrow Agent shall designate to Buyer. If this Agreement is not terminated pursuant to Sections 7. l(a) and/or 8.2, then Buyer shall deposit with the Escrow Agent on the first ( l51    Business Day following the expiration of the Due Diligence Period an additional Seven Hundred Fifty Thousand and no/I 00 Dollars ($750,000.00) (such cash deposit, together with all accrued interest thereon, shall be referred to as the " Additiona  l  Deposit") in the form of a cashier's check or wire transfer in immediately available funds. If such Additional Deposit is not timely deposited, the same shall constitute a material default hereunder and Seller may terminate this Agreement, but only after one (1) Business Day following written notice from either the Escrow Agent or Seller to Buyer (e-mail to suffice) of such failure, in which event the Initial Deposit, and all interest accrued thereon, shall be immediately delivered to Seller as liquidated damages in accordance with Section 7.1(c), and the obligations of the parties hereunder shall terminate (and no party hereto shall have any further obligation in connection herewith except under those provisions that expressly survive a termination of this Agreement). The Initial Deposit and, if delivered, the Additional Deposit(s) (as defined below), together with all accrued interest thereon, shall be referred to collectively herein as the "Deposit". Upon delivery by Buyer to Escrow Agent, the Deposit will be deposited by Escrow Agent in an interest-bearing account acceptable to Buyer and Seller and shall be held in escrow in accordance with the provisions of Section 14.5. All interest earned on the Deposit so invested by Escrow Agent shall be paid to the party to whom the Deposit is paid, except that if the Closing occurs, Buyer shall receive a credit for such interest in accordance with subsection 2.2(a). The Deposit will be held in escrow, and applied to the HIS York South Hotel closing, to secure Buyer's performance under this Agreement.

SECTION 2.4.The Closing.

(a)Closing Date. The closing of the sale and purchase of the Assets or an individual Asset (as the context may require, a "Closing" or the "Closings") must take place in the following sequence: (I) first, the FIS Hershey Hotel; (2) second, the H2S York Hotel; and (3) third, the HIS York South Hotel. Buyer shall provide Seller written notice of Buyer's intent to close on the individual Hotels no later than ten (I 0) days prior to each intended Closing date (each a "Closing Date Notice") but in no event will the Closing of the HIS York South Hotel occur after March 10, 2020. Unless this Agreement is earlier terminated as expressly set forth herein, Buyer and Seller acknowledge and agree on the following: (a) the FIS Hershey Hotel Closing shall occur between January 15, 2020 and February 19, 2020; (b) the H2S York Hotel Closing shall occur between February 15, 2020 and March I  0, 2020; and (c) the HIS York Hotel Closing shall occur between February 15, 2020 and March 10, 2020.

(b)Closing Time. The Closing shall be held on the Closing Date at l :00 P.M.

(Eastern Standard Time) by "New York Style Closing" through Escrow Agent.

(c)Closing  Mecbanics. Notwithstanding any other provision herein to the contrary, there shall be no requirement that Seller or Buyer physically attend the Closing. Buyer and Seller hereby authorize their respective attorneys to execute and deliver to Escrow Agent any additional or supplementary instructions as may be necessary or convenient to implement the terms of this Agreement and facilitate the closing of the transactions contemplated hereby, provided that such instructions are consistent with and merely supplement this Agreement and shall not in any way modify, amend or supersede this Agreement.

ARTICLE III

SECTION 3.1.Gene ra l    S eller   Representations and   Warranties.Each Seller represents and warrants to Buyer as to itself as follows:

(a)Formation; Existence. With respect to HIS York South Seller and H2S York Seller, each is a limited liability company, duly organized, validly existing and in good standing under thaws of the Commonwealth of Pennsylvania, and, with respect to FIS Hershey Seller, it is a limited partnership, duly formed, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania.

(b)Power and Authority. It has all requisite power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions provided for in this Agreement have been duly authorized by all necessary action on its part. This Agreement has been duly executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights and by general principles of equity (whether applied in a proceeding at law or in equity).

(c)No Consents. No consent, license, approval, order, permit or authorization of, or registration, filing or declaration with, any court, administrative agency or commission or other Governmental Authority or instrumentality, domestic or foreign, is required to be obtained or made by Seller in connection with the execution, delivery and performance of this Agreement or any of the transactions required or contemplated hereby, except for any consent or approval required in connection with the transfer of the Operating Agreements and the Equipment Leases.

(d)No Conflicts.  The execution, delivery and compliance with, and performance of the terms and provisions of, this Agreement, and the sale of the Assets, will not

(i)conflict with or result in any violation of its organizational documents, or (ii) violate any existing term or provision of any order, writ, judgment, injunction, decree, statute, law, rule or regulation applicable to it or its assets or properties.

(e)Foreign Person. It is not a "foreign person" as defined in Section 1445 of the Code and the regulations issued thereunder.

SECTION 3.2.Representations and Wa rrant ies of Seller as to the Assets. Each Seller hereby represents and warrants  to Buyer  as follows with  respect  to the  portion of the Assets it owns:

(a)Operating Agreeme  nts. To Seller's Knowledge, all material Operating Agreements and Equipment Leases (and any amendments or modification thereof) affecting the Hotels are set forth on Schedule 3.2(a) and 3.2(b). respectively, attached hereto and  the same have not been modified or amended, except as shown in such documents. To Seller's Know le dge,  Seller has delivered or made available, or promptly following the date hereof shall deliver or  make available, to Buyer true and complete copies of all such written Operating Agreements  and Equipment Leases in its possession.

(b)Employees. Seller does not have any employees. All Employees of the Hotels are employees of Manager.

(c)Leases. To Seller's Knowledge, Schedule 3.2(c) sets forth a correct and complete list of the material leases for the Hotels as of the date hereof (the "  Leases"). Except as set forth in Schedule 3.2(c). as of the date hereof, to Seller '  s Knowledge, (i) all such Leases are in full force and effect, and (ii) Seller has not given or received any written notice of any material breach or default under any of the Leases that has not been cured.

(d)Condemnation. As of the date hereof, Seller has not received written notice of any condemnation or similar proceedings affecting the Assets, and to Seller's Knowledge, no such action is threatened.

(e)Litigation.  To  Seller's  Knowledge  and  except  as  disclosed  in Schedule 3.2(e) attached hereto, as of the date hereof, (i) there are no actions, suits or proceedings filed and pending against or affecting the Assets in any court (including bankruptcy) or before or by an arbitration tribunal or regulatory commission, department or agency which are not covered by insurance and which would materially and adversely affect the ability of Seller to perform its obligations hereunder, and (ii) no such actions,  suits or proceedings has been threatened against Seller in writing.

(f)Env ironm nt al  Matter . To Seller's Knowledge, Seller has not received any written notice from any governmental or regulatory authority of any violation of applicable Environmental   Laws ,  which   has  not   been   corrected.    For  the  purposes  of  this  section, " Env ironmental  Laws" means any and all federal, state, county and local statutes, laws, regulations and rules in effect on the date of this Agreement relating to the protection of the environment or to the use, transportation and disposal of Hazardous Materials.

(g)Anti- Te r ro  ris  m Laws.

(i)None of Seller or, to Seller's Knowledge, its Affiliates, is in violation of any laws relating to terrorism, money laundering or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Action of 2001, Public Law 107-56 and Executive Order No.  13224 (Blocking Property and Prohibiting Transactions with Persons Who Commit,

Threaten to Commit, or Support Terrorism)  (the "Executi  e  Order")  (collectively, the "Anti-Money Laund rin g and Anti -Te rror is m Laws").

(ii)None of Seller or, to Seller's Knowledge, its Affiliates, is acting, directly or indirectly, on behalf of terrorists, terrorist organizations or narcotics traffickers, including those persons or entities that appear on the Annex to the Executive Order, or are included on any relevant lists maintained by the Office of Foreign Assets Control of U.S. Department of Treasury, U.S. Department of State, or other U.S. government agencies, all as may be amended from time to time.

(iii)None of Seller or, to Seller's Knowledge, its Affiliates or, without inquiry, any of its brokers or other agents, in any capacity in connection with the sale of the Hotels (A) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any person included in the lists set forth in the preceding paragraph; (B) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (C) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Money Laundering and Anti Terrorism Laws.

(iv)Seller understands and acknowledges that Buyer may become subject to further anti-money laundering regulations, and agrees to execute instruments, provide information, or perform any other acts as may reasonably be requested by Buyer, for the purpose of: (A) carrying out due diligence as may be required by Applicable Law to establish Seller's identity and source of funds;

(B) maintaining records of such identities and sources of funds, or verifications or certifications as to the same; and (C) taking any other actions as may be required to comply with and remain in compliance with anti-money laundering regulations applicable to Seller.

(v)Neither Seller, nor, to Seller's Knowledge, (A) any person controlling or controlled by Seller, is a country, territory, individual or entity named on a Government List (as hereinafter defined), and (B) the monies used in connection with this Agreement and amounts committed with respect thereto, were not and are not derived from any activities that contravene any of the Anti-Money Laundering and Anti-Terrorism Laws (including funds being derived from any person, entity, country or territory on a Government List or engaged in any unlawful activity defined under Title 18 of the United States Code, Section l 956(c)(7)).

(h)Seller shall provide Buyer with financial statements concerning the Hotels as of the most recent fiscal year ending (together with any subsequently prepared financial statements supplied by Seller to Buyer (collectively, the "Financial Statements")). The Financial Statements provided to Buyer shall be prepared in accordance with generally accepted accounting principles and as maintained by Seller in the ordinary course of Seller's business.

(i)Seller represents and warrants that the information provided by Seller or its third party advisors (by way of example not by way of limitation its broker, advisor, or accountant) is unedited and without redaction, whether delivered directly by Seller to Buyer, or as the same may be compiled by Seller's third party advisors for delivery to Buyer.

G) The foregoing representations and warranties are made by Seller with the knowledge and expectation that Buyer is placing complete reliance on them.

SECTION 3.3.

Wa  rranti s  of Seller.

Amendm ent to  Schedu les and Lim itations on Representations and

(a)Amendm nts to Schedu les . Seller shall have the right to amend and supplement the schedules to this Agreement from time to time prior to the Closing by providing a written copy of such amendment or supplement to Buyer. Notwithstanding the foregoing, Seller shall have no liability, and Buyer shall make no claim against Seller, for (and, except as provided in the  parenthetical set forth in clause (iii) below, Buyer shall be deemed to have waived any failure of a condition hereunder by reason of) a failure of any condition or a breach of any representation or warranty, covenant or other obligation of Seller under this Agreement or any amendment or supplement described in this subsection 3.3(a) or any document executed by Seller in connection with this Agreement (including, for this purpose, any matter that would have constituted a breach of Seller's representations and warranties had they been made on the Closing Date) if the failure or breach in question constitutes or results from a condition, facts or other matter (i) that was known to Buyer (i.e., within Buyer's Knowledge) prior to the expiration of the Due Diligence Period (or is reflected by the Asset File), (ii) that was within Buyer's Knowledge (or is reflected by the Asset File) prior to Closing and Buyer proceeds with the Closing or (iii) that was not within Se ller '  s Knowledge as of the Effective Date (provided, however, and notwithstanding Seller's lack or liability and Buyer's waiver of any claim for condition, fact or other matter referenced in this Section 3.3(a)(iii), nothing referenced in this Section 3.3(a)(iii) shall prevent the failure of Buyer's conditions to closing as provided in Section 5.2 if the condition, fact or other matter referenced in this Section 3.3(a)(iii) would materially and adversely impact the ownership or value of the Assets).

(b)Limit ation on Represe ntations  and Warranties of Selle  r. Notwithstanding anything in this Agreement to the contrary, if the representations and warranties relating to the Leases, the Equipment Leases and the Operating Agreements set forth in Section 3.2 and the status of the contract parties thereunder contained herein were true and correct as of the date of this Agreement, only a material change in circumstances or status of the contract parties occurring after the expiration of the Due Diligence Period shall permit Buyer to terminate this Agreement or constitute grounds for Buyer's failure to close.

SECTION 3.4.Covena  nts of Sell er  Pr ior  to Closing. From the date hereof until the Closing or earlier termination of this Agreement ,  Seller or Seller's agents shall:

(a)Insurance. Keep the Hotels insured against fire and other hazards in such amounts and under such terms as Seller deems advisable consistent with past practices.

(b)Conduct of  Business. Maintenance and Operation of Ass ets. Continue to carry on the business and maintain the Hotels substantially in the same manner as currently conducted and maintained including, but not limited to, payment of all occupancy taxes (and other hotel/motel taxes and fees).

(c)New Operatin g  Agreements . Without the prior written consent of Buyer, which consent shall not be unreasonably withheld or de layed, _  Sci lcr will not enter into any third party contracts, or renew, amend or supplement any third party contracts; provided, however, Seller may enter into or renew any third party contracts, or amend or supplement any third party contracts, without Buyer's consent, if (i) such contract is entered into (or renewed, amended, or supplemented, as the case may be) in the course of customary operation of the Hote ls ,  or is necessary as a result of an emergency at the Hotels, or (ii) is terminable on thirty (30) days or less notice, without penalty. If Seller enters into or renews any third party contracts, or amends or supplements any third party contracts after the date of this Agreement ,  then Seller shall promptly provide written notice and a copy thereof to Buyer and unless the same required Buyer's approval pursuant to this paragraph and such approval was not obtained, Buyer shall assume such contract at the Closing and the schedule of contracts attached to the Assignment of Contracts and Leases shall be so modified, and such contract shall be deemed added to Schedule 3.2(a) attached hereto and Schedule 3.2(a) shall be deemed amended at the Closing to include such contracts. If a new contract, or a renewal, amendment or supplement to an existing contract, requires Buyer's approval or Seller otherwise requests Buyer's approval and Buyer does not object within two days after receipt of a copy of such contract, then Buyer shall be deemed to have approved such contract.

(d)Post Effective Date  Monetary Liens  and Enc  umb rances. Without the prior written consent of Buyer, Seller covenants after the Effective Date and before Closing, Seller shall not willingly create any new monetary liens or encumbrances over all or any part of the Hotels or any interest thereon,  without the prior written consent of Buyer, and, as of Closing, no new monetary liens or encumbrances shall have arisen against the Property.

SECTION 3.5.Cove  nant s  of elle  r  Fo llo  wing the Closin g. Seller covenants it will assist Buyer for Buyer's third-party auditors  (Deloitte)  to  collect  necessary  information  as described on Schedule 3.5 subsequent to Closing and for a period not  to exceed  two (2) calendar years following the Closing of the applicable Hotel.

ARTICLE IV

REPR S ENT ATTO S, WARR ANT IES AND COVENANT S  OF  BUY R

SECTION 4.1 .Repre entation and Warr anti es of Buy  r. Buyer hereby represents and warrants to Seller as follows:

(a)Form atio  n  and xiste nce. It is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware.

(b)Po  wer and Auth o  rit y.  It has all requisite power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement ,  the purchase

of the Assets and the consummation of the transactions provided for herein have been duly authorized by all necessary action on the part of Buyer. This Agreement has been duly executed and delivered by Buyer and constitutes the legal, valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights and by general principles of equity (whether applied in a proceeding at law or in equity).

(c)No Conflicts. The execution, delivery and compliance with, and performance of the terms and provisions of, this Agreement, and the purchase of the Assets, wi11 not (i) conflict with or result in any violation of its organizational documents, (ii) conflict with or result in any violation of any provision of any bond, note or other instrument of indebtedness, contract, indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party in its individual capacity, or (iii) violate any existing term or provision of any order, writ,judgment, injunction, decree, statute, law, rule or regulation applicable to it or its assets or properties.

(d)Anti-Money Laundering and Anti-Terrorism Laws.

(i)Neither Buyer nor, to Buyer's Knowledge, its direct or indirect owners, principals, employees or affiliates, is in violation of, has been charged with or is under indictment for the violation of, or has pied guilty to or been found guilty of the violation of, any Anti-Money Laundering and Anti-Terrorism Laws.

(ii)None of Buyer or, to Buyer's Knowledge, its direct or indirect owners, principals, employees or affiliates, is acting, directly or indirectly, on behalf of terrorists, terrorist organizations or narcotics traffickers, including those persons or entities that appear on the Annex to the Executive Order, or are included on any relevant lists maintained by the Office of Foreign Assets Control of U.S. Department of Treasury, U.S. Department of State, or other U.S. government agencies, all as may be amended from time to time.

(iii)Neither Buyer, nor any person controlling or controlled by Buyer, is a country, territory, individual or entity named on a Government List (as hereinafter defined), and the monies used in connection with this Agreement and amounts committed with respect thereto, were not and are not derived from any activities that contravene any of the Anti-Money Laundering and Anti-Terrorism Laws or any other applicable anti-money laundering or anti-bribery Applicable Laws and regulations (including funds being derived from any person, entity, country or territory on a Government List or engaged in any unlawful activity defined under Title 18 of the United States Code, Section l 956(c)(7)).

(iv)Buyer is not engaging in the transactions contemplated hereunder, directly or indirectly, in violation of any Applicable Laws  relating  to  drug trafficking, money laundering or predicate crimes to money laundering or drug trafficking. None of the funds of Buyer have been or will be derived from any unlawful activity with the result that the investment of direct or  indirect  equity owners in Buyer is prohibited by Applicable Laws or that the transactions

contemplated hereunder or this Agreement is or will be in violation of Applicable Laws .  Buyer has implemented and will continue to implement proced ures,  and has consistently and will continue to consistently apply those procedures, to ensure the foregoing representations and warranties  remain  true and  correct  at all times  prior to and at the Closing.

(e)Franchise Agree ment  Represe ntations. Buyer (i) has received and reviewed a copy of the Franchise Disclosure Document as of the Effective Date, (ii) is not a "Competitor" (as defined in the Franchise Agreement) ,  (iii) is not a Sanctioned Person (as defined in the Franchise Agreement), (iv) is capable of operating the Hotel pursuant to the "Standards" (as defined in the Franchise Agreement) and (v) meets Franchisor's current business requirements for new franchisees.

SECTION 4.2.Covenant of Bu  ye r Prior to  lo  i ng. Buyer shall use all commercially reasonable, diligent, and good faith efforts to obtain the transfer of all Licenses and Permits (to the extent transferable) or the issuance of new licenses and permits. Buyer, at its cost and expense, shall submit all necessary applications and other materials to the appropriate Governmental Authority and take such other actions to effect the transfer of the Licenses and Permits or issuance of new licenses and permits, as of the Closing, and Seller shall use commercially reasonable efforts (at no cost or expense to Seller) to cooperate with Buyer to cause the Licenses and Permits to be transferred or new licenses and permits to be issued to Buyer.  Notwithstanding anything to the contrary in this Section 4.2, Buyer shall not post any notices at the Hotels or pub) ish any notices required for the transfer of the Licenses or Permits or issuance of new licenses and permits without the prior written consent of Seller, which consent may not be unreasonably withheld. It shall not be a condition to the Closing hereunder that Buyer has obtained any transfer of Licenses or Permits or issuance of any new licenses or permits.

SECTION 4.3.Employee Matters. Buyer acknowledges that the Employees are currently employed by Manager or their Affiliates, and that the parties intend that there will be a continuity of employment with respect to the Employees on and after the Closing Date pursuant to employment agreements between Manager and the Employees. Upon the applicable Closing for each Asset ,  Buyer and Manager agree to release, indemnify, and hold harmless the applicable Seller from any and all obligations, claims, suits, damages, expenses,  actions, demands, losses, liabilities claimed by an Employee occurring on and after such Closing Date. Buyer shall offer (or caused to be offered) employment to at least the minimum number of terminated Employees as shall be necessary in order to comply with the WARN Act, and further Buyer shall indemnify the Seller and its Affiliates from and against Losses incurred under the WARN Act with respect to the Employees. The provisions of this Section 4.3 shall survive the Closing without limitation.

SECTION 4.4.Bookings. Buyer shall honor all existing Bookings and all other Bookings made in accordance with this Agreement for any period on or after the Closing Date.  The provisions of this Section 4.4 shall survive the Closing without limitation.

SECTION 4.5.Franchise Agree m n ts. Buyer shall enter into new franchise agreements with the respective Franchisors with respect to each of the Assets ,  effective as of the Closing and on Franchisor's then standard terms and conditions (collectively,  the  "Replacement Franc  hise Agree me  nt"). The parties acknowledge that the transfer of the franchise rights granted

under the Franchise Agreement to Buyer is subject to the prior written consent of the Franchisor under the respective Franchise Agreement(s). Buyer shall within three (3) Business Days of the Effective Date download or otherwise obtain the application from the Franchisor to enter into a Replacement Franchise Agreement and shall thereafter proceed in good faith to obtain the consent of the Franchisor to the transfer of such franchise rights to Buyer and the execution of a Replacement Franchise Agreement. Accordingly, Buyer shall promptly submit to Franchisor a complete application to become a franchisee of the Franchisor's franchise system accompanied by payment of the then-prevailing application fee. As part of the application process, Buyer shall provide any and all information and documentation that the Franchisor requires, including, without limitation, financial statements, organizational documents, background information regarding the owners of Buyer and other documentation supporting its application. Without limiting the foregoing, Buyer shall use best efforts to obtain the consent of the Franchisor to the transfer of the franchise rights and issuance by Franchisor of a Replacement Franchise Agreement, which may entail promptly responding to requests from the Franchisor and otherwise promptly complying with all obligations of a transferee under the Franchise Agreement. Seller agrees to reasonably cooperate, at no cost to Seller, with Buyer and Franchisor in such process. Buyer shall have until the expiration of the Due Diligence Period to obtain a satisfactory PIP and confirm the same in writing to Seller. Buyer's failure to obtain a satisfactory PIP prior to the expiration of the Due Diligence Period shall result in an automatic termination of this Agreement whereupon the Escrow Agent shall return to Buyer the Initial Deposit and shall disburse to Seller the Independent Consideration. Buyer's written confirmation to Seller that the PIP is satisfactory shall be a covenant by Buyer to accept and be bound by such PIP, and to complete such PIP within the time periods set forth in such PIP. In connection with the transfer of the franchise rights, (i) Buyer shall execute any and all documentation required by Franchisor and, if required by Franchisor, shall cause a guaranty from a guarantor satisfactory to Franchisor to be delivered to Franchisor in such form as Franchisor may require, and (ii) Buyer shall pay any and all fees and charges associated therewith (including, without limitation, any transfer fee mandated under the Franchise Agreement). Buyer shall provide to Seller, no later than the expiration of the Due Diligence Period, written confirmation that the PIP is satisfactory and written confirmation of the Franchisor's consent to the Replacement Franchise Agreement. Buyer's failure to provide Seller written confirmation of Franchisor's consent to the Replacement Franchise Agreement prior to the expiration of the Due Diligence Period shall result in an automatic termination of this Agreement whereupon the Escrow Agent shall return to Buyer the Initial Deposit and shall disburse to Seller the Independent Consideration. Buyer's execution of a Replacement Franchise Agreement with Franchisor shall not be a condition to Buyer's obligation to close the transactions contemplated by this Agreement and failure of Buyer to execute a Replacement Franchise Agreement shall constitute a material default by Buyer hereunder and shall not entitle Buyer to a refund of the Deposit.

SECTION 4.6.Financing omrnilment. Buyer shall timely apply to a lender and thereafter use commercially reasonable and good faith efforts for financing the acquisition of the Assets, to be obtained at Buyer's sole cost and expense. No later than the expiration of the Due Diligence Period, Buyer shall provide to Seller an executed Financing Commitment or written notice that Buyer was unable to secure the same, whereupon said written notice shall act as a termination of this Agreement and the Escrow Agent shall return to Buyer the Deposit and shall disburse to Seller the Independent Consideration. Notwithstanding the immediately foregoing sentence to the contrary, Buyer's obtaining any acquisition financing for the Assets at Closing shall

not be a condition to Buyer's obligation to close the transactions contemplated by this Agreement and failure of Buyer to obtain such acquisition financing shal I not entitle Buyer to a refund of the Deposit.

ARTICLE V

CONDITIONS PRECEDENT TO CLOSING

SECTION 5.1.conditions  Precedent to Seller  s  Obligat ions . The obligation of Seller to consummate the transfer of the Assets to Buyer on the Closing Date is subject to the satisfaction (or waiver by Seller) as of the Closing of the following conditions:

(a)Repres entat ions and Warr a  nties. Each of the representations and warranties made by Buyer in this Agreement shall be true and correct in all material respects when made and on and as of the Closing Date as though such representations and warranties were made on and as of the Closing Date.

(b)Obli gations and ovena rlt s . Buyer shall have performed or complied in all material respects with each obligation  and  covenant  required  by this Agreement  to  be performed or complied with by Buyer on or before the Closing.

(c)No Prohibition on Transfe r. No order or injunction of any court or administrative agency of competent jurisdiction nor any statute, rule, regulation or executive order promulgated by any Governmental Authority of competent jurisdiction shall be in effect as of the Closing which restrains or prohibits the transfer of the Assets or the consummation of any other transaction contemplated hereby.

(d)Buyer  Delive  rable  .     Seller  shall   have   received   all  of  the  documents required to be delivered by Buyer under Section 6.1.

(e)Purchase Price. Seller shall have received the Purchase Price in accordance with subsection 2.2(a) and all other amounts due to Seller from Buyer hereunder.

(f)Re  l  as of Seller. Manager and the respective Franchisor(s) shall have committed, in a writing acceptable to Seller in its sole and absolute discretion, subject to the consummation of the Closing, to release Seller of all obligations and liabilities under the respective Existing Management Agreements and Franchise Agreements. If Buyer has not entered into a Replacement Franchise Agreement with Franchisor and/or Seller has not been released in full by Franchisor from any obligations under the applicable Franchise Agreement(s)  pertaining  to  the period on or after the Closing, the same shall constitute a material default by Buyer hereunder and Seller may terminate this Agreement, in which event the Deposit, and all interest accrued thereon, shall be immediately delivered to Seller as liquidated damages in accordance with Section 1 2.1.

(g)1ntentio  nally  Om itt  d.

(h)As  tuned Obligations. Buyer shall have assumed the Assumed Obligations for each of the Assets. Buyer hereby releases Seller and its Affiliates from any and all claims, losses, damages, liabilities, costs and expenses which Buyer has or may have in relation to the

Assumed Obligations, and Buyer shall indemnify and hold Seller harmless from an against any loss, cost,  damage ,  cla i m,  or expense arising out of or in connection with Buyer's failure to perform the Assumed Obligations from and after the Closing Date.

SECTION 5.2.Cond it ions to Buyer  Obli gat ions. The obligation of Buyer to purchase and pay for the Assets is subject to the satisfaction  (or waiver  by Buyer) as of the Closing of the following conditions:

(a)Re  presenta tions and Warrantie s. Each of the representations and warranties made by Seller in this Agreement shall be true and correct in all material respects when made and on and as of the Closing Date as though such representations and warranties were made on and as of the Closing Date (unless such representation or warranty is made on and as of a specific dat e, in which case it shall be true and correct in al I material respects as of such date), except and to the extent of any inaccuracies or changes to the representations and warranties made by Seller pursuant to changes to schedule under Section 3.3(a) or otherwise constitutes or results from a condition, facts or other matter (i) that was known to Buyer (i.e.,  within Buyer's Knowledge) prior to the expiration of the Due Diligence Period (or is reflected by the Asset File), (ii) that was within Buyer'  s Knowledge (or is reflected by the Asset File) prior to Closing and Buyer proceeds with the Closing or (iii) that was not within Seller's Knowledge as of the Effective Date, unless and to the extent an amendment pursuant to Section 3.3(a)(iii) or such condition, fact or other matter that was not within Seller's Knowledge as of the Effective Date under clause (iii) immediately above shall materially and adversely impact the ownership or value of the Assets.

(b)Obli gat ions a nd    o venan  ts.  Seller shall  have performed  or complied  in all material respects with  each  obligation  and  covenant  required  by this Agreement  to be performed or complied with by Seller on or before the Closing.

(c)No Prohibiti on on  T  ran sfe r.  No order or injunction of any court or administrative agency of competent jurisdiction nor any statute, rule, regulation or executive order promulgated by any Governmental Authority of competent jurisdiction shall be in effect as of the Closing which restrains or prohibits the transfer of the Assets or the consummation of any other transaction contemplated hereby.

(d)D  live ry of Title. Title to the Hotels shall be delivered to Buyer in the manner required under Section 8.3.

(e)Seller Deliverables. Buyer shall have received all of the documents required to be delivered by Seller under Section 6.2.

SECTION 5.3.Waiver of Conditi ons  Precedent. The Closing shall constitute conclusive evidence that Seller and Buyer have respectively waived any conditions which are not satisfied as of the Closing.

SECTION 5.4.Frust rati n of Clos ing Cond it  ions. Neither Seller nor Buyer may rely on the failure of a closing condition set forth in Sections 5.1  or 5.2  if such  failure  was caused by such Party's failure to act in  good  faith  or to  use  its commercially  reasonable  efforts to cause the Closing to occur.

ARTlCLE VI

CLOSING DELIVERIES

SECTION 6.1.Buyer Closing Deliveries.

Buyer shall deliver the following documents at Closing:

(a)with respect to each individual Asset:

(i)an assignment and assumption of the Operating Agreements, the Equipment Leases, Bookings, and Leases (an "Assignment of ont racts  and Leases") duly executed by Buyer in substantially the form of Exhibit A attached hereto;

(ii)a general assignment and assumption of the Licenses and Permits and Intangible Property in the form of Exhibit D attached hereto (the "Assignment of Intangibles"), duly executed by Buyer;

(iii)such other documents and instruments as may be reasonably requested by Title Company in order to consummate the transactions described in this Agreement; and

(iv)such documentation as any Governmental Authority reasonably requires to be executed by Buyer in connection with the Assumed Obligations.

(b)with respect to the transactions contemplated hereunder:

(i)all transfer tax returns which are required by law and the regulations issued pursuant thereto in connection with the payment of all state or local real property transfer  taxes that are payable or arise as a result of the consummation  of  the transactions contemplated by this Agreement, in each case, as prepared by Seller and duly executed by Buyer; and

(ii)a closing statement for each individual Asset and a combined closing statement for the Assets prepared and approved by Seller and Buyer, consistent with the terms of this Agreement.

SECTION 6.2.Seller Closin g Del.iver ies.

Seller shall deliver the following documents at Closing:

(a)with respect to each individual Asset:

(i)a special warranty deed for each of the Hotels duly executed by the applicable Seller in form substantially similar to the form set forth on Exhibits B attached hereto (collectively, the "Deed");

(ii)a bill of sale (the "Bill of Sale") duly executed by Seller in substantially the form of Exhibit C attached hereto, transferring the FF&E, supplies, Inventories, and Accounts Receivable to Buyer;

(iii)the Assignment of Contracts and Leases duly executed by Seller, together with copies, and if available, originals of all contracts and agreements assigned thereby;

(iv)the Assignment oflntangibles, duly executed by Seller;

(v)all keys and keycards in Seller's possession, security and access codes to the Hotels;

(vi)an affidavit that Seller is not a "foreign person" within the meaning of the Foreign Investment in Real Property Tax Act of 1980, as amended,  in substantially the form of Exhibit F attached hereto;

(vii)title to the vehicles owned by Seller and used at each of the Hotels, if any; and

(viii)such other documents and instruments as may be reasonably requested by Title Company in order to consummate the transactions described in this Agreement.

(b)with respect to the transactions contemplated hereunder:

(i)all transfer tax returns which are required by law and the regulations issued pursuant thereto in connection with the payment of all state or local real property transfer taxes that are payable or arise as a result of the consummation of the transactions contemplated by this Agreement, in each case, as prepared and duly executed by Seller, as applicable; and

(ii)a closing statement for each individual Asset and a combined closing statement for the Assets prepared and approved by Seller and Buyer,  consistent with the terms of this Agreement.

(iii)duly executed non-competition, non-solicitation agreement for 5 years with a radius of 5 miles.

ARTICLE VII

INSPECTIONSAND RELEASE

SECTION 7.1.Right  of Jn s  pection.

(a)Inspections. Commencing on the Effective Date and continuing until 5:00

P.M. (Eastern Standard Time) on the last Wednesday before the date that is forty-five (45) days after the Effective  Date (the " Due  Dil igence  Period")  (time  being of the essence),  Buyer and  its

agents shall have the right, upon reasonable prior written e-mail notice to Justin Shelton at jshelton@gospringwood.com conspicuously entitled in such e-mail subject heading "REQUEST FOR INSPECTION" (and which shall in any event be at least 48 hours in advance) and at Buyer's sole cost, risk and expense, to inspect the Hotels during normal business hours on Business Days, provided that any such inspection shall not unreasonably impede the normal day-to-day business operation of the Hotels, and provided further that Seller shall be entitled to accompany Buyer and its agents on such inspection. Notwithstanding the foregoing, Buyer shall not have the right to interview or otherwise communicate with the Employees, any guests or licensees of the Hotels or other users or occupants of the Hotels without the prior written consent of Seller (which may be granted or denied in Seller's sole discretion), to interview or communicate with any Governmental Authority with respect to the Hotels without the prior written consent of Seller (which may be granted or denied in Seller's sole discretion), or to do any invasive testing of the Hotels without the prior written consent of Seller (which may be granted or denied in Seller's sole and absolute discretion). Prior to the expiration of the Due Diligence Period, however, Buyer shall have the right to interview the General Manager and Director of Sales upon Buyer's written request to Justin Shelton at least two (2) Business Days prior to such interview, and Buyer acknowledges and agrees that Seller may have an agent or representative present at such interview. A representative of Seller shall be entitled to accompany Buyer and its agents on any such permitted interviews, communications and testing. Buyer's right of inspection of the Hotels shall be subject to the rights of the guests of the Hotels and the rights of Manager under the applicable Existing Management Agreement. Prior to any such inspection, Buyer shall deliver to Seller copies of certificates of insurance reasonably satisfactory to Seller evidencing commercial general liability insurance policies (naming Seller, each such applicable Manager, and such other affiliated parties as Seller may reasonably designate, as an additional insured) which shall be maintained by Buyer and all third parties engaged by Buyer with access to the Hotels ("Buyer's Vendors") in connection with Buyer's or any Buyer's Vendor's investigations upon the Hotels, with limits, coverages and insurers under such policies reasonably satisfactory to Seller.  Seller hereby agrees that limits of $  1,000,000 per occurrence/$2,000,000 in the aggregate for property damage, bodily or personal injury or death shall be acceptable to Seller. In addition, Buyer and each of Buyer's Vendors shall carry the following: (i) excess (umbrella) liability insurance with limits of not less than $2,000,000 per occurrence; (ii) comprehensive automobile liability insurance with a $1,000,000 combined single limit; (iii) employer's liability insurance with a limit of $1,000,000 per occurrence; and (iv) worker's compensation insurance in compliance with applicable statutory requirements. Buyer hereby indemnifies and agrees to defend and hold Seller and the Seller-Related Entities harmless from and against all loss, cost (including, without limitation, reasonable attorneys' fees), claim or damage arising out of, resulting from, relating to or in connection with or from any such inspection by Buyer or its agents, except to the extent such claim or damage was caused solely by the gross negligence or willful misconduct of Seller or Seller's agents. Seller shall have the right (but not the obligation) to cure any of Buyer's and/or Buyer's agents violations of this Section  7.1. If, on or before the expiration of the Due Oil igence Period, Buyer shall determine in its sole discretion that it is satisfied with the Assets, then Buyer shall promptly (but in all events prior to the expiration of the Due Diligence Period), time being of the essence, notify Seller of such determination in writing ("Satisfaction Notice"), and if no Satisfaction Notice is provided, then this Agreement, and the obligations of the parties hereunder, shall terminate, and no party hereto shall have any further obligation in connection herewith except under those provisions that expressly survive a termination of this Agreement.   In such event, the Deposit shall  be released  to Buyer by Escrow

Agent. To the extent in Seller's possession or reasonable control, Seller shall deliver to Buyer the due diligence items (the " Due  Dili gen  e  Ttems"),  as more particularly described on Schedule 7. l(a) attached hereto within five (5) Business Days of the Effective Date. The  provisions  of  this subsection 7.1(a) shall survive the termination of this Agreement or the Closing without limitation.

(b)ins  pection  of Books  and Rec rds. Subject to the  provisions  of  subsection 7.1(a), during the Due Diligence Period, Buyer may review at the Hotels, to the extent that such items are existing and in Seller's possession or control, the current books and records concerning the Hotels, certificates of occupancy, as built plans and specifications, surveys, rent rolls,  tax statements, inventory lists ,  service and maintenance agreements ,  and other instruments, documents and agreements reasonably requested by Buyer to investigate the Hotels, excluding proprietary documents and information, documents and information which are subject to confidentiality agreements which do not permit their disclosure to Buyer, and documents and information subject to the attorney client privilege.

(c)Buyer Remed ies. The failure of Buyer to receive any document or item pursuant to this Section 7. I shall not extend the Due Diligence Period, and Buyer's sole remedy with respect thereto shall be to terminate this Agreement pursuant to subsection 7.1 (a) prior to the expiration of the Due Diligence Period.

SECTION 7.2.Examination and No Contingencies.

(a)Examination. Buyer will be making such examination of the Assets and all other matters affecting or relating to the transactions contemplated hereunder as Buyer has deemed necessary. In entering into this Agreement, Buyer has not been induced by and has not relied upon any written or oral representations, warranties or statements, whether express or implied, made by Seller or any Affiliate, member or manager of Seller, or any officer, director, member, agent, employee, or other representative of any of the foregoing or by any broker or any other person representing or purporting to represent Seller with respect to the Assets, the Condition of the Assets or any other matter affecting or relating to the transactions contemplated hereby, other than those expressly set forth in this Agreement. Buyer's obligations under this Agreement shall not be subject to any contingencies, diligence or conditions except as expressly set forth in this Agreement. Buyer acknowledges and agrees that, except as expressly set forth herein, Seller makes no representations or warranties whatsoever, whether express or implied or arising by operation of law, with respect to the Assets or the Condition of the Assets. BUYER AGREES THAT THE ASSETS WILL BE SOLD AND CONVEYED TO (AND ACCEPTED BY) BUYER AT THE CLOSING IN THE THEN EXISTING CONDITION OF THE ASSETS, AS IS, WHERE IS ,  WITH ALL FAULTS, AND WITHOUT ANY WRITTEN OR VERBAL REPRESENTATIONS OR WARRANTIES WHATSOEVER ,  WHETHER EXPRESS OR IMPLIED OR ARISING BY OPERATION OF LAW, other than as expressly set forth in this Agreement. Without limiting the generality of the foregoing, except as set forth in this Agreement, the transactions contemplated by this Agreement are without statutory, express or implied warranty,  representat ion,  agreement,  statement or expression of opinion of or with respect to the Condition of the Assets or any aspect thereof, including, without li mitat ion,  (i) any and all statutory, express or implied representations or warranties related to the suitability for habitation, merchantability, or fitness for a particular purpose, (ii) any statutory, express or implied representations or warranties created by any affirmation of fact or promise, by any description of

the Assets or by operation of law and (iii) all other statutory, express or implied representations or warranties by Seller whatsoever. Buyer acknowledges that Buyer has knowledge and expertise in financial and business matters that enable Buyer to evaluate the merits and risks of the transactions contemplated by this Agreement. The provisions of this Section 7.2 shall survive the Closing without limitation and shall not be deemed merged into any instrument or conveyance delivered at the Closing.

(b)ondit ion   of the  Assets.For  purposes  of  this  Agreement,  the  term "C nditio n of the Assets" means the following matters:

(i)Phys ica l  ondition  of the Hotels.  The quality, nature and adequacy of the physical condition of the Hotels, including, without limitation,  the quality of the design, labor and materials used to construct the improvements included in the Hotels; the condition of structural elements, foundations, roofs, glass, mechanical, plumbing, electrical, HVAC, sewage, and utility components and systems; the capacity or availability of sewer, water, or other utilities; the geology, flora, fauna, soils, subsurface conditions, groundwater, landscaping, and irrigation of or with respect to the Hotels, the location of the Hotels in or near any special taxing district, flood hazard zone, wetlands area, protected habitat, geological fault or subsidence zone, hazardous waste disposal or clean-up site, or other special area, the existence, location, or condition of ingress, egress, access, and parking; the condition of the personal property and any fixtures; the presence of any bedbugs, rodents, or other pests; and the presence  of any  asbestos  or other  Hazardous  Materials,  dangerous, or toxic substance, material or waste in, on, under or about the Hotels and the improvements located thereon. "Hazardous Material "means (A) those substances included within the definitions of any one or more of the terms "hazardous substances," "toxic pollutants", "hazardous materials", "toxic substances", and "hazardous waste" in the Comprehensive Environmental Response,  Compensation and Liability Act, 42 U.S.C. § 960 I et seq. (as amended), the Hazardous Materials Transportation Act, as amended, 49 U.S.C. Sections 1801 et seq., the Resource Conservation and Recovery Act of 1976 as amended, 42 U.S.C.  Section  6901  et  seq., Section 311 of the Clean Water Act, 15 U.S.C. § 2601  et  seq., 33  U.S.C.  § 1251 et seq., 42 U.S.C. 7401 et seq. and the regulations  and  publications  issued under any such laws, (B) petroleum, radon gas, lead  based  paint,  asbestos  or asbestos containing material and polychlorinated biphenyls and (C) mold or water conditions which may exist at the Hotels or other matters governed  by  any  applicable federal, state or local law or statute.

(ii)Adequacy of the A  s  ts. The economic feasibility, cash flow and expenses of the Assets, and habitability, merchantability, fitness, suitability and adequacy of the Hotels for any particular use or purpose.

(iii)Legal C mp l  iance of the A ets.  The  compliance  or  non- compliance of Seller or the operation of the Hotels or any part thereof in accordance with, and the contents of, (A) all codes, laws, ordinances, regulations, agreements, licenses, permits, approvals and applications of or with  any  Governmental Authorities asserting jurisdiction over the Hotels, including, without limitation,

those relating to zoning, land use, building, public works, parking, fire and police access, handicap access, life safety, subdivision and subdivision sales, and Hazardous Materials, dangerous, and toxic substances, materials, conditions or waste, including, without limitation, the presence of Hazardous Materials in, on, under or about the Hotels that would cause state or federal agencies to order a cleanup of the Hotels under any applicable legal requirements and (B) all agreements, covenants, conditions, restrictions (public or private), condominium plans, development agreements, site plans, building permits, building rules, and other instruments and documents governing or affecting the use, management, and operation of the Hotels.

(iv)Matters Disclosed in the Schdu les and the Asset Fi le. Those matters referred to in this Agreement and the documents listed on the schedules attached hereto and the matters disclosed in the Asset File.

(v)Insurance. The availability, cost, terms and coverage of liability, hazard, comprehensive and any other insurance of or with respect to the Hotels.

(vi)ondiLion of Tit le. The condition of title to the Hotels, including, without limitation, vesting, legal description, matters affecting title, title defects, liens, encumbrances, boundaries, encroachments, mineral rights, options, easements, and access; violations of restrictive covenants, land use, zoning ordinances, setback lines, or development agreements; the availability, cost, and coverage of title insurance; leases, rental agreements, occupancy agreements, rights of parties in possession of, using, or occupying the Hotels; and standby fees, taxes, bonds and assessments.

SECTION 7.3.Release. Buyer hereby agrees that unless Seller has committed Actual Fraud (as hereinafter defined), Seller, and each of its partners, members, trustees, directors, officers, employees, representatives, property managers, asset managers, agents, attorneys, Affiliates and related entities, heirs, successors, and assigns (collectively, including Seller, the "Releasees") shall be, and are hereby, fully and forever released and discharged from any and all liabilities, losses, claims (including third party claims), demands, damages (of any nature whatsoever), causes of action, costs, penalties, fines, judgments, reasonable attorneys' fees, consultants' fees and costs and experts' fees (collectively, the "Claims") with respect to any and all Claims, whether direct or indirect, known or unknown, foreseen or unforeseen, that may arise on account of or in any way be connected with the Assets or the Hotels including, without limitation, the physical, environmental and structural condition of the Hotels or any law or regulation applicable thereto, including, without limitation, any Claim or matter (regardless of when it first appeared) relating to or arising from (a) the presence of any environmental problems, or the use, presence, storage, release, discharge, or migration of Hazardous Materials on, in, under or around the Hotels regardless of when such Hazardous Materials were first introduced in, on or about the Hotels, (b) any patent or latent defects or deficiencies with respect to the Hotels, (c) any and all matters related to the Hotels or any portion thereof (including without limitation, the condition and/or operation (subject to any representations or warranties made in respect to operations) of the Hotels and each part thereof), and (d) the presence, release and/or remediation of asbestos and asbestos containing materials in, on or about the Hotels regardless of when such

asbestos and asbestos containing materials were first introduced in, on or about the Hotels, including, in each instance referenced in (a) through (c) above, any claims arising in whole or in part as a  result of the negligence or strict liability of any Releasee; provided, however, that in no event shall Releasees be released from (i) any Claims arising pursuant to the provisions of this Agreement or Seller's obligations, if any, under the Closing Documents or (ii) any Claims arising from any fraudulent acts committed by Seller to Buyer in connection with the transactions contemplated by this Agreement. Buyer hereby waives and agrees not to commence any action, legal proceeding, cause of action or suits in law or equity, of whatever kind or nature, including, but not limited to, a  private right of action under the federal Superfund laws, 42 U.S.C. Sections 960 I et seq. (as such laws and statutes may be amended, supplemented or replaced from time to time), directly or indirectly, against the Releasees or their agents in connection with Claims described above and all similar provisions or rules of law. In this connection and to the greatest extent permitted by law, Buyer hereby agrees, represents and warrants that Buyer realizes and acknowledges that factual matters not known to it may have given or may he1eafter give rise to causes of action, claims, demands, debts, controversies, damage, costs, losses and expenses which are presently unknown, unanticipated and unsuspected, and Buyer further agrees, represents and warrants that the waivers and releases herein have been negotiated and agreed upon in light of that realization and that Buyer nevertheless hereby intends to release, discharge and acquit the Releasees from any such unknown, unanticipated or unsuspected Claims, debts, and controversies which might in any way be included as a material portion of the consideration given to Seller by Buyer in exchange for Seller's performance hereunder. The term "Actual Fraud" as used in this paragraph shall mean that Selle1 has intentionally misrepresented material facts with respect to the Hotels for the purpose of deceiving Buyer, as determined by a final, non-appealable judgement by a court of competent jurisdiction. Without limiting the generality of the foregoing, the sale of the Assets shall be subject to all waivers of warranty and releases set forth in the Deed. Seller has given Buyer material concessions regarding this transaction in ex.change for Buyer agreeing to the provisions of this Section 7.3. Seller and Buyer have each initialed this Section 7.3 lo futther indicate their awareness and acceptance of each and cv.ery provision hereof. The provisions of this Section 7.3 shall survive the Closing without limitation and shall not be deemed merged into any instrument or conveyance delivered at the Closing.

BUYER'S INITIALS:

SECTION 7.4.DISCLAIMER. ANY INFORMATJON PROVIDED OR TO BE PROVJDED WITH RESPECT TO THE ASSETS IS SOLELY FOR BUYER'S CONVENIENCE AND WAS OR WILL BE OBTAINED FROM A VARIETY OF SOURCES. SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION AND MAKES NO (AND EXPRESSLY DISCLAIMS ALL) REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION EXCEPT AS EX PRESSLY SET FORTH IN THIS AGREEMENT OR THE CLOSING DOCUMENTS. SELLER SHALL NOT BE LIABLE FOR ANY MISTAKES, OMISSIONS, MISREPRESENTATION OR ANY FAILURE TO INVESTIGATE THE ASSETS NOR SHALL SELLER BE BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS, APPRAISAL,

asbestos and asbestos containing materials were first introduced in, on or about the Hotels, including, in each instance referenced in (a) through (c) above, any claims arising in whole or in part as a result of the negligence or strict liability of any Releasee; provided, however, that in no event shall Releasees be released from (i) any Claims arising pursuant to the provisions of this Agreement or Seller's obligations, if any, under the Closing Documents or (ii) any Claims arising from any fraudulent acts committed by Se11er to Buyer in connection with the transactions contemplated by this Agreement. Buyer hereby waives and agrees not to commence any action, legal proceeding, cause of action or suits in law or eqwty, of whatever kind or nature, including, but not limited to, a private right of action under the federal Superfund laws, 42 U.S.C. Sections 9601 et seq. (as such laws and statutes may be amended, supplemented or replaced from time to time), directly or indirectly, against the Releasees or their agents in connection with Claims described above and all similar provisions or rules of law. In this connection and to the greatest extent permitted by law, Buyer hereby agrees, represents and warrants that Buyer realizes and acknowledges that factual matters not known to it may have given or may hereafter give rise to causes of action, claims, demands, debts, controversies, damage, costs, losses and expenses which are presently unknown, unanticipated and unsuspected, and Buyer further agrees, represents and warrants that the waivers and releases herein have been negotiated and agreed upon in light of that realization and that Buyer nevertheless hereby intends to release, discharge and acquit the Releasees from any such unknown, unanticipated or unsuspected Claims, debts, and controversies which might in any way be included as a material portion of the consideration given to Seller by Buyer in exchange for Seller's performance hereunder. The term "Actual Fraud" as used in this paragraph shall mean that Seller has intentionally misrepresented material facts with respect to the Hotels for the purpose of deceiving Buyer, as determined by a final, non-appealable judgement by a court of competent jurisdiction. Without limiting the generality of the foregoing, the sale of the Assets shall be subject to all waivers of warranty and releases set forth in the Deed. Seller has given Buyer material concessions regarding this transaction in exchange for Buyer agreeing to the provisions of this Section 7.3. Seller and Buyer have each initialed this Section 7.3 to further indicate their awareness and acceptance of each and every provision hereof. The provisions of this Section 7,3 shall survive the Closing without limitation and shall not be deemed merged into any instrument or conveyance delivered at the Closing.

SELLER'S INITIALS:

SECTION 7.4.DISCLAIMER. ANY INFORMATION PROVIDED OR TO BE PROVIDED WITH RESPECT TO THE ASSETS IS SOLELY FOR BUYER'S CONVENIENCE AND WAS OR WILL BE OBTAINED FROM A VARJETY OF SOURCES. SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR VERJFICATION OF SUCH INFORMATION AND MAKES NO (AND EXPRESSLY DISCLAIMS ALL) REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR THE CLOSING DOCUMENTS. SELLER SHALL NOT BE LIABLE FOR ANY MISTAKES, OMISSIONS, MISREPRESENTATION OR ANY FAILURE TO INVESTIGATE THE ASSETS NOR SHALL SELLER BE BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS, APPRAISAL,

ENVIRONMENTAL ASSESSMENT REPORTS OR OTHER INFORMATION PERTAINING TO THE ASSETS OR THE OPERATION THEREOF, FURNISHED BY SELLER, ITS REPRESENTATIVES OR ANY OTHER PERSON OR ENTITY ACTING ON SELLER'S BEHALF EXCEPT, IN EACH CASE, AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY OF THE CLOSJNG DOCUMENTS.

BUYER'S INITIALS:

ARTICLE VIII

TITLE AND PERMITTED EXCEPTIONS

SECTION 8.1.Title Insurance and Survey. The Hotels shall be sold and are to be conveyed, and Buyer agrees to purchase the Hotels, subject to the Permitted Exceptions.

SECTION 8.2.Title Commitment und Survey.  Promptly after the Effective Date, Buyer shall order from the Title Company a Title Commitment. Prior to the Title Report Objection Date, Buyer shall also have the right to obtain from a surveyor registered in the Commonwealth of Pennsylvania an ALTA/NSPS as-built survey(s) of the Asset(s) (individually or collectively, as the context shall require, the "Survey"). Buyer is solely responsible for obtaining any updated title commitments, surveys, or any other title related matters Buyer desires with respect to the Assets, at Buyer's sole cost and expense. Buyer shall have until not later than 5:00 P.M. (Eastern Standard

Time) on the date that is no later than ten ( I 0) days prior to the end of the Due Diligence Period (the "Title Rop011 Objection l)atc"), to notify Seller's attorney in writing (the "Title Rcpo1t  Objection NpticoH) as to any items shown on the Title Commitment or any matters disclosed by the Survey that Buyer believes are not Permitted Exceptions. Buyer's failure to timely deliver the Title Report Objection Notice on or prior to the 5:00 P.M. (Eastern Standard Time) on the Title Report Objection Date shall constitute Buyer's irrevocable acceptance of the Title Commitment and Survey and Buyer shall be deemed to have unconditionally waived any right to object to any matters set forth therein. If Buyer timely delivers a Title Report Objection Notice, Seller shall have seven (7) days after receipt of such notice to notify Buyer in writing (the "Seller Response Notice") (i) that Seller will remove or cause to be removed such objectionable exceptions from title on or before the Closing, in which case the provisions of subsection 8.3(b) shall apply; or (ii) that Seller elects not to cause such exceptions to be removed in which case Buyer may elect, at any time by written notice to Seller prior to the end of the Due Diligence Period, to accept the Title Commitment and/or Survey in its current condition or terminate this Agreement and the Deposit shall be returned to Buyer and the pa1ties shall have no further obligations to each other except for those that expressly survive the termination of this Agreement. Notwithstanding anything to the contrary herein, in the event that Buyer does not elect, by written notice to Seller prior to the end of the Due Diligence Period, to terminate this Agreement pursuant to this Section 8.2, Buyer shall be deemed to have elected to accept the Title Commitment and/or Survey in its current condition and shall waive any right to terminate this Agreement pursuant to this Section 8,2. Nothing in this subsection shall require Seller, despite any election by Seller to attempt to discharge any title exceptions, to take or bring any action or proceeding or any other steps to remove any title exception or to expend any moneys therefor, other than with respect to the Post Effective Date

31

ENVIRONMENTAL ASSESSMENT REPORTS OR OTHER INFORMATION PERTAINING TO THE ASSETS OR THE OPERATION THEREOF, FURNISHED BY SELLER, ITS REPRESENTATIVES OR ANY OTHER PERSON OR ENTITY ACTING ON SELLER'S BEHALF EXCEPT, IN EACH CASE, AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY OF THE CLOSING DOCUMENTS.

SELLER'S INITIALS:BUYER'S INITIALS:

ARTICLE VIII

11TLE AND PERMITTED EXCEPTIONS

SECTION 8.1.Tit le  Insmaa.ce and Survey. The Hotels shall be sold and are to be conveyed, and Buyer agrees to purchase the Hotels, subject to the Permitted Exceptions,

SECTION 8.2.1  ue C ommitm ent and Survey. Promptly after the Effective Date, Buyer shall order from the Title Company a Title Commitment. Prior to the Title Report Objection Date, Buyer shall  also have the  right to  obtain  from  a surveyor  registered  in the Commonwealth of Pennsylvania an ALTA/NSPS as-built survey(s) of the Asset(s) (individually  or collectively,  as the context shall require, the "Survey"). Buyer is solely responsible for obtaining any updated title commitments, surveys, or any other title related  matters  Buyer  desires  with  respect  to the Assets, at Buyer's sole cost and expense. Buyer shall have lUltil not later than 5:00 P.M. (Eastern Standard Time) on the date that is no later than ten (10) days  prior to the  end  of the Due Diligence Period  (the "Title Report Objection Date"), to notify Seller's attorney in writing  (the  "Title  Report Objection Notice") as to any items shown on the Title  Commitment  or  any  matters  disclosed  by the Survey that Buyer believes are not Permitted Exceptions. Buyer's failure to timely deliver  the Title Report Objection Notice on or prior to the 5:00 P.M. (Eastern Standard Time) on the Title Report Objection Date shall constitute Buyer's irrevocable  acceptance  of  the  Title  Commitment and Survey and Buyer shall be deemed to have unconditionally waived any right to object to any matters set forth therein. If Buyer timely delivers a  Title Report  Objection  Notice,  Seller  shall  have seven (7) days after receipt of such notice to notify Buyer in writing (the "Seller Response Notice") (i) that Seller will remove or  cause  to be removed  such  objectionable  exceptions  from title on or before the Closing, in which case the provisions  of subsection  8.3(b) shall apply; or (ii) that Seller elects not to cause such exceptions to  be  removed  in which  case Buyer  may elect, at  any time by written notice to Seller prior to the end of the Due Diligence Period, to accept the Title Commitment and/or Survey in its current condition or terminate this  Agreement  and the Deposit shall be returned to Buyer and the parties shall have no further obligations to each other except for those that expressly survive the termination of this Agreement. Notwithstanding anything to the contrary herein, in the event that Buyer  does  not  elect,  by written  notice to Seller prior  to the end of the Due Diligence Period, to terminate  this Agreement  pursuant  to this Section  8.2, Buyer shall be deemed to have elected to accept the Title Commitment  and/or  Survey in its current  condition and shaU waive any right to terminate this Agreement pursuant to this Section 8.2. Nothing in this subsection shall require Seller, despite any election by Seller to attempt to discharge any title exceptions, to take or bring any action or proceeding or any other steps to  remove  any  title exception or to expend any moneys therefor, other than with respect to the Post Effective Date

Monetary Encumbrances and Post Effective Date Seller Encumbrances (as hereinafter defined) pursuant to Section 8.3 of this Agreement.

SECTION  8.3.De  li very  of Tit le  .

(a)Po  t  Effect ive  D  ate ell e  r  Enc um bran ces . As of the Closing, Seller shall obtain releases of or cause Title Company to insure over or against (i) the deeds  of  trust  or mortgages created by Seller encumbering the Hote ls ,  and (ii) any liens encumbering the Hotels affirmatively placed on the Hotels by Seller after the effective date of the Title Commitment ("  Post Effective Date Selle r Encumb rances").  Other than as set forth in this  Agreement  (including, without  li mitatio n,  the  first  sentence  of  this   subsection 8.3(a),   and   the   entirety   of subsection 8.3(c)), Seller shall not be required to take or bring any  action  or  proceeding  or any other steps to remove any title exception or to expend any moneys therefor,  nor shall  Buyer  have any right of action against Selle r,  at law or in equ it y,  for Seller's inability to convey  title subject  only to the Permitted Exceptions.

(b)Rights of  Te  rminat io n. Notwithstanding the foregoing, in the event that Seller is unable to convey title subject only to the Permitted Exceptions, and Buyer has not, prior to the Closing Date, given notice to Seller that Buyer is willing to waive objection to each title exception which is not a Permitted Exception, Seller shall have the right, in Seller's sole and absolute discretion, to (i) take such action as Seller shall deem advisable to attempt to discharge or cause Title Company to insure over or against each such title exception which is not a Permitted Exception or (ii) terminate this Agreement. In the event that Seller shall elect to attempt to discharge or cause Title Company to insure over or against such title exceptions which are not Permitted Exceptions, Seller shall be entitled to one or more adjournments of the Closing Date for a period not to exceed 60 days in the aggregate. If, for any reason whatsoever, Seller has not discharged or caused Title Company to insure over or against such title exceptions which are not Permitted Exceptions prior to the expiration of the last of such adjournments, and if Buyer is not willing to waive objection to such title exceptions, this Agreement shall be terminated as of the expiration of the last of such adjournments. In the event of a termination of this Agreement pursuant to this subsection 8.3(b), the Deposit shall be refunded to Buyer and neither party shall have any further rights or obligations hereunder except for those that expressly survive the termination of this Agreement. Except for a lien or encumbrance evidencing or securing a monetary obligation of the Seller, nothing in this clause (b) shall require Seller, despite any election by Seller to attempt to discharge or cause Title Company to insure over to Buyer's reasonable satisfaction or against any title exceptions,  to take or bring any action or proceeding or any other steps to remove any title exception or to expend any moneys therefor, other than with respect to the Post Effective Date Seller Encumbrances and the Post Effective Date Monetary Encumbrances (as hereinafter defined) .

(c)Post Effective Date  Mone  tary E  ncum bran ces .  Notwithstanding  the forego ing,  at the Clos ing ,  in addition to releasing or causing Title Company to insure over or against any Post Effective Date Seller Encumbrances which Buyer does not waive its objection to pursuant to subsection 8.3(b), Seller shall obtain  a release of or cause Title Company  to insure over or against any lien encumbering  the Hotels after the effective date of the Title Commitment  caused or created by Seller and which may be removed or insured over solely by the payment of a sum of money (a " Pos t  ffec ti ve  Date Mo  ne tary  E  nc  umbr anc e" ).

SECTION 8.4.Cooperation. In connection with obtaining the Title Policy, Buyer and Seller, as applicable, and to the extent requested by Title Company, will deliver to Title Company (a) evidence sufficient to establish (i) the legal existence of Buyer and Seller and (ii) the authority of the respective signatories of Seller and Buyer to bind Seller and Buyer, as the case may be, (b) a certificate of good standing of Seller, and (c) an affidavit acceptable and approved by the Title Company to satisfy or delete all any Permitted Exceptions.

ARTICLE IX

TRANSACTION COSTS AND RISK OF LOSS

SECTION 9.1.Transaction Costs.

(a)Apportionment of Costs. In addition to the their respective apportionment obligations hereunder, (i) Seller and Buyer shall each be responsible for the payment of the costs of their respective legal counsel, advisors and other professionals employed thereby in connection with the sale of the Assets; (ii) Buyer and Seller shall each be responsible for the payment of fifty percent (50%) of the cost of any escrow established under this Agreement (including, but not limited to, any fees and expenses of Escrow Agent); (iii) Buyer and Seller shall each be responsible for the payment of fifty percent (50%) of any state and local transfer, or conveyance taxes payable in connection with the conveyance of the Hotels, and any sales, use, or similar taxes due in connection with the transfer of the portion of the Hotels constituting personal property (including vehicles); and (iv) Buyer shall be solely responsible for the payment of: (A) the policy premiums for the Title Policy, (B) any recording fees or stamp taxes payable in connection with the conveyance of the Assets, or any other changes or fees payable in connection with the conveyance of the Assets, (C) Intentionally omitted, (D) all costs and expenses associated with Buyer's due diligence, (E) all costs of (1) removing any so-called "standard exceptions" to the Title Policy, unless such standard exceptions may be satisfied by a customary owner's affidavit, (2) obtaining an extended coverage Title Policy and (3) any endorsements to the Title Policy, and the cost of obtaining the Survey; (F) the policy premiums in respect of any mortgage title insurance obtained by Buyer or its lender; (G) all search costs with respect to the Assets and updates related thereto not included in the basic policy premium; (H) any fees payable to replace the goods or services provided under the Operating Agreements (which are not assigned or transferred to Buyer); (I) obtaining any financing Buyer may elect to obtain (including any fees, financing costs, mortgage and recordation taxes and documentary stamps in connection therewith); and (J) the application for, the issuance of and/or the performance under the Replacement Franchise Agreement (including, but not limited to, any fees, reimbursements or other amounts charged by Franchisor in connection with the issuance of the Replacement Franchise Agreement).

(b)Indemnification. Each party to this Agreement shall indemnify the other parties and their respective successors and assigns from and against any and all loss, damage, cost, charge, liability or expense (including court costs and reasonable attorneys' fees) which such other party may sustain or incur as a result of the failure of either party to timely pay any of the aforementioned taxes, fees or other charges for which it has assumed responsibility under this section.

(c)Survival. The provisions of this Article IX shall survive the Closing or the termination of this Agreement without limitation.

SECTION 9.2.Risk of Loss.

(a)C  ndemnation and Casua lt y.  If, after the Effective Date but on or before the Closing Date, the Hotels or any portion thereof shall be (i) damaged or destroyed by fire or other casualty or (ii) taken as a result of any condemnation or eminent domain proceeding, Seller shall promptly notify Buyer and, at Closing, Seller will credit against the Purchase Price payable by Buyer at the Closing an amount equal to the net proceeds (other than on account of business or rental interruption relating to the period prior to Closing), if any, received by Seller as a result of such casualty or condemnation, plus the amount of any deductible payable by Buyer (unless such casualty or condemnation constitutes a Material Casualty or Material Condemnation, as applicable, in which case no deductible paid by Buyer shall be credited against the Purchase Price), less any amounts spent by Seller to restore the Hotels. Subject to subsection 9.2(d), if as of the Closing Date, Seller has not received any such insurance or condemnation proceeds, then the parties shall nevertheless consummate on the Closing Date the conveyance of the Assets (without any credit for such insurance or condemnation proceeds except for a credit for any deductible payable by Buyer under such insurance, unless a Material Casualty or Material Condemnation has occurred, as applicable, in which case no deductible paid by Buyer shall be credited against the Purchase Price) and Seller will at the Closing assign to Buyer all rights of Seller (Notwithstanding 3.4(a), Seller will maintain 100% of the replacement costs of the Hotels via Seller's insurance), if any, to the insurance or condemnation proceeds (other than on account of business or rental interruption relating to the period prior to Closing) and to all other rights or claims arising out of or in connection with such casualty or condemnation.

(b)Right of Terminat ion. Notwithstanding the provisions of subsection 9.2(a), if, on or before the Closing Date, the Hotels or any portion thereof shall be (i) damaged or destroyed by a Material Casualty or (ii) taken as a result of a Material Condemnation, Buyer shall have the right, exercised by notice to Seller no more than fifteen (15) Business Days after Buyer has received notice of such Material Casualty or Material Condemnation, to terminate this Agreement with respect to the subject Hotel, in which event Deposit shall be refunded to Buyer and neither party shall have any further rights or obligations hereunder other than those which expressly survive the termination of this Agreement; notwithstanding the foregoing, if a Material Causality occurs to one or more of the Hotel, party may elect to reduce the Deposit by the proportional share of the subject hotel or hotels amount, and proceed to Closing. If Buyer fails to timely terminate this Agreement in accordance with this subsection 9.2(b), the provisions of subsection 9.2(a) shall apply as if the casualty or condemnation did not rise to the level of a Material Casualty or Material Condemnation, as applicable. As used in this subsection 9.2(b), a "Material asualty" shall mean any damage to the Hotels or any portion thereof by fire or other casualty that in Seller's architects or engineer's reasonable judgment may be expected to cost in excess of Seven Hundred Fifty Thousand and no/I 00 Dollars ($750,000.00) for each Hotel to repair. As used in this subsection 9.2(b), a "Material ondemnation" shall mean a taking of the Hotels or any material portion thereof as a result of a condemnation or eminent domain proceedings that permanently impairs the use and value of such Hotels, and which cannot be restored to substantially the same use and value as before the taking.

(c)Seller Risk of Loss. Subject to the provisions of this Section 9.2, the risk of loss or damage to the Hotels shall remain with Seller until delivery of the Deed.

(d)Ins  urance Proceeds. Subject to subsections 9.2(a) and (b), Buyer and Seller hereby agree that any insurance claims, insurance proceeds or other recoveries payable in connection with a casualty occurring prior to the Closing Date shall be retained by or paid to Seller, and are not part of the Assets to be transferred to Buyer. If any such proceeds or recoveries are received by Buyer ,  Buyer shall promptly deliver the same to Seller. The provisions of this subsection 9.2(d) shall survive the Closing without limitation.

ARTICLE X

ADJUSTMENTS

SECTION 10.1.Adjustments. Unless otherwise provided below, the following and all revenue and expenses are to be adjusted and prorated between Seller and Buyer as of 11:59

P.M. on the day preceding the Closing, local time for each of the Hotels (the "Cut-Off Time"), based upon a 365-day year, and the net amount thereof under this Section I 0.1 shall be added to (if such net amount is in Seller's favor) or deducted from (if such net amount is in Buyer's favor) the Purchase Price payable at the Closing:

(a)Taxes and Ass essme.nts. All real estate and personal property taxes and assessments and condominium assessments and fees levied against the Assets shall be prorated as of the Cut-Off Time between Buyer and Seller. With respect to Hotels, if the amount of any such taxes is not ascertainable on the Closing Date, the proration for such taxes shall be based on the most recent available bill; provided, however, that after the Closing, Seller and Buyer shall reprorate the taxes (based upon the highest available discount) and pay any deficiency in the original proration to the other party promptly upon receipt of the actual bill for the relevant taxable period. In the event that the Assets or any part thereof shall be or shall have been affected by an assessment or assessments, whether or not the same become payable in annual i nstallments ,  Seller shall, at the Closing, be responsible for any installments due prior to the Closing and Buyer shall be responsible for any installments due on or after the Closing. The reproration obligation in this subsection 10.l(a) shall survive the Closing without li m itation.

(b)Water  a  nd Sewer  Charges, Uti li tie . All utility services shall be prorated as of the Cut-Off Time between Buyer and Seller. To the extent possible, readings shall be obtained for all utilities as of the Cut-Off Time. If not possible, the cost of such utilities shall be prorated between Seller and Buyer by estimating such cost on the basis of the most recent bill for such service; provided, however ,  that after the Closing,  Seller and Buyer shall reprorate the amount for such utilities and pay any deficiency in the original proration to the other party promptly upon receipt of the actual bill for the relevant billing period. Seller shall receive a credit for all deposits transferred to Buyer or which remain on deposit for the benefit of Buyer with respect to such utility contracts, otherwise such deposits shall be refunded to Seller, as applicable.

(c)Operating  Agreements . Charges and payments (including the reimbursement of expenses) under all Operating Agreements.

(d)Miscellaneous Revenue s. Revenues, if any, arising out of any other income producing agreements not described in this Section 10.1.

(e)Inventory. Subject to subsection 10.l(f) below, Seller shall receive a credit for all Property Inventory and Retail Merchandise in unopened cases in an amount equal to Seller's actual cost (including sales and/or use tax) for such items.

(f)Alcoholic Beverages. If applicable, Seller shall receive a credit for all unopened bottles or containers of alcoholic beverages as of the Closing in an amount equal to Seller's actual cost (including sales and/or use tax) for such items.

(g)Lic enses and Permits. All amounts prepaid, accrued or due and payable under any Licenses and Permits (other  than  utilities  which  are  separately  prorated  under subsection 10.1 (b)) transferred to Buyer shall be prorated as of the Cut-Off  Time  between  Seller and Buyer. Seller shall receive a credit for all deposits made by Seller under  the  Licenses  and Permits which are transferred to Buyer or which remain on deposit for the benefit of Buyer.

(h)Deposits  for Bookin gs. Buyer shall receive a credit for all prepaid deposits for Bookings scheduled for accommodations or events on or after the Closing Date which Buyer is obligated to honor pursuant to this Agreement, except to the extent such deposits are transferred to Buyer.

(i)Restaurants and Bars. Seller shall close out the transactions in the restaurants and bars in the Hotels as of the Cut-Off Time and shall retain all monies accrued as of the Cut-Off Time, and Buyer shall be entitled to any monies accrued from the restaurants and bars thereafter.

U) Vend ing  Ma  h ines. Seller shall remove all monies from all vending machines, laundry machines, pay telephones and other coin-operated equipment as of the Cut-Off Time and shall retain all monies collected therefrom as of the Cut-Off Time, and Buyer shall be entitled to any monies collected therefrom after the Cut-Off Time.

(k)Trade Payable  s. Except to the extent an adjustment or proration is made under another subsection of this Section 10.1, (i) Seller shall be responsible for all amounts payable to vendors, contractors or other suppliers of goods or services to the Hotels (the "Trade Payables") prior to the Closing which are due and payable as of the Closing Date for goods or services which have been delivered to the Hotels prior to Closing, and (ii) Buyer shall receive a credit for the amount of such Trade Payables which have accrued, but are not yet due and payable, as of the Closing Date, and Buyer shall pay all such Trade Payables accrued as of the Closing Date when such Trade Payables become due and payable up to the amount of such credit (plus any late fees and penalties resulting from Buyer's failure to pay such Trade Payables when due); provided, however, Seller and Buyer shall reprorate the amount of credit for any Trade Payables and pay any deficiency in the original proration to the other party promptly upon receipt of the actual bill for such goods or services. Seller shall receive a credit to the Purchase Price for all advance payments or deposits made with respect to FF&E, Retail Merchandise, Property and Equipment, Inventories and other property ordered, but not delivered to the Hotels, prior to the Closing Date, and Buyer shall pay the amounts which become due and payable for such FF&E, Retail Merchandise,

Property and Equipment, Inventories and other property which  were ordered  but not delivered  to  the Hotels prior to Closing. The reproration obligation in this subsection I 0.1(k) shall survive the Closing without limitation.

(I)Cash. Seller shall receive a credit to the Purchase Price for all cash on hand at the Hotels and all cash on deposit in any house bank at the Hotels as of the Closing. Seller shall retain all amounts in any operating accounts of the Hotels in any bank, and there shall be no credit or adjustment hereunder with respect to such cash.

(m)Emplo yee ompen ation. Seller shall be responsible for the following liabilities to or respecting Employees having accrued prior to the Cut-Off Time: all Employees' wages, bonuses, pension benefits, any COBRA rights, together with F.I.C.A. unemployment and other taxes and benefits due from any employer of such Employees specifically excluding both (x) any accrued sick leave and (y) any unearned vacation pay. Notwithstanding the foregoing, with respect to accrued bonuses for the year in which the Closing occurs, Seller's pro-rated share shall be based upon the estimated bonus to be paid in the year of Closing. Buyer shall be responsible for all other liabilities to or respecting Employees, whether having accrued prior to or after the Cut-Off Time. Buyer shall be responsible for all severance payments for Employees arising on or after the Closing and for all Employees not offered employment by Buyer (or its manager) as of the Closing on the same terms as those provided to such Employees by Manager on the day immediately preceding the Closing Date.

(n)Leases. All rents and other amounts prepaid, accrued or due and payable under any of the Leases shall be prorated as of the Cut-Off Time between Seller and Buyer. Buyer shall receive a credit for all security deposits, if any, held by Seller.

(o)Other.  If applicable, the Purchase Price shall be adjusted at Closing to reflect the adjustment of any other item which, (i) under the explicit terms of this Agreement, is to be apportioned at Closing to effectuate the intent that, except as otherwise expressly provided herein, all items of operating revenue and operating expense of the Assets prior to the Cut-Off Time shall be for account of and paid by Seller and all items of operating revenue and operating expense of the Assets with respect to the period after the Cut-Off Time shall be for the account of and paid by Buyer, or (ii) is customarily prorated at the closing of similar transactions.

SECTION I 0.2.Re-Adjustment. Except as provided in subsection 10.1(a), if any items to be adjusted pursuant to this Article X are not determinable at the Closing, the adjustment shall be made subsequent to the Closing when the charge is determined. Either Seller or Buyer may deliver to the other party no later than 90 days following the Closing Date a schedule of prorations setting forth such party's determination of any adjustments to the prorations made at Closing that it believes are necessary to complete the prorations as set forth in this Article X. Any errors or omissions in computing adjustments or readjustments at the Closing or thereafter shall be promptly corrected or made, provided that the party seeking to correct such error or omission or to make such readjustment shall have notified the other party of such error or omission or readjustment on or prior to the date that is 90 days following the Closing.

SECTION 10.3.Accounts Receivable.

(a)Guest Ledger. All revenues received or to be received from transient guests on account of room rents for the period prior to and including the Cut-Off Time shall belong to Seller. At Closing, Seller shall receive a credit in an amount equal to: (i) all amounts charged to the Guest Ledger for all room nights up to (but not including) the night during which the Cut-Off Time occurs, and (ii) one-half of all amounts charged to the Guest Ledger for the room night which includes the Cut-Off Time and the night preceding the consummation of the Closing. For the period beginning on the day immediately following the Cut-Off Time, such revenues collected from the Guest Ledger shall belong to Buyer. In the event that an amount less than the total amount due from a guest is collected and the guest continues in occupancy after the Cut-Off Time, such amount shall be applied first to any amount owing by such person to Seller and thereafter to such person's amounts accruing to Buyer.

(b)Accoun ts  Receiva ble (Other than Guest Ledge r).

(i)On the Closing Date Seller shall retain all Accounts Receivable and retain the right to pursue collection as to any such Accounts Receivable due to Seller.

(ii)The Accounts Receivable shall not include the Guest Ledger, which is addressed in subsection I 0.3(a).

SECTION I 0.4.Survival. The provisions of this Article X and the obligations of Seller and Buyer hereunder shall survive the Closing without limitation.

ARTICLE XI

INDEMNIFICATION

SECTION 11.1.Indemnification by eller.  From and after the Closing and subject to Sections 11.3 and 11.4, Seller shall indemnify and hold Buyer, its Affiliates, members and partners, and the partners, shareholders, officers, directors, employees, representatives and agents of each of the foregoing (collectively, the " Buye r-  Re  lated  E  nt itie s") harmless from and against any and all costs, fees, expenses, damages, deficiencies, interest and penalties (including, without limitation, reasonable attorneys' fees and disbursements) actually suffered or incurred by any such indemnified party in connection with any and all losses, liabilities, claims, damages and expenses ("Losses"), arising out of, or in any way relating to, (a) any breach of any representation or warranty of Seller contained in this Agreement or in any Closing Document and (b) any breach of any covenant of Seller which survives the Closing contained in this Agreement or in any Closing Document. Notwithstanding anything to the contrary contained herein, Seller shall have no liability or obligation to indemnify and hold Buyer Related Entities harmless from any Losses to the extent such Losses results from or is related to any acts or omissions of Manager or results from or is related to any acts or omissions of any of the Buyer-Related Entities. The provisions of this Section 11.  1  shall survive the Closing without limitation.

SECTION 11.2.Indemnification by Buyer. From and after the Closing, Buyer shall indemnify and hold Seller, its Affiliates, members and partners, and the partners, shareholders, officers, directors, employees, representatives and agents of each of the foregoing (collectively,

the "Selle  r-Relat ed nt itie  s") harmless from any and all Losses arising out of,  or in any way relating to, (a) any breach of any representation or warranty by Buyer contained in this Agreement or in any Closing Document and (b) any breach of any covenant of Buyer which survives the Closing contained in this Agreement or in any Closing Document. The provisions  of  this Section 11.2 shall survive the Closing without limitation.

SECTION 11.3.Lim itation  on  Ind e  mn ificat ion. Notwithstanding the foregoing provisions of Section 11.1 ,  (a) Seller shall not be required to indemnify Buyer or any Buyer Related Entities under this Agreement unless the aggregate of all amounts for which an indemnity would otherwise be payable by Seller under Section 11.1 or any other indemnity provisions of this Agreement exceeds the Basket Limitation and,  in such event, Seller shall be responsible only for such amount in excess of the Basket Limitation (but not in excess of the Cap Limitation), (b) in no event shall the liability of Seller with respect to the indemnification provided for in Section 1 I .1 or any other indemnity provisions of this Agreement exceed in the aggregate the Cap Limitation,  and (c) if prior to the Closing, Buyer obtains or has knowledge of any inaccuracy or breach of any representation, warranty or covenant of Seller contained in this Agreement (or the same is reflected by the Asset File) prior to Closing and nonetheless proceeds with and consummates the Closing (a " Buy e  r  Waived Brea h"), then Buyer and any Buyer-Related Entities shall be deemed to have waived and forever renounced any right to assert a claim for indemnification under this Article Xl for, or any other claim or cause of action under this Agreement, at law or in equity on account of any such Buyer Waived Breach.

SECTION 11.4.Survival. The representations, warranties and covenants of Seller contained in this Agreement and the Closing Documents shall survive for a period of six (6) months after the Closing unless otherwise provided for in this Agreement.

SECTION 11.5.lnd mn ifica tion  as ole Remedy.  If the Closing has occurred, the sole and exclusive remedy available to a party in the event of a breach by the other party to this Agreement of any representation, warranty, covenant or other provision of this Agreement or any Closing Document which survives the Closing shall be the indemnifications provided for under this Article XI, which indemnifications shall survive the Closing as provided in this Article XI without limitation.

ARTICLE XII

AT lON

SECTION 12. 1 .Seller's Tenninat ion.

(a)TERMINATION BY SELLER. THIS AGREEMENT MAY BE TERMINATED BY SELLER PRIOR TO THE CLOSING lF (I) ANY OF THE CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS SET FORTH IN SECTION 5.1 HAVE NOT BEEN SATISFIED OR WAIVED BY SELLER ON OR PRIOR TO THE CLOSING DATE OR

(II)THERE IS A MATERIAL BREACH OR DEFAULT BY BUYER IN THE PERFORMANCE OF ANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT. SELLER'S TERMINATION RIGHTS UNDER 12.l(a) MAY ONLY BE EXERCISED AFTER SELLER HAS BEEN

PROVIDED WITH WRITTEN NOTICE AND FIVE (5) BUSINESS DAYS' CHANCE TO CURE,

(b)CONSEQUENCE OF TERMINATION. IN THE EVENT THIS AGREEMENT IS TERMINATED PURSUANT TO SUBSECTION 12. l(a), THIS AGREEMENT SHALL BE NULL AND VOID AND OF NO FURTHER FORCE OR EFFECT AND NEITHER PARTY SHALL HAVE ANY RIGHTS OR OBLIGATIONS AGAINST OR TO THE OTHER EXCEPT (I) FOR THOSE PROVISIONS HEREOF WHICH BY THEIR TERMS EXPRESSLY SURVIVE THE TERMINATION OF THIS AGREEMENT AND (II) AS SET FORTH IN SUBSECTION 12.l(c),

(c)REMEDIES FOR BUYER DEFAULT. IN THE EVENT SELLER TERMINATES THIS AGREEMENT AS A RESULT OF A BREACH OR DEFAULT BY BUYER IN ANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT, ESCROW AGENT SHALL IMMEDIATELY DISBURSE THE DEPOSIT TO SELLER AND, UPON SUCH DISBURSEMENT, SELLER AND BUYER SHALL HAVE NO FURTHER OBLIGATIONS UNDER THIS AGREEMENT, EXCEPT THOSE WHICH EXPRESSLY SURVIVE SUCH TERMINATION. BUYER AND SELLER HEREBY ACKNOWLEDGE AND AGREE THAT IT WOULD BE IMPRACTICAL AND/OR EXTREMELY DIFFICULT TO FIX OR ESTABLISH THE ACTUAL DAMAGE SUSTAINED BY SELLER AS A RESULT OF SUCH DEFAULT BY BUYER, AND AGREE THAT THE DEPOSIT IS A REASONABLE APPROXIMATION THEREOF, ACCORDINGLY, SUBJECT TO SECTION 14.24 HEREIN, IN THE EVENT THAT BUYER BREACHES THIS AGREEMENT BY DEFAULTING IN THE COMPLETION OF THE PURCHASE OF THE ASSETS, THE DEPOSrT SHALL CONSTITUTE AND BE DEEMED TO BE THE AGREED AND LIQUIDATED DAMAGES OF SELLER, AND SHALL BE PAID BY ESCROW AGENT TO SELLER AS SELLER'S SOLE AND EXCLUSIVE REMEDY HEREUNDER; PROVIDED, HOWEVER, THE FOREGOING SHALL NOT LIMIT BUYER'S INDEMNITY OBLIGATIONS OWED TO SELLER PURSUANT TO THIS AGREEMENT WHICH SURVIVE A TERMINATION OF THIS AGREEMENT. THE PAYMENT OF THE DEPOSIT AS LIQUIDATED DAMAGES IS NOT INTENDED TO BE A FORFEITURE OR PENALTY, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER. FOR THE AVOIDANCE OF DOUBT, THESE REMEDIES FOR BUYER DEFUALT ARE ONLY AVAILABLE IF BUYER REFUSES TO CURE OR REFUSES TO BEGIN A PROCESS TO CURE IF A DEFAULT OR BREACH CANNOT BE CURED WITHIN FIVE (5) BUSINESS DAYS UNDER 12.l(a).

SELLER'S INITIALS:BUYER'S INITIALS:

2

(a)TERMINATION DY BUYER. THIS AGREEMENT MAY BE TERMINATED BY BUYER PRIOR TO THE CLOSING IF ANY OF THE CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS SET FORTH IN SECTION 5.2 HAVE NOT BEEN SATISFIED OR WAIVED BY BUYER ON OR PRIOR TO THE CLOSING DATE for any reason other than Buyer's breach or Default under this Agreement, In which case, Escrow Agent shall

40

PROVIDED WITH WRITTEN NOTICE AND FIVE (5) BUSINESS DAYS' CHANCE TO CURE.

(b)CONSEQUENCE OF TERMINATION. IN TI-IE EVENT THIS AGREEMENT IS TERMINATED PURSUANT TO SUBSECTION 12.l(a), THIS AGREEMENT SHALL BE NULL AND VOID AND OF NO FURTHER FORCE OR EFFECT AND NEITHER PARTY SHALL HAVE ANY RIGHTS OR OBLIGATIONS AGAINST OR TO THE OTHER EXCEPT (I) FOR THOSE PROVISIONS HEREOF WHICH BY THEIR TERMS EXPRESSLY SURVIVE THE TERMINATION OF THIS AGREEMENT AND (II) AS SET FORTH IN SUBSECTION 12.l(c).

(c)REivffiDlES FOR BUYER DEFAULT. IN THE EVENT SELLER TERMINATES THIS AGREEMENT AS A RESULT OF A BREACH OR DEFAULT BY BUYER IN ANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT, ESCROW AGENT SHALL IMMEDIATELY DISBURSE THE DEPOSIT TO SELLER AND, UPON SUCH DISBURSEMENT, SELLER AND BUYER SHALL HAVE NO FURTHER OBLIGATIONS UNDER THIS AGREEMENT, EXCEPT THOSE WHICH EXPRESSLY SURVIVE SUCH TERMINATION.  BUYER AND SELLER HEREBY ACKNOWLEDGE AND AGREE THAT IT WOULD BE IMPRACTICAL AND/OR EXTREMELY DIFFICULT TO FIX OR ESTABLISH THE ACTUAL DAMAGE SUSTAINED BY SELLER AS A RESULT OF SUCH DEFAULT BY BUYER, AND AGREE THAT THE DEPOSIT IS A REASONABLE APPROXIMATION THEREOF. ACCORDINGLY, SUBJECT TO SECTION 14.24 HEREIN, IN THE EVENT THAT BUYER BREACHES THIS AGREEMENT BY DEFAULTING IN THE COMPLETION OF THE PURCHASE OF THE ASSETS, THE DEPOSIT SHALL CONSTITUTE AND BE DEEMED TO BE THE AGREED AND LIQUIDATED DAMAGES OF SELLER, AND SHALL BE PAID BY ESCROW AGENT TO SELLER AS SELLER'S SOLE AND EXCLUSIVE REMEDY HEREUNDER; PROVIDED, HOWEVER, THE FOREGOING SHALL NOT LIMIT BUYER'S INDEMNITY OBLIGATIONS OWED TO SELLER PURSUANT TO THIS AGREEMENT WHICH SURVIVE A TERMINATION  OF THIS AGREEMENT.   THE PAYMENT  OF THE DEPOSIT AS LIQUIDATED DAMAGES IS NOT INTENDED TO BE A FORFEITURE OR PENALTY, BUT rs INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER. FOR THE AVOIDANCE OF DOUBT, THESE REMEDIES FOR BUYER DEFUALT ARE ONLY AVAILABLE IF BUYER REFUSES TO CURE OR REFUSES TO BEGIN A PROCESS TO CURE IF A DEFAULT OR BREACH CANNOT BE CURED WITHIN FIVE (5) BUSINESS DAYS UNDER 12.l(a).

SELLER'S INITIALS:

SECTION 12.2.Buyer  's Terminatio  n.

(a)TERMINATION BY BUYER. THIS AGREEMENT MAY BE TERMINATED BY BUYER PRIOR TO THE CLOSING IF ANY OF THE CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS SET FORTI-I IN SECTION 5.2 HAVE NOT BEEN SATISFIED OR WAIVED BY BUYER ON OR PRIOR TO THE CLOSING DATE for any reason other than Buyer's breach or Default under this Agreement, In which case, Escrow Agent shall

disburse the Deposit to Buyer, as Buyer's SOLE AND EXCLUSIVE REMEDY, AND UPON SUCH DISBURSEMENT, this Agreement shall be of no further force or effect, EXCEPT for THOSE provisions WHICH EXPRESSLY SURVIVE SUCH TERMINATION. BUYER'S TERMINATION RIGHTS UNDER 12.2(a) MAY ONLY BE EXERCISED AFTER A NOTICE WITH FIVE (5) BUSINESS DAYS CHANCE TO CURE.

(b)REMEDIES FOR SELLER DEFAULT. IF SELLER SHALL MATERIALLY DEFAULT IN THE PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT TO CAUSE THE SALE OF THE ASSETS ON THE CLOSING DATE, BUYER, AS ITS SOLE AND EXCLUSIVE REMEDY, MAY EITHER (I) TERMINATE THIS AGREEMENT and DIRECT ESCROW AGENT TO DELIVER THE DEPOSIT TO BUYER AND RETAIN THE DEPOSIT, AT WHICH TIME THIS AGREEMENT SHALL BE TERMINATED AND OF NO FURTHER FORCE AND EFFECT EXCEPT FOR THE PROVISIONS WHICH EXPLICITLY SURVIVE SUCH TERMINATION, OR (II) if(A) Seller's default constitutes a willful and intentional refusal or failure to convey the Assets as provided in this Agreement for any reason other than a provision of this Agreement that (1) permits Seller to terminate this Agreement, (2) relieves Seller of the obligation to convey the Assets or (3) conditions Seller's obligation to convey the Assets and such condition  has not been satisfied, and (B) Buyer has (I) waived all conditions to Closing for the benefit of Buyer under this Agreement, (2)has delivered to Escrow Agent and Title Company the documents, instruments and other items required to be delivered by Buyer at the Closing, including  immediately  available funds on account of the Purchase Price, together with an unconditional written instruction to proceed  to the Closing, and (3) Seller thereafter fails or refuses to deliver to Escrow Agent within three (3) Business Days thereafter the documents and instruments required to be delivered by Seller at the  Closing,  then Buyer may, in lieu of exercising the remedy provided for in subsection  12.2(b)(I)  (but  not  in addition thereto), commence appropriate  legal  proceedings  seeking  to  enforce  Seller's  obligation to convey the Assets through specific performance (including the right to file/record a !is pendens); provided, however, that no such proceeding for specific  performance  shall  require  Seller to do any of the following (unless otherwise expressly required of Seller by this Agreement): (x) change the physical condition of the Assets or restore the same after fire, casualty or condemnation; (y) expend money or post a bond to remove  a title objection  or other title defect or correct  any  matter  shown on the Survey (EXCEPT AS SET FORTH IN SUBSECTION 8.3(c)); or (z) secure any permit, approval, consent or other agreement or instrument from any third party not affiliated  with  Seller with respect to the Assets or Seller's conveyance of the Assets; provided, further, that the remedy provided for in this subsection 12.2(6)(II) shall be available to  Buyer  only  if Buyer  commences  such proceeding within not more than NINETY (90)  DAYS  AFTER  THE  SCHEDULED CLOSING DATE. FAILURE TO FILE A SUIT FOR SPECIFIC PERFORMANCE WITHIN NINETY (90) DAYS AFTER THE SCHEDULED CLOSING DATE SHALL BE DEEMED A WAIVER OF SUCH REMEDY. BUYER AND SELLER HEREBY ACKNOWLEDGE AND AGREE THAT IT WOULD BE IMPRACTICAL AND/OR EXTREMELY  DIFFICULT TO  FIX OR ESTABLISH THE ACTUAL DAMAGE SUSTAINED BY BUYER AS A RESULT OF SUCH DEFAULT BY SELLER, AND AGREE THAT THE REMEDY SET FORTH IN CLAUSE (I) ABOVE IS A REASONABLE APPROXIMATION THEREOF. ACCORDINGLY,  IN  THE EVENT THAT SELLER BREACHES THIS AGREEMENT BY DEFAULTING IN THE COMPLETION OF THE SALE, AND BUYER DOES NOT EXERCISE THE REMEDY SET FORTH IN CLAUSE (II) ABOVE,  THEREBY  LIMITING  IT TO THE  REMEDY  SET FORTH IN    CLAUSE    (I)   ABOVE,   THE    DELIVERY    OF   THE    DEPOSIT   TO   BUYER SHALL

CONSTITUTE AND BE DEEMED TO BE THE AGREED AND LIQUIDATED DAMAGES OF BUYER WHICH IS NOT INTENDED TO BE A FORFEITURE OR PENALTY, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO BUYER. BUYER AGREES TO, AND DOES HEREBY, WAIVE ALL OTHER REMEDIES AGAINST SELLER WHICH BUYER MIGHT OTHERWISE HAVE AT LAW OR IN EQUITY BY REASON OF SUCH DEFAULT BY SELLER. FOR THE AVOIDANCE OF DOUBT, THESE REMEDIES FOR SELLER DEFAULT ARE ONLY AVAILABLE IF SELLER REFUSES TO CURE OR REFUSES TO BEGIN A PROCESS TO CURE IF A DEFAULT OR BREACH CANNOT BE CURED WITHIN FIVE (5) BUSINESS DAYS UNDER 12.2(a).

BUYER'S INITIALS:

ARTICLE XIII

REAL  PROPERTY  TAXTI.EDUCTION PROCEED INGS

SECTION  13.1.Prosecution  end  Settlement  <>f Proceedin gs.   Seller  reserves  unto itself and shall have the right to initiate, prosecute and/or settle any tax reduction proceedings in respect of the Hotels relating to any period of Seller's ownership of the Hotels; provided, however, that Seller shall not settle any tax reduction proceedings in respect of the Hotels relating to or affecting taxes attributable to the fiscal year in which the Closing occurs without Buyer's prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed, Buyer shall reasonably cooperate with Seller in connection with the prosecution of any such tax reduction proceedings.

SECTION 13.2. AJ>pli ontio11  or Re fund s  or Snv ings. Any refunds or savings in the payment of taxes resulting from such tax reduction proceedings applicable to taxes payable during the period prior to the date of the Closing shall belong to and be the property of Seller, and any refunds or savings in the payment of taxes applicable to taxes payable from and after the date of the Closing shall belong to and be the property of Buyer. All attorneys' fees and other expenses incurred in obtaining such refunds or savings shall be apportioned between Seller and Buyer in proportion to the gross amount of such refunds or savings payable to Seller and Buyer, respectively (without regard to any amounts reimbursable to tenants); provided, however, that neither Seller nor Buyer shall have any liability for any such fees or expenses in excess of the refund or savings paid to such party unless such patty initiated such proceeding.

SECTION 13,3.

Closing without limitation.

Survival.The provisions of this Article Xlll shall survive the

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CONSTITUTE AND BE DEEMED TO BE THE AGREED AND LIQUIDATED DAMAGES OF BUYER WHICH IS NOT INTENDED TO BE A FORFEITURE OR PENALTY, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO BUYER. BUYER AGREES TO, AND DOES HEREBY, WAIVE ALL OTHER REMEDIES AGAINST SELLER WHICH BUYER MIGHT OTHERWISE HAVE AT LAW OR IN EQUITY BY REASON OF SUCH DEFAULT BY SELLER. FOR THE AVOIDANCE OF DOUBT, THESE REMEDIES FOR SELLER DEFAULT ARE ONLY AVAILABLE IF SELLER REFUSES TO CURE OR REFUSES TO BEGIN A PROCESS TO CURE IF A DEFAULT OR BREACH CANNOT BE CURED WITHIN FNE (5) BUSINESS DAYS UNDER 12.2(a).

SELLER'S INITIALS:BUYER'S INITIALS:

ARTICLE XIII

REAL PROPERTY TAX REDUCTION PROCEEDINGS

SECTION 13.1.Prosecution and Settlement of Proceedings. Seller reserves unto itself and shall have the right to initiate, prosecute and/or settle any tax reduction proceedings in respect of the Hotels relating to any period of Seller's ownership of the Hotels; provided, however, that Seller shall not settle any tax reduction proceedings in respect of the Hotels relating to or affecting taxes attributable to the fiscal year in which the Closmg occurs without Buyer's prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Buyer shall reasonably cooperate with Seller in connection with the prosecution of any such tax reduction proceedings.

SECTION 13.2.Application of Refunds or Savings.  Any refunds or savings in the payment of taxes resulting from such tax reduction proceedings applicable to taxes payable during the period prior to the date of the Closing shall belong to and be the property of Seller, and any refunds or savings in the payment of taxes applicable to taxes payable from and after the date of the Closing shall belong to and be the property of Buyer. All attorneys' fees and other expenses incurred in obtaining such refimds or savings shall be apportioned between Seller and Buyer in proportion to the gross amount of such refunds or savmgs payable to Seller and Buyer, respectively (without regard to any amounts reimbursable to tenants); provided, however, that neither Seller nor Buyer shall have any liability for any such fees or expenses in excess of the refund or savings paid to such party unless such party initiated such proceeding.

SECTION 13.3.

Closing without limitation.

Survival.The provisions of this Article XIII shall survive the

ARTICLE XIV

MISCELLANEOUS

SECTION I  4.I.Use of Springw od Hospitality ame. Buyer hereby acknowledges and agrees that neither Buyer nor any affiliate, successor, assignee or designee of Buyer shall be entitled to use the name "Springwood Hospitality" or "Springwood" in any way whatsoever. The provisions of this Section 14. l shall survive the Closing and any termination of this Agreement without limitation.

SECTION 14.2.Exculpation of SelI  r.  Notwithstanding anything to the contrary contained herein, Seller's shareholders, partners, members, the partners or members of such partners, the shareholders of such partners, members, and the trustees, officers, directors, employees, agents and security holders of Seller and the partners or members of Seller assume no personal liability for any obligations entered into on behalf of Seller and its individual assets shall not be subject to any claims of any person relating to such obligations. The foregoing shall govern any direct and indirect obligations of Seller under this Agreement. The  provisions  of  this Section 14.2 shall survive the Closing or any termination of this Agreement without limitation.

SECTION 14.3.Brokers.

(a)Se  lle  r  Representat ion and Warranty. Seller represents and warrants to Buyer, as of the date hereof and as of the Closing, that it has dealt  with  no broker,  salesperson,  finder or consultant with respect to this Agreement or the transactions contemplated  hereby  other than Broker. Seller agrees to indemnify,  protect, defend  and  hold Buyer harmless from and against all claims, losses, damages, liabilities, costs, expenses (including reasonable attorneys' fees and disbursements) and charges resulting from Seller's breach of the foregoing representation in this subsection 14.3(a). Seller shall be responsible for the payment of any amounts due Broker. The provisions of this subsection 14.3(a) shall survive the Closing and  any  termination  of  this Agreement without li m itati on.

(b)Buy er Represe ntat ion and Warranty.  Buyer represents and warrants to Seller, as of the date hereof and as of the Closing, that it has dealt with no broker, sa lesman,  finder or consultant with respect to this Agreement or the transactions contemplated hereby other than Broker. Buyer agrees to indemnify, protect, defend and hold Seller harmless from and against all claims, losses, damages, liabilities, costs, expenses (including reasonable attorneys' fees and disbursements) and charges resulting from Buyer's breach of the foregoing representations in this subsection 14.3(b). The provisions of this subsection 14.3(b) shall survive the Closing and any termination of this Agreement without limitation.

(c)Pennsylv an ia  Real  Estate  Recovery  Fund.    A Real  Estate  Recovery  Fund exists to reimburse any person who has obtained a final civil judgment against a Pennsylvania real estate licensee owing to fraud, misrepresentation, or deceit in a real estate transaction and who has been unable to collect the judgment after exhausting alI legal and equitable remedies. For complete details about the Fund, call (717) 783-3658 or (800) 822-2113 (within Pennsylvania) and (717) 783-4854 (outside Pennsylvania).

SECTION 14.4.Confident iali ty,  Press Release and fRS  Repo  rting  Req u iremen  ts.

(a)Confi dent ialit y.  Buyer and Seller, and each of their respective Affiliates shall hold as confidential all information disclosed in  connection  with  the  transactions  contemplated hereby and concerning each other, the Assets, this Agreement and the transactions contemplated hereby and shall not release any such information to third parties without the prior written consent of the other parties hereto ,  except it is understood and agreed that  Buyer  may disclose (i) any information which was previously or is hereafter publicly disclosed (other than in violation of this Agreement or other confidentiality agreements with Seller or its Affiliates to which Buyer or Affiliates of Buyer are parties), (ii) to their partners, advisers, underwriters, analysts, employees, Affiliates, officers, directors ,  consultants, lenders, accountants ,  legal counsel, title companies or other advisors of any of the foregoing, provided that they are advised as to the confidential nature of such information and are instructed to maintain such confidentiality, (iii) to comply with any law, rule or regulation (including without limitation those of the United States Securities and Exchange Commission). Notwithstanding the  foregoing,  and  anything  to  the contrary in this Agreement, nothing contained herein shall impair Buyer's right (or the right of any permitted assignee including Lodging Fund REIT III,  Inc.  ("Parent"  and  General  Partner  to Buyer)) to disclose information relating to this Agreement or the Hotels (a) to any due diligence representatives and/or consultants that are engaged by, work for or are acting on behalf of, any securities dealers, investment advisors and/or broker-dealers evaluating Buyer,  its  permitted assignees or Parent, (b) in connection with any filings with governmental agencies (including the Securities and Exchange Commission) by Parent, and (c) to any broker-dealers  or  investment advisors in Parent'  s selling group and any of Parent's investors, including  pursuant  to  the confidential offering memorandum used in connection with Parent's ongoing private offering; provided ,  however, Buyer shall not include Seller's, Seller's parent company nam e,  or  Seller's "doing business as" name in such disclosure without the prior written consent of  Seller.  The foregoing shall constitute a modification of any prior confidentiality agreement that may have been entered into by the parties,  and  as either  necessary  to enforce  this Agreement  or as contemplated by Sections 12.l(c) and/or 12 .2(b) herein. The provisions of this Section 14.4 shall survive  the Closing or the termination of this Agreement for a period of one year.

(b)Press Release. Seller or Buyer may issue a press release with respect to this Agreement and the transactions contemplated hereby, provided that the content of any such press release shall be subject to the prior written consent of the other party hereto and in no event shall any such press release issued by Buyer disclose the identity of Seller '  s direct or indirect beneficial owners by name or the consideration paid to Seller for the Assets .

(c)fRS  Reporting  Requ irements.    For  the  purpose  of  complying  with  any information reporting requirements or other rules and regulations of the IRS that are or may become applicable as a result of or in connection with the transaction contemplated by this Agreement, including, but not limited to, any requirements set forth in proposed Income Tax Regulation Section 1.6045-4 and any final or successor version thereof (collectively, the "IRS Repott  ing  Req ui rements"), Seller and Buyer hereby designate and appoint Escrow Agent to act as the " Reporting  Person" (as that term is defined in the IRS Reporting Requirements) to be responsible for complying with any IRS Reporting Requirements .  Escrow Agent hereby acknowledges and accepts such designation and appointment and agrees to fully comply with any IRS Reporting Requirements that are or may become applicable as a result of or in connection

with the transaction contemplated by this Agreement. Without limiting the responsibility and obligations of Escrow Agent as the Reporting Person, Seller and Buyer hereby agree to comply with any provisions of the IRS Reporting Requirements that are not identified therein as the responsibility of the Reporting Person, including, but not limited to, the requirement that Seller and Buyer each retain an original counterpart of this Agreement for at least four years following the calendar year of the Closing.

SECTION 14.5.Es r  w  Provis  ion  .

(a)Escrow Account. Escrow Agent shall hold the Deposit in escrow in an interest-bearing bank account at a federally insured banking institution (the "Escrow Account").

(b)Responsibility of Es row Agent. Escrow Agent shall hold the Deposit in escrow in the Escrow Account until the Closing or sooner termination of this Agreement and shall hold or apply such proceeds in accordance with the terms of this subsection 14.5(b), if notice and actions is required by either party, and the party receiving notice fails to take timely action after a second written notice from the noticing party, the noticing party will be entitled to prevailing party attorney fees to enforce the release of the escrow account in accordance with Section 14.24. Seller and Buyer understand that no interest is earned on the Deposit during the time it takes to transfer into and out of the Escrow Account. At the Closing, the Deposit shall be paid by Escrow Agent to, or at the direction of, Seller. If for any reason the Closing does not occur and either party makes a written demand upon Escrow Agent for payment of such amount, Escrow Agent shall, within twenty-four (24) hours, give written notice to the other party of such demand. If Escrow Agent does not receive a written objection within five Business Days after the giving of such notice, Escrow Agent is hereby authorized to make such payment. If Escrow Agent does receive such written objection within such five Business Day period or if for any other reason Escrow Agent in good faith shall elect not to make such payment, Escrow Agent shall continue to hold such amount until otherwise directed by joint written instructions from the parties to this Agreement or a final judgment of a court of competent jurisdiction. However, Escrow Agent shall have the right at any time to deposit the Deposit with the clerk of the court of Pennsylvania. Escrow Agent shall give written notice of such deposit to Seller and Buyer. Upon such deposit Escrow Agent shall be relieved and discharged of all further obligations and responsibilities hereunder.

(c)Liability of Escrow Agent. The parties acknowledge that Escrow Agent is acting solely as a stakeholder at their request and for their convenience, that Escrow Agent shall not be deemed to be the agent of either of the parties, and Escrow Agent shall not be liable to either of the parties for any act or omission on its part, other than for its gross negligence or willful misconduct. Seller and Buyer shall jointly and severally indemnify and hold Escrow Agent harmless from and against all costs, claims and expenses, including attorneys' fees and disbursements, incurred in connection with the performance of Escrow Agent's duties hereunder.

(d)Acknow led gement. Escrow Agent has acknowledged its agreement to these provisions by signing this Agreement in the place indicated following the signatures of Seller and Buyer.

SECTION 14.6.Success   ors  and  Ass ig  ns  and  No  Third-Patt  y  Beneficiaries.The stipulations, terms, covenants and agreements contained in this Agreement shall inure to the benefit

of, and shall be binding upon, the parties hereto and their respective permitted successors and assigns (including any successor entity after a public offering of stock, merger, consolidation, purchase or other similar transaction involving a party hereto) and nothing herein expressed or implied shall give or be construed to give to any Person, other than the parties hereto and such assigns, any legal or equitable rights hereunder.

SECTION 14.7.Assignment. This Agreement may not be assigned by Buyer without the prior written consent of Seller, other than to Affiliates of Buyer. Buyer may designate an Affiliate to which the Agreement will be assigned at the Closing, provided that Buyer provides Seller with a draft assignment for this Agreement at least five (5) days prior to Closing and provided that Buyer will continue to remain liable under this Agreement notwithstanding any such designation. Notwithstanding anything herein to the contrary, including, without limitation, Section 9.1(a), in the event Buyer assigns its rights under this Agreement, Buyer shall be solely responsible for any additional transfer taxes assessed as a result thereof, and shall pay such additional taxes at settlement and recording of the Deed. Seller shall have no liability for any realty transfer taxes, interest and penalties assessed based on any consideration greater than the Purchase Price set forth herein, and Buyer shall indemnify, defend and hold Seller harmless from any costs, liability or expense incurred by Seller in connection with an assignment of this Agreement by Buyer, including, without limitation, any transfer taxes and legal fees incurred by Seller in connection therewith.

SECTION 14.8.Further Assurances. From time to time, as and when requested by any party hereto, the other party shall execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions as such other party may reasonably deem necessary or desirable to consummate the transactions contemplated by this Agreement.

SECTION 14.9.Notices. All notices, demands or requests made pursuant to, under or by virtue of this Agreement must be in writing and shall be (i) personally delivered,

(ii)delivered by express mail, Federal Express or other comparable overnight courier service, (iii) faxed or emailed, with telephone or written confirmation within one Business Day, or (iv) mailed to the party to which the notice, demand or request is being made by certified or registered mail, postage prepaid, return receipt requested, as follows:

(a)To Seller:

c/o Springwood Hospitality 146 Pine Grove Circle York, Pennsylvania 17403

Attention:Justin Shelton, Manager Telephone:(717) 718-2996

Email:js helton@gospringw ood. com with copies thereof to:

Morris, Manning & Martin, LLP

3343 Peachtree Road, N.E., Suite 1600

Atlanta, Georgia 30326

Attention:W. Alex Heaton, Esq. Facsimile:(404) 365-9532

Telephone:(404) 495-3662

Email:ah  ato n@mm rn la  w.com

(b)To Buyer :

Lodging Fund REIT III OP, LP 644 Lovett Street SE

Grand Rapids, Michigan 49506 Attention:David Durell, CAO Telephone:616-264-3838

Email:ddurell@lodgingfund.com with copies thereof to:

McShane & Bowie, PLC

99 Monroe Avenue NW, Suite 1100 Grand Rapids, Michigan, 49503 Attention:John H. Faris Telephone:616-732-5037 Email:jhf@msb law.com

(c)To Escrow Agent/Title Company

First American Title Insurance Company 1125 1 7th Street, Suite 500

Denver, CO 80202

Attention:Beverly Carlson Telephone:303-879-1138

Email:bevcarlson@firstam.com

All notices (x) shall be deemed to have been given on the date that the same shall  have  been delivered in accordance with the provisions of this section (for purposes of clarification ,  notices given by facsimile and email shall be deemed given on the date received), and  (y) may  be given either by a party or by such party's attorneys. Any party may, from time  to time, specify  as  its address for purposes of this Agreement any other address upon the giving of l O  days' prior notice thereof to the other parties.

SECTION 14.l 0. Ent ire  Agreement. This Agreement, along with the exhibits and schedules hereto contains all of the terms agreed upon between the parties hereto with respect to the subject matter hereof, and all understandings and agreements heretofore had or made among the parties hereto, whether oral or written, are merged in this Agreement which alone fully and completely expresses the agreement of the parties hereto. Seller and Buyer each represent and warrant that they have not relied on any representations of the other party other than those representations explicitly set forth in this Agreement.

SECTION 14.11. Amendments. This Agreement may not be amended, modified, supplemented or terminated, nor may any of the obligations of Seller or Buyer hereunder be waived, except by written agreement executed by the party or parties to be charged.

SECTION 14.12.   No Waiver.  No waiver by either party of any failure or refusal  by   the other party to comply with its obligations hereunder shall be deemed a waiver of any other or subsequent failure or refusal to so comply.

SECTION 14.13. Governing  Law.  This Agreement  shall  be governed  by, interpreted under, and construed and enforced in accordance with, the laws of the Commonwealth of Pennsylvania without regard to its principles of conflicts of law.

SECTION 14.14. Submission to Jurisdiction. Each of Buyer and Seller irrevocably submits to the jurisdiction of (a) the Supreme Court of the Commonwealth of Pennsylvania and

(b)the United States District Court for the Middle District of Pennsylvania for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Each of Buyer and Seller further agrees that service of any process, summons, notice or document by U.S. registered mail to such party's respective address set forth above shall be effective service of process for any action, suit or proceeding in Pennsylvania with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence. Each of Buyer and Seller irrevocably and unconditionally waives trial by jury and irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in (i) the Supreme Court of the Commonwealth of Pennsylvania and (ii) the United States District Court for the Middle District of Pennsylvania, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

SECTION 14.15. Severability. If any term or provision of this Agreement or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Agreement or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

SECTION 14.16.ection Headings. The headings of the various sections of this Agreement have been inserted only for purposes of convenience, are not part of this Agreement and shall not be deemed in any manner to modify, explain, expand or restrict any of the provisions of this Agreement.

SECTION 14.17. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.

SECTION 14.18. Acceptance of Deed. The acceptance of the Deed by Buyer shall be deemed full compliance by Seller of all of Seller's obligations under this Agreement except for those obligations of Seller which are specifically stated to survive the delivery of the Deed or the

Closing hereunder.The prov1s1ons of this Section 14.18 shall survive the Closing or any termination of this Agreement without limitation.

SECTION 14.19.  Construction. The parties acknowledge that the parties and their counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any exhibits or amendments hereto.

SECTION 14.20. Recordation. Neither  this  Agreement  nor  any  memorandum  or notice of this Agreement may be recorded by any party hereto without the prior written consent of the other party hereto .  The provisions of this Section 14.20 shall survive the Closing or any termination of this Agreement without limitation.

SECTION 14.21. WAIVER OFJURY TRIAL. SELLER AND BUYER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY AGAINST ANOTHER PARTY ON ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT. THE PROVISIONS OF THIS SECTION 14.21 SHALL SURVIVE THE CLOSING OR ANY TERMINATION OF THIS AGREEMENT WITHOUT LIMITATION.

SECTION 14.22.  Time is of the  Essence. Seller and Buyer agree that time is of the essence with respect to the obligations of Buyer and Seller under this Agreement.

SECTION 14.23. Hotel Non-Comp te. Seller agrees that for a period of five (5) years from and after the Closing Date (the " Restric  ted Period") , neither Seller nor any Affiliate of Seller (such parties, collectively, the " Res tricted Parties") shall provide more than a ten percent (I 0.00%) investment in, manage, develop, construct, consult for, or obtain employment in any hotels within a five (5) mile radius (the "  Restricted Territory") of any of the individual Hotels, without the prior written consent of Buyer, which may be withheld, conditioned or delayed in Buyer's sole and absolute discretion. Notwithstanding anything in the immediately preceding sentence to the contrary, Buyer and Seller acknowledge and agree that neither Seller nor any Affiliate of Seller shall be restricted at any time (including, without limitation, the Restricted Period) or at any location (including, without limitation, the Restricted Territory) from investing in, managing, consulting for, or obtaining employment in any hotels that are managed by Manager as of the Closing Date.

SECTION 14.24 .  Prevailin g  Party. Should either party employ an attorney to enforce any of the provisions hereof (whether before or after Closing, and including any claims or actions involving amounts held in escrow) or to recover damages for the breach of this Agreement, the non-prevailing party in any final judgment agrees to pay the other party's reasonable expense s,  including reasonable attorneys' fees and expenses in or out of litigation and, if in litigation, trial, appellate, bankruptcy or other proceed ings,  expended or incurred in connection therewith, as determined by a court of competent jurisdiction.

SECTION 14.25. Ant i-Terrori m Law. Each party shall take any actions that may be required to comply with the terms of the USA Patriot Act of 2001, as amended, any regulations promulgated under the foregoing law, the Executive Order, the other Anti-Money Laundering and

Anti-Terrorism Laws, or any other Laws, regulations or executive orders designed to combat terrorism, drug-trafficking or money laundering, if applicable, to this Agreement. Each party represents and warrants to the other party that it is not an entity named on the List of Specially Designated Nationals and Blocked Persons maintained by the U.S. Department of Treasury (the "Government List"), as last updated prior to the date of this Agreement.

SECTION 14.26. Calculation of Time Periods. Unless  otherwise  specified,  in computing any period of time described herein, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, unless such last day is a Saturday, Sunday or legal holiday for national banks in the location where the Hotels are located or in Pennsylvania, in which event the period shall run until the end of the next day which is neither a Saturday, Sunday, or legal holiday.

SECTION 14.27. Ongoing Manger :  ngagement.  During the Due Diligence  Period, Seller and Manager (an Affiliate of Seller) shall cooperate in good faith to negotiate a mutually agreeable form of Asset(s) management agreement to be used in Manager's ongoing management at each and all of the Assets (individually or collectively, as the context shall require, the "Ongoing Management Agreement"), and once approved parties will execute an amendment to the Agreement to document the approval of the Ongoing Management Agreement. In the event that the parties are unable to finalize the final form of the Ongoing Management Agreement on or prior to the expiration of the Due Diligence Period, either Buyer or Seller shall each have the right to terminate this Agreement prior to the expiration of the Due Diligence Period, whereon Buyer shall receive a refund of its Deposit, and thereafter no party shall have any further rights or obligations under this Agreement, except for those set forth herein which expressly survive the termination of this Agreement. Manager will provide Buyer for Buyer's review and comment the initial draft of the Ongoing Management Agreement no later than five (5) days following the Effective Date, and Buyer shall provide Seller and Manager its initial comments to the draft of the Ongoing Management Agreement no later than twenty (20) days following its receipt of Manager's initial draft. Manager, Seller and Buyer acknowledge that the Ongoing Management Agreement shall contain provide for a five (5)-year term and include Manager compensation for an amount approximating three percent (3%) of total revenues for any Hotel.

SECTION 14.28.  Right of  First  Offer. The  parties acknowledge  and agree that they will negotiate in good faith during the Due Diligence Period to finalize a written form of right of first offer to provide Buyer or its Affiliates the right to make the first offer to purchase any hotels (other than those Hotels included herein or currently pending sale as of the Effective Date to third parties pursuant to other purchase-sale agreements or letters of intent) currently owned or being developed by Seller or its Affiliates (as the context may require, individually a "ROFO Hotel" and, collectively, the "ROFO Hotels") (the "ROFO Agreement"); provided, however, that the failure to finalize such ROFO Agreement shall not provide Seller or Buyer the right to terminate this Agreement. The parties hereto acknowledge and agree that the ROFO Agreement shall (i) not be recorded by Seller or Buyer (or either of their Affiliates) at any time; (ii) expire twenty-four (24) months following the Effective Date; (iii) provide that Seller (or its Affiliates) will provide notice to Buyer of its intent to sell a ROFO Hotel(s) and then allow Buyer (or its Affiliate) ten (10) Business Days to provide Seller (or its Affiliate) a letter of intent for such ROFO Hotel(s) (the "ROFO Offer"); (iv) provide that Seller (or its Affiliate) will respond to Buyer's ROFO Offer within five (5) Business Days with its acceptance or rejection of such ROFO Offer (provided that

Seller's failure to respond within such five (5) Business Day period shall be deemed to be a rejection of such ROFO Offer); and (v) allow for Seller (or its Affiliate) to freely market the ROFO Hotel following Seller's (or its Affiliate's) rejection of the ROFO Offer.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

IN WITNESS WHEREOF, this Agreement has been duly executed by the pa1ties hereto as of the day and year first above written.

SELLER:

CENTRAL PA EQUITIES 17, LLC,

a Pennsylvania limited liability company

By:  /s/ David H. Hogg

Name:  David H. Hogg

Title:  Manager

CENTRAL PA EQUITIES 19, LLC,

a Pennsylvania limited liability company

By:  /s/ David H. Hogg

Name:  David H. Hogg

Title:  Manager

SPRINGWOOD – FHP LP,

a Pennsylvania limited partnership

By:  /s/ David H. Hogg

Name:  David H. Hogg

Title:  Manager

[BUYER'S SIGNATURE PAGE TO FOLLOW]

BUYER:

LODGING FUND REIT III OP, LP

A Delaware limited partnership

By: Lodging Fund REIT III, Inc. Its: General Partner

By:/s/ David R. Durell

Name: David R. Durell

Title: Chief Acquisition Officer

[ESCROW AGENT JOINDER SIGNATURE PAGE TO FOLLOW]

JOINDER BY ESCROW AGENT

FIRST AMERICAN TITLE INSURANCE COMPANY, referred to in this Agreement as the "Escrow Agent," hereby acknowledges that it received this Agreement executed by Seller and Buyer as of the _ day of November, 2019, and accepts the obligations of Escrow Agent as set forth herein. Escrow Agent further acknowledges that it received the Initial Deposit on the day of November, 2019. Escrow Agent hereby agrees to hold and distribute the Initial Deposit and, if made, the Additional Deposit, in accordance with the terms and provisions of the Agreement.

FIRST AMERICAN TITLE INSURANCE COMPANY

By: /s/ Nichole Segura

Name:  Nichole Segura

Title: Commercia Escrow Officer

[END OF SIGNATURE PAGES]

SCHEDULE A LEGAL DESCRIPTIONS

HIS York South Hotel Legal Description:

ALL THAT CERTAIN TRACT OF LAND AND IMPROVEMENTS SITUATE IN THE TOWNSHIP OF YORK, COUNTY OF YORK, COMMONWEALTH OF PENNSYLVANIA, BEING A PORTION OF LANDS OF QUEEN PAULINE, L.P., AS SHOWN ON A PLAN ENTITLED "UNIT #1 EXHIBIT PLAN", HERETO ATTACHED, PREPARED BY SITE DESIGN CONCEPTS, INC., FILE 4688-DEC-l, AND MORE FULLY DESCRIBED AS FOLLOWS TO WIT:

BEGINNING at a steel pin on the Pennsylvania Department of Transportation's (PENNDOT's) legal right-of-way line for Exit 16, On-ramp "E" of Interstate 83 (S.R. 0083) and at lands now or formerly of Manor Care of York (Record Book 2000, Page 7348); THENCE leaving said right-of way line and along said lands of Manor Care of York, South 29 degrees 07 minutes 03 seconds East, 375.05 feet to a concrete monument at lands now or formerly of Presbyterian Homes, Inc. (Record Book 2169, Page 5768); THENCE along the same the following two (2) courses:

1.South 62 degrees 30 minutes 48 seconds West, 59.98 feet to an axle;

2.South 29 degrees 06 minutes 23 seconds East, 100.38 feet to a point;

THENCE in and through lands of Queen Pauline, L.P., the following fifteen (15) courses:

1.South 63 degrees 44 minutes 51 seconds West, 206.20 feet to a point;

2.By a curve to the right having a radius of 5.00 feet and an arc length of 7.60 feet, the chord of which extends North 72 degrees 41 minutes 06 seconds West, 6.89 feet to a point;

3.North 29 degrees 07 minutes 03 seconds West, 1.38 feet to a point;

4.By a curve to the right having a radius of 5.00 feet and an arc length of 7.85 feet, the chord of which extends North 15 degrees 52 minutes 57 seconds East, 7.07 feet to a point;

5.North 60 degrees 52 minutes 57 seconds East, 13.00 feet to a point;

6.North 29 degrees 07 minutes 03 seconds West, 80.00 feet to a point;

7.North 42 degrees 36 minutes 48 seconds  West, 10.28 feet to a point;

8.North 29 degrees 07 minutes 03 seconds West, 170.00 feet to a point;

9.South 60 degrees 52 minutes 57 seconds West, 13.00 feet to a point;

10.By a curve to the right having a radius of 5.00 feet and an arc length of7.85 feet, the chord of which extends North 74 degrees 07 minutes 03 seconds West, 7.07 feet to a point;

11.North 29 degrees 07 minutes 03 seconds West, 14.86 feet to a point;

12.By a curve to the right having a radius of I 0.00 feet and an arc length of 14.22 feet, the chord of which extends North 11 degrees 36 minutes 49 seconds East, 13.05 feet to a point;

13.North 52 degrees 20 minutes 41 seconds East, 5.94 feet to a point'

14.By a curve to the left having a radius of 686.76 feet and an arc length of3.5 l feet, the chord of which extends North 52 degrees 11 minutes 55 seconds East, 3.51 feet to a point;

15.North 37 degrees 56 minutes 52 seconds West, 55.80 feet to a point on PENNDOT's previously mentioned legal right-of-way line for Exit 16, On-ramp "E" oflnterstate 83;

Sch. A-I

THENCE along said right-of-way line by a curve to the left having a radius of 630.96 feet and an arc length of 286.64 feet, the chord of which extends North 39 degrees 02 minutes 15 seconds East,  284.18 feet to a steel pin and the PLACE OF BEGINNING.

Containing 2.262 acres.

Under and subject, to easements, conditions and restrictions contained m prior deeds and instruments of record.

H2S York Hotel Legal Description:

ALL that certain tract of land and improvements situate in the Township of York, County of York, Commonwealth of Pennsylvania, as shown on a Final  Land  Development  Plan  prepared  for  Central PA Equities 19,  LLC, by Site Design Concepts, Inc., File Name 46814-LD-I ,  said  Plan being recorded in the Office of the Recorder of Deeds in and for York County, Pennsylvania, in Record Book _ _ _ _ _  ,  Page _  _ _ _ _.  and more fully described as follows, to wit:H2S

BEGINNING at a concrete monument on York Township's northern right-of-way line for Pauline Drive, a 60 foot wide right-of-way, and at lands now or formerly of Manor Care of York (South) Equipment, LLC (Record Book 2000, Page 7348); thence leaving said right-of-way line and along lands of the same, North 29 degrees 07 minutes 02 seconds West, 349.35 feet to a concrete monument at lands now or formerly of York Traditions Bank (Record Book 2182,  Page 7142); thence along the same,  North 60 degrees 52 minutes 57 seconds East,  340.00 feet to a steel pin on York Townsh ip '  s western right-of-way line for the previously mentioned Pauline Drive; thence along said right-of-way line the following three (3) courses: (I) South 29 degrees 07 minutes 02 seconds East, 81.11 feet to a steel pin; (2) by a curve to the right having a radius of 270.00 feet and an arc length of 431.26 feet, the chord of which extends South 16 degrees 38 minutes 28 seconds West, 386.86 feet to a steel pin; (3) South 62 degrees 23 minutes 58 seconds West, 62.87 feet to a concrete monument and the place of BEGINNING. CONTAINING 2.380 acres.

Under and subject, to easements, conditions and restrictions contained in prior deeds and instruments of record.

IT BEING a part of the same premises which Pauline Drive Limited Partnership, a Maryland limited partnership, by deed dated January 1 ,  1993 and recorded January 4,  1 993,  in the Office of the Recorder of Deeds, in and for York County, Pennsylvania, in Record Book 547, Page 213, granted and conveyed unto South York Development Co., a general partnership, the Grantor herein.

FIS Hershey Hotel Legal Description:

ALL THAT CERTAIN portion of land in Derry Township, Dauphin County, Pennsylvania, identified as "Lot No. l" on a plan titled "Preliminary/Final Land Development Plan for Equitable Owner: Central PA Equities 13 LLC", as prepared by Light-Heigel & Associates, Inc., Project No.

PAI 1-0022, Dated June 3, 2011, as recorded in the Office of Recording in and for Dauphin,

County, Pennsylvania,  in Instrument No. _  _  _  _  , 2012, being lands now or formerly of

Township of Derry Industrial and Commercial Development Authority, as described in Instrument No. 20070037849, being more particularly described as follows:

BEGINNING at a mag. nail in concrete (set) on the dedicated right-of-way line of Mill Street (T-582) of the aforementioned plan and the line of lands now or formerly of Leisure Lanes of Lancaster & Inc., as described in Deed Book 3584, at Page 324; thence, along the dedicated right-of-way line of Mill Street the following three (3) courses and distances: I) S44°53'48"E, 91.56' to a point; thence, 2) S42°23'47"E, 164.05' to a point; thence, 3) along an arc of curve to the right, being a transition curve between Mill Street and Areba Avenue (T-711), having a radius of 15.00', an arc length of 21.35', a delta angle 81°33'07", and a chord bearing and length of S01°37'13"E, 19.59' to a point; thence, along the dedicated right-of-way line of Areba  Avenue the following three (3) courses and distances: l) S39°09'20"W, 188.50' to a point; thence, 2) S38°3 l '2 l "W, 132.58' to a point; thence, 3) along an arc of curve to the right, being a transition curve between Areba Avenue and Hockersville Road (SR 2011), having a radius of 25.00, an arc length of39.49', a delta angle of90°29'50", and a chord bearing and length of S83°46'16"W, 35.51' to a point on the dedicated right-of-way line of Hockersville Road; thence along the dedicated right-of-way line of Hockersville Road the following three (3) courses and distances: l) N50°58'49"W, 130.91' to a point; thence, 2) along an arc of curve to the left, having a radius of 2,532.50', an arc length of 103.89', a delta angle of 02°21 '02", and a chord bearing and length of N52°09'19"W, 103.88' to a point; thence, 3) N53°19'50"W, 50.60' to point on the line of lands now or formerly of Jay Maruti Inc., as described in Deed Book 3948, at Page 505; thence, along lands of Maruti, N35°58' 56"E, 130.39' to a 3/4" rebar with cap (set) on the line of lands now or formerly of Leisure Lanes of Lancaster & Inc., as described in Deed Book 3584, at Page 324; thence, along lands of Leisure Lanes of Lancaster & Inc. the following four (4) courses and distances: 1) S48°23'04"E, 80.88' to a mag. nail in concrete post base (set); thence, 2) N45°06'12"E, 120.54' to a 3/4"rebar with cap (set); thence, 3) N46°41 '04" W, 47.70' to a 3/4" rebar with cap (set); thence, 4) N40°44'46"E, 149.65' to the Point of Beginning, containing 102,560 square feet or 2.354 acres.

SCHEDULE A-1

Hotel Facilities and Other Improvements

Hampton Inn York South 2159 S. Queen St.

York, PA 17402

Home2 Suites York 212 Pauline

York, PA 17402

Fairfield Inn &  Suites Hershey Chocolate Avenue 651 W. Areba Avenue

Hershey, PA 17033

SCHEDULE A-2

Intentionally Omitted.

SCHEDULE A-3

Management Agreements &  Franchise Agreements

HIS York South Hotel

Management Agreement, effective as of May 31, 2013, between HIS York South Seller and Springwood Hospitality, LLC, a Pennsylvania limited liability company, as amended and assigned from time to time.

Franchise Agreement, effective as of April 9, 2012, between a HIS York South Seller and Hampton Inns Franchise LLC ("HIS York South J-1 tel  Franchisor"), as amended and assigned from time to time.

H2S York Hotel

Management Agreement, effective as of March 22, 2016, between H2S York Seller and Springwood Hospitality, LLC, a Pennsylvania limited liability company, as amended and assigned from time to time.

Franchise Agreement, effective as of July 24, 2015, between H2S York Seller and Hilton Franchise Holding LLC ("H2S Y rk Hotel Fran ch is or"), as amended and assigned from time to time.

FIS Hershey Hotel

Management Agreement, effective as of June 5, 2012, between FIS Hershey Seller and Springwood Hospitality, LLC, a Pennsylvania limited liability company, as amended and assigned from time to time.

Franchise Agreement, dated as of September 27, 2011, between FIS Hershey Seller and Marriott International, Inc. ("Fl Hershey Hotel Franch iso r"), as amended and assigned from time to time.

SCHEDULE A-4

Purchase Price Allocation Asset Allocations

Asset	Purchase Pri e
HIS York South Hotel	$1 2,600,000.00
H2S York Hotel	$1 4,200,000.00
FIS Hershey Hotel	$ 20,000,000.00
Total	$ 46,800,000.00

Individual Allocations

HIS York South HotelPurchase Price Land$----

Building$_  _ _ _

FF&E$----

Intangibles$

Total$12,600,000.00

H2S York HotelPurchase Price Land $ Building$

FF&E  $Intangibles$Total$14,200,000.00

FIS Hershey HotelPu rchase Price Land$----

Building$_   _   _   _

FF&E$----

Intangibles$

Total$20,000,000.00

SCHEDULE 2.l(c)

EXCLUDED FIXTURES, PERSONAL PROPERTY OR EQUIPMENT

None.

SCHEDULE 3.2{a) OPERATING AGREEMENTS

HIS York South Hotel

Ecolab dated May 20, 2019-Pest Control

Penn Waste dated March I, 2017-Waste Disposal

Tod's Landscaping dated October 26, 2018-Landscaper

Block dated February 27, 2019-Copier Service

Choice dated  January  27, 2014-Fire  Testing/Monitoring

ThyssenKrupp  dated  January  16, 2015-Elevator Service

Verizon-Phone (POTS) Lines

Windstream dated November 15, 2013-PRI Phone Lines

AT&T dated September 30, 2013-Jnternet Circuit

AT&T WI-FI Services dated July 29, 2013-Guest Internet

Hilton Worldwide (HSIA) dated February 21, 2014-Hilton Network Internet

Allbridge (formerly BulkTV) dated August 28, 2014-DirectTV

Mood Media dated December 4, 2014-Music (public/on-hold)

Columbia Gas/Shipley dated November 1, 2019-Gas

MetEd/WGL  Energy  dated  January  I, 2017-Electric

MetEd/Talen  Energy dated  January  1, 2020-Electric

Uniguest dated November 26, 2013-Business Center H2S York Hotel

Ecolab dated July 17, 2019-Pest Control

Penn Waste dated July I, 2019-Waste Disposal

Tod's dated January 1, 2019-Landscaper

Block dated June 29, 2019-Copier Service

Choice  dated  May  19, 2016-Fire Testing/Monitoring

ThyssenKrupp  dated  June  16, 2017-Elevator Service

Frontier dated May 9, 2016-Phone (POTS) Lines

Nitel dated October 31, 2017-PRI Phone Line

Nitel dated October 3 I, 2017-Guest Internet Circuit (I 00m)

AT&T WI-FI Services dated April 21, 2019-Guest Internet Support

Hilton Worldwide (HSIA) dated April 22, 2019-OnQ System and Support

Allbridge (formerly BulkTV) dated February 4, 2017-DirectTV

Mood Media dated February 15, 2016-Music (public/on-hold)

Columbia Gas of PA dated November 1, 2019-Gas

MetEd  dated  January  1, 2017-Electric

MetEd  dated  January  1, 2020-Electric

Uniguest dated March 26, 2016-Business Center

FIS Hershey Hotel

Orkin dated April 1, 2013-Pest Control

Penn Waste dated December 1, 2018-Waste Disposal

Team Lewis dated January 1, 2019-Landscaper

BFPE International dated January 16, 2014-Fire Extinguisher

Choice dated January 22, 2014-Fire Testing/Monitoring

ThyssenKrupp dated February 12, 2014-Elevator Service

Verizon-Phone (POTS) Lines

Verizon dated January 29, 2013-PRI Phone Lines

Verizon Business-Internet Circuit

Active Networks April 4, 2013-Guest Internet

World Cinema dated 2017-DirectTV

Mood Media (Muzak) dated January 30, 2013-Music (public/on-hold)

PPL/WGL  Energy  dated  January  l, 2017-Electric

PPL/WGL  Energy dated  January  1, 2020-Electric

UGI/Shipley dated November 1, 2019-Gas

Trendtrackers-Contract/Temp Labor

Uniguest dated September 28, 2019-Business Center

SCHEDULE 3.2(b)

LIST OF EQUIPMENT LEASES

None .

SCHEDULE 3.2(c) LIST OF LEASES

None.

SCHEDULE 3.2(e) LITIGATION

None.

(a)

FORM OF ASSIGNMENT OF CONTRACTS AND LEASES

ASSIGNMENT AND ASSUMPTION OF CONTRACTS AND LEASES dated as of ____________ ___, 201_, by and among CENTRAL PA EQUITIES 17, LLC, a Pennsylvania limited liability company, CENTRAL PA EQUITIES 19, LLC, a Pennsylvania limited liability company, and SPRINGWOOD – FHP LP, a Pennsylvania limited partnership, each having an address at 146 Pine Grove Circle, York, Pennsylvania 17403 (collectively, “Assignor”), and _____________________, a ______________________ having an address at ______________________________ (“Assignee”).

Background

This Assignment and Assumption of Contracts and Leases is being executed and delivered pursuant to that certain Agreement of Purchase and Sale dated as of _______________, 2019 (as assigned and/or amended, the “Purchase Agreement”) between Assignor, as seller, and Assignee, as buyer.  All capitalized terms used but not defined herein shall have the meanings ascribed to them in the Purchase Agreement.

Assignment and Assumption

In consideration of Ten ($10.00) Dollars in hand paid by Assignee, the receipt and sufficiency of which is hereby acknowledged, Assignor does hereby assign, transfer and set over unto Assignee, all of Assignor’s right, title and interest in and to:

(i)all Operating Agreements, including without limitation the contracts set forth on Schedule A attached hereto but not including any such contracts that are not assignable (unless the required consent has been obtained) (collectively, the “Contracts”);

(ii)all Equipment Leases, including without limitation the leases set forth on Schedule B attached hereto but not including any such leases that are not assignable (unless the required consent has been obtained);

(iii)all Leases set forth on Schedule C attached hereto;

(iv)to the extent assignable, all of Assignor’s right, title and interest in and to all warranties and guarantees, if any, relating to the personal property located on the Land or in the buildings and other improvements located thereon (collectively, the “Warranties”); and

(v)all Bookings at the Hotels for dates after the date hereof.

TO HAVE AND TO HOLD, the same unto Assignee, its successors and assigns, from and after the date hereof, subject to the terms, covenants, conditions and provisions contained in the Purchase Agreement.

Assignee hereby assumes the performance of all of the terms, covenants and conditions of the Contracts set forth on Schedule A attached hereto, the Equipment Leases set forth on

IN WITNESS WHEREOF, the Assignor and Assignee have duly executed this instrument as of the day first above written.

ASSIGNOR:

CENTRAL PA EQUITIES 17, LLC,

a Pennsylvania limited liability company

By: _______________________

Name: David H. Hogg

Title: Manager

CENTRAL PA EQUITIES 19, LLC,

a Pennsylvania limited liability company

By: _______________________

Name: David H. Hogg

Title: Manager

SPRINGWOOD - FHP LP,

a Pennsylvania limited partnership

By: _______________________

Name: David H. Hogg

Title: Manager

[Signatures continued on following page]

ASSIGNEE:

Lodging Fund REIT III OP, LP

A Delaware limited partnership

By: Lodging Fund REIT III, Inc.

Its: General Partner

By:  _____________________

Name:  David R. Durell

Title:  Chief Acquisition Officer

(b)EXHIBIT B

FORM OF DEED

Prepared By and Upon Recordation Return To:

________________________

________________________

________________________

Tax Parcel No(s). _____________________

SPECIAL WARRANTY DEED

This Deed, Made the _____ day of ____________, 201_, to be effective as of ______________ ___, 201_.

Between

[SELLER ENTITY, a Pennsylvania limited _____________] (hereinafter called the Grantor), of the first part,

and

________________________, a ___________________________ (hereinafter called the Grantee), of the second part,

Witnesseth that the said Grantor, for and in consideration of the sum of $10.00 lawful money of the United States of America, unto it well and truly paid by the said Grantee, at or before the sealing and delivery hereof, the receipt whereof is hereby acknowledged, has conveyed, granted, bargained and sold, released and confirmed, and by these presents does convey, grant, bargain and sell, release and confirm unto the said Grantee, its successors and assigns,

All that certain property described in Exhibit A, attached hereto.

Under and Subject, nevertheless, to all easements, covenants, agreements and restrictions of record, but only to the extent that the same presently are valid and subsisting and affect the above-described property; and nothing contained herein shall construed as an acknowledgment of the validity or any of the same or as an extension, ratification or renewal thereof if the same otherwise have expired or become unenforceable by its own terms or by limitation, violation, or for any other reason whatsoever.

Together with all and singular the buildings and improvements, ways, streets, alleys, driveways, passages, waters, water-courses, rights, liberties, privileges, hereditaments and appurtenances, whatsoever unto the hereby granted premises belonging, or in any wise

In Witness Whereof, the said Grantor has duly executed this Deed on the date first above written.

By:

Name:

Title:

COMMONWEALTH OF ______________ :

:  SS

COUNTY OF _______________:

ON THIS, the _____ day of ____________, 201_, before me, the undersigned officer, personally appeared ______________ who acknowledged him/herself to be the ____________ of __________________, and that he as such officer, being authorized to do so, executed the foregoing Special Warranty Deed for the purposes therein contained, by signing the name of the corporation by him/herself as said officer.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

____________________________________

Notary Public

My Commission expires:

(Notarial Seal)

Certificate of Residence

The address of the above-named Grantee is:

__________________

_____________________________

On behalf of the Grantee

(c)ORM OF BILL OF SALE

CENTRAL PA EQUITIES 17, LLC, a Pennsylvania limited liability company, CENTRAL PA EQUITIES 19, LLC, a Pennsylvania limited liability company, and SPRINGWOOD – FHP LP, a Pennsylvania limited partnership, each having an address at 146 Pine Grove Circle, York, Pennsylvania 17403 (hereinafter collectively referred to as “Seller”), in consideration of Ten ($10.00) Dollars in hand paid by ________________________ having a mailing address at ________________________________ (hereinafter referred to as “Buyer”), the receipt and sufficiency of which is hereby acknowledged, does hereby sell, grant, assign, convey, transfer, set over, and quit-claim unto Buyer, its successors and assigns, all of Seller’s right, title and interest in and to any and all fixtures, chattels and articles of personal property that are attached to or located in or upon the Assets described on Schedule A hereto and the buildings and other improvements located thereon, or any portion thereof, including, but not limited to, the FF&E, supplies, the Inventories, and the Assigned Accounts Receivable (all of the property and interests hereinbefore described are hereinafter referred to as the “Property”).

TO HAVE AND TO HOLD the Property unto Buyer, its successors and assigns forever.

This Bill of Sale is made without warranty or representation, express or implied, by, or recourse against, Seller of any kind or nature whatsoever except as expressly provided in the Agreement of Purchase and Sale dated as of __________________, 2019 between Seller and Buyer (as assigned and/or amended, the “Purchase Agreement”).  Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Purchase Agreement.

[Signatures On Next Page.]

This Bill of Sale has been duly executed by Seller as of the ____ day of _____, 201_.

SELLER:

CENTRAL PA EQUITIES 17, LLC,

a Pennsylvania limited liability company

By: ________________________

Name: David H. Hogg

Title: Manager

CENTRAL PA EQUITIES 19, LLC,

a Pennsylvania limited liability company

By: _________________________

Name: David H. Hogg

Title: Manager

SPRINGWOOD - FHP LP,

a Pennsylvania limited partnership

By: _________________________

Name: David H. Hogg

Title: Manager

(d)EXHIBIT D

FORM OF ASSIGNMENT AND ASSUMPTION OF INTANGIBLE PROPERTY

ASSIGNMENT AND ASSUMPTION OF INTANGIBLE PROPERTY dated as of ____________ ___, 201_, by and among CENTRAL PA EQUITIES 17, LLC, a Pennsylvania limited liability company, CENTRAL PA EQUITIES 19, LLC, a Pennsylvania limited liability company, and SPRINGWOOD – FHP LP, a Pennsylvania limited partnership, each having an address at 146 Pine Grove Circle, York, Pennsylvania 17403 (collectively, “Assignor”), and ______________________ having an address at ___________________________________ (“Assignee”).

Background

This Assignment and Assumption of Intangible Property is being executed and delivered pursuant to that certain Agreement of Purchase and Sale dated as of ________________, 2019 (as assigned and/or amended, the “Purchase Agreement”) between Assignor, as seller, and Assignee, as buyer.  All capitalized terms used but not defined herein shall have the meanings ascribed to them in the Purchase Agreement.

Assignment and Assumption

In consideration of Ten ($10.00) Dollars in hand paid by Assignee, the receipt and sufficiency of which is hereby acknowledged, Assignor does hereby assign, transfer and set over unto Assignee, and Assignee does hereby assume, all of Assignor’s right, title and interest in and to:

(i)to the extent Assignor’s rights and interests therein are assignable, the Intangible Property; and

(ii)to the extent assignable, the Licenses and Permits.

TO HAVE AND TO HOLD, the same unto Assignee, its successors and assigns, from and after the date hereof, subject to the terms, covenants, conditions and provisions contained therein.

This Assignment is made without warranty or representation, express or implied, by, or recourse against, Assignor of any kind or nature whatsoever except as expressly provided in the Purchase Agreement.

IN WITNESS WHEREOF, the Assignor and Assignee have duly executed this instrument as of the day first above written.

ASSIGNOR:

CENTRAL PA EQUITIES 17, LLC,

a Pennsylvania limited liability company

By: ______________________

Name: David H. Hogg

Title: Manager

CENTRAL PA EQUITIES 19, LLC,

a Pennsylvania limited liability company

By: ______________________

Name: David H. Hogg

Title: Manager

SPRINGWOOD - FHP LP,

a Pennsylvania limited partnership

By: ______________________

Name: David H. Hogg

Title: Manager

[Signatures continued on following page]

ASSIGNEE:

Lodging Fund REIT III OP, LP

A Delaware limited partnership

By: Lodging Fund REIT III, Inc.

Its: General Partner

By:   /s/ David R. Durell

Name:  David R. Durell

Title:  Chief Acquisition Officer

Dated:__________, _____

[____________,
a Pennsylvania limited ________]

By: ___________________________________________
Name:
Title:

EX-10.57.2

                                                                                                                                                                 EXHIBIT 10.57.2   

FIRST AMENDMENT TO AGREEMENT OF PURCHASE AND SALE

This FIRST AMENDMENT TO AGREEMENT OF PURCHASE AND SALE (this "First

Amendment") is made as of the 13 day of January, 2020 (the "Amendment Date") by and among CENTRAL PA EQUITIES 17, LLC, a Pennsylvania limited liability company ("HIS York SouthSeller"), CENTRAL PA EQUITIES 19, LLC, a Pennsylvania limited liability company ("H2SYork Seller"), SPRINGWOOD - FHP LP, a Pennsylvania limited partnership ("FIS HersheySeller", together with HI,S York South Seller and H2S York Seller herein referred to collectively and individually, as the context so requires, as "Seller"), and LODGING FUND REIT III OP, LP, a Delaware limited partnership (the "Buyer").

WHEREAS, Buyer and Seller entered into that certain Agreement of Purchase and Sale dated November 22, 2019 (the "Agreement") for the purchase and sale of three (3) hotels, namely the Hampton Inn York South hotel in York, PA ("HIS York South Hotel"), the Home2Suites York hotel in York, PA ("H2S York Hotel") and the Fairfield Inn & Suites Hershey Chocolate Avenue hotel in Hershey, PA ("FIS Hershey Hotel", together with HIS York South Hotel and H2S York Hotel herein referred to collectively and individually, as the context so requires, the "Property");

WHEREAS,  dur' ing the course  of Buyer's ' due diligence  studies,  Buy' er  has realized that Buyer will need an extension to the Due Diligence Period;

WHEREAS, as of the Amendment Date, the parties have not finalized the Ongoing Management Agreement; and

WHEREAS, as more particularly described herein, the parties wish to (a) reinstate the Agreement, (b) extend the Due Diligence Period, (c) amend the Closing Date(s) and provide for an increase in the Purchase Price in the event that the FIS Hershey Hotel Closing occurs after Friday, February 28, 2020, and (d) provide the parties additional time to negotiate the Ongoing Management Agreement.

NOW THEREFORE, for valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:

1. Capitalization. All capitalized terms used herein will have the meanings ascribed to those terms in the Agreement, unless otherwise specified herein.

2. Reinstatement of Purchase Agreement. The Agreement as of the Amendment Date is reinstated and is in full force and effect.

3. Due Diligence Period. Notwithstanding any provision of Section 7.l(a) of the Agreement to the contrary, the Due Diligence Period is hereby extended for fourteen (14) days following the Amendment Date.

4. Closing Date. Section 2.4(a) of the Agreement is hereby deleted in its entirety and replaced with the following:

"(a) Closing Date.  Unless this Agreement is terminated upon the express terms herein, the closing of the sale and purchase of the Assets or an individual Asset (as the context may require, a "Closing" or the "Closings") must take place in the following sequence: (1) first, the FIS Hershey Hotel; (2) second, the H2S York Hotel; and (3) third, the HIS York South Hotel. Buyer shall provide Seller written notice of Buyer's intent to close on the individual Hotels no later than ten (10) days prior to each intended Closing date (each a "Closing Date Notice") but in no event will the Closing of the HIS York South Hotel occur after March 10, 2020. Unless this Agreement is earlier terminated as expressly set forth herein, Buyer and Seller acknowledge and agree on the following: (a) the FIS Hershey Hotel Closing shall occur no later than February 25, 2020; (b) the H2S York Hotel Closing shall occur between February 15, 2020 and March 10, 2020; and (c) the HIS York Hotel Closing shall occur between February 15, 2020 and March 31, 2020. Notwithstanding any provision of Section 2.2 to the contrary, in the event that the FIS Hershey Hotel Closing occurs after Friday, February 28, 2020 for any reason, the Purchase Price to be paid by Buyer shall be increased dollar-for-dollar to the full amount of interests, fee, and other expenses incurred by FIS Hershey Seller with respect to its mortgage lien financing on the FIS Hershey Hotel, up to an amount not to exceed Fifty Thousand and No/100 Dollars ($50,000.00). In such event, the Individual Allocation attributed to such FIS Hershey Hotel shall be increased in the additional Purchase Price."

5. OngoingManagementAgreement. Buyer and Seller will diligently pursue completion or rejection of the management agreement prior to the expiration of the Due Diligence Period. Notwithstanding anything in Section 14.27 of the Agreement to the contrary, the parties hereby agree that if they are unable to finalize the final form of the Ongoing Management Agreement on or prior to the expiration of the Due Diligence Period, either Buyer or Seller shall have the right to terminate this Agreement, whereon Buyer shall receive a refund of its Deposit, and thereafter no party shall have any further rights or obligations under the Agreement (as amended by this First Amendment), expect for those set forth in the Agreement that expressly survive the termination of this Agreement.

6. Conflict: Counterparts. In the event of any conflict between the terms of this Amendment and the Agreement, this Amendment shall control. This Amendment may be executed in multiple counterparts via facsimile or email in .PDF format, each of which shall be deemed to be an original, but such counterparts when taken together shall constitute but one Amendment.

7. Successors and Assigns. This Amendment shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors, administrators and assigns.

8. Ratification. Except as set forth above, the terms of the Agreement are hereby ratified and confirmed in their entirety.

[Signature Page to Follow]

IN WITNESS WHEREOF, this First Amendment has been duly executed by the parties hereto as of the day and year first above written.

SELLER:

CENTRAL PA EQUITIES 17, LLC,

a Pennsylvania limited liability company

By: /s/ David H. Hogg

Name: David H. Hogg

Title: Manager

CENTRAL PA EQUITIES 19, LLC,

a Pennsylvania limited liability company

By: /s/ David H. Hogg

Name: David H. Hogg

Title: Manager

SPRINGWOOD - FHP LP,

a Pennsylvania limited partnership

By: /s/ David H. Hogg

Name: David H. Hogg

Title: Manager

[BUYER'S SIONATURE PAGE TO FOLLOW]

BUYER:

LODGING FUND REIT III OP,  LP

A  Delaware limited partnership

By: Lodging Fund REIT III, Inc. Its: General Partner

By: /s/ David R. Durell

Name: David R. Durell

Title: Chief Acquisition Officer

EX-10.57.3

EXHIBIT 10.57.3

SECOND AMENDMENT TO AGREEMENT OF PURCHASE AND SALE

This SECOND AMENDMENT TO AGREEMENT OF PURCHASE AND SALE (this

"Second Amendment") is made as of the 31st day of January, 2020 (the "Amendment Date") by and among CENTRAL PA EQUITIES 17, LLC, a Pennsylvania limited liability company ("HISYork South Seller"), CENTRAL PA EQUITIES 19, LLC, a Pennsylvania limited liability company ("H2S York Seller"), SPRINGWOOD - FHP LP, a Pennsylvania limited partnership ("FIS Hershey Seller", together with HIS York South Seller and H2S York Seller herein referred to collectively and individually, as the context so requires, as "Seller"), and LODGING FUND REIT III OP, LP, a Delaware limited partnership (the "Buyer").

WHEREAS, Buyer and Seller entered into that certain Agreement of Purchase and Sale dated November 22, 2019, as amended by that certain First Amendment to Agreement of Purchase and Sale dated January 13, 2020 (together, the "Agreement") for the purchase and sale of three (3) hotels, namely the Hampton Inn York South hotel in York, PA ("HIS York South Hotel"), the Home2 Suites York hotel in York, PA ("H2S York Hotel") and the Fairfield Inn & Suites Hershey Chocolate Avenue hotel in Hershey, PA ("FIS Hershey Hotel", together with HIS York South Hotel and H2S York Hotel herein referred to collectively and individually, as the context so requires, the "Property");

WHEREAS, Buyer has not yet provided a copy of its Satisfaction Notice;

WHEREAS, during the course of Buyer's due diligence studies, Buyer has realized that Buyer will be unable to obtain a satisfactory building inspection report, a satisfactory PIP ("PIPApproval"), property tax schedules for each Property, satisfactory appraisals for each Property, and a complete management agreement prior to the expiration of the Due Diligence Period;

WHEREAS, as more particularly described herein, the parties wish to (a) reinstate the Agreement and deem this Second Amendment as Buyer's Satisfaction Notice, subject to the conditions herein; and (b) provide Buyer with additional time to obtain a satisfactory building inspection report, a satisfactory PIP ("PIP Approval"), property tax schedules for each Property, satisfactory appraisals for each Property, and a complete management agreement prior to the expiration of the Due Diligence Period;

NOW THEREFORE, for valuable consideration, the receipt of which 1s hereby acknowledged, the parties agree as follows:

I.     Capitalization. All capitalized terms used herein will have the meanings ascribed to those terms in the Agreement, unless otherwise specified herein.

2. Reinstatement of Purchase Agreement; Satisfaction Notice. The Agreement as of the Amendment Date is reinstated and is in full force and effect. The parties acknowledge and agree that this Second Amendment shall serve as Buyer's Satisfaction Notice pursuant to Section

7.1(a)  of the Agreement; provided, however, that Buyer shall still have the right to terminate the

Agreement after the expiration of the Due Diligence Period as expressly stated  in the  Agreement and in Sections 3,4,  5,  6, and 7of this Second Amendment.

3. Building Inspection Report. Buyer shall have until the date that is February 10, 2020 ("Building Inspection Approval Date") to terminate the Agreement by delivering written notice to Seller. Termination may be made if, in the Buyer's sole and complete discretion, the Buyer determines that the building inspection reports for the HIS York South Seller and FIS Hershey Seller are unsatisfactory. In the event that Buyer does not provide a written notice of termination to Seller on or prior to the Building Inspection Approval Date, Buyer shall be deemed to have terminated the Agreement effective as of 5:00 PM EST on the last day of the Building Inspection Approval Date. In the event that Buyer terminates (or is deemed to have terminated) this Agreement pursuant to this subsection, the Escrow Agent shall return to Buyer the Deposit and shall disburse to Seller the Independent Consideration.

4. Final PIP Approval Date. The following is hereby added as Section 4.7 of the Agreement:

"Notwithstanding any provision of Section 4.5 to the contrary, Buyer shall have until the date that is February 10, 2020 (the "Final PIP Approval Date") to terminate the Agreement by delivering written notice to Seller. Termination may be made by the Buyer or its acquisition Lender, if, in each the Buyer's or Lender's sole and complete discretion, the Buyer or the Lender determine that the PIP is unsatisfactory. In the event that Buyer does not provide a written notice of termination to Seller on or prior to the Final PIP Approval Date, Buyer shall be deemed to have terminated the Agreement effective as of 5:00 PM EST on the last day of the Final PIP Approval Date. In the event that Buyer terminates (or is deemed to have terminated) this Agreement pursuant to this subsection, the Escrow Agent shall return to Buyer the Deposit and shall disburse to Seller the Independent Consideration."

5. Property Taxes. Buyer shall have until the date that is February 10, 2020 ("Property Tax Approval Date") to terminate the Agreement by delivering written notice to Seller. Termination may be made if, in the Buyer's sole and complete discretion, the Buyer determines that the property tax schedules for any or all Assets are unsatisfactory. In the event that Buyer does not provide a written notice of termination to Seller on or prior to the Property Tax Approval Date, Buyer shall be deemed to have terminated the Agreement effective as of5:00 PM EST on the last day of the Property Tax Approval Date. In the event that Buyer terminates (or is deemed to have terminated) this Agreement pursuant to this subsection, the Escrow Agent shall return to Buyer the Deposit and shall disburse to Seller the Independent Consideration.

6. Appraisals. Notwithstanding any provision of Section 4.6 to the contrary, Buyer shall have until the date that is February 10, 2020 ("Appraisal Approval Date") to terminate the Agreement by delivering written notice to Seller. Termination may be made if, in the Buyer's sole and complete discretion, Buyer determines that the appraisals for any or all Assets are unsatisfactory. In the event that Buyer does not provide a written notice of termination to Seller on or prior to the Appraisal Approval Date, Buyer shall be deemed to have terminated the Agreement effective as of 5:00 PM EST on the last day of the Appraisal Approval Date. In the event that Buyer terminates (or is deemed to have terminated) this Agreement pursuant to this subsection, the Escrow Agent shall return to Buyer the Deposit and shall disburse to Seller the Independent Consideration.

7. Management Agreement. Parties are finalizing the insurance, and termination fee structure of the management agreement, therefore, each party shall have until the date that is February I 0, 2020 ("Management Agreement Approval Date") to terminate the Agreement by delivering written notice to non-termination party. Termination may be made if, in either party's sole and complete discretion, either party determines that the management agreement insurance or termination fee provisions are unsatisfactory. In the event that either party does not provide a written notice of termination to Seller on or prior to the Management Agreement Approval Date, Buyer shall be deemed to have terminated the Agreement effective as of 5:00 PM EST on the last day of the Management Agreement Approval Date. In the event that Buyer terminates (or is deemed to have terminated) this Agreement pursuant to this subsection, the Escrow Agent shall return to Buyer the Deposit and shall disburse to Seller the Independent Consideration.

8. Conflict: Counterparts. In the event of any conflict between the terms of this Amendment and the Agreement, this Amendment shall control. This Amendment may be executed in multiple counterparts via facsimile or email in .PDF format, each of which shall be deemed to be an original, but such counterparts when taken together shall constitute but one Amendment.

9. Successors and Assigns. This Amendment shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors, administrators and assigns.

I0.Ratification. Except as set forth above, the terms of the Agreement are hereby ratified and confirmed in their entirety.

[Signature Page to Follow]

IN WITNESS WHEREOF, this Second Amendment has been duly executed by the parties hereto as of the day and year first above written.

SELLER:

CENTRAL PA EQUITIES 17, LLC,

a Pennsylvania limited liability company

By:  /s/ David H. Hogg

Name:  David H. Hogg

Title:  Manager

CENTRAL PA EQUITIES 19, LLC,

a Pennsylvania limited liability company

By:  /s/ David H. Hogg

Name:  David H. Hogg

Title:  Manager

SPRINGWOOD – FHP LP,

a Pennsylvania limited partnership

By:  /s/ David H. Hogg

Name:  David H. Hogg

Title:  Manager

[BUYER'S SIGNATURE PAGE TO FOLLOW]

BUYER:

LODGING FUND REIT III OP, LP

A Delaware limited partnership

By: Lodging Fund REIT Ill, Inc. Its: General Partner

By: /s/ David R. Durell

Name: David R. Durell

Title: Chief Acquisition Officer

EX-10.57.4

EXHIBIT 10.57.4

THIRD AMENDMENT TO AGREEMENT OF PURCHASE AND SALE

This THIRD AMENDMENT TO AGREEMENT OF PURCHASE AND SALE (this

“Third Amendment”) is made as of the 10th day of February, 2020 (the “Amendment Date”) by and among CENTRAL PA EQUITIES 17, LLC, a Pennsylvania limited liability company (“HISYork South Seller”), CENTRAL PA EQUITIES 19, LLC, a Pennsylvania limited liability company (“H2S York Seller”), SPRINGWOOD – FHP LP, a Pennsylvania limited partnership (“FIS Hershey Seller”, together with HIS York South Seller and H2S York Seller herein referred to collectively and individually, as the context so requires, as “Seller”), and LODGING FUND REIT III OP, LP, a Delaware limited partnership (the “Buyer”).

WHEREAS, Buyer and Seller entered into that certain Agreement of Purchase and Sale dated November 22, 2019, as amended by the First Amendment dated January 13, 2020 and as amended by the Second Amendment dated January 31, 2020 to Agreement of Purchase and Sale (collectively, the “Agreement”) for the purchase and sale of three (3) hotels, namely the Hampton Inn York South hotel in York, PA (“HIS York South Hotel”), the Home2 Suites York hotel in York, PA (“H2S York Hotel”) and the Fairfield Inn & Suites Hershey Chocolate Avenue hotel in Hershey, PA (“FIS Hershey Hotel”, together with HIS York South Hotel and H2S York Hotel herein referred to collectively and individually, as the context so requires, the “Property”);

WHEREAS, Buyer has not yet provided a copy of its Satisfaction Notice;

WHEREAS, during the course of Buyer’s due diligence studies, Buyer has realized that Buyer will be unable to obtain satisfactory property tax schedules for each Property, satisfactory appraisals for each Property, and complete management agreements prior to the expiration of the Due Diligence Period;

WHEREAS, as more particularly described herein, the parties wish to (a) deem this Third Amendment as Buyer’s Satisfaction Notice as to the PIP Approval and building inspection reports, but such Satisfaction Notice remains subject to the conditions herein; and (b) provide Buyer with additional time to obtain satisfactory property tax schedules for each Property, satisfactory appraisals for each Property, and a complete management agreement prior to the expiration of the Due Diligence Period;

NOW THEREFORE, for valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:

1. Capitalization. All capitalized terms used herein will have the meanings ascribed to those terms in the Agreement, unless otherwise specified herein.

2. Satisfaction Notice. The parties acknowledge and agree that, as to the PIP Approval in Section 4.7 and building inspection reports identified by the Second Amendment, this Third Amendment shall serve as Buyer’s Satisfaction Notice pursuant to Section 7.1(a) of the Agreement; provided, however, that Buyer shall still have the right to terminate the Agreement after the expiration of the Due Diligence Period as expressly stated in the Agreement and in Sections 3,  4, and 5of this Third Amendment.

3. Property Taxes. Buyer shall have until the date that is February 17, 2020 (“Property Tax Approval Date”) to terminate the Agreement by delivering written notice to Seller. Termination may be made if, in the Buyer’s sole and complete discretion, the Buyer determines that the property tax schedules for any or all Assets are unsatisfactory. In the event that Buyer does not provide a written notice of termination to Seller on or prior to the Property Tax Approval Date, Buyer shall be deemed to have terminated the Agreement effective as of 5:00 PM EST on the last day of the Property Tax Approval Date. In the event that Buyer terminates (or is deemed to have terminated) this Agreement pursuant to this subsection, the Escrow Agent shall return to Buyer the Deposit and shall disburse to Seller the Independent Consideration.

4. Appraisals. Notwithstanding any provision of Section 4.6 to the contrary, Buyer shall have until the date that is February 17, 2020 (“Appraisal Approval Date”) to terminate the Agreement by delivering written notice to Seller. Termination may be made if, in the Buyer’s sole and complete discretion, Buyer determines that the appraisals for any or all Assets are unsatisfactory. In the event that Buyer does not provide a written notice of termination to Seller on or prior to the Appraisal Approval Date, Buyer shall be deemed to have terminated the Agreement effective as of 5:00 PM EST on the last day of the Appraisal Approval Date. In the event that Buyer terminates (or is deemed to have terminated) this Agreement pursuant to this subsection, the Escrow Agent shall return to Buyer the Deposit and shall disburse to Seller the Independent Consideration.

5. Management Agreement. Parties are finalizing the insurance, and termination fee structure of the management agreement, therefore, each party shall have until the date that is February 17, 2020 (“Management Agreement Approval Date”) to terminate the Agreement by delivering written notice to non-termination party. Termination may be made if, in either party’s sole and complete discretion, either party determines that the management agreement insurance or termination fee provisions are unsatisfactory. In the event that either party does not provide a written notice of termination to Seller on or prior to the Management Agreement Approval Date, Buyer shall be deemed to have terminated the Agreement effective as of 5:00 PM EST on the last day of the Management Agreement Approval Date. In the event that Buyer terminates (or is deemed to have terminated) this Agreement pursuant to this subsection, the Escrow Agent shall return to Buyer the Deposit and shall disburse to Seller the Independent Consideration.

6. Closing Date. Section 2.4(a) of the Agreement is hereby deleted in its entirety and replaced with the following:

"(a) Closing Date. Unless this Agreement is terminated upon the express terms herein, the closing of the sale and purchase of the Assets or an individual Asset (as the context may require, a "Closing" or the "Closings") must take place in the following sequence: (1) first, the FIS Hershey Hotel; (2) second, the H2S York Hotel; and (3) third, the HIS York South Hotel. Buyer shall provide Seller written notice of Buyer’s intent to close on the individual Hotels no later than ten (10) days prior to each intended Closing date (each a “Closing Date Notice”). Unless this Agreement is terminated upon the express terms herein, Buyer and Seller shall execute a Fourth Amendment by February 17, 2020 memorializing mutually

agreeable closing dates for each of the Hotels. Furthermore, upon the execution of such Fourth Amendment, Buyer covenants the following: (a) that it will release a portion of the Deposit no later than one (1) Business Day after the execution of the Fourth Amendment to pay for additional interest, fees and other expenses incurred by the FIS Hershey Seller associated with the mortgage financing on the FIS Hershey Hotel, up to Fifty Thousand and No/100 Dollars (such amount, the “FIS Hershey Financing Charge”), and (b), notwithstanding the release of the Deposit contemplated by (a) for the dollar-for-dollar amount of such FIS Hershey Financing Charge, the Purchase Price to be paid by Buyer upon the purchase of the FIS Hershey shall be increased in the amount of the FIS Hershey Financing Charge In such event, the Individual Allocation attributed to such FIS Hershey Hotel shall be increased in the amount of the additional Purchase Price.”

7. Conflict; Counterparts. In the event of any conflict between the terms of this Amendment and the Agreement, this Amendment shall control. This Amendment may be executed in multiple counterparts via facsimile or email in .PDF format, each of which shall be deemed to be an original, but such counterparts when taken together shall constitute but one Amendment.

8. Successors and Assigns. This Amendment shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors, administrators and assigns.

9. Ratification. Except as set forth above, the terms of the Agreement are hereby ratified and confirmed in their entirety.

[Signature Page to Follow]

IN WITNESS WHEREOF, this Third Amendment has been duly executed by the parties hereto as of the day and year first above written.

SELLER:

CENTRAL PA EQUITIES 17, LLC,

a Pennsylvania limited liability company

By:  /s/ David H. Hogg

Name:  David H. Hogg

Title:  Manager

CENTRAL PA EQUITIES 19, LLC,

a Pennsylvania limited liability company

By:  /s/ David H. Hogg

Name:  David H. Hogg

Title:  Manager

SPRINGWOOD – FHP LP,

a Pennsylvania limited partnership

By:  /s/ David H. Hogg

Name:  David H. Hogg

Title:  Manager

BUYER:

LODGING FUND REIT III OP, LP

A Delaware limited partnership

By: Lodging Fund REIT Ill, Inc.

Its: General Partner

By: /s/ David R. Durell

Name: David R. Durell

Title: Chief Acquisition Officer

EX-10.57.5

EXHIBIT 10.57.5

FOURTH AMENDMENT TO AGREEMENT OF PURCHASE AND SALE

This FOURTH AMENDMENT TO AGREEMENT OF PURCHASE AND SALE (this

“Fourth Amendment”) is made as of the 17th day of February, 2020 (the “Amendment Date”) by and among CENTRAL PA EQUITIES 17, LLC, a Pennsylvania limited liability company (“HIS York South Seller”), CENTRAL PA EQUITIES 19, LLC, a Pennsylvania limited liability company (“H2S York Seller”), SPRINGWOOD – FHP LP, a Pennsylvania limited partnership (“FIS Hershey Seller”, together with HIS York South Seller and H2S York Seller herein referred to collectively and individually, as the context so requires, as “Seller”), and LODGING FUND REIT III OP, LP, a Delaware limited partnership (the “Buyer”).

WHEREAS, Buyer and Seller entered into that certain Agreement of Purchase and Sale dated November 22, 2019, as amended by the First Amendment dated January 13, 2020 and as amended by the Second Amendment dated January 31, 2020, and as amended by the Third Amendment dated February 10, 2020 to Agreement of Purchase and Sale (together, the “Agreement”) for the purchase and sale of three (3) hotels, namely the Hampton Inn York South hotel in York, PA (“HIS York South Hotel”), the Home2 Suites York hotel in York, PA (“H2S York Hotel”) and the Fairfield Inn & Suites Hershey Chocolate Avenue hotel in Hershey, PA (“FIS Hershey Hotel”, together with HIS York South Hotel and H2S York Hotel herein referred to collectively and individually, as the context so requires, the “Property”);

WHEREAS, Buyer intends this Fourth Amendment to its unconditional Satisfaction Notice in accordance with Section 7.1(a);

NOW THEREFORE, for valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:

1.Capitalization. All capitalized terms used herein will have the meanings ascribed to those terms in the Agreement, unless otherwise specified herein.

2.Satisfaction Notice. The parties acknowledge and agree that this Fourth Amendment shall serve as Buyer’s Satisfaction Notice pursuant to Section 7.1(a) of the Agreement.

3.Purchase Price. The first sentence of Section 2.2(a) shall read as follows:

“(a)Consideration. The consideration for the purchase of the Assets shall be Forty-Six Million Eight Hundred Seventy-Five Thousand and no/100 ($46,875,000.00) (the “Purchase Price”).

4.Deposit. The last sentence in Section 2.3 shall read as follows:

“The Deposit will be held in escrow, and shall be evenly applied among each Asset at such Asset’s respective Closing.”

5.Closing Date. Section 2.4(a) of the Agreement is hereby deleted in its entirety and replaced with the following:

"(a) Closing Date. Unless this Agreement is terminated upon the express terms herein, the closing of the sale and purchase of the Assets or an individual Asset (as the context may require, a "Closing" or the "Closings") must take place in the following sequence: (1) first, the FIS Hershey Hotel; (2) second, the H2S York Hotel; and (3) third, the HIS York South Hotel. Buyer shall provide Seller written notice of Buyer's intent to close on the individual Hotels no later than ten (10) days prior to each intended Closing date (each a "Closing Date Notice"). Unless this Agreement is earlier terminated as expressly set forth herein, Buyer and Seller acknowledge and agree on the following: (a) the FIS Hershey Hotel Closing shall occur no later than April 2, 2020; (b) the H2S York Hotel Closing shall occur no later than June 1, 2020, however, if the H2S York Hotel closes before May 18, 2020, Buyer shall receive a Twenty-Five Thousand Dollar ($25,000) credit, applied to purchase price of the H2S York; and (c) the HIS York Hotel Closing shall occur no later than July 31, 2020, however, if the HIS York Hotel Closing occurs before July 2, 2020, the Buyer shall receive a Twenty Five Thousand Dollar ($25,000) credit, applied to the purchase price of the HIS York Hotel. For the avoidance of doubt, any reference to the purchase price increase to compensate Seller for costs, fees, or charges in connection with the mortgage interest of the FIS Hershey Hotel is hereby deleted.”

6.Purchase Price Allocation.  Schedule A-4 of the Agreement is hereby deleted in its entirety and replaced with Schedule A-4 (“Purchase Price Allocation”) attached hereto and incorporated herein.

7.Ongoing Management Agreement. Seller and Buyer acknowledge and agree that the Ongoing Management Agreement contemplated by Section 14.27 of the Agreement has been agreed upon by the parties in substantially the same form as Exhibit A, subject to customary administrative updates (e.g. hotel names, addresses, franchisors) including a complete Exhibit D, attached hereto (the “Final Management Agreement”) and that such Final Management Agreement will be executed at each Closing. Notwithstanding the immediately preceding sentence to the contrary, the parties acknowledge and agree that: (i) the Section 3-05 Audit requirements set forth in Schedule 3.5 of the Agreement shall be inserted into the Final Management Agreement in substantially the same form as the language included in Schedule 3.5 of the Agreement; provided, however that all references to “Seller” in such schedule shall be revised to be the “Operator” (as such term is defined in the Final Management Agreement), and (ii) Parties will continue, in good faith, to negotiate or update the terms required by Section 12.1, as applicable or advisable until the Closing Date; in the event parties have not agreed within 24-hours of the first Closing Date, then Buyer shall obtain and bind insurance in both coverage and policy limits suitable to Buyer.

8.Conflict; Counterparts. In the event of any conflict between the terms of this Amendment and the Agreement, this Amendment shall control. This Amendment may be executed in multiple counterparts via facsimile or email in .PDF format, each of which shall be deemed to be an original, but such counterparts when taken together shall constitute but one Amendment.

9.Successors and Assigns. This Amendment shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors, administrators and assigns.

10.Ratification. Except as set forth above, the terms of the Agreement are hereby ratified and confirmed in their entirety.

[Signature Page to Follow]

IN WITNESS WHEREOF, this Fourth Amendment has been duly executed by the patties hereto as of the day and year first above written.

CENTRAL PA EQUITIES 17, LLC,

a Pennsylvania limited liability company

By:  /s/ David H. Hogg

Name:  David H. Hogg

Title:  Manager

CENTRAL PA EQUITIES 19, LLC,

a Pennsylvania limited liability company

By:  /s/ David H. Hogg

Name:  David H. Hogg

Title:  Manager

SPRINGWOOD – FHP LP,

a Pennsylvania limited partnership

By:  /s/ David H. Hogg

Name:  David H. Hogg

Title:  Manager

[BUYER'S SIGNATURE PAGE TO FOLLOW]

BUYER:

LODGING FUND REIT III OP, LP

A Delaware limited partnership

By: Lodging Fund REIT Ill, Inc. Its: General Partner

By: /s/ David R. Durell

Name: David R. Durell

Title: Chief Acquisition Officer

SCHEDULE A-4

Purchase Price Allocation Asset Allocations

Asset	Purchase Price
HIS York South Hotel	$12,625,000.00
H2S York Hotel	$14,225,000.00
FIS Hershey Hotel	$20,025,000.00
Total	$46,875,000.00

Sch. A-4

Exhibit A

Ongoing Management Agreement

[Attached behind.]

HOTEL MANAGEMENT AGREEMENT

LF3

TRS, LLC

[Hotel address]

TABLE OF CONTENTS (CONTINUED)

			Page
ARTICLE I	THE HOTEL		1
	1.1	Hotel Description	1
ARTICLE II	TERM		2
	2.1	Initial and Renewal Terms	2
ARTICLE III	GENERAL SERVICES BY OPERATOR		2
	3.1	Scope of Services	2
	3.2	Reimbursements of Transition Expenses	4
	3.3	Major Agreements	4
	3.4	Independent Contractor Status	4
	3.5	Standard of Care and Disclaimer of Fiduciary Duty	5
	3.6	Third Party Undertaking Management Functions	6
ARTICLE IV	GENERAL OPERATION OF THE HOTEL		6
	4.1	Exclusive Operator of Hotel	6
	4.2	Manner of Operations	6
	4.3	Consultation with Owner	6
	4.4	Hiring of General Manager	6
ARTICLE V	HOTEL EMPLOYEES		7
	5.1	Hotel Employees and Contractors	7
	5.2	Benefit Plan	7
	5.3	Lodging for Executive Employees	8
	5.4	Employment Laws	8
	5.5	Employment Policy	8
	5.6	Collective Bargaining Agreements	9
ARTICLE VI	PROVISION OF FUNDS		9
	6.1	Available Funds for Operations	9
	6.2	No Advance of Funds	9
ARTICLE VII	CENTRALIZED SERVICES; MULTI-PROPERTY PROGRAMS; NETWORKING SERVICES		10
	16.1	Centralized Services	10
	16.2	Multi-property Programs	10
	16.3	Networking Services	11
ARTICLE VIII	WORKING CAPITAL AND BANK ACCOUNTS
	8.1	Working Capital	11
	8.2	Operating and FF&E Account	11
	8.3	Internal Controls for Accounts	11
			12

TABLE OF CONTENTS (CONTINUED)

			Page
ARTICLE IX	BOOKS, RECORDS AND STATEMENTS; BUDGETS		12
	9.1	Accounting Procedures	12
	92.	Monthly Reports	13
	9.3	Audited Financials	13
	9.4	Annual Budgets	14
	9.5	Resolution of Disputes over Budgets	14
	9.6	Approval for Capital Expenditures	15
ARTICLE  X	MANAGEMENT  FEES  AND  PAYMENTS  TO  OPERATOR  AND OWNER		15
	10.1	Base Fee	15
	10.2	Incentive Fee	15
	10.3	Funds from Operating Account	16
	10.4	Audit of Management Fees	16
	10.5	Renovation Services	16
	10.6	Reimbursable Expenses	16
ARTICLE XI	FF&E RESERVE		17
	11.1	Establishing FF&E Reserve Account	17
	11.2	Use of Funds in FF&E Reserve Account	17
ARTICLE XII	INSURANCE		17
	12.1	Insurance Requirements	17
	12.2	Named Insured Party	17
	12.3	Form of Insurance	18
	12.4	Cancellation and Modification of Insurance	18
	12.5	No Subrogation Rights	18
	12.6	Insurance Proceeds	18
	12.7	Payment for Insurance	18
ARTICLE XIII	SPECIAL TERMINATION EVENTS		19
	13.1	Performance Test	19
ARTICLE XIV	DAMAGE OR DESTRUCTION; CONDEMNATION		19
	14.1	Fire or Casualty	19
	14.2	Condemnation	19
	14.3	Miscellaneous	20
ARTICLE XV	EVENTS OF DEFAULT		20
	15.1	Listing of Defaults	20
	15.2	Termination Rights	21
	15.3	Non-Exclusive Remedy	21
	15.4	Force Majeure	21
	15.5	Waiver of Certain Claims	21

TABLE OF CONTENTS (CONTINUED)

			Page
ARTICLE XVI	TERMINATION		22
	16.1	Termination Fee	22
	16.2	Prior Commitments to Customers	22
	16.3	Transition of Management	23
	16.4	WARN Act Liability	23
ARTICLE XVII	ASSIGNMENT		24
	17.1	Assignment by Operator	24
	17.2	Assignment by Owner	24
	17.3	Effect of Assignment	24
ARTICLE XVIII	NOTICES		24
	18.1	Requirement for Notice	24
ARTICLE XIX	ESTOPPELS		25
	19.1	Confirmation of Agreement	25
ARTICLE XX	INDEMNIFICATION25		25
	20.1	Indemnity of Operator	25
	20.2	Indemnity of Owner	26
	20.3	Employment Claims	26
	20.4	Procedure for Indemnity	26
	20.5	Survival Beyond Termination	27
ARTICLE XXI	MISCELLANEOUS		27
	21.1	Binding and Enforceable Agreement	27
	21.2	Transactions with Affiliates	27
	21.3	Entire Agreement	27
	21.4	Headings	28
	21.5	Waiver	28
	21.6	Binding Agreement	28
	21.7	Choice of Law	28
	21.8	Qualified Loans	28
	21.9	Dispute Resolution	28
	21.10	No Guarantee of Operating Results	29
	21.11	Oversight of Renovation Services	29
	21.12	Operating Funds	29
	21.13	Consents and Approvals	30
	21.14	Signature Counterparts	30
	21.15	Subordination, Non-Disclosure and Attornment	30

TABLE OF CONTENTS (CONTINUED)

		Page
EXHIBITS
EXHIBIT A	Centralized Services
EXHIBIT B	EBITDA Projections; Calculation of Incentive Fee
EXHIBIT C	Insurance Requirements
EXHIBIT D	Competitive Set
EXHIBIT E	Certain Definitions

v

HOTEL MANAGEMENT AGREEMENT HOTEL NAME

THIS HOTEL MANAGEMENT AGREEMENT (this "Agreement"), made effective as of [DATE], 2020 (the "Commencement Date"), is entered into between LF3  TRS, LLC, a Delaware limited liability company ("Owner"), and SPRINGWOOD HOSPITALITY, LLC, a [STATE NAME] limited liability company ("Operator").

RECITALS

A.Owner owns the hotel known as the [NICK NAME OF HOTEL] located at [LOCATION] (the "Hotel"); and

B.[Owner has entered into a Franchise Agreement (the "Franchise Agreement"), dated as of [FA DATE], with [NAME OF FRANCHISOR] ("Franchisor") under which Owner is licensed to operate the Hotel as a [BRAND NAME], or similarly situated brand (the "Brand");] and

C.Owner desires to engage Operator to manage and operate the Hotel, and Operator has agreed to manage and operate the Hotel, in accordance with the terms and conditions of this Agreement.

NOW, THEREFORE, for and in consideration of the mutual promises contained herein, and for other good and valuable consideration, Owner and Operator agree as follows:

ARTICLE I

THE HOTEL

1.1Hotel Description

Owner and Operator acknowledge that the Hotel consists of and contains:

A.That certain real property (the "Land") located at the address shown in Recital A

above, and improvements thereon with [] guest rooms and other facilities

together with any outdoor parking areas, retail spaces and other facilities located

on the Land (the "Building") or otherwise used by the Hotel;

B.Mechanical systems and built-in installations (the "Installations") of the Building including, but not limited to, heating, ventilation, air conditioning, electrical and plumbing systems, elevators, and built-in laundry, refrigeration and kitchen equipment;

C.Furniture, furnishings, wall coverings, floor coverings, window treatments, fixtures and hotel equipment and vehicles (the "FF&E");

D.Chinaware, glassware, silverware, linens, and other items of a similar nature (the "Operating Equipment"); and

1

E.Stock and inventories of paper supplies, cleaning materials and similar consumable items and food and beverage (the "Operating Supplies").

ARTICLE II

TERM

2.1Initial and Renewal Terms

This Agreement shall have a term commencing on the Commencement Date and expiring on the date (as the same may be extended in accordance with the provisions of this Agreement, the "Expiration Date") which is the fifth (5th) anniversary of the later of (a) the Commencement Date, or (b) the date the Hotel opens for business to the public, unless sooner terminated in accordance with the provisions of this Agreement or unless extended by the written agreement of Owner and Operator (the "Initial Term"). Subject to the earlier termination of this Agreement pursuant to the terms of this Agreement, this Agreement shall, upon mutual consent of Operator and Owner, be extended for up to two (2) additional consecutive five (5) year renewal terms (each a "Renewal Term", and together with the Initial Term and all prior Renewal Terms, the "Term") (each such Renewal Term to commence on the day immediately following the last day of the then expiring term) unless Owner or Operator provides a written notice of non-renewal to the other party ("Non- Renewal Notice") at least sixty (60) days prior to the last day of the then-expiring Term.

ARTICLE III

GENERAL SERVICES BY OPERATOR

3.1Scope of Services

During the Term, Operator, for the account of Owner, shall in accordance with the applicable provisions of this Agreement, and only to the extent Owner has provided sufficient funds therefor, either through Hotel operations or directly from Owner:

A.Recruit, train, direct, supervise, employ and dismiss on-site staff (the "Hotel Employees") necessary for the operation of the Hotel;

B.Establish all prices, rates and charges for guest rooms, meeting rooms, commercial space (including stores, office space and lobby space), food, beverage, and other salable or rentable items comprising the Hotel and its business;

C.Implement advertising, marketing, promotion, publicity and other similar programs for the Hotel;

D.(i) Negotiate and enter into leases, licenses and concession agreements (collectively, the "Leases") for stores, office space and lobby space at the Hotel, collect the rent under the Leases and otherwise administer the Leases; provided, however, that all Leases require Owner’s prior written approval which may be withheld and (ii) negotiate and enter into contracts for the provision of goods and services required in the ordinary course of business in operating the Hotel;

provided, however, without Owner's prior written approval, which shall not be unreasonably withheld, conditioned or delayed, Operator shall not enter into any contract for the provision of goods and services to the Hotel unless the same is (1) terminable upon not more than thirty (30) days' notice without penalty, or (2) is provided for in the applicable Budget, or (3) requires an annual (calculated in the aggregate) payment of less than $6000;

E.Apply for, process and take all necessary steps, as determined by Operator, to procure and keep in effect in Owner's name (or, if required by the licensing authority, in Operator's name, or a third party tenant's name, or any or all of the foregoing) all licenses and permits required for the operation of the Hotel;

F.Purchase all FF&E, Operating Equipment and Operating Supplies reasonably necessary for the operation of the Hotel,; provided, however, that any such single purchases exceeding $2,500 require Owner’s prior written approval, which shall not be unreasonably withheld, conditioned or delayed; Establish and revise, as necessary, administrative policies and procedures including, without limitation, policies and procedures for the control of revenue and expenditures, for the purchase of Operating Equipment, Operating Supplies and services, for the control of credit, and for the scheduling of maintenance.

G.Provide routine accounting services in accordance with the "Uniform System of Accounts" (Eleventh Revised Edition 2014, as further revised from time to time), as adopted by the American Hotel and Motel Association of the United States and Canada (the "Uniform System") and purchasing services as required in the ordinary course of business;

H.Comply with all applicable laws, ordinances, regulations, rulings and orders of governmental authorities affecting or issued in connection with the Hotel, as well as with orders and requirements of any board of fire underwriters or any other body which may exercise similar functions, so long as Owner promptly delivers to Operator any notice of violation thereof received by Owner;

I.Cause all ordinary repairs and maintenance to the Hotel, of which Operator is aware, to be made and conducted; provided, however, that any repairs that are structural in nature, or cost more than $6,000 require Owner’s prior written approval, which shall not be unreasonably withheld, conditioned or delayed;

J.Provide project management services on Owner's behalf in connection with capital improvements to the Hotel, or the renovation and refurbishment of the Hotel, provided that all such capital improvements shall be funded from the FF&E Reserve Account (as hereinafter defined) or by Owner in accordance with the applicable approved Budgets;

K.Subject to Section 3.3 below, operate the Hotel in accordance with the Franchise Agreement, as it may be amended or replaced at any time during the Term, and any mortgage or deed of trust encumbering the Land (the "Mortgage"), and any

covenants, conditions and restrictions encumbering the Land as of the date of this Agreement (the "Encumbrances") (collectively, the Franchise Agreement, the Mortgage and the Encumbrances, the "Major Agreements");

L.Prepare and deliver to Owner any Budgets and such other information as required by this Agreement;

M.Procure and maintain insurance in accordance with ARTICLE XII;

N.Open and maintain the Operating Account and the FF&E Reserve Account as required by this Agreement;

O.Retain legal counsel and such other professionals, consultants, and specialists (collectively the “Counsel”) as Operator deems necessary in connection with the management of the Hotel, the cost of which shall be an Operating Expense; provided, however, (i) Operator shall not expend more than $1,500 per occurrence with respect to such fees and expenses without the prior written consent of Owner,

(ii) Owner receives written notice explaining the circumstances for the retention of the Counsel, and (iii) Owner provides written approval of the retention such counsel, whereby consent may unreasonably withheld, so long Owner provides adequate Counsel to the expectation explained in Manager’s notice;

P.Provide such other services as are required under the terms of this Agreement.

3.2Reimbursements of Transition Expenses

Owner and Operator shall both utilize the M3 hospitality accounting and analytics software. Operator shall be reimbursed by Owner for any out-of-pocket expenses and disbursements incurred by Operator during or in connection with any switch to a software system other than M3 or material changes in reports or chart of accounts within the M3 system. Operator shall maintain and provide to Owner invoices or other evidence supporting such charges.

3.3Major Agreements

Operator covenants it will comply with the material terms of all Major Agreement, so long as complete and accurate copies of the Major Agreements, have been delivered to Operator sufficiently in advance of the Commencement Date to allow Operator to review the terms of such Major Agreements.

3.4Independent Contractor Status

In the performance of its duties in the administration, management and operation of the Hotel, Operator shall act solely as an independent contractor. Nothing herein shall constitute or be construed to be or create a partnership or joint venture between Owner and Operator, or be construed to appoint or constitute Operator as an agent of Owner for any purpose, or be construed to create a lease by Operator of the Hotel or its facilities. Except as otherwise provided in this Agreement, including without limitation the provisions of Article XX hereof, (a) unless Operator exceeds its authority or acts not in accordance with the approved Budgets, all debts and liabilities

to third persons incurred by Operator in the course of its operation and management of the Hotel in accordance with the provisions of this Agreement shall be the debts and liabilities of Owner only, and (b) unless Operator acts grossly negligent, with reckless disregard, fraudulently or in bad faith or commits intentional misrepresentations or acts not in accordance with the approved Budgets, Operator shall not be liable for any such obligations by reason of its management supervision, direction and operation of the Hotel for Owner. Operator may so inform third parties with whom it deals on behalf of Owner and may take any other reasonable steps to carry out the intent of this paragraph. It is expressly covenanted that this Agreement is no more than an agreement for the rendering of services by Operator on behalf of Owner in the operation and management of the Hotel only. To the extent that any fiduciary or other duties may be implied as a result of the relationship of the parties under this Agreement, the parties disclaim any such implied duties and agree that: (a) Operator shall have no duties that are inconsistent with, or would have the effect of expanding, modifying, limiting or restricting any of the express terms of this Agreement, (b) the express terms of this Agreement shall control the duties of Operator hereunder,

(c) this Agreement shall be interpreted in accordance with general principles of contract interpretation without regard to the common law principles of agency, and (d) any liability of the parties shall be based solely on principles of contract law and the express terms of this Agreement. The parties further acknowledge and agree that for the purposes of determining the nature and scope of any fiduciary duties of Operator under this Agreement, the terms of this Agreement, and the duties and obligations set forth herein, are intended to satisfy all such fiduciary duties that may exist as a result of the relationship between the parties, including all duties of loyalty, good faith, fair dealing and full disclosure, and any other duty deemed to exist under the common law principles of agency or otherwise (other than the duty of good faith and fair dealing implied under general contract principles, independent of the common law principles of agency). Accordingly, notwithstanding anything to the contrary in this Agreement, to the fullest extent permitted under applicable law, the parties hereby unconditionally and irrevocably waive and disclaim any power or right such party may have to claim any punitive, exemplary, treble, incidental or consequential damages for any breach of fiduciary duties.

3.5Standard of Care and Disclaimer of Fiduciary Duty

Operator shall operate the Hotel in a reasonably prudent and efficient manner as is common among operators managing similar properties in the same geographic area that the Hotel is in, in the same industry. Both Owner and Operator agree that, to the extent allowable under applicable law, neither Operator, nor any of its Affiliates or any of their respective directors, officers, employees, consultants, agents or representatives, shall owe any fiduciary duty to Owner in the operation of the Hotel. Operator shall not, in the performance of its obligations under this Agreement, be liable to Owner or to any other Person for any act or omission (whether negligent, tortious or otherwise) of Operator or any of its Affiliates or any of their respective directors, officers, employees, consultants, agents or representatives, except only to the extent such liabilities, obligations, claims, costs and expenses arise out of or are caused by the willful misconduct (including fraud or the willful breach of this Agreement), gross negligence or bad faith of Operator or any of its Affiliates or any of their respective directors, officers, employees, consultants, agents or representatives.

3.6Third Party Undertaking Management Functions

Operator may, upon consulting Owner, delegate to third parties certain management functions. All such delegation shall require Owner's approval.

ARTICLE IV

GENERAL OPERATION OF THE HOTEL

4.1Exclusive Operator of Hotel

Owner hereby engages Operator as the exclusive operator of the Hotel during the Term, and Operator hereby accepts such engagement. Subject to the terms of this Agreement and the Owner’s approval of the applicable Budget, Operator shall have control and discretion in the operation, direction, management and supervision of the Hotel. Such control and discretion of Operator shall include, without limitation, the determination of credit policies (including entering into agreements with credit card organizations), terms of admittance, charges for rooms, food and beverage policies, employee wages, benefits and severance policies, entertainment policies, leasing, licensing and granting of concessions for commercial space at the Hotel (subject to Section 3.1C above), and all phases of advertising, promotion and publicity relating to the Hotel.

4.2Manner of Operations

Operator shall operate the Hotel and all of its facilities and activities in the same manner as is customary and usual in the operation of other hotels operated by Operator under the Brand in markets similar to the Hotel, to the extent consistent with the Budget and the Hotel's facilities, for so long as the Hotel remains under the Brand. If the Hotel is not operated under the Brand, then Operator shall operate the Hotel and all of its facilities and activities in the same manner as is customary and usual in the operation of similar hotels by Operator in the geographic area of the Hotel to the extent consistent with the Budget and the Hotel's facilities.

4.3Consultation with Owner

Operator will be available to consult with and advise Owner, at Owner's reasonable request, concerning all policies and procedures affecting all phases of the conduct of business at the Hotels. Operator, including any Hotel Employee, will participate in conferences with Owner at any reasonable frequency and duration as Owner requires.

4.4Hiring of General Manager

Prior to hiring any general manager for the Hotel ("General Manager"), Operator will deliver the résumé of such proposed General Manager to Owner, and Owner shall have a period not to exceed seven (7) business days from and after delivery of such résumé to Owner to interview such General Manager, and consent to proposed General Manager’s hiring; if Owner does not object to the General Manager’s résumé within seven (7) business days after delivery, then Owner’s consent is deemed granted.

ARTICLE V

HOTEL EMPLOYEES

5.1Hotel Employees and Contractors

All Hotel Employees shall be employees of Operator, an Affiliate of Operator, or a professional employer organization ("PEO") engaged by Operator. Subjet to the approved Budget, and any limitations of a Major Agreement, Operator may, as deemed reasonably necessary by Operator, utilize shared employees and shared positions across multiple hotels owned by the same or different owners, or may assign employees of Operator, an Affiliate of Operator or PEO temporarily, part-time or on a shared basis to perform services at the Hotel or from a remote location, including Operator's home office; and the allocable portion of such temporary, part-time shared employee's salary (including employee benefits and all applicable employer taxes as well as any federal, state or local taxes imposed upon Operator for such reimbursement) while performing services for the Hotel, then actual expenses incurred by such employee in traveling to and from the Hotel (limited to $600 for reasonable travel expenses), will be reimbursed to Operator by Owner, or to the owner of the hotel from which the employee is being shared, including any federal, state or local taxes imposed upon Operator for such reimbursement, as an Operating Expense, and such employee will be entitled to complimentary lodging, food and beverages, and parking and other amenities, and use of Hotel facilities while performing such services away from the employee's home hotel. Subject to the Budgets, Operator shall have absolute discretion to hire, fire, promote, supervise, direct and train all employees at the Hotel, to reasonably fix their compensation and benefits, subject to market rates in similar geographic areas and job descriptions, and generally to establish and maintain all policies relating to employment and employment benefits. All costs of every kind and nature pertaining to all employees at the Hotel arising out of the employer-employee relationship, including, without limitation, salaries, benefits (including vacation, sick and personal days and accruals at the accrual rate established by Operator), bonuses, relocation cost for Director of Sales and the General Manager, reasonable employment-related legal costs, employee taxes, costs incurred in connection with governmental laws and regulations and insurance rules, and such other expenses as Operator, in its reasonable discretion, may deem appropriate (e.g., costs of defense of employees charged with a crime in connection with the performance of their duties at the Hotel and costs of defending claims brought by Hotel employees against Owner, Operator or the Hotel) shall be an Operating Expense, and, absent a legal determination that the Operator acted with willful misconduct or grossly negligent, Owner shall reimburse, indemnify, defend, and hold harmless Operator from all costs, expenses, fees (including, without limitation, attorney's fees), costs, liabilities and claims incurred in connection therewith.

5.2Benefit Plan

Operator may, to the extent consistent with the Budget, enroll the Hotel Employees in retirement, health and welfare employees benefit plans substantially similar to corresponding plans implemented in other hotels with similar service levels managed by Operator. Such plans may be joint plans for the benefit of employees at more than one hospitality property owned, leased or managed by Operator or its affiliates. Subject (except as set forth below) to the Budgets, employer contributions to such plans (including without limitation, but not subject to the Budgets, any withdraw liability incurred upon termination of this Agreement) and reasonable administrative

fees which Operator may expend in connection therewith, shall be responsibility of Owner and shall be an Operating Expense. The administrative expenses of any joint plans will be equitably apportioned by Operator among properties covered by such plan. Owner hereby acknowledges and agrees that compliance with the provisions of Worker Adjustment and Retraining Notification. Act and/or similar state or local laws (together with all rules and regulations promulgated thereunder and including, without limitation, any such state or local laws, the "WARN Act") upon any disposition of the Hotel, upon any termination of this Agreement or upon the occurrence of any other event outside the normal course of operation giving rise to the application of the WARN Act, is the responsibility and obligation of Owner, and Owner hereby agrees to reimburse, indemnify, defend, and hold harmless Operator from all costs, expenses, fees (including, without limitation, reasonable attorney's fees), costs, liabilities and claims incurred in connection therewith which Operator may incur arising out of or in connection with any breach or claimed breach of the WARN Act in connection with any such disposition, termination or other occurrence. For the avoidance of doubt, if Operator identifies a violation, or a violation that is imminent of the WARN Act, Operator will immediately provide written notice to Owner prior to incurring any costs as described herein.

5.3Lodging for Operator’s Employees

Operator, in its discretion, may (i) on an as-available basis provide lodging for Operator's key employees visiting the Hotel in connection with the performance of Operator's services and allow them the use Hotel facilities and (ii) subject to the Budget, provide such General Manager of the Hotel temporary living quarters within the Hotel, and the use of all Hotel facilities, in either case at a discounted price or without charge and not to exceed thirty (30) days.

5.4Employment Laws

Operator shall not be liable for any failure of the Hotel to comply prior to the Commencement Date with any federal, state, local and foreign statutes, laws, ordinances, regulations, rules, permits, judgments, orders and decrees affecting labor union activities, civil rights or employment in the United States, including, without limitation, the Civil Rights Act of 1870, 42 U.S.C. §1981, the Civil Rights Acts of 1871, 42 U.S.C. §1983 the Fair Labor Standards Act, 29 U.S.C. §201, et seq., the Civil Rights Act of 1964, 42 U.S.C. §2000e, et seq., as amended, the Age Discrimination in Employment Act of 1967, 29 U.S.C. §621 et seq., the Rehabilitation Act, 29 U.S.C. §701, et seq., the Americans With Disability Act, of 1990, 29 U.S.C. §706, 42

U.S.C. §12101 et seq., the Employee Retirement Income Security of 1974, 29 U.S.C. §301, et seq., the Equal Pay Act, 29 U.S.C. §201 et seq., the National Labor Relations Act, 29 U.S.C. §151, et seq., and any regulations promulgated pursuant to such statutes (collectively, as amended from time to time, and together with any similar laws now or hereafter enacted, the "Employment Laws").

5.5Employment Policy

Operator shall from time to time develop and implement policies, procedures and programs for the Hotel (collectively, the "Employment Policies") reasonably designed to affect compliance with the Employment Laws. The Employment Policies shall be consistent with industry standards from time to time for reputable hotel management companies. Owner acknowledges and agrees

that Operator shall have the right to institute severance payment policies for the Hotel Employees so long as such policies are reasonable and customary in the industry; notwithstanding the foregoing, any Employment Policy desired by Operator that materially increases costs associated with the approved Budget must then be approved by Owner.

5.6Collective Bargaining Agreements

Each party represents, at the time of entering into this Agreement, that neither such party nor any of its affiliates or related entities has entered into any agreement with a labor organization that has the purpose or effect of requiring Operator to waive any rights under the National Labor Relations Act with respect to the employees at the Hotel, including but not limited to, any neutrality and/or card check recognition agreement. Neither party shall execute any agreement with a labor organization or agree to any labor contract provision that would impact the other party, including any type of card-check neutrality, without the express prior written consent of the other party. If either party is notified of collective bargaining or labor union activity which may affect the Hotel, such party will notify the other party within three (3) business days of receipt thereof. Operator shall negotiate with any labor unions representing any employees at the Hotel or otherwise affecting the Hotel and any collective bargaining agreement or labor contract will be executed by Operator, or an affiliate of Operator, as the employer. Owner agrees to comply with all applicable obligations under any such Operator-approved collective bargaining agreement, the cost of which shall be an Operating Expense. Operator shall not have any obligations or liabilities under any collective bargaining agreement as a result of the termination of this Agreement including, without limitation, any obligation to fund any portion of an unfunded pension liability. All such liabilities and obligations shall be the liabilities and obligation of the Owner or replacement manager.

ARTICLE VI PROVISION OF FUNDS

6.1Available Funds for Operations

In performing its services under this Agreement, Operator shall act solely for the account of Owner. Operator shall not be deemed to be in default of its obligations under this Agreement to the extent it is unable to perform any obligation due to a lack of available funds from the operation of this Hotel or as otherwise provided by Owner.

6.2No Advance of Funds

Operator shall in no event be required (i) to advance any of its funds (whether by waiver or deferral of its management fees or otherwise) for the operation of the Hotel or (ii) to incur any liability unless Owner shall have furnished Operator with funds necessary for the discharge thereof prior to incurring such liability.

ARTICLE VII

CENTRALIZED SERVICES; MULTI-PROPERTY PROGRAMS; NETWORKING SERVICES

7.1Centralized Services

Operator shall provide or cause its affiliated companies to provide for the Hotel and its guests the full benefit of any reservations system hereafter established by Operator or its affiliates (if such reservations systems do not violate the provisions of the Franchise Agreement) and provide, or cause its affiliated companies to provide, centralized accounting services, IT services, purchasing services, revenue management services, sale and marketing services, training, satisfaction surveys, and/or other centralized services as may be made available generally to similar properties managed by Operator from time to time (individually and collectively, "Centralized Services"). The Centralized Services currently provided by Operator are described in Exhibit A attached hereto. The cost of Centralized Services shall be (i) provided and invoiced in amounts according to the approved Budgets, (ii) reasonably allocated to the Hotel on an equitable basis with all other hotels utilizing the Centralized Services of Operator or its affiliates in a manner that does not unreasonably favor other hotels managed by Operator over the Hotel, and (iii) reimbursed to Operator on a cost reimbursement basis, which costs may include, without limitation, salaries (including payroll taxes and employee benefits) of employees and officers of Operator and its affiliates, costs of all equipment employed in the provision of such services, and a reasonable charge for additional overhead of Operator or its affiliates. Operator agrees that, with respect to any new Centralized Services offered by Operator in the future, the cost of such services shall be established on an equitable basis among all hotels utilizing the Centralized Services.

7.2Multi-property Programs

Owner acknowledges and agrees that Operator may in Operator's discretion enter into certain purchasing, maintenance, service or other contracts with respect to the operation of the Hotel and other hotels operated by Operator (collectively, "Multi-Property Programs" pursuant to which Operator or affiliates of Operator may receive rebates, discounts, cash or other incentives, administration fees, concessions, profit participations, stock or stock options, investment rights or similar payments or economic considerations (collectively, "Operator Rebates") from the vendors or suppliers of goods or services provided under such Multi-Property Programs. Owner acknowledges and agrees that (i) Operator has disclosed to Owner the types of Multi-Property Programs Operator currently makes available to properties which it operates and (ii) (a) the Hotel is likely to receive substantial benefit from its participation in such Multi-Property Programs which the Hotel could not obtain on its own and for which Operator is not adequately compensated by its Base Fee and Incentive Fee, (b) any and all Operator Rebates are the sole property of Operator and not Owner, and (c) the receipt by Operator of any Operator Rebates does not breach any fiduciary or other duty which Operator may have to Owner. Notwithstanding the foregoing, Operator hereby covenants to Owner that the terms of any Multi-Property Programs in which the Hotel participates, when taken as a whole, shall not be materially less favorable to the Hotel than the prevailing terms of contracts to provide similar goods or services on a single-property basis obtainable on a commercially reasonable basis from unrelated parties in the area of the Hotel, and Owner may elect to require use of its own or an affiliate’s Multi-Property Programs.

7.3Networking Services

Operator shall have the right to install and use Operator's networking services (the "Network") and associated software at the Hotel throughout the Term which will be compatible with Owner’s current software and/or information will be delivered to Owner in a format compatible with its current software. The Network installation and connectivity charges and associated software license fees shall be determined in an equitable manner by Operator, shall be subject to the reasonable approval of Owner, shall be an Operating Expense, and shall be paid or reimbursed to Operator out of the Operating Account, or if the funds therein are insufficient, by Owner. Owner acknowledges that, as of the date hereof, such charges and fees are approximately

$15 per user per month and agrees that such charge is reasonable and approved.

ARTICLE VIII

WORKING CAPITAL AND BANK ACCOUNTS

8.1Working Capital

Prior to the Commencement Date, Owner will fund the Operating Account with a commercially reasonable amount of initial working capital for the Hotel, for use during the transition of management to Operator's management of the Hotel. Thereafter, Owner shall at all times provide, either from Total Revenues or from other funds of Owner, funds sufficient in amount, in the good faith business judgment of Operator (as identified in an applicable cash flow forecast pursuant to Section 9.2 below or in a supplement to such cash flow forecast), to constitute normal working capital for the uninterrupted and efficient operation of the Hotel, including without limitation funds sufficient to pay all Operating Expenses as and when due and operate, maintain and equip the Hotel for a period of two (2) months in accordance with all Major Agreements and to maintain the Hotel in a first-class physical condition ("Working Capital"). Working Capital for the first two (2) months of operation of the Hotel has been estimated at $100,000. Operator may adjust the total required Working Capital from time to time as required based upon changes in the Budgets. If at any time the funds in the Operating Account are less than the required Working Capital, Operator shall deliver written notice to Owner of the amount required to be deposited into the Operating Account, and Owner shall deposit such sum into the Operating Account within five (5) days of such written notice; provided that, Operator shall not to exceed three (3) requests per fiscal year.

8.2Operating and FF&E Account

All funds received by Operator in the operation of the Hotel, including Working Capital and other funds furnished by Owner from time to time as required under this Agreement, shall be deposited in an operating account held by Operator (the "Operating Account") in such federally insured bank, savings and loan or trust company as may be selected by Operator and reasonably approved by Owner. Any successor or substitute bank, savings and loan or trust company shall be selected in the same manner. From the Operating Account, but only to the extent of funds in the Operating Account, Operator shall pay Operating Expenses, Fixed Charges, debt service, capital costs and other amounts, if and to the extent the same are required to be paid by Operator on Owner's behalf under this Agreement. In addition to the Operating Account, an account shall be

established by Operator at the same institution or another institution selected by Operator and reasonably approved by Owner for a reserve for replacements, substitutions, and additions to the FF&E or other capital improvements (the "FF&E Reserve Account").

8.3Internal Controls for Accounts

The Operating Account and (unless otherwise required by any Mortgage encumbering the Hotel) the FF&E Reserve Account shall be in the name of Operator for the account of Owner (and held in the EIN of Owner for IRS reporting purposes) and shall be under the control of Operator. Checks or other documents of withdrawal shall be signed only by representatives of Operator, provided that such representatives shall be bonded or otherwise insured in a manner reasonably satisfactory to Owner. The premiums for such bonding or other insurance shall be an Operating Expense and paid from the Operating Account or by Owner to the extent insufficient funds exist in the Operating Account for the payment of such premiums. Upon the expiration or termination of this Agreement and once Operator has been paid all funds due to Operator under this Agreement, all remaining amounts in the Operating Account and the FF&E Reserve Account shall be transferred to Owner.

ARTICLE IX

BOOKS, RECORDS AND STATEMENTS; BUDGETS

9.1Accounting Procedures

Operator shall keep full and accurate books of account and other records reflecting the results of the operation of the Hotel on an accrual basis and in accordance with the Uniform System with such exceptions as may be required by the provisions of this Agreement; provided, however, that Operator may, with prior notice to Owner, make such modifications to the methodology in the Uniform System as are consistent with Operator's standard practice in accounting for its operations under management contracts generally, so long as such modifications do not affect the determination of Total Revenues, Operating Expenses or Fixed Charges under Article XL. Except for the books and records which may be kept in Operator's principal office or accounting office pursuant to the adoption of a central billing system or other centralized service, the books of account and all records relating to or reflecting the operation of the Hotel shall be kept at the Hotel, and such books of accounts and other records shall be available to Owner and its representatives at all reasonable times and upon reasonable prior written notices for examination, audit, inspection and transcription. All of such books and records including, without limitation, books of account, guest record and front office records shall be property of Owner. Upon any termination of this Agreement, all such books and records shall be turned over to Owner to ensure the orderly continuation of the operation of the Hotel. All of such books and records shall thereafter be available to Operator at all reasonable times for inspection, audit, examination and transcription for a period of three (3) years. In the event Owner elects to resume its own internal auditing of the Hotel, Operator hereby agrees and acknowledges that it will provide Owner with access to any and all system as may reasonably be required for Owner to undertake such auditing, including but not limited to any accounting hardware or software or any property-based management hardware or software. Owner may elect to perform its own internal accounting with consent of Operator, which consent shall not be unreasonably withheld and subject further to the Owner and Operator agreeing

in good faith to an amendment to this Agreement to provide for data migration and sharing of accounting information with Operator.

Operator is responsible, unless directed otherwise by Owner, to remit, pay and ensure compliance with all sales and lodging tax in accordance with all applicable local, county or state laws and regulations. All such taxes shall be an Operating Expense.

9.2Monthly Reports

Operator shall deliver to Owner within fifteen (15) days after the end of each month, the following items (collectively, the "Monthly Reports"):

A.A balance sheet prepared in accrual basis with all period-end balances reconciled as of the last day of such month;

B.A source and use of funds statement for such month;

C.A consolidated income and expense statement by department for such month;

D.Detailed departmental income and expense statements for such month;

E.Operator must comply with all financial statement audit requests of Owner within ten (10) business days of the request, including providing such items such as cash reconciliations, hotel ledger reports, payroll reports, prepaid schedules, inventory details, and other such items that support the income statement and balance sheet of the financial statements;

F.Such other monthly reports as Owner may reasonably request.

The Monthly Reports shall be prepared in accordance with GAAP using the Uniform System to the extent applicable and shall otherwise be prepared in accordance with Operator's standard financial reporting and budgeting practices, and to the extent the Operator is unable to provide information to the Owner, the Owner shall charge the Operator for the time and effort the Owner must expel to ensure its annual financial statement audit is completed by the required deadline. Operator shall use systems and reports that function with Owner’s existing systems, including the delivery of all information, including Monthly Reports, in a format acceptable to Owner.

9.3Audited Financials

If desired by Owner or required by Owner's Mortgage lender, year-end financial statements for the Hotel (including a balance sheet, income statement and statement of sources and uses of funds) shall be audited by an independent certified public accountant selected by Owner subject to Operator's reasonable approval, the cost of which shall be an Owner expense and not an Operating Expense. Such accountant shall address any findings, reports or opinions that concern Operator's work under this Agreement to both Operator and Owner. Operator shall provide reasonable assistance with such accountant in the preparation of such statements. Year-end final financial statement will be delivered within twenty-one (21) days of the last day of Owner’s Fiscal Year.

9.4Annual Budgets

On or before November 1st of each Fiscal Year (or partial Fiscal Year) during the Term, Operator shall submit to Owner for the next Fiscal Year the following items (collectively, the "Budgets"):

A.An operating budget (the "Operating Budget") setting forth in reasonable line- item detail the projected income from and expenses of all aspects of the operations, direction, management, and supervision of the Hotel. The Owner shall have the right to approve the rates or anticipated occupancy. Any Operator proposed exceedances of the standards required by the Franchise Agreement that will materially increase the Operating Budget expenses shall require the consent of Owner;

B.A capital budget (the "Capital Budget") setting forth in reasonable line-item detail proposed capital projects and expenditures for the Hotel including but not limited to FF&E expenditures. Any Operator proposed exceedances of the standards required by the Franchise Agreement that will materially increase the Capital Budget expenses shall require the consent of Owner; and

C.Such other reports or projections or meetings as Owner may reasonably request and to which Operator agrees.

The Budgets shall be prepared in accordance with GAAP using the Uniform System to the extent applicable and shall otherwise be prepared in accordance with Operator's standard financial reporting and budgeting practices. Owner shall notify Operator in writing of its approval or disapproval of the Budgets not later than thirty (30) days after the delivery of the Budgets to Owner and, if Owner disapproves any such Budgets, Owner shall state in such notice the reasons therefor with reasonable specificity. Owner shall not disapprove any item in the Budgets that is reasonably necessary for the continued operation of the Hotel in accordance with the requirements of any of the Major Agreements and the operational standards set forth in this Agreement. In the event Owner fails to notify Operator in writing of its approval or disapproval of any Budgets on or before the expiration of such thirty (30) day approval period, then such Budgets shall be deemed approved by Owner.

9.5Resolution of Disputes over Budgets

If the Budgets (or any component of the Budgets) with respect to any Fiscal Year are disapproved by Owner in accordance with the provisions of this Agreement, then, until approval of the Budgets (or such components) by Owner, Operator, until the resolution of such dispute, shall cause the Hotel to be operated substantially in accordance with most recent approved Budgets, except for, or as modified by (a) those components of such Budgets for the applicable Fiscal Year approved by Owner; (b) expenses that are variable based on the utilization of the Hotel, to the extent required based upon the occupancy of the Hotel which shall be paid as required; and

(c) necessary expenses for the continued operation of the hotel in accordance with the Major Agreements, operational standards set forth in this Agreement, or in Operator's good faith judgment are necessary to protect the physical integrity or lawful operation of Hotel or the health

or safety of its occupants; provided, however, that Operator shall promptly notify Owner of expenditures for such expenses.

9.6Deviations from the Budgets

Upon approval by Owner of a Budget, Operator shall use its good faith efforts to manage, operate and maintain the Hotel for the subsequent Fiscal Year in accordance with the Budget and attempt to adhere thereto, as nearly as practicable, on the condition that if Operator shall be unable, with the exercise of due diligence, and all commercially reasonable efforts to comply with the approved Budget, such inability shall not by itself constitute a default under this Agreement.

Operator shall be authorized to take appropriate remedial action without receiving Owner's prior consent (i) in an emergency threatening the Hotel, its guests, invitees or employees; or (ii) if the continuation of the given condition will subject Operator and/or Owner to civil or criminal liability, and Owner has either failed to remedy the situation or has failed to take appropriate legal action to stay the effectiveness of any Laws. In such an event, Operator shall cooperate with Owner in the pursuit of any such action and shall have the right to participate therein.

9.7Approval for Capital Expenditures

Operator shall seek approval from Owner, which shall not be unreasonably withheld, conditioned or delayed, for any capital expense that is over $5,000 individually, or $20,000 in the aggregate in the Fiscal Year, unless such expense(s) are provided for in the applicable Operating Budget or Capital Budget.

ARTICLE X

MANAGEMENT FEES

AND PAYMENTS TO OPERATOR AND OWNER

10.1Base Fee

Operator shall be entitled to receive, on or before the 5th day of each month, commencing upon the Commencement Date and thereafter throughout the Term, for services rendered under this Agreement, a base management fee (the "Base Fee") equal to 3.0% of Total Revenues.

10.2Incentive Fee

In addition to the Base Fee and any other amounts due to Operator or its affiliates in accordance with this Agreement, Operator shall be entitled to receive an incentive management fee (the "Incentive Fee") in an amount equal to ten percent (10%) of the excess of Gross Operating Profit over the projected Gross Operating Profit as set forth in Exhibit B to this Agreement. "Gross Operating Profit" shall be as defined in the Uniform System. The Incentive Fee shall be paid quarterly on or before the 5th day of end of the calendar quarter based on the actual Gross Operating Profit through the end of the immediately preceding calendar quarter. Owner and Operator acknowledge and agree that the Incentive Fee is calculated on a cumulative basis over the course of an entire Fiscal Year, and that accordingly the total amount of the Incentive Fee payable to Operator for a particular Fiscal Year (calculated on a cumulative year-to-date basis) may vary

upwards or downwards from quarter to quarter and is subject to ongoing reconciliations throughout each Fiscal Year. Any overpayment of Incentive Fees from time to time will be charged against the amount of Base Fee due in the next following month after the date of determination of the overpayment. In the event this Agreement terminates on any date other than December 31st of any calendar year, the Incentive Fee shall be prorated for the actual days which have expired in the calendar year in which the termination occurred. An example of the calculation of the Incentive Fee is set forth on Exhibit B attached hereto.

10.3Funds from Operating Account

On or before the twentieth (20th) day following the last day of each calendar month (or such other fiscal period as Owner and Operator may agree upon) of each Fiscal Year during the Term, after (a) payment of Operating Expenses (including, without limitation, Base Fee, Incentive Fee, Fixed Charges, deposits to the FF&E Reserve Account in accordance with Section 11.1) and, to the extent the same are to be paid by Operator under this Agreement, debt service, (b) any required payment to Operator pursuant to Section 10.7 below, and (c) retention of Working Capital sufficient in the reasonable opinion of Operator to assure the uninterrupted and efficient operation of the Hotel as required under Section 9.1 above and consistent with the cash flow forecast for the applicable period provided to Owner pursuant to Section 9.2 above, all remaining funds in the Operating Account shall be paid to Owner.

10.4Audit of Management Fees

At the end of each Fiscal Year and, if an audit is performed pursuant to Section 9.3 above, following receipt by Owner of such audit, an adjustment will be made, if necessary, based on the audit so that Operator shall have received the accurate Base Fee and Incentive Fee for such Fiscal Year. Within thirty (30) days of receipt by Owner and Operator of such audit, Operator shall either

(a)place in the Operating Account or remit to Owner, as appropriate, any excess amounts Operator may have received for such fees during such calendar year or (b) be paid out of the Operating Account or by Owner, as appropriate, any deficiency in the amounts due Operator for the Base Fee and the Incentive Fee.

10.5Renovation Services

From time to time, the Hotel may require renovation to upgrade its facilities to remain competitive and for asset preservation. Subject to Owner's request and prior approval, Operator shall provide project management services to include setting a scope for design, materials and construction for such renovation, requesting multiple bids and securing agreements with contractors, supervising the work of contractors, and providing project accounting updates to Owner on a regular basis. Operator shall provide these services for a fee equal to 4.0% of the total cost of such renovations (the "Project Management Fee"), as and when such costs are incurred. If Owner elects to use an affiliate construction company, Operator will take all steps necessary and helpful to facilitate such renovations.

10.6Reimbursable Expenses

To the extent consistent with any applicable approved Budget, Owner shall be obligated to reimburse Operator for all travel lodging, meals, telephone, telecopy, postage, standard overnight

courier charges, employee training and other expenses incurred by Operator which are reasonable and directly related to its performance of services under this Agreement ("Reimbursable Expenses").

ARTICLE XI FF&E RESERVE

11.1Establishing FF&E Reserve Account

During each Fiscal Year there shall be allocated and paid on a monthly basis to the FF&E Reserve Account from Total Revenues or other funds provided by Owner an amount in accordance with the terms and amounts of the Owner’s lender or franchisor. The Owner may adjust the FF&E pursuant to requests of the Mortgage lender or Franchisor.

11.2Use of Funds in FF&E Reserve Account

All funds in the FF&E Reserve Account, together with any interest earned thereon and the proceeds of any sale of FF&E (which proceeds shall be deposited in the FF&E Reserve Account) shall be used solely for purposes of replacing or refurbishing the FF&E in accordance with the applicable Capital Budget or other capital improvements as approved by Owner.

ARTICLE XII

INSURANCE

12.1Insurance Requirements

Operator shall obtain and maintain throughout the Term the insurance coverage set forth in Exhibit C the cost of which shall be an Operating Expense. Operator shall also obtain, keep in force, and maintain at all times minimum insurance amounts that (a) is property damage coverage for the Hotel on an “open perils” basis (including builder’s risk during any period or periods of time that construction or remodeling is being performed), (b) includes, without limitation, the perils of fire, vandalism, and malicious mischief, flood, seepage and back-up of sewers and drains, sinkhole, loss or damage from sprinklers and from leakage or explosion or cracking of boilers carrying steam, water or gas, pressure vessels or similar apparatus, and (c) is in an amount equal to 100% of the full replacement cost of all improvements to the Hotel, the cost of which shall not be an Operating Expense.

12.2Named Insured Party

All insurance policies shall name Operator as the insured party and shall name as additional insured's Owner and such other parties as may be required by the terms of the Major Agreements as appropriate. Owner understands that coverage afforded the Owner as an additional insured is solely for liability arising out of Operator's activities performed by Owner by or on behalf of Operator and that it may be necessary for Owner to purchase separate policies to cover Owner activities not performed by or on behalf of Operator. In the event that Owner shall obtain any such

insurance other than through the program established by Operator, such insurance policy shall name Operator as an additional named insured party.

12.3Form of Insurance

All insurance policies shall be in such form and with such companies as shall be reasonably satisfactory to Owner and provided Owner has given Operator detailed written notice of such requirements, shall comply with the requirements of any Major Agreement. Insurance may be provided under blanket or master policies covering one or more other hotels operated by Operator or owned by Owner. The portion of the premium for any blanket or master policies which is allocated to the Hotel as an Operating Expense or Fixed Charge shall be determined in an equitable manner by Operator and reasonably approved in advance by Owner and paid out of the Operating Account, or if the funds therein are insufficient, by Owner, upon demand therefore by Operator.

12.4Cancellation and Modification of Insurance

All insurance policies shall specify that they cannot be canceled or modified on less than thirty (30) days prior written notice to both Owner and Operator and any additional insureds (or such longer period as may be required under a Major Agreement, provided that Operator has been advised in writing of such period).

12.5No Subrogation Rights

All insurance policies shall provide, to the extent customarily obtainable from the insurance company providing such insurance, that the insurance company will have no right of subrogation against Owner, Operator, any party to a Major Agreement or any of their respective agents, employees, partners, members, officers, directors or beneficial assigns. Owner and Operator hereby release one another from any and all liability, to the extent of the waivers of subrogation obtained under Section 12.5, associated with any damage, loss or liability with respect to which property insurance coverage is provided pursuant to this Article or otherwise.

12.6Insurance Proceeds

The proceeds of any insurance claim (other than proceeds payable to third parties under the terms of the applicable policy) shall be paid into the Operating Account to the extent of Owner's interest therein unless otherwise required by the terms of a Major Agreement.

12.7Payment for Insurance

Operator shall have the right to pay for, or reimburse itself for, insurance required under this Article XII out of the Operating Account. Notwithstanding anything to the contrary set forth in this Agreement, Operator shall have no obligation to obtain or maintain any insurance set forth in this Article if funds from Total Revenues or funds otherwise provided by Owner are not made available to Operator to purchase the same.

ARTICLE XIII

SPECIAL TERMINATION EVENTS

13.1Performance Test

If, in each of any two (2) consecutive complete Fiscal Years during the Term, both of the following occurs: (a) the RevPAR index for each Fiscal Year (as determined by data from STR for a competitive set of hotels mutually agreed upon by Operator and Owner) shall be less than one hundred percent (100%) based upon the trailing 12 months; and also (b) the Gross Operating Profit for each such Fiscal Year as determined in accordance with the annual audit provided for in Section

10.4 shall be less than Twenty (20%) of the amount in the approved Budgets for each such Fiscal Years, then, upon payment in full of all amounts then due and owing to Operator and the performance in full of all of Owner's obligations to Operator and/or any affiliate of Operator, Owner may terminate this Agreement upon ninety (90) days written notice given to Operator not more than sixty (60) days after Owner's receipt of RevPAR index data and audit for the second consecutive Fiscal Year. Notwithstanding the foregoing, the test under (a) of the preceding sentence will not apply during any year that the Hotel undergoes any material renovation and for twelve (12) months following the completion of such renovation. If Owner elects to terminate this Agreement pursuant to this Section 13.1, Operator may elect, by written notice given to Owner within thirty (30) days after the giving of Owner's termination notice, to make an advance (the "Cure Payment") to Owner in an amount equal to the amount by which Gross Operating Profit for the second of the two Fiscal Year years in such two consecutive Fiscal Year period is less than the approved Budget for such Fiscal Year (the "Base Level"). If Operator makes the Cure Payment within thirty (30) days after Operator receives the foregoing termination notice, then this Agreement shall remain in full force and effect notwithstanding Owner's election to terminate and, for the purpose of applying this Section 13.1 to future Fiscal Years within the Term, Gross Operating Profit for the calendar year for which Operator made a Cure Payment shall be deemed to be greater than One Hundred Ten Percent (110%) of approved Budget for such Fiscal year.

ARTICLE XIV

DAMAGE OR DESTRUCTION; CONDEMNATION

14.1Fire or Casualty

If the Hotel is damaged by fire or other casualty, Operator shall promptly, but in no event wait more than twenty-four (24) hours to, notify Owner. This Agreement shall remain in full force and effect subsequent to such casualty provided that either party may terminate this Agreement upon thirty (30) days prior notice to the other party if (a) Owner shall elect to close the Hotel permanently as a result of such casualty (except on a temporary basis for repair or restoration) or

(b)Owner shall determine in good faith not to proceed with the restoration of the Hotel and provided further that Operator may terminate this Agreement upon sixty (60) days prior notice to Owner if twenty percent (20%) or more of the rooms in the Hotel are unavailable for rental for a period of sixty (60) days or longer as a result of such casualty.

14.2Condemnation

If all or any portion of the Hotel becomes the subject of a condemnation proceeding or if Owner or Operator learns that any such proceeding may be commenced, such party shall promptly, but in no event wait more than twenty-four (24) hours to, notify the other party promptly upon receipt of written notice thereof. Either party may terminate this Agreement on sixty (60) days' notice to the other party if (1) all or substantially all of the Hotel is taken through condemnation or (2) less than all or substantially all of the Hotel is taken, but, in the reasonable judgment of the party giving the termination notice, the Hotel cannot, after giving effect to any restoration as might be reasonably accomplished through available funds from the condemnation award, be profitably operated as a hotel consistent with the requirements of the hotel franchise agreement then in effect with respect to the Hotel.

14.3Miscellaneous

Any condemnation award or similar compensation shall be the property of Owner, provided that, subject to the provisions of any first mortgage or deed of trust loan encumbering the Hotel, Operator shall have the right to bring a separate proceeding against the condemning authority for any damages and expenses specifically incurred by Operator as a result of such condemnation. Upon any termination of the Agreement under this Article XV, Operator shall be entitled to receive the Termination Fee provided in Article XVII.

ARTICLE XV

EVENTS OF DEFAULT

15.1Listing of Defaults

The following shall constitute an event of default under this Agreement:

A.If either party shall be in default in the payment of any amount required to be paid under the terms of this Agreement, or Owner fails to fund the Operating Account as required under this Agreement, and such default continues for a period of ten

(10) days after written notice is delivered indicating that such payment was not paid (or, with respect to a non-recurring payment under this Agreement (e.g., excluding payments of Base Fees, Incentive Fees and Centralized Services Fees), such default continues for a period of ten (10) days after written notice is delivered indicating that such payment was due and not paid);

B.If either party shall be in material default in the performance of its other obligations under this Agreement, and such default continues for a period of thirty (30) days after written notice from the other party, provided that if such default cannot by its nature reasonably be cured within such thirty (30) day period, an event of default shall not occur if and so long as the defaulting party promptly commences and diligently pursues the curing of such default; provided, however, in no event shall the cure period with respect to such obligation exceed sixty (60) days;

C.If either party shall (i) make an assignment for the benefit of creditors,

(ii) institute any proceedings seeking relief under any federal or state bankruptcy or insolvency laws, (iii) institute any proceeding seeking the appointment of a

receiver, trustee, custodian or similar official for its business or assets, or (iv) consent to the institution against it of any such proceeding by any other person or entity (an "Involuntary Proceeding"); or

D.If an Involuntary Proceeding shall be commenced against the other party and shall remain undismissed for a period of thirty (30) days.

E.If within thirty (30) days after receiving Operator's written request, Owner fails to approve any changes, repairs, alterations, improvements, renewals or replacements to the Hotel which Operator determines in its reasonable judgment are necessary

(i)to protect the Hotel, Owner and/or Operator from innkeeper liability exposure,

(ii)to ensure material compliance with any applicable code requirements pertaining to life safety systems requirements, or (iii) to ensure material compliance with any of the Major Agreements or any applicable state, local or federal employment law, including without limitation the Americans with Disabilities Act.

15.2Termination Rights

If any event of default shall occur and not be cured within the applicable cure period set forth in this Agreement, the non-defaulting party may terminate this Agreement immediately upon delivering written notice to the defaulting party (or such longer period as is specified in the written termination notice delivered by the non-defaulting party to the defaulting party).

15.3Non-Exclusive Remedy

The right of termination set forth in Section 15.2 shall not be in substitution for, but shall be in addition to, any and all rights and remedies for breach of contract available in law or at equity.

15.4Force Majeure

Neither party shall be deemed to be in default of its obligations under this Agreement if and to the extent that such party is unable to perform such obligation as a result of fire or other casualty, act of God, strike or other labor unrest, unavailability of materials, war, terrorist activity, riot or other civil commotion or any other cause beyond the control of such party (which shall not include the inability of such party to meet its financial obligations or in any event apply to the payment of any amounts due to either party under this Agreement) (collectively, "Force Majeure Events").

15.5Waiver of Certain Claims

Each of the parties hereto irrevocably waives any right such party may have against the other party hereto at law, in equity or otherwise to any consequential damages, punitive damages, special or exemplary damages.

ARTICLE XVI

TERMINATION

16.1Termination Fee

Upon any termination of this Agreement by Operator pursuant to Section 15.1A, B or E, or by Owner or Operator pursuant to Section 13.1 or Article XV (an "Early Termination"), Owner shall, in addition to any other rights or remedies that may be available to Operator, pay to Operator the Termination Fee. Any Termination Fee due from Owner to Operator shall be payable within thirty (30) days of termination of this Agreement. The calculation of the Termination Fee is set forth herein. If there is a dispute between Owner and Operator as to the amount of the Termination Fee, this Agreement shall nonetheless terminate, Owner shall pay to Operator the amount that is not in dispute and shall deposit the disputed portion in an escrow satisfactory to Owner and Operator with interest on the amount in escrow to be allocated in proportion to the manner in which the escrow fund is ultimately allocated, and the parties shall thereafter resolve the amount of the Termination Fee.

(a)If the Termination Date occurs during the first year of the Initial Term then the Termination Fee is $400,000;

(b)If the Termination Date occurs during the second year of the Initial Term then the Termination Fee is $300,000;

(c)If the Termination Date occurs during the third year of the Initial Term then the Termination Fee is $200,000;

(d)If the Termination Date occurs during the fourth year of the Initial Term then the Termination Fee is $100,000;

(e)If the Termination Date occurs during the fifth year of the Initial Term or any Renewal Term, then the Termination Fee is waived;

16.2Waiver of Termination in Event of Sale.

In the event the Owner sells the Hotel to an unrelated third party before the fourth anniversary of the Contract Commencement date, and either (i) assigns to new owner this agreement, or (ii) termination of this agreement is contemporaneous the execution of a continuing management agreement for Operator on substantially similar terms to this Agreement, then Operator shall waive any such fees contemplated under this Agreement. In the event the Owner sells the Hotel to an unrelated third party before the fourth anniversary of the Contract Commencement date, and neither (i) assigns to new owner this agreement, or (ii) termination of this agreement is contemporaneous the execution of a continuing management agreement for Operator on substantially similar terms to this Agreement, then the Termination Fee payable to Operator shall be discounted to $50,000.

16.3Prior Commitments to Customers

Upon termination of this Agreement for any reason, Owner agrees that Hotel reservations and any and all contracts made in connection with Hotel banquet or other group services made by Operator in the ordinary and normal course of business, absent any gross negligence or willful misconduct, for dates subsequent to the date of termination and at rates prevailing for such reservations at the time they were made, shall be honored and remain in effect after the date of termination of this Agreement.

16.4Transition of Management

Upon any termination or expiration of this Agreement for any reason whatsoever, Owner expressly agrees that Operator may remove any of its documents which are proprietary to Operator (including, without limitation, manuals, employee files, software programs, stored data, and internal correspondence of a proprietary nature) but specifically excluding financial records, documents, guest logs, correspondence or other materials proprietary to the Hotel. Owner shall have the right to make copies of all re-hired employee files and other non-proprietary files and information relating to management of the Hotel upon request, and any actions required by such request will not be unreasonably withheld, conditioned or delayed. Operator shall have the right to retain copies of all financial records, documents, guest logs, correspondence or other materials proprietary to the Hotel upon request, and any actions required by such request will not be unreasonably withheld, conditioned or delayed. Upon such termination or expiration, within twenty (20) days of billing thereof, Owner shall pay to Operator, in addition to any other amounts due pursuant to this Agreement (i) Operator's reasonable out-of-pocket costs incurred by reason of request by Owner for assistance after termination of this Agreement and not otherwise reasonably expected of Operator in the orderly termination of its operations at the Hotel, (ii) any unpaid fees and other charges and reimbursements due Operator hereunder, and (iii) to the extent reasonable and consistent with Operator's standard practices and industry standards, termination-related employee expenses, including payments of accrued and earned sick and vacation time, pension, bonus and other termination payments due to employees.

16.5WARN Act Liability

Owner acknowledges that Operator or its Affiliates or the PEO employer of Hotel employees may have an obligation under applicable law (including the WARN Act) to give advance notice to Hotel personnel of any termination of employment and that failure to comply with such notification obligation might give rise to certain liabilities under applicable law. Accordingly, notwithstanding anything to the contrary in this Agreement, the effective date of termination may, at Operator's discretion, be extended to permit Operator to comply with all time periods under applicable law (including the WARN Act) if any, unless Owner agrees in writing to defend, indemnify and hold harmless Operator and its Affiliates from and against all claims (including lost compensation, fines, penalties and attorneys' fees and expenses) incurred by Operator or its Affiliates or the PEO employer of Hotel employees, arising thereunder as a result of such termination.

ARTICLE XVII

ASSIGNMENT

17.1Assignment by Operator

Operator shall not assign or pledge this Agreement without the prior consent of Owner. (a) any entity which is the successor by merger, consolidation or reorganization of Operator or Operator's general partner, managing member or parent corporation; or (b) the purchaser of all or substantially all of the hotel management business of Operator or Operator's general partner, managing member or parent corporation. Nothing in this Agreement shall prohibit or be deemed to prohibit any pledge by Operator of the Base Fee, Incentive Fee or any other amounts received by Operator under this Agreement to any lender as collateral security for debt of Operator and/or Operator's affiliates, assuming such pledge is in compliance with the USA Patriot Act.

17.2Assignment by Owner

Owner shall not assign this Agreement without the prior consent of Operator, provided that Owner may assign this Agreement without Operator's consent to any person or entity acquiring Owner's fee interest in the Hotel as of the effective date of such acquisition if such assignee agrees in writing to be bound by this Agreement and assumes in writing all of Owner's obligations under this Agreement from and after the effective date of such assignment any such assignment will not result in a transfer or termination fee. Owner shall have the right to assign this Agreement to any Qualified Lender (as defined in Section 21.8 below) as collateral security for any Qualified Loan (as defined in Section 21.8 below).

17.3Effect of Assignment

Upon any permitted assignment of this Agreement except for an assignment as collateral security to a Qualified Lender and the assumption of this Agreement by the assignee, the assignor shall be relieved of any obligation or liability under this Agreement arising after the effective date of the assignment.

ARTICLE XVIII

NOTICES

18.1Requirement for Notice

Any notice, statement or demand required to be given under this Agreement shall be in writing, sent by certified mail, postage prepaid, return receipt requested, or by nationally- recognized overnight courier, receipt confirmed, addressed if to:

Owner:LF3 TRS, LLC

1635 43rd Street South Suite 205

Fargo, ND 85103

Attn:Linzey Erickson

With a Copy to:durellaw, PLC

2815 Michigan Ave NE Suite C

Grand Rapids, MI 49506 Attn:John H. Faris

Operator:Springwood Hospitality Management 3, LLC 146 Pine Grove Circle

York PA 17403

Attn:Justin Shelton

With a Copy to:Springwood Hospitality LLC

146 Pine Grove Circle York PA 17403

Attn:David Hogg

or to such other addresses as Operator and Owner shall designate in the manner provided in this Section 18.1. Any notice or other communication shall be deemed given (a) on the date three (3) business days after it shall have been mailed, if sent by certified mail, or (b) on the date received if it shall have been given to a nationally-recognized overnight courier service.

ARTICLE XIX

ESTOPPELS

19.1Confirmation of Agreement

Owner and Operator agree that from time to time upon the request of the other party or a party to a Major Agreement, it shall execute and deliver within ten (10) business days after the request a certificate confirming that this Agreement is in full force and effect, stating whether this Agreement has been modified and supplying such other information as the requesting party may reasonably require, and if either party refuses or fails to respond to such request, then the requesting party may charge $500 for every day delayed.

ARTICLE XX

INDEMNIFICATION

20.1Indemnity of Operator

Operator hereby agrees to indemnify, defend and hold Owner (and Owner's agents, principals, shareholders, partners, members, officers, directors and employees) harmless from and against all liabilities, losses, claims, damages, costs and expenses (including, but not limited to, reasonable attorneys' fees and expenses) that may be incurred by or asserted against any such party and that arise from or in connection with (a) the fraud, willful misconduct or gross negligence of the General Manager and/or any off-site employees of Operator, (b) the breach by Operator of any

provision of this Agreement, or (c) any action taken by Operator which is beyond the scope of Operator's authority under this Agreement. Owner shall promptly provide Operator with written notice of any claim or suit brought against it by a third party, which might evoke such indemnification. Owner shall cooperate with the Operator or its counsel in the preparation and conduct of any defense to any such claim or suit.

20.2Indemnity of Owner

Except as provided in Section 20.1, Owner hereby agrees to indemnify, defend and hold Operator (and Operator's agent, principals, shareholders, partners, members, officers, directors and employees) harmless from and against all liabilities, losses, claims, damages, cost and expenses (including, but not limited to, reasonable attorney's fees and expenses) that may be incurred by or asserted against such party and that arise from or in connection with the fraud, willful misconduct or gross negligence of Owner. Operator shall promptly provide Owner with written notice of any claim or suit brought against it by a third party, which might evoke such indemnification. Operator shall cooperate with the Owner or its counsel in the preparation and conduct of any defense to any such claim or suit.

20.3Employment Claims

Supplementing the provisions of Section 20.1 and 20.2, if any claim shall be made against Owner and/or Operator which is based upon a violation or alleged violation of the Employment Laws (an "Employment Claim"), the Employment Claim shall fall within Operator's indemnification obligations under Section 20.1 only if it is based upon the willful misconduct or gross negligence of the General Manager of the Hotel and/or Operator's off-site employees.

20.4Procedure for Indemnity

If any action, lawsuit or other proceeding shall be brought against any party (the "Indemnified Party") hereunder arising out of or based upon any of the matters for which such party is indemnified under this Agreement, such Indemnified Party shall promptly notify the party required to provide indemnification hereunder (the "Obligor") in writing thereof and Obligor shall promptly assume the defense thereof (including without limitation the employment of counsel selected by Obligor), such defense to be subject to the consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed (provided, however, by way of illustration and not limitation, it shall be reasonable for the Indemnified Party to deny consent to any settlement that requires the Indemnified Party to admit guilty or liability). The Indemnified Party shall cooperate with the Obligor in the defense of any such action, lawsuit or proceeding, on the condition that the Obligor shall reimburse the Indemnified Party for any out-of-pocket costs and expenses actually incurred in connection therewith. The Obligor shall have the right to negotiate settlement or consent to the entry of judgment with respect to the matters indemnified hereunder; provided, however, that if any such settlement or consent judgment contemplates any action or restraint on the part of Indemnified Party, then such settlement or consent judgment shall require the written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed. In addition to the foregoing, the Indemnified Party shall have the right, at the expense of the Indemnified Party, to employ separate counsel in any such action and to participate in the defense thereof. An Indemnified Party may settle any action for which it is indemnified hereunder

on behalf of itself only (i.e., with respect to its own liability and with no requirement of Obligor to admit guilt or liability) with the prior written consent of Obligor, which consent shall not be unreasonably withheld or delayed (provided, however, by way of illustration and not limitation, it shall be reasonable for Obligor to deny consent to any settlement that requires Obligor to expend funds in an amount Obligor determines in good faith to be appropriate so long as the Indemnified Party remains adequately protected at all times). In the even the Obligor fails to use reasonable efforts to defend or compromise any action, lawsuit or other proceeding for which an Indemnified Party is indemnified hereunder, the Indemnified Party may, at Obligor's expense and without limiting Obligor's liability under the applicable indemnity, assume the defense of such action and the Obligor shall pay the charges and expenses of such attorneys and other persons on a current basis within thirty (30) days of submission of invoices or bills therefore. In the event the Obligor is Owner and Owner neglects or refuses to pay such charges, Operator may pay such charges out of the Operating Account and deduct such charges from any amounts due Owner, or add such charges to any amounts due Operator from Owner under this Agreement. If Operator is the Obligor and Operator neglects or refuses to pay such charges, the amount of such charges shall be deducted from any amounts due Operator under this Agreement.

20.5Survival Beyond Termination

The provisions of this Article shall survive the termination of this Agreement with respect to acts, omissions and occurrences arising during the Term.

ARTICLE XXI MISCELLANEOUS

21.1Binding and Enforceable Agreement

Owner and Operator shall execute and deliver all other appropriate supplemental agreements and other instruments, and take any other action necessary to make this Agreement fully and legally effective, binding, and enforceable as between them and as against third parties.

21.2Transactions with Affiliates

Operator may engage one or more of its affiliates or other related parties to furnish goods or services to Hotel, provided, however, that the terms of any such arrangement, when taken as a whole, shall not be materially less favorable to the Hotel than the prevailing terms of similar such arrangements obtainable on a commercially reasonable basis from unrelated parties in the area of Hotel. Operator shall promptly notify Owner of any such engagement of Operator's affiliates to the extent such engagement and affiliations are not included in the applicable Budgets.

21.3Entire Agreement

This Agreement constitutes the entire agreement between the parties relating to the subject matters hereof, superseding all prior agreements or undertakings, oral or written. Owner acknowledges that in entering into this Agreement Owner has not relied on any projection of earnings, statements as to the possibility of future success or other similar matter which may have been prepared by the Operator.

21.4Headings

The headings of the titles to the several articles of this Agreement are inserted for convenience only and are not intended to affect the meaning of any of the provisions hereof.

21.5Waiver

A waiver of any of the terms and conditions of this Agreement may be made only in writing and shall not be deemed a waiver of such terms and conditions of any future occasion.

21.6Binding Agreement

This Agreement shall be binding upon and inure to the benefit of Owner and Operator and their respective successors and permitted assigns.

21.7Choice of Law

This Agreement shall be construed, both as to its validity and as to the performance of the parties in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to principles of conflict of laws.

21.8Qualified Loans

Excluding Operator's right to receive payment of the Base Fee, Incentive Fee (to the extent accrued), Centralized Service Fees and reimbursement and other amounts due to Operator pursuant to this Agreement, each of which as contemplated in accordance with approved Budgets, Operator agrees to subordinate this Agreement to the lien of any Qualified Loan which now or hereafter encumber the Hotel; provided, however, Operator shall have the right to condition such subordination on its receipt of a commercially reasonable form of non-disturbance agreement from a Qualified Lender (as hereafter defined). The term "Qualified Loan" means (i) any loan from a Qualified Lender secured by a mortgage or deed of trust encumbering the Hotel or all of any part of Owner's interest therein, and (ii) all amendments, modifications, supplements and extensions of any such mortgage or deed of trust. The term "Qualified Lender" means any recognized third party institutional lender such as any federally insured commercial or savings bank, national banking association, savings and loan association, investment banking firm, commercial finance company and other similar lending institution that is a holder of a Qualified Loan.

21.9Jurisdiction

The laws of the Commonwealth of Pennsylvania shall govern the interpretation, validity, performance, and enforcement of this Agreement. Any litigation relating to matters arising under, in connection with or with respect to this Agreement shall be brought by Owner or Operator in a court for the county of the state in which the Hotel is located or in the federal district court for the district where the Hotel is located. Owner and Operator hereby consent to the jurisdiction of such courts and waive any defense that such courts lack venue with respect to such proceeding.

This Section 21.9 shall survive the expiration or termination of this Agreement.

21.10No Guarantee of Operating Results

Owner acknowledges that (a) all budgets and financial projections, prepared by Operator or its Affiliates prior to the Commencement Date or under this Agreement, are intended to assist in operating the Hotel, but are not to be relied on by Owner or any third party as to the accuracy of the information or the results predicted therein, and (b) Operator does not guarantee the accuracy of the information nor the results of in such budgets and projections. Accordingly, Owner agrees that (i) neither Operator nor its Affiliates shall have any liability whatsoever to Owner or any third party for any divergence between such budgets and projections and actual operating results achieved, (ii) the failure of the Hotel to achieve any forecasted Total Revenue in the Budgets or shall not constitute a default by Operator or give Owner the right to terminate this Agreement, and

(i)if Owner provides any such budgets or projections to a third party, Owner shall advise such third party in writing of the substance of the disclaimer of liability set forth in this Section 21.10.

21.11Oversight of Renovation Services

Owner acknowledges that any review, advice, assistance, recommendation or direction provided by Operator with respect to the design, construction, equipping, furnishing, decoration, alteration, improvement, renovation or refurbishing of the Hotel (including, if applicable, the property improvement plan or any capital expenditure) (a) is intended solely to assist Owner in the development, construction, maintenance, repair and upgrading of the Hotel and Owner's compliance with its obligations under this Agreement, and (b) does not constitute any representation, warranty or guaranty of any kind whatsoever that (i) there are no errors in the plans and specification, and (ii) there are no defects in the design of construction of the Hotel or installation of any building systems or FF&E therein, or (c) the plans, specifications, construction and installation work will comply with all applicable laws (including the American with Disabilities Act or similar laws or regulations governing public accommodations for individuals with disabilities). Accordingly, Owner agrees that neither Operator nor its Affiliates shall have any liability whatsoever to Owner or any third party for any (1) errors in the plans and specifications,

(2) defects in the design of construction of the Hotel or installation of any building systems or FF&E therein, or (3) non-compliance with any engineering and structural design standards or applicable laws.

21.12Operating Funds

Operator's obligations under this Agreement are subject in all respects to the availability of sufficient funds from the operation of the Hotel, or which are otherwise provided by Owner. Except as otherwise expressly provided in this Agreement, all costs and expenses of operating the Hotel shall be payable out of funds from the operation of the Hotel, or which are otherwise provided by Owner. In no event shall Operator be obligated to pledge or use its own credit or advance any of its own funds to pay any such costs or expenses for the Hotel. Operator is not, and never shall be, liable to any creditor of Owner or its subsidiaries or affiliates for any debt incurred by Operator which was incurred in furtherance of Operator's services hereunder for the Hotel. Owner agrees, unless Operator exceeds the scope of its authority and must indemnify Seller pursuant to Section 20.1, to indemnify and hold Operator harmless from and against any and all such claims of creditors and against all costs, charges and expenses (including attorney's fees and expenses) incurred or sustained by Operator in connection with any action, suit or proceeding to

which it may be made a party by any creditor of Owner or with respect to any debt incurred by Operator which was incurred in furtherance of providing the services hereunder for the Hotel (the "Credit Obligation"). In the event that Operator has pledged or used its own credit, or advanced any of its own funds to pay any costs or expenses, for the Hotel, Owner may be required to provide a parent guaranty to guarantee any such Credit Obligation and for repayment of any such extensions of credit by Operator upon thirty (30) days prior written notice from Operator. Accordingly, notwithstanding anything to the contrary in this Agreement, Operator shall be relieved from its obligations to operate the Hotel in accordance with this Agreement whenever and to the extent that Operator is prevented or restricted in any way from doing so by reason of (a) the occurrence of a Force Majeure event, (b) Owner's breach of any term of this Agreement (including Owner's obligation to provide sufficient funds or a parent guaranty as required under this Agreement), or (c) any limitation or restriction in this Agreement on Operator's authority or ability to expend funds in respect of the Hotel. The provisions of this Section 21.12 shall survive the termination of this Agreement with respect to acts, omissions and occurrences arising during the Term.

21.13Consents and Approvals

Owner acknowledges that in granting any consents, approvals or authorizations under this Agreement, and in providing any advice, assistance, recommendation or direction under this Agreement, neither Operator nor its Affiliates guarantee success or a satisfactory result from the subject of such consent, approval, authorization, advice, assistance, recommendation or direction. Accordingly, Owner agrees that neither Operator nor its Affiliates shall have any liability whatsoever to Owner or any third person by reason of (a) any consent, approval or authorization, or advice, assistance, recommendation or direction, given or withheld by Operator, or (b) any delay or failure by Operator to provide any consent, approval or authorization, or advice, assistance, recommendation or direction.

21.14Signature Counterparts

To facilitate execution, this Agreement may be executed in as many counterparts as may be required, each of which so executed shall be deemed an original, irrespective of the date of its execution and delivery, and counterparts together shall constitute one and the same instrument. Counterparts delivered by facsimile, email or other electronic means shall be deemed originals for all purposes. It shall not be necessary that the signature on behalf of both parties hereto appear on each counterpart hereof.

21.15Subordination, Non-Disclosure and Attornment

Owner will endeavor to ensure that existing and future mortgagees and lessors provide Operator with commercially reasonable non-disturbance agreements in form and content reasonably acceptable to Operator, which agreements shall if acceptable to future mortgagee and lessors, preclude the termination of this Agreement absent the uncured breach of this Agreement by Operator, and shall further preclude the conveyance or leasing of the Hotel (whether on foreclosure, deed in lieu thereof or otherwise) to any Person to which Owner could not assign this Agreement without Operator's consent. Operator shall negotiate such agreements in good faith, and execution of such agreement shall not be unreasonable delayed.

[The remainder of the page is intentionally left blank.]

IN WITNESS WHEREOF, Owner and Operator have duly executed this Hotel Management Agreement the day and year first above written.

OWNER:

By: Name: Title:

OPERATOR:

By: Name: Justin Shelton

Title: Manager for Springwood Hospitality Management 3, LLC

EXHIBIT A CENTRALIZED SERVICES

Fees	Amount/ Calculation	Description
Accounting and Financial Services Fee (M3)	Direct pass through from Vendor. Approximately $700 per month	To reimburse Operator for costs related to the integration, support, budgeting, centralized accounting services, and financial reporting associated with the Hotel.
Payroll Service (Inova)	Direct pass through from Vendor.  Based on employee census, $9 per month	To reimburse Operator for payroll management.
Revenue Management (Springwood)	$900 for select service and $1,100 for Extended Stay monthly	To reimburse Operator for Revenue Management.
Sales support (Springwood)	$1,200 for select service and $1,500 for Extended Stay monthly	To reimburse Operator for Sales support to the properties.
Corporate Facilities Management (Springwood)	$500 a month.	To reimburse Operator for Corporate Facilities Management.
Property Operations and Maintenance System (Quore)	Direct pass through from Vendor. $175 a month	To reimburse Operator for electronic operating system and maintenance system.
Texting Guest service program (Kipsu)	Direct pass through from Vendor. $150 a month	To reimburse Operator for texting based system for guest service.

*This is not meant to be a complete list of items, but is meant to identify the larger monetary items that are already included in the current expenses for the properties. Most are direct pass-through charges that are subject to price fluctuations from 3rd party vendors.

EXHIBIT B

EBITDA Projections; Calculation of Incentive Fee GROSS OPERATING PROJECTIONS (Attached)

Calculation of Incentive Fee Example:

Projected Gross Operating Profit$100,000 ($25,000 per quarter) Actual Gross Operating Profit$25,000 in Quarter 1

$35,000 in Quarter 2

$22,000 in Quarter 3

$50,000 in Quarter 4

Installment payments:10% of Year–to-Date excess of Actual Gross Operating Profit over Projected Gross Operating Profit, less prior installment Gross Operating Profit payments

Quarter 1:$0 = ([$25,000-$25,000] x 10%) – $0

Quarter 2:$1,000 = [($60,000-$50,000] x 10%) - $0

Quarter 3:-$300 = [($82,000-$75,000] x10%) - $1,000

Note: $300 to be deducted from next installment of Base Fee

Quarter 4:$2,500= [($132,000-$100,000] x10%) - $700

Total Incentive Fee:$3,200 = ($132,000-$100,000) x10%)

EXHIBIT C

Insurance Requirements

1.Commercial general liability insurance against claims for bodily injury, including death, personal injury or property damage occurring on, in or about the Hotel, with a combined single limit of not less than One Million Dollars ($1,000,000) for each occurrence, with an annual aggregate (where applicable) of Two Million Dollars ($2,000,000.00).

2.Liquor Liability (dram shop) Insurance (if Liquor is sold) with minimum primary limits of not less than One Million Dollars ($1,000,000) for each occurrence

3.Commercial automobile liability insurance providing coverage on any owned, leased, hired and non-owned vehicles with combined single limits of not less than One Million Dollars ($1,000,000.00) per accident for bodily injury, and property damage.

4.Umbrella and Excess liability umbrella coverage (including excess Liquor Liability (dram shop) Insurance) with limits of not less than Twenty-Five Million Dollars ($25,000,000) per occurrence and Twenty-Five Million Dollars ($25,000,000) in the aggregate.

5.Employment Practices Liability with a combined single limit of not less than One Million Dollars ($1,000,000) for each occurrence covering all employees of the hotel, including 3rd party coverage.

6.Crime Insurance (Fidelity) covering the dishonest act of employees in the amount of not less than $250,000.

7.Workers Compensation Insurance on all Hotel Employees in compliance with applicable statutory requirements with a $500,000 limit under the employer’s liability section.

8.Fidelity insurance, in such amounts and with such deductibles as Operator may deem advisable, covering Operator's employees at the Hotel (other than executive employees of Operator) or in job classifications normally bonded in other hotels it manages in the United States or otherwise required by law;

9.Business interruption insurance covering loss of income for a minimum period of twelve (12) months resulting from interruption of business resulting from physical damage caused by the occurrence of any of the risks affecting the Hotel insured under an "all-risk" policy referred to in Section 12.1(A);

10.If the Hotel is located within an area designated "flood prone" pursuant to the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, as the same may be amended from time to time, flood insurance in such amount as Owner or Owner’s Mortgage lender may reasonably require;

11.Such other or additional insurance as may be (i) required under the provisions of any applicable Major Agreements (provided Operator has been given detailed written notice of such requirements) or (ii) requested by Owner in writing and customarily carried by prudent operators of hotels of having a quality and service level similar to the brand under the Franchise Agreement in the geographic area of the Hotel.

2

EXHIBIT D

Competitive Set

1.As shown on the Star Reports.

2.

3.

4.

5.

EXHIBIT E CERTAIN DEFINITIONS

Affiliate means an entity that controls, is controlled by or under common control with the subject entity. For this purpose, “control” shall mean the ability to direct the operations and policies of an entity, whether by ownership of interests, contract or otherwise.

Agreement means this Hotel Management Agreement.

Base Fee shall have the meaning in Section 10.1. Base Level shall have the meaning in Section 13.1. Budgets shall have the meaning in Section 9.4.

Building shall have the meaning in Section 1.1.

Capital Budget shall have the meaning in Section 9.4.

Centralized Services shall have the meaning given in Section 7.1

Centralized Services Fee shall mean the amount paid for Centralized Services and described in Exhibit A.

Commencement Date shall have the meaning given to it in the introductory paragraph to this Agreement

Early Termination shall have the meaning in Section 16.1. Employment Claim shall have the meaning in Section 20.3. Employment Laws shall have the meaning in Section 5.4.

Employment Policies shall have the meaning in Section 5.5.

Encumbrances shall have the meaning in Section 3.1. Expiration Date shall have the meaning in Section 2.1.

FF&E shall have the meaning in Section 1.1.

FF&E Reserve Account shall have the meaning in Section 8.2.

Fiscal Year shall mean each twelve (12) consecutive calendar month period or partial twelve (12) consecutive calendar month period within the Term commencing on January 1st (or, with respect to the first year of the Term, the Commencement Date) and ending on December 31st (or, with respect to the last year of the Term, the expiration or earlier termination of the Term) unless Owner and Operator otherwise agree.

Fixed Charges shall mean the cost of the following items to the Hotel or its facilities, which are properly attributable under the Uniform System to the period in question:

(i)Real estate taxes, assessments, personal property taxes and any other ad valorem taxes imposed on or levied in connection with the Hotel, the Installations and the FF&E (collectively, "Property Taxes");

(ii)Insurance against physical damage to the Hotel; and

(iii)Payments into the FF&E Reserve Account in accordance with Section 11.1.

Force Majeure Events shall have the meaning in Section 15.4.

GAAP shall mean generally accepted accounting principles in the United States of America, as in effect from time to time, set out in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

General Manager shall have the meaning in Section 4.4.

Gross Operating Profit for any period shall mean the amount, if any, by which Total Revenues for such period exceed Operating Expenses for such period.

Hotel shall have the meaning given in Recital A to this Agreement.

Hotel Employees shall have the meaning in Section 3.1.

Incentive Fee shall have the meaning in Section 10.2. Indemnified Party shall have the meaning in Section 20.4. Initial Term shall have the meaning in Section 2.1.

Installations shall have the meaning in Section 1.1. Involuntary Proceeding shall have the meaning in Section 15.1. Land shall have the meaning in Section 1.1.

Leases shall have the meaning in Section 3.1.

Major Agreements shall have the meaning in Section 3.1. Monthly Reports shall have the meaning in Section 9.2. Mortgage shall have the meaning in Section 3.1.

Multi-Property Programs shall have the meaning in Section 7.2.

Operating Expenses shall mean all costs and expense of maintaining, conducting and supervising the operation of the Hotel and all of its facilities, which are properly attributable under the Uniform System to the period in question. Operating Expenses shall include, without limitation:

(i)The cost of all Operating Equipment and Operating Supplies;

(ii)Salaries and wages of Hotel personnel, including costs of payroll taxes, employee benefits and severance payments. Except as set forth in Exhibit A (“Centralized Services”), the salaries or wages of off-site employees or offsite executives of Operator shall not be Operating Expenses, provided that if it becomes necessary for an off-site employee or executive of Operator to temporarily perform reasonable and necessary services for a reasonable and necessary period of time at the Hotel of a nature normally performed by Hotel Employees, his or her salary (including payroll taxes and employee benefits) for such period only, as well as his or her traveling expenses, shall be Operating Expenses and reimbursed to Operator by Owner;

(iii)The costs of all other goods and services obtained in connection with the operation of the Hotel including, without limitation, heat and utilities, laundry, landscaping and exterminating services and office supplies;

(iv)The costs of all non-capital repairs to and maintenance of the Hotel;

(v)Insurance premiums (or allocable portion thereof in the case of blanket policies) for all insurance maintained under Article XIII (other than insurance against physical damage to the Hotel) and losses incurred on any self-insured risks including deductibles;

(vi)All taxes, assessments, permit fees, inspection fees, and water and sewer charges and other charges (other than income and franchise taxes) payable by or assessed against Owner with respect to the operation of the Hotel, excluding Property Taxes (defined below);

(vii)Legal fees and fees of any independent certified public accountant for services directly related to the operation of the Hotel and its facilities;

(viii)All expenses for advertising the Hotel and all expenses of sales promotion and public relations activities;

(ix)All Reimbursable Expenses, which fees and disbursements shall be paid out of the Operating Account or paid or reimbursed by Owner to Operator upon demand. Without limiting the generality of the foregoing, such charges may include all reasonable travel, telephone, telegram, facsimile, air express and other incidental expenses but, except as otherwise provided in this Agreement, shall not include any of the regular expenses of the central offices maintained by Operator, other than

offices maintained at the Hotel for the management of the Hotel. Operator shall maintain and make available to Owner invoices or other evidences supporting such charges;

(x)The Base Fee and Centralized Services Fees, as set forth in Exhibit A;

(xi)Periodic payments made in the ordinary course of business under the Franchise Agreement;

(xii)Any other item specified as an Operating Expense in this Agreement; and

(xiii)Any other cost or charge classified as an Operating Expense or an Administrative and General Expense under the Uniform System unless specifically excluded under the provision of this Agreement.

Operating Expense shall not include:

(i)Amortization and depreciation;

(ii)The making of or the repayment of any loans or any interest thereon;

(iii)The costs of any alterations, additions, or improvements which for Federal income tax purposes must be capitalized and amortized over the life of such alteration, addition, or improvement;

(iv)Payments on account of any equipment lease that is to be capitalized under GAAP;

(v)Payments under any space lease, ground lease, submerged land lease, or easement agreement;

(vi)Payments into or out of the FF&E Reserve Account;

(vii)Payments of Incentive Fees; or

(viii)Any item defined as a Fixed Charge;

(ix)Capital Expenditures.

Network shall have the meaning in Section 7.3.

Non-Renewal Notice shall have the meaning in Section 2.1.

Obligor shall have the meaning in Section 20.4. Operating Account shall have the meaning in Section 8.2. Operating Budget shall have the meaning in Section 9.4.

Operating Equipment shall have the meaning in Section 1.1.

Operating Supplies shall have the meaning in Section 1.1. Operator Rebates shall have the meaning in Section 7.2. PEO shall have the meaning in Section 5.1.

Person shall mean an individual or a partnership, corporation, limited liability company, trust or other entity formed under the laws of any jurisdiction.

Project Management Fee shall have the meaning in Section 10.6. Purchasing Management Fee shall have the meaning in Section 10.7. Qualified Lender shall have the meaning in Section 21.8.

Qualified Loan shall have the meaning in Section 21.8. Reimbursable Expenses shall have the meaning in Section 10.8. Renewal Term shall have the meaning in Section 2.1.

RevPAR means Revenue Per Available Room, as defined by STR, Inc.

Term shall have the meaning in Section 2.1.

Total Revenues shall mean all income, revenue and proceeds resulting from the operation of the Hotel and all of its facilities (net of refunds and credits to guest and other items deemed "Allowances" under the Uniform System), which are properly attributable under the Uniform System to the period in question. Total Revenues shall include, without limitation, all amounts derived from:

(i)The rentals of rooms, banquet facilities and conference facilities;

(ii)The sale of food and beverage whether sold in a bar, lounge or restaurant, delivered to a guest room, sold through an in-room facility or vending machines, provided in meeting or banquet rooms or sold through catering operations;

(iii)Charges for admittance to or the use of any parking facilities, recreational facilities or any entertainment events at the Hotel; and

(iv)The gross income amount on which the proceeds of business interruption or similar insurance are determined, with respect to any period for which such proceeds are received.

Total Revenues shall not include:

(i)Sales or use taxes or similar government impositions collected by Owner or Operator;

(ii)Tips, service charges and other gratuities received by Hotel Employees;

(iii)Proceeds of insurance, except for those expressly included in Total Revenues;

(iv)Proceeds of the sale or condemnation of the Hotel, any interest therein or any other asset of Owner not sold in the ordinary course of business, or the proceeds of any loans or financing;

(v)Capital contributed by Owner to the Hotel;

(vi)Rental income from any and all building rooftop or antennae leases;

(vii)The receipts of any tenant, license or concessionaire under a Lease; and

(viii)Interest, if any, accrued on the balance of the Operating Account or the FF&E Reserve Account.

Uniform System shall have the meaning in Section 3.1.

WARN Act shall have the meaning in Section 5.2.

Working Capital shall have the meaning in Section 8.1.

EX-10.58.1

EXHIBIT 10.58.1

LOAN AGREEMENT

THIS LOAN AGREEMENT (as it may be amended, restated, supplemented, extended or renewed from time to time, this “Agreement”) is made as of February 21, 2020, between WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”), and LF3 SOUTHAVEN, LLC, a Delaware limited liability company (“Landlord Borrower”) and LF3 SOUTHAVEN TRS, LLC, a Delaware limited liability company (“Tenant Borrower”, and together with Landlord Borrower, individually and/or collectively, as the context may require, “Borrower”).

FOR VALUABLE CONSIDERATION, the parties agree as follows:

agreement to lend

Agreement.  Subject to the terms and conditions provided herein, Lender agrees to make the following loans to Borrower: (a) a term loan (the “Loan”) in the maximum principal amount of $13,460,000.00.  Notwithstanding anything to the contrary, Lender shall not be obligated to advance Loan funds in an amount exceeding the lowest of the following (the “Loan Amount”): (1) $13,460,000.00, (2) 65.0% of documented Site acquisition costs approved by Lender, or (3) 65.0% of the appraised value of the Site, as may be adjusted by Lender in its sole discretion.  Borrower agrees to borrow and repay the Loan, with interest, in accordance with the Note, this Agreement, and the other Loan Documents. 

LOAN Terms

Loan Purpose.  The Loan shall be used exclusively by Borrower to finance the cost of the Site acquisition, to finance the cost of the PIP Improvements and to fund closing costs and certain other permitted amounts (to the extent herein provided), in accordance with the terms of this Agreement and the other Loan Documents. 

Notes.  The Loan will be evidenced by the Term Loan Note by Borrower to Lender in the principal amount of $13,460,000.00 (the “Note”). 

Collateral.  The Loan will be secured by the Collateral described in the “Collateral Table” attached as Exhibit 2.3, as well as all other Collateral described in the Loan Documents.

Closing.  The date on which the Closing occurs is the “Closing Date.”  Borrower hereby authorizes Lender to insert the Closing Date on the first page hereof, as the date hereof, and in the various Loan Documents, including the Note, as the date thereof.  The Closing must occur on or before 11:00 o’clock a.m. Pacific time, on February 21, 2020 (the “Closing Deadline”).  If the Closing has not occurred on or before the Closing Deadline, Lender shall have absolutely no obligation whatsoever to make the Loan to Borrower.  Lender may extend the Closing Deadline in Lender’s sole discretion.  Any Closing Deadline extension must be in writing to be valid.

Funding.  Prior to Closing, Borrower shall deliver to Lender a complete, executed “Closing Draw Request” for disbursement of the Loan proceeds. At Closing Lender will fund the Loan by wire transfer in accordance with the instructions contained in the Closing Draw Request.  Lender shall be entitled to fully rely and act on the Closing Draw Request and shall have no duty to verify the content or accuracy of information contained therein, the authority of the person executing the Closing Draw Request or the identity of the sender thereof.  Lender does not have and is not undertaking any obligation whatsoever to Borrower to verify the source of the Closing Draw Request or to detect errors in transmission or content, including discrepancies between account names and numbers. 

Closing Fee.  At Closing, Borrower will pay Lender a closing fee equal to 0.50% of the Loan Amount.

Transaction Costs; Deposits.  Borrower shall pay Lender, at or before Closing, all reasonable out‑of‑pocket costs and expenses incurred by or on behalf of Lender in connection with Lender’s underwriting and closing due diligence and the negotiation, documentation, and closing of the Loan (including in connection with Lender’s evaluation of and determinations with respect to, the Closing conditions) (the “Transaction Costs”).  Transaction Costs include the following, as applicable:  (a) Lender’s outside legal counsel fees; (b) expenses for UCC search reports, title searches, and title insurance; (c) escrow, recording, and filing fees; (d) transfer or mortgage taxes (if any);

(e) costs of site inspections, inspection reports, surveys, appraisals, flood certifications, environmental reports and testing, and other due diligence required by Lender; and (f) costs and fees of consultants and other professional advisers retained by Lender.  At Closing, all deposits paid by Borrower prior to entering into this Agreement, other than rate lock fee deposits (if any), shall be applied to pay Transaction Costs and any other fees, costs and expenses then payable by Borrower.  If the deposit exceeds the sum of such items, the excess will be refunded at Closing.

General Payment Provisions.

Manner and Place; No Deductions.  Principal, interest, and all other amounts due to Lender from time to time under the Notes, this Agreement, and the other Loan Documents, including each Monthly Payment due under the Notes (each, a “Payment”) shall be made by Automated Clearing House (“ACH”) debit (and Borrower agrees to execute and deliver to Lender such authorizations and agreements as Lender may require to establish such ACH arrangements) unless Lender gives prior written consent, in its sole discretion, for Payments to be made by wire transfer.  Any Payment made by wire transfer and not received by Lender prior to 12:00 o’clock noon (Pacific time) may, in Lender’s sole discretion, be deemed to have been received on the immediately succeeding Business Day and any applicable interest or fee shall continue to accrue.  All Payments, including Payments made by ACH debit, shall be in U.S. dollars and shall be made from a business deposit account in Borrower’s name at a U.S. bank.  All Payments shall be made without deduction of present and future Taxes (such amounts to be paid by Borrower) and without any other abatement, reduction, setoff, defense, counterclaim, deferment or recoupment.

Application of Payments Generally.  Except as otherwise provided in subsection (c) below: (i) all Payments of principal and interest required to be made pursuant to the Note shall be applied first to accrued and unpaid interest and then to principal; (ii) Payments by or on behalf of Borrower for fees, costs, and other expenses payable pursuant to any Loan Document, including Payments with respect to Transaction Costs, Closing fees and expenses, and other amounts payable by a Credit Party pursuant to any provision of the Loan Documents, shall be applied to the applicable fee, cost or other expense; and (iii) if Lender receives any other Payment, including Collateral proceeds and principal prepayments, Lender shall apply such Payment in such order, manner, and amounts as is specifically provided in the applicable Loan Document pursuant to which such Payment is made, or, in the absence of such a provision, in such order, manner, and amounts as Lender, in its sole discretion, may determine.  Any prepayment shall be without prejudice to Borrower’s obligations under any swap agreement (as defined in 11 U.S.C. § 101), which shall remain in full force and effect subject to the terms of such swap agreement (including provisions that may require a reduction, modification or early termination of a swap transaction, in whole or in part, in the event of such prepayment, and may require Borrower to pay any fees or other amounts for such reduction, modification or early termination), and no such fees or amounts shall be deemed a penalty hereunder or otherwise.

Application of Payments After Default.  Any other provision of this Agreement, the Note or any other Loan Document to the contrary notwithstanding, during such time as a Default has occurred and is continuing, all Payments shall be applied in such order and manner and in such amounts as Lender, in its sole discretion, may determine.

REPRESENTATIONS AND WARRANTIES

Borrower acknowledges and agrees that the representations and warranties in this Article are a material consideration to Lender; that Lender is relying on their correctness and completeness in entering into this Agreement and making the Loan; and that these representations and warranties are true and accurate as of the date hereof, will be true and accurate as of the Closing, as if made at Closing, and will survive the Closing, regardless of any investigation or inspection by Lender.  Accordingly, Borrower represents, warrants, and certifies to and covenants with Lender that:

Borrower Status.  Borrower’s exact legal name is set forth on the signature page hereof.  Borrower is a domestic U.S. entity, validly existing and in good standing under the laws of the state of its formation, is duly qualified and licensed to do business in the state where each Site is located, and has full power and authority to enter into and perform its obligations under the Loan Documents to which it is a party.  Borrower’s chief executive office and principal place of business is at the location set forth on the signature page hereof. The organizational chart attached

as Exhibit 3.1, relating to Borrower and certain of its Affiliates, is true, complete and correct on and as of the date hereof.

Due Authorization, Execution and Delivery.  The Loan Documents have been duly authorized and validly executed and delivered by Borrower.  The individual(s) executing the Loan Documents on behalf of Borrower have been duly authorized to do so in accordance with resolutions duly adopted by Borrower’s board of directors (or similar governing body), members, or partners, as the case may be.

No Conflicts; No Defaults.  The authorization, execution, delivery, consummation, and performance by Borrower of the Loan Documents does not and will not conflict with, violate, or breach (a) any provision of Borrower’s organizational documents; (b) any Applicable Law; or (c) any Contractual Obligation of Borrower.  Borrower is not in default under and, to the best of Borrower’s knowledge, no event has occurred that, with the giving of notice or the passage of time, or both, would constitute a default under any Contractual Obligation of Borrower.

Binding Obligations. This Agreement and the other Loan Documents to which a Credit Party is a party constitute the legal, valid and binding obligations of such Credit Party, enforceable against such Credit Party in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, insolvency, liquidation, reorganization and other laws affecting the rights of creditors generally, and general principles of equity.

Litigation and Condemnation.  There is no action, suit, investigation, proceeding or arbitration at law or in equity, including condemnation proceedings or proceedings in lieu of condemnation, pending or, to the best of Borrower’s knowledge, threatened against or affecting (a) any Credit Party or any of its or their assets or revenues; or (b) any of the Loan Documents or any of the transactions contemplated thereby.

Administrative, Criminal and Governmental Matters and Investigations.  There are no administrative or criminal matters or investigations, government investigations or audits, or other similar matters currently pending or, to the best of Borrower’s knowledge, threatened that involve any Credit Party nor has any Credit Party been involved in any such matters within the past seven years.

Bankruptcy and Similar Matters. There are no bankruptcy, insolvency, or similar proceeding currently pending or, to the best of Borrower’s knowledge, threatened that involve any Credit Party.  During the past seven years:  (a) no assets of any Credit Party have been the subject of any foreclosure or similar proceeding or been transferred by deed in lieu; (b) no Credit Party has filed (or had filed against such Credit Party) a petition under the U.S. Bankruptcy Reform Act of 1978, 11 U.S.C. §101, et seq. (the “Bankruptcy Code”) or obtained a discharge of its debts under the Bankruptcy Code; and (c) no Person that is a principal officer, executive, member, manager or equity owner of a Credit Party held a similar position in an entity that, during the time such Person held such position or within one year after leaving such position, filed (or had filed against it) a petition under the Bankruptcy Code or that obtained a discharge of its debts under the Bankruptcy Code.

Solvency.  Both before and after giving effect to consummation of the transactions contemplated by the Loan Documents to be consummated at or concurrently with the Closing and the payment and accrual of all Transaction Costs, and other costs, fees, and expenses payable in connection with the foregoing, the Credit Parties taken together, and Borrower, individually, are Solvent.

Anti-Money Laundering; Anti-Terrorism; Anti-Corruption Laws.  None of Borrower, any Credit Party or their respective Affiliates (each, an “AML Party”) is: (a) a Sanctioned Person; (b) controlled by or acting on behalf of a Sanctioned Person; (c) under investigation for an alleged breach of Sanction(s) by a governmental authority that enforces Sanctions; or (d) under administrative, civil or criminal investigation for an alleged violation of, or has received notice from or made a voluntary disclosure to any governmental authority regarding a possible violation of, Anti-Corruption Laws.  Each AML Party  is and will remain in compliance with the following (collectively, the “AML Requirements”):  all U.S. economic sanctions laws and executive orders; all regulations promulgated by OFAC; all Anti-Corruption Laws; and all applicable anti-money laundering and counter-terrorism provisions of the Bank Secrecy Act, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, P.L. 107-56, and all rules and regulations issued pursuant to such laws, including those relating to “know your customer”, anti-money laundering, and anti-terrorism.  No AML Party is or will become a Person

included by OFAC on the list of Specially Designated Nationals and Blocked Persons (the “SDN List”) or who is otherwise the target of Sanctions.

Title to Assets; Permitted Exceptions.  Borrower owns all assets reflected in its most recent balance sheet delivered to Lender, except for assets disposed of in the ordinary course of business since the date of such balance sheet.  Borrower is the owner of all of the Collateral, free and clear of all Liens and other matters affecting title to such assets, other than the Permitted Exceptions.

Outstanding Indebtedness.  As of the Closing Date and after giving effect to the Closing, Borrower and the other Credit Parties have no outstanding Indebtedness, other than (a) the Obligations; and (b) trade debt incurred and paid in the ordinary course of business and in any event within 60 days after incurrence.

Compliance with Law; Permits.  Each Site and the operations of each Credit Party at such Site comply with all Applicable Law, except for such noncompliance that has not had, and could not reasonably be expected to have, a Material Adverse Effect.  All governmental permits required to use and operate such Site for the Permitted Concept, including liquor licenses, if any, have been obtained and are in full force and effect, except for permits, the failure of which to obtain or maintain has not had, and could not reasonably be expected to have, a Material Adverse Effect.

Site Conditions, Zoning, Access, and Utilities.  Each Site, including all buildings and other improvements associated with such Site, is in good condition and repair; well maintained, ordinary wear and tear excepted; fully equipped and operational; free (to the best of Borrower’s knowledge) from structural defects; and safe and properly lighted.  Each Site is unconditionally zoned by the appropriate Government Authority for the use of such Site for the Permitted Concept.  Permanent, legal access is available to each Site from a physically open and dedicated public right-of-way.  Adequate public or private utilities are available at each Site to permit operation of such Site as a Permitted Concept, and all utility connection fees and use charges have been paid in full.

Franchise Agreement.  Attached as Exhibit 3.14 is a complete list of each Franchise Agreement and the information set forth thereon with respect to each Franchise Agreement is true, complete, and correct.  At Lender’s request from time to time, Borrower shall deliver to Lender a fully executed, complete copy of each Franchise Agreement. Each Franchise Agreement is in full force and effect, the entire interest of the franchisee thereunder is owned by one or more of the Credit Parties, and such interest has not been assigned, transferred, mortgaged, or otherwise encumbered other than pursuant to Lender’s Liens.  No notice of default from Franchisor has been received by any Credit Party with respect to any Franchise Agreement that has not been cured, and no notice of default to Franchisor has been given that has not been cured.  To the best of Borrower’s knowledge, no event has occurred and no condition exists, including with respect to any required remodeling or re-imaging, that, with the giving of notice or the lapse of time or both, would constitute a default under any Franchise Agreement.  Other than the PIP, Borrower is not subject to any property or performance improvement plan or similar requirement under the Franchise Agreement. Borrower has fully disclosed to Lender all requirements of the PIP, including expenses, required reserves, and other requirements.

Management Agreement.  Attached as Exhibit 3.15 is a complete list of each Management Agreement and the information set forth thereon with respect to each Management Agreement is true, complete, and correct.  At Lender’s request from time to time, Borrower shall deliver to Lender a fully executed, complete copy of each Management Agreement.  The Management Agreement is in full force and effect, the entire interest of the Site owner thereunder is held by Borrower, and such interest has not been assigned, transferred, mortgaged, or otherwise encumbered other than pursuant to Lender’s Liens.  No notice of default from Manager has been received by any Credit Party that has not been cured, and no notice of default to such Manager has been given that has not been cured.  To the best of Borrower’s knowledge, no event has occurred and no condition exists that, with the giving of notice or the lapse of time or both, would constitute a default under the Management Agreement.  The Management Agreement (a) is fully subordinate to the Loan and Loan Documents, including to all Lender’s Liens; and (b) does not contain any rights of first refusal or other options in favor of Manager to acquire any Collateral or other property of Borrower.

Taxes.  All federal, state, local and foreign income, franchise and other material tax returns and reports (collectively, “Tax Returns”) required to be filed by any Tax Affiliate have been filed with the appropriate Government Authorities, all such Tax Returns are true and correct in all material respects, and all Taxes reflected therein or otherwise due and payable have been paid prior to the date on which any Liabilities may be added thereto

for non-payment except for those contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves are maintained on the books of the appropriate Tax Affiliate in accordance with GAAP.  No Tax Return is under audit or examination by any Government Authority and no notice of such an audit or examination or any assertion of any claim for Taxes has been given or made by any Government Authority.  Proper and accurate amounts have been withheld by each Tax Affiliate from their respective employees for all periods in full and complete compliance with Applicable Law, and such withholdings have been timely paid to the respective Government Authorities.  No Tax Affiliate has participated in a “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4(b) or has been a member of an affiliated, combined or unitary group other than the group of which a Tax Affiliate is the common parent.  “Tax Affiliate” means Borrower and its subsidiaries (if any) and any Borrower Affiliate with which Borrower files or is eligible to file consolidated, combined or unitary tax returns.  “Taxes” means all taxes, including income taxes, excess profits taxes, sales taxes, gross receipts taxes, payroll taxes, withholding taxes, ad valorem real and personal property taxes and assessments, and all other taxes, duties, imposts, levies, assessments, deductions, withholdings, and charges imposed by any Government Authority, and all Liabilities with respect thereto, excluding taxes imposed on or measured by the Lender’s net income.

Evaluation Information.  All information provided to Lender by or on behalf of any Credit Party in connection with the Loan (collectively, the “Evaluation Information”) is correct and complete in all material respects as of the date thereof.  Borrower acknowledges that Lender is relying on the Evaluation Information in entering into this Agreement and making the Loan available to Borrower.  None of the Credit Parties has any knowledge of any material change in any of the Evaluation Information that has not been disclosed to Lender in writing.

Full Disclosure.  There is no fact known to any Credit Party that materially and adversely affects the business, operations, assets or condition (financial or otherwise) of any of the Credit Parties that has not been disclosed herein or in the Evaluation Information.  None of the representations or warranties made by any Credit Party in the Loan Documents or any exhibit, report, statement or certificate furnished by or on behalf of any Credit Party pursuant thereto, as of the date such representations and warranties are made or deemed made, contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered.

Commercial Purpose of Loan.  The purpose of the Loan is a commercial business purpose and not a personal, family, or household purpose.  No portion of the Collateral is being used by Borrower or any other Person for any personal, family or household purposes.

Securities Activities.  Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying any margin stock (as defined within Regulations T, U or X of the Board of Governors of the Federal Reserve System), and none of Borrower's assets consists of such margin stock.  No part of the Loan will be used to purchase or carry any margin stock or to extend credit to others for that purpose or for any other purpose that violates the provisions of Regulations T, U or X of said Board of Governors.

Regulated Entities.  None of any Credit Party, any Person controlling any Credit Party, or any Affiliate of any Credit Party, is (a) an "investment company" within the meaning of the Investment Company Act of 1940; or (b) subject to regulation under the Federal Power Act, the Interstate Commerce Act, any state public utilities code, or any other federal or state statute, rule or regulation limiting its ability to incur Indebtedness, pledge its assets or perform its obligations under the Loan Documents.

ERISA.  None of the Credit Parties maintains, or has any Liabilities with respect to, any employee benefit plan or multiemployer plan, as defined in the Employee Retirement Income Security Act of 1974 (“ERISA”).

Hotel Lease.  The information set forth on Exhibit 3.23 with respect to the Hotel Lease is true, complete, and correct.  Borrower has delivered to Lender a fully executed, complete copy of the Hotel Lease.  The Hotel Lease is in full force and effect, Tenant is the sole owner of the entire leasehold interest thereunder, and such interest has not been assigned, transferred, subleased, mortgaged, or otherwise encumbered other than pursuant to Liens in Lender’s favor.  No notice of default under the Hotel Lease has been received or given by Borrower that has not been cured.  To the best of Borrower’s knowledge, no event has occurred and no condition exists, that, with the giving of notice or the lapse of time or both would constitute a default under the Hotel Lease.  In the event of any conflict between the terms of the Hotel Lease and the Loan Documents, the terms of the Loan Documents shall control.

Beneficial Ownership Certification. As of the Closing Date, all of the information included in the Beneficial Ownership Certification is true and correct.

AFFIRMATIVE COVENANTS

Until such time as all Obligations are fully paid and performed:

Organization and Status; Preservation of Existence.  Borrower will continue to be validly existing and in good standing under the laws of its state of incorporation or formation and will continue to be qualified to do business in the state where each Site is located.

Collateral.  Borrower will (a) keep the Collateral free and clear of all Liens, other than the Permitted Exceptions; (b) use the Collateral only in its trade or business; (c) keep the tangible Collateral at each Site and maintain such tangible Collateral in good operating condition and repair and in material compliance with manufacturers’ recommendations, normal wear and tear excepted; and (d) own and keep at each Site all equipment, including all machinery, furniture, appliances, trade fixtures, tools, office and record keeping equipment, and inventory required to be maintained by Borrower at such Sitepursuant to the Franchise Agreement and the Management Agreement for such Site and that are reasonably necessary for the proper and prudent operation of such Site as the Permitted Concept.

Taxes.  Borrower shall timely pay or cause to be paid, prior to delinquency, all Taxes which may at any time be assessed, levied or imposed upon Borrower, any Site, the Collateral, the Loan Documents, the Obligations, or the rents, issues, profits, damages, income and other benefits now or hereafter derived from any of the Sites, or which may arise in respect of the occupancy, use, possession or operation thereof.

Insurance.

Insurance Requirements.  Borrower shall obtain and keep in full force and effect insurance of the types and in amounts customarily carried in lines of business and in geographic areas similar to Borrower’s and as Lender may specify from time to time including insurance of the types and in amounts specified in the Insurance Requirements Agreement, which may specify, among other things,  (i) property insurance; (ii) business income insurance; (iii) builder’s risk insurance, for any period during which construction shall take place on the Site; (iv) commercial general liability insurance, including excess/umbrella coverage and, if liquor, beer, or wine may be sold at or from the Site, liquor liability coverage; (v) worker’s compensation insurance; (vi) flood insurance; (vii) earthquake insurance, for Sites located in an area designated by the US Geological Survey as high hazard; and (viii) such other policies and coverages as may be necessary to comply with Applicable Law or as Lender may otherwise require.  Each required insurance policy and coverage (each, a “Policy”) and each required binder, certificate, or other evidence of coverage (collectively, with the Policy, the “Policy Documents”) shall satisfy the requirements set forth in this Section and in any Insurance Requirements Agreement (collectively, the “Insurance Requirements”), unless, in a particular case, Lender, in its sole discretion and in writing, modifies or waives a particular Insurance Requirement.  All Insurance Requirements are at the sole cost and expense of Borrower and apply to each Site.  If, in addition to Borrower, any other Credit Party has an insurable interest in a particular Site, the Insurance Requirements shall apply with equal force to such other Credit Party, as if such Credit Party were a Borrower.  Borrower’s compliance or non-compliance with the Insurance Requirements shall not limit Borrower’s liability for the acts or omissions of Borrower or any other Credit Party as provided herein or in any of the other Loan Documents.

Policy Requirements.  Each insurer must be licensed to do business in each state where a Site is located and, except for NFIP approved flood insurance carriers, must be rated A-:VIII or better by Best’s Key Rating Guide.  Each Policy Document shall name Lender and its successors and/or assigns, and affiliates, as their interests may appear, as additional insureds and as mortgagee and loss payee, as applicable, and shall state Borrower’s correct address and list Borrower as the named insured.  Each Policy shall (i) provide that the Policy will not be terminated, cancelled or substantially modified without at least 30 days’ prior written notice to Lender (10 days for non-payment) and be written for a period of at least 12 consecutive months; (ii) include a waiver of subrogation by the insurer as to claims against Lender, its employees, agents, and affiliates and provide that such Policy cannot be cancelled or suspended on account of the conduct of Borrower, its affiliates, or any of their respective officers, directors, employees, or agents; (iii) be written on an “occurrence” basis and

provide that all coverage under such Policy is primary, that any “no other insurance” clause in such Policy excludes policies of insurance maintained by Lender or its affiliates, and that such Policy will not be brought into contribution with any insurance maintained by Lender or its affiliates; (iv) contain a standard without contribution mortgagee clause endorsement in favor of Lender, its successors, assigns, and affiliates, as their interests may appear; and (v) include an agreement by the insurer that any loss will be payable in accordance with the terms of the Policy notwithstanding any act or neglect of Borrower, anyone acting for Borrower, or any tenant or other occupant of a Site.  At least 30 days prior to the expiration of each Policy, Borrower shall furnish Lender written evidence that such Policy has been renewed or replaced by delivering to Lender a copy of the replacement Policy or other documentation reasonably satisfactory to Lender evidencing that the required insurance is in full force and effect. 

Lender Insurance.  SPECIAL NOTICE:  Unless Borrower provides Lender with evidence that the required Policies have been obtained, are in full force and effect, and meet the Insurance Requirements, Lender may purchase insurance at Borrower’s expense to protect Lender’s interests.  Borrower may later cancel any insurance purchased by Lender, but only after providing Lender with evidence that Borrower has obtained insurance satisfying the Insurance Requirements.  Borrower shall reimburse Lender, upon demand, for the costs of such insurance obtained by Lender, together with interest thereon at the default interest rate applicable to the Loans from the date such insurance was purchased to the date of such reimbursement.

Casualty.

Casualty; Continuation of Obligations.  Borrower shall at all times bear the entire risk of any loss, theft, damage to, or destruction of, any Collateral from any cause whatsoever, including as a result of a taking by eminent domain (a “Casualty”).  If a Casualty occurs, whether or not covered by insurance, Borrower will promptly give Lender written notice thereof, describing the nature and extent thereof.  No Casualty shall relieve Borrower of any of its Obligations, including its obligation to make regularly scheduled Note payments.

Restoration Obligation.  Promptly following the occurrence of a Casualty, Borrower shall, at its expense, commence and diligently complete the repair, restoration, replacement, and rebuilding of the Collateral as nearly as possible to its value, condition and character immediately prior to the Casualty (a “Restoration”).  Borrower shall not be excused from Borrower’s Restoration obligation, regardless of whether there are Insurance Proceeds available to Borrower or whether any such Insurance Proceeds are sufficient in amount, and the application or release by Lender of any Insurance Proceeds shall not cure or waive any Default under this Agreement or the other Loan Documents or invalidate any act done pursuant thereto.

Application of Insurance Proceeds.  All insurance proceeds with respect to any Casualty (the “Insurance Proceeds”) shall be payable to Lender, and Borrower authorizes and directs any affected insurance company to pay the Insurance Proceeds directly to Lender.  If Borrower receives any Insurance Proceeds relating to such Casualty, Borrower shall promptly pay such proceeds to Lender.  All Insurance Proceeds will be applied by Lender to payment of the Obligations in such order as Lender, in its sole discretion, shall determine.  To the extent that Insurance Proceeds are applied to prepay principal on the Loan, no prepayment fee will be charged in connection with such prepayment; provided, however, Borrower shall pay Breakage Costs (as defined in the Note) as liquidated damages for loss of a bargain and not as a penalty as calculated as set forth in the Note.   Notwithstanding the foregoing, if no Default has occurred and is continuing, the Insurance Proceeds, less costs, fees and expenses incurred by Lender and Borrower in the collection thereof, including adjuster’s fees and expenses and reasonable attorneys’ fees and expenses (the “Net Insurance Proceeds”), shall be made available to Borrower as follows:  (i) if the Net Insurance Proceeds are less than $100,000, the Net Insurance Proceeds shall be paid to Borrower and applied by Borrower to the cost of the Restoration; and (ii) if the Net Insurance Proceeds are $100,000 or greater, the Net Insurance Proceeds shall be held and disbursed by Lender, or as Lender may from time to time direct, as the Restoration progresses, to pay or reimburse Borrower for Restoration costs, upon Borrower’s written request accompanied by evidence, reasonably satisfactory to Lender, that:  (A) the Restoration is in compliance with Applicable Law and all private restrictions and requirements; (B) the amount requested has been paid or is then due and payable and is properly a part of such cost; (C) there are no Liens for labor or materials previously supplied in connection with the Restoration; (D) if the estimated cost of the Restoration exceeds the Net Insurance Proceeds (exclusive of proceeds received from Borrower’s business income insurance), Borrower has deposited into an escrow

satisfactory to Lender such excess amount, which sum will be disbursed pursuant to escrow instructions satisfactory to Lender; and (E) the balance of such Net Insurance Proceeds, together with the funds deposited into escrow, if any, will, after making the payment requested, be sufficient to pay the balance of the Restoration costs.  Upon receipt by Lender of evidence reasonably satisfactory to it that the Restoration has been completed, the cost thereof has been paid in full, and that there are no Liens for labor or materials supplied in connection therewith, the balance, if any, of such Net Insurance Proceeds shall be paid to Borrower. 

Obligations regarding Representations and Warranties.  Borrower will do all things necessary or appropriate such that the representations and warranties of Borrower and the other Credit Parties contained in any of the Loan Documents remain true, complete, and correct.

Franchise Agreement.  Borrower will timely comply with and perform all of its obligations under each Franchise Agreement, including all remodeling and re-imaging obligations, and will give Lender prompt written notice of the occurrence of any default by any Credit Party or Franchisor under such Franchise Agreement and of any notice of default given to any Credit Party by Franchisor.  Borrower will send Lender copies of all notices given by a Credit Party to Franchisor concurrently with the giving of such notices to Franchisor.  Borrower will keep each Franchise Agreement in full force and effect and will exercise all available options, such that the term of each Franchise Agreement, as so extended, will not expire prior to the Maturity Date (as defined in the Note).  Borrower will notify Lender immediately if any Site becomes subject to any PIP, and Borrower shall provide such information with respect to such PIP as Lender may require, including the expected expenses, required reserves and compliance requirements.  Borrower will complete (or cause to be completed), in lien free condition, all improvements required pursuant to each PIP by the earlier of (a) the date required thereunder; and (b) October 15, 2020. 

Management Agreement.  Borrower will timely comply with and perform all of the property owner’s obligations under the Management Agreement and will give Lender prompt written notice of the occurrence of any default by any Credit Party or Manager under the Management Agreement and of any notice of default given to any Credit Party by Manager.  Borrower will also give Lender prompt written notice of any bankruptcy filing by or against Manager of which Borrower has knowledge.  Borrower will send Lender copies of all notices given by a Credit Party to Manager concurrently with the giving of such notices to Manager.  Borrower will keep the Management Agreement in full force and effect and will exercise all available options, such that the term of the Management Agreement, as so extended, will not expire prior to the Maturity Date (as defined in the Note).

Requirement to Operate.  At all times, Borrower shall (a) occupy each Site and diligently operate its business at each Site as the Permitted Concept; provided, however, that Borrower may cease operations at a particular Site during the course of a Restoration, to the extent that operations cannot reasonably be conducted during such Restoration; and (b) maintain each Site, including all buildings and other improvements associated with the Site, in good condition and repair, ordinary wear and tear excepted and safe and properly lighted.  Borrower will set aside and maintain adequate reserves for repair, replacement and maintenance of each Site. 

Compliance with Applicable Law; Permits.  Borrower will comply with all Applicable Law, except for such non-compliance as could not reasonably be expected to have a Material Adverse Effect.  Borrower will obtain and maintain in full force and effect at all times all permits that are required to use and operate each Site as a Permitted Concept,  including any required liquor licenses.

Payment of Indebtedness.  Borrower will, and will cause each Credit Party to, pay and discharge, when due and prior to delinquency, all of its Indebtedness, including, within 60 days of incurrence, all trade debt.

Books and Records.  Borrower will keep proper books and records in which complete and correct entries are made pursuant to GAAP and Applicable Law of all financial transactions and Borrower’s assets and business.

Inspections.  Each Credit Party shall, during normal business hours and upon reasonable advance notice (unless a Default shall have occurred and be continuing, in which case no notice shall be required and Lender shall have access at any and all times):  (a) provide access to each Site to the Lender Parties, and their representatives,  as often as Lender reasonably deems appropriate; and (b) permit the Lender Parties and their representatives to inspect, audit and make copies (or take originals if reasonably necessary) of such Credit Party’s books and records, and to inspect, review, evaluate and make physical inspections and appraisals of the Collateral in any manner and through any

medium that Lender considers advisable, and, in each such case, each Credit Party agrees to provide Lender, at Borrower’s cost and expense, such clerical and other assistance as Lender may reasonably request.

Estoppel Certificates.  From time to time and within 15 days after a request from Lender, Borrower will execute and deliver to Lender a certificate, in the form supplied by Lender, certifying (a) the unpaid principal of and interest on the Note as of the date of the certificate and whether Borrower or any other Credit Party claims any offset or defense against any such amounts; (b) whether, to the best of Borrower’s knowledge, there are then any existing Defaults by Borrower in the performance of its Obligations under any of the Loan Documents, and, if there are any such Defaults, specifying the nature and extent thereof; and (c) as to such other facts and circumstances as Lender may reasonably request.

Financial Reporting.

Quarterly Reports.  Within 45 days after the end of each Fiscal Quarter of Borrower (excluding the last Fiscal Quarter in each Fiscal Year), Borrower shall deliver to Lender:

Complete Financial Statements for the Fiscal Quarter then ended (other than for  individuals).  Financial Statements are to include standard hotel data of rooms sold and rooms available for the Fiscal Quarter, as well as gross revenue breakdown of room revenue from other revenue for such period, so that occupancy ADR and RevPAR statistics for such Fiscal Quarter can be calculated;

The Smith Travel Research Reports for such Fiscal Quarter; and

Copies of the most recent Franchisor quality assurance reports available to Borrower.

Annual Reports.  Within 90 days after the end of each Fiscal Year of Borrower, Borrower shall deliver to Lender:

Complete Financial Statements as outlined in clause (a) above for the Fiscal Year then ended;

Complete REIT Financial Statements for the Fiscal Year then ended; and

Budgets and projections, including for capital expenditures, for the operation of each Site for the current Fiscal Year, in form and content reasonably satisfactory to Lender.

Other Information.  Within 15 days following Lender’s written request, Borrower will also deliver to Lender such additional Financial Statements and information (financial or otherwise) as Lender may reasonably request from time to time, to verify compliance with the terms and conditions of the Loan Documents, including any financial covenants.

Financial Statement Requirements.  All Financial Statements, other than Financial Statements for Credit Parties that are individuals or trusts, shall be prepared in accordance with GAAP on a consistent basis from period to period.  The Financial Statements need not be audited, but Borrower shall deliver to Lender copies of any audited Financial Statements which may be prepared, as soon as they are available.  “Financial Statements” means, for each of (i) Landlord Borrower, (ii) Tenant Borrower, (iii) Landlord Borrower and Tenant Borrower on a consolidated basis, and (iv) each other Credit Party that is an entity, a consolidated and consolidating balance sheet, including retained earnings, as of the end of the relevant fiscal period, together with related consolidating profit and loss statements, cash flows (if available), shareholders’ equity, and all related schedules for the fiscal period then ended; provided, however, quarterly Financial Statements will not require statements of retained earnings or cash flows unless requested by Lender.  In those cases where a Credit Party is an individual or a trust, Financial Statements shall also include statements of assets and liabilities, statements of trust property (if the Credit Party is a trust), tax returns, and such other information as Lender may reasonably request.  “REIT Financial Statements” means for Lodging Fund REIT III, Inc.a consolidated and consolidating balance sheet, including retained earnings, as of the end of the relevant fiscal period, together with related consolidating profit and loss statements, cash flows (if available), shareholders’ equity, and all

related schedules for the fiscal period then ended, such consolidated statements to be audited by an independent certified public accountant of nationally recognized standing reasonably acceptable to Lender. “Fiscal Quarter” and “Fiscal Year” means, respectively, the quarterly accounting periods and the annual accounting periods of Borrower consistent with the Borrower’s accounting and reporting practices in effect on the Closing Date.

Tax Returns.  Borrower shall deliver to Lender true and complete copies of all Tax Returns filed by Borrower, or if Borrower is a disregarded entity for tax purposes, by such Borrower’s sole member, during each Fiscal Year on or before the earlier of (i) 30 days after filing such Tax Returns with the appropriate Government Authorities; or (ii) November 15 of the succeeding Fiscal Year. Within 15 days following Lender’s written request, Borrower shall deliver to Lender true and complete copies of any requested Tax Returns filed by any other Credit Party.

Compliance Certificates.  Each delivery of Financial Statements shall be accompanied by a compliance certificate from each Credit Party, in the form of Exhibit 4.15(f) (a “Compliance Certificate”), duly executed by the treasurer, chief financial officer, or other appropriate officer of such Credit Party.

Financial Covenants.  Borrower shall comply with each of the following financial covenants:

(a) Debt Service Coverage Ratio.  Borrower must maintain a Debt Service Coverage Ratio of at least 1.30:1, measured as of (i) March 31, 2021, and (ii) the last day of each Fiscal Quarter of Borrower’s next succeeding Fiscal Quarters throughout the Loan term.

(a) Debt Yield.  Borrower must maintain a Debt Yield of at least 10.0%, measured as of (i) March 31, 2021,and (ii) the last day of each Fiscal Quarter of Borrower’s next succeeding Fiscal Quarters throughout the Loan term.

Notice of Litigation and Other Defaults.  Borrower will give prompt written notice to Lender of the following of which Borrower has knowledge:  (a) any lawsuit or proceeding instituted by or against it in any court or before any arbitrator, commission or regulatory body or any such proceeding which is threatened against it; (b) any other action, event or condition of any nature which could reasonably be expected to have a Material Adverse Effect, or which, with notice or lapse of time or both, would constitute an event of default or a default under any other instrument or agreement to which it is a party or by or to which it or any of its assets may be bound or subject; and (c) the occurrence of any Default and the action Borrower proposes to take with respect thereto.

Single Purpose Entity Requirements.  Borrower shall comply with the following requirements and cause its organizational documents to include the following provisions, as required by Lender:  (a) Borrower shall not engage in any business or activity other than the acquisition, ownership, operation, maintenance, development and improvement of the Site and activities incidental thereto; (b) Borrower shall not acquire or own any material asset other than the Site and such incidental equipment and other personal property as may be necessary for the operation of the Site; (c) Borrower shall not commingle its assets with the assets of any of its Affiliates or of any other Person or transfer any assets, including pursuant to any statutory division, to any such Person other than transfers and distributions on account of equity interests in the Borrower permitted pursuant to the Loan Documents; (d) Borrower shall not allow any Person to pay its debts and liabilities (except Guarantor) or fail to pay its debts and liabilities solely from its own assets; (e) Borrower shall not fail to maintain its records, books of account and bank accounts separate and apart from those of its Affiliates and any other Person; (f) Borrower shall not fail to correct any known misunderstandings regarding the separate identity of Borrower; (g) Borrower shall not hold itself out to be responsible or pledge its assets or credit worthiness for the debts of another Person or allow any Person to hold itself out to be responsible or pledge its assets or credit worthiness for the debts of the Borrower (except for Guarantor); (h) Borrower shall not make any loans or advances to any Person, including any Affiliate of Borrower; (i) Borrower shall not fail to file its own tax returns or to use separate contracts, purchase orders, stationery, invoices and checks; (j) Borrower shall not fail either to hold itself out to the public as a legal entity separate and distinct from any other Person or to conduct its business solely in its own name in order not to mislead others as to the Person with which such other party is transacting business, or to suggest that Borrower is responsible for the debts of any third party (including any Affiliate of Borrower); (k) Borrower shall not fail to allocate fairly and reasonably among Borrower and any third party (including any Guarantor) any overhead for common employees, shared office space or other overhead and

administrative expenses; (l) Borrower shall not allow any Person to pay the salaries of Borrower’s employees or fail to maintain a sufficient number of employees for Borrower’s contemplated business operations; (m) Borrower shall not fail to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; (n) Borrower shall not share any common logo with or hold itself out as or be considered as a department or division of any Affiliate of Borrower or any other Person or allow any Person to identify Borrower as a department or division of that Person; (o) Borrower shall not conceal assets from any creditor, or enter into any transaction with the intent to hinder, delay or defraud creditors of the Borrower or the creditors of any other Person; (p) Borrower shall not incur, create or assume any indebtedness or liabilities other than the Loan and any swap, derivative, foreign exchange or hedge transaction or arrangement or similar transaction or arrangement entered into by Borrower in connection with the Loanand unsecured trade payables incurred in the ordinary course of its business that are related to the ownership and operation of the Site and the Collateral not to exceed two percent (2%) of the outstanding balance of the Loan, and which is not evidenced by a note and which must be paid within sixty (60) days and which are otherwise expressly permitted under the Loan Documents; (q) no indebtedness, other than the Secured Obligations, may be secured by the Site; (r) Borrower shall not, to the fullest extent permitted by law, engage in any dissolution, liquidation, consolidation, merger, sale, statutory division or other transfer of any of its assets outside the ordinary course of Borrower’s business; (s) Borrower shall not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other), including pursuant to any statutory division, or own any equity interest in any other entity; (t) Borrower shall not, without the unanimous written approval of all members of Borrower, (i) file any insolvency, or reorganization case or proceeding, (ii) institute proceedings to have Borrower be adjudicated bankrupt or insolvent, (iii) institute proceedings under any applicable insolvency law, to seek any relief under any law relating to relief from debts or the protection of debtors, (iv) consent to the filing or institution of bankruptcy or insolvency proceedings against Borrower, (v) file a petition seeking, or consent to, reorganization or relief with respect to Borrower under any applicable federal or state law relating to bankruptcy or insolvency, (vi) seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official of or for Borrower or a substantial part of its property, (vii) make any assignment for the benefit of creditors of Borrower, (viii) admit in writing Borrower’s inability to pay its debts generally as they become due, or (ix) take action in furtherance of any of the foregoing; (t) Borrower shall comply with all organizational formalities necessary to maintain its separate existence; (u) Borrower shall not enter into any transaction with any Affiliate except on an arm’s-length basis on terms which are intrinsically fair and no less favorable than would be available for unaffiliated third parties, and pursuant to written, enforceable agreements; or (v) Borrower shall cause the managers, officers, employees, agents and other representatives of Borrower to act at all times with respect to Borrower consistently and in furtherance of the foregoing and in the best interests of Borrower.

Hotel Lease Obligations.  Borrower will timely comply with and perform all obligations under the Hotel Lease, and will give Lender prompt written notice of the occurrence of any default under such Hotel Lease.  Borrower will send Lender copies of all notices given under the Hotel Lease.  Borrower will keep the Hotel Lease in full force and effect and will exercise all available options under the Hotel Lease, such that the term of the Hotel Lease, as extended, will not expire prior to the Maturity Date (as defined in the Note) for the Loan.

Beneficial Ownership Regulation. Borrower shall (a) notify Lender of any change in the information provided in the Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified therein (or, if applicable, the Borrower ceasing to fall within an express exclusion to the definition of “legal entity customer” under the Beneficial Ownership Regulation) and (b) promptly upon the reasonable request of Lender, provide Lender, as the case may be, with any information or documentation requested by it for purposes of complying with the Beneficial Ownership Regulation.

NEGATIVE COVENANTS

Until such time as all Obligations are fully paid and performed:

No Name or Other Organizational Changes.  No entity Credit Party shall (a) amend, restate, supplement, or terminate its organizational documents in a manner that could reasonably be expected to have a Material Adverse Effect; or (b) change any of the following from what it is as of the Closing:  (i) its name; (ii) its place of business or, if there is more than one principal place of business, its chief executive office; (iii) its mailing address; (iv) the location of its books and records; (v) the type of legal entity that it is; (vi) the organization identification number issued by its state of incorporation or organization, if it has one; however if such Credit Party does not have such a number and

later obtains one, such Credit Party will immediately notify Lender of such number; or (vii) its state of incorporation or organization, without, in each instance, giving Lender at least 45 days’ prior written notice thereof and taking all actions deemed necessary or appropriate by Lender to continuously protect and perfect Lender’s Liens in the Collateral.

Accounting Changes.  No Credit Party shall change its accounting treatment, or reporting practices, except as required by GAAP or Applicable Law and then only after giving effect to Section 8.23 or change its Fiscal Year from that in effect on the date hereof.

Maintenance of Existence; Consolidations and Mergers.  No entity Credit Party shall dissolve, liquidate, or otherwise cease to exist or merge, consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person; provided, however, that the foregoing shall not operate to prevent a transaction that results in the Obligations being paid and performed in full.

Business and Operational Changes.  No Credit Party shall (a) make any changes in any of such Credit Party’s business objectives, purposes, or operations that could reasonably be expected to adversely affect repayment of the Obligations or that could reasonably be expected to have a Material Adverse Effect; (b) carry on any business, operations or activities substantially different from those carried on by such Credit Party at the date hereof, including business, operations and activities reasonably related thereto; or (c) by itself or through any sale, lease or other transfer, convert any Site or other Collateral to an alternative use.

No Liens.  No Credit Party shall incur, maintain or otherwise suffer to exist any Lien upon or with respect to any Collateral, except for Permitted Exceptions.

Franchise Agreement Changes.  No Credit Party shall:  (a) agree to any Franchise Agreement amendment that could reasonably be expected to materially and adversely affect (i) the rights and privileges of the franchisee thereunder; or (ii) the rights, privileges, and remedies of Lender under the Loan Documents with respect to the Collateral or the Franchise Agreement; or (b) assign, transfer, mortgage, pledge or otherwise encumber any Franchise Agreement or any interest therein to any Person other than Lender.  Borrower will send Lender a copy of all Franchise Agreement amendments promptly following execution thereof by all parties thereto.

Management Agreement Changes.  No Credit Party shall (a) agree to any Management Agreement amendment that (i) could reasonably be expected to materially and adversely affect the rights and privileges of the owner thereunder or the rights, privileges, and remedies of Lender under the Loan Documents with respect to the Collateral or the Management Agreement; or (ii) that would be inconsistent with the operational restrictions set forth in Section 5.4; (b) assign, transfer, mortgage, pledge or otherwise encumber the Management Agreement or any interest therein to any Person other than Lender; (c) make any change in Manager; or (d) become obligated with respect to any other Contractual Obligation for the maintenance or operation of any Site or for providing services in connection with such Site, other than the Management Agreement and other agreements entered into in the ordinary course of business and on normal and customary terms.  Borrower will send Lender a copy of all Management Agreement amendments promptly following execution thereof by all parties thereto.

Prohibited Transactions.  No Credit Party shall do or permit to be done, voluntarily or involuntarily, or by operation of law or otherwise, any of the following (each, a “Prohibited Transaction”) without the prior written consent of Lender, in its sole discretion:  (a) sell, lease, mortgage, pledge, license, assign, transfer, or otherwise encumber or dispose of any Collateral to any Person, except for (i) sales of inventory in the ordinary course of business; and (ii) so long as no Default has occurred and is continuing, sales or other dispositions of obsolete equipment consistent with past practices, so long as such items are replaced by items of equal or greater value and utility; (b) sell, mortgage, pledge, assign, transfer, or otherwise encumber or dispose of its interest in this Agreement or the other Loan Documents; (c) engage in or allow a change of Control of any Credit Party to occur, including a change resulting from (i) direct or indirect transfers of beneficial ownership of, or the right and power to vote, stock or partnership, membership or other ownership interests, whether in one or a series of transactions; or (ii) creation or issuance of new or additional equity interests; (d) pledge, assign, or otherwise encumber or dispose of any interest in any Credit Party as collateral for any obligation of a Credit Party or any other Person; or (e) enter into any agreement to do, or which would or could result in, any of the foregoing.

Affiliate Transactions; Use of Funds.  No Credit Party shall enter into a transaction between such Credit Party and another Credit Party or any Affiliate of any Credit Party unless the transaction is on terms substantially as advantageous as those which could be obtained in a comparable arm’s length transaction with an independent third party.  Borrower shall not use any proceeds of the Loan or the Collateral for personal, family, or household purposes.  No Credit Party shall use any portion of the Loan proceeds, directly or indirectly, to purchase or carry “margin stock” as defined in Regulation T, U or X of the Federal Reserve Board or repay or otherwise refinance Indebtedness of any Credit Party or others incurred to purchase or carry such margin stock, or otherwise in any manner which is in contravention of any Applicable Law or in violation of this Agreement.

Equity Distributions.  Borrower shall not make any dividend or distribution for or on account of equity interests in Borrower if, either before or after giving effect to such dividend or distribution, a Default or Event of Default would occur or has occurred and is continuing.

ERISA.  Borrower shall not establish, maintain or incur any Liabilities with respect to, any ERISA employee benefit plan or multiemployer plan.

No Further Indebtedness.  Borrower shall not create, incur, assume, permit to exist, or otherwise become or remain directly or indirectly liable with respect to any Indebtedness, other than (a) the Obligations and trade indebtedness incurred in the ordinary course of business provided, that such trade indebtedness shall be unsecured trade payables incurred in the ordinary course of its business that are related to the ownership and operation of the Site and the Collateral not to exceed two percent (2%) of the outstanding balance of the Loan, and which is not evidenced by a note and which must be paid within sixty (60) days and which are otherwise expressly permitted under the Loan Documents; (b) obligations of Borrower existing or arising under any Related Swap Contract in form and substance satisfactory to Lender entered into by Borrower in connection with the Loan; and (c) obligations of Borrower existing or arising under any other Swap Contract entered into by Borrower in connection with the Loan provided that (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for purposes of speculation or taking a “market view;” and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party.

Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws. No Credit Party or their Affiliates shall: (a) use any of the Loan proceeds for the purpose of: (i) providing financing to or otherwise making funds directly or indirectly available to any Sanctioned Person; or (ii) providing financing to or otherwise funding any transaction which would be prohibited by Sanctions or would otherwise cause Lender or Borrower, or any entity affiliated with Lender or Borrower, to be in breach of any Sanction; (b) fund any repayment of the Loan with proceeds derived from any transaction that would be prohibited by Sanctions or would otherwise cause Lender or Borrower, or any entity affiliated with Lender or Borrower, to be in breach of any Sanction; or (c) provide financing to or otherwise fund any transaction which would be prohibited by Anti-Corruption Laws or would otherwise cause Lender or Borrower, or any entity affiliated with Lender or Borrower, to be in breach of any Anti-Corruption Laws.  Each Credit Party shall, at all times, comply, and cause its Affiliates to comply, with all AML Requirements. Borrower shall notify Lender in writing not more than one (1) Business Day after becoming aware of any breach of this Section.

Hotel Lease Changes.  Borrower shall not, without the prior written consent of Lender, in its reasonable discretion:  (a) agree to any amendment to the Hotel Lease that (i) could reasonably be expected to materially and adversely affect the rights and privileges of Borrower thereunder or the rights, privileges, and remedies of Lender under the Loan Documents with respect to the Collateral or the Hotel Lease; or (ii) that would be inconsistent with the operational restrictions set forth in Section 5.4; (b) enter into any sublease with respect to the Site; (c) assign, transfer, mortgage, pledge or otherwise encumber the Hotel Lease or any interest therein to any Person other than Lender; or (d) terminate the Hotel Lease.  Borrower will send Lender a copy of all Hotel Lease amendments promptly following execution thereof by all parties thereto.

DEFAULTs AND REMEDIES

Defaults.  The following constitute events of default (each, an “Event of Default”):

Non-Payment.  The Borrower or any other Credit Party fails to pay within five (5) days after the same becomes due (i) any amount of principal of any Loan, (ii) any interest on any Loan or any fee due hereunder, or (iii) any other amount payable hereunder or under any other Loan Document.

Misrepresentations.  If any representation or warranty of any Credit Party contained in any of the Loan Documents was untrue or incorrect in any material respect when made or deemed made, or if a Credit Party renders any statement or account which is untrue, incorrect, or incomplete in any material respect.

Certain Covenant Breaches.  If Borrower (i) shall fail to maintain insurance in accordance with the requirements of this Agreement or any of the other Loan Documents; (ii) shall fail to perform or observe any term, covenant or agreement contained in any of Sections 4.1, 4.10, 4.13, 4.15, 4.16, 4.17, 4.18 or 4.20; or (iii) breaches any of the covenants contained in Article 5.  An Event of Default under clause (ii) or clause (iii) shall conclusively be deemed to be a continuing Event of Default until Lender, in its sole discretion, waives such Event of Default in writing.

Non-Monetary Events of Default.  If any Credit Party fails to observe or perform any of the covenants, conditions, or obligations of this Agreement or any of the other Loan Documents, other than those referred to in the other subsections of this Section 6.1, and such failure continues without being fully cured for more than 30 days following written notice to such Credit Party of such failure.  However, if such failure is not willful or intentional, does not place any rights or interest in any Collateral in immediate jeopardy, and is within the reasonable power of such Credit Party to promptly cure after receipt of notice thereof, all as determined by Lender in its reasonable discretion, then such failure shall not constitute an Event of Default (unless otherwise expressly provided) if during such 30-day period, such Credit Party begins to cure the failure and then diligently pursues the cure to completion, except that in no event will the cure period under this subsection exceed 90 days from the date such Credit Party receives the notice from Lender.  If such Credit Party fails to cure such failure within the time periods provided in this subsection, an Event of Default shall be deemed to have occurred without further notice or demand of any kind being required.

Dissolution. Any Credit Party that is an entity is dissolved or its existence is terminated or there is commenced against any such Credit Party any action or proceeding which seeks as one of its remedies the dissolution of such Credit Party or termination of its existence.

Bankruptcy, Insolvency, and Certain Other Proceedings.  Occurrence of any of the following:

Insolvency; Business Cessation.  Any Credit Party (A) ceases to be Solvent; (B) generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (C) voluntarily ceases to conduct its business in the ordinary course; or (D) takes any action to effectuate or authorize any of the foregoing;

Insolvency Proceedings.  Any Credit Party shall institute or have instituted against it any proceeding or other action under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship, receivership, or relief of debtors, (A) seeking to adjudicate it bankrupt or insolvent; (B) seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, composition of it or its debts or any similar order; or (C) seeking entry of an order for relief or appointment of a custodian, receiver, trustee, conservator, liquidating agent, liquidator, or other official with similar powers, for it or for any substantial part of its property; and in the case of any such proceeding or other action instituted against (but not by or with the consent of) such Credit Party, either (i) such proceeding or action shall remain undismissed or unstayed for a period of 60 days or more; or (ii) any action sought in such proceedings shall occur;

Failure of Enforceability or Lien.  If (A) any provision of any Loan Document shall, at any time after the delivery of such Loan Document, fail to be valid and binding on, or enforceable against, a Credit Party; (B) any Loan Document purporting to grant a Lien to secure any Obligation shall, at any time after the delivery thereof, fail to create a valid and enforceable Lien on any Collateral purported to be covered thereby; (C) any such Lien shall fail or cease to be a perfected Lien with the priority required

in the relevant Loan Document; or (D) a Credit Party shall state in writing that any of the events described in the preceding clauses of this subsection has occurred; or

Actions in Furtherance.  Any Credit Party shall take any action to authorize or effectuate, or otherwise further, any action or circumstance described in the preceding clauses of this Section 6.1(f).

Death or Incompetency of Guarantor.  A Guarantor dies or becomes incompetent; provided, however, that in the event of a death or incompetency, an Event of Default shall not occur if either (i) such Guarantor's estate or conservator, as applicable, assumes unconditionally the obligations arising under the Guaranty in a manner satisfactory to Lender, and Lender determines in its reasonable discretion that such deceased Guarantor's estate or Guarantor, through Guarantor's conservator, as applicable, maintains a tangible net worth and liquidity that is not less than the tangible net worth and liquidity of the applicable Guarantor at such Guarantor's death or incompetency, or (ii) a substitute Guarantor acceptable to Lender, in Lender's sole and absolute discretion, is provided within 30 days of such death or incompetence.

Litigation.  A final judgment or judgments for the payment of money shall be rendered against any Credit Party, unless (i) the same shall be (A) fully covered by insurance and the issuer(s) of the applicable policies shall have acknowledged full coverage in writing within 30 days of judgment or (B) vacated, stayed, bonded, paid or discharged within a period of 45 days from the date of such judgment; or (ii) payment of such money judgment would not have a Material Adverse Effect.

Other Defaults.  If (i) a default occurs in the payment or performance when due (after giving effect to any applicable notice and grace periods), whether by acceleration or otherwise, of any Indebtedness or other material Contractual Obligation of any Credit Party; (ii) the Franchise Agreement, the Management Agreement or the Hotel Lease terminates or expires prior to the performance and payment in full of the Loan; or (iii) any other event or circumstance designated elsewhere in this Agreement or the other Loan Documents as an Event of Default shall occur.

Breach of Sanctions Provisions.  The failure of any representation or warranty of Borrower, or Borrower’s or any Credit Party’s failure to perform or observe any covenant, contained in either of those Sections of this Agreement entitled “Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws” or “Sanctions”.

Crimes and Forfeitures.  Any officer, director, manager, or owner of a Credit Party shall be charged with, indicted for, or convicted of a crime (other than misdemeanor traffic violations), a punishment for which could include the forfeiture of any assets of such Credit Party or of any equity interest in such Credit Party, the loss of eligibility for any permit, imprisonment, or a material fine or other material monetary penalty.

Cross-Default.  There occurs under any Related Swap Contract any default or event of default under such Related Swap Contract as to which the Borrower or any Credit Party is the defaulting party.

Remedies.  Upon the occurrence and during the continuance of an Event of Default, Lender may declare all or any part of the Obligations to be due and payable without presentment, demand, protest or further notice of any kind.  Upon any Event of Default described in Section 6.1(f), all of the unpaid principal of the Loan, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document shall be immediately due and payable.  Borrower waives any notice of intent to accelerate payment of such principal, interest or amounts, and notice of such acceleration.  In connection with any acceleration of all or any part of the Obligations under this Section 6.2, Borrower shall pay Breakage Costs (as defined in the Note) as liquidated damages for loss of a bargain and not as a penalty as calculated as set forth in the Note. In addition, Lender may exercise, at its option, concurrently, successively or in any combination, all rights and remedies now or in the future available under any of the Loan Documents or at law or in equity, and none of such rights or remedies are exclusive.  Neither the acceptance of this Agreement nor its enforcement shall prejudice or in any manner affect Lender’s rights to realize upon or enforce its rights with respect to any security now or in the future held by Lender, and Lender is entitled to enforce this Agreement and its rights and remedies with respect to any such security in such order and manner as it may in its sole discretion determine.

No Waiver or Cure.  Neither the application of a default rate of interest in the circumstances described in the Note or any of the other Loan Documents nor the imposition of any late fee shall be interpreted to extend any cure period set forth in the Note or any other Loan Document; to cure any Default; or to otherwise limit or waive any of Lender’s rights or remedies under this Agreement, the Note, or any other Loan Document.

Full Payment Required.  The acceptance by Lender of any sum after the same is due shall not constitute a waiver of the right either to require prompt payment, when due, of all other sums hereby secured or to declare a subsequent Event of Default.  The acceptance by Lender of any sum in an amount less than the sum then due shall be deemed to be an acceptance on account only and upon condition that it shall not constitute a waiver of Borrower’s obligation to pay the entire sum then due, and Borrower’s failure to pay such entire sum then due shall, at Lender’s election, constitute an immediate Event of Default without the necessity for any further notice, notwithstanding such acceptance of such amount on account.

Right to Cure; Interest; Late Fees.  Lender may (but has no obligation to) pay, perform, and discharge any and all costs, expenses and liabilities that are the responsibility of any Credit Party under any Loan Document, if such Credit Party fails to timely pay, perform or discharge the same after 10 days prior written notice to such Credit Party of Lender’s intent to take such action.  All amounts reasonably expended by Lender in so doing shall (a) be part of the Obligations, secured by Lender’s Liens; (b) bear interest at the default interest rate applicable to the Loan from the date Lender made payment until paid; and (c) be immediately due and payable to Lender on demand.  All other amounts at any time owed by any Credit Party to Lender, other than amounts due and payable pursuant to the Note, shall bear interest at the default interest rate applicable to the Loan from the date due until paid.  Late fees shall be due and payable as provided in the Note.

LENDER TRANSFERS

Lender Transfers.  Lender, from time to time and without the consent of any Credit Party, may assign, sell, or transfer all or any portion of its right, title, and interest, including servicing rights, in the Loan or the Loan Documents, in each case whether as part of a securitization or by participation, assignment, sale or other transfer (each, a “Lender Transfer,” with the interests that are the subject of the Lender Transfer being referred to as the “Transferred Interests”).  From and after the date of a Lender Transfer, Lender shall automatically be released from liability for the performance of any obligation arising out of or relating to the Transferred Interests.  Each Credit Party shall execute such modifications to the Loan Documents or other documents as shall, in Lender’s reasonable judgment, be necessary or desirable in connection with any Lender Transfer.  Upon a Lender Transfer (including transfer of a participation interest) of less than all of the Loan (a “Partial Assignment”), each Credit Party agrees that:  (a) Lender may become a fiscal agent, administrative agent, or servicer of the Loan or may delegate servicing or agent responsibilities to another Person; (b) the granting of consents or approvals pursuant to the Loan Documents may require the compliance with participation agreements, servicing agreements, co-lending agreements or other agreements governing the Partial Assignment, including the joinder or agreement of other Persons holding an interest pursuant to the Partial Assignment or providing servicing with respect to the Loan; and (c) Lender will not be in breach or violation of this Agreement or the other Loan Documents or be deemed to have acted unreasonably after a Partial Assignment if Lender withholds a consent or approval by reason of Lender’s inability to obtain the required joinder or agreement of such other Persons.

GENERAL PROVISIONS

Defined Terms; Applicability of General Provisions.  Capitalized terms used herein and in the other Loan Documents and not otherwise defined herein or therein have the meanings set forth on the “Schedule of Defined Terms” attached as Exhibit 8.1.  The Schedule of Defined Terms also includes various rules of construction and interpretation that the parties agree are applicable to each Loan Document.  Unless otherwise specifically provided, all terms defined herein, on the Schedule of Defined Terms, or in any other Loan Document shall have the same defined meanings when used in any certificate or other document made or delivered pursuant hereto or thereto.  Terms (including uncapitalized terms) not otherwise defined herein and that are defined in the UCC shall have the meanings therein provided.  The provisions of this Article and the Schedule of Defined Terms apply equally to each Loan Document and each Credit Party, the same as if such provisions were set forth in full in each other Loan Document.

Modifications, Approvals, Waivers and Consents.  None of the terms and provisions of this Agreement or the other Loan Documents may be amended, extended, renewed, terminated, or supplemented, nor shall Lender have

waived any of its rights under any of the Loan Documents, by any course of dealing or other action or inaction of the parties, unless and until the Credit Parties obtain Lender’s prior written consent with respect to any such matter, which consent may be withheld or conditioned in Lender’s sole discretion, unless otherwise expressly provided in the Loan Documents.  Lender’s approval or waiver of, or consent to, any matter shall not be deemed an approval or waiver of, or consent to, the same or any other matter on any future occasion.  All approvals, waivers, and consents granted by Lender for any matter shall be narrowly construed to cover only the parties and facts identified in such approval, waiver or consent.  No failure to exercise and no delay in exercising, on Lender’s part, any right, remedy, power or privilege hereunder or pursuant to any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or pursuant to any other Loan Document preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

Binding Effect.  Each of the Loan Documents shall become effective when executed by the required Credit Parties and Lender and shall be binding upon and inure to the benefit of the Credit Parties and Lender, and, in each case, their respective heirs, executors, representatives, successors and permitted assigns.

Costs, Expenses and Fees.  Any action taken by a Credit Party with respect to the Loan or any Loan Document, even if required thereunder or at Lender’s request, shall be at Borrower’s sole cost and expense.  Borrower agrees to pay Lender, or reimburse Lender within 10 days of written demand therefor, for all reasonable out-of-pocket costs and expenses, including reasonable attorneys’ fees and expenses, incurred by or on behalf of the Lender Parties in connection with:  (a) the interpretation or administration of the Loan and Loan Documents, including Lender’s evaluation of, and determinations with respect to, any conditions precedent that must, at any time, be satisfied by Borrower; (b) the preparation, negotiation, execution, and consummation of any modification, termination, or waiver of any Loan Document, including any commitment or proposal letter related thereto; (c) any request for Lender consent to or approval of any matter; (d) internal audit reviews, field inspections, Collateral examinations, and Collateral releases and substitutions; (e) any refinancing or restructuring of the Loan in the nature of a “work-out”; (f) the enforcement or preservation of any right or remedy under any Loan Document or with respect to any Obligation or the Collateral, or any other related right or remedy, whether at law or in equity; (g) the commencement, defense, conduct of, intervention in, or the taking of any other action with respect to, any proceeding (including any bankruptcy or insolvency proceeding) related to any Credit Party, any Loan Document, any Collateral, or any Obligation (including preparation for and/or response to any subpoena or request for document production relating thereto); and (h) any other matter stated herein or in any other Loan Documents to be at the expense of Borrower or any other Credit Party.  Lender may charge, and Borrower agrees to pay, a reasonable processing and review fee in connection with the foregoing matters.  Lender may also charge Borrower such additional fees as Lender may require, as consideration to Lender in connection with, and as a condition precedent to, any such matter.  From time to time, Lender may impose fees or charges, which Borrower agrees to pay, for returned checks, multiple payoff quotes, additional document copies, processing non-ACH payments, release fees, and such other services as it may provide to any Credit Party during the term of the Loan.

Broker Involvement. Borrower represents and warrants to and covenants with Lender that no Credit Party has dealt with any broker, agent, finder or other intermediary, and Lender represents and warrants to and covenants with Borrower that no Lender Party has dealt with any broker, agent, finder or other intermediary, in each case in connection with the Loan and the transactions contemplated by this Agreement and the other Loan Documents.

Indemnities.  Borrower agrees to indemnify, hold harmless and defend each of the Lender Parties (each, an “Indemnitee”) for, from and against all Liabilities that may be imposed on, incurred by or asserted against an Indemnitee in any matter relating to or arising out of:  (a) any Loan Document or Obligation (or repayment thereof) or the use of Loan proceeds; (b) the Lending Proposal, or any other commitment letter, proposal, or term sheet with any Person; (c) Borrower’s operations at or relating to the Sites; (d) the Collateral, including its design, construction, operation, alteration, maintenance, or use by Borrower or any other Person; (e) any permitted disclosure of Credit Party Information; (f) any misrepresentation or inaccuracy in any representation or warranty in any Loan Document; (g) any breach or failure by any Credit Party to pay or perform the Obligations; or (h) any other act, event or transaction related, contemplated in or attendant to any of the foregoing, including any actual or prospective investigation, litigation or other proceeding relating to any of the foregoing, whether or not such Indemnitee initiated such investigation, litigation or other proceeding or is a party thereto and without regard to legal theory, including pursuant to Applicable Law, common law, equity, contract, tort, or otherwise (collectively, the “Indemnified Matters”).  Notwithstanding the foregoing, Borrower shall not have any liability hereunder to any Indemnitee with respect to any

Indemnified Matter, to the extent such liability has resulted primarily from the gross negligence or willful misconduct of such Indemnitee, as determined by a court of competent jurisdiction in a final non-appealable judgment or order.  Furthermore, Borrower and each other Credit Party waive and agree not to assert against any Indemnitee, and shall cause each other Credit Party to waive and not assert against any Indemnitee, any right of contribution with respect to any Liabilities that may be imposed on, incurred by or asserted against any Lender Party.

Survival.  Any indemnification or other protection provided to a Lender Party pursuant to any Loan Document, all representations and warranties made in any Loan Document, the provisions of this Article 8, and all other provisions of the Loan Documents that are stated to survive, shall survive repayment in full and performance of the Obligations and inure to the benefit of any Person that at any time held a right thereunder and, thereafter, its successors and permitted assigns.

Limitation of Liability. In no event shall Lender, any Credit Party, or any Affiliate of Lender or any Credit Party be liable to any Person on any theory of liability for any special, indirect, consequential or punitive damages (including any loss of profits, business or anticipated savings).  Lender and each Credit Party hereby waive, release and agree (and shall cause each of its respective Affiliates to waive, release and agree) not to sue upon any claim for special, indirect, consequential or punitive damages, whether or not accrued and whether or not known or suspected to exist in its favor; provided, however, that nothing herein shall be deemed a waiver of Lender’s rights to sue upon or otherwise recover on all amounts due Lender under the Loan Documents, including with respect to the Obligations and the Collateral.

Relationship of the Parties.  The relationship between Lender, on the one hand, and the Credit Parties, on the other hand, is solely that of lender and creditor.  Lender has no fiduciary relationship or duty to any Credit Party arising out of or in connection with, and there is no agency, tenancy or joint venture relationship between Lender and any Credit Party by virtue of, any Loan Document or any transaction contemplated therein.  No Loan Document provision is intended, nor shall be deemed or construed, to make Lender in any way responsible for the debts, obligations or losses of any Credit Party.

Notices.  All notices, demands, requests, and other communications (collectively, “Notices”) required or authorized to be made by the Loan Documents shall be in writing and addressed (a) if to Borrower, to the notice address for the Borrower Representative as on the signature page hereto to such other address as the Borrower Representative may provide to Lender in a Notice given after the date hereof; (b) if to any other Credit Party, to the notice address for such Credit Party specified in the Loan Documents executed by such Credit Party or to such other address as such Credit Party may provide to Lender in a Notice given after the date hereof; and (c) if to Lender, at Lender’s notice address on the signature page hereto or to such other address as Lender may provide to the Credit Parties in a Notice given after the date hereof.  Notices may be given by hand delivery; by overnight delivery service, freight prepaid; or by U.S. mail, postage paid, and shall be effective and deemed to have been received (x) upon personal delivery to a responsible individual at the appropriate notice address, if Notice is given by hand delivery; (y) one Business Day after delivery to an overnight delivery service, if Notice is given by overnight delivery service; and (z) two Business Days following deposit in the U.S. mail, if Notice is given by U.S. mail.

Governing Law.  The laws of the State of NEW YORK (without giving effect to its conflicts of laws principles) shall govern all matters arising out of, in connection with or relating to this Agreement and the other Loan Documents, including its validity, interpretation, construction, performance and enforcement.

Jurisdiction and Service of Process.  Any legal action or proceeding with respect to any Loan Document shall be brought exclusively in the courts of the State of New York having proper venue, and Borrower accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts; provided, however, that nothing in this Agreement shall limit or restrict Lender’s right to commence any proceeding in the federal or state courts located in the state in which a particular Site is located to the extent Lender deems such proceeding necessary or advisable to exercise remedies available under any Loan Document.  Lender and Borrower hereby irrevocably waive any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, that either of them may now or hereafter have to the bringing of any such action or proceeding in such jurisdictions.  Borrower hereby (a) irrevocably waives personal service of any and all legal process, summons,

notices and other documents of any kind; (b) consents to such service in any suit, action or proceeding brought in the United States by any means permitted by Applicable Law, including by the mailing thereof to Borrower’s address specified on the signature page hereto; and (c) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Applicable Law.

Waiver of Jury Trial.  LENDER AND EACH CREDIT PARTY, TO THE MAXIMUM EXTENT PERMITTED BY LAW, WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF, IN CONNECTION WITH OR RELATING TO, THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND ANY OTHER TRANSACTION CONTEMPLATED HEREBY AND THEREBY.  THIS WAIVER APPLIES TO ANY ACTION, SUIT OR PROCEEDING WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE.

Arbitration.

Arbitration.  The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise in any way arising out of or relating to (i) any credit subject hereto, or any of the Loan Documents, and their negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination; or (ii) requests for additional credit.  In the event of a court ordered arbitration, the party requesting arbitration shall be responsible for timely filing the demand for arbitration and paying the appropriate filing fee within 30 days of the abatement order or the time specified by the court. Failure to timely file the demand for arbitration as ordered by the court will result in that party’s right to demand arbitration being automatically terminated.

Governing Rules.  Any arbitration proceeding will (i) proceed in a location in the State selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “Rules”).  If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control.  Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute.  Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law.

No Waiver of Provisional Remedies, Self-Help and Foreclosure.  The arbitration requirement does not limit the right of any party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding.  This exclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph.

Arbitrator Qualifications and Powers.  Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00.  Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations.  The arbitrator will be a neutral attorney licensed in the State or a neutral retired judge of the state or federal judiciary of the State, in either case with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated.  The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim.  In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator's discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication.  The arbitrator shall resolve all disputes in accordance with the substantive law of the State and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award.  The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the corresponding rules of civil practice and procedure applicable in the State or other applicable law.  Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction.  The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.

Discovery.  In any arbitration proceeding, discovery will be permitted in accordance with the Rules.  All discovery shall be expressly limted to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date.  Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party's presentation and that no alternative means for obtaining information is available.

Class Proceedings and Consolidations.  No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except parties who have executed any Loan Document, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity.

Payment Of Arbitration Costs And Fees.  The arbitrator shall award all costs and expenses of the arbitration proceeding.

Miscellaneous.  To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA.  No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation.  If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the Loan Documents or the subject matter of the dispute shall control.  This arbitration provision shall survive termination, amendment or expiration of any of the Loan Documents or any relationship between the parties.

Small Claims Court.  Notwithstanding anything herein to the contrary, each party retains the right to pursue in Small Claims Court any dispute within that court’s jurisdiction.  Further, this arbitration provision shall apply only to disputes in which either party seeks to recover an amount of money (excluding attorneys’ fees and costs) that exceeds the jurisdictional limit of the Small Claims Court.

Severability.  Any provision of any Loan Document being held illegal, invalid or unenforceable in any jurisdiction shall not affect any part of such provision not held illegal, invalid or unenforceable, any other provision of any Loan Document or any part of such provision in any other jurisdiction.

Document Execution.  This Agreement and the other Loan Documents may be executed in any number of counterparts and by different parties in separate counterparts, each of which, when so executed, shall be deemed an original and all of which, taken together, shall constitute one integrated agreement.  Signature pages may be detached from multiple separate counterparts and attached to a single counterpart.  Except as otherwise expressly provided in any Loan Document, the E-Transmission of an executed signature page to a Loan Document shall be as effective as delivery of a manually executed counterpart thereof.  The parties may, but are not required to, transmit or otherwise make or communicate any Loan Document as an E-Transmission, except that the Credit Parties shall deliver, as a further condition to Closing, live pen and ink signatures for those Loan Documents to be delivered on or before Closing, that Lender, in its sole discretion, designates as requiring live signatures.  From time to time after Closing, each Credit Party agrees to deliver to Lender, upon Lender’s request, a live pen and ink signature page for any Loan Document.  Where this Agreement or any other Loan Document, including any executed signature pages, is communicated by E-Transmission:  (a) this Agreement, such other Loan Document and such signature pages shall conclusively be deemed sufficient to satisfy any requirement for a “writing,” “authentication,” “signature,” or “original” pursuant to any Loan Document or Applicable Law and shall be admissible as an original in any legal proceeding arising out of or relating to this Agreement or any of the other Loan Documents; and (b) each such E-Transmission shall have the same legal effect as a live pen and ink signed paper original.  Neither Lender nor any Credit Party shall contest the validity or enforceability of any Loan Document, on the basis that such Loan Document, or one or more signatures hereto or thereto was the subject of an E-Transmission; provided, however, that nothing herein shall limit a party’s right to contest whether this Agreement or such other Loan Document has been altered after E-Transmission or whether the E-Transmission was delivered to an appropriate representative of Lender.  “E-Transmission” means the communication of any document, including signature pages, by e-mail or any system used to receive or transmit faxes electronically.

USA Patriot Act Notice, Compliance.  The USA Patriot Act of 2001 (Public Law 107-56) and federal regulations issued with respect thereto require all financial institutions to obtain, verify and record certain information that identifies individuals or business entities which open an “account” with such financial institution.  Consequently, Lender may from time-to-time request, and Borrower shall provide to Lender, Borrower’s name, address, tax identification number and/or such other identification information as shall be necessary for Lender to comply with federal law.  An “account” for this purpose may include, without limitation, a deposit account, cash management service, a transaction or asset account, a credit account, a loan or other extension of credit, and/or other financial services product.

Tombstones; Use of Lender Name.  Each Credit Party consents to the publication by Lender of any tombstones, press releases, advertising or other promotional materials (including via E-Transmission) relating to the financing transactions contemplated by this Agreement using such Credit Party’s name, product photographs, logo or trademark.  Lender shall provide a draft of any such press release, advertising or other promotional material to Borrower Representative for review and comment prior to the publication thereof.  Each Credit Party agrees not to issue any press release or other public disclosure using the name or logo of or otherwise referring to Lender or any of its Affiliates, the Loan Documents, or any transaction contemplated thereby, without Lender’s prior consent, except to the extent required to do so under Applicable Law and then only after consulting with Lender prior thereto.

Time of the Essence; Time Periods.  Time is of the essence for performance of the Obligations under each of the Loan Documents.  Unless otherwise expressly stated in a particular Loan Document, the time for performance of any obligation or taking any action under such Loan Document shall be deemed to expire at 5:00 o’clock p.m. on the last day of the applicable time period provided for in such Loan Document.  If the time for performance of any obligation or taking any action under such Loan Document expires on a day other than a Business Day, the time for performance or taking such action shall be extended to the next succeeding Business Day.  Unless otherwise expressly stated, references in any of the Loan Documents to a particular time of day shall be to Pacific time.

Right Of Setoff; Deposit Accounts.  Upon and after the occurrence  of an Event of Default, (a) Borrower hereby authorizes Lender, at any time and from time to time, without notice, which is hereby expressly waived by Borrower, and whether or not Lender shall have declared the Note to be due and payable in accordance with the terms hereof, to set off against, and to appropriate and apply to the payment of, Borrower's obligations and liabilities under the Note (whether matured or unmatured, fixed or contingent, liquidated or unliquidated), any and all amounts owing by Lender to Borrower (whether payable in U.S. dollars or any other currency, whether matured or unmatured, and in the case of deposits, whether general or special (except trust and escrow accounts), time or demand and however evidenced),

and (b) pending any such action, to the extent necessary, to hold such amounts as collateral to secure such obligations and liabilities and to return as unpaid for insufficient funds any and all checks and other items drawn against any deposits so held as Lender, in its sole discretion, may elect.  Borrower hereby grants to Lender a security interest in all deposits and accounts maintained with Lender to secure the payment of all obligations and liabilities of Borrower to Lender under the Loan Documents.

Authorization to Provide Information.  Each Credit Party authorizes its banks, creditors (including trade creditors), vendors, suppliers, Franchisor, Manager, and customers to disclose and release to the Lender Parties any and all information they may request from time to time regarding (a) any depository, loan or other credit account of such Credit Party; (b) the status of the Franchise Agreement and the Management Agreement; (c) the affairs and financial condition of such Credit Party, or any operator of the Sites; and (d) the business operations at the Sites, including Site level and entity level operating results.  Each Credit Party also expressly authorizes the Lender Parties, from time to time while any of the Obligations are outstanding to perform background, credit, judgment, lien and other checks, searches, inspections and investigations and to obtain personal and business credit reports and asset reports with respect to such Credit Party and to answer questions about its credit experience with such Credit Party.  All of the information which the Lender Parties obtain from time to time in accordance with this Section, together with all other information which the Lender Parties now possess or in the future may acquire with respect to any of the Credit Parties, the Collateral, the Loan, or the business operations at the Sites, whether pursuant to the Loan Documents or otherwise, is referred to as “Credit Party Information.”

Permitted Disclosures of Credit Party Information.  Each Credit Party authorizes the Lender Parties (each, an “Authorized Person”) to disclose Credit Party Information:  (a) to Franchisor upon the occurrence and during the continuation of a Default; (b) to any proposed transferee, purchaser, assignee, servicer, participant, lender, investor, ratings agency, or other Person with respect to any proposed Lender Transfer or sale of any of the Collateral; (c) to any other Authorized Person or any insurance or title company in connection with the transactions contemplated by the Loan Documents, including any action, suit, or proceeding arising out of, in connection with, or relating to, this Agreement or the other Loan Documents, the Loan, or any other transaction contemplated hereby; (d) to the extent such information is or becomes available to an Authorized Person from sources not known by such Authorized Person to be subject to disclosure restrictions; (e) to the extent disclosure is required by Applicable Law or other legal process or is requested or demanded by any Government Authority; and (f) as may otherwise be authorized in writing by Borrower. Borrower and each other Credit Party also authorize and consent to the use by the Authorized Persons of data relating to Borrower’s operations, including unit-level and corporate level operating results, to produce and distribute various industry statistical analyses and data compilations, provided that all such analyses and data compilations will be aggregated and will not be specifically attributable to the Sites, Borrower, any other Credit Party, or any operator or lessee of the Sites.  Each Credit Party agrees that the disclosures permitted by this Section and any other disclosures of Credit Party Information authorized pursuant to any of the Loan Documents may be made even though any such disclosure may involve the transmission or other communication of Credit Party Information from the nation of residence or domicile of such Credit Party or an Authorized Person to another country or jurisdiction, and each Credit Party waives the provisions of any data privacy law, rule, or regulation of any applicable Government Authority that would otherwise apply to the disclosures authorized in this Section.

Corrections and Insertions.  Lender may correct patent errors in the Loan Documents and fill in all blanks in this Agreement and the other Loan Documents consistent with the agreement of the parties.

Transaction Characterization.  The Loan Documents are a contract to extend a Financial Accommodation (as such term is used in the Bankruptcy Code) for Borrower’s benefit.

Further Assurances.  At any time and from time to time, upon Lender’s written request and at Borrower’s sole expense, Borrower shall promptly execute and deliver any and all such further instruments and documents and take such further action as Lender may reasonably deem necessary or advisable to (a) fully implement and obtain the full benefits of this Agreement and the other Loan Documents; (b) protect, preserve, maintain and enforce Lender’s rights in (and the priority of Lender’s Liens on) any Collateral; and (c) enable Lender to exercise all of its rights, remedies and powers granted in the Loan Documents.

Accounting Requirements.  All accounting terms shall be construed, and all accounting determinations required to be made pursuant to any Loan Document, including with respect to financial covenant compliance, shall, unless

otherwise expressly provided, be made, in accordance with GAAP.  However, if there is a change in GAAP following the date of this Agreement and that change is implemented by Borrower, such change shall not be given effect if such change would affect a calculation that measures compliance with, or entitles any Credit Party to any rights under, any provision of the Loan Documents unless Borrower and Lender agree in advance and in writing to modify such provisions to reflect such change.  Unless such provisions are modified, all Financial Statements, compliance certificates and similar documents provided pursuant to the Loan Documents shall be provided together with a reconciliation between the calculations and amounts set forth therein before and after giving effect to such change.  Notwithstanding any other provision contained herein or any of the other Loan Documents, all terms of an accounting or financial nature used in this Agreement or any of the other Loan Documents shall be construed, and all computations of amounts and ratios provided for in this Agreement or any of the other Loan Documents shall be made, without giving effect to any election under FAS 159 (ASC 825) (or any other financial accounting standard having a similar result or effect) to value any Indebtedness or other liabilities of any Credit Party at “fair value,” as defined therein.

Interpretation.  The Loan Documents shall be interpreted and construed in a fair and impartial manner without regard to such factors as which party prepared the document, the relative bargaining powers of the parties or a party’s domicile, but shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the parties.

Interpretative Rules.  Unless otherwise expressly provided or the context may otherwise require:  (a) the words “hereof”, “herein”, “hereunder” and words of similar import, when used in a Loan Document, shall refer to such Loan Document as a whole and not to any particular provision hereof or thereof; (b) in the computation of time periods from a specified date to a later specified date, the term “from” means “from and including” and the words “to” and “until” each mean “to but excluding” and the word “through” means “to and including” and the term “including” means “including without limitation”; (c) the term “incur” means incur, create, make, issue, assume or otherwise become directly or indirectly liable in respect of or responsible for, in each case whether directly or indirectly, and the terms “incurrence” and “incurred” and similar derivatives shall have correlative meanings; (d) the term “sole” means “sole and absolute”; (e) Article, Section, subsection, clause, Appendix, Exhibit, Schedule, and Table references in a Loan Document are to such items in or attached to such Loan Document; (f) references to a Loan Document include all exhibits, schedules, and appendices thereto and, unless Lender’s consent is required therefor but was not obtained, any amendment, restatement, or supplement thereto; (g) references to any statute, law, ordinance, regulation or rule are to such statute, law, ordinance, regulation or rule, as modified from time to time and to any successor to any such statute, law, ordinance, regulation or rule, in each case as in effect at the time any such reference is operative; (h) Article, Section, subsection, Appendix, Exhibit, Schedule and Table titles and other divisions contained in any Loan Document are without substantive meaning or content of any kind and are not a part of the agreement between the parties; (i)  the meaning of any term defined (including by reference) in any Loan Document shall be equally applicable to both the singular and plural forms of such term; and (j) references to days, months, and years are to calendar days, months, or years, unless otherwise defined.

Co-Borrower Provisions.

Joint and Several Liability.  References in this Agreement and the other Loan Documents to “Borrower” are to each Borrower signing this Agreement.  Each Borrower’s liability with respect to the Obligations is joint and several, notwithstanding the provisions of subsection (c) below, including any allocation of losses and liabilities pursuant to such subsection or otherwise.  Each Borrower is a direct, primary and independent obligor, and no Borrower shall be deemed to be a guarantor, accommodation party or otherwise secondarily liable for the Obligations.  Each Borrower represents and warrants to and covenants with Lender that (i) Borrowers are engaged in operations that require financing on a joint basis and, accordingly, each Borrower will materially benefit, directly or indirectly, from the Loan; (ii) the Loan has been offered to Borrowers on a joint basis and would not be available to Borrowers on an individual basis on the terms and conditions stated in this Agreement; and (iii) the benefits received by each Borrower are reasonably equivalent to the obligations undertaken by each Borrower.

Borrower Representative.  Each Borrower hereby appoints LF3 SOUTHAVEN TRS, LLC (“Borrower Representative”) as its representative and agent, and Borrower Representative accepts such appointment, for the purposes of (i) making the Closing Draw Request, including giving Lender disbursement instructions, wire and deposit instructions, and telephonic confirmations; (ii) delivering certificates, including compliance

certificates; (iii) selecting interest rate options, if applicable; (iv) giving and receiving all Notices and consents hereunder or under any of the other Loan Documents; (v) requesting and providing information with respect to accounts payable matters; financial reporting matters, property tax matters (if applicable); insurance matters, and all other account servicing matters; and (vi) taking all other actions (including in respect of compliance with covenants) on behalf of any Borrower or the Borrowers under the Loan Documents or otherwise with respect to the Loan.  Lender may regard any notice or other communication pursuant to any Loan Document from Borrower Representative as a notice or communication from all Borrowers.  Each warranty, covenant, agreement and undertaking made on behalf of a Borrower by the Borrower Representative shall be deemed for all purposes to have been made by such Borrower and shall be binding upon and enforceable against such Borrower to the same extent as if the same had been made directly by such Borrower. 

Obligations and Allocations among Borrowers.  If any Borrower (the “Overpaying Borrower”) pays (whether directly or by application of Collateral), or is otherwise held liable for, obligations in excess of the Pro Rata Share of the Overpaying Borrower, the other Borrowers will pay the amount of such excess to the Overpaying Borrower and will indemnify the Overpaying Borrower for, from and against any claims, damages, loss or liability arising from or related to such overpayment.  Borrowers agree to maintain books and records accurately reflecting each Borrower’s Pro Rata Share.  This subsection is only intended to allocate payments, losses, and liabilities among Borrowers in order that (i) as between Borrowers, each Borrower is ultimately liable for its Pro Rata Share; and (ii) the value to each Borrower of the resulting rights and claims against other Borrowers pursuant to this subsection will assure that no Borrower is rendered “insolvent” by virtue of the Obligations for purposes of any Applicable Law relating to fraudulent conveyances and similar claims.  The rights and obligations among Borrowers pursuant to this subsection shall survive the payment and performance of the Obligations.  “Pro Rata Share” means the amount of Loan proceeds actually advanced to or for the benefit of each Borrower as reflected on the books and records of such Borrower.  Each Borrower has expressly assumed the risk that such Borrower’s actual liability may exceed such Borrower’s Pro Rata Share and that overpayments may not actually be reimbursed or indemnified.

Waivers.

Each Borrower authorizes Lender, without notice to or demand on such Borrower, and without affecting such Borrower's liability for the Obligations, from time to time to: (i) alter, compromise, extend, accelerate or otherwise change the time for payment of, or otherwise change the terms of, the indebtedness of any other Borrower to Lender on account of the Loan; (ii) take and hold security from any other Borrower for the payment of any Obligations and exchange, enforce, waive, subordinate or release any such security; (iii) apply such security and direct the order or manner of sale thereof, including without limitation, a non-judicial sale permitted by the terms of the controlling security agreement, mortgage, or deed of trust, as Lender in its discretion may determine; (iv) release or substitute any one or more of the endorsers or any guarantors of any Loan hereunder, or any other party obligated thereon; and (v) apply payments received by Lender from any other Borrower to indebtedness of such other Borrower to Lender other than to any Loan extended under this Agreement. 

Each Borrower waives any right to require Lender to: (i) proceed against any other Borrower or any other Person; (ii) proceed against or exhaust any security held from any other Borrower or any other Person; (iii) pursue any other remedy in Lender's power; (iv) apply payments received by Lender from any other Borrower to any of the Obligations; (v) make any presentments or demands for performance, or give any notices of nonperformance, protests, notices of protest or notices of any kind, including without limitation, any notice of nonperformance, protest, notice of protest, notice of dishonor, notice of intention to accelerate or notice of acceleration; or (vi) set off against the Obligations the fair value of any real or personal property given as collateral for the Obligations (whether such right of setoff arises under statute or otherwise).  In addition to the foregoing, each Borrower specifically waives any statutory right it might have to require Lender to proceed against other Borrowers or any collateral that secures the Obligations.

Each Borrower waives to the extent permitted by Applicable Law any defense to its liability for repaying any Loan extended under this Agreement based upon or arising by reason of: (i) any disability or other defense of any other Borrower or any other person; (ii) the cessation or limitation from any

cause whatsoever, other than payment in full, of the liability of any other Borrower for the Obligations; (iii) any lack of authority of any officer, director, partner, agent or other person acting or purporting to act on behalf of any other Borrower or any defect in the formation of any other Borrower; (iv) the application by any other Borrower of the proceeds of any Loan extended under this Agreement for purposes other than the purposes intended or understood by Lender or each other Borrower; (v) any act or omission by Lender which directly or indirectly results in or aids the discharge of any other Borrower by operation of law or otherwise, or which in any way impairs or suspends any rights or remedies of Lender against any other Borrower; (vi) any impairment of the value of any interest in any security for any Obligations, including without limitation, the failure to obtain or maintain perfection or recordation of any interest in any such security, the release of any such security without substitution, and/or the failure to preserve the value of, or to comply with Applicable Law in disposing of, any such security; or (vii) any modification of the Indebtedness of any other Borrower for any Loan extended under this Agreement, including without limitation the renewal, extension, acceleration or other change in time for payment of, or other change in the terms of, the indebtedness of any Borrower for any Loan extended under this Agreement, including increase or decrease of the rate of interest thereon.

Until the Obligations shall have been paid in full, no Borrower shall have any right of subrogation.  Each Borrower waives all rights and defenses it may have arising out of (i) any election of remedies by Lender, even though that election of remedies, such as a non-judicial foreclosure with respect to any security for each Loan extended under this Agreement, destroys its rights of subrogation or its rights to proceed against any other Borrower for reimbursement, or (ii) any loss of rights it may suffer by reason of any rights, powers or remedies of any other Borrower in connection with any anti-deficiency laws or any other laws limiting, qualifying or discharging any Borrower's indebtedness for each Loan extended under this Agreement, whether by operation of law, or otherwise, including any rights Borrower may have to claim a fair market credit with respect to a deficiency or have a fair market value hearing to determine the size of a deficiency following any foreclosure sale or other disposition of any real property security for any portion of the Indebtedness, and Borrower waives any right Borrower may have under any “one-action” rule.  Borrower further waives the benefit of any homestead, exemption or other similar laws.

Until all Obligations arising under or in connection with this Agreement shall have been paid in full, each Borrower waives any right to enforce any remedy which Lender now has or may hereafter have against any other Borrower or any other person, and waives any benefit of, or any right to participate in, any security now or hereafter held by Lender.  To the fullest extent permitted by Applicable Law, Borrower waives all rights of a surety and the benefits of any applicable suretyship law, statute or regulation, and without limiting any of the waivers set forth herein, Borrower further waives any other fact or event that, in the absence of this provision, would or might constitute or afford a legal or equitable discharge or release of or defense to Borrower.

Credit Party Experience and Advisers; No Lender Advice.  Each Credit Party represents, warrants, and covenants that (a) such Credit Party (i) IS EXPERIENCED IN COMPLEX AND SOPHISTICATED BUSINESS MATTERS AND COMMERCIAL FINANCING TRANSACTIONS OF THE TYPE CONTEMPLATED BY THE LOAN DOCUMENTS; (ii) HAS HAD SUFFICIENT TIME TO CAREFULLY REVIEW ALL PROVISIONS, TERMS AND CONDITIONS OF EACH LOAN DOCUMENT AND CONSULT WITH SUCH INVESTMENT, TAX, LEGAL, FINANCIAL AND OTHER ADVISERS AS SUCH CREDIT PARTY HAS DEEMED APPROPRIATE; and (iii) HAS DETERMINED THAT THE LOAN DOCUMENTS COMPLETELY AND ACCURATELY REFLECT THE FINAL BUSINESS DEAL OF THE PARTIES; and (b) no Lender Party or any employee, agent, representative, or adviser of a Lender Party has provided any Credit Party with any investment, tax, legal, or financial advice or acted as an advisor to any Credit Party with respect to such matters.

Acknowledgement Regarding Any Supported QFCs.  To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Swap Contracts or any other agreement or instrument that is a QFC (such support, “QFC Credit Support” and, each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the FDIC under the Federal Deposit Insurance Act and Title II of the Dodd-Frank

Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):

In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that any rights and remedies of the parties with respect to the Lender if the Lender has failed to perform any of its obligations under the Loan Documents shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.

As used in this Section 8.31, the following terms have the following meanings:

“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

“Covered Entity” means any of the following:

a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);

a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or

a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

Entire Agreement.  The Loan Documents collectively constitute the final expression and entire written agreement of Lender and the Credit Parties with respect to the subject matter thereof; supersede all prior and contemporaneous agreements, discussions, and understandings relating to the subject matter thereof, written or oral, including prior letters of interest, proposal letters, commitment letters, fee letters, confidentiality agreements, or other agreements, involving any Credit Party or Lender or any of their respective Affiliates relating to a financing of substantially similar form, purpose, or effect; and may not be contradicted by evidence of any alleged oral agreement.

Attachments.  The following items are attached to and are an integral part of this Agreement:

Exhibit 2.3:Collateral Table

Exhibit 2.4:Closing Conditions

Exhibit 3.1:Organizational Chart

Exhibit 3.14:Franchise Agreement Information

Exhibit 3.15:Management Agreement Information

Exhibit 3.23:Hotel Lease Information

Exhibit 4.15(f):Form of Compliance Certificate

Exhibit 8.1:Schedule of Defined Terms

[SIGNATURE PAGES FOLLOW]

EXECUTED effective as of the date first set forth above.

BORROWER:
LF3 SOUTHAVEN, LLC, a Delaware limited liability company
By:	Lodging Fund REIT III OP, LP, a Delaware limited partnership, its Sole Member
	By:	Lodging Fund REIT III, Inc., a Maryland corporation, its General Partner
		By:	/s/ Katie Cox
		Name:	Katie Cox
		Title:	Chief Financial Officer
LF3 SOUTHAVEN TRS, LLC, a Delaware limited liability company
By:	Lodging Fund REIT III TRS, Inc., a Delaware corporation, its Sole Member
		By:	/s/ Katie Cox
		Name:	Katie Cox
		Title:	Chief Financial Officer
Address for Notices:
1635 43rd Street South, Suite 205
Fargo, North Dakota 58103
Attn:  Corey R. Maple
With copy to:
Dave Durell
644 Lovett St SE, Suite A
Grand Rapids, Michigan 49506

LENDER:

WELLS FARGO BANK, NATIONAL ASSOCIATION

By:  /s/ Maureen Malphus

Printed Name:  Maureen Malphus

Its: Vice President

Address for Notices:

Wells Fargo Bank, National Association

1808 Aston Avenue, Suite 250
Carlsbad, California 92008
Attention: Loan Administration

EXHIBIT 2.3

COLLATERAL TABLE

At Closing, the Collateral will include a first priority blanket lien on and security interest in all of Borrower’s tangible and intangible personal property, wherever located, including all such property located at or used in connection with the Sites identified below.  The Collateral will also include first priority Mortgages on each Site identified below.

Permitted Concept	Owner of Record	Street Address	City	State	ZIP
Homewood Suites	LF3 Southaven, LLC	135 Homewood Drive	Southaven	MS	38671

EXHIBIT 2.4

CLOSING CONDITIONS

Lender's obligation to close and fund the Loan is subject to Lender's satisfaction with or waiver of, in Lender's sole discretion, the following conditions, including required deliverables, each at Borrower's expense, it being agreed that if any of the conditions are not satisfied or waived by the Closing Deadline, Lender shall have absolutely no obligation whatsoever to make the Loan to the Borrower.

1. Due Diligence.  Lender shall have received and approved all items, documents and information required by Lender in connection with its underwriting and due diligence for the Loan and shall have completed such credit underwriting and due diligence with respect to Borrower, each Guarantor, the Collateral described in this Agreement, as well as all other collateral described in any of the Loan Documents, and the Loan as Lender deems appropriate.

2. Payment of Costs, Expenses and Fees.  All costs, expenses and fees to be paid by Borrower on or before the Closing will have been paid in full.

3. No Default; Representations.  Both before and after giving effect to the Closing, there shall be no Default.  Each representation and warranty made by Borrower and each Guarantor pursuant to the Loan Documents shall be true and correct in all material respects.

4. Absence of Litigation.  There shall not exist any action, suit, investigation, litigation or proceeding pending or threatened in any court or before any arbitrator or governmental authority that challenges the transactions contemplated by the Lending Proposal, the Loan or any other transactions contemplated hereby.

5. Executed Loan Documents.  Lender shall have received each of the following Loan Documents, together with all such other documents and instruments as are required by Lender in connection with the Loan, in each case duly executed and, where appropriate, acknowledged, by all of the parties to such documents, other than Lender, each in form and substance satisfactory to Lender:

(a) This Agreement.

(b) A promissory note evidencing the Loan.

(c) A guaranty signed by each Guarantor.

(d) A mortgage or deed of trust and environmental indemnity agreement for the Site.

(e) A security agreement from Borrower and each other party required to grant a security interest in the Collateral.

(f) A Borrower authorization.

(g) A request for all advances to be funded on the Closing Date.

6. Absence of Material Adverse Effects.  Lender shall have determined that no Material Adverse Effect has occurred since Borrower's submission of the Evaluation Information and there are no facts or circumstances existing and not previously disclosed in writing to Lender with respect to any Borrower or  Guarantor, the Collateral, the seller, if any, of any Collateral, any other person representing or otherwise acting on behalf of any Borrower or Guarantor, or the transaction that, in Lender's judgment, are inconsistent in a material and adverse manner with any such Evaluation Information that, if known to Lender, would have caused Lender not to agree to make the Loan to the Borrower.

7. Financing Statement Filings.  Lender shall have received evidence that appropriate financing statements have been properly filed with the appropriate governmental authorities and that the security interests of Lender in all Collateral consisting of personal property are in first lien position.

8. Deliverables.  Borrower shall have delivered to Lender or Lender shall otherwise have obtained, and Lender shall have approved, the following, together with such other information and documentation as Lender may reasonably require, all at Borrower’s expense:

(a) Pay-Off Letters and Lien Terminations.  (i) Evidence that any and all existing liens encumbering any of the Collateral, including liens to be paid from the initial funding of the Loan, have been released; or (ii) pay-off letters with respect to such liens, except for such liens as Lender has agreed may remain and that have been subordinated to the Loan and Lender’s liens on terms and conditions satisfactory to Lender.

(b) Evidence that Existing Debt Paid.  Evidence that all outstanding seller financing, indebtedness owed to any of Borrower’s shareholders, members, partners, or principals and all other indebtedness owed to any third party, excluding indebtedness held by Lender or its affiliates, has been paid in full prior to closing, unless Lender agrees, in its sole discretion, that such indebtedness may remain, in which case the indebtedness must be unsecured and fully subordinated to the Loan and Lender’s liens on terms satisfactory to Lender.

(c) Insurance.  Evidence that the insurance coverages that Borrower is required to have in force at closing pursuant to the Loan Documents have been obtained and are in full force and effect and in compliance with the requirements of the Loan Documents.

(d) Approval of Other Agreements.  Acceptable agreements with third parties necessary to operate each Site, including license and franchise or management agreements, as well as the Hotel Lease.  All such agreements shall be in full force and effect, in the name of Borrower, shall have expiration dates, including all renewal and extension options, of not less than the maturity date for the Loan, and the non-borrower third party to such agreements shall have delivered to Lender such executed subordination agreements, collateral assignments, comfort letters, status certificates, and consents with respect thereto, as Lender may, in its sole discretion, require.

(e) Appraisal.  An appraisal that is compliant with applicable law and such additional requirements and standards as Lender may specify, performed by state certified appraisers selected by Lender, for each Site for which Lender requires an appraisal.  Lender will order each appraisal.  The reports must be dated no earlier than 60 days prior to closing.

(f) Survey.  A survey from a licensed surveyor acceptable to Lender for each Site for which Lender requires a survey, certified to Lender and the title company.

(g) Opinions.  Such legal opinions as Lender may reasonably require, in form and substance and from counsel reasonably satisfactory to Lender.

(h) Solvency Certificate.  A certificate from Borrower, signed by Borrower’s chief financial officer or other comparable person certifying to Lender that, both before and immediately after consummation of the transactions contemplated by the Loan Documents and after giving effect thereto, Borrower is solvent.

9. Title and Title Insurance.  At Borrower’s expense, the mortgage or deed of trust relating to each Site shall have been recorded and the title company selected by Lender to close the Loan shall be unconditionally committed to issue to Lender an ALTA lender’s title insurance policy with respect to each such Site in such form and amounts and with such endorsements as Lender may require, insuring that each mortgage or deed of trust is in first lien position subject only to exceptions permitted by Lender.

10. Environmental.  Lender shall have approved the environmental condition of each Site.  Prior to closing, Lender will order an environmental assessment for each such Site, at Borrower’s expense.  On occasion, additional assessment work will be required to adequately understand environmental risks.  Additional work may include  regulatory office review, site inspection, phase I and/or phase II subsurface investigations.  If additional work is required and there is no pre-existing phase I and/or phase II reports or if such reports are out of date (typically six months prior to closing), Lender may order new phase I and/or phase II reports from Lender approved consultants, at Borrower’s expense.

11. Confirmation of Equity.  Information satisfactory to Lender verifying the source and availability to Borrower of any equity required of Borrower in the transaction.

12. Site Conditions.  Lender shall have approved the location and site characteristics of each Site.

13. Beneficial Ownership. Borrower shall have delivered to Lender, a Beneficial Ownership Certification in relation to it (or a certification that Borrower qualifies for an express exclusion from the “legal entity customer” definition under the Beneficial Ownership Regulations), at least five (5) Business Days prior to the Closing Date.

14. Other Conditions.  All other conditions to Lender’s obligations to close the Loan have been satisfied.

Exhibit 3.1

ORGANIZATIONAL CHART

Exhibit 3.14

Franchise Agreement Information

Named Franchisee	Named Franchisor	Franchise Agreement Effective Date	Franchise Agreement Expiration Date
LF3 Southaven TRS, LLC	Hilton Franchise Holding LLC	February 21, 2020	March 31, 2036

Exhibit 3.15

MANAGEMENT Agreement Information

Management Company	Owner	Management Agreement Effective Date	Management Agreement Expiration Date
Vista Host, Inc.	LF3 Southaven TRS, LLC	February 21, 2020	February 21, 2025

Exhibit 3.23

Hotel Lease Information

Name of Lessor	Name of Lessee	Lease Description	Lease Expiration Date (without options)
LF3 Southaven, LLC	LF3 Southaven TRS, LLC	Lease Agreement dated as of February 21, 2020	February 28, 2030

EXHIBIT 4.15(f)

COMPLIANCE CERTIFICATE FORM

COMPLIANCE CERTIFICATE

WELLS FARGO BANK, NATIONAL ASSOCIATION

Re:Loan Agreement (the “Agreement”) dated , 20, between LF3 SOUTHAVEN, LLC, a Delaware limited liability company and LF3 SOUTHAVEN TRS, LLC, a Delaware limited liability company (collectively, “Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”).  Capitalized terms used in this Compliance Certificate and not defined herein have the meanings given to those terms in the Agreement.

The undersigned certifies the following to Lender, as of the date of this Compliance Certificate:

1. The attached Financial Statements are complete and true and have been prepared in accordance with GAAP from period to period and otherwise in compliance with the requirements stated in the Agreement.

Borrower is in compliance with all financial covenants contained in the Loan Agreement.  Attached hereto as Schedule 1 are the covenant calculations used in determining compliance with the financial covenants.

No Default has occurred that is continuing, except for the following, as to which Borrower is taking the actions listed in order to cure such Default:  If none, so state.

DEFAULT CURE ACTIONS

Since the Closing Date and except as disclosed in prior Compliance Certificates delivered to Lender, neither Borrower nor any other Credit Party has:

Changed its legal name, identity, jurisdiction of incorporation, organization or formation or organizational structure or formed or acquired any subsidiary except as follows: ;

Acquired the assets of, or merged or consolidated with or into, any Person, except as follows: ; or

Changed its address or otherwise relocated, except as follows: .

All real property impositions that are due and owing have been paid.

All fees owed to Franchisor pursuant to the Franchise Agreement that are due have been paid, and no default has occurred under the Franchise Agreement.

The Site passed its latest quality assurance report by Franchisor, except with respect to the following items: . The date of such report is: , 20,  and the score is: .

The current Franchisor for the Site is .

The current Manager for the Site is .

Dated: , 20,

LF3 SOUTHAVEN, LLC, a Delaware limited liability company
By:	Lodging Fund REIT III OP, LP, a Delaware limited partnership, its Sole Member
	By:	Lodging Fund REIT III, Inc., a Maryland corporation, its General Partner
		By:	/s/ Katie Cox
		Name:	Katie Cox
		Title:	Chief Financial Officer
LF3 SOUTHAVEN TRS, LLC, a Delaware limited liability company
By:	Lodging Fund REIT III TRS, Inc., a Delaware corporation, its Sole Member
		By:	/s/ Katie Cox
		Name:	Katie Cox
		Title:	Chief Financial Officer

Schedule I

Financial Covenant Calculations

EXHIBIT 8.1

SCHEDULE OF DEFINED TERMS

Defined Terms.  The following terms have the meanings set forth below: 

“AAA” has the meaning specified in Section 8.14.

“ACH” has the meaning specified in Section 2.8.

“Affiliate” means, with respect to a Person, each officer, director, manager, general partner, or joint-venturer of such Person and any other Person that directly or indirectly Controls, is Controlled by, or is under common Control with, such Person.

“Agreement” has the meaning specified in the introductory paragraph hereto.

“AML Party” has the meaning specified in Section 3.9.

“AML Requirements” has the meaning specified in Section 3.9.

“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction from time to time concerning or relating to bribery or corruption, including the United States Foreign Corrupt Practices Act of 1977 and the rules and regulations thereunder and the U.K. Bribery Act 2010 and the rules and regulations thereunder.

“Applicable Law” means, as to a Person, any law (statutory or common), ordinance, rule, regulation, order, policy, other legal requirement or determination of an arbitrator or Government Authority, in each case applicable to or binding on such Person or any of its assets or to which such Person or any of its assets is subject.

“Authorized Person” has the meaning specified in Section 8.22.

“Bankruptcy Code” has the meaning specified in Section 3.7.

“Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.

“Beneficial Ownership Regulation” means 31 CFR § 1010.230.

“BHC Act Affiliate” has the meaning specified in Section 8.31.

“Borrower” has the meaning specified in the introductory paragraph hereto.

“Borrower Representative” has the meaning specified in Section 8.29.

“Business Day”  means any day that is not a Saturday, Sunday or other day on which commercial banks in the U.S. are authorized or required by Law to remain closed.  

“Capital Lease” means any lease or similar arrangement that is classed as a capital lease pursuant to GAAP.

“Casualty” has the meaning specified in Section 4.5.

“Closing” means the satisfaction with or waiver of, in Lender’s sole discretion, each of the “Closing Conditions” listed on Exhibit 2.4 with respect to funding of the Loan.

“Closing Date” has the meaning specified in Section 2.4.

“Closing Deadline” has the meaning specified in Section 2.4.

“Closing Draw Request” has the meaning specified in Section 2.5.

“Collateral” means all real and personal property, tangible and intangible, as to which Lender is granted a Lien pursuant to any Loan Document, and any other property, real or personal, tangible or intangible, now existing or hereafter acquired, that may at any time be or become subject to a Lien in favor of Lender, with references to “Collateral” to include all or any portion of or interest in any of the Collateral.

“Collateral Table” has the meaning specified in Section 2.3.

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § I et seq.), as amended from time to time, and any successor statute.

 “Compliance Certificate” has the meaning specified in Section 4.15.

“Contractual Obligation” means as to any Person, any provision of any security issued by such Person or of any agreement, instrument, or other undertaking (other than a Loan Document) to which such Person is a party or by which it or any of its property is bound or subject, including the Franchise Agreement and the Management Agreement.

“Control” and “Controlled” means possession of either (a) the power to vote, or the beneficial ownership of, 10% or more of any class of voting securities (or other ownership interests) of such Person; or (b) the power to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

“Covered Entity”  has the meaning specified in Section 8.31.

“Covered Party”  has the meaning specified in Section 8.31.

“Credit Party” means Borrower, each Guarantor and each other Person (other than Lender) that is or may become a party to this Agreement or any other Loan Document.

“Credit Party Information” has the meaning specified in Section 8.21.

“Debt Service Amount” means the actual interest and principal payments due on the Loan during the 12 month period ending on the applicable Determination Date; provided, during the first 12 months after the Closing Date, the Debt Service Amount will be calculated based on the interest and principal payments made to the applicable Determination Date, provided such payments will be annualized; and provided further, if at any time during the 12 month period ending on the applicable Determination Date, interest-only payments are due, then with respect to such interest-only period, the Debt Service Amount will be the monthly payment of principal and interest that would be due based on a 25 year amortization schedule using the then-current interest rate.

 “Debt Service Coverage Ratio” means, with respect to the 12-month period ending on the measurement date, the ratio, calculated for Borrower for such time period, each as determined in accordance with GAAP and calculated according to the Uniform System of Accounts for Hotels, of (a) Net Operating Income; to (b) the Debt Service Amount.

“Debt Yield” means, with respect to the 12-month period of time immediately preceding the date of determination, the percentage, calculated for Borrower for such time period, each as determined in accordance with GAAP and calculated according to the Uniform System of Accounts for Hotels, of:  (a) Net Operating Income; to (b) the outstanding principal amount of the Loan as of the date of determination.

“Default” means any Event of Default (as defined in Article 6) or any event or circumstance that, with the passage of time or the giving of notice or both, would (if not cured or otherwise remedied during such time) become an Event of Default.

“Default Right” has the meaning specified in Section 8.31.

“Determination Date” means the last day of each Fiscal Quarter occurring after the Closing Date.

 “E-Transmission” has the meaning specified in Section 8.16.

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“ERISA” has the meaning specified in Section 3.22.

“Evaluation Information” has the meaning specified in Section 3.17.

“Event of Default” has the meaning specified in Section 6.1.

“Excluded Swap Obligation” means with   respect  to  any  Guarantor,  any  Swap Obligation  if, and to the extent that, all or a portion of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes  illegal under the Commodity Exchange Act or any rule, regulation or order   of  the   Commodity   Futures   Trading   Commission   (or   the   application   or  official interpretation of any thereof) by virtue of such Guarantor's failure for any reason to constitute an "eligible contract participant" as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guarantee of such Guarantor or the grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee  or security interest is or becomes illegal.

“Financial Statements” has the meaning specified in Section 4.15.

“Fiscal Quarter” has the meaning specified in Section 4.15.

“Fiscal Year” has the meaning specified in Section 4.15.

“Franchise Agreement” means the franchise agreement, license agreement, or similar agreement relating to a particular Site, granted by the franchisor or licensor named in such agreement (“Franchisor”), together with all amendments, assignments, restatements, extensions, supplements, and exhibits thereto, that grants to Borrower the right to develop and operate such Site as the Permitted Concept.

“Franchisor” has the meaning specified in the definition of “Franchise Agreement”.

“GAAP” means generally accepted accounting principles in the United States, as in effect from time to time, set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants, in the statements and pronouncements of the Financial Accounting Standards Board and in such other statements by such other entity as may be in general use by significant segments of the accounting profession that are applicable to the circumstances as of the date of determination.

“Government Authority” means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

“Guarantor” has the meaning specified in the definition of “Guaranty”.

“Guaranty” means a guaranty agreement pursuant to which one or more Persons (each, a “Guarantor”, with references in the Loan Documents to “Guarantor” to mean and include each such Guarantor) guarantees payment and performance of all of the Obligations.

“Hotel Lease” means the Lease Agreement related to the Site described on Exhibit 3.23 attached hereto, together with all amendments, assignments, restatements, extensions, supplements, and exhibits thereto.

“Indebtedness” means, without duplication, all of the following, whether or not matured:  (a) indebtedness for borrowed money, including the outstanding balances of any revolving lines of credit; (b) obligations evidenced by bonds, debentures, notes, or similar instruments; (c) reimbursement and other obligations with respect to letters of credit and acceptances; (d) obligations representing the deferred purchase price of property or services; (e) obligations created or arising under any conditional sale or other title retention agreement; (f) obligations with respect to Capital Leases; (g) any other obligation for borrowed money or other financial accommodation (direct or contingent), whether evidenced by a note, instrument, guaranty or other writing and whether contingent, unliquidated or disputed; and (h) net obligations under any Swap Contract. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.

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“Indemnified Matters” has the meaning specified in Section 8.6.

“Indemnitee” has the meaning specified in Section 8.6.

“Insurance Proceeds” has the meaning specified in Section 4.5.

“Insurance Requirements” has the meaning specified in Section 4.4.

“Landlord Borrower”  has the meaning specified in the introductory paragraph hereto.

 “Lender” has the meaning specified in the introductory paragraph hereto.

“Lender Party” means each of Lender and its Affiliates.

“Lender Transfer” has the meaning specified in Section 7.1.

“Lending Proposal” means that certain Lending Proposal accepted by and agreed to by Borrower on December 6, 2019.

“Liabilities” means all claims, actions, suits, judgments, damages, losses, liabilities, obligations, fines, penalties, sanctions, costs, fees, Taxes, commissions, charges, disbursements and expenses, in each case of any kind or nature, including fees, charges and disbursements of financial, legal and other advisors and consultants (including those incurred in connection with responding to subpoenas or other discovery requests, third party or otherwise) and including interest accrued thereon or as a result thereof, whether joint or several, and whether or not indirect, contingent, consequential, actual, punitive, treble or otherwise.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit arrangement, encumbrance, lien (statutory or other), security interest, including purchase money security interests, and any other preference, priority or preferential arrangement of any kind or nature whatsoever, including any conditional sale contract or other title retention agreement, the interest of a lessor under a Capital Lease and any synthetic or other financing lease having substantially the same economic effect as any of the foregoing.

“Loan” has the meaning specified in Section 1.1.

“Loan Amount” has the meaning specified in Section 2.2.

“Loan Documents” means, collectively, this Agreement; the Note; the Guaranty; the Mortgage; and each security agreement, management agreement subordination, environmental indemnity agreement, Closing Draw Request, cross-default and/or cross-collateral agreement, and each other document or instrument now or hereafter executed and delivered by any Credit Party in connection with the Loan or any of the foregoing, with references in the Loan Documents to a particular Loan Document to mean such Loan Document, as it may be amended, restated, supplemented, extended or renewed from time to time.  Each Exhibit, Schedule, Table, or Appendix attached to a Loan Document is an integral part of such Loan Document, the same as if set forth in full in the body thereof.  The definition of Loan Documents shall exclude any Related Swap Contract.

“Management Agreement” means the management or similar agreement withthe manager named in such agreement (“Manager”), together with all amendments, assignments, restatements, extensions, supplements, and exhibits thereto and relating to a particular Site, granting Manager the right to manage and operate such Site as the Permitted Concept.

“Manager” has the meaning specified in the definition of “Management Agreement”.

“Master Agreement” has the meaning specified in the definition of “Swap Contract”.

“Material Adverse Effect” means any fact, event, circumstance or other effect, whether foreseeable or unforeseeable, that alone or in combination with other facts, events, circumstances, or effects occurring or existing concurrently with such fact, event, circumstance, or effect results in or causes, or could reasonably be expected to result in or cause, a material adverse change in any of (a) the condition (financial or otherwise), business, performance, operations or assets of any Credit Party; (b) the ability of any Credit Party to perform its obligations under any Loan Document; (c) the validity or enforceability of any Loan Document or the rights and remedies of Lender under any Loan Document; or (d) the Collateral, Lender’s Liens in the Collateral, or the priority of such Liens.

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“MaximumLoan Amount” has the meaning specified in Section 2.2.

“Mortgage” means each mortgage, deed of trust, or similar document granting a Lien to Lender, now or hereafter encumbering any of the Collateral, with references in the Loan Documents to “Mortgage” being to each such Mortgage.

“Net Insurance Proceeds” has the meaning specified in Section 4.5.

“Net Operating Income” means, as determined in accordance with GAAP and calculated according to the Uniform System of Accounts for Hotels, the following:  (i) the sum of net income (or loss), interest expense, income taxes, depreciation, amortization, management fees, replacement reserves, and officers’ salaries expensed on the income statement, minus (ii) the greater of (1) 4% of total revenues as an assumed reserve for replacement or (2) actual replacement reserve, minus (iii) the greater of (1) 3% of total revenues as an assumed management fee or (2) actual management fees (including both base and incentive management fees), minus (iv) non-recurring miscellaneous income (as determined by Lender), and plus (v) non-recurring miscellaneous expense (as allowed by Lender), and plus or minus any adjustments made by Lender in its sole discretion to calculations for acquisitions or other similar circumstances where operating performance history is limited.

“Note” has the meaning specified in Section 2.2.

“Notices” has the meaning specified in Section 8.10.

“Obligations” means all amounts, obligations, liabilities, covenants and duties of every type and description (including for the payment of money), owing by any Credit Party to any Lender Party arising out of, under, or in connection with any Loan Document, all obligations arising under Related Credit Arrangements (excluding any Excluded Swap Obligations), and all costs and expenses incurred in connection with enforcement and collection of the foregoing, including the fees, charges and disbursements of counsel, in each case, whether direct or indirect, absolute or contingent, due or to become due, liquidated or not, now existing or hereafter arising, however acquired, and whether or not evidenced by any instrument.

“Overpaying Borrower” has the meaning specified in Section 8.29.

“Partial Assignment” has the meaning specified in Section 7.1.

“Payment” has the meaning specified in Section 2.8.

“Permitted Concept” means the concept set forth for a particular Site in the Collateral Table or such other concept as may be approved by Lender in its sole discretion for a particular Site.

“Permitted Exceptions” means (a) recorded easements, covenants, conditions, restrictions, encumbrances, and other matters of record affecting the Collateral and approved by Lender in its sole discretion; (b) the Lien for current real property taxes and assessments, not yet due and payable, with respect to any real property Collateral; and (c) Liens in favor of a Lender Party. 

“Person” means any individual, partnership, corporation, business trust, public benefit corporation, joint stock company, estate, association, firm, enterprise, trust, limited liability company, unincorporated association, joint venture and any other entity or Government Authority.

“PIP” means the Product Improvement Plan dated October 15, 2019, issued for the Site by the Franchisor.

“PIP Improvements” means the improvements to the Site, and furniture and fixtures required to be incorporated into the Site pursuant to the PIP.

“Policy” has the meaning specified in Section 4.4.

“Policy Documents” has the meaning specified in Section 4.4.

“Pro Rata Share” has the meaning specified in Section 8.29.

“Prohibited Transaction” has the meaning specified in Section 5.8.

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“QFC”  has the meaning specified in Section 8.31.

“QFC Credit Support” has the meaning specified in Section 8.31.  

“REIT Financial Statements” has the meaning specified in Section 4.15.

 “Related Credit Arrangements” means, collectively, any Related Swap Contracts and any Related Treasury Management Arrangements.

“Related Swap Contract” means all Swap Contracts which are entered into or maintained by any Credit Party with the Lender or an Affiliate of the Lender.

“Related Treasury Management Arrangement” means all arrangements for the delivery of cash management services, including treasury, depository, overdraft, credit or debit card, electronic funds transfer and other cash management arrangements, to or for the benefit of any Credit Party which are now or hereafter entered into or maintained with the Lender or an Affiliate of the Lender.

“Restoration” has the meaning specified in Section 4.5.

“Rules” has the meaning specified in Section 8.14.

“Sanction” or “Sanctions”  means individually and collectively, respectively, any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and anti-terrorism laws, including but not limited to those imposed, administered or enforced from time to time by:  (a) the United States of America, including those administered by the OFAC, the U.S. State Department, the U.S. Department of Commerce, or through any existing or future Executive Order, (b) the United Nations Security Council, (c) the European Union, (d) the United Kingdom, or (e) any other governmental authorities with jurisdiction over any Credit Party or its Affiliates.

“Sanctioned Person”  means any Person that is a target of Sanctions, including without limitation, a Person that is:  (a) listed on OFAC’s Specially Designated Nations and Blocked Persons List; (b) listed on OFAC’s consolidated Non-Specially Designated Nationals List; (c) a legal entity that is deemed by OFAC to be a Sanctions target based on the ownership of such legal entity by Sanctioned Person(s); or (d) a Person that is a Sanctions target pursuant to any territorial or country-based Sanctions program.

“Schedule of Defined Terms” has the meaning specified in Section 8.1.

“SDN List” has the meaning specified in Section 3.9.

“Site” means (a) each site listed in the Collateral Table and (b) each other business property that now or hereafter constitutes Collateral or at which any Collateral is located or that is otherwise designated or deemed a Site pursuant to any Loan Document, in each case including the buildings and improvements thereon and rights and privileges appurtenant thereto.  All references in the Loan Documents to “Site” shall mean each such Site.

“Solvent” means, with respect to any Person as of any date of determination, that, as of such date, (a) the value of the assets of such Person (both at fair value and present fair saleable value) is greater than the total amount of liabilities (including contingent and unliquidated liabilities) of such Person; (b) such Person is able to pay all liabilities of such Person as such liabilities mature; and (c) such Person does not have unreasonably small capital.  In computing the amount of contingent or unliquidated liabilities at any time, such liabilities shall be computed at the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

“Supported QFC” has the meaning specified in Section 8.31.

“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject

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to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

“Swap Obligation” means, with respect to any Guarantor, any obligation to pay or perform under  any  agreement, contract or transaction that constitutes a "swap" within the meaning of section la(47) of the Commodity Exchange Act. 

“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include the Lender or any Affiliate of the Lender).

“Tax Affiliate” has the meaning specified in Section 3.16.

“Tax Returns” has the meaning specified in Section 3.16.

“Taxes” has the meaning specified in Section 3.16.

“Tenant Borrower”  has the meaning specified in the introductory paragraph hereto.

“Transaction Costs” has the meaning specified in Section 2.7.

“Transferred Interests” has the meaning specified in Section 7.1.

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York.

“United States” and “U.S.” means the United States of America.

“U.S. Special Resolution Regimes” has the meaning specified in Section 8.31.

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EX-10.58.2

EXHIBIT 10.58.2

TERM LOAN NOTE

Dated as of February 21, 2020 (the “Note Date”)

Note Amount:  $13,460,000.00

FOR VALUE RECEIVED,  LF3 SOUTHAVEN, LLC, a Delaware limited liability company and LF3 SOUTHAVEN TRS, LLC, a Delaware limited liability company (individually and collectively, “Borrower”), promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION, and its successors and assigns (“Lender”), at 1808 Aston Avenue, Suite 250, Carlsbad, California 92008 (or such other place as may be designated by Lender), the principal sum stated above as the Note Amount, with interest thereon, on the dates and at the rates and upon the terms and conditions specified below.  This Term Loan Note (this “Note”) is the Note referred to in the Loan Agreement, dated the same date as this Note, between Borrower and Lender (as it may be amended, restated, supplemented, extended or renewed from time to time, the “Loan Agreement”) and is being executed and delivered pursuant thereto (the loan made pursuant to this Note and the Loan Agreement being referred to in this Note as the “Loan”).  Capitalized terms used in this Note and not defined in this Note have the meanings given to such terms in the Loan Agreement.

Interest Rate.

Interest.The outstanding principal balance of this Note shall bear interest (computed on the basis of a 360-day year, actual days elapsed) at a fixed rate of 3.695% per annum. 

Basis of Computation.  The interest rate is an annual rate and will be computed using a 360-day year and charged for actual days elapsed. 

Definitions. As used herein, the following terms shall have the meanings set forth after each, and any other term defined in this Note shall have the meaning set forth at the place defined:

1.1.1. “Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in the U.S. are authorized or required by Law to remain closed.

1.1.2. “Cost of Funds Rate” means the yield as of the initial date of funding of this Note, on United States Treasury bills, notes or bonds, selected by Lender in its discretion, having maturity comparable to the scheduled maturities of the installment(s) being prepaid.

1.1.3. “Current Value” means the net present value of the dollar amount of the interest to be earned, discounted at the Treasury Rate.

1.1.4. “Payment Day” means the first day of each calendar month; provided that, if a Payment Day is not a Business Day, such Payment Day shall be the next succeeding Business Day.  The Maturity Date shall also be considered a Payment Day.

1.1.5. “Treasury Rate” means the yield, as of the date of prepayment, on United States Treasury bills, notes or bonds, selected by Lender in its discretion, having maturities comparable to the scheduled maturities of the installment(s) being prepaid.

Payments.

When Due; Maturity Date.  Interest on the Loan shall be paid in arrears.  Interest accrued on the Loan from the Note Date to the first Payment Day to occur after the Note Date is due and payable on such first Payment Day.  Regular monthly payments (each, a “Monthly Payment”) will commence on the second Payment Day to occur after the Note Date, and will continue on each Payment Day thereafter through the Payment Day occurring on March 3, 2025 (the “Maturity Date”). 

EXHIBIT 10.58.2

Monthly Payment Amounts.  During the period commencing on the Note Date and ending on March 31, 2021, only interest accrued on the loan shall be due and payable on each Payment Day.  Thereafter, each Monthly Payment will be equal to (i) a principal payment in the amount set forth on Exhibit A with respect to the month in which such payment is due; plus (ii) all accrued and unpaid interest to the Payment Day on which the Monthly Payment is due.

Payment at Maturity.  On the Maturity Date, in addition to the required Monthly Payment, Borrower shall also pay the entire remaining unpaid balance of the Loan, if any; all accrued and unpaid interest to the Maturity Date; and any other amounts payable under this Note and the other Loan Documents.

Prepayments.

Except as may otherwise be expressly provided in this Note and the other Loan Documents, Borrower may not make any prepayment of the Loan except as follows:     (i) Borrower must give Lender at least 30 days’ prior written notice of the proposed prepayment; and (ii) the prepayment must be accompanied by payment to Lender of the following:  (A) any and all costs, fees, and other expenses, including late fees, then due and payable with respect to the Obligations; (B) interest on the prepaid principal through the prepayment date (C) (to the extent not prohibited by law) Breakage Costs as liquidated damages for loss of a bargain and not as a penalty, which Breakage Costs shall be calculated in accordance with the provisions of subsection (b) below; and (D) a Prepayment Fee in the amount described in subsection (c) below, unless the Loan Documents specifically state that, with respect to a particular prepayment, no Prepayment Fee is due.  INTEREST ON THE PREPAYMENT AMOUNT MUST BE PAID THROUGH THE PREPAYMENT DATE.  Any prepayment shall be without prejudice to Borrower’s obligations under any swap agreement (as defined in 11 U.S.C. § 101), which shall remain in full force and effect subject to the terms of such swap agreement (including provisions that may require a reduction, modification or early termination of a swap transaction, in whole or in part, in the event of such prepayment, and may require Borrower to pay any fees or other amounts for such reduction, modification or early termination), and no such fees or amounts shall be deemed a penalty hereunder or otherwise.

Breakage Costs.  In the event that there occurs a prepayment of the Loan pursuant to subsection (a) hereof, Insurance Proceeds are applied by Lender to payment of the Obligations following a Casualty pursuant to Section 4.5(c) of the Loan Agreement, or all or any part of the Obligations are declared to be due and payable pursuant to Section 6.2 of the Loan Agreement, “Breakage Costs” shall accrue and equal the Current Value of:

1.1.6. the interest that would have accrued on the principal amount prepaid at the Cost of Funds Rate, minus

1.1.7. the interest that could accrue on the principal amount prepaid at the Treasury Rate.

In both cases, interest will be calculated from the prepayment date to the Maturity Date.  In no event shall the Breakage Costs be less than zero.

If the indebtedness evidenced by this Note is accelerated in accordance with the terms of this Note or the Loan Agreement, the resulting balance due shall be considered a prepayment due and payable as of the date of acceleration.

The Borrower agrees and acknowledges that the Lender will have suffered damages on account of the early repayment of the Loan and that, in view of the difficulty in ascertaining the amount of such damages, the Breakage Costs constitute reasonable compensation and liquidated damages to compensate the Lender on account thereof.

The Breakage Costs and their payment shall not in any way reduce, affect or impair any other obligation of the Borrower under this Note or the other Loan Documents.

EXHIBIT 10.58.2

Prepayment Fee.  The “Prepayment Fee” will equal 1.0% of the prepaid principal if made before the date that is six months prior to the Maturity Date; provided that in the event that the Site is sold by Borrower to an independent third party (i.e.: not an Affiliate of the Borrower) in an arms’ length transaction, the Prepayment Fee will be waived.  On or after the date that is six months prior the Maturity Date, the Prepayment Fee is zero.

Application of Prepayment Amounts.  Subject to the provisions of Section 2.8(c) of the Loan Agreement:  (i) amounts paid pursuant to Section 3(a) shall be applied in payment of the amounts specified therein; (ii) all prepaid principal shall be applied to the unpaid principal balance of this Note; provided, however, that any permitted partial prepayment of principal shall be applied to principal in the inverse order of maturity, such that the scheduled Monthly Payment amounts for the Loan otherwise calculated do not change; and (iii) all other payments pursuant to this Note shall be applied first to accrued and unpaid interest on the Note and the balance to reduction of principal on the Note, in the inverse order of maturity.

General Payment Provisions.  All payments due pursuant to this Note shall be payable at the place and in the manner provided in Section 2.8 of the Loan Agreement and otherwise in accordance with the provisions of that Section, which Section is incorporated herein by this reference.

Default Interest.  From and after the maturity date of this Note, or such earlier date as all principal owing hereunder becomes due and payable by acceleration or otherwise, or upon the occurrence and during the continuance of an Event of Default, then at the option of Lender, in its sole and absolute discretion, the outstanding principal balance of this Note shall bear interest at an increased rate per annum (computed on the basis of a 360-day year, actual days elapsed) equal to 4% above the rate of interest from time to time applicable to this Note (the “Default Rate”).

Late Fees.  If Borrower fails to make any payment pursuant to this Note or any other Loan Document on or before the 5th day after the due date for such payment, then Borrower shall pay Lender a late fee equal to 5% of such past-due payment.  Such late fee will be immediately due and payable and is in addition to any other charges, costs, fees, and expenses that Borrower may owe as a result of the late payment, including the imposition of a default rate of interest pursuant to this Note or any other Loan Document.

Waivers.  Borrower and all endorsers, guarantors, and sureties of this Note waive presentment, demand for payment, notice of dishonor, notice of protest, and protest, notice of intent to accelerate, notice of acceleration and all other notices or demands in connection with delivery, acceptance, performance, default or endorsement of this Note.

Lender Computations Final.  Lender’s computations, in accordance with the terms of this Note and the Loan Agreement, of interest rates, Monthly Payment amounts, and final payment amounts, and other amounts due and owing from Borrower to Lender shall be final and conclusive, absent manifest error.

Maximum Rate of Interest.  Anything herein to the contrary notwithstanding, the obligations of Borrower hereunder or pursuant to any other Loan Document shall be subject to the limitation that payments of interest shall not be required, for any period for which interest is computed hereunder, to the extent (but only to the extent) that contracting for or receiving such payment would be contrary to the provisions of any Applicable Law limiting the highest rate of interest which may be lawfully contracted for, charged or received by Lender, and in such event Borrower shall pay Lender interest at the highest rate permitted by Applicable Law.

Inconsistencies.  If there are any inconsistencies between the terms of this Note and the other Loan Documents, the provisions of this Note shall control.

Applicability of General Provisions.  All provisions of the Article in the Loan Agreement titled “General Provisions”, as well as the defined terms in the Loan Agreement, including in the Schedule of Defined Terms attached thereto, apply to this Note, the same as if such provisions were set forth in full in this Note.

[SIGNATURE PAGE FOLLOWS]

EXHIBIT 10.58.2

IN witness whereof, Borrower has executed this Note as of the date stated above.

BORROWER:
LF3 SOUTHAVEN, LLC, a Delaware limited liability company
By:	Lodging Fund REIT III OP, LP, a Delaware limited partnership, its Sole Member
	By:	Lodging Fund REIT III, Inc., a Maryland corporation, its General Partner
		By:	/s/ Katie Cox
		Name:	Katie Cox
		Title:	Chief Financial Officer
LF3 SOUTHAVEN TRS, LLC, a Delaware limited liability company
By:	Lodging Fund REIT III TRS, Inc., a Delaware corporation, its Sole Member
		By:	/s/ Katie Cox
		Name:	Katie Cox
		Title:	Chief Financial Officer

EXHIBIT A

PAYMENT SCHEDULE

EX-10.58.3

EXHIBIT 10.58.3

SECURITY AGREEMENT

This SECURITY AGREEMENT (the “Agreement”) is made as of February 21, 2020, by LF3 SOUTHAVEN, LLC, a Delaware limited liability company and LF3 SOUTHAVEN TRS, LLC, a Delaware limited liability company (individually and/or collectively, as the context may require, “Debtor”), for the benefit of WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”), as the secured party.  References in this Agreement to “Debtor” are to each Debtor signing this Agreement.

RECITALS:

A.Lender has agreed to lend Debtor an amount up to the sum of $13,460,000.00 (collectively, the “Loan”) in accordance with the terms of the Loan Agreement, of even date herewith, between Lender and Debtor (the “Loan Agreement”).

B.It is a condition to Lender closing the transactions described in the Loan Agreement that Debtor execute and deliver this Agreement granting Lender a first priority lien on the UCC Collateral.  Capitalized terms used in this Agreement and not defined in this Agreement have the meanings given to such terms in the Loan Agreement.

AGREEMENT:

In consideration of Lender making the Loan, as an inducement to Lender to do so, and for other valuable consideration, Debtor represents and warrants to, and covenants and agrees for the benefit of, Lender as follows:

Grant.  Debtor grants to Lender a security interest in the UCC Collateral, as described on Exhibit A.

Limitations.  By accepting this Agreement, Lender confirms and agrees that, notwithstanding the inclusion of general intangibles as part of the UCC Collateral and the creation, attachment and perfection of Lender’s security interest in general intangibles in accordance with the provision of Section 9-408(a) of the UCC, such creation, attachment and perfection, as it relates to the Franchise Agreement and Management Agreement, is subject to the limitations imposed by Section 9-408(d) of the UCC which provide that such creation, attachment, and perfection (a) is not enforceable against the Franchisor or Manager; (b) does not impose a duty or obligation on the Franchisor or Manager; (c) does not require the Franchisor or Manager to recognize the security interest, pay or render performance to Lender, or accept payment or performance from Lender; (d) does not entitle Lender to use or assign Debtor’s rights under the Franchise Agreement or Management Agreement; and (e) does not entitle Lender to use, assign, possess, or have access to any trade secrets or confidential information of the Franchisor or Manager.

Obligations Secured.  The security interest granted pursuant to this Agreement is given to secure the payment and performance of the Loan and all other Obligations and the Liabilities (as defined below).  The obligations secured hereby are referred to herein as the “Secured Obligations”.  Any other provision hereof to the contrary notwithstanding, the Secured Obligations do not include the obligations of any Credit Party in any environmental indemnity agreement.

Agency.  Debtor acknowledges and agrees that, to the extent any Secured Obligation is held by an Affiliate of Lender, rather than directly by Lender, Lender is acting both for itself, with respect to Secured Obligations held by Lender, and as the representative and collateral agent for and on behalf of such Affiliate with respect to Secured Obligations held by such Affiliate, and Lender is entitled, both on its own behalf and as the representative and collateral agent for and on behalf of such Affiliate, to exercise all rights and remedies of the secured party under this Agreement.

Use; Ownership.  Debtor will (a) keep all of the tangible UCC Collateral at its current business site (the “Collateral Site”, with references to “Collateral Site” to include each site where Debtor is conducting business and where tangible UCC Collateral is located); (b) use the UCC Collateral only in its trade or business; (c) maintain all of the tangible UCC Collateral in good operating order and repair, normal wear and tear excepted; (d) use and maintain the UCC Collateral only in compliance with manufacturers’ recommendations and all Applicable Law; (e) keep all of the UCC Collateral free and clear of any and all Liens, other than those in favor of Lender; (f) maintain at the Collateral

Site(s) all of the equipment, machinery, furniture, appliances, trade fixtures, tools, and office and record keeping equipment required to be maintained at the Collateral Site(s) pursuant to the Franchise Agreement and Management Agreement and that are reasonably necessary for the proper and prudent operation of the Collateral Site(s) as a Permitted Concept; and (g) remain the sole owner of the UCC Collateral and not sell, lease, mortgage, hypothecate, license, grant a security interest in or otherwise transfer or encumber any of the UCC Collateral (a “Transfer”) except for sales of inventory in the ordinary course of business and, so long as no Default has occurred and is continuing, sales or other dispositions of obsolete equipment consistent with past practices, so long as such items are replaced by items of equal or greater value and utility.  Except as provided in the preceding sentence, Debtor will not part with possession of any of the UCC Collateral (except to Lender or for maintenance and repair).

Financing Statements and Further Assurances; Waivers.  Debtor agrees, on Lender’s request, to furnish to Lender such further information, to execute and deliver to Lender such documents and instruments and to do such other acts and things as Lender may at any time reasonably request relating to the perfection or protection of the security interest in the UCC Collateral created hereby, in a first priority lien position, or for the purpose of carrying out the intent of this Agreement.  Debtor shall obtain and furnish to Lender any subordinations, releases, landlord, lessor, bailee or mortgagee waivers, control agreements, and similar documents as may be from time to time requested by, and in form and substance satisfactory to, Lender.  Debtor will warrant and defend the UCC Collateral and Lender against all claims by all persons in connection with the Secured Obligations.  Debtor (a) waives any right under the UCC or other Applicable Law to receive notice or copies of any filed or recorded financing statements, amendments thereto, continuations thereof or termination statements; and (b) releases and excuses Lender from any obligation under the UCC or other Applicable Law to provide notice or a copy of any such filed or recorded documents.

Lender’s Authority.  Debtor authorizes Lender, and ratifies any prior authorization, to file financing statements, continuations, and amendments thereto describing the UCC Collateral and containing any other information required by the UCC, in such form and substance as Lender, in its sole discretion, may determine.

Certain Rights and Remedies.  If an Event of Default has occurred and is continuing and in addition to the rights and remedies available to Lender under this Agreement or any other Loan Document, Lender, without any other notice to or demand upon Debtor, shall have the rights and remedies of a secured party under the UCC and any additional rights and remedies that may be provided to a secured party in any jurisdiction in which any UCC Collateral is located, including the right to enter upon each Collateral Site, take possession of and remove such UCC Collateral therefrom.  Lender may require Debtor to assemble all or any part of the UCC Collateral at such location(s) as Lender may reasonably designate.  Lender shall give to Debtor at least 10 calendar days prior written notice of the time and place of any public sale of UCC Collateral or of the time after which any private sale or any other intended disposition is to be made.  Debtor acknowledges that 10 calendar days prior written notice of such sale or sales shall be reasonable notice.  Debtor waives any and all rights that it may have to a judicial hearing in advance of the enforcement of any of Lender’s rights and remedies hereunder, including its right following an Event of Default to take immediate possession of the UCC Collateral and to exercise its rights and remedies with respect thereto.

Receivers.  Debtor irrevocably agrees that upon the occurrence of an Event of Default, Lender may obtain an order, ex parte, from a state or federal court appointing a receiver for (a) the business operations of Debtor; (b) the UCC Collateral; and/or (c) any or all of the assets and property rights of Debtor.  Lender’s right to obtain such an order ex parte from such court shall be as a matter of right and without notice to Debtor or anyone claiming under Debtor and without regard to the then value of the UCC Collateral or the interest of Debtor therein.  DEBTOR WAIVES ANY RIGHT TO A HEARING OR NOTICE OF HEARING PRIOR TO THE APPOINTMENT OF A RECEIVER AND IRREVOCABLY CONSENTS TO SUCH APPOINTMENT.  Debtor irrevocably agrees that any receiver appointed pursuant to this Section may have all of the powers and duties of receivers in like or similar cases, including the right, with Lender’s express written consent, to operate and sell all property of the receivership estate, and that such powers and duties shall be vested in the receiver until the later of (x) the date of confirmation of sale of the receivership estate; (y) the date of expiration of any redemption period; or (z) the date the receiver is discharged.  Debtor waives any and all rights to object to the appointment of a receiver as provided herein or to the receiver’s operation or disposition of the receivership estate.

Marshaling.  Lender shall not be required to marshal any present or future collateral security (including the UCC Collateral) for, or other assurances of payment of, the Obligations or to resort to such collateral security or other assurances of payment in any particular order, and all of its rights and remedies hereunder and in respect of such

collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising.  To the extent that it lawfully may, Debtor agrees that it will not invoke any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of Lender’s rights and remedies under this Agreement or under of the other Loan Documents, and, to the extent that it lawfully may, Debtor irrevocably waives the benefits of all such laws.

Proceeds of Dispositions; Expenses.  Debtor shall pay to Lender on demand any and all expenses, including reasonable attorneys’ fees and disbursements, incurred or paid by Lender in protecting, preserving or enforcing its rights and remedies under or in respect of any of the Secured Obligations or any of the UCC Collateral.  After deducting all of the foregoing expenses, the residue of any proceeds of collection or sale or other disposition of the UCC Collateral shall, to the extent actually received in cash, be applied to payment of the Secured Obligations in such order or preference as Lender may determine.  Upon the final payment and satisfaction in full of all of the Secured Obligations and after making any payments required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of the UCC, any excess shall be returned to Debtor.  In the absence of final payment and satisfaction in full of all of the Secured Obligations, Debtor shall remain liable for any deficiency.

Other Security Documents.  The provisions hereof supplement the provisions of any other Loan Document that grants a Lien to Lender or that otherwise secures payment or performance of any of the Secured Obligations, and nothing contained therein shall derogate from any of the rights or remedies of Lender hereunder.

No Entity Name Changes.  No Debtor that is an entity shall change its name from that set forth on the signature page hereof without giving Lender at least 45 days’ prior written notice thereof and taking all actions deemed necessary or appropriate by Lender to continuously protect and perfect Lender’s Liens in the UCC Collateral.

Applicability of General Provisions.  All provisions of the Loan Agreement Article entitled “General Provisions” apply to this Agreement, the same as if such provisions were set forth in full in this Agreement.

Related Credit Arrangement.  All obligations of the Debtor under the Related Credit Arrangements, including any Related Swap Contracts and Related Treasury Management Arrangements, but excluding any Excluded Swap Obligations, to which the Lender or its Affiliates are a party shall be deemed to be liabilities of the Debtor (“Liabilities”), and the Lender or Affiliate of the Lender party to any such Related Credit Arrangement shall be deemed to be a secured party hereunder with respect to such Liabilities; provided,  however, that such obligations shall cease to be Liabilities at such time, prior to the maturity date of the Loan, as such Person (or Affiliate of such Person) shall cease to be a “Lender” under the Loan Agreement.  No Person who obtains the benefit of this Agreement by virtue of the provisions of this Section shall have, prior to the maturity date of the Loan, any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Obligations (including the release or modification of any Obligations or security therefor) other than in its capacity as the Lender and only to the extent expressly provided in the Loan Documents.

Governing Law.  the laws of the State of NEW YORK (without giving effect to the conflicts of laws principles thereof) shall govern all matters arising out of, in connection with or relating to this Agreement, including its validity, interpretation, construction, performance and enforcement.

Binding Effect.  This Agreement shall be binding upon and inure to the benefit of Debtor and Lender and their respective successors and permitted assigns, including, any United States trustee, any debtor in possession or any trustee appointed from a private panel and, if any Debtor is an individual, such individual’s heirs, personal representatives, administrators, and executors.

EXECUTED effective as of the date first set forth above.

DEBTOR:
BORROWER:
LF3 SOUTHAVEN, LLC, a Delaware limited liability company
By:	Lodging Fund REIT III OP, LP, a Delaware limited partnership, its Sole Member
	By:	Lodging Fund REIT III, Inc., a Maryland corporation, its General Partner
		By:	/s/ Katie Cox
		Name:	Katie Cox
		Title:	Chief Financial Officer
LF3 SOUTHAVEN TRS, LLC, a Delaware limited liability company
By:	Lodging Fund REIT III TRS, Inc., a Delaware corporation, its Sole Member
		By:	/s/ Katie Cox
		Name:	Katie Cox
		Title:	Chief Financial Officer

EXHIBIT A

THE UCC COLLATERAL

The “UCC Collateral” consists of all of the following described property, whether now owned or hereafter acquired and wherever located, together with all replacements and substitutions therefor and all cash and non-cash proceeds (including insurance proceeds and any title and UCC insurance proceeds) and products thereof, and, in the case of tangible property, together with all additions, attachments, accessions, parts, equipment and repairs now or hereafter attached or affixed thereto or used in connection therewith, excluding, however, any and all “consumer goods,” as defined in the UCC:  All of Debtor’s right, title, and interest in:  (a) all types of property included within the term “equipment” as defined by the UCC (except vehicles, boats and airplanes), including machinery, furniture, appliances, trade fixtures, tools, and office and record keeping equipment; (b) all inventory, including all goods held for sale, raw materials, work in process and materials or supplies used or consumed in Debtor’s business; (c) all documents; general intangibles; accounts; contract rights; chattel paper and instruments; money; securities; investment properties; deposit accounts; supporting obligations; letters of credit and letter of credit rights; commercial tort claims; and records, software and information contained in computer media (such as databases, source and object codes and information therein), together with any equipment and software to create, utilize, maintain or process any such records or data on electronic media; (d) any and all plans and specifications, designs, drawings and other matters prepared for any construction on any real property owned by or leased to Debtor at a Collateral Site or regarding any improvements to any Collateral Sites and any and all construction contracts, design agreements, engineering agreements and other agreements related to the construction of any such improvements; (e) goodwill; and (f) to the extent constituting collateral with respect to which a security interest may be created pursuant to Article 9 of the UCC, amounts paid as rents, fees, charges, accounts, or other payments for the use or occupancy of rooms and other public facilities in hotels, motels, or other lodging properties.

EX-10.58.4

EXHIBIT 10.58.4

ENVIRONMENTAL INDEMNITY AGREEMENT

THIS ENVIRONMENTAL INDEMNITY AGREEMENT (the “Agreement”) is dated as of February 21, 2020, and is made by LF3 SOUTHAVEN, LLC, a Delaware limited liability company and LF3 SOUTHAVEN TRS, LLC, a Delaware limited liability company (individually and collectively, “Borrower”); and COREY R. MAPLE, an individual (“Guarantor”) (Borrower and Guarantor are individually and collectively referred to herein as the “Indemnitor”) for the benefit of WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”).

RECITALS:

Lender has agreed to make certain Loan(s) (the “Credit Facilities”) available to Borrower in accordance with the terms of the Loan Agreement, dated the same date as this Agreement, between Lender and Borrower (the “Loan Agreement”).  It is a condition precedent to Lender making the Credit Facilities available to Borrower that Indemnitor execute and deliver this Agreement to Lender.

AGREEMENT

FOR VALUABLE CONSIDERATION, Indemnitor represents and warrants to and agrees with Lender as follows:

Definitions.  Capitalized terms used in this Agreement and not defined in this Agreement have the meanings given to such terms in the Loan Agreement.  The following terms shall have the following meanings:

“Borrower Agents” means all of Borrower’s tenants, subtenants, concessionaires, licensees, agents, employees, contractors, and invitees.

“De Minimis Amounts” means Hazardous Materials being used, or stored for future use, by Indemnitor on a Site and that (a) do not constitute a violation or threatened violation of Environmental Law or require any reporting or disclosure under any Environmental Law; and (b) are consistent with customary and prudent business practices for similar businesses in the county where the Site is located.  De Minimis Amounts do not include Hazardous Materials being disposed of, generated, manufactured, processed, produced, released, transported, or treated.

“Environmental Condition(s)” means (a) the presence on the Site of Hazardous Materials (other than in De Minimis Amounts), including any Release, whether known or unknown and regardless of timing, source, or fault; or (b) non-compliance by any Credit Party or Borrower Agent, or the Site, including its operations, with any Environmental Laws.  With respect to Governmental Authorities or other third parties, designation of a condition as an Environmental Condition pursuant to this Agreement is not to be construed as an admission by any party of any legal conclusion.

“Environmental Laws” means all present and future laws (including common law), ordinances, rules, regulations, requirements, orders, directives, injunctions or decrees of any Governmental Authority, relating to Hazardous Materials or the protection of human health, safety or the environment in the jurisdictions where the Site is located or where any Hazardous Materials used, generated or disposed of by Indemnitor are located.

“Environmental Liens” means all liens and encumbrances imposed pursuant to any Environmental Law.

“Environmental Permits” means all permits, licenses or similar authorizations required in order to occupy and operate the Site for the Permitted Concept in compliance with all Environmental Laws.

“Hazardous Materials” means any substance, material or waste that is classified, regulated or otherwise characterized under any Environmental Law as hazardous, toxic, explosive, radioactive, a contaminant or a pollutant or by other words of similar meaning or regulatory effect, including petroleum and any fraction thereof and additives thereto, asbestos, polychlorinated biphenyls, nuclear waste, and any toxic mold or fungus of a type that might pose a risk to human health or the environment or negatively impact the value of the Site (“Toxic Mold”).

“Hazardous Materials Investigation” means:  (a) any pending, threatened, or completed enforcement, Remediation, or other action, claim, proceeding, agreement, or order by any Governmental Authority relating to any Hazardous Material or any Environmental Law; (b) any investigation, study, warning, notice of violation, administrative or judicial complaint, summons, citation, directive, or other formal or informal notice by any Governmental Authority relating to any Hazardous Material or any Environmental Law; and (c) any pending or threatened claim by any Person relating to any Hazardous Material or any Environmental Law.

“Investigations” means and includes environmental site assessments and other investigations of potential Environmental Conditions on or about the Site, including but not limited to sampling and analysis of soil, water, air, building materials and other materials and substances, whether solid, liquid or gas.

“Release” means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into or out of the Site of any Hazardous Material, including the movement of Hazardous Materials through or in the air, soil, surface water or groundwater.

“Remedial Action” or “Remediation” means the investigation, removal, or clean-up of contamination, environmental degradation, or damage caused by, related to or arising from a Release or presence of any Hazardous Materials on or from the Site, as required by Environmental Law or any Governmental Authority, including any actions to prevent, cure or mitigate any Release, any pre-remedial studies and investigations or post remedial care; any action to comply with Environmental Law or Environmental Permits, and all acts necessary to clean and disinfect any portions of the Site affected by Toxic Mold and to eliminate the sources of Toxic Mold on the Site.

“Site” means each Site identified in the Loan Agreement, including properties that become Sites pursuant to the Loan Agreement.  As used herein, the phrase “on the Site” includes in, on, at, about, above, or under the Site.

Compliance with Environmental Laws.  Indemnitor shall comply with all applicable Environmental Laws and Environmental Permits in connection with the use, operation, or maintenance of the Site.  Indemnitor shall not use or permit the use of any Hazardous Materials on the Site, other than in De Minimis Amounts.  Indemnitor shall keep the Site, and shall cause the Site to be kept, free and clear of all Environmental Conditions and Environmental Liens.  Indemnitor shall use its best efforts, with due diligence, to cause: (a) the other Credit Parties and the Borrower Agents to comply with the terms of this Agreement; and (b) the Site to be kept, free and clear of all Environmental Conditions to the extent required by Environmental Laws.

Representations and Warranties.  The representations and warranties in this Section are made and are true and correct as of the date hereof and shall continue to be true and correct at all times prior to termination hereof.  Unless otherwise stated, all representations and warranties are made to the best of Indemnitor’s knowledge after due inquiry.  Except as otherwise disclosed in writing to Lender prior to or contemporaneously with the execution of this Agreement:

All Environmental Permits have been obtained and are in full force and effect;

The current and past operations of the Credit Parties and all Borrower Agents on the Site were and are in compliance with Environmental Laws and all Environmental Permits, and no Credit Party has received any written or oral notice of any such non-compliance;

No Hazardous Materials (other than De Minimis Amounts) have been used, disposed of or otherwise Released on the Site nor has any Credit Party received any oral or written notice alleging any Release has occurred.  There is no threat of any Release migrating to the Site that could create an Environmental Condition.  There are not now nor have there ever been any buried or partially buried storage tanks on the Site;

No Credit Party has received any written or oral notice or other communication from any Person relating to (i) any Hazardous Materials Investigation relating to the Site; (ii) any Remediation; or (iii) possible liability of any Person under any Environmental Laws arising from the operation or condition of the Site;

All information known to any Credit Party or contained in the files of the Credit Parties relating to Environmental Conditions has been provided to Lender, including information relating to any prior Remediation;

No part of the Premises constitutes wetlands subject to the jurisdiction of the U.S. Army Corps of Engineers or the U.S. Environmental Protection Agency; and

The Site is not subject to any Environmental Liens and none are threatened or pending.

Notification of Certain Matters.  Indemnitor shall promptly notify Lender in writing, upon Indemnitor obtaining actual knowledge of:  (a) any Environmental Condition; (b) any material non-compliance with any Environmental Law related in any way to the Site; (c) any Environmental Lien on the Site or any act or omission which would reasonably be expected to result in the imposition of an Environmental Lien on the Site; (d) any Hazardous Materials Investigation relating to the Site; (e) any written or oral notice or other communication of which any of the Credit Parties becomes aware from any source whatsoever (including a Governmental Authority) relating in any way to liability pursuant to, noncompliance with, or enforcement actions under Environmental Laws in connection with the condition or operation of the Site; or (f) any circumstance or condition that renders any of Indemnitor’s representations and warranties in this Agreement to be inaccurate or incomplete.

Requirement for Remedial Action.  Indemnitor shall promptly undertake and complete appropriate Remedial Action with respect to all matters covered by Environmental Law and Section 4, unless Indemnitor establishes to the reasonable satisfaction of Lender (but only as to matters where Remedial Action is not otherwise required by Governmental Authority) that neither Indemnitor nor any other Credit Party has any potential liability therefor under Environmental Law, or this Agreement.  All such Remedial Actions pursuant to this Section shall be (a) undertaken and completed to the reasonable satisfaction of Lender and in compliance with Environmental Law and the Environmental Permits; (b) undertaken by environmental consultants, engineers, and contractors and in accordance with remediation plans, all as approved in advance and in writing by Lender, such approval not to be unreasonably withheld or delayed; and (c) at the sole cost and expense of Indemnitor.  Lender shall have the right, at Lender’s expense, to observe and monitor all Remedial Actions using environmental consultants and engineers selected by Lender.

Borrower Investigations.  Indemnitor shall perform such Investigations as Lender may from time to time reasonably request in writing with respect to matters for which Lender has reasonably determined that Indemnitor or another Credit Party may have any potential liability, either under Environmental Law, or this Agreement, and shall provide to Lender all reports, analyses, and results (each, a “Report”) of such Investigations.  Each Report shall be addressed to Lender, entitling Lender to rely on the Report or Lender shall be provided a written agreement from the Person issuing the Report stating that Lender is entitled to rely on the Report.  If Indemnitor independently undertakes any Investigation, such Investigation shall be undertaken by an Environmental Professional (as that term is now or may hereafter be defined in 40 CFR Part 312), or equivalent professional, and Indemnitor shall provide Lender with all Reports from that Investigation, addressed to Lender as stated above.

Investigations by Lender or Government Authority.  Lender and any other Person designated by Lender, including any receiver, any representative of a Governmental Authority, and any environmental consultant, shall have the right, but not the obligation, to enter upon the Site upon reasonable prior notice (or at any time without prior notice in the event of an emergency), to perform such Investigations as Lender reasonably deems necessary or appropriate or as any Government Authority may require.  Indemnitor shall cooperate with and provide access to Lender and any such person or entity designated by Lender without any requirement for an access agreement, license or indemnity from Lender or its designee.

Costs of Investigations.  All Investigations requested or undertaken by Lender pursuant to this Section shall be at Indemnitor’s sole cost and expense if, when Lender requests or performs such Investigation, either (i) Lender has a reasonable basis for believing that an Environmental Condition exists on the Site for which Indemnitor may have any potential liability, either under Environmental Law, or this Agreement, unless the results of the Investigation disclose that an Environmental Condition does not exist, or (ii) a Default has occurred and is continuing.  Otherwise, the cost of such Investigation shall be paid by Lender.  Indemnitor shall reimburse Lender for all such costs and expenses for

which Indemnitor is obligated within 20 days of written demand from Lender, accompanied by reasonable evidence of the costs and expenses so incurred.

Indemnification.  Indemnitor shall indemnify, hold harmless and defend Lender and its Affiliates (each, an “Indemnified Party”) for, from and against all Liabilities and costs of Remediation (whether or not performed voluntarily) that may be imposed on, incurred by or asserted against any such Indemnified Party in any matter relating to or arising out of, in connection with or as a result of any of the following:  (a) any misrepresentation or inaccuracy in any representation or warranty in this Agreement;  (b) any material breach or failure to perform any covenants or other obligations imposed on Indemnitor pursuant to this Agreement; and (c) the following:  (i) the presence of any Hazardous Materials that are or were at any time located on the Site; (ii) the Release, treatment, transportation, storage, arranging for disposal or disposal of any Hazardous Materials that are or were at any time located on the Site; (iii) any past, present or threatened non-compliance with or violations of Environmental Law or Environmental Permits in connection with activities, operations or Environmental Conditions on the Site; (iv) the imposition, recording or filing or the threatened imposition, recording or filing of any Environmental Lien encumbering the Site; or (v) any administrative processes or proceedings or judicial proceedings in any way connected with any matter addressed in this Agreement (collectively, the “Environmental Indemnified Matters”); provided, however, that Indemnitor shall not have any liability under this Section to any Indemnified Party with respect to any Environmental Indemnified Matter to the extent such liability has resulted primarily from the gross negligence or willful misconduct of such Indemnified Party, as determined by a court of competent jurisdiction in a final non-appealable judgment or order.

Hazardous Materials Investigations.  Lender may join and participate as a party in, if Lender so elects, any Hazardous Material Investigation of any Environmental Condition that is or might be impacting the Site.  All costs and expenses incurred by Lender pursuant to this Agreement shall be deemed to be Liabilities for purposes of Indemnitor’s indemnity obligations.

Release of Lender.  Indemnitor fully, finally and forever releases and discharges Lender and its Affiliates from, waives, and agrees not to sue, or otherwise assert against, Lender or any of its Affiliates, any claims, liabilities, obligations, actions, causes of action, debts, demands, suits, judgments, losses, fines, penalties, sanctions, costs, fees, taxes, charges, disbursements, expenses, defenses, challenges, contests, or other opposition, of whatever kind or nature and however characterized, at law, in equity or otherwise (including, without limitation, with respect to any diminution in business or property value or loss or denial of use of real property) that Indemnitor now has or in the future may have, whether known or unknown, foreseen or unforeseen, now existing or arising in the future, against Lender or its Affiliates arising out of or relating to this Agreement, any Investigation, any Environmental Condition, any Hazardous Materials Investigation, or any Remediation on, at or affecting the Site, except to the extent arising primarily from the gross negligence or willful misconduct of Lender or such Affiliate, as determined by a court of competent jurisdiction in a final non-appealable judgment or order.

Reinstatement of Obligations.  If any time all or any part of any payment made by Indemnitor or received by Lender or one of its Affiliates from Indemnitor pursuant to this Agreement is or must be rescinded or returned for any reason whatsoever (including the insolvency, bankruptcy or reorganization of Indemnitor), then the obligations of Indemnitor under this Agreement shall, to the extent of the payment rescinded or returned, be deemed to have continued in existence, notwithstanding such previous payment made by Indemnitor or receipt of payment by Lender or such Affiliate, and the obligations of Indemnitor hereunder shall continue to be effective or be reinstated, as the case may be, as to such payment, all as though such previous payment by Indemnitor had never been made.

Full Recourse.  The indemnity and other obligations contained herein are not subject to any non-recourse or other limitation of liability provisions contained in any of the Loan Documents, and the liability of Indemnitor pursuant to this Agreement shall not be limited by any such non-recourse or similar limitation of liability provisions.

Agreement Not Secured by Liens.  By acceptance of this Agreement, Lender confirms its agreement and understanding that the obligations of Indemnitor hereunder  are unsecured by any interest in the Collateral.

Independent Obligations; Joint and Several Liability.  The obligations of Indemnitor and the rights and remedies of Lender and its Affiliates in this Agreement are independent from and are in addition to those pursuant to any of the other Loan Documents, and such rights and remedies may be enforced and otherwise pursued independently

of any other rights and remedies of Lender and the Lender Affiliates under any other Loan Document.  Each party executing this Agreement shall be jointly and severally liable for all Indemnitor obligations under this Agreement.

General Provisions; Survival.  All provisions of the Loan Agreement Article entitled “General Provisions” apply to this Agreement, the same as if such provisions were set forth in full in this Agreement.  All representations, warranties, covenants, and obligations of Indemnitor in this Agreement shall survive the payment or other satisfaction of the Credit Facilities.

[SIGNATURE PAGE FOLLOWS]

EXECUTED as of the date written on the first page of this Agreement.

BORROWER:
LF3 SOUTHAVEN, LLC, a Delaware limited liability company
By:	Lodging Fund REIT III OP, LP, a Delaware limited partnership, its Sole Member
	By:	Lodging Fund REIT III, Inc., a Maryland corporation, its General Partner
		By:	/s/ Katie Cox
		Name:	Katie Cox
		Title:	Chief Financial Officer
LF3 SOUTHAVEN TRS, LLC, a Delaware limited liability company
By:	Lodging Fund REIT III TRS, Inc., a Delaware corporation, its Sole Member
		By:	/s/ Katie Cox
		Name:	Katie Cox
		Title:	Chief Financial Officer
GUARANTOR:
/s/ Corey R. Maple
COREY R. MAPLE

EX-10.58.5

EXHIBIT 10.58.5

Prepared by and Return to: Morris, Manning & Martin, LLP Attn:  Frederick C. C. Boyd, III, Esq. 1600 Atlanta Financial Center 3343 Peachtree Road, N.E. Atlanta, GA  30326 (405) 504 - 7775 Reviewed for Mississippi Recording Purposes by: Evans Petree PC Harley Steffens, Esq. 1000 Ridgeway Loop Rd, Ste. 200 Telephone 901-525-6781 MS Bar No. 102517

DEED OF TRUST,

SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS,

FINANCING STATEMENT, AND FIXTURE FILING

dated as of February 21, 2020

Trustor:	LF3 SOUTHAVEN, LLC, a Delaware limited liability company	1635 43rd Street South, Suite 205 Fargo, North Dakota 58103 Attn:  Corey R. Maple Telephone 701-630-6500
Trustee:	KENNETH D. FARMER	c/o First American Title Insurance Company 2001 Airport Road, Suite 301 Flowood, MS 39232 Telephone 601-863-1021
Lender:	WELLS FARGO BANK, NATIONAL ASSOCIATION	1808 Aston Avenue, Suite 250 Carlsbad, California 92008 Attn:  Loan Administration Telephone 888-272-6333

This Deed of Trust covers property which is or may become so affixed to real property as to become fixtures and also constitutes a fixture filing under applicable Mississippi law.

Premises:  135 Homewood Drive, Southaven, DeSoto County, Mississippi 38671

INDEXING INSTRUCTIONS:Lot 7Q, Part of 4th Revision to Lot 7G of the 6th Revision to Section B, Briargate Commercial Subdivision in Section 31, Township 1 South, Range 7 West, Desoto County, Mississippi, as per Plat Book 107, Page 22 and the Order to Vacate and Alter Plat thereof recorded in Warranty Deed Book 652, Page 721, in the Office of the Chancery Clerk of Desoto County, Mississippi.

DEED OF TRUST,

SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS,

FINANCING STATEMENT, AND FIXTURE FILING

THIS DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, FINANCING STATEMENT AND FIXTURE FILING (the “Deed of Trust”) is made as of February 21, 2020, by LF3 SOUTHAVEN, LLC, a Delaware limited liability company, as Grantor and Trustor (“Trustor”) whose mailing address is 1635 43rd Street South, Suite 205, Fargo, North Dakota 58103, Attn: Corey R. Maple,  KENNETH D. FARMER (“Trustee”), as trustee, whose mailing address is c/o First American Title Insurance Company, 2001 Airport Road, Suite 301, Flowood, MS 39232, and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”) as beneficiary, whose mailing address is 1808 Aston Avenue, Suite 250, Carlsbad, California 92008, Attn:  Loan Administration.

FOR VALUABLE CONSIDERATION, it is agreed as follows:

DEED OF TRUST

Grant of Deed of Trust.  Trustor irrevocably grants, conveys, assigns, warrants, bargains, sells, and transfers to Trustee, in trust, WITH POWER OF SALE AND RIGHT OF ENTRY AND POSSESSION, for the benefit and security of Lender, and grants to Lender a security interest in, all of the Trust Estate; TO HAVE AND TO HOLD the Trust Estate hereby granted, conveyed, assigned, warranted, bargained, sold, and transferred, or so intended, together with all estate, right, title and interest of Trustor and anyone claiming by, through or under Trustor, in, to, under or derived from the Trust Estate and all rights and appurtenances relating thereto, unto Lender, its successors and assigns forever, upon the terms, provisions and conditions set forth in this Deed of Trust, subject only to the Permitted Exceptions.  This Deed of Trust is being made pursuant to the terms and conditions of the Loan Agreement, of even date herewith, between Trustor, as Borrower, and Lender (as it may be amended, restated, supplemented, extended or renewed from time to time, the “Loan Agreement”).  Capitalized terms used in this Deed of Trust and not otherwise defined in this Deed of Trust have the meanings given to those terms in the Loan Agreement.

IMPORTANT NOTICE TO LIEN CLAIMANTS:

Any lien attaching to the Trust Estate after the date hereof (each, a “Junior Lien”) shall be subject and subordinate to all of the Secured Obligations, including: (a) any debt now or hereafter owed Lender or any affiliate of Lender by Trustor or any other Credit Party, including advances (whether or not obligatory) made subsequent to the recording of this Deed of Trust; and (b) any modification to this Deed of Trust, any other Loan Document, or the Secured Obligations after the date of recording of this Deed of Trust, including, without limitation, increases in the amount of the Secured Obligations, increases in interest rates with respect to any Secured Obligation, and changes to the maturity date of any Secured Obligation, notwithstanding that such modification may occur after the date such Junior Lien attaches or may adversely affect or prejudice the rights of any Junior Lien claimant.  Nothing herein shall be deemed an approval or consent by Lender to, or waiver of Lender’s right to object to, any such Junior Lien.

The Trust Estate.  The “Trust Estate” consists of all of Trustor’s estate, right, title and interest in and to the following described property and property rights, whether now existing or hereafter acquired, including in any greater estate hereafter acquired, with references in this Deed of Trust to the Trust Estate to mean and include all or any portion of or interest in any of the Trust Estate:

The Land and Improvements.  The real property described on Exhibit 1.2, together with any and all rights and privileges appurtenant thereto (the “Land”), and all buildings and other improvements located or erected on the Land, including any and all items of property attached or affixed to such buildings or other improvements (or any portion thereof) (collectively, the “Improvements”), which Improvements are intended and agreed to be an integral part of the real property.  The Land and the Improvements are referred to in this

Deed of Trust as the “Premises.”  If there is more than one parcel of real property described on Exhibit 1.2, references in this Deed of Trust to “Land” and “Improvements” shall be to the Land and Improvements relating to and encompassing each such parcel, each of which constitutes a “Premises,” and references to “Premises” shall include each such Premises.

Leases and Rents.  Any and all leasehold estates covering any portion of the Premises, including sublease estates, and including all cash or security deposits, advance rentals, and deposits or payments of similar nature (collectively, the “Leases”), together with any and all rents, issues, profits, damages, income and other benefits now or hereafter derived from the Premises, including amounts paid as rents, fees, charges, accounts, or other payments for the use or occupancy of rooms and other public facilities in hotels, motels, or other lodging properties (collectively the “Rents”).

Other Interests.  Any and all (i) interest, estate or other claim, in law or in equity, in any of the Premises, including any greater estate in either the Land or the Improvements; (ii) easements, rights-of-way and other rights used in connection with the Premises, including all rights to the nonexclusive use of common drive entries; (iii) water rights, water stock, and claims or title to water; (iv) land lying within the right-of-way of any street, open or proposed, adjoining the Premises, and any and all sidewalks, parkways, driveways, alleys and strips and gores of land adjacent to or used in connection with the Premises; and (v) awards made for the taking by eminent domain, or by any proceeding of purchase in lieu thereof, of the whole or any part of the Premises (including awards for severance damages).

UCC Collateral.  The “UCC Collateral” described on Exhibit 1.2(d).

Proceeds.  All proceeds, both cash and non-cash, and products of any of the foregoing.

Duration of Deed of Trust.  This Deed of Trust shall continue in full force and effect until such time as all indebtedness under the Note(s) executed and delivered pursuant to the Loan Agreement and all other Secured Obligations (defined below) have been fully, finally, and irrevocably paid and performed, at which time this Deed of Trust shall be void, and Lender agrees to execute an instrument evidencing the satisfaction of all obligations under this Deed of Trust and releasing this Deed of Trust.

Warranty.  Trustor represents, warrants and covenants that Trustor (a) is, and, as to any portion of the Trust Estate acquired hereafter, will upon such acquisition be, the owner of the Trust Estate and all legal and beneficial interests therein, including a fee simple ownership interest in the Premises, free and clear of all Liens, other than the Permitted Exceptions; and (b) shall remain the owner of the entire Trust Estate and all legal and beneficial interests therein free and clear of all Liens, other than the Permitted Exceptions.

OBLIGATIONS SECURED

The Secured Obligations.  This Deed of Trust is given to secure the following obligations (collectively, the “Secured Obligations”):

Note Indebtedness.  Payment of the indebtedness evidenced by the Term Loan Note dated as of even date herewith, in the principal amount of $13,460,000.00,by Trustor and payable to Lender, with the final payment being due on or beforeMarch 3, 2025 (as amended from time to time, the “Note”), with interest thereon, all as provided in the Notes and other Loan Documents, including interest rate increases or decreases, maturity date extensions, and payment modifications (including deferrals or accelerations of principal or interest).  References herein to “Note” and “Loan” are to each such Note and related Loan. 

Loan Obligations.  Payment of all other Indebtedness and other sums, with interest thereon, that may be owed or arise under, and performance of all other Obligations contained in or arising under, this Deed of

Trust, the other Loan Documents, and in any other instrument now or hereafter given to evidence or further secure payment or performance of any Obligation.

Other Obligations.  All obligations of the Trustor under the Related Credit Arrangements, including any Related Swap Contracts and Related Treasury Management Arrangements, but excluding any Excluded Swap Obligations, to which the Lender or its Affiliates are a party shall be deemed to be Secured Obligations of the Trustor, and the Lender or Affiliate of the Lender party to any such Related Credit Arrangement shall be deemed to be a beneficiary and mortgagee hereunder with respect to such Secured Obligations; provided,  however, that such obligations shall cease to be Secured Obligations at such time, prior to the maturity date of the Loan, as such Person (or Affiliate of such Person) shall cease to be a “Lender” under the Loan Agreement.  No Person who obtains the benefit of this Deed of Trust by virtue of the provisions of this Section shall have, prior to the maturity date of the Loan, any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Secured Obligations (including the release or modification of any Secured Obligations or security therefor) other than in its capacity as the Lender and only to the extent expressly provided in the Loan Documents.

Future Advances.  All future principal advances, with all interest thereon, to or for the benefit of Trustor, made pursuant to the terms of this Deed of Trust or any of the other Loan Documents.

Other Disbursements and Protective Advances.  All disbursements and other advances made by Lender for (i) the payment of Taxes, maintenance, care, protection or insurance on or with respect to the Trust Estate; (ii) the discharge of Liens having priority over the lien of this Deed of Trust; (iii) the curing of waste of the Trust Estate; (iv) indemnification obligations regarding environmental liabilities associated with the Trust Estate; (v) service charges and expenses incurred by reason of a default hereunder, including late charges, attorneys’ fees and court costs; and (vi) all other charges, disbursements, advances, costs and expenses now or hereafter incurred by Lender pursuant to any of the Loan Documents or as permitted by Applicable Law, in all cases with interest thereon until paid at the default interest rate applicable to the Loan.  Notwithstanding the foregoing, Lender shall have no obligation to make any disbursements or advance any sums as a result of this subsection.

Obligations Generally.  Payment and performance of all other Obligations, including any other obligations that are stated in this Deed of Trust to be included as Secured Obligations.

Priority.  The Trust Estate shall secure all of the Secured Obligations presently or hereafter owed, and the priority of the Lien created hereby for all such Secured Obligations shall be as of the time this Deed of Trust is recorded.  Without limiting the foregoing, all advances and disbursements pursuant to Sections 2.1(d) and 2.1(e), whether such advances are obligatory, optional or both and whether made before or after default or maturity or other similar event, shall be secured hereby to the same extent as if such advance or disbursement has been made contemporaneously with the execution hereof, even though no advance may have been made at the time of execution hereof and even though no indebtedness is outstanding at the time any advance is made.

Certain Obligations Not Secured.  Notwithstanding any other provision hereof or the other Loan Documents, this Deed of Trust does not secure any obligations of Trustor or any other Credit Party in any Loan Document with respect to state and federal environmental laws, rules, regulations and permits; hazardous materials and other environmental conditions; environmental investigations; the release or threatened release of any hazardous materials; and all environmental remediation requirements.

Agency.  To the extent that any Secured Obligation is held by an Affiliate of Lender, rather than directly by Lender, Lender is acting both for itself, with respect to the Secured Obligations held by Lender, and as the representative and collateral agent for and on behalf of such Affiliate with respect to Secured Obligations held by such Affiliate, and Lender is entitled, both on its own behalf and as the representative and collateral agent for and on behalf of such Affiliate, to exercise all rights and remedies of the secured party under this Deed of Trust.

TRUSTOR COVENANTS

Use.  Trustor shall use the Trust Estate solely for the operation of a Permitted Concept in accordance with the Franchise Agreement and Management Agreement and for no other purpose.  Trustor shall not, without Lender’s prior written consent, (a) initiate or acquiesce in a change in the zoning classification; or (b) grant, amend, modify or consent to any easement or covenants, conditions and restrictions pertaining to the Trust Estate.

Impositions; Right to Contest.  Prior to delinquency, Trustor shall pay the following (collectively, the “Impositions”):  (a) all Taxes, water and sewer rents and charges, and charges for utility services that may be assessed, levied or imposed upon Trustor, the Trust Estate, the Loan Documents, or the Secured Obligations; and (b) all claims and demands of mechanics, laborers, materialmen and others which, if unpaid, might create a Lien on the Trust Estate, unless Trustor shall contest the amount or validity thereof as permitted in this Section.  If by law any Imposition is payable in installments, Trustor may pay the same in installments as they become due and before any fine, penalty, interest, or cost may be added thereto for nonpayment.  So long as no Default has occurred that is continuing, Trustor may, at its own expense, contest by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity of any Imposition; provided that Trustor (y) shall have first demonstrated to Lender’s reasonable satisfaction that such proceedings operate to prevent the sale of the Trust Estate to satisfy such Imposition prior to a final determination; and (z) shall have either (i) deposited with Lender adequate security for the payment of the Imposition (including any interest and penalties); or (ii) paid the Imposition in full under protest or furnished such other security or undertaking as may be permitted by Applicable Law to accomplish a stay of any sale of the Trust Estate.

Maintenance and Repair.  Trustor shall:  (a) maintain the Trust Estate in good condition and repair, subject to reasonable and ordinary wear and tear, and free from actual or constructive waste; (b) operate, remodel, update and modernize the Trust Estate as required by the Franchise Agreement and Management Agreement and as is otherwise prudent and reasonable; and (c) pay all operating costs of the Trust Estate in the ordinary course of business, including utility costs.  Trustor shall not do, nor allow any tenant or other user of the Trust Estate to do, any act that materially increases the dangers to human health or the environment, poses an unreasonable risk of harm to any Person (whether on or off the Premises), impairs or is reasonably likely to impair in any material respect the value of the Trust Estate, is contrary to Applicable Law, or violates in any material respect any applicable covenant, condition, restriction, agreement or easement.

Alterations.  Except as may be required or permitted by the Loan Agreement, Trustor shall not make, nor permit to be made, any alterations (including additions) to the Improvements without Lender’s prior written consent, not to be unreasonably withheld or conditioned, except that Trustor may make nonstructural alterations costing less than $100,000 in the aggregate at any one time without Lender’s consent.  Structural alterations include any alterations that would affect the foundation of the Improvements; involve the structural elements of the Improvements, such as a load-bearing wall, structural beams, columns, supports or roof; or materially affect any building systems, including electrical systems, plumbing, HVAC, and fire and safety systems.  All such work shall: (a) be at the sole cost of Trustor; (b) be undertaken using licensed contractors; (c) be prosecuted diligently to completion; (d) be of good workmanship and materials; (e) be free of all mechanics’ and materialmen’s liens; and (f) comply fully with the terms of this Deed of Trust, the Loan Agreement, the Franchise Agreement, the Management Agreement, and all Applicable Law.

Condemnation.

Takings; Continuation of Obligations.  If there is a taking of all or any portion of the Trust Estate or the commencement of any proceedings or negotiations which might result in a taking by any lawful authority by exercise of the right of condemnation or by agreement in lieu of condemnation (a “Taking”), Trustor shall promptly give Lender written notice of the Taking.  No Taking shall relieve Trustor of any Secured Obligations, including its obligations to make regularly scheduled payments of principal and interest pursuant to the Note and the other Loan Documents.  Trustor authorizes and empowers Lender, at Lender’s option and in Lender’s

sole discretion, to settle, adjust, or compromise any claim for loss or damage in connection with any Taking or proposed Taking and to commence, appear in and prosecute in its own name or on behalf of Trustor any such action or proceeding arising out of or relating to a Taking or proposed Taking.

Restoration Obligations.  Promptly following the occurrence of a Taking, other than a Total Taking (defined below), Trustor shall, at its expense, commence and diligently complete the repair, restoration, replacement, and rebuilding of the Trust Estate as nearly as possible to its value, condition and character immediately prior to the Taking (a “Restoration”).  Trustor shall not be excused from Trustor’s Restoration obligation, regardless of whether or not there are Condemnation Proceeds available to Trustor or whether any such Condemnation Proceeds are sufficient in amount, and the application or release by Lender of any Condemnation Proceeds shall not cure or waive any Default under this Deed of Trust or the other Loan Documents or invalidate any act done pursuant thereto.

Condemnation Proceeds.  All compensation, awards, damages, rights of action, and proceeds awarded to Trustor by reason of any such Taking or received by Trustor as the result of a transfer in lieu of a Taking (the “Condemnation Proceeds”) are hereby assigned, and shall be paid, directly to Lender.  Trustor agrees to execute such further assignments of the Condemnation Proceeds as Lender may require.  If Trustor receives any Condemnation Proceeds, Trustor shall promptly pay the Condemnation Proceeds to Lender, to be applied by Lender to payment of the Secured Obligations in such order as Lender, in its sole discretion, shall determine.  To the extent that Condemnation Proceeds are applied to prepay principal on Note, no prepayment fee will be charged in connection with such prepayment.  Notwithstanding the foregoing, if no Default has occurred and is continuing and if the Taking is not a Total Taking, the Condemnation Proceeds, less costs, fees and expenses incurred by Lender and Trustor in the collection thereof, including reasonable attorneys’ fees and expenses (the “Net Condemnation Proceeds”), shall be made available to Trustor, to be used by Trustor to satisfy its Restoration obligations, substantially in the manner and according to the procedures, limitations, and requirements provided in the Loan Agreement for the distribution of Net Insurance Proceeds, as if the Net Condemnation Proceeds were Net Insurance Proceeds.  “Total Taking” means a Taking of substantially all of the Trust Estate or of such a portion of the Trust Estate that the remainder cannot reasonably be used for the purposes for which used prior to the Taking.

No Discharge.  Trustor’s obligations and liabilities hereunder or under any other Loan Document shall not be released, discharged or otherwise affected by reason of:  (a) any damage to, destruction of, or condemnation or similar taking of the Trust Estate; (b) any restriction on, or interference by any Person with, any use of any of the Trust Estate; (c) any title defect or encumbrance affecting the Trust Estate; (d) any claim that Trustor has or might have against Lender or Trustee; (d) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to Lender, or any action taken with respect to this Deed of Trust by any trustee or receiver of Lender, or by any court, in any such proceeding; (e) any default or failure on Lender’s part to perform or comply with any of the terms of the Loan Documents or of any Related Agreement; or (f) any other act or occurrence whatsoever, whether similar or dissimilar to the foregoing.

Actions Affecting Trust Estate.  Trustor shall give Lender written notice of and, unless otherwise directed in writing by Lender, shall appear in and contest any action or proceeding purporting to affect the security or priority of this Deed of Trust or the rights or powers of Lender or Trustee and shall pay all reasonable costs and expenses (including costs of evidence of title, litigation, and reasonable attorneys’ fees) in any such action or proceeding in which Lender or Trustee may appear.

Actions by Lender or Trustee.  If Trustor fails to make any payment or to do any act required hereby, Lender or Trustee may, each in its sole discretion, but without obligation so to do, without releasing Trustor from any obligation, and with only such notice to or demand upon Trustor as is reasonable under the circumstances, but in no event exceeding five days’ prior written notice, make or do the same in such manner and to such extent as Lender or Trustee may deem necessary or appropriate, including:  (a) entering upon and taking possession of the Trust Estate and otherwise exercising its rights and remedies hereunder and under the other Loan Documents; (b) taking such actions and making such additions, alterations, repairs and improvements to the Trust Estate as Lender or Trustee

reasonably may consider necessary or appropriate to keep the Trust Estate in good condition and repair or otherwise to protect the value or security of any of the Trust Estate, including payment of Impositions and insurance premiums; and (c) taking such actions as Lender or Trustee reasonably may consider necessary or appropriate to protect the priority, validity and enforceability of the lien of this Deed of Trust on the Trust Estate.  Trustor shall, immediately upon demand by Lender or Trustee, as the case may be, pay to Lender or Trustee all amounts expended by Lender or Trustee, including all costs and expenses reasonably incurred by Lender or Trustee in connection with the exercise by Lender or Trustee of the foregoing rights (including costs of evidence of title, court costs, appraisals, surveys, fees of receivers, and reasonable attorneys’ fees), together with interest at the default interest rate applicable to the Loan on such amounts from the date incurred until paid.

Prohibited Transactions.  In order to induce Lender to make the Loan, Trustor agrees that, upon the occurrence of a Prohibited Transaction (as defined in the Loan Agreement) without the prior written consent of Lender, in Lender’s sole discretion, Lender shall have the absolute right, at its option, without prior demand or notice, to declare all sums secured hereby immediately due and payable.  In connection with any request for consent to a Prohibited Transaction, Trustor agrees to pay Lender such fees and other amounts as Lender may require, as consideration to Lender in connection with, and as a condition precedent to, any such matter.

No Liens or Encumbrances.  Trustor covenants not to grant or suffer to exist, and Trustor covenants to pay and promptly discharge, at Trustor’s sole cost and expense, all Liens upon the Trust Estate, other than Permitted Exceptions.  Trustor covenants to notify Lender immediately in writing of any such Lien.  Except as otherwise provided in this Deed of Trust with respect to Impositions, Trustor may contest in good faith the validity of any involuntary Lien, provided Trustor shall first deposit with Lender a bond or other security satisfactory to Lender in such amount as Lender shall reasonably require, but not more than 150% of the amount of the claim, and provided further that if Trustor loses such contest, Trustor will thereafter diligently proceed to cause such Lien to be removed and discharged, at Trustor’s sole cost and expense.  If Trustor fails to remove or discharge any Lien, then, in addition to any other right or remedy of Lender or Trustee, Lender or Trustee may, after only such notice to Trustor as may be reasonable under the then existing circumstances, but shall not be obligated to, discharge the same, either by paying the amount claimed to be due, or by procuring the discharge of such Lien by depositing in a court a bond or the amount claimed or otherwise giving security for such claim, or by procuring such discharge in such manner as is or may be prescribed by law.  Trustor shall, immediately upon demand therefor by Lender or Trustee, pay to Lender or Trustee an amount equal to all amounts expended by Lender or Trustee, including all costs and expenses incurred by Lender or Trustee in connection with the exercise by Lender or Trustee of the foregoing rights, together with interest thereon from the date of each such expenditure at the default interest rate applicable to the Loan.  Such costs and expenses shall be secured by the Liens in favor of Lender, including the lien of this Deed of Trust, and are part of the Secured Obligations. 

Periodic Appraisals.  Lender may require an appraisal of the Premises, or an update to a previously provided appraisal of the Premises, indicating the present appraised fair market value thereof:  (a) if Lender determines in good faith that an appraisal is required as a result of (i) any law, regulation or guideline or any change or interpretation thereof; or (ii) any central bank or other fiscal, monetary or other Government Authority having jurisdiction over Lender or its activities requesting, directing or imposing a condition upon Lender (whether or not such request, direction or condition shall have the force of law); (b) at any time after the occurrence and during the continuance of a Default; or (c) at any other time that Lender, in its reasonable discretion deems it appropriate.  Appraisals and updates pursuant to subsections (a) and (b) shall be at Trustor’s sole cost and expense.  Appraisals and updates pursuant to subsection (c) shall be at Lender’s sole cost and expense; provided, however, that Lender may charge Trustor for one such appraisal or update for the Premises in each calendar year during the continuance of the Deed of Trust.  All such appraisals and updates shall comply with Applicable Law, as well as Lender’s internal requirements, and shall be conducted by appraisers selected and retained by or on behalf of Lender.

Flood Insurance.  If Trustor owns the Improvements and if the Premises are located in a Special Flood Hazard Area (“SFHA”) designated by the Federal Emergency Management Administration, Trustor shall, at its expense, obtain and maintain flood insurance under the National Flood Insurance Program (“NFIP”) for the Premises meeting the Insurance Requirements in the Loan Agreement and providing insurance coverage sufficient to rebuild or replace

the Improvements in an amount not less than the lesser of:  (a) the outstanding principal balance of each Note secured hereby, including any prior liens on the Premises; (b) the maximum amount of coverage allowed for the type of property under the NFIP; or (c) the value of the Improvements and equipment located on the Land, but not the value of the Land itself.  The policy must state the proper SFHA zone for the Premises (i.e., SFHA zones beginning with “A” or “V”).  Deductibles must be stated and may not exceed $50,000.  SPECIAL NOTICE:  Notice is hereby given to Trustor that, if Trustor fails to renew or keep in effect adequate flood insurance on the Premises during the time that the NFIP mandates flood insurance coverage, federal law requires Lender to purchase the flood insurance for the Premises and authorizes Lender to charge Trustor the cost of premiums and fees incurred in purchasing the insurance.  Any flood insurance that Lender purchases may not fully protect Trustor’s interest and equity in the Premises and will be substantially more expensive than the insurance Trustor may obtain.

Granting of Easements, Etc.  If no Default shall have occurred and be continuing, Trustor may, from time to time with respect to its interest in the Trust Estate and with Lender’s prior written consent:  (a) grant easements and other rights in the nature of easements; (b) release existing easements or other rights in the nature of easements which are for the benefit of the Trust Estate; (c) dedicate or transfer unimproved portions of the Trust Estate for road, highway or other public purposes; (d) execute petitions to have the Trust Estate annexed to any municipal corporation or utility district; and (e) execute and deliver to any person any instrument appropriate to confirm or effect such grants, releases, dedications and transfers.  At any time, or from time to time, without liability therefor and without notice, upon written request of Lender and without affecting the personal liability of any Person for payment of the Secured Obligations or the effect of this Deed of Trust upon the remainder of the Trust Estate, Trustee may reconvey any part of the Trust Estate or join in any of the foregoing actions.

Lender’s Power.  Without affecting the liability of any Person liable for the payment or performance of any of the Secured Obligations and without affecting the lien of this Deed of Trust upon the Trust Estate not then or theretofore released as security for the Secured Obligations, Lender may, from time to time and without notice:  (a) release any Person so liable; (b) extend the Secured Obligations; (c) grant other indulgences; (d) release or reconvey, or cause to be released or reconveyed, at any time at Lender’s option any parcel, portion or all of the Trust Estate; (e) take or release any other or additional security or any guaranty for any of the Secured Obligations; or (f) make adjustments or other arrangements with debtors in relation thereto.

Recording; Further Assurances.  Trustor shall, from time to time, perform or cause to be performed any other act and shall execute or cause to be executed any and all further instruments (in recordable form) as Lender or Trustee may reasonably request for carrying out the intention of, or facilitating the performance of, this Deed of Trust, including to maintain the priority of the Deed of Trust at the date of initial recording.

Representations and Warranties.  Trustor represents and warrants to Lender that: (a) to the best of Trustor’s knowledge:  (i) all Improvements are, or upon completion will be, located within the boundary lines of the Land and do not and will not, upon completion, encroach upon the land of any adjacent owner; (ii) no improvements of any third Person encroach upon the Land; and (iii) no Person has any unrecorded right, title or interest in the Premises or any other part of the Trust Estate, whether by right of adverse possession, prescriptive easement, right of first refusal, right of first offer, option to purchase, lease, or other Contractual Obligation; and (b) there are no delinquent accounts payable or mechanics’ or materialmen’s Liens in favor of any materialman, laborer, or other Person in connection with labor or materials furnished to or performed on any of the Premises and no work has been performed or is in progress, nor have materials been supplied to any portion of the Trust Estate or agreements entered into for work to be performed or materials to be supplied to any portion of the Trust Estate prior to the date of this Deed of Trust.

Purchase Money Deed of Trust.  This Deed of Trust is a purchase money mortgage as a portion of the Secured Obligations are being used by Trustor to finance the acquisition of the Trust Estate.

Grant of Security Interest.  As further security for payment and performance of the Secured Obligations, Trustor grants to Lender a lien on and security interest in and to all of the UCC Collateral, and this Deed of Trust constitutes a security agreement with Trustor, as debtor, and Lender, as secured party.  Lender confirms that, notwithstanding the inclusion of general intangibles as part of the UCC Collateral and the creation, attachment and

perfection of Lender’s lien on and security interest in general intangibles in accordance with the provision of UCC Section 9-408(a), such creation, attachment and perfection is subject to the limitations imposed by UCC Section 9‑408(d) which provide that such creation, attachment, and perfection (a) is not enforceable against Franchisor or Manager; (b) does not impose a duty or obligation on Franchisor or Manager; (c) does not require Franchisor or Manager to recognize such lien and security interest, pay or render performance to Lender, or accept payment or performance from Lender; (d) does not entitle Lender to use or assign Trustor’s rights under the Franchise Agreement or the Management Agreement; and (e) does not entitle Lender to use, assign, possess, or have access to any trade secrets or confidential information of Franchisor or Manager.

Fixture Filing.  This Deed of Trust shall be effective as a financing statement filed as a fixture filing with respect to all fixtures included within the Trust Estate and is to be filed for record in the real estate records of each county where any part of the Trust Estate (including said fixtures) is situated.  The mailing address of Trustor is the address of Trustor set forth in the introductory paragraph in this Deed of Trust, and the address of Lender from which information concerning the Liens may be obtained is the address of Lender as set forth in the introductory paragraph of this Deed of Trust.

ASSIGNMENT OF LEASESAND RENTS

Assignment of Leases and Rents.  Trustor assigns, transfers, and conveys to Lender all of Trustor’s estate, right, title and interest in and to the Leasesand Rents and gives to and confers upon Lender the right, power and authority to collect the Rents; to give receipts, releases and satisfactions; to sue, in the name of Trustor or Lender, for all Rents; and to apply the Rents to the payment of the Secured Obligations in such order as Lender shall determine.  Trustor further irrevocably appoints Lender its true and lawful attorney-in-fact, at the option of Lender at any time and from time to time, to demand, receive and enforce payment, to give receipts, releases and satisfactions, and to sue, in the name of Trustor or Lender, for all Rents.  Trustor authorizes and directs the lessees, tenants and occupants to make all payments under the Leases directly to Lender upon written demand by Lender, without further consent of Trustor; provided, however, that Trustor shall have the right to collect such Rents (but not more than one month in advance unless the written approval of Lender is first obtained), and to retain and enjoy same, so long as a Default shall not have occurred.  The assignment of the Rents made in this Section is intended to be an absolute, present assignment from Trustor to Lender and not merely the passing of a security interest.  Rents collected subsequent to any Event of Default shall be applied to the costs, if any, of taking possession and control of and managing the Trust Estate and collecting such amounts, including to pay reasonable attorney’s fees, receiver’s fees, premiums on receiver’s bonds, costs of repairs to the Trust Estate, premiums on insurance policies, taxes, assessments and other charges on the Trust Estate, and the costs of discharging any obligation or liability of Trustor with respect to the Leases and to the sums secured by this Deed of Trust, all in such order as Lender may, in its sole discretion, determine. 

Rights of Lender.  Upon the occurrence and during the continuance of an Event of Default, Lender may, at any time without notice (except if required by any Applicable Law), either in person, by agent or by a court-appointed receiver (with such receiver to have all powers and duties set forth for receivers in this Deed of Trust and as prescribed by Applicable Law), regardless of the adequacy of Lender’s security, and at Lender’s sole election (without any obligation to do so), to the extent permitted by Applicable Law, enter upon and take possession and control of the Trust Estate to perform all acts necessary and appropriate to operate and maintain the Trust Estate, including to execute, cancel or modify the Leases, make repairs to the Trust Estate, execute or terminate contracts providing for the management or maintenance of the Trust Estate, all on such terms as are deemed best to protect the security of this assignment.  Lender or the receiver, to the extent permitted by Applicable Law, shall have access to the books and records used in the operation and maintenance of the Trust Estate and shall be liable to account only for those Rents actually received.  Lender shall not be liable to Trustor, anyone claiming under or through Trustor or anyone having an interest in the Trust Estate by reason of anything done or left undone by Lender hereunder, except to the extent of Lender’s gross negligence or willful misconduct.  Any entering upon and taking possession and control of the Trust Estate by Lender or the receiver and any application of Rents as provided herein shall not cure or waive any Default or invalidate any other right or remedy of Lender.

Trustor’s Affirmative Obligations.  Trustor shall:  (a) fulfill, perform and observe in all respects each and every condition and covenant of Trustor contained in any Lease; (b) give prompt notice to Lender of any claim or event of default under any Lease given to or by Trustor, together with a complete copy or statement of any information submitted or referenced in support of such claim or event of default; (c) at the sole cost and expense of Trustor, enforce the performance and observance of each and every covenant and condition of any Lease to be performed or observed by any other party thereto, unless such enforcement is waived in writing by Lender; and (d) appear in and defend any action challenging the validity, enforceability or priority of the Lien created hereby or the validity or enforceability of any Lease.  Trustor shall cause the tenant under each Lease to comply with Trustor’s obligations contained in Article 3; provided, however, this requirement shall not relieve or release Trustor from any of its obligations under Article 3 or elsewhere in any of the Loan Documents.

Negative Covenants.  Trustor shall not, without Lender’s consent, in Lender’s sole discretion:  (a) enter into any Lease; (b) modify or amend the terms of any Lease; (c) grant any consents under any Lease, including any consent to an assignment of any Lease, a mortgaging of the leasehold estate created by any Lease or a subletting by the tenant under any Lease; (d) terminate, cancel, surrender, or accept the surrender of, any Lease, or waive or release any Person from the observance or performance of any obligation to be performed pursuant to any Lease or from liability on account of any warranty given thereunder; or (e) assign, transfer, mortgage, pledge or hypothecate any Lease or any interest therein to any party other than Lender.  Any lease, modification, grant, termination, cancellation, surrender, waiver or release in violation of the foregoing provisions shall be null and void and of no force and effect.

No Merger.  Unless Lender otherwise consents or elects, Trustor’s title to the Trust Estate and the leasehold interest in the Trust Estate created by any Lease shall not merge, but shall always be kept separate and distinct, notwithstanding the union of such estates in Trustor, Lender or any other person by purchase, operation of law, or by foreclosure or sale of the Trust Estate pursuant hereto or otherwise.

EVENTS OF DEFAULT AND REMEDIES

Events of Default.  Each Event of Default constitutes an “Event of Default” under this Deed of Trust.

Remedies.  Trustor irrevocably agrees that, upon the occurrence of an Event of Default, in addition to all other rights and remedies provided in this Deed of Trust, in any of the other Loan Documents, or by Applicable Law, Lender may take all or any of the following actions:

Acceleration.  Declare all or any part of the Secured Obligations immediately due and payable without any presentment, demand, protest or notice of any kind.

Right of Entry.  Either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court and without regard to the adequacy of its security, enter upon and take possession of the Trust Estate, either in its own name or in the name of Trustee, and do any acts that it deems necessary or desirable to preserve the value, marketability or rentability of, to increase the income from, or to protect the security of this Deed of Trust with respect to, the Trust Estate and, with or without taking possession of the Trust Estate, sue for or otherwise collect the Rents, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection (including reasonable attorneys’ fees) to the Secured Obligations, all in such order as Lender may determine.  The entering upon and taking possession of the Trust Estate, the collection of such Rents and the application thereof shall not cure or waive any default or notice of default or invalidate any act done in response to such default or pursuant to such notice of default.  Notwithstanding the continuance in possession of the Trust Estate or the collection, receipt and application of Rents, Lender and Trustee shall be entitled to exercise every right and remedy provided for in any of the Loan Documents or by law upon occurrence of any Event of Default.

Foreclosure.  Commence an action to foreclose the Lien of this Deed of Trust as a mortgage in a single parcel or in several parcels, appoint a receiver, or specifically enforce any of the covenants of this Deed of Trust.

Exercise of Power of Sale.  Exercise the power of sale contained in this Deed of Trust and deliver to Trustee a written statement of breach, notice of default and election to cause Trustor’s interest in the Trust Estate to be sold, all in accordance with Applicable Law.

If Lender elects to exercise the power of sale contained in this Deed of Trust, Lender shall notify Trustee in writing and shall deposit with Trustee copies of this Deed of Trust and the Note and such receipts and evidence of expenditures made and secured hereby as Trustee may require.

Upon receipt of such notice from Lender and at the direction of Lender, Trustee shall cause to be recorded, published or delivered such notices of default and notices of sale as may then be required by law or this Deed of Trust.  Trustee shall, only at the direction of Lender and without demand on Trustor, after such time as may then be required by law and after recordation of such notice of default and after notice of sale having been given as required by law, sell Trustor’s interest in the Trust Estate at the time and place of sale fixed by it in such notice of sale, either as a whole, or in separate lots or parcels or items as Lender shall deem expedient, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States payable at the time of sale, or as otherwise may then be required by law.  Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient deed or deeds conveying the property so sold, without any covenant or warranty, express or implied.  The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof.  Any person, including, without limitation, Trustor, Trustee or Lender, may purchase at such sale and Trustor covenants to warrant and defend the title of such purchaser or purchasers.  Lender shall have the right to credit bid at any such sale.

Trustee or Lender may sell not only the real property but also the UCC Collateral and other interests which are a part of the Trust Estate, or any part thereof, as a unit and as a part of a single sale, or may sell any part of the Trust Estate separately from the remainder of the Trust Estate.  Neither Trustee nor Lender shall be required to take possession of any part of the Trust Estate or to have any of the UCC Collateral present at any sale of the Trust Estate.  Trustee or Lender may appoint or delegate any one or more persons as agent to perform any act or acts necessary or incident to any sale held by Trustee or Lender, including the posting of notices and the conduct of sale, but in the name and on behalf of Lender.  If any sale hereunder is not completed or is defective in the opinion of Trustee or Lender, such sale shall not exhaust the power of sale hereunder, and Trustee or Lender shall have the right to cause a subsequent sale or sales to be made hereunder.

As may be permitted by law, after deducting all costs, fees and expenses of Trustee and of this Deed of Trust, including costs of evidence of title in connection with sale, Trustee or Lender shall apply the proceeds of sale (A) first, to payment of all costs, fees and expenses, including attorneys’ fees and expenses incurred by Lender in exercising the power of sale or foreclosing this Deed of Trust; (B) second, to the payment of the Secured Obligations (including, without limitation, the principal, accrued interest and other sums due and owing under the Note and the amounts due and owing to Lender under this Deed of Trust) in such manner and order as Lender may elect; and (C) third, the remainder, if any, shall be paid to Trustor, or such other persons as may be legally entitled thereto.

Trustee may, in the manner provided by law, postpone sale of all or any portion of the Trust Estate by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement or subsequently noticed sale, and without further notice make such sale at the time fixed by the last postponement, or may, in its discretion, give a new notice of sale.

Receiver.  Obtain an order, ex parte, from a state or federal court appointing a receiver for (i) the business operations of Trustor; (ii) the Trust Estate; and/or (iii) any or all of the assets and property rights of Trustor.  Lender’s right to obtain such an order ex parte from such court shall be as a matter of right and without notice to Trustor or anyone claiming under Trustor, and without regard to the then value of the Trust Estate or the interest of Trustor therein.  TRUSTOR WAIVES ANY RIGHT TO A HEARING OR NOTICE OF HEARING PRIOR TO THE APPOINTMENT OF A RECEIVER AND IRREVOCABLY CONSENTS TO SUCH APPOINTMENT.  Trustor irrevocably agrees that any receiver appointed pursuant to this subsection may have all of the powers and duties of receivers in like or similar cases, including the right, with Lender’s express written consent, to operate and sell all property of the receivership estate, and that such powers and duties shall be vested in the receiver until the later of (x) the date of confirmation of sale of the receivership estate, (y) the date of expiration of any redemption period, or (z) the date the receiver is discharged.  Trustor waives any and all rights it may have to object to the appointment of a receiver as provided herein or to the receiver’s operation or disposition of the receivership estate.

Personal Property.  It is the express understanding and intent of the parties that as to any personal property interests subject to Article 9 of the UCC, Lender, upon an Event of Default, may proceed under the UCC or may proceed as to both real and personal property interests in accordance with the provisions of this Deed of Trust and its rights and remedies in respect to real property, as specifically permitted under Section 9-604 of the UCC.

Lender’s Exercise of Remedies.  Lender and Trustee shall be entitled to enforce payment and performance of any Secured Obligations and to exercise all rights and powers under this Deed of Trust or under any of the other Loan Documents or any laws now or hereafter in force, notwithstanding some or all of the Secured Obligations may now or hereafter be otherwise secured, whether by mortgage, deed of trust, pledge, lien, assignment or otherwise.  Neither the acceptance of this Deed of Trust nor its enforcement, whether by court action or pursuant to the power of sale or other powers contained in this Deed of Trust, shall prejudice or in any manner affect Lender’s or Trustee’s right to realize upon or enforce any other security now or hereafter held by Lender or Trustee, it being agreed that Lender and Trustee shall be entitled to enforce this Deed of Trust and any other security now or hereafter held by Lender or Trustee in such order and manner as it may in its absolute discretion determine.

Possession of Trust Estate.  If, following the sale of the Trust Estate pursuant to the exercise of remedies under this Deed of Trust, Trustor continues to occupy any of the Trust Estate so sold, Trustor shall be deemed immediately and automatically to have become the tenant of the purchaser at such sale, which tenancy shall be a tenancy from day to day, terminable at the will of either tenant or landlord, at a reasonable rental per day based upon the value of the portion of the Trust Estate so occupied, such rental to be due and payable daily to the purchaser.  An action of unlawful detainer shall lie if the tenant holds over after a demand in writing for possession of such Trust Estate.

Waiver of Rights.  To the maximum extent permitted under Applicable Law, Trustor knowingly, voluntarily, and unconditionally: (a) waives the benefit of any Applicable Law now or hereafter existing that (i) provides for any appraisement or valuation before sale of any portion of the Trust Estate; (ii) in any way extends the time for the enforcement of the collection of the Secured Obligations or creates or extends a moratorium or period of redemption from any sale made in furtherance of collecting the Secured Obligations; (iii) limits Lender’s right to pursue a deficiency judgment after a judicial or non-judicial foreclosure or limits the amount of any deficiency judgment; or (iv) requires or permits Trustor or the court to determine or otherwise consider the fair market value of any of the Trust Estate in connection with such judicial or non-judicial foreclosure and as a potential limitation on the amount of any deficiency judgment; and (b) agrees that Trustor will not at any time insist upon, plea, claim or take the benefit or advantage of any law now or hereafter in force providing for any homestead exemption, and Trustor, for Trustor, Trustor’s representatives, successors and assigns, and for any and all Persons ever claiming any interest in the Trust Estate, waives and releases all rights of homestead exemption.  In addition, Trustor expressly waives and relinquishes any and all rights, remedies and defenses that Trustor may have or be able to assert by reason of any Applicable Law pertaining to the rights, remedies and defenses of sureties.  The rights, benefits and defenses hereby waived in this Section include any and all rights, benefits and defenses which might be available to Trustor under Applicable Law that might otherwise operate to limit the liability of Trustor under, or the enforcement of, this Deed of Trust, the other Loan Documents, or the Secured Obligations.

Marshaling.  Neither Lender nor Trustee shall be required to marshal any present or future collateral security (including the Trust Estate) for, or other assurances of payment of, the Secured Obligations or to resort to such collateral security or other assurances of payment in any particular order, and all of its rights and remedies hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising.  To the extent that it lawfully may, Trustor agrees that it will not invoke any law relating to the marshaling of collateral which might cause a delay in or impede the enforcement of Lender’s or Trustee’s rights and remedies under this Deed of Trust or under any of the other Loan Documents, and, to the extent that it lawfully may, Trustor irrevocably waives the benefits of all such laws.

Multiple Security.  If (a) the Trust Estate consists of one or more parcels, whether or not contiguous and whether or not located in the same county, and/or (b) if, in addition to this Deed of Trust, Lender now or hereafter holds or is the beneficiary of one or more additional mortgages, liens, deeds of trust or other security for the Secured Obligations upon other property in the state where the Premises are located (whether such property is owned by Trustor or others), Lender may, at its election, commence or consolidate in a single trustee’s sale or foreclosure action all of the trustee’s sale or foreclosure proceedings against all such collateral securing the Secured Obligations (including the Trust Estate), which action or sale may be brought, consolidated, or conducted in the courts of any county in which any of such collateral is located.  Trustor irrevocably waives any objections to the commencement or consolidation of the foreclosure proceedings in a single action and any objections to the laying of venue or based on the grounds of forum non conveniens which it may now or hereafter have.  Trustor agrees that if Lender is prosecuting one or more foreclosure or other proceedings against a portion of the Trust Estate or against any other collateral directly or indirectly securing the Secured Obligations, or if Lender obtains a judgment of foreclosure and sale or similar judgment against such collateral (or, in the case of a trustee’s sale, shall have met the statutory requirements therefor with respect to such collateral), then, whether or not such proceedings are being maintained or judgments were obtained in or outside the state in which the Premises are located, Lender may commence or continue any trustee’s sale or foreclosure proceedings and exercise its other remedies granted in this Deed of Trust against all or any part of the Trust Estate, and Trustor waives any objections to the commencement or continuation of a foreclosure of this Deed of Trust or exercise of any other remedies hereunder based on such other proceedings or judgments, and waives any right to seek to dismiss, stay the execution of, remove, transfer or consolidate either any action under this Deed of Trust or such other proceedings on such basis.  It is expressly understood and agreed that to the fullest extent permitted by Applicable Law, Lender may, at its election, cause the sale of all collateral which is the subject of a single trustee’s sale or foreclosure action at either a single sale or at multiple sales conducted simultaneously and take such other measures as are appropriate in order to effect the agreement of the parties to dispose of and administer all collateral securing the Secured Obligations (directly or indirectly) in the most economical and least time-consuming manner.

Request for Notice.  Trustor requests a copy of any notice of default and that any notice of sale under this Deed of Trust be mailed to it in accordance with the provisions below for the giving of notices.

MISCELLANEOUS

Applicability of General Provisions.  All provisions of the Loan Agreement Article entitled “General Provisions” apply to this Deed of Trust, the same as if such provisions were set forth in full in this Deed of Trust.

The Trustee.  Trustee accepts the trusts hereby created and agrees to perform its duties in this Deed of Trust for the benefit of Lender.  To the extent permitted by and consistent with Applicable Law, Trustee will not exercise its rights under this Deed of Trust except upon written direction from Lender.  Lender may, from time to time, by a written instrument executed and acknowledged by Lender, mailed to Trustor and recorded in the county in which the Trust Estate is located and by otherwise complying with the provisions of Applicable Law, substitute a successor or successors to any Trustee named herein or acting hereunder, and such successor(s) shall, without conveyance from the Trustee predecessor, succeed to all title, estate, rights, powers and duties of such predecessor.  Trustor shall pay or cause to be paid the compensation to which Trustee is entitled hereunder and all proper disbursements and expenses incurred by Trustee hereunder.

Reconveyance.  Upon Lender’s written request stating that all Secured Obligations have been satisfied in full or otherwise upon Lender’s written request and upon payment by Trustor of Trustee’s fees, Trustee shall reconvey to Trustor, or to the person or persons legally entitled thereto, without warranty, any portion of the Trust Estate then held hereunder.  The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof.  The grantee in any reconveyance may be described as “the person or persons legally entitled thereto.”  Trustor shall also pay Lender a reasonable processing fee in connection with such reconveyance.

Notices.  Notices pursuant to this Deed of Trust shall be given as provided in the Loan Agreement, with notices to Trustee to be given at the address stated in the first paragraph of this Deed of Trust or to such other address as Trustee may specify to the other parties in writing.

Governing Law.  The creation of this Deed of Trust and the rights and remedies of Lender with respect to the Trust Estate, as provided HEREIN and by the laws of the state WHERE THE Premises are located, AS WELL AS LIEN PRIORITIES, INCLUDING WITH RESPECT TO MECHANICS’ AND MATERIALMEN’S LIENS,shall be governed by and construed in accordance with the internal laws of SUCH state, without regard to its conflicts of law principles.  With respect to ALL other provisions of this Deed of Trust, this Deed of Trust shall be governed by and construed in accordance with the internal laws of the State of NEW YORK, without regard to its conflicts of law principles.

Other Security Documents.  The provisions hereof supplement the provisions of any other Loan Document that grants a Lien to Lender or that otherwise secures payment or performance of any of the Secured Obligations, and nothing contained therein shall derogate from any of the rights or remedies of Lender hereunder.

Mortgagee in Possession.  Nothing contained in this Deed of Trust shall be construed as constituting Lender a mortgagee in possession in the absence of the actual taking of possession of the Trust Estate.

Modifications.  This Deed of Trust may not be modified except in a writing executed by Trustor and Lender.  Any agreement made by Trustor and Lender after the date hereof relating hereto, to the Trust Estate, or to any Secured Obligation shall be superior to any intervening or subordinate Lien.

Last Dollars Secured; Priority.  If at any time this Deed of Trust shall secure less than all of the principal amount of the Secured Obligations, it is expressly agreed that any repayments of the principal amount of the Secured Obligations shall not reduce the amount of the Lien of this Deed of Trust until the Lien amount shall equal the principal amount of the Secured Obligations outstanding.

Binding Effect.  This Deed of Trust shall be binding upon and inure to the benefit of Trustor and Lender and their respective successors and permitted assigns, including, any United States trustee, any debtor in possession or any trustee appointed from a private panel.

State Specific Provisions.  In the event of any inconsistencies between this Section 6.11 and any of the other terms and provisions of this Deed of Trust, the terms and provisions of this Section 6.11 shall control and be binding.  With respect to the Premises which are located in the State of Mississippi, notwithstanding anything contained herein to the contrary:

(a)Acceleration; Remedies.  At any time during the existence of an Event of Default, Lender, at Lender’s option, may declare the Indebtedness to be immediately due and payable without further demand, and may request Trustee to exercise the power of sale and Lender may exercise any other remedies permitted by applicable law or provided in this Deed of Trust or in any other Loan Document.  Trustor acknowledges that the power of sale granted in this Deed of Trust may be exercised by Trustee without prior judicial hearing.  Trustor has the right to bring an action to assert the non-existence of an Event of Default or any other defense of Trustor to acceleration and sale. 

Lender shall be entitled to collect all reasonable costs and expenses incurred in pursuing such remedies, including reasonable attorneys’ fees, costs of documentary evidence, abstracts and title reports.

If Lender invokes the power of sale, Lender or Trustee shall mail copies of the notice of sale to Trustor and to other persons prescribed by applicable law in the manner provided by applicable law.  Trustee may sell, in accordance with Miss. Code Ann. § 89-1-55 and Section 111 of the Constitution of Mississippi, the Trust Estate at the time and place and under the terms designated in the notice of sale in one or more parcels and in such order as Trustee may determine.  Trustee may postpone sale of all or any parcel of the Trust Estate to any later time on the same date by public announcement at the time and place of any previously scheduled sale.  Lender or Lender’s designee may purchase the Trust Estate at any sale.

Trustee shall deliver to the purchaser at the sale, within a reasonable time after the sale, a deed conveying the Trust Estate so sold without any covenant or warranty, express or implied.  The recitals in Trustee’s deed shall be prima facie evidence of the truth of the statements contained in those recitals.  Trustee shall apply the proceeds of the sale in the following order:  (a) to all costs and expenses of the sale, including Trustee’s fees in the amount allowed by applicable law, attorneys’ fees and costs of title evidence; (b) to the Obligations in such order as Lender, in Lender’s discretion, directs; and (c) the excess, if any, to the Trustor or such other person or persons legally entitled to it.

Lender shall have the right on one or more occasions to institute one or more actions or proceedings at law or in equity to enforce the rights and remedies of Lender under this Deed of Trust.

Following a Trustee’s sale of the Premises, the Trustee shall deliver to the buyer a Trustee’s deed conveying the property so sold without any covenant or warranty, expressed or implied.  The recitals in the Trustee’s deed shall be prima facie evidence of the truth of the statements made therein.

Trustor further agrees that in case of any sale hereunder, it will at once surrender possession of the Premises to such buyer.

(b)Release.  Upon payment of the Indebtedness, Lender shall release the lien of this Deed of Trust.  Trustor shall pay Lender’s reasonable costs incurred in releasing this Deed of Trust.

(c)Further Assurances for Trustee.  Trustor shall execute, acknowledge, and deliver, at its sole cost and expense, all further acts, deeds, conveyances, assignments, estoppel certificates, financing statements, transfers and assurances as Trustee may reasonably require from time to time in order to better assure, grant, and convey to Trustee the rights intended to be granted, now or in the future, to Trustee under this Deed of Trust.

(d)Successor Trustee.  Lender, at Lender’s option, with or without cause, may from time to time remove Trustee and appoint a successor trustee by a Deed of Trust recorded in the city or county in which this Deed of Trust is recorded.  Without conveyance of the Trust Estate, the successor trustee shall succeed to all the title, power and duties conferred upon the Trustee in this Deed of Trust and by applicable law.  For purposes of this Deed of Trust, the term “Trustee” means the person identified as Trustee in the first paragraph of this Deed of Trust and any successor trustee appointed by Lender pursuant to this Section or otherwise appointed as permitted by law.

[SIGNATURE PAGE FOLLOWS]

EXECUTED effective as of the date first set forth above.

TRUSTOR:

LF3 SOUTHAVEN, LLC, a Delaware limited liability company

By:Lodging Fund REIT III OP, LP, a Delaware limited partnership, its Sole Member

By:Lodging Fund REIT III, Inc., a Maryland corporation, its General Partner

By:  /s/ Katie Cox________________

Name:  Katie Cox

Title:  Chief Financial Officer

ACKNOWLEDGEMENT

STATE OF NORTH DAKOTA

COUNTY OF CASS

Personally appeared before me, the undersigned authority in and for the said county and state, on this 18th day of February, 2020, within my jurisdiction, the within named Katie Cox, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed in the above and foregoing instrument and acknowledged that he/she executed the same in his/her representative capacity, and that by his/her signature on the instrument, and as the act and deed of the person(s) or entity(ies) upon behalf of which he/she acted, executed the above and foregoing instrument, after first having been duly authorized so to do.

/s/Jennifer Moum

Notary Public

My commission expires:

April 25, 2022

135 Homewood Drive

Southaven, Mississippi 38671

DeSoto County

EXHIBIT 1.2

LEGAL DESCRIPTION

Real property in the City of Southaven, County of DeSoto, State of Mississippi, described as follows:

PARCEL 1:

LOT 7Q, PART OF 4TH REVISION TO LOT 7G OF THE 6TH REVISION TO SECTION B, BRIARGATE COMMERCIAL SUBDIVISION IN SECTION 31, TOWNSHIP 1 SOUTH, RANGE 7 WEST, DESOTO COUNTY, MISSISSIPPI, AS PER PLAT BOOK 107, PAGE 22 AND THE ORDER TO VACATE AND ALTER PLAT THEREOF RECORDED IN WARRANTY DEED BOOK 652, PAGE 721, IN THE OFFICE OF THE CHANCERY CLERK OF DESOTO COUNTY, MISSISSIPPI.

PARCEL 2:

NON-EXCLUSIVE BENEFICIAL EASEMENTS CONTAINED IN THAT CERTAIN EASEMENTS WITH COVENANTS AND RESTRICTIONS AFFECTING LAND RECORDED IN BOOK 564, PAGE 334, IN THE OFFICE OF THE CHANCERY CLERK OF DESOTO COUNTY, MISSISSIPPI, INCLUDING, BUT NOT LIMITED TO, THE USE OF BRIARGATE WAY, BROOKS CROSSING, AND HOMEWOOD DRIVE CREATED BY PLAT RECORDED IN PLAT BOOK 107, PAGE 22 AND THE ORDER TO VACATE AND ALTER PLAT THEREOF RECORDED IN WARRANTY DEED BOOK 652, PAGE 721, IN THE OFFICE OF THE CHANCERY CLERK OF DESOTO COUNTY, MISSISSIPPI, FOR INGRESS AND EGRESS.

FOR INFORMATIONAL PURPOSES ONLY: The recorded plat is as described in Parcel 1 above. The tax Parcel No. is 1079-3108.0-00007.14. The address is 135 Homewood Drive, Southaven, MS 38671.

EXHIBIT 1.2(d)

THE UCC COLLATERAL

The “UCC Collateral” consists of all of the following described property, whether now owned or hereafter acquired and wherever located, together with all replacements and substitutions therefor and all cash and non-cash proceeds (including insurance proceeds and any title or UCC insurance proceeds) and products thereof, and, in the case of tangible property, together with all additions, attachments, accessions, parts, equipment and repairs now or hereafter attached or affixed thereto or used in connection therewith, excluding, however, any and all “consumer goods,” as defined in the UCC:  All of Trustor’s right, title, and interest in:  (a) all types of property included within the term “equipment” as defined by the UCC (except vehicles, boats and airplanes), including machinery, furniture, appliances, trade fixtures, tools, and office and record keeping equipment; (b) all inventory, including all goods held for sale, raw materials, work in process and materials or supplies used or consumed in Trustor’s business; (c) all documents; general intangibles; accounts; contract rights; chattel paper and instruments; money; securities; investment properties; deposit accounts; supporting obligations; letters of credit and letter of credit rights; commercial tort claims; and records, software and information contained in computer media (such as databases, source and object codes and information therein), together with any equipment and software to create, utilize, maintain or process any such records or data on electronic media; (d) any and all plans and specifications, designs, drawings and other matters prepared for any construction on any of the Premises or regarding any improvements to any of the Premises and any and all construction contracts, design agreements, engineering agreements and other agreements related to the construction of any such improvements; (e) goodwill; (f) all goods that are to become fixtures located on the Land; and (g) to the extent constituting collateral with respect to which a security interest may be created pursuant to Article 9 of the UCC, amounts paid as rents, fees, charges, accounts, or other payments for the use or occupancy of rooms and other public facilities in hotels, motels, or other lodging properties.

EX-10.58.6

EXHIBIT 10.58.6

GUARANTY

This GUARANTY (the “Guaranty”) is made as of February 21, 2020, by COREY R. MAPLE (“Guarantor”), to and for the benefit of WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”).

RECITALS:

A.Lender has agreed to lend LF3 SOUTHAVEN, LLC, a Delaware limited liability company and LF3 SOUTHAVEN TRS, LLC, a Delaware limited liability company (collectively, “Borrower”) up to $13,460,000.00 (the “Loan”) in accordance with the terms of the Loan Agreement, of even date herewith, between Lender and Borrower (the “Loan Agreement”).  Capitalized terms used in this Guaranty and not defined in the Guaranty have the meanings given to such terms in the Loan Agreement.

B.Lender requires, as a condition precedent to making the Loan, that Borrower obtain this Guaranty duly executed by Guarantor.  Lender will be relying on this Guaranty in making the Loan.  The making of the Loan by Lender to Borrower is of value to each Guarantor and is reasonably expected to benefit Guarantor.

AGREEMENT

In consideration of Lender making the Loan, as an inducement for Lender to do so, and for other valuable consideration, Guarantor represents, warrants, agrees, and covenants as follows:

Guaranty.  Except and only to the extent otherwise specifically provided in Section 10 below, Guarantor unconditionally, absolutely and irrevocably guarantees: (a) the full, prompt, and complete payment when due, whether by acceleration or otherwise, of (i) the entire amount of principal, accrued interest, and premiums due from time to time under each Loan; and (ii) all other Obligations of Borrower to Lender under or in respect of any of the Loan Documents, including reimbursements, late charges, interest and default interest (including post-petition interest to the extent a petition is filed by or against Borrower under the Bankruptcy Code), damages, indemnity obligations, collection and court costs, attorneys’ fees, advances, and all other expenses and charges of any kind, in each case whether incurred prior to or after the execution of this Guaranty and all without set-off, counterclaim, recoupment, or deduction of any amounts owing or alleged to be owing by Lender to Borrower or Guarantor; and (b) the full and complete payment and performance, when due, of (i) all other Obligations, including all indemnity obligations,  and (ii) of any amounts due by Borrower under any Related Credit Arrangements; but in each case excluding any Excluded Swap Obligations. All of the indebtedness, obligations, and liabilities described in this Section are referred to in this Guaranty as the “Guaranteed Obligations.”  All payments made pursuant to this Guaranty shall be in U.S. dollars and shall be made from a business deposit account in Guarantor’s name at a U.S. bank.

Nature of Guaranty; Joint and Several Liability of Multiple Guarantors.  This Guaranty is an absolute and unconditional guaranty of payment and performance and not of collection.  Guarantor’s obligations under this Guaranty are primary and are independent of the obligations of any other Credit Party, and a separate action or actions may be brought and executed against any one or more of the Guarantors, whether or not such action is brought against such Credit Party and whether or not such Credit Party is joined in such action or actions.  If this Guaranty is signed by more than one Person, the liability of each such Guarantor is joint and several.  EACH MARRIED INDIVIDUAL SIGNING THIS GUARANTY AGREES THAT RECOURSE MAY BE HAD AGAINST SUCH INDIVIDUAL’S INTEREST IN ALL PROPERTY JOINTLY HELD WITH SUCH PERSON’S SPOUSE, INCLUDING COMMUNITY PROPERTY, AND SUCH PERSON’S SEPARATE PROPERTY, FOR ALL GUARANTEED OBLIGATIONS.

Duration; Indemnification.  This Guaranty is effective when received by Lender and, except as may otherwise be specifically provided herein, shall continue in full force and effect until all of the Guaranteed Obligations are fully and finally paid and performed and Lender has no further obligation to make loans or otherwise extend credit to or for the benefit of Borrower.  The Guaranteed Obligations shall not be considered fully and finally paid and performed unless and until all payments by Borrower to Lender are no longer subject to any right on the part of any Person, including Borrower, Borrower as a debtor-in-possession, or any trustee in bankruptcy, to require Lender to disgorge such payments or to seek to recoup all or any portion of such payments.  Accordingly, this Guaranty shall continue to

be effective or be reinstated, as applicable, if at any time the payment or performance of all or any portion of the Guaranteed Obligations is rescinded or reduced in amount or must otherwise be restored or returned by Lender, whether as a “voidable preference” or “fraudulent conveyance,” or under any federal or state law, including the Bankruptcy Code or otherwise, all as though such payment or performance had not been made, and Guarantor will indemnify, defend, and hold Lender and each of Lender’s Affiliates (each an “Indemnitee”) harmless for, from and against, any and all Liabilities incurred by Lender in connection with such rescission, reduction, return or restoration.  This Guaranty shall remain in full force and effect and continue to be effective if (a) any petition is filed by or against Guarantor or any other Credit Party for relief under the Bankruptcy Code; (b) Guarantor or any other Credit Party becomes insolvent or makes an assignment for the benefit of creditors; or (c) a receiver or trustee is appointed for all or any significant part of the assets of Guarantor or any other Credit Party.

Representations and Warranties.  Each Guarantor acknowledges and agrees that the representations and warranties in this Section are a material consideration to Lender; that Lender is relying on their correctness and completeness in entering into the Loan Agreement and the transactions contemplated by the Loan Documents and in  making the Loan(s); and that these representations and warranties are true and accurate as of the date hereof, will be true and accurate as of the Closing, as if made at Closing, and will survive the Closing, regardless of any investigation or inspection by Lender.  Additionally, Guarantor shall take, or cause to be taken, all such actions as may be necessary or appropriate to ensure that the representations and warranties in this Guaranty continue to be true and correct in all material respects.  Accordingly, each Guarantor represents, warrants, and certifies to and covenants with Lender that:

Legal Capacity; Name and Residence Address.  As to each Guarantor that is a natural person, such Guarantor’s exact legal name is as set forth on the signature page of this Guaranty; such Guarantor has full legal capacity to enter into and perform such Guarantor’s obligations under this Guaranty; and such Guarantor’s principal residence is at the location set forth on the signature page of this Guaranty.

No Violations, Breaches, or Defaults.  The entry into and performance by Guarantor of this Guaranty does not and will not violate any judgment, order, law or regulation applicable to Guarantor or result in any breach of, constitute an event of default under, or result in the creation of any lien, charge, security interest or other encumbrance upon any Collateral pursuant to any indenture, mortgage, deed of trust, bank loan or credit agreement or other instrument to which Guarantor is a party or by which Guarantor’s assets are bound.

Legal, Valid and Binding.  Upon execution by Guarantor of this Guaranty, the Guaranty shall constitute the legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, liquidation, reorganization and other laws affecting the rights of creditors generally and general principles of equity.

Anti-Money Laundering; Anti-Terrorism.  Guarantor and its Affiliates (each, an “AML Party”) are  and will remain in material compliance with all: (i) U.S. economic sanctions laws and executive orders; (ii) regulations promulgated by the U.S. Office of Foreign Assets Control (“OFAC”); and (iii) applicable anti-money laundering and counter-terrorism provisions of the Bank Secrecy Act, the U.S. Patriot Act, and all rules and regulations issued pursuant to such laws, including those relating to “know your customer”, anti-money laundering, and anti-terrorism.  No AML Party is or will become a Person (A) included by OFAC on the list of Specially Designated Nationals and Blocked Persons (the “SDN List”) or who is otherwise the target of U.S. economic sanctions laws, such that, in either case, a U.S. Person cannot engage in business transactions with such Person; or (B) that is controlled by, or acting, directly or indirectly, for or on behalf of any Person on the SDN List or a foreign government that is the target of U.S. economic sanctions prohibitions, such that entry into or performance under any Loan Document would violate Applicable Law.  For purposes of this subsection, “Affiliate” does not include the equity owners of any entity that is publicly traded on a recognized national U.S. stock exchange.  Within five days of written request, Guarantor shall provide Lender with such documentation as Lender may request from time to time, to verify compliance with the terms and conditions of this subsection, including with respect to sources of funds for Payments made or to be made by Guarantor.

Investigations and Litigation.  There is no action, suit, investigation, proceeding or arbitration at law or in equity, including condemnation proceedings or proceedings in lieu of condemnation, pending or, to Guarantor’s best knowledge, threatened against or affecting Guarantor or any of its assets or revenues or any of the Loan Documents or any of the transactions contemplated thereby.

Solvency.  Both before and immediately after consummation of the transactions contemplated by the Loan Documents and after giving effect to such transactions, Guarantor is Solvent.

Recourse.  As to each Guarantor that is a natural person, as of the date hereof and continuing at all times thereafter, recourse by Lender may be had against (i) such Guarantor’s interest in all property (including community property, if applicable) jointly held with any other Person, including such Guarantor’s spouse, if such Guarantor is married; and (ii) such Guarantor’s separate property; and that, if such Guarantor is a married individual, no joinder of such Guarantor’s spouse is required for this Guaranty to be fully enforceable against all property and assets (including, without limitation, community and separate property) of such Guarantor.

Personal Assets.  The assets identified as Guarantor’s assets on each financial statement and other document or instrument delivered to Lender in connection with the Loan (including in connection with Lender’s underwriting process) are Guarantor’s sole and separate assets, individually owned by such Guarantor, and do not constitute community property jointly held with any other Person or marital property. No other Person, including Guarantor’s spouse, has any right or interest in such assets and no consent of any other Person, including Guarantor’s spouse, is necessary to make such assets available for satisfaction of all obligations under this Guaranty.

Waivers.  Guarantor unconditionally waives and agrees not to assert:  (a) any requirement that Lender first make demand upon, or seek to enforce or exhaust remedies against any other Credit Party or other Person or against any Collateral or property of any other Credit Party or other Person before demanding payment from Guarantor or seeking to enforce this Guaranty; (b) any rights, benefits and defenses which might otherwise be available to Guarantor pursuant to Applicable Law that might operate to limit (i) Guarantor’s or any other Credit Party’s liability under, or the enforcement of, this Guaranty and the other Loan Documents; or (ii) the right of Lender to recover a deficiency judgment, or to otherwise proceed, against Guarantor or any other Person obligated for the payment of the Guaranteed Obligations, after any foreclosure, trustee’s sale, or UCC sale, of any Collateral securing payment of the Guaranteed Obligations; (c) any statute of limitations affecting the obligations or liabilities under the Loan Documents of Guarantor or any other Credit Party; (d) diligence, presentment, protest, demand for performance, notice of nonperformance, notice of intent to accelerate, notice of acceleration, notice of protest, notice of dishonor, notice of extension, renewal, alteration or amendment, notice of acceptance of this Guaranty, notice of default under any of the Loan Documents, and all other notices whatsoever; and (e) any other claim or defense that otherwise would be available to Guarantor based on principles of suretyship or guarantee or otherwise governing obligations of persons secondarily liable thereon or because any of the Guaranteed Obligations are secured by a lien on real property.

Effect of Certain Matters.  Guarantor’s obligations hereunder shall not be affected or impaired by reason of, and Guarantor waives any and all rights and defenses that Guarantor may otherwise have arising out of, any of the following:  (a) the modification (whether or not material) of any obligations of any other Credit Party under, or of any provisions of, any Loan Document, whether or not Guarantor joined in or consented to such modification; (b) Lender’s taking of or omission to take any action pursuant to any Loan Document, including granting any waiver, consent, or extension or any failure, omission, or delay by Lender to enforce any obligation, condition or other provision in any Loan Document or to assert or exercise any right, power or remedy conferred on Lender in any Loan Document; (c) the assignment to or assumption by any third party of any or all of the rights or obligations of any Credit Party under any Loan Document; (d) the release or discharge of any other Credit Party from the performance or observance of any obligation, undertaking or condition to be performed by such Credit Party under any Loan Document by operation of law or otherwise; (e) any action, inaction or election of remedies by Lender that results in any impairment or destruction of any subrogation, indemnification, reimbursement or contribution rights of Guarantor; (f) any setoff, defense, counterclaim, abatement, recoupment, reduction, change in Applicable Law or any other event or circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor, indemnitor or surety under Applicable Law; (g) the termination or renewal of any Guaranteed Obligation; (h) the obtaining by Lender of any additional Collateral; the release or substitution by Lender of any Collateral; or the perfection or failure to perfect any liens or security interests with respect to any Collateral; (i) the use of any Loan proceeds, regardless of whether such use complies with the Loan Documents, with Lender having no duty to monitor the use or application of any Loan disbursement; or (j) any invalidity, irregularity or unenforceability in whole or in part of any Loan Document, or any limitation of the liability of any other Credit Party under the Loan Documents, including any claim that the Loan Documents were not duly authorized, executed, or delivered on behalf of any Credit Party.

Access to Credit Party Information.  Guarantor now has and will continue to have independent means of obtaining information concerning the affairs, financial condition and business of each other Credit Party.  Regardless of what information Lender may from time to time have, Lender shall have no obligation to provide to Guarantor any information concerning, or to monitor for the benefit of, Guarantor (a) the business operations of any Credit Party; (b) the performance by any Credit Party of, or the ability of any Credit Party to perform, such Credit Party’s obligations pursuant to the Loan Documents; or (b) any other matter.

Subordination.  All Indebtedness, together with all rights of subrogation, contribution, reimbursement, and indemnification, of any Credit Party to Guarantor, now or in the future (collectively, the “Intercompany Indebtedness”) is hereby subordinated to the Guaranteed Obligations.  Any such Intercompany Indebtedness, if Lender so requests, shall be collected, enforced and received by Guarantor as trustee for Lender and be paid over to Lender on account of the Guaranteed Obligations, but without reducing or affecting in any manner the liability of Guarantor under this Guaranty or any other Loan Document.

Waiver of Subrogation and Certain Other Rights.  Guarantor waives any claim, defense, or other right which Guarantor may now have or hereafter acquire against any other Credit Party, or any other Person primarily or secondarily obligated with respect to any of the Guaranteed Obligations or the Collateral that arises from the existence or performance of the obligations of Guarantor under this Guaranty, including any right of subrogation, reimbursement, exoneration, contribution, indemnification or any right to participate in any claim or remedy of Lender against any other Credit Party or Person, or any property securing any of the Guaranteed Obligations which Lender now has or hereafter acquires, whether or not such claim, right or remedy arises in equity or under contract, statute or common law.

Limitations on Recourse to Guarantor. 

(a) Recourse Limitations.  Subject to the qualifications set forth in this Section 10, Lender shall not enforce the liability and obligation of Guarantor to pay, perform and observe the Guaranteed Obligations by any action or proceeding wherein a money judgment shall be sought against Guarantor, except that Lender may bring a foreclosure action, an action for specific performance or any other appropriate action or proceeding, including a trustee’s sale or UCC sale, to enable Lender to enforce and realize upon its interest under this Guaranty and the other Loan Documents, or in the Collateral; provided, however, that any judgment in any such action or proceeding shall be enforceable against Guarantor only to the extent of Guarantor’s interest in the Collateral, except as specifically provided in this Section 10.  The provisions of this Section 10 shall not, however: (i) constitute a waiver, release, limitation, or impairment of any Obligation evidenced or secured by any of the Loan Documents; (ii) impair the right of Lender to name Guarantor or other Credit Party as a party defendant in any action or suit to enforce its rights, powers, and remedies upon the occurrence of an Event of Default; (iii) affect the validity or enforceability of this Guaranty; (iv) impair the right of Lender to obtain the appointment of a receiver; or (v) constitute a prohibition against Lender to commence any appropriate action or proceeding in order for Lender to exercise its remedies against all or any portion of the Collateral.

(b) Recourse for Certain Acts and Omissions.  Lender shall have full recourse to Guarantor and all of its assets, and Guarantor shall be personally liable to Lender, for all Liabilities incurred or suffered by Lender or any Affiliate of Lender as a result of:

(i) The commission of a criminal act by any Credit Party or the seizure by or forfeiture to any Government Authority of any Collateral or of any equity interest in a Credit Party;

(ii) The failure by Borrower or any Credit Party to apply any funds derived from the Collateral, including operating revenues, security deposits, Insurance Proceeds and Condemnation Proceeds (as defined in the Mortgage), as required by the Loan Documents;

(iii) Fraud or misrepresentation of any Credit Party made in or in connection with the Loan Documents or the Loan;

(iv) Any Credit Party contests or in any way interferes, directly or indirectly, with (A) any foreclosure action, trustee’s sale, UCC sale, or other action or proceeding to realize upon the Collateral; (B) any receivership proceeding; (C) the enforcement of the assignment of rents and leases in the Mortgage; or (D) any other enforcement of Lender’s rights, powers, and remedies under any of the Loan Documents pursuant to which Lender has a Lien (whether by making any motion, bringing any counterclaim, claiming any defense, seeking any injunction or other restraint, commencing any action seeking to consolidate any such enforcement action by Lender or any Lender Affiliate with any other action, or otherwise);

(v) Borrower’s failure to pay Impositions (as defined in the Mortgage) or maintain the insurance coverages required pursuant to the Loan Documents and pay all insurance premiums therefor except to the extent such failure to pay Impositions or insurance premiums arises solely from insufficient cash flows from operations of the Site (provided that any such insufficiency is not related to the misappropriation or misapplication of such cash flow by Borrower or any Credit Party);

(vi) Damage or destruction to the Collateral caused by the grossly negligent, reckless or intentional acts or omissions of any Credit Party or any employee, agent, contractor, representative, invitee, or licensee of any Credit Party or the commission by any Credit Party of any act of material waste with respect to the physical Collateral;

(vii) The failure of any Credit Party to perform its obligations with respect to environmental matters under any environmental indemnity or similar agreement;

(viii) Borrower’s failure to pay for any loss, liability or expense (including attorneys’ fees) incurred by Lender arising out of any claim or allegation made by Borrower, its successors or assigns, or any creditor of Borrower, that the Loan Agreement or the transactions contemplated by the Loan Documents establish a joint venture, partnership or other similar arrangement between Borrower and Lender;

(ix) Any brokerage commission or finder’s fees claimed in connection with the transactions contemplated by the Loan Documents to the extent that such brokerage commission or finder’s fees arise from the acts of any Credit Party;

(x) If Borrower fails to maintain terrorism insurance coverage as required under the Loan Documents, such coverage is available in the locale of the Site at commercially reasonable rates, and there is sufficient cash flow from the Site to pay the applicable insurance premiums (provided any insufficiency is not related to misappropriation or misapplication of cash flow by Borrower or any Credit Party), uninsured damage to the Collateral resulting from acts of terrorism;

(xi) Borrower’s breach of its obligations under Section 3.10 of the Mortgage;

(xii) The removal or disposal of any tangible personal property Collateral from the Site in violation of the terms and conditions of the Loan Documents or the abandonment or surrender of any Collateral of whatever type or character;

(xiii) The failure by any Credit Party to comply with its indemnification obligations pursuant to the Loan Documents;

(xiv) The payment of any distributions other than as permitted in the Loan Documents; or

(xv) The Management Agreement is terminated without a replacement management agreement delivered in accordance with Section 4.8 of the Loan Agreement, surrendered or materially modified, in each case, without the prior written consent of Lender, in its sole discretion; or if any Credit Party that is a party thereto fails to materially comply with the terms of the Management Agreement.

Guarantor shall also be personally liable to Lender for reasonable attorney's fees and other costs and expenses incurred by Lender in connection with any of the foregoing or in enforcing its rights and remedies pursuant to any of the Loan Documents, including with respect to this Section, regardless of whether such matters are legal or equitable in nature or arise under tort or contract law.

(c) Full Recourse.  Notwithstanding anything to the contrary contained in this Guaranty or the other Loan Documents, the limitation on Guarantor’s liability provided in Section 10(a)SHALL BECOME NULL AND VOID, SHALL BE OF NO FURTHER FORCE AND EFFECT, AND GUARANTOR SHALL BE FULLY LIABLE FOR THE GUARANTEED OBLIGATIONS IF:

(i) A Prohibited Transaction occurs in violation of the Loan Documents;

(ii) An Event of Default described in Section 6.1(f) of the Loan Agreement occurs with respect to any Credit Party;

(iii) Any Credit Party commences any legal proceeding against Lender or any Lender Affiliate pursuant to which such Credit Party seeks to recover damages or other affirmative recovery against Lender or a Lender Affiliate, including any proceeding asserting claims based on any theory of lender liability; or

(iv) Either the Franchise Agreement is terminated, surrendered or materially modified by the Borrower or any Credit Party or Hotel Lease is terminated, surrendered or materially modified,  in each case, without the prior written consent of Lender, in its sole discretion; or if any Credit Party that is a party thereto fails to materially comply with the terms of the Franchise Agreement; provided,  however, there shall be no liability under this clause following a termination or surrender of the Franchise Agreement if the termination or surrender is due to the franchisor under the Franchise Agreement imposing capital expenditures or other financial obligations on the Borrower and there is insufficient cash flow from the Site available to the Borrower to meet such obligations.

No Waiver.  Nothing in this Section 10 shall be deemed to be a waiver of any right which Lender may have under Sections 506(a), 506(b), 1111(b) or any other provision of the United States Bankruptcy Code, as such sections may be amended, or corresponding or superseding sections of the Bankruptcy Amendments and Federal Judgeship Act of 1984, to file a claim in any relevant bankruptcy proceeding for the full amount due to Lender under the Loan Documents or to require that all Collateral shall continue to secure the amounts due under the Loan Documents.

Notices.  All Notices shall be given as provided in the Loan Agreement, if to Guarantor, at the address set forth below, and if to Lender, as provided in the Loan Agreement.

Commercial Transaction; No Advice.  Guarantor confirms, acknowledges and agrees that (a) this Guaranty is being executed and delivered in connection with a commercial business transaction; (b) none of the Loan proceeds is being or will be used by Guarantor or any other Person for any personal, family, or household purpose; and (c) Guarantor has not received any legal, tax, financial or accounting advice from Lender or any Affiliate of Lender.

Binding Effect.  This Guaranty is binding on Guarantor and its successors and assigns, and, if Guarantor is an individual, on such individual’s heirs, personal representatives, administrators, and executors, and including a debtor-in-possession on behalf of Guarantor, and shall inure to the benefit of Lender, its successors and assigns, including any Person obtaining any rights from Lender in a Lender Transfer.

Severability.  Any provision of this Guaranty being held illegal, invalid or unenforceable in any jurisdiction shall not affect any part of such provision not held illegal, invalid or unenforceable, any other provision of any Loan Document or any part of such provision in any other jurisdiction.

Remedies.  No delay on the part of Lender in the exercise of any right or remedy under this Guaranty shall operate as a waiver thereof.  No single or partial exercise by Lender of any right or remedy shall preclude other or

further exercise thereof or the exercise of any other right or remedy.  No modification or waiver of any of the provisions of this Guaranty shall be binding upon Lender except as set forth in a writing executed by Lender.

Limitation of Liability for Certain Damages.  In no event shall Lender, any Credit Party, or any Affiliate of Lender or any Credit Party be liable to any Person on any theory of liability for any special, indirect, consequential or punitive damages (including any loss of profits, business or anticipated savings).  Each of Lender and each Credit Party hereby waives, releases and agrees (and shall cause each of its respective Affiliates to waive, release and agree) not to sue upon any such claim for any special, indirect, consequential or punitive damages, whether or not accrued and whether or not known or suspected to exist in its favor; provided, however, that nothing herein shall be deemed a waiver of Lender’s rights to sue upon or otherwise recover on all amounts due Lender under the Loan Documents, including with respect to the Obligations and Guaranteed Obligations. 

Governing Law.  THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ITS CONFLICTS OF LAWS PRINCIPLES BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS) SHALL GOVERN ALL MATTERS ARISING OUT OF, IN CONNECTION WITH OR RELATING TO THIS GUARANTY, INCLUDING ITS VALIDITY, INTERPRETATION, CONSTRUCTION, PERFORMANCE AND ENFORCEMENT.

Jurisdiction and Service of Process.  Any legal action or proceeding with respect to any Loan Document shall be brought exclusively in the courts of the State of New York having proper venue, and Guarantor accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts; provided, however, that nothing in this Guaranty shall limit or restrict Lender’s right to commence any proceeding in the federal or state courts located in the state in which a particular Site is located to the extent Lender deems such proceeding necessary or advisable to exercise remedies available under any Loan Document.  Lender and Guarantor hereby irrevocably waive any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, that either of them may now or hereafter have to the bringing of any such action or proceeding in such jurisdictions.  Guarantor hereby (a) irrevocably waives personal service of any and all legal process, summons, notices and other documents of any kind; (b) consents to such service in any suit, action or proceeding brought in the United States by any means permitted by Applicable Law, including by the mailing thereof to Guarantor’s address specified on the signature page hereto; and (c) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Applicable Law.

Waiver of Jury Trial.  LENDER AND GUARANTOR, TO THE FULLEST EXTENT PERMITTED BY LAW, WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF, IN CONNECTION WITH OR RELATING TO, THIS GUARANTY, THE OTHER LOAN DOCUMENTS AND ANY OTHER TRANSACTION CONTEMPLATED HEREBY AND THEREBY.  THIS WAIVER APPLIES TO ANY ACTION, SUIT OR PROCEEDING WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE.

Arbitration. 

Arbitration.  The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise in any way arising out of or relating to (i) any credit subject hereto, or any of the Loan Documents, and their negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination; or (ii) requests for additional credit.  In the event of a court ordered arbitration, the party requesting arbitration shall be responsible for timely filing the demand for arbitration and paying the appropriate filing fee within 30 days of the abatement order or the time specified by the court. Failure to timely file the demand for arbitration as ordered by the court will result in that party’s right to demand arbitration being automatically terminated.

Governing Rules.  Any arbitration proceeding will (i) proceed in a location in the State selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between

the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “Rules”).  If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control.  Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute.  Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law.

No Waiver of Provisional Remedies, Self-Help and Foreclosure.  The arbitration requirement does not limit the right of any party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding.  This exclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph.

Arbitrator Qualifications and Powers.  Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00.  Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations.  The arbitrator will be a neutral attorney licensed in the State or a neutral retired judge of the state or federal judiciary of the State, in either case with a minimum of ten years’ experience in the substantive law applicable to the subject matter of the dispute to be arbitrated.  The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim.  In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator's discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication.  The arbitrator shall resolve all disputes in accordance with the substantive law of the State and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award.  The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the corresponding rules of civil practice and procedure applicable in the State or other applicable law.  Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction.  The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.

Discovery.  In any arbitration proceeding, discovery will be permitted in accordance with the Rules.  All discovery shall be expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date.  Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party's presentation and that no alternative means for obtaining information is available.

Class Proceedings and Consolidations.  No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except parties who have executed any Loan Document, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity.

Payment Of Arbitration Costs And Fees.  The arbitrator shall award all costs and expenses of the arbitration proceeding.

Miscellaneous.  To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA.  No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation.  If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the Loan Documents or the subject matter of the dispute shall control.  This arbitration provision shall survive termination, amendment or expiration of any of the Loan Documents or any relationship between the parties.

Small Claims Court.  Notwithstanding anything herein to the contrary, each party retains the right to pursue in Small Claims Court any dispute within that court’s jurisdiction.  Further, this arbitration provision shall apply only to disputes in which either party seeks to recover an amount of money (excluding attorneys’ fees and costs) that exceeds the jurisdictional limit of the Small Claims Court.

Agreement to Credit Party Provisions.  Guarantor has received and reviewed a copy of the Loan Agreement and each of the other Loan Documents.  Guarantor agrees that the provisions of the Article in the Loan Agreement titled “General Provisions” apply to this Guaranty, the same as if such provisions were set forth in full in this guaranty.  Furthermore, Guarantor Assumes and agrees to be bound by and to perform all of the terms, conditions, and obligations contained in the Loan Agreement and in any Other loan document that are stated to be applicable to, or otherwise apply to, Guarantors OR Credit Parties.  Guarantor acknowledges and agrees that Guarantor is a Credit Party.

Authorization.  Guarantor hereby authorizes Guarantor’s banks, creditors, and suppliers to disclose and release to Lender, its affiliates, and their respective officers, employees, attorneys, agents, representatives and advisers (collectively, the “Lender Parties”) all credit and financial information that any of the Lender Parties may request relating to Guarantor and Guarantor’s business.  Guarantor also authorizes each of the Lender Parties to: (a) perform background, credit, judgment, lien and other checks, searches, inspections, and investigations and to obtain personal and business credit and asset reports with respect to Guarantor and Guarantor’s business, all as the Lender Parties deem appropriate in their sole judgment; (b) share the results thereof, as well as any other information provided to them from time to time by or on behalf of Guarantor, among themselves, with insurance companies and title companies, and as otherwise required by law; (c) answer questions about their credit experience with Guarantor; and (d) retain the information provided to them in connection with the transactions contemplated by the Loan Documents.

Entire Agreement.  This Guaranty embodies the entire agreement of the parties and supersedes all prior agreements and understandings, oral or written, relating to the subject matter hereof.  Guarantor acknowledges and affirms that Guarantor did not rely on any statement, oral or written, not contained in this Guaranty or the other Loan Documents in making Guarantor’s decisions to enter into this Guaranty.

Keepwell. Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Credit Party to honor all of its obligations under this Guaranty in respect of Swap Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section 24 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 24, or otherwise under this Guaranty, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount).  The obligations of each Qualified ECP Guarantor under this Section shall remain in full force and effect until the payment or performance of all of the Guaranteed Obligations. Each Qualified ECP Guarantor intends that this Section 24 constitute, and this Section 24 shall be deemed to constitute, a "keepwell, support, or other agreement" for the benefit of each other Credit Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.  For purposes hereof, "Qualified ECP Guarantor" means, in respect of any Swap Obligation, each Credit Party that has total assets exceeding $10,000,000 at the time the relevant Guaranty becomes effective with respect to such Swap Obligation or such other person as constitutes an "eligible contract participant" under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an "eligible contract participant" at such time by entering into a keepwell under Section la(18)(A)(v)(II) of the Commodity Exchange Act.

[SIGNATURE PAGE FOLLOWS]

EXECUTED effective as of the date first set forth above.

GUARANTOR:

/s/ Corey R. Maple

Signature

Printed Name:  COREY R. MAPLE

Address for Notices:

1635 43rd Street South

Suite 205

Fargo, ND 51803

Attn: Corey R. Maple

EX-10.59

EXHIBIT 10.59

HOTEL MANAGEMENT AGREEMENT

By and Between



LF3 SOUTHAVEN TRS, LLC

and


VISTA HOST INC.

HOTEL MANAGEMENT AGREEMENT

This Hotel Management Agreement (this "Agreement"), dated as of February 21, 2020 is by and between LF3 SOUTHAVEN TRS, LLC, a Delaware limited liability company ("Owner"), and VISTA HOST INC., a Texas corporation ("Manager").

RECITALS

A.        Owner, is the operating leasee of (i) certain real property described on Exhibit A attached hereto and incorporated herein (the "Real Property"), and (ii) all improvements upon the Real Property (the "Improvements") including, without limitation, a hotel known as the Homewood Suites Southaven.  The Real Property and the Improvements are herein collectively called the "Hotel."

B.         Manager is qualified to operate, direct, manage and supervise the Hotel.

C.         Owner desires to turn over to Manager the operation, direction, management and supervision of the Hotel, and Manager desires to assume all such responsibilities as agent for and on the account of Owner upon the terms and subject to the conditions set forth in this Agreement. 

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein, the sufficiency of which is hereby acknowledged by the parties hereto, Owner and Manager hereby agree as follows:

ARTICLE I
DEFINITIONS

Section 1.1. As used in this Agreement, the following terms shall have the following meanings:

AAA means the American Arbitration Association.

Accounting Period means each of twelve (12) calendar months in each Fiscal Year.

Affiliate means any person or entity that directly or indirectly through one or more intermediaries, controls or is controlled by, Manager or Owner, as the case may be.  For purposes of this definition, the term "control" means the power to direct or cause the direction of management and policies, through the ownership of voting rights, by contract or otherwise.

Agency Account shall have the meaning set forth in ‎Section 8.1 of this Agreement.

Agreement means this Management Agreement.

Annual Business Plan means the detailed annual business plan for the operation of the Hotel for each Fiscal Year prepared by Manager pursuant to ‎Section 10.1 of this Agreement.

Base Management Fee means the amount payable to Manager pursuant to ‎Section 11.1(a) of this Agreement.

Benefit Plans means all employee benefit plans of Manager, which include, without limitation, a 401(k) plan, a bonus and incentive plan, and a health insurance plan.

Books and Records shall have the meaning set forth in ‎Section 9.1 of this Agreement.

Contract Commencement Date means the date hereof.

Competitive Set means the set of hotels in the geographic vicinity of the Hotel competing with the Hotel as reasonably chosen by Owner and agreed to by Manager.

CPI means the Consumer Price Index - Seasonably Adjusted U.S. City Average for All Items for All Wage Earners and Clerical Earners (1982-1984 = 100), published monthly in the Monthly Labor Review by the Bureau of Labor Statistics of the United States Department of Labor (the "CPI-W").  If the CPI-W is discontinued, CPI shall mean the Consumer Price Index - Seasonably Adjusted U.S. City Average for All Items for All Urban Consumers (1982 - 1984 = 100) (the "CPI-U").  If both the CPI-W and CPI-U are discontinued, comparable statistics on the purchasing power of the consumer dollar published the Bureau of Labor Statistics or any other agency of the United States government shall be used.

Environmental Law shall mean:  (i) the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. §§ 9601 et seq.), as amended; (ii) the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act (42 U.S.C. §§ 6901 et seq.), as amended; (iii) the Emergency Planning and Community Right to Know Act (42 U.S.C. §§ 11001 et seq.), as amended; (iv) the Clean Air Act (42 U.S.C. §§ 7401 et seq.), as amended; (v) the Clean Water Act (33 U.S.C. §§ 1251 et seq.), as amended; (vi) the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), as amended; (vii) the Hazardous Materials Transportation Act (49 U.S.C. §§ 1801 et seq.), as amended; (viii) the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. §§ 136 et seq.), as amended; (ix) the Safe Drinking Water Act (42 U.S.C. §§ 300f et seq.), as amended; (x) any state, county, municipal or local statutes, laws or ordinances similar or analogous to the federal statutes listed in parts (i) - (ix) of this definition; (xi) any rules, regulations, guidelines, directives, orders or the like adopted pursuant to or to implement the statutes, laws, ordinances and amendments listed in parts (i) - (x) of this definition; and (xii) any other law, statute, ordinance, amendment, rule, regulation, or order relating to environmental matters or Hazardous Materials.

FF&E means all furniture, furnishings, equipment, fixtures, apparatus and other personal property used in, or held in storage for use in, the operation of the Hotel, other than Operating Equipment, Operating Supplies and fixtures attached to and forming part of the Hotel.

Financial Statement shall have the meaning set forth in ‎Section 9.2 of this Agreement.

Fiscal Year means a calendar year starting on January 1 and ending on December 31, or portion thereof, depending upon the Contract Commencement Date and the Termination Date.

Franchise Agreement means the Homewood Suites Franchise Agreement, dated as of February 21, 2020 between Owner and Hilton Franchise Holding, LLC for the Hotel.

Gross Revenues shall mean all revenues and receipts of every kind derived from the operation of the Hotel and all departments and parts thereof including, without limitation, income (from both cash and credit transactions after reasonable deductions for bad debts and discounts for prompt or cash payments and refunds) from the rental of guest rooms, telephone charges, stores, offices, exhibit and sales space of every kind; license, lease and concession fees and rentals (but excluding gross receipts of licensees, lessees and concessionaires); income from vending machines; parking; health membership fees; food and beverage sales; wholesale and retail sales of merchandise; service charges (to the extent not distributed to employees as gratuities), and proceeds, if any, from business interruption or other loss of income insurance.  Expressly excluded from the definition of Gross Revenues are the following: gratuities to employees of the Hotel; federal, state, and local excise, sales or use taxes or any other taxes collected directly from patrons or guests or included as part of the sales price of any goods or services; proceeds from the sale of FF&E; insurance proceeds (other than proceeds from business interruption or other loss of income insurance); condemnation proceeds (other than for a temporary taking); any proceeds from any sale of the Hotel or from the refinancing of any debt encumbering the Hotel; contributions by Owner; proceeds of property tax abatements or refunds; interest or earnings on any reserves; income or receipts related to damage awards received from third parties.

Group Services means group benefits, services, and facilities generally made available by Manager at other properties owned or managed by Manager, including, where applicable, business and sales-promotion services; advertising and public relation services; computerized management information services; educational and training programs and facilities; central purchasing and procuring services; employee benefits administration; payroll

administration; revenue management services of $1,000 per month; eCommerce services; and risk management services.  Group Services does not include Manager's central office overhead and general office and administrative expenses (as opposed to that of the Hotel).  The Manager will not mark-up the cost of any Group Services.

Hazardous Material shall mean any chemical, substance, waste, material, equipment or fixture defined as or deemed hazardous, toxic, a pollutant, a containment, or otherwise regulated under any Environmental Law, including, but not limited to, petroleum and petroleum products, waste oil, halogenated and non-halogenated solvents, PCBs, and asbestos and asbestos containing materials.

Hotel means the Real Property and the Improvements.

House Profit means the excess, during each Fiscal Year (and proportionately for any period less than a Fiscal Year), of Gross Revenues over Operating Expenses incurred in the operation of the Hotel by Manager in fulfilling its duties hereunder during such Fiscal Year, determined in accordance with the accounting system established by the Uniform System (except as modified by this Agreement).

Improvements shall have the meaning set forth in Recital A of this Agreement.

Laws means any and all laws, rules, regulations, requirements, orders, notices, determinations and ordinances of any federal, state, municipal or other authority having jurisdiction over the Hotel, now or hereafter in force, including, without limitation, any alcoholic beverage control board, health inspectors, and the Board of Fire Underwriters.

Management Fees mean the Base Management Fee.

Manager means Vista Host Inc.

Manager Indemnitees shall have the meaning set forth in ‎Section 17.1 of this Agreement.

Mortgage shall mean any mortgage, deed of trust, or other security instrument entered into by Owner secured by the Hotel securing a lender that is not an Affiliate of Owner, unless it is an Affiliate of Manager. 

Net Operating Income means the amount equal to House Profit less real property taxes, personal property taxes, casualty and liability insurance premiums applicable to or incurred by the Hotel. 

Operating Budget means the operating budget prepared by Manager for the Hotel for each Fiscal Year for which each Annual Business Plan is prepared, setting forth an itemized statement of any and all anticipated costs and expenses to be incurred in connection with the operation, direction, management and supervision of the Hotel for such Fiscal Year.

Operating Equipment means all equipment, except for FF&E and Operating Supplies, used, or held in storage for future use, in connection with the operation of the Hotel including, without limitation, all dishes, platters, serving trays, china, glassware, linens, silverware, uniforms and all kitchen, restaurant and bar equipment.

Operating Expenses shall mean expenses and deductions incurred in the operation of the Hotel by Manager in fulfilling its duties hereunder during such Fiscal Year, determined in accordance with the accounting system established by the Uniform System (except as modified by this Agreement).  Operating Expenses shall not include real property taxes, personal property taxes, and other ad valorem taxes imposed on the Hotel and FF&E, insurance premiums and deductibles for property, casualty, and liability insurance, equipment lease payments, ground rent, debt service, depreciation, and amortization.

Operating Funds shall have the meaning set forth in ‎Section 8.2 of this Agreement.

Operating Supplies means all supplies, except for FF&E and Operating Equipment used, or held in storage for future use, in connection with the operation of the Hotel including, without limitation, all engineering, maintenance and housekeeping supplies and all food and beverages of all kinds.

Original Term shall have the meaning set forth in ‎Section 2.1 of this Agreement.

Owner means LF3 Southaven TRS, LLC.

Owner Indemnitees shall have the meaning set forth in ‎Section 17.2 of this Agreement.

Real Property shall have the meaning set forth in Recital A of this Agreement.

Required Minimum Amount means the amount of working capital necessary for Manager to ensure that the Hotel has sufficient cash to pay its bills in a timely manner, which amount shall initially be set at no less than $75,000 subject to change upon mutual agreement between Owner and Manager.  "Working Capital" is defined as the excess of current assets less current liabilities.

Taxes means any and all real estate taxes, personal property taxes, assessments, ad valorem taxes and similar charges on or relating to the Hotel or any of its component parts.

Termination Date shall have the meaning set forth in ‎Section 2.1 of this Agreement.

Termination Fee means the amount payable to Manager pursuant to ‎ARTICLE XIII of this Agreement.

Termination Event shall have the meaning set forth in ‎Section 13.2 of this Agreement.

Uniform System means the Uniform System of Accounts for the Lodging Industry Eleventh Revised Edition, as revised and adopted by the Hotel Association of New York City, Inc., in effect from time to time and as modified by applicable provisions of this Agreement.

ARTICLE II
TERM

Section 2.1. Term.  The term ("Term") of this Agreement shall commence on the Contract Commencement Date, and shall continue until the fifth (5th) anniversary after the Contract Commencement Date (the "Original Term") unless sooner terminated by Manager or Owner pursuant to the provisions of this Agreement.  The date this Agreement actually terminates shall hereinafter be called the "Termination Date."    

Section 2.2. Renewal Terms.  This Agreement shall be automatically renewed for two (2) successive five (5) year terms (each a "Renewal Term") unless either party to this Agreement provides written notice to the other party on or before thirty (30) days prior to the expiration of the then current Original Term or Renewal Term, as the case may be, that it elects not to renew this Agreement.  The rights and obligations of Owner and Manager during any Renewal Term shall be governed by the provisions of this Agreement as if such Renewal Term was the Original Term.

ARTICLE III
ENGAGEMENT OF MANAGER AND

COMMENCEMENT OF MANAGEMENT OF THE HOTEL

Section 3.1. Engagement of Manager to Manage Hotel.  Owner hereby grants to Manager the sole and exclusive right, and hereby appoints Manager as Owner's sole and exclusive agent, subject to the provisions of this Agreement to operate, direct, manage and supervise the Hotel without interference from Owner, and Manager hereby undertakes and agrees to perform, as the agent of and for the account of Owner, all of the services required hereunder and to comply with all of the provisions of this Agreement.

Section 3.2. Manager as Agent.  Manager, and all employees of Manager working at the Hotel, shall act solely on behalf of and as agent for Owner and not on its own behalf.  All employees working at the Hotel shall be employees of VH Hotel Management Inc., a wholly owned subsidiary of Manager, and Manager shall have no authority to hire employees for Owner.  Nothing contained in this Agreement shall be construed as creating, between the parties hereto or with any third party, a partnership, joint venture or any relationship other than agency.  Any and all debts, obligations and other liabilities incurred by Manager in connection with the Hotel, shall be incurred on behalf of Owner, and Manager shall not be liable for payment therefore; provided, Manager and its employees and agents shall not incur debts or other liabilities on behalf of Owner unless the same are (i) reasonable, (ii) necessary or reasonably prudent for operation of the Hotel, or (iii) within the approved Operating Budget or otherwise specifically approved by Owner.  The relationship of Owner and Manager shall be that of principal and agent, and nothing contained in this Agreement shall be construed to create a partnership or joint venture between them or their successors in interest.  Manager's agency established by this Agreement is coupled with an interest and may not be terminated by Owner until the expiration of the Term of this Agreement, except as provided herein.

ARTICLE IV

Intentionally Omited

ARTICLE V
OPERATION OF THE HOTEL

Section 5.1. Duties of Manager.  On and after the Contract Commencement Date, Manager shall (i) direct, supervise, manage and operate the Hotel in all aspects in an efficient and economical manner consistent with hotels of a comparable size, location, age, class and level of service having similar facilities and (ii) determine and administer the programs and policies to be followed in connection therewith, all in accordance with the provisions of this Agreement, on the condition that Manager shall not be obligated to advance any of its own funds in connection with such duties.  Without limiting the generality of the foregoing, Manager shall perform each of the following functions:

(a) Recruit, employ, relocate, pay, supervise and discharge all employees and personnel necessary for the operation of the Hotel (included in the foregoing shall be the determination of all personnel policies).

(b) Establish all prices, rates and charges for guest rooms, meeting rooms, commercial space (including all stores, office space and lobby space), food, beverage, and other salable or rentable items comprising the Hotel and its business.

(c) Negotiate and enter into, on behalf of Owner, service contracts required in the ordinary course of business in operating the Hotel including, without limitation, contracts for electricity, gas, telephone, cable, cleaning, vermin extermination, elevator and boiler maintenance, and other services which Manager deems advisable, on the condition that Manager shall not enter into any service contract contemplated by this subsection that is not cancelable by Owner on a maximum of ninety (90) days prior notice and no penalty without the prior written consent of Owner, which consent shall not be unreasonably withheld.

(d) Negotiate and enter into, on behalf of Owner, concession agreements, leases, licenses and similar contracts for use by concessionaires, tenants, licensees and other intended users of the facilities at the Hotel, on the condition that Manager shall not enter into any agreement, lease, license or contract contemplated by this subsection that is not cancelable by Owner on a maximum of ninety (90) days prior written notice and no penalty without the prior written consent of Owner.

(e) To the extent within the control of Manager, obtain and keep in full force and effect, either in its own name on behalf of Owner or in Owner's name, as may be required by applicable Laws, any and all new, renewal and additional licenses and permits necessary to enable Manager to operate the Hotel in accordance with applicable Laws.

(f) Accord rooms to persons to whom such privileges are customarily accorded in the industry, including, without limitation, (i) employees of Manager's parent company, pursuant to its personnel policies and subject to space availability, and (ii) such employees of Owner as Owner may from time to time designate.

(g) Establish and revise, as necessary, administrative policies and procedures including, without limitation, policies and procedures for the control of revenue and expenditures, for the purchase of Operating Equipment, Operating Supplies and services, for the control of credit, and for the scheduling of maintenance.

(h) In accordance with the Annual Business Plan procure, or arrange for the procurement of, as agent for Owner, all replacement Operating Equipment and Operating Supplies necessary to maintain and operate the Hotel properly in the ordinary course of business.

(i) Make or install, or cause to be made or installed, in the name of Owner, all normal capital repairs, decorations, renewals, revisions, alterations, rebuilds, replacements, additions, and improvements in and to the Hotel building and FF&E, in the ordinary course of business, that Manager deems necessary or appropriate for the proper operation and maintenance of the Hotel, on the condition that such items are contemplated by the Annual Business Plan for such Fiscal Year in which such action is taken.

(j) Arrange and contract for all advertising and promotion of the Hotel which Manager in its reasonable discretion deems necessary or appropriate for the operation of the Hotel.

(k) Open and maintain the Agency Account as required by this Agreement.

(l) Prepare and deliver to Owner the Annual Business Plans and Financial Statements, and such other information as required by this Agreement.

(m) Plan, execute and supervise repairs and maintenance at the Hotel, but all related capital expenditures in the aggregate in excess of $10,000 shall be implemented by, or on behalf of, Owner. 

(n) Provide the Group Services.

(o) Procure and maintain insurance in accordance with ‎ARTICLE VII.

(p) Keep Owner advised as to all major policy matters affecting the Hotel.

(q) To the extent within the control of Manager, operate the Hotel in compliance with the Franchise Agreement and the Mortgage.  Manager shall notify Owner within five (5) business days of any notice of violations of Franchise Agreement or Mortgage received by Manager.

(r) Conduct such other operations from time to time as may be required under this Agreement.

Section 5.2. Authority of Manager.  Except as otherwise specifically set forth in this Agreement, (i) the management and operation of the Hotel shall be under the exclusive supervision and control of Manager which shall be responsible for the proper and efficient operation of the Hotel, and (ii) Manager shall have reasonable discretion and control, free from unreasonable interference, interruption or disturbance, in all matters relating to management and operation of the Hotel.

Section 5.3. Employees.

(a) Except as otherwise set forth in this Agreement, Manager shall have complete discretion and control over all personnel matters at the Hotel including, without limitation, decisions regarding hiring, promoting, compensating, supervising, terminating, directing and training all employees at the Hotel, and, generally, establishing and maintaining all policies relating to employment.  Owner shall not directly exercise any authority over or interfere with any personnel employed at the Hotel except that the Owner shall have the right to approve the hiring of the hotel general manager, or transfer any employee, such approval shall not be unreasonably withheld.

(b) Owner shall reimburse Manager for the monthly salary, payroll taxes and fringe benefits under the Manager's Benefit Plans of all personnel employed by Manager and working at the Hotel.  Owner acknowledges that it has reviewed and approved Manager's Benefit Plans.  Owner shall also reimburse Manager for all out-of-pocket costs and expenses incurred when the general manager and/or department heads of the Hotel attend meetings, functions, training sessions or conventions deemed advisable by Manager including, without limitation, travel, program and materials costs.

Section 5.4. Litigation.  Without Owner's prior written consent, Manager may initiate, settle or otherwise dispose of litigation relating to the Hotel where the claim asserted is less than or equal to $5,000.  Manager shall not initiate, settle or otherwise dispose of litigation relating to the Hotel in excess of $5,000 per claim without Owner's prior written consent, not to be unreasonably withheld.  Notwithstanding the foregoing, nothing shall limit Manager's ability to defend, settle or otherwise dispose of litigation against Manager in its individual capacity and not as an agent of Owner. 

Section 5.5. Owner's Right of Inspection and Review.  Manager shall permit Owner and its duly authorized agents and representatives the right to enter upon any part of the Hotel at all reasonable times for the purpose of examining or inspecting the Hotel, its records relating to the Hotel, or operation or any other purpose which Owner, in its reasonable discretion, shall deem advisable relating to the Hotel.

Section 5.6. Standards.  Manager shall operate the Hotel and all its facilities and activities in the same manner as is customary and usual in the operation of similar hotels in the area of the Hotel and for other Homewood Suites franchises for properties of similar age, location and construction, all to the extent consistent with the Annual Business Plan, Operating Budget and the Hotel's facilities.  Manager will be available to consult with and advise Owner, at Owner's reasonable request, concerning all policies and procedures affecting all phases of the conduct of business at the Hotel.   Manager shall be available on not less than a monthly basis to discuss the operating results of the Hotel.

ARTICLE VI
OPERATING EXPENSES PAID BY OWNER

Section 6.1. Expenses Incurred by Manager on Behalf of Owner.  All actions of Manager in the performance of its obligations, all expenses incurred under this Agreement including, without limitation, all payroll, Benefit Plans and payroll related expenses of the Hotel's employees shall be for and on behalf of Owner and for its account, and all debts and liabilities arising in the course of business of the Hotel including, without limitation, any and all costs related to claims by employees of the Hotel concerning their employment, shall be the obligation of Owner, and Manager shall not be liable for any of such expenses, debts, liabilities and obligations by reason of its direction, management, supervision and operation of the Hotel on behalf of Owner.  Neither Manager nor any of its Affiliates shall be obligated to advance any of its own funds to or for the account of Owner or the Hotel, or to incur any liability on behalf of Owner or the Hotel unless Owner shall have furnished Manager with funds necessary for the discharge thereof prior to incurring such liability.

Section 6.2. Professional Services.  Manager may hire independent contractors to provide such legal, accounting and other professional services as Manager deems necessary or appropriate in the ordinary course of business.

Section 6.3. Contracts with Affiliates.  Manager may, on behalf of Owner, contract with Affiliates of Manager for any services which are customarily provided to the Hotel or comparable properties by third party vendors, only on the condition that (i) Owner has approved the contract, or (ii) the fees charged or the terms of any such contract with Manager's Affiliate shall be no less favorable to Owner or the Hotel than fees or terms which could be obtained from an unaffiliated third party, and  such contract is cancelable by Owner on a maximum of ninety (90) day prior notice without penalty.  All fees payable to Manager or its Affiliates pursuant to any such contract shall be in addition to the Management Fees.

Section 6.4. Reimbursable Expenses.  Manager may reimburse itself consistent with the approved Operating Budget and the other provisions of this Agreement for the payroll expense of any employee of Manager or an Affiliate of Manager who is performing a necessary job function including general manager,

assistant manager, director of sales, sales manager on behalf of the Hotel or Owner that is otherwise vacant.  Manager may also reimburse itself for reasonable third party out of pocket costs and expenses incurred by Manager, Manager's Affiliates or personnel of Manager's Affiliates, as the case may be, in the course of Manager fulfilling the duties described in this Agreement including, without limitation, delivery charges, Group Services, attendance at training programs and travel expenses.  Owner agrees to reimburse Manager for costs associated with corporate accounting services by paying an accounting fee of $1,000 per accounting period or any portion thereof and this fee may be adjusted annually based on changes in the CPI.

ARTICLE VII
COMPLIANCE WITH LAWS

Section 7.1. Compliance by Manager.  Manager shall use its good faith efforts to comply with and abide by all applicable Laws relating to the operation of the Hotel, including without limitation all laws relating to employment, on the condition that Manager shall have the right, but not the obligation, in its reasonable discretion, to contest or oppose, by appropriate legal proceedings, the validity or applicability of any Laws.

Section 7.2. Compliance by Owner.  Owner shall comply with and abide by all applicable Laws relating to the ownership and operation of the Hotel, on the condition that Owner shall have the right to contest or oppose, by appropriate legal proceedings, the validity or applicability of any Laws and postpone compliance therewith pending the determination of such contest, if so permitted by law and not detrimental to the operation of the Hotel.  If Owner contests or is in non-compliance with any Law, Owner shall indemnify and hold harmless Manager from and against any loss, cost, damage and expense (including without limitation, attorney fees), as a result of such contest or non-compliance.  Owner shall promptly notify Manager of any known or claimed violations of Laws affecting the Hotel or Owner.

ARTICLE VIII
AGENCY ACCOUNT, OPERATING FUNDS

AND CAPITAL RESERVE FUND

Section 8.1. Agency Account.  All monies received by Manager in the operation of the Hotel, including the Operating Funds furnished by Owner, shall be deposited in accounts (collectively, the "Agency Account") in Owner's name, designating appropriate representatives of Manager and Owner as signatories in a bank or similar institution recommended by Manager.  Such monies shall not be commingled with any other funds of Owner.  Withdrawals from the Agency Account shall be made only by authorized representatives of Manager and/or Owner and on the condition that such representatives of Manager are bonded or otherwise insured.  All payments made by Manager under this Agreement shall be made from the Agency Account.

Section 8.2. Operating Funds.  Until the first Annual Business Plan is approved, Owner shall maintain cash in the Agency Account in an amount reasonably estimated by Manager to be sufficient to properly operate the Hotel.  Thereafter, Owner shall maintain cash in the Agency Account pursuant to each Annual Business Plan sufficient in amount to properly operate the Hotel ("Operating Funds").  If, at any time during the Original Term or any Renewal Term, the Operating Funds shall fall below the Required Minimum Amount or it is reasonably anticipated to do so within the next ten (10) days, Owner shall deposit into the Agency Account, on or before three (3) days after receipt of written notice from Manager of such shortfall or anticipated shortfall, additional funds in an amount necessary to bring the Operating Funds up to the Required Minimum Amount.  Subject to the requirements of the Operating Budget for such Fiscal Year, any Operating Funds in the Agency Account in excess of the Required Minimum Amount, shall be distributed to Owner on a quarterly basis.

Section 8.3. Payment of Operating Expenses.  Manager shall pay all ordinary operating expenses of the Hotel consistent with this Agreement and the approved Operating Budget or approved by Owner out of Operating Funds including, without limitation, (i) any and all compensation and other benefits paid to employees of Manager at the Hotel, and (ii) any and all fees or compensation of any kind due Manager pursuant to this Agreement, all in accordance with the provisions of this Agreement.  Manager shall not be required to make any advance or payment to or for the account of Owner except out of the Operating Funds, and Manager shall not be obligated to incur any liability or obligation on behalf of Owner.

ARTICLE IX
BOOKS, RECORDS AND FINANCIAL STATEMENTS

Section 9.1. Accounting System.

(a) Manager, unless Owner gives Manger written notice of its election to resume its own internal accounting, shall keep full and adequate books of account and other records (collectively, the "Books and Records") as are necessary to reflect all fees, costs and the results of the operation of the Hotel on an accrual basis, all substantially in accordance with the Uniform System.  In maintaining the Books and Records for the Hotel, Manager shall use the standard practices it follows with respect to similar facilities managed by Manager.  Manager may perform accounting services at the Hotel, Manager's parent company corporate office, or such other location where Manager performs centralized accounting services.  Manager reserves the right to enter into a contract with a qualified independent third party for payroll and other accounting services if Manager reasonably determines that it would be more cost efficient to do so and it is consistent with the approved Operating Budget.  Except for such Books and Records as Manager may elect to keep at its parent company corporate office or other suitable location, Manager shall keep the Books and Records at the Hotel and make them available to Owner and its representatives at all reasonable times for examination, audit, inspection and transcription. 

(b) Manager's obligation under this ‎ARTICLE IX is contingent upon Owner providing acceptable accounting hardware and software to Manager. Manager shall use its accounting software and the Owner shall provide it property based management systems, but these systems must be coordinated to function with the Owner's existing systems, including delivery of all information (including financial information) in a format acceptable to Owner, whereby Owner’s approval will not be unreasonably witheld.  If Manager reasonably determines that the current accounting equipment or property based management software at the Hotel (or the property management system utilized by Owner) is inadequate to perform the required accounting and management functions, Manager shall so notify Owner and recommend such necessary hardware and software for purchase or lease by Owner.  Owner, or Manager on Owner's behalf, shall purchase or lease to the extent consistent with the approved Operating Budget such necessary hardware and software within thirty (30) days after Manager delivers such notice.

(c) All Books and Records including, without limitation, books of accounts, guest records and front office records, but excluding personnel files and payroll records, shall at all times be the property of Owner.  Upon termination of this Agreement, all Books and Records, except for personnel files and payroll records, shall be turned over to Owner to ensure the orderly continuation of the operation of the Hotel, on the condition that the Books and Records shall thereafter be available to Manager and its representatives at all reasonable times by appointment for inspection, audit, examination and transcription. Notwithstanding anything herein to the contrary, Owner may request personnel files and payroll books for internal or external review and audit, including audits by Owner’s agents.

(d) Manager is responsible, unless directed otherwise by Owner, to remit, pay and ensure compliance with all sales and lodging tax in accordance with all applicable local, county or state laws and regulations.

Section 9.2. Financial Statements.  Manager shall deliver to Owner, within fifteen (15) days after the end of each Accounting Period and within fifteen (15) days after the end of each quarter, the periodic financial statements for the Hotel.  Manager shall also deliver within fifteen (15) days after the end of each Fiscal Year a preliminary financial statement followed by a final financial statement within twenty-one (21) days after the end of the Fiscal Year.  All financial statements shall be in form and substance reasonably acceptable to Owner (the "Financial Statement"), which Financial Statement shall include the following information:

(a) Balance sheet as of the last day of the accounting period, on an accrual basis, with all period-end balances reconciled;

(b) A consolidated income and expense statement for the accounting period and Fiscal Year and comparing the current accounting period and Fiscal Year-to-date performance with the Operating Budget and previous year performance (if available);

(c) An income and expense statement by department showing results of Hotel's operation for the accounting period and Fiscal Year and comparing the current accounting period and Fiscal Year-to-date performance with the Operating Budget and previous year performance (if available);

(d) Manager shall comply with all financial statement audit requests of Owner within ten (10) business days of the request, including, without limitation, providing to Owner or Owner’s auditors such items such as cash reconciliations, hotel ledger reports, payroll reports, prepaid schedules, inventory details, and other such items that support the income statement and balance sheet of the financial statements.

(e) Such other reports as Owner may reasonably request.

The Financial Statements shall be determined from the Books and Records, and be prepared using the accrual method of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) using the uniformed system.  Any disputes as to the contents of any Financial Statement or any accounting matter hereunder shall be determined by an independent certified public accountant to be agreed upon in the exercise of good faith by both parties, whose decision shall be final and conclusive as to both Manager and Owner, and in the event Manager does not respond, or provides incomplete reports, then Manager shall reimburse Owner for all expenses, including reasonable amounts for time and labor, that Owner incurs completing its annual financial statement audit by any required deadline.

Section 9.3. Initial Accounting Records.  Owner shall provide Manager with opening balance sheet entries for Manager's use within thirty (30) days after the Contract Commencement Date.  Manager shall not be responsible for any reconstruction of accounting records prior to the Contract Commencement Date.  Owner acknowledges that Manager has no knowledge of and cannot certify the accuracy of any historical financial information provided to Manager by Owner.

ARTICLE X
ANNUAL BUSINESS PLAN

Section 10.1. Preparation of Annual Business Plan.

(a) Manager shall, on or before thirty (30) days prior to the end of each Fiscal Year of operation, prepare and submit to Owner for its approval, which approval shall not be unreasonably withheld, the Annual Business Plan for the operation of the Hotel under this Agreement.

(b) Each Annual Business Plan shall include without limitation the following, all in reasonable detail and, where appropriate, with the basis for all assumptions expressly set forth:  (i) an Operating Budget; (ii) a cash flow forecast; and (iii) a budget for capital improvements and fixed asset additions.

(c) Owner shall review the Annual Business Plan and either approve or notify Manager of any objections to the Annual Business Plan in writing on or before thirty (30) days after Owner's receipt thereof.  If Owner fails to deliver written notice of disapproval of any proposed Annual Business Plan within such thirty-day period, Owner shall be deemed to have approved the Annual Business Plan as submitted by Manager.

Section 10.2. Annual Business Plan Disputes.  If Owner objects to all or any part of a proposed Annual Business Plan, Owner shall deliver written notice to Manager setting forth the specific objections of Owner to the Annual Business Plan, and Manager and Owner shall in good faith negotiate a mutually satisfactory Annual Business Plan.  If Manager and Owner are unable to resolve disputes over an Annual Business Plan prior to commencement of the applicable Fiscal Year, then, until resolved, the amount of the disputed items shall be 110% of the actual amount expended for such items during the preceding Fiscal Year, adjusted for a full twelve months of operation as such amount may be adjusted to reflect changes in the CPI. 

Section 10.3. Deviations from Annual Business Plan.

(a) Upon approval by Owner of an Annual Business Plan, Manager shall use its good faith efforts to manage, operate and maintain the Hotel for the subsequent Fiscal Year in accordance with the Annual Business Plan and attempt to adhere thereto, as nearly as practicable, on the condition that if Manager shall be unable, with the exercise of due diligence, and all commercially reasonable efforts to comply with the approved Annual Business Plan, such inability shall not by itself constitute a default under this Agreement.

(b) Manager shall be authorized to take appropriate remedial action without receiving Owner's prior consent (i) in an emergency threatening the Hotel, its guests, invitees or employees; or (ii) if the continuation of the given condition will subject Manager and/or Owner to civil or criminal liability, and Owner has either failed to remedy the situation or has failed to take appropriate legal action to stay the effectiveness of any Laws.  In such an event, Manager shall cooperate with Owner in the pursuit of any such action and shall have the right to participate therein.

(c) Owner acknowledges that any approved Annual Business Plan is a reasonable estimate and that any projections set forth in the Annual Business Plan are subject to and may be affected by changes in financial, economic and other conditions and circumstances beyond Manager's reasonable control and that such projections are not to be construed as a warranty or guaranty by Manager of the actual results of operations to be obtained.

ARTICLE XI
MANAGEMENT FEES AND EXPENSES

Section 11.1. Management Fees.  In consideration of the services Manager is to render under this Agreement during each Fiscal Year or portion thereof commencing on the Contract Commencement Date, Owner shall pay to Manager the following Management Fees:

(a) After Owners' receipt of each monthly Financial Statement and the monthly reports applicable to such immediately preceding accounting period, Manager shall be authorized to withdraw monthly from the Operating Funds a Base Management Fee equal to three percent (3%) of the prior month's Gross Revenues.

(b) In addition to the Base Management Fee, Manager shall be entitled to receive an Incentive Management Fee in an amount, if any, for each Fiscal Year commencing with Fiscal Year 2020 equal to twenty percent (20%) of the House Profit in excess of the prior Fiscal Year  House Profits, only applicable for the immediately preceding Fiscal Year ("Incentive Management Fee"). The Incentive Management Fee shall be paid within fifteen (15) days of receipt of the final year-end financial statements.

Section 11.2. Reimbursement of Expenses.  Owner shall be responsible for the payment of all costs and expenses incurred by the Hotel through the actions of Manager pursuant to this Agreement.  Owner shall reimburse Manager within thirty (30) days after Owner receives written notice from Manager for any debts and expenses relating to the Hotel that Manager has paid.  If Owner fails to reimburse Manager for any such amount under this ‎Section 11.2 within such 30-day period, such amount shall thereafter accrue interest at one and one-half percent (1.5%) per month from the end of such 30-day period until paid.  Nothing contained in this Agreement shall be deemed to require Manager to advance any funds on behalf of the Hotel or Owner.  Manager shall submit to the Owner a detailed invoice of the Management Fee and all expenses to be reimbursed, along with supporting documentation.  Owner shall have three business days to either approve the management invoice or to reasonably object to any specific charges identifying both the amount of dispute and the reason for such dispute.  Manager shall be paid any amount not disputed immediately after the earlier of Owner's approval, or the three business day period has expired.

ARTICLE XII
INSURANCE, DAMAGE AND CONDEMNATION

Section 12.1. Insurance.   Manager and/or Owner shall procure and maintain from and after the Contract Commencement Date, at Owner's cost and expense pursuant to ‎Section 6.1, the insurance policies described in ‎Section 12.2 in amounts sufficient to reasonably and adequately protect Owner and Manager against loss or damage arising in connection with the ownership, management and operation of the Hotel and to satisfy the requirements of the Franchise Agreement and the Mortgage.  Owner assumes all risks of, and Manager shall bear no responsibility for, coverage that is subsequently determined to be inadequate.  If insurance is procured by Owner, Owner shall furnish Manager with certificates evidencing such coverage on or before the Contract Commencement Date and upon any and all subsequent renewals thereof.  Within ten (10) days of a written request from time to time by Manager, certified copies of the applicable insurance policies shall be delivered by Owner to Manager.  Any insurance required by Owner hereunder or actually obtained by Owner shall be primary as to any insurance obtained by Manager.  These policies will be in the name of Owner and will name Manager (and any Affiliates of Manager as Manager may specify) of the Hotel as an additional insured.  If Manager is responsible for obtaining the insurance coverages, the policies will name the Owner of the Hotel as an additional insured. All insurance policies   (i) shall contain riders and endorsements adequately protecting the interests of Owner, including, without limitation, provisions for at least thirty (30) days' notice to Owner prior to cancellation; (ii) shall be issued by financially sound and reputable insurers; (iii) shall provide that the insurer shall have no right of subrogation against Manager, Owner, Manager's Affiliates, or their agents or employees; and (iv) shall be provided at Owner's expense.  Any insurance required to be provided by Manager in ‎Section 12.2 may be provided under the blanket insurance policy of Manager, which policy covers other hotel properties managed by Manager.  All premiums, costs and expenses shall be allocated among the properties participating under such program in accordance with generally accepted underwriting standards.  Any deductible applicable to any of the insurance required pursuant to ‎Section 12.2 shall be paid by Owner.  Owner assumes no responsibility for, or interest in, additional premiums or proceeds (other than standard audit adjustments) generated by the blanket insurance policy of Manager.  Coverage extended to any additional insured or additional named insured under these policies will expire on the Termination Date.  To the extent applicable, Owner shall be provided certificates evidencing the insurance coverages required pursuant to ‎Section 12.1 and ‎Section 12.2 on or before the Contract Commencement Date, and upon any and all subsequent renewals thereof. Owner shall have the right at any time for any reasonable period of time to place property and casualty insurance coverage, and with the consent of Manager (which shall not be unreasonably withheld or delayed) any other required coverage under ‎Section 12.1 and ‎Section 12.2.  If Owner notifies Manager that Owner shall place the insurance coverage, Manager shall cooperate with Owner and shall terminate, with advance notice to Owner, any overlapping insurance coverage.

Section 12.2. Required Coverage.  Manager and/or Owner shall procure and maintain, subject to Owner's prior right to place property and casualty insurance, at a minimum the insurance policies with coverage limits and deductibles, all as provided in Exhibit B to this Agreement, to the extent applicable to the Hotel.

Section 12.3. Other Insurance.  Other insurance, such as flood and earthquake insurance, shall be maintained as required by Laws or if deemed advisable by Manager and approved by Owner to fully protect Owner, Manager and the holder of the Mortgage on the Hotel against loss or damage arising in connection with the ownership, management and operation of the Hotel.

Section 12.4. Damage and Repair.

(a) If, during the Term of this Agreement, the Hotel is damaged or destroyed by fire, casualty or other cause, Owner may, at its costs and expense and consistent with any loan documents secured by the Hotel, with all reasonable diligence repair or replace the damaged or destroyed portion of the Hotel to at least the same condition as existed previously.  Manager shall have the right to discontinue operating the Hotel to the extent it deems necessary to comply with applicable Laws or as Manager reasonably deems necessary for the safe and orderly operation of the Hotel.  If Manager elects to discontinue operating the Hotel during any period of repair and rebuilding or if the Hotel is otherwise not fully operable and Manager continues operating the Hotel in a limited capacity, Owner shall pay Manager (from the proceeds of business interruption insurance or from Operating Funds), each month until the Hotel

is fully operational, an amount equal to one-twelfth (1/12) of the total Base Management Fees paid to Manager for the 12 months immediately preceding the damage or destruction or, if Manager has managed the Hotel for less than 12 months preceding the damage or destruction, an amount equal to the monthly average of the Base Management Fees projected to be paid to Manager for the first Fiscal Year, as set forth in the initial Annual Business Plan.  To the extent available proceeds from the insurance described in this Agreement shall be applied to such repairs or replacements.

(b) If damage or destruction to the Hotel from any cause will, in Manager's reasonable opinion, materially and adversely affect the operation of the Hotel, and Owner fails to promptly commence and complete any required repairing, rebuilding or replacement of the same so that the Hotel shall be substantially the same as it was prior to such damage or destruction, Manager may, at its option, terminate this Agreement upon thirty (30) days prior written notice to Owner, but no Termination Fee shall be payable in any case, even during the Original Term of this Agreement and Owner shall have no further liability, except for matters accrued, in whole or in part, prior to the Termination Date.

Section 12.5. Condemnation.

(a) If all or substantially all of the Hotel shall be taken in any eminent domain, condemnation, compulsory acquisition, or similar proceeding by any competent authority for any public or quasi-public use or purpose, or if a portion of the Hotel shall be so taken so that it is unreasonable to continue to operate the Hotel in accordance with the standards required by this Agreement, this Agreement shall terminate, and Owner shall pay to Manager as liquidated damages, a sum equal to the monthly average of the last three month's Base Management Fee multiplied by the number of months and partial months remaining in the Original Term.

(b) If all or substantially all of the Hotel shall be taken by the events described in ‎Section 12.5‎(a), but the effect is of a temporary nature, then Owner shall pay Manager (from the proceeds of business interruption insurance or from Operating Funds), each month until the Hotel is fully operational, an amount equal to one-twelfth (1/12) of the total Base Management Fees paid to Manager for the twelve (12) months immediately preceding the taking or, if Manager has managed the Hotel for less than twelve (12) months preceding the taking, an amount equal to the monthly average of the Base Management Fees projected to be paid to Manager for the first Fiscal Year, as set forth in the initial Annual Business Plan.  To the extent available, any award for the taking or condemnation as shall be necessary to render the Hotel equivalent to its condition prior to such event may be used for such purposes.  If Owner terminates the Franchise Agreement and this Agreement as a result of condemnation or taking, Owner shall pay to Manager as liquidated damages, subject to any required approval of any lender secured by the Hotel, a sum equal to the monthly average of the last three month's Base Management Fee multiplied by the number of months and partial months remaining in the Original Term.

(c) If any partial or complete taking or condemnation will, in the Manager's reasonable opinion, materially and adversely affect the safe and orderly operation of the Hotel,  Manager may, at its option, terminate this Agreement upon thirty (30) days prior written notice to Owner and neither Owner nor Manager shall have any further liability to the other under this Agreement.

Section 12.6. Force Majeure.  If act of God, acts of war, acts of terrorism, civil disturbance, labor strikes, governmental action, including, without limitation, the revocation or denial of any license or permit necessary for the operations contemplated in this Agreement where such revocation or denial is not due to Manager's fault, increases in minimum wage or benefit requirements, or any other causes beyond the control of Manager, will, in Manager's reasonable opinion, materially and adversely affect safe and orderly operation of the Hotel, then Manager may, at its option, terminate this Agreement upon thirty (30) days prior written notice to Owner and neither Owner nor Manager shall have any further liability to the other under this Agreement, except for matters accrued, in whole or in part, prior to the Termination Date.

ARTICLE XIII
TERMINATION

Section 13.1. Right of Termination.  This Agreement may be terminated at any time by mutual written agreement of Manager and Owner.  Owner may terminate this Agreement immediately due to the gross negligence, willful misconduct or fraud by Manager. If a Termination Event (as defined below) occurs, the non-

defaulting party (or, to the extent such termination right is not based on a default, the party entitled to terminate this Agreement) may terminate this Agreement, subject to notice and cure provisions to the extent provided therein.  In addition, Manager and/or Owner may terminate this Agreement if such right is expressly provided to such party in ‎Section 12.4,  ‎Section 12.5,  ‎Section 12.6 or ‎Section 13.1 of this Agreement.  A Termination Event shall also constitute a default under this Agreement as to the applicable party. 

Section 13.2. Termination Events.  As used herein, the term "Termination Event" shall mean the occurrence of any of the following events:

(a) The failure by either party to keep, observe, or perform any material representation, warranty, covenant, agreement, term, condition or provision to be kept, observed, or performed by such party including, without limitation, the failure to pay to the other party any sums as and when they become due hereunder, and such default shall continue uncured either (i) for a period of ten (10) days after the defaulting party's receipt of written notice thereof from the non-defaulting party, or (ii) if such default does not relate to the payment of monies, for a period no longer than thirty (30) days, provided, however, if the defaulting party is diligently attempting to cure such default but such default cannot be cured for reasons beyond the power of the defaulting party, the defaulting party shall be allowed up to sixty (60) days in the aggregate to cure such default.

(b) The failure by Owner to maintain the Required Minimum Amount in the Agency Account, and such default shall continue uncured for a period of ten (10) days after receipt of notice of such failure from Manager.

(c) The making by either party of a general assignment for the benefit of creditors; or a petition of application by either party to any tribunal for the appointment of a trustee, custodian, receiver or liquidator of all or substantially all of its business, estate or assets; or the commencement by either party of any proceeding under any bankruptcy, reorganization, arrangement, insolvency, readjustment or debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect.

(d) The entering of an order appointing a trustee, custodian, receiver or liquidator of all or substantially all of the assets of either party, and such order shall remain in effect for more than ninety (90) days.

(e) The failure by either party to generally pay its debts as they become due or the suffering by either party of any writ of attachment or execution or any similar process to be issued or levied against it or any substantial part of its property which is not released, stayed, bonded or vacated within ninety (90) days after its issue or levy.

(f) No termination event will have occurred, and no termination fee levied if the Owner sells the Hotel, or the Owner, and the purchasing company accepts an assignment of this Agreement, or executes a new management agreement retaining the Manager.

Section 13.3. Remedies.  Unless 13.2(f) applies, upon the breach of any term or condition of this Agreement by Manager, the sole remedy of Owner shall be to terminate this Agreement without the payment of any Termination Fee to Manager; except that Owner shall be able to seek actual, direct damages and/or equitable relief in the event that (i) Manager's breach constitutes the sole cause of a default under the Franchise Agreement, (ii) Manager voluntarily ceases operations of the Hotel for more than twenty-four (24) hours, except for force majeure, a casualty or other reasons beyond its control, or (iii) Manager is convicted of committing a crime or found liable for an intentional tort, as the case may be.  If Owner elects to terminate this Agreement in its sole discretion and without cause, or elects to terminate this Agreement in the event of the sale of the Hotel, it may do so only upon giving Manager at least sixty (60) days written notice and payment on the date of termination to Manager an onboarding/off-boarding fee for Manager’s cooperation and out-of-pocket costs associated with any changeover and onboarding/off-boarding of management companies, including through the sale of the Hotel, based upon the date of termination as follows:

(a)          If the Termination Date is on or before the first anniversary date of the Contract Commencement Date, then the Termination Fee is $100,000;

(b)          If the Termination Date is after the first anniversary date but on or before the second anniversary date of the Contract Commencement Date, then the Termination Fee is $50,000;

(c)          If the Termination Date is after the second anniversary but on or before the third anniversary date of the Contract Commencement Date, then the Termination Fee is $25,000;

(d)          If the Termination Date is after the third anniversary of the Contract Commencement Date, then the Termination Fee is $15,000.

Section 13.4. Payment of Outstanding Fees and Expenses.  The termination of this Agreement for any reason shall not relieve any party of any payment obligations to the other party, and all accrued fees and expenses shall be paid in full on or before the Termination Date including, without limitation, the Termination Fee (if applicable).

Section 13.5. Rebates and Discounts.  Because of its purchasing power derived through its operations of its own hotels, its management of the Hotel and its management or franchising of other hotels, Manager and/or its Affiliates may from time to time negotiate rebates and discounts from the vendors of certain products and services.  Manager agrees that the portion of such rebates and discounts allocable to the Hotel will be promptly passed on to the Owner. 

Section 13.6. Post-Termination.  For a period of thirty (30) days after the Termination Date, Manager shall reasonably cooperate with Owner in the transition and orderly transfer of management of the Hotel to Owner or Owner's designated agent.  Manager shall prepare a final accounting of Hotel operations and disburse to Owner, funds held by Manager on behalf of Owner, less a reserve determined by Manager in its reasonable discretion for accrued and estimated contingent liabilities and estimated outstanding insurance claims or obligations.  To the extent assignable, Manager shall assign operating licenses used in the operation of the Hotel, issued in the name of Manager, to Owner.  In the event licenses are not assignable, Manager shall reasonably cooperate, at no expense or liability to Manager, with Owner to cause such licenses to be reissued in the name of owner or new manager.  Manager shall peacefully vacate and surrender Hotel to Owner.

ARTICLE XIV
REPRESENTATIONS AND COVENANTS

Section 14.1. Mutual Representations and Warranties.  Owner and Manager each represent and warrant as to itself, as applicable, that (a) all Recitals and representations in this Agreement are true and correct; (b) each of Manager and Owner are duly formed or organized, validly existing and in good standing under applicable Laws; (c) all requisite partnership or corporate action has been taken to permit each of Manager and Owner to enter into this Agreement and to carry out the terms hereof; (d) the officer or partner signing this Agreement is authorized to do so; and (e) neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will (i) violate any Laws, (ii) result in or constitute a breach or default under any indenture, contract or other commitment or restriction to which Manager or Owner is a party or by which either is bound, (iii) require any consent, vote or approval which has not been obtained, or (iv) result in the creation or imposition of any lien or encumbrance upon the Hotel or breach any instrument affecting the Hotel.

Section 14.2. Owner's Representations and Covenants.  Owner represents, warrants and covenants to Manager as follows:

(a) Owner has full power and authority to enter into this Agreement, and Owner's execution shall not breach any instrument affecting Owner or the Hotel.

(b) The Hotel is zoned for use as a hotel and all necessary governmental and other licenses, permits and approvals for such use and for the food and beverage (excluding the sale and service of alcoholic beverages) operations of the Hotel have been obtained or have been or will be timely applied for and will be in full force and effect (to the extent such services are anticipated to be provided at the Hotel) on the Contract Commencement Date.

(c) Owner has, and throughout the Term of this Agreement shall maintain, ownership of the Hotel and own or lease the FF&E and Operating Equipment, free and clear of all liens and encumbrances except those that do not materially affect the operation of the Hotel by Manager.

(d) During the term of this Agreement, Owner shall use its best efforts to pay, keep, observe and perform all payments, terms, covenants, conditions and obligations to be made, kept, observed or performed by Owner under any lease, license, franchise, concession, mortgage or other agreement or security instrument with respect to the Hotel, and shall keep such agreements and instruments in full force and effect.

(e) Manager, so long as it is not in default under this Agreement, shall have the right to peacefully and quietly possess, manage and operate the Hotel during the term of this Agreement, but only in accordance with the terms of this Agreement, and Owner, shall, at its sole expense, undertake to assure such peaceful and quiet possession by Manager unless Owner is unable to do so because of the acts of Manager, its employees or other agents.

(f) Owner is and, during the Term of this Agreement shall remain, in full compliance with all Laws that prohibit, regulate or restrict financial transactions, including, but not limited to, conducting any activity or failing to conduct any activity, if such action or inaction constitutes a money laundering crime prohibited under the Money Laundering Control Act, 18 U.S.C. § 1956, et seq., or the Bank Secrecy Act, 31 U.S.C. § 5311, et seq., and any amendments or successors thereto and any applicable regulations promulgated thereunder.

(g) Neither Owner, nor any of its owners, nor any officer, director, member, manager, partner or employee of Owner, is or will become named as a "Specially Designated National and Blocked Person" as designated by the United States Department of the Treasury's Office of Foreign Assets Control or as a person, group, entity or nation designated in Presidential Executive Order 13224 as a person who:  (i) commits, threatens to commit, or supports terrorism, (ii) is owned or controlled, directly or indirectly, by the government of any country that is subject to the United States Embargo; or (iii) is acting, directly or indirectly, for or on behalf of any person, group, entity or nation named by the United States Treasury Department as a "Specially Designated National and Blocked Person," or for or on behalf of any person, group, entity or nation designated in Presidential Executive Order 13224 as a person who commits, threatens to commit, or supports terrorism and is not engaged in this transaction, directly or indirectly, on behalf of, or facilitating this transaction, directly or indirectly, on behalf of, any such person, group, entity or nation.  No funds will be used by Owner to make any payments due pursuant to this Agreement were or will be obtained, directly or indirectly, from a Specially Designated National and Blocked Person or otherwise derived from a country that is subject to United States Embargo, provided that, in the event that Owner is a publicly traded company whose shares are listed on a national stock exchanged, such representation and warranty shall not apply to such shareholder of Owner.

(h) During the Term of this Agreement, Owner shall provide in a timely manner to Manager clear and accurate copies of Owner's Mortgage and Franchise Agreement and all relevant correspondence relating thereto.

ARTICLE XV
ASSIGNMENT

Section 15.1. Assignment by Owner.  Owner shall not assign or transfer or permit the assignment or transfer of this Agreement or any of Owner's rights and obligations hereunder without the prior written consent of Manager, on the conditions that (i) Owner may assign this Agreement without Manager's consent to any Affiliate of Owner or to any successor or assign that may result from the merger, consolidation or reorganization of Owner or its Affiliate provided that any such assignee shall assume and agree in writing to be bound by all of the terms and subject to all of the conditions set forth in this Agreement, and (ii) Owner shall not be released from its obligations hereunder without Manager's prior written consent which consent shall not be unreasonably withheld.  Owner shall deliver to Manager a copy of any instrument of assignment.  No assignment by Owner shall be binding on Manager until written notice thereof is furnished Manager, together with a copy of the applicable assignment and assumption document and evidence of such assignee's compliance with the insurance obligation of Owner imposed by this Agreement.

Section 15.2. Assignment by Manager.  Manager shall not assign or transfer or permit the assignment or transfer of this Agreement or any of Manager's rights and obligations hereunder without the

prior written consent of Owner, on the conditions that (i) Manager may assign this Agreement without Owner's consent to any Affiliate of Manager or to an entity under the control of the then-current senior executives of Manager or to any successor or assign that may result from the merger, consolidation or reorganization of Manager or its Affiliate or the sale of all or substantially all of the equity and/or assets of Manager.  Provided that any such  assignee shall assume and agree to be bound by all of the terms and subject to all of the conditions set forth in this Agreement, and Manager shall not be released from its obligations hereunder without Owner's prior written consent which consent shall not be unreasonably withheld.  Manager shall upon request deliver to Owner a copy of any instrument of assignment.

ARTICLE XVI
MORTGAGE AND TAXES

Section 16.1. Taxes.  All Taxes accruing during the Term of this Agreement shall be paid by Owner or by Manager, upon Owner's request, from Operating Funds or funds provided by Owner before any fine, penalty or interest is added thereto or lien is placed upon the Hotel, unless payment thereof is, in good faith, being contested by Manager and/or Owner and enforcement thereof is stayed without potential penalties.  Owner may pay such Taxes in installments to the minimum extent permitted by applicable Laws.  If payment is to be made by Manager, Owner shall promptly, after receipt, forward all notices of, and invoices for, the Taxes to Manager.  If payment is made by Owner, Owner shall deliver to Manager, prior to the respective due dates, proof of payment of the Taxes.  If Owner fails to timely pay any Taxes, Manager may, but is not obligated to, pay such Taxes on Owner's behalf from any available funds in the Agency Account, following which Owner shall immediately replenish the Agency Account in the amount of the Taxes paid by Manager.  Manager's responsibilities specifically exclude the preparation, filing or contesting of Taxes, unless requested by Owner in writing, on the condition that the cost of such preparation, filing or protest shall be paid by Owner.  Owner shall indemnify, defend and hold harmless Manager from and against any costs, expenses (including reasonable attorneys' fees), liabilities and claims relating to the payment or nonpayment of Taxes.

Section 16.2. Mortgage.  All mortgage payments for any Mortgage on the Hotel shall be paid by Owner, or by Manager upon Owner’s request, as and when they become due, and shall comply with and perform any and all covenants contained in such Mortgage, in each instance before any event of default (as defined in any such Mortgage) or other event occurs under any Mortgage, which would trigger such mortgagee's right to institute foreclosure proceedings against the Hotel.

ARTICLE XVII
INDEMNIFICATION AND LIMITATION OF LIABILITY

Section 17.1. Indemnification by Owner.  Except for liabilities incurred by Manager due to the gross negligence, willful misconduct or fraud of Manager, its employees or other agents, Owner hereby indemnifies, defends and holds harmless Manager and its Affiliates and each of their respective officers, directors, shareholders, employees, representatives and agents (collectively, the "Manager Indemnitees"), from and against any and all losses, costs, damages, liabilities, claims, actions and expenses whatsoever (including, without limitation, reasonable attorneys' fees and court expenses), incurred by any of the Manager Indemnitees arising out of, as a result of, or in connection with operation of the Hotel, including, without limitation, (i) the performance by Manager or its Affiliates of its services hereunder, including, without limitation, any and all obligations incurred relating to any agreements with third parties entered into by Manager or Owner in connection with the management or operation of the Hotel, (ii) any act or omission (whether or not willful, tortious, or negligent) of Owner or any third party (except those for which Manager expressly indemnifies Owner hereunder), or (iii) any other occurrence related to the Hotel or Manager's duties under this Agreement (except those for which Manager expressly indemnifies Owner hereunder).  TO THE MAXIMUM EXTENT ALLOWED BY LAW, THE OBLIGATIONS OF OWNER IN THE PRECEDING SENTENCE SHALL APPLY NOTWITHSTANDING THE NEGLIGENCE OF ANY OF THE MANAGER INDEMNITEES, WHETHER SUCH NEGLIGENCE IS SOLE, CONCURRENT, CONTRIBUTORY OR OTHERWISE.  Owner may apply the proceeds of any available insurance to the payment of any claim under the indemnity set forth in this ‎Section 17.1.  The provisions of this ‎Section 17.1 shall survive the expiration or termination of this Agreement and shall be binding upon Owner's successors and assigns.  The Manager Indemnitees shall not invoke this indemnity for anything to the extent covered by insurance.

Section 17.2. Indemnification by Manager.  Manager hereby indemnifies, defends and holds harmless Owner, and its Affiliates and each of their respective officers, directors, shareholders, employees, representatives and agents (collectively, the "Owner Indemnitees") from and against any and all losses, costs, damages, liabilities, claims, actions and expenses whatsoever (including, without limitation, reasonable attorneys' fees and court expenses), incurred by the Owner Indemnitees as a result of (i) the fraud, willful misconduct or gross negligence of Manager or its employees, and (ii) any action taken by Manager or its employees, which is beyond the scope of Manager's authority under this Agreement.  Manager may apply the proceeds of any available insurance to the payment of any claim under the indemnity set forth in this ‎Section 17.2.  The provisions of this ‎Section 17.2 shall survive the expiration or termination of this Agreement and shall be binding upon Manager's successors and assigns.  The Owner Indemnitees shall not invoke this indemnity for anything to the extent covered by insurance.

Section 17.3. No Successor Liability.  Notwithstanding anything herein to the contrary, neither Manager nor its Affiliates shall be liable as a successor employer or entity for any actions Owner may have taken in the employer-employee relationship with Owner's current or former employees or employees of Owner's Affiliates before the Contract Commencement Date.  Specifically, Manager shall not be liable or responsible in any manner for, and Owner shall indemnify, defend and hold Manager harmless from, any and all losses, costs, damages, liabilities, claims, actions and expenses whatsoever (including, without limitation, reasonable attorneys' fees and court costs) arising out of Owner's ownership or operation of the Hotel, or employment of employees at the Hotel prior to the Contract Commencement Date.

ARTICLE XVIII
MISCELLANEOUS

Section 18.1. Severability.  Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Laws, but if any provision of this Agreement shall be prohibited by or invalid under applicable Laws, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

Section 18.2. No Waiver.  The failure of either party to insist upon strict performance of any of the terms or provisions of this Agreement or to exercise any option, right or remedy herein contained, shall not be construed as a waiver or as a relinquishment for the future of such term, provision, option, right or remedy, but the same shall continue and remain in full force and effect.  No waiver by either party of any term or provision hereof shall be deemed to have been made unless expressed in writing and signed by such party.

Section 18.3. Agency.  The relationship of Owner and Manager shall be that of principal and agent.  Nothing contained in this Agreement shall be construed to create a partnership or joint venture between them or their successors in interest.  Neither party shall borrow money in the name of, or pledge the credit of, the other.  Manager's agency established by this Agreement is coupled with an interest and may not be terminated by Owner except in accordance with the terms hereof.

Section 18.4. Consents.  Except as otherwise provided herein, whenever the consent or approval of Owner or Manager is required under this Agreement, such consent or approval shall not be unreasonably withheld.  Such consent or approval shall be in writing only and shall be duly executed by an authorized officer or agent of the party granting such consent or approval.

Section 18.5. Successors Bound.  This Agreement shall be binding upon and inure to the benefit of Owner and Manager, and each party's successors and permitted assigns.

Section 18.6. Notices.  Notices, statements and other communications to be given under the terms of this Agreement shall be in writing and personally delivered or sent by certified or registered mail or by Federal Express or other similar overnight mail service to the address for each party set forth below or at such other address as from time to time is designated by either party in writing.  Notices, demands and requests

which shall be served upon either party in the foregoing manner, shall be deemed served or given for all purposes hereunder at the time such notice, demand or request shall be personally delivered or received.

To Owner:
	LF3 Southaven TRS, LLC
	Attn: Sam Montgomery
	1635 43rd Suite South, Suite 205
	Fargo, North Dakota 51803
With Copy to:
	Legendary Capital, LLC
	Attn: Linzey Erickson
	1635 43rd Suite South, Suite 205
	Fargo North, Dakota 51803
To Manager:
	Vista Host Inc.
	Attn: Kathie Long
	10370 Richmond Ave., Suite 150
	Houston, TX  77042

Section 18.7. Entire Agreement.  This Agreement constitutes the entire Agreement between the parties relating to the subject matter hereof and supersedes all prior understandings and writings, and may be amended only by a written agreement signed by the parties hereto.

Section 18.8. Time.  Time is of the essence with respect to this Agreement.

Section 18.9. Financing of Hotel.

(a) Owner shall not represent in any proposed financing arrangement or to any proposed lender or participant in a private or public investment offering that Manager, or any of its Affiliates, are or shall be in any way responsible for Owner's obligations under such financing arrangement, nor are or shall be participating in the offering; nor shall Owner in any way make use of the name of Manager in connection with any proposed financing arrangement to any lender or participant in an offering, other than to state that the Hotel will be managed by Manager pursuant to the terms of this Agreement.

(b) In order to insure Owner's full and faithful compliance with this ‎Section 18.9 and to prevent any misunderstanding on the part of a proposed lender or investor, Manager and Owner agree as follows:

(i) Prior to the closing of any proposed financing arrangement, Owner shall notify Manager of such arrangement, and Manager shall have the right to notify the proposed lender of the legal relationship between Manager and Owner and to inform the lender that neither Manager nor any of its Affiliates make any representations or warranties in connection with any information provided to it by Owner.

(ii) Prior to the printing of any prospectus, concerning any private or public investment offering, Owner shall furnish Manager with a copy of the prospectus, and the prospectus shall not be published or distributed without Manager's prior written consent, which consent may be withheld only if there are statements in the prospectus that might reasonably mislead investors as to the legal relationship between Manager and Owner, or the matters permitted herein.  In addition, Manager may require Owner to insert in any prospectus a statement that neither Manager nor any of its Affiliates make any warranties or representations in connection with any information contained in the prospectus, and may inform any participant in any private investment offering of the legal relationship between Manager and Owner and that neither Manager nor any of its Affiliates make any warranties or representations in connection with any information contained in any prospectus or any other information provided to it by Owner.

Section 18.10. Trade Names.  Trade names, trademarks and service marks of both Manager and Owner may be used by either party in connection with the management and operation of the Hotel during the term of this Agreement, on the condition that neither party shall thereby acquire any right to such name or mark.  Upon termination of this Agreement, each party shall discontinue using any such names and marks of the other in the conduct of its business, and shall not intentionally engage in any business or advertising practice that could lead the public to believe that there is any continuing relationship, affiliation or identity with Manager or Owner as to the Hotel.

Section 18.11. Third Parties.  No obligation of either party hereunder shall be enforceable by any person or entity other than the parties hereto.

Section 18.12. Further Instruments.  The parties shall execute and deliver all other appropriate agreements and instruments as may reasonably be required to give effect to the transactions contemplated hereby.

Section 18.13. CPI Adjustment.  Wherever an exact dollar amount is provided in this Agreement that amount shall be adjusted each Fiscal Year to reflect changes in the CPI, using that index for the January immediately preceding the date of this Agreement and the stated dollar amounts in this Agreement as the base for all future calculations.  Such calculations shall be cumulative.

Section 18.14. Arbitration.  Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration administered by the AAA in accordance with its applicable rules; provided that either Owner or Manager can within sixty (60) days of the commencement of the arbitration stay such arbitration by commencing and diligently prosecuting litigation when the amount being sought reasonably is expected to exceed in the aggregate $100,000.  The arbitration shall allow discovery consistent with the discovery rules under the Federal Rules of Civil Procedure.  The arbitration shall be conducted by a single arbitrator or a panel of three arbitrators with at least ten years experience in the hotel industry, appointed in accordance with the rules of the AAA or as otherwise agreed in writing by Manager and Owner at the time of such dispute.  The prevailing party shall be awarded reasonable costs and expenses, including without limitation, reasonable attorneys' fees.  The award of the arbitrator(s) shall be final and binding upon the parties, and any judgment on the award rendered by the arbitrator(s) may be entered in any court have jurisdiction thereof.

Section 18.15. Counterparts.  This Agreement may be executed simultaneously in various counterparts, each of which shall deemed an original, and all of which together shall constitute one and the same instrument.

Section 18.16. Estoppel Certificate.  Owner and Manager shall, upon request of the other party, each deliver an estoppel certificate relating to this Agreement in form and substance reasonably satisfactory to the requesting party.

Section 18.17. Applicable Law, Venue.  This Agreement shall be governed by the laws of the State of Mississippi.  Venue for any action under this Agreement shall be in Mississippi.

OWNER:
LF3 Southaven TRS, LLC
By:	Lodging Fund REIT III TRS, Inc.
Its:	Sole Member
By:	/s/ Katie Cox
Name:		Katie Cox
Name:		Katie Cox, Chief Financial Officer
MANAGER:
VISTA HOST, INC.,
a Texas corporation
By:	/s/ Kathie Long
Name:		Kathie Long, Vice President

EXHIBIT A

LEGAL DESCRIPTION OF REAL PROPERTY

The Land referred to herein below is situated in the County of Desoto, State of Mississippi, and is described as follows:

PARCEL 1:

LOT 7Q, PART OF 4TH REVISION TO LOT 7G OF THE 6TH REVISION TO SECTION B, BRIARGATE COMMERCIAL SUBDIVISION IN SECTION 31, TOWNSHIP 1 SOUTH, RANGE 7 WEST, DESOTO COUNTY, MISSISSIPPI, AS PER PLAT BOOK 107, PAGE 22 AND THE ORDER TO VACATE AND ALTER PLAT THEREOF RECORDED IN WARRANTY DEED BOOK 652, PAGE 721, IN THE OFFICE OF THE CHANCERY CLERK OF DESOTO COUNTY, MISSISSIPPI.

PARCEL 2:

NON-EXCLUSIVE BENEFICIAL EASEMENTS CONTAINED IN THAT CERTAIN EASEMENTS WITH COVENANTS AND RESTRICTIONS AFFECTING LAND RECORDED IN BOOK 564, PAGE 334, IN THE OFFICE OF THE CHANCERY CLERK OF DESOTO COUNTY, MISSISSIPPI, INCLUDING, BUT NOT LIMITED TO, THE USE OF BRIARGATE WAY, BROOKS CROSSING, AND HOMEWOOD DRIVE CREATED BY PLAT RECORDED IN PLAT BOOK 107, PAGE 22 AND THE ORDER TO VACATE AND ALTER PLAT THEREOF RECORDED IN WARRANTY DEED BOOK 652, PAGE 721, IN THE OFFICE OF THE CHANCERY CLERK OF DESOTO COUNTY, MISSISSIPPI, FOR INGRESS AND EGRESS.

FOR INFORMATIONAL PURPOSES ONLY: The recorded plat is as described in Parcel 1 above. The tax Parcel No. is 1079-3108.0-00007.14. The address is 135 Homewood Drive, Southaven, MS 38671.

EXHIBIT B

INSURANCE COVERAGE

Manager and/or Owner shall at all times keep the Hotel insured with the kinds and amounts of insurance described below.  This insurance shall be written by companies authorized to issue insurance in the state in which the Hotel is located and holding a current Best's rating of at least A-VI.  The policies of insurance must name the Owner of the Hotel as an additional named insured, if available.  If not available, Owner must be included as additional insured except for Workers’ Compensation. On or before the inception of this Management Agreement and annually thereafter, certificates of insurance shall be deposited with Owner at the address of its corporate office. 

Manager and/or Owner shall be responsible for obtaining the following insurance coverages.  (The policies of insurance must name the Manager of the Hotel, and any Affiliates of Manager as Manager may specify, as an additional named insured, if available.  If not available, the Manager of the Hotel and any Affiliates of Manager, as Manager may specify, must be included as an additional insured). 

(i)           Real and personal property insurance on the "Special Causes of Loss Form" (formerly "All Risk" form) (including earthquake and flood in reasonable sublimits and deductibles as determined by Owner) and including operation of building laws/increased cost of construction and debris removal endorsements, in an amount not less than 100% of the full replacement cost thereof (as defined below), with all coinsurance waived (Debris Removal of $25,000 and Ordinance or Law $10,000 sublimits);

(ii)          Boiler and Machinery Insurance, including business interruption and extra expense on an actual loss-sustained basis, with all coinsurance waived, in the minimum amount of $5,000,000, or in such greater amounts as are then customary or as may be reasonably requested by Owner from time to time;

(iii)         Business Interruption and Extra Expense insurance, insuring Special Causes of Loss perils on an actual loss sustained/gross earnings basis, with all coinsurance waived;

(iv)         Commercial general liability insurance, (ISO - 1986 or broader) with limits of not less than $1,000,000 each occurrence and $2,000,000 general aggregate, including Liquor Liability Insurance; 

(v)          Insurance covering such other hazards and in such amounts as may be customary for comparable properties in the areas of the Hotel as may be reasonably requested by Owner;

(vi)         Crime insurance to include Guest Property with a limit of at least $300,000 and a deductible of no more than $35,000 or as may be reasonably requested by Owner;

(vii)        Statutory Workmen's compensation insurance and at least $500,000/$500,000/$500,000 Employer's Liability Insurance;

(viii)       Business Automobile liability insurance for "All Autos" with a limit of not less than $1,000,000 for each accident;

Responsibility for Premiums.  All premiums and costs will be the obligation of the Owner.

Replacement Cost.  The term "full replacement cost" as used herein shall mean the actual replacement cost of the Hotel without regard to depreciation.  In the event Owner believes that full replacement cost (the then-replacement cost less such exclusions) has increased or decreased at any time, it shall have the right to have such full replacement cost re-determined.

Waiver of Subrogation.  All insurance policies carried by Manager or Owner shall expressly waive any right of subrogation on the part of the insurer against the other parties.

Form Satisfactory, etc.  All of the policies of insurance referred to in this Exhibit B shall be written in a form and with deductibles reasonably satisfactory to Owner.  Manager shall pay all of the premiums as agent of Owner relating to insurance coverages required to be obtained by Manager and deliver certificates thereof to Owner prior to their effective date and annually thereafter.  In the event of the failure of Manager either to effect such insurance as herein called for or to pay the premiums therefore, or to deliver such certificates thereof to Owner at the times required, upon not less than seven (7) days written notice, Owner shall be entitled, but shall have no obligation, to effect such insurance and pay the premiums.  Each insurer mentioned in this Exhibit B shall agree, by endorsement to the policy or policies issued by it, that it will give to Owner at least thirty (30) days written notice before the coverage under such policy or policies in question shall be cancelled.

Increase in Limits.  If Owner at any time deems the limits and/or retentions of the coverages outlined in Exhibit B then carried to be either excessive or insufficient, Owner and Manager shall endeavor in good faith to agree in writing on the proper and reasonable limits for such insurance to be carried and such insurance shall thereafter be carried with the limits and/or retentions thus agreed on until further change pursuant to the provision of this Exhibit B.

Blanket Policy.  Notwithstanding anything to the contrary contained in this Exhibit B, Manager or Owner may bring the insurance provided for herein within the coverage of a so-called blanket policy or policies of insurance carried and maintained by Manager or Owner; provided, however, that the coverage afforded to Manager and Owner will not be reduced or diminished or otherwise be different from that which would exist under a separate policy of insurance, and provided further that the requirements of this Exhibit B are otherwise satisfied.

Separate Insurance.  If the Owner purchases the insurance policies, Manager will have the option of purchasing Contingent Liability coverage for the benefit of the Manager only.  Otherwise, Manager shall not on Manager's own initiative or pursuant to the request or requirement of any third party, take out separate insurance or increase the amount of any then existing insurance by securing an additional policy or additional policies, unless all parties having an insurable interest in the subject matter of the insurance, including in all cases Owner is included therein as insured, and the loss is payable under such separate additional insurance in the same manner as losses are payable under this agreement.  Manager shall immediately notify Owner in writing that Manager has obtained any such separate insurance or of the increasing of any of the amounts of the then existing insurance.

Reports on Insurance Claims.  Manager shall promptly investigate and make a complete and timely written report to the appropriate insurance company as to all accidents.  Claims for damage relating to the ownership, operation, and maintenance of the Hotel, any damage or destruction to the Hotel and the estimated cost of repair thereof shall be prepared by the Manager.  The Manager shall prepare any and all reports required by any insurance company as required under the terms of the insurance policy involved, and a final copy of such report shall be furnished to Owner.  Manager shall be authorized to execute proofs of such loss, in the aggregate amount of $5,000 or less, with respect to any single casualty or other event.

2

EX-21.1

EXHIBIT 21.1

Subsidiaries of the Registrant

Name	Jurisdiction of Incorporation
Lodging Fund REIT III OP, LP	Delaware
Lodging Fund REIT III TRS, Inc.	Delaware
LF3 Cedar Rapids, LLC	Delaware
LF3 Cedar Rapids TRS, LLC	Delaware
LF3 Pineville, LLC	Delaware
LF3 Pineville TRS, LLC	Delaware
LF3 Eagan, LLC	Delaware
LF3 Eagan TRS, LLC	Delaware
LF3 Prattville, LLC	Delaware
LF3 Prattville TRS, LLC	Delaware
LF3 Lubbock Casa, LLC	Delaware
LF3 Lubbock Casa TRS, LLC	Delaware
LF3 Lubbock Expo, LLC	Delaware
LF3 Lubbock Expo TRS, LLC	Delaware
LF3 Southaven, LLC	Delaware
LF3 Southaven TRS, LLC	Delaware

1

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 350)

I, Corey R. Maple, certify that:

1.     I have reviewed this annual report on Form 10-K of Lodging Fund REIT III, Inc. (the “registrant”);

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this report;

4.     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Intentionally omitted;

(c)          Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)          Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)          All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)          Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 24, 2020

/s/ Corey R. Maple

Corey R. Maple, Chief Executive Officer,

Chairman of the Board and Secretary

(principal executive officer)

1

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 350)

I, Katie Cox, certify that:

1.     I have reviewed this annual report on Form 10-K of Lodging Fund REIT III, Inc. (the “registrant”);

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this report;

4.     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)          Intentionally omitted;

(c)          Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)          Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)          All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)          Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 24, 2020

/s/ Katie Cox

Katie Cox, Chief Financial Officer

(principal financial officer)

1

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Certification of Chief Executive Officer and Chief Financial Officer

In connection with the Annual Report on Form 10-K of Lodging Fund REIT III, Inc. (the “Company”) for the year ended December 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Corey R. Maple, as the Chief Executive Officer of the Company, and Katie Cox, as the Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to his or her knowledge, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 24, 2020

/s/ Corey R. Maple

Corey R. Maple, Chief Executive Officer,

Chairman of the Board and Secretary

(principal executive officer)

/s/ Katie Cox

Katie Cox, Chief Financial Officer

(principal financial officer)

1

XML

FRANCHISE AGREEMENTS

12 Months Ended

Dec. 31, 2019

FRANCHISE AGREEMENTS

FRANCHISE AGREEMENTS

10.    FRANCHISE AGREEMENTS

As of December 31, 2019 and 2018, all of the Company’s hotel properties were operated under franchise agreements with initial terms of 10 to 18 years. Franchise agreements allow the hotel properties to operate under the respective brands. Pursuant to the franchise agreements, the Company pays a royalty fee of 5% to 6% of room revenue, plus additional fees for marketing, central reservation systems and other franchisor costs. Certain hotels are also charged a program fee of generally between 3% and 4% of room revenue. The Company paid an initial fee of $50,000 to $175,000 at the time of entering into each franchise agreement which is being amortized over the term of each agreement.

XML

DEBT

12 Months Ended

Dec. 31, 2019

DEBT

DEBT

6.    DEBT

Lines of Credit

On August 22, 2018, the Company entered into a $3.0 million revolving line of credit, collateralized by 300,000 partnership units of Lodging Fund REIT III OP, LP. The line of credit has a variable interest rate equal to the U.S. Prime Rate, plus 1.00%, with a minimum rate of 5.00%. As of December 31, 2019 and 2018, the interest rate was 5.75% and 6.50%, respectively, and there was no outstanding balance on the line of credit. The line of credit requires monthly payments of interest only, with all principal due at maturity. In November 2019, the line of credit was amended to extend the maturity date from November 22, 2019 to November 22, 2020, and lower the minimum interest rate from 6.0% to 5.0% per annum. The amendment also revised the guarantee of the line of credit to include a partial guarantee by each of Corey Maple and Norman Leslie, as the members of the Advisor, each in the amount of $1.2 million.

On November 15, 2018, the Company entered into a $25.0 million revolving line of credit to provide immediate funds to acquire hotel properties. The facility had a variable interest rate equal to 30‑day LIBOR, plus 3.25% and had an initial term of 12 months. Each advance made under the facility was secured by a hotel property, required monthly payments of interest for the first three months following the advance, and monthly payments of principal and interest thereafter. The Company drew $5.2 million on the line of credit in connection with the purchase of the Cedar Rapids Property, which remained outstanding at December 31, 2018.  The outstanding balance was repaid in full in March 2019 when the Cedar Rapids property was refinanced.  As of December 31, 2018, the interest rate was 5.60%, and the line of credit was closed in September 2019.

Mortgage Debt

As of December 31, 2019, the Company had $41.7 million in outstanding mortgage debt secured by five properties, with maturity dates ranging from March 2024 to October 2026, with fixed interest rates ranging from 4.13% to 5.33%, and a weighted-average interest rate of 4.72%. The loans generally require monthly payments of principal and interest on an amortized basis, with certain loans allowing for an interest-only period up to 12 months following origination, and generally require a balloon payment due at maturity. As of December 31, 2019, certain mortgage debt was guaranteed by the members of the Advisor.  As of December 31, 2018, the Company did not have any outstanding mortgage debt. The Company was in compliance with all debt covenants as of December 31, 2019 and 2018. The following table sets forth the hotel properties securing each loan, the interest rate, maturity date, and the outstanding balance as of December 31, 2019 for each of the Company’s mortgage debt obligations.

	Interest		Outstanding
	Rate as of		Balance as of
	December 31,	Maturity	December 31,
Hotel Property	2019	Date	2019
Holiday Inn Express - Cedar Rapids(1)	5.33%	03/01/2024	$	5,527,392
Hampton Inn & Suites - Pineville	5.13%	06/06/2024		9,154,289
Hampton Inn - Eagan	4.60%	07/01/2024		9,369,276
Home2 Suites - Prattville(1)	4.13%	08/01/2024		9,620,000
Home2 Suites - Lubbock	4.69%	10/06/2026		8,000,430
				41,671,387
Premium on assumed debt, net				389,285
Deferred financing costs, net				(1,080,040)
Debt, net			$	40,980,632

⁽¹⁾ Loan is interest-only for the first 12 months after origination.

Future Minimum Payments

As of December 31, 2019, the future minimum principal payments on the Company’s debt were as follows:

2020	$	745,181
2021		979,421
2022		1,027,297
2023		1,077,500
2024		30,969,668
Thereafter		6,872,320
		41,671,387
Premium on assumed debt, net		389,285
Deferred financing costs, net		(1,080,040)
	$	40,980,632

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DEBT - Future Minimum Payments (Details)	Dec. 31, 2019 USD ($)
Future minimum payments
2020	$ 745,181
2021	979,421
2022	1,027,297
2023	1,077,500
2024	30,969,668
Thereafter	6,872,320
Total	41,671,387
Premium on assumed debt, net	389,285
Deferred financing costs, net	(1,080,040)
Debt, net	$ 40,980,632

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	12 Months Ended
	Dec. 31, 2019 USD ($) segment	Dec. 31, 2018 USD ($)
Basis of Presentation and Principles of Consolidation
Number of Reportable Segments | segment	1
Advertising Costs
Advertising Expense	$ 311,172	$ 7,339
Property Management Fees
Property management fees (as a percent)	4.00%
Asset management fees (as a percent)	0.75%
Acquisition Costs
Acquisition fee (as a percent)	1.40%
Income Taxes
Non eligibility term for REIT non compliance	4 years
Reclassifications
Earnest money deposits held in escrow accounts		500,000
Deferred tax assets, net	$ 205,808	$ 19,236
Land improvements
Investment in Hotel Properties
Estimated useful lives	15 years
Building improvements
Investment in Hotel Properties
Estimated useful lives	15 years
Buildings
Investment in Hotel Properties
Estimated useful lives	40 years
Furniture, fixtures, and equipment | Minimum
Investment in Hotel Properties
Estimated useful lives	3 years
Furniture, fixtures, and equipment | Maximum
Investment in Hotel Properties
Estimated useful lives	7 years

XML

PREPAID EXPENSES AND OTHER ASSETS (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
PREPAID EXPENSES AND OTHER ASSETS
Franchise fees	$ 475,000	$ 392,500
Acquisition costs	472,569	158,575
Deferred tax assets, net	205,808	19,236
Insurance	113,571	22,495
Other	356,636	192,362
Total	$ 1,623,584	$ 785,168

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SCHEDULE III- Real Estate and Accumulated Depreciation - Investment in Real Estate and Accumulated Depreciation (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Investment in Real Estate:
Balance at beginning of period	$ 7,859,555
Acquisitions	58,386,351	$ 7,858,333
Improvements	418,114	1,222
Balance at end of period	66,664,020	7,859,555
Accumulated Depreciation:
Balance at beginning of period	(43,810)
Depreciation expense	(1,211,902)	(43,810)
Balance at end of period	$ (1,255,712)	$ (43,810)

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STOCKHOLDERS' EQUITY (Details)	12 Months Ended
	Dec. 31, 2019 USD ($) Vote $ / shares shares	Dec. 31, 2018 USD ($) $ / shares shares	Jun. 01, 2018 USD ($) $ / shares
Stockholders' Equity
Common stock, shares authorized | shares	900,000,000	900,000,000
Preferred stock, shares authorized | shares	100,000,000	100,000,000
Common stock voting rights | Vote	1
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Percentage of current share net asset value	95.00%
Common stock dividends per share declared on daily rate basis	$ 0.00191781
Share repurchase plan, amount available for eligible repurchases | $	$ 799,133	$ 49,530
Private offering
Stockholders' Equity
Common stock, par value (in dollars per share)			$ 0.01
Common stock, offering price			$ 10.00
Maximum offering | $			$ 100,000,000

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INCOME TAXES - Narrative (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Operating Loss Carryforwards [Line Items]
Percentage of distributions paid that were determined to be returns of capital distributions	100.00%	100.00%
Net deferred tax assets	$ 205,808	$ 19,236
Federal
Operating Loss Carryforwards [Line Items]
NOL carryforwards	1,100,000	14,263
State
Operating Loss Carryforwards [Line Items]
NOL carryforwards	$ 268,502	$ 4,973

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RELATED PARTY TRANSACTIONS - Narratives (Details)	12 Months Ended
	Dec. 31, 2019 USD ($) $ / room shares	Dec. 31, 2018 USD ($) shares
Related Party Transactions
Distributions paid	$ 1,496,566	$ 79,056
Amounts due and payable	966,379	713,350
Advisor And Affiliates
Related Party Transactions
Reimbursements paid to advisor and affiliates	6,261,377	1,644,945
Amounts due and payable	$ 918,863	685,685
NHS
Related Party Transactions
Renewal term of advisory agreement	5 years
Monthly base management fee (as a percent)	4.00%
Accounting fee per room | $ / room	14.00
Administrative fee (as a percent)	0.60%
Reimbursements paid to advisor and affiliates	$ 227,398	10,588
Amounts due and payable	$ 47,516	15,360
Advisory Agreement | Legendary Capital REIT III, LLC
Related Party Transactions
Term of advisory agreement	10 years
Acquisition fee (as a percent)	1.40%
Financing fee (as a percent)	1.40%
Asset management fee (as a percent)	0.75%
Refinancing fee (as a percent)	0.75%
Real estate commissions, maximum (as a percent)	5.00%
Annual guarantee fee (as a percent)	1.00%
Annual subordinated performance fee (as a percent)	20.00%
Cumulative return (as a percent)	6.00%
Distributions (as a percent)	5.00%
Distributions as a percent of the limited partners' capital contributions in event of liquidation, termination, merger or other cessation (as a percent)	5.00%
Distributions as a percent of net proceeds from sale of properties in event of liquidation, termination, merger or other cessation (as a percent)	20.00%
Reimbursement after termination of the Offering (as a percent)	15.00%
Distributions payable	$ 126,247	8,744
Advisory Agreement | Legendary Capital REIT III, LLC | Maximum
Related Party Transactions
Disposal fee (as a percent)	4.00%
Real estate commissions (as a percent)	3.00%
Advisory Agreement | Legendary Capital REIT III, LLC | Minimum
Related Party Transactions
Disposal fee (as a percent)	0.00%
Advisory Agreement | Legendary Capital REIT III, LLC | Corey Maple
Related Party Transactions
Distributions paid	$ 37,634	$ 18,765
Number of shares held by shareholders | shares	53,763	53,763
Advisory Agreement | Legendary Capital REIT III, LLC | Norman Leslie
Related Party Transactions
Distributions paid	$ 37,634	$ 18,765
Number of shares held by shareholders | shares	53,763	53,763

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CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Assets
Investment in hotel properties, net of accumulated depreciation of $1,255,712 and $43,810	$ 65,408,308	$ 7,815,745
Cash and cash equivalents	10,898,556	3,732,404
Restricted cash	5,275,815	800,000
Accounts receivable, net	107,976	25,606
Franchise fees, net	721,690	49,444
Due from related parties		1,285
Prepaid expenses and other assets	1,623,584	785,168
Total Assets	84,035,929	13,209,652
Liabilities and Equity
Debt, net	40,980,632	4,999,140
Accounts payable	543,669	148,907
Accrued expenses	925,265	281,946
Due to related parties	966,379	713,350
Other liabilities	434,974	81,619
Total liabilities	43,850,919	6,224,962
Commitments and contingencies (See Note 12)
Equity
Preferred stock, $0.01 par value, 100,000,000 shares authorized; no shares issued and outstanding
Common stock, $0.01 par value, 900,000,000 shares authorized; 6,005,743 and 1,135,010 shares issued and outstanding	60,057	11,350
Additional paid-in capital	58,961,101	11,083,985
Accumulated deficit	(18,396,163)	(4,041,428)
Total stockholders' equity	40,624,995	7,053,907
Non-controlling interest	(439,985)	(69,217)
Total equity	40,185,010	6,984,690
Total Liabilities and Equity	$ 84,035,929	$ 13,209,652

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	9 Months Ended	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2019
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Distributions declared (in dollars per share)	$ 0.70	$ 0.70

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ACCRUED EXPENSES (Tables)

12 Months Ended

Dec. 31, 2019

ACCRUED EXPENSES

Accrued expenses

	December 31,
	2019		2018
Distributions payable	$	342,515	$	37,871
Acquisition costs		187,800		114,526
Property taxes		114,960		56,317
Interest		136,960		26,018
Other		143,030		47,214
	$	925,265	$	281,946

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SCHEDULE III - Real Estate and Accumulated Depreciation

12 Months Ended

Dec. 31, 2019

SCHEDULE III - Real Estate and Accumulated Depreciation

SCHEDULE III - Real Estate and Accumulated Depreciation

SCHEDULE III

Real Estate and Accumulated Depreciation

As of December 31, 2019

									Costs
									Capitalized
									Subsequent to
					Initial Cost				Acquisition		Gross Amounts at End of Year
							Building,		Building,				Building,
					Land and		Building		Building		Land and		Building
	Date	Number			Land		Improvements		Improvements		Land		Improvements				Accumulated		Depreciable
Description	Acquired	of Rooms	Encumbrances		Improvements		and FF&E		and FF&E		Improvements		and FF&E		Total(1)		Depreciation		Lives
Holiday Inn Express - Cedar Rapids, IA	Nov - 2018	83	$	5,527,392	$	1,536,966	$	6,321,367	$	290,720	$	1,536,966	$	6,612,087	$	8,149,053	$	(310,451)	3 - 40 yrs.
Hampton Inn & Suites - Pineville, NC	Mar - 2019	111		9,154,289		2,014,533		12,327,740		38,090		2,014,533		12,365,830		14,380,363		(376,530)	3 - 40 yrs.
Hampton Inn - Eagan, MN	Jun - 2019	122		9,369,276		1,691,813		12,536,520		80,770		1,691,813		12,617,290		14,309,103		(291,830)	3 - 40 yrs.
Home2 Suites - Prattville, AL	Jul - 2019	90		9,620,000		1,691,954		13,414,060		8,860		1,691,954		13,422,920		15,114,874		(233,425)	3 - 40 yrs.
Home2 Suites - Lubbock, TX	Dec - 2019	100		8,000,430		803,229		13,906,502		896		803,229		13,907,398		14,710,627		(43,476)	3 - 40 yrs.
		506	$	41,671,387	$	7,738,495	$	58,506,189	$	419,336	$	7,738,495	$	58,925,525	$	66,664,020	$	(1,255,712)

⁽¹⁾ The aggregate cost for federal income tax purposes is approximately $66.3 million at December 31, 2019 (unaudited).

Investment in Real Estate:	2019		2018
Balance at beginning of period	$	7,859,555	$	-
Acquisitions		58,386,351		7,858,333
Improvements		418,114		1,222
Balance at end of period	$	66,664,020	$	7,859,555
Accumulated Depreciation:	2019		2018
Balance at beginning of period	$	(43,810)	$	-
Depreciation expense		(1,211,902)		(43,810)
Balance at end of period	$	(1,255,712)	$	(43,810)

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ORGANIZATION - (Details)	12 Months Ended
	Dec. 31, 2019 USD ($) segment Vote $ / shares shares	Dec. 31, 2018 Vote $ / shares shares	Jun. 01, 2018 USD ($) $ / shares
Organization
Number of reportable segments | segment	1
Number of voting classes of partnership units | Vote	2	2
Number of non voting classes of partnership units | Vote	1	1
Common stock, par value (in dollars per share) | $ / shares	$ 0.01	$ 0.01
Cumulative number of shares issued	6,005,743
Cumulative number of shares issued pursuant to the DRIP	89,333
Cumulative gross proceeds from issuance of stock | $	$ 59,000,000
Private offering
Organization
Common stock, par value (in dollars per share) | $ / shares			$ 0.01
Maximum offering | $			$ 100,000,000
Operating Partnership | Common Partnership Units
Organization
Number of outstanding partnership units	0	0
Operating Partnership | Series B Limited Partnership Units
Organization
Number of outstanding partnership units	1,000	1,000

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INCOME TAXES - Components of Income Tax Benefit (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Federal:
Deferred	$ 143,746	$ 14,263
State:
Deferred	42,826	4,973
Income tax benefit	$ 186,572	$ 19,236

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RELATED PARTY TRANSACTIONS - Legendary Capital (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Related Party Transactions
Amounts due and payable	$ 966,379	$ 713,350
Advisor And Affiliates
Related Party Transactions
Reimbursements	6,261,377	1,644,945
Amounts due and payable	918,863	685,685
Advisor And Affiliates | Offering Costs
Related Party Transactions
Reimbursements	2,174,471	939,873
Advisor And Affiliates | General and Administrative
Related Party Transactions
Reimbursements	2,699,813	484,310
Advisor And Affiliates | Sales and Marketing
Related Party Transactions
Reimbursements	386,694	127,041
Advisor And Affiliates | Financing Costs
Related Party Transactions
Reimbursements		45,114
Advisor And Affiliates | Acquisition Costs
Related Party Transactions
Reimbursements	989,346	41,467
Advisor And Affiliates | Other Costs
Related Party Transactions
Reimbursements	11,053	7,140
Legendary Capital REIT III, LLC | Advisory Agreement
Related Party Transactions
Acquisition fees	818,521	103,476
Financing fees	818,521	103,476
Asset management fees	305,398	10,286
Performance fees	68,534	4,747
Distributions	126,247	8,744
Total fees and distributions	$ 2,010,974	$ 221,985

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SUBSEQUENT EVENTS - (Details)								12 Months Ended
	Mar. 16, 2020 USD ($)	Mar. 10, 2020 USD ($)	Feb. 21, 2020 USD ($) room	Feb. 10, 2020 USD ($) shares	Jan. 10, 2020 USD ($)	Jan. 01, 2020 $ / shares	Aug. 22, 2018 USD ($)	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2018 USD ($)	Mar. 24, 2020 USD ($) shares	Feb. 17, 2020 USD ($) room	Jan. 08, 2020 USD ($) room
Subsequent Events
Common stock dividends per share declared on daily rate basis | $ / shares								$ 0.00191781
Outstanding balance								$ 41,671,387
Distributions paid								$ 1,496,566	$ 79,056
Cumulative number of shares issued since inception of the Offering | shares								6,005,743
Cumulative number of shares issued pursuant to the DRIP | shares								89,333
Cumulative gross proceeds from issuance of stock since inception of the Offering								$ 59,000,000
Revolving line of credit | Lender One
Subsequent Events
Revolving line of credit							$ 3,000,000
Outstanding amount								$ 0	$ 0
Revolving line of credit | Lender One | U.S. Prime Rate
Subsequent Events
Variable interest rate							1.00%
Subsequent Event
Subsequent Events
Common stock dividends per share declared on daily rate basis | $ / shares						$ 0.00191781
Distributions paid		$ 382,325		$ 358,474	$ 342,515
Distributions paid pursuant to the DRIP		$ 150,022		139,094	$ 130,304
Cumulative number of shares issued since inception of the Offering | shares										6,962,813
Cumulative number of shares issued pursuant to the DRIP | shares										133,482
Cumulative gross proceeds from issuance of stock since inception of the Offering										$ 68,400,000
Subsequent Event | Revolving line of credit | Lender One
Subsequent Events
Revolving line of credit	$ 3,000,000
Amount drew from line of credit	$ 2,000,000
Subsequent Event | Revolving line of credit | Lender Three
Subsequent Events
Revolving line of credit				$ 5,000,000
Effective interest rate				5.25%
Partnership units held as collateral | shares				100,000
Outstanding amount										$ 3,200,000
Subsequent Event | Revolving line of credit | Lender Three | U.S. Prime Rate
Subsequent Events
Variable interest rate				0.50%
Subsequent Event | Fairfield Inn Lubbock Hotel
Subsequent Events
Number of rooms in hotel property | room												101
Contractual purchase price												$ 15,150,000
Subsequent Event | Fairfield Inn Lubbock Hotel | Loan Maturing April 2029
Subsequent Events
Loan assumed												$ 9,400,000
Interest rate (as a percent)												4.93%
Subsequent Event | Pennsylvania hotel properties
Subsequent Events
Escrow deposit											$ 1,500,000
Subsequent Event | Fairfield Inn & Suites, Hershey, Pennsylvania
Subsequent Events
Number of rooms in hotel property | room											108
Subsequent Event | Home2 Suites, York, Pennsylvania
Subsequent Events
Number of rooms in hotel property | room											107
Subsequent Event | Hampton Inn & Suites, York, Pennsylvania
Subsequent Events
Number of rooms in hotel property | room											100
Subsequent Event | Homewood Suites, Southhaven, Mississippi
Subsequent Events
Number of rooms in hotel property | room			99
Contractual purchase price			$ 20,500,000
Subsequent Event | Homewood Suites, Southhaven, Mississippi | Term Loan Maturing March 2025
Subsequent Events
Interest rate (as a percent)			3.695%
Term loan			$ 13,460,000
Subsequent Event | Management Agreement with Vista Host | Homewood Suites, Southhaven, Mississippi
Subsequent Events
Number of renewal terms			2 years
Term of agreement			5 years
Property management fee (as a percent)			3.00%
Management fees			$ 1,000
Subsequent Event | Forecast | Pennsylvania hotel properties
Subsequent Events
Contractual purchase price											$ 46,900,000

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
CONSOLIDATED BALANCE SHEETS
Accumulated depreciation	$ 1,255,712	$ 43,810
Preferred stock, Par Value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	100,000,000	100,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	900,000,000	900,000,000
Common stock, shares issued	6,005,743	1,135,010
Common stock, shares outstanding	6,005,743	1,135,010

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Cash Flows from Operating Activities:
Net loss	$ (4,901,434)	$ (1,210,858)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation	1,211,902	43,810
Amortization	250,787	48,007
Write-off of unamortized deferred financing costs	25,629
Change in operating assets and liabilities:
Accounts receivable	(82,370)	(25,606)
Franchise fees	(700,000)	(50,000)
Due from related parties	1,285	(1,285)
Prepaid expenses and other assets	(838,416)	(785,168)
Accounts payable	410,036	89,782
Accrued expenses	460,124	229,349
Due to related parties	129,904	230,314
Other liabilities	364,750	81,619
Net cash used in operating activities	(3,667,803)	(1,350,036)
Cash Flows from Investing Activities:
Acquisitions of hotel properties	(40,686,810)	(7,754,857)
Improvements and additions to hotel properties	(308,188)	(1,222)
Net cash used in investing activities	(40,994,998)	(7,756,079)
Cash Flows from Financing Activities:
Proceeds from issuance of debt	25,078,427	6,229,000
Principal payments on debt	(5,919,455)	(1,000,000)
Payments of deferred financing costs	(1,027,619)	(173,368)
Proceeds from issuance of common stock	47,126,690	11,045,805
Payments of offering costs	(7,456,709)	(2,383,862)
Distributions paid	(1,496,566)	(79,056)
Net cash provided by financing activities	56,304,768	13,638,519
Net change in cash, cash equivalents, and restricted cash	11,641,967	4,532,404
Beginning Cash, Cash Equivalents, and Restricted Cash	4,532,404
Ending Cash, Cash Equivalents, and Restricted Cash	16,174,371	4,532,404
Supplemental Disclosure of Cash Flow Information:
Interest paid	1,021,163	1,389
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Debt assumed in connection with hotel property acquisition	17,699,541
Costs to acquire hotel properties included in due to related parties	109,926	103,476
Debt issuance costs included in due to related parties	109,459	103,943
Offering costs included in accounts payable	(15,274)	59,125
Offering costs included in due to related parties	(151,133)	266,873
Offering costs included in accrued expenses	8,857	14,725
Distributions included in accrued expenses	174,338	37,872
Distributions included in due to related parties	54,873	8,744
Reinvested distributions	799,133	49,530
Reconciliation of Cash, Cash Equivalents, and Restricted Cash:
Cash and cash equivalents, beginning of period	3,732,404
Restricted cash, beginning of period	800,000
Cash, cash equivalents, and restricted cash, beginning of period	16,174,371	4,532,404
Cash and Cash Equivalents, at Carrying Value, Ending Balance	10,898,556	3,732,404
Restricted cash, end of period	5,275,815	800,000
Cash, cash equivalents, and restricted cash, end of period	$ 16,174,371	$ 4,532,404

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RELATED PARTY TRANSACTIONS (Tables)

12 Months Ended

Dec. 31, 2019

Legendary Capital REIT III, LLC

Related Party Transactions

Schedule of fees and reimbursements earned and payable

	For the Year Ended December 31,
	2019		2018
Fees:
Acquisition fees	$	818,521	$	103,476
Financing fees		818,521		103,476
Asset management fees		305,398		10,286
Performance fees		68,534		4,747
	$	2,010,974	$	221,985
Reimbursements:
Offering costs	$	2,174,471	$	939,873
General and administrative		2,699,813		484,310
Sales and marketing		386,694		127,041
Financing costs		—		45,114
Acquisition costs		989,346		41,467
Other		11,053		7,140
	$	6,261,377	$	1,644,945

NHS

Related Party Transactions

Schedule of fees and reimbursements earned and payable

	For the Year Ended December 31,
	2019		2018
Fees:
Management fees	$	342,101	$	4,950
Administrative fees		52,605		687
Accounting fees		49,028		2,324
	$	443,734	$	7,961
Reimbursements	$	227,398	$	10,588

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PREPAID EXPENSES AND OTHER ASSETS (Tables)

12 Months Ended

Dec. 31, 2019

PREPAID EXPENSES AND OTHER ASSETS

Prepaid expenses and other assets

	December 31,
	2019		2018
Franchise fees	$	475,000	$	392,500
Acquisition costs		472,569		158,575
Deferred tax assets, net		205,808		19,236
Insurance		113,571		22,495
Other		356,636		192,362
	$	1,623,584	$	785,168

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2019

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

13.    SUBSEQUENT EVENTS

On January 1, 2020, the Company’s board of directors declared cash distributions on the outstanding shares of common stock based on daily record dates for (i) the period from January 1, 2020 through January 31, 2020, which was paid in February 2020, and (ii) the period from February 1, 2020 through February 29, 2020, which was paid in March 2020.  Our board of directors also authorized cash distributions on the outstanding shares of common stock based on daily record dates for the period from March 1, 2020 through March 31, 2020.  Investors may choose to receive cash distributions or purchase additional shares through the DRIP. Distributions for these periods will be calculated based on stockholders of record each day during these periods at a rate of $0.00191781 per share per day.

On January 8, 2020, the Company acquired a 101-room Fairfield Inn & Suites by Marriott hotel property in Lubbock, Texas, for $15.15 million, exclusive of closing costs.  In connection with the acquisition, the Company assumed the existing loan secured by the property, which had an outstanding balance of $9.4 million at the time of the transaction.  The loan has a fixed interest rate of 4.93% per annum, matures on April 6, 2029, and requires monthly payments of principal and interest with a balloon payment due at maturity.  In connection with the acquisition, the Company also entered into an agreement with NHS to manage the property at terms consistent with the Company’s existing agreements with NHS. Additionally, the Company signed a new franchise agreement with Marriott that expires in August 2037.

On January 10, 2020, the Company paid distributions of $342,515, declared for daily record dates for each day in the period from December 1, 2019 through December 31, 2019, which included $130,304 of distributions paid pursuant to the DRIP. On February 10, 2020, the Company paid distributions of $358,474, declared for daily record dates for each day in the period from January 1, 2020, through January 31, 2020, which included $139,094 of distributions paid pursuant to the DRIP. On March 10, 2020, the Company paid distributions of $382,325, declared for daily record dates for each day in the period from February 1, 2020 through February 29, 2020, which included $150,022 of distributions paid pursuant to the DRIP.

On February 10, 2020, the Company entered into a $5.0 million revolving line of credit loan agreement (the “Line of Credit”).  The Line of Credit requires monthly payments of interest only, with all outstanding principal amounts being due and payable at maturity on February 10, 2021.  The Line of Credit has a variable interest rate equal to the Prime Rate as published in the Wall Street Journal, plus 0.50%, resulting in an effective rate of 5.25% per annum as of February 10, 2020.  The Line of Credit is secured by our Cedar Rapids Property and our Eagan Property, which are also subject to term loans with the same lender, and 100,000 limited partnership units of the Operating Partnership.  The Line of Credit includes cross-collateralization and cross-default provisions such that the existing mortgage loan agreements with respect to the Cedar Rapids Property and the Eagan Property, as well as future loan agreements that the Company may enter into with this lender, are cross-defaulted and cross-collateralized with each other.  The Line of Credit, including all cross-collateralized debt, is guaranteed by Corey Maple, the Company’s Chief Executive Officer.  As of March 24, 2020, the outstanding balance on the Line of Credit was $3.2 million.

On February 17, 2020, the due diligence period expired under the purchase agreement in which the Company agreed to acquire a 108-room Fairfield Inn & Suites by Marriott hotel in Hershey, Pennsylvania, a 107-room Home2 Suites by Hilton hotel in York, Pennsylvania, and a 100-room Hampton Inn & Suites by Hilton hotel in York, Pennsylvania (collectively, the “Pennsylvania Hotel Properties”). The contractual purchase price of the Pennsylvania Hotel Properties is approximately $46.9 million plus closing costs, subject to adjustment as provided in the purchase agreement. As required by the purchase agreement, the Company has deposited a total of $1.5 million into escrow as earnest money pending the closing or termination of the purchase agreement. Except in certain circumstances described in the purchase agreement, if the Company fails to complete the acquisition, it will forfeit the earnest money.  There can be no assurance that the Company will complete these acquisitions on the contemplated terms, or at all.

On February 21, 2020, the Company acquired a 99-room Homewood Suites by Hilton hotel property located in Southaven, Mississippi, for $20.5 million, exclusive of closing costs.  In connection with the acquisition, the Company entered into a $13.46 million term loan. The loan has a fixed interest rate of 3.695% per annum, matures on March 3, 2025, requires monthly payments of interest-only through March 31, 2021, and thereafter requires monthly payments of principal and interest with a balloon payment due at maturity. The loan requires the maintenance of certain financial covenants, and pursuant to the loan agreement, Corey Maple, the Company’s Chief Executive Officer (the “Guarantor”), entered into a Guaranty, which is (i) a full recourse guarantee to the lender in certain circumstances, including the occurrence of certain events, including, without limitation, certain bankruptcy or insolvency proceedings involving the borrower, and (ii) recourse guarantee limited to the payment of all claims, actions, suits, damages, losses, expenses or other obligations actually incurred by the lender as a result of certain “bad boy” events, including criminal acts, fraud or misrepresentation in connection with the loan documents, damage to the collateral caused by gross negligence, reckless or intentional acts or omissions, or certain other intentional acts or omissions of the borrower or Guarantor, all as further described in the Guaranty. In connection with the acquisition the Company also entered a management agreement with Vista Host Inc. (“Vista Host”), a third-party management company, to provide property management and hotel operations management services. The agreement has an initial term expiring on February 21, 2025, which automatically renews for two successive five-year periods, unless terminated in accordance with its terms. The Company will pay Vista Host a base management fee for property management services equal to 3% of the prior month’s gross revenues, a monthly accounting fee of $1,000, and Vista Host may earn annual incentive management fees if certain growth and operational performance metrics are achieved. 

On March 16, 2020, the Company drew $2.0 million on our $3.0 million revolving line of credit, which was outstanding as of March 24, 2020.

As of March 24, 2020, the Company’s private offering remained open for new investment, and since the inception of the offering the Company had issued and sold 6,962,813 shares of common stock, including 133,482 shares issued pursuant to the DRIP, resulting in the receipt of gross offering proceeds of $68.4 million.

Subsequent to December 31, 2019, there was a global outbreak of a new strain of coronavirus, COVID-19. The global and domestic response to the COVID-19 outbreak continues to rapidly evolve. Thus far, certain responses to the COVID-19 outbreak have included mandates from federal, state and/or local authorities that required temporary closure of certain travel and hospitality. The COVID-19 outbreak and associated responses could negatively impact future hotel revenues and operations at our properties, which could result in a  material impact to the Company’s future results of operations, cash flows and financial condition.

******

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RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2019

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

9.    RELATED PARTY TRANSACTIONS

Legendary Capital REIT III, LLC—Substantially all of the Company’s business is managed by the Advisor and its affiliates, pursuant to the Advisory Agreement. The Company has no direct employees. The employees of Legendary Capital, LLC (the “Sponsor”), an affiliate of the Advisor, provide services to the Company related to the negotiations of property acquisitions and financing, asset management, accounting, investor relations, and all other administrative services. The Company reimburses the Advisor and its affiliates, at cost, for certain expenses incurred on behalf of the Company. The Advisory Agreement has a term of 10 years.

The Advisor earns a one-time acquisition fee of up to 1.4% of the hotel purchase price including funds allocated for any PIP at the time of each hotel property acquisition, a financing fee of up to 1.4% of the hotel purchase price including funds allocated for any PIP at the time of closing the initial financing, and an annual asset management fee of up to 0.75% of the gross assets of the Company, which is payable on a monthly basis. The Advisor will also be paid a refinancing fee of up to 0.75% of the principal amount of any refinancing at the time of closing the refinancing, and a disposition fee equal to between 0.0% and 4.0% of the hotel sales price, payable at the closing of the disposition, and real estate commissions of up to 3.0% of the hotel purchase price in connection with the sale of a hotel property in which the Advisor or its affiliates provided substantial services, but in no event greater than one-half of the total commissions paid with respect to such property if a commission is paid to a third-party as well as the Advisor, and in no event will total commissions exceed 5.0% of the hotel sales price. Certain affiliates of the Advisor may receive an annual guarantee fee equal to 1.0% of the guaranty amount, paid on a monthly basis, for debt obligations of the hotel properties personally guaranteed by such affiliates. The Advisor may earn an annual subordinated performance fee equal to 20% of the distributions after the common stockholders and Operating Partnership limited partners (other than the Series B Limited Partnership Unit (“Series B LP Unit”) holders) have received a 6% cumulative, but not compounded, return per annum.

Per the terms of the Operating Partnership’s operating agreement, the Advisor receives distributions from the Operating Partnership in connection with their ownership of non-voting Series B LP Units. The Advisor’s ownership of Series B LP Units is presented as non-controlling interest on the accompanying consolidated financial statements. In years other than the year of liquidation, after the Company’s common stockholders have received a 6% cumulative but not compounded return on their original capital contributions, the Advisor receives distributions equal to 5% of the total distributions made. In the year of liquidation, termination, merger or other cessation of the general partner, or the liquidation of the Operating Partnership, holders of the Series B LP Units shall be distributed an amount equal to 5% of the limited partners’ capital contributions after the common stockholders and the limited partners have received a return of their original capital contributions plus a 6% cumulative but not compounded return. In the year of liquidation, termination, merger or other cessation of the general partner, or the liquidation of the Operating Partnership holders of the Series B LP Units shall also be distributed an amount equal to 20% of the net proceeds from the sale of the properties, after the common stockholders and the limited partners have received a return of their original capital contributions plus a 6% cumulative but not compounded return from all distributions.

The Advisor and its affiliates may be reimbursed by the Company for certain organization and offering expenses in connection with the Offering, including legal, printing, marketing and other Offering-related costs and expenses. Following the termination of the Offering, the Advisor will reimburse the Company for any such amounts incurred by the Company in excess of 15% of the gross proceeds of the Offering. In addition, the Company may pay directly or reimburse the Advisor and its affiliates for certain costs incurred in connection with its provision of services to the Company, including certain acquisition costs, financing costs, and sales and marketing costs, as well as an allocable share of general and administrative overhead costs.  All reimbursements are paid to the Advisor and its affiliates at cost.

Fees and reimbursements earned and payable to the Advisor and its affiliates, for the year ended December 31, 2019 and period ended December 31 2018, were as follows:

	For the Year Ended December 31,
	2019		2018
Fees:
Acquisition fees	$	818,521	$	103,476
Financing fees		818,521		103,476
Asset management fees		305,398		10,286
Performance fees		68,534		4,747
	$	2,010,974	$	221,985
Reimbursements:
Offering costs	$	2,174,471	$	939,873
General and administrative		2,699,813		484,310
Sales and marketing		386,694		127,041
Financing costs		—		45,114
Acquisition costs		989,346		41,467
Other		11,053		7,140
	$	6,261,377	$	1,644,945

For the year ended December 31, 2019 and period ended December 31 2018, the Operating Partnership recognized distributions payable to the Advisor in the amount of $126,247 and $8,744, respectively, in connection with the Advisor’s ownership of Series B LP Units.  For the year ended December 31, 2019 and period ended December 31 2018, the Company paid distributions in the amount of $37,634 and $18,765, respectively, to Corey Maple and Norman Leslie in connection with their ownership of 53,763 shares each, of the Company’s common stock. 

As of December 31, 2019 and 2018, the Company had amounts due and payable to the Advisor and its affiliates of $918,863 and $685,685, respectively, which is included in due to related parties on the accompanying consolidated balance sheets.

NHS, LLC dba National Hospitality Services—NHS is wholly-owned by Norman Leslie, a director and executive officer of the Company and a principal of the Advisor. NHS provides property management and hotel operations management services for the Company’s hotel properties, pursuant to individual management agreements. The agreements have an initial term expiring on December 31st of the fifth full calendar year following the effective date of the agreement, which automatically renews for a period of five years on each successive five-year period, unless terminated in accordance with its terms.

NHS earns a monthly base management fee for property management services, including overseeing the day-to-day operations of the hotel properties equal to 4% of gross revenue. NHS may also earn an accounting fee of $14.00 per room for accounting services, payable monthly, and an administrative fee equal to 0.60% of gross revenues for administrative and other services. The Company reimburses NHS for certain costs of operating the properties incurred on behalf of the Company. All reimbursements are paid to NHS at cost.

Fees and reimbursements earned and payable to, NHS for the year ended December 31, 2019 and period ended December 31 2018, were as follows:

	For the Year Ended December 31,
	2019		2018
Fees:
Management fees	$	342,101	$	4,950
Administrative fees		52,605		687
Accounting fees		49,028		2,324
	$	443,734	$	7,961
Reimbursements	$	227,398	$	10,588

As of December 31, 2019 and 2018, the Company had amounts due and payable to NHS of $47,516 and $15,360, respectively, which is included in due to related parties on the accompanying consolidated balance sheets.

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ACCRUED EXPENSES

12 Months Ended

Dec. 31, 2019

ACCRUED EXPENSES

ACCRUED EXPENSES

5.    ACCRUED EXPENSES

Accrued expenses consisted of the following:

	December 31,
	2019		2018
Distributions payable	$	342,515	$	37,871
Acquisition costs		187,800		114,526
Property taxes		114,960		56,317
Interest		136,960		26,018
Other		143,030		47,214
	$	925,265	$	281,946

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INVESTMENT IN HOTEL PROPERTIES - Summary (Details)	Dec. 31, 2019 USD ($) state property room	Dec. 31, 2018 USD ($)
Investment in hotel properties consisted of the following:
Land and land improvements	$ 7,738,495	$ 1,536,966
Building and building improvements	53,238,276	5,558,557
Furniture, fixtures, and equipment	5,687,249	764,032
Investment in hotel properties, at cost	66,664,020	7,859,555
Less: accumulated depreciation	(1,255,712)	(43,810)
Investment in hotel properties, net	$ 65,408,308	$ 7,815,745
Other disclosures
Number of hotel properties owned | property	5
Aggregate number of rooms in hotel properties | room	506
Number of states where hotel properties are owned | state	5

XML

ACCRUED EXPENSES (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
ACCRUED EXPENSES
Distributions payable	$ 342,515	$ 37,871
Acquisition costs	187,800	114,526
Property taxes	114,960	56,317
Interest	136,960	26,018
Other	143,030	47,214
Accrued Liabilities	$ 925,265	$ 281,946

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details)	Dec. 31, 2019 USD ($)
Fair value of financial instruments
Gross carrying value	$ 41,671,387
Mortgage Debt
Fair value of financial instruments
Fair value	42,700,000
Gross carrying value	$ 41,671,387

XML

SCHEDULE III - Real Estate and Accumulated Depreciation - Changes in Real Estate and Accumulated Depreciation (Details)	12 Months Ended
	Dec. 31, 2019 USD ($) room	Dec. 31, 2018 USD ($)
Real Estate and Accumulated Depreciation.
Number of Rooms | room	506
Encumbrances	$ 41,671,387
Initial Cost
Land and Land Improvements	7,738,495
Building, Building Improvements and FF&E	58,506,189
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	419,336
Gross Amount at End of Year
Land and Land Improvements	7,738,495
Building, Building Improvements and FF&E	58,925,525
Total	66,664,020	$ 7,859,555
Accumulated Depreciation	(1,255,712)	$ (43,810)
Aggregate cost for federal income tax purposes	$ 66,300,000
Holiday Inn Express (the "Cedar Rapids Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	83
Encumbrances	$ 5,527,392
Initial Cost
Land and Land Improvements	1,536,966
Building, Building Improvements and FF&E	6,321,367
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	290,720
Gross Amount at End of Year
Land and Land Improvements	1,536,966
Building, Building Improvements and FF&E	6,612,087
Total	8,149,053
Accumulated Depreciation	$ (310,451)
Hampton Inn & Suites(the "Pineville Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	111
Encumbrances	$ 9,154,289
Initial Cost
Land and Land Improvements	2,014,533
Building, Building Improvements and FF&E	12,327,740
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	38,090
Gross Amount at End of Year
Land and Land Improvements	2,014,533
Building, Building Improvements and FF&E	12,365,830
Total	14,380,363
Accumulated Depreciation	$ (376,530)
Hampton Inn (the "Eagan Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	122
Encumbrances	$ 9,369,276
Initial Cost
Land and Land Improvements	1,691,813
Building, Building Improvements and FF&E	12,536,520
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	80,770
Gross Amount at End of Year
Land and Land Improvements	1,691,813
Building, Building Improvements and FF&E	12,617,290
Total	14,309,103
Accumulated Depreciation	$ (291,830)
Home2 Suites (the "Prattville Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	90
Encumbrances	$ 9,620,000
Initial Cost
Land and Land Improvements	1,691,954
Building, Building Improvements and FF&E	13,414,060
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	8,860
Gross Amount at End of Year
Land and Land Improvements	1,691,954
Building, Building Improvements and FF&E	13,422,920
Total	15,114,874
Accumulated Depreciation	$ (233,425)
Home2 Suites (the “Lubbock Home2 Property”)
Real Estate and Accumulated Depreciation.
Number of Rooms | room	100
Encumbrances	$ 8,000,430
Initial Cost
Land and Land Improvements	803,229
Building, Building Improvements and FF&E	13,906,502
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	896
Gross Amount at End of Year
Land and Land Improvements	803,229
Building, Building Improvements and FF&E	13,907,398
Total	14,710,627
Accumulated Depreciation	$ (43,476)
Minimum | Holiday Inn Express (the "Cedar Rapids Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Hampton Inn & Suites(the "Pineville Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Hampton Inn (the "Eagan Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Home2 Suites (the "Prattville Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Home2 Suites (the “Lubbock Home2 Property”)
Gross Amount at End of Year
Depreciable Lives	3 years
Maximum | Holiday Inn Express (the "Cedar Rapids Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Hampton Inn & Suites(the "Pineville Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Hampton Inn (the "Eagan Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Home2 Suites (the "Prattville Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Home2 Suites (the “Lubbock Home2 Property”)
Gross Amount at End of Year
Depreciable Lives	40 years

XML

INCOME TAXES - Deferred Taxes (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Deferred Tax Assets
Net operating loss carryforwards - Federal	$ 1,148,996	$ 14,263
Net operating loss carryforwards - State	268,502	4,973
Total, deferred tax assets	1,417,498	19,236
Deferred Tax Liabilities
Tax FF&E basis less than book basis - Federal	(990,986)
Tax FF&E basis less than book basis - State	(220,704)
Total, deferred tax liabilities	(1,211,690)
Deferred tax assets, net	$ 205,808	$ 19,236

XML

FRANCHISE AGREEMENTS - (Details)	12 Months Ended
	Dec. 31, 2019 USD ($)
Maximum
Franchise Agreements
Initial term of franchise agreement	18 years
Royalty fee (as a percent)	6.00%
Program fee (as a percent)	4.00%
Initial franchise fee	$ 175,000
Minimum
Franchise Agreements
Initial term of franchise agreement	10 years
Royalty fee (as a percent)	5.00%
Program fee (as a percent)	3.00%
Initial franchise fee	$ 50,000

XML

DEBT - (Tables)

12 Months Ended

Dec. 31, 2019

DEBT

Schedule of mortgage debt outstanding

	Interest		Outstanding
	Rate as of		Balance as of
	December 31,	Maturity	December 31,
Hotel Property	2019	Date	2019
Holiday Inn Express - Cedar Rapids(1)	5.33%	03/01/2024	$	5,527,392
Hampton Inn & Suites - Pineville	5.13%	06/06/2024		9,154,289
Hampton Inn - Eagan	4.60%	07/01/2024		9,369,276
Home2 Suites - Prattville(1)	4.13%	08/01/2024		9,620,000
Home2 Suites - Lubbock	4.69%	10/06/2026		8,000,430
				41,671,387
Premium on assumed debt, net				389,285
Deferred financing costs, net				(1,080,040)
Debt, net			$	40,980,632

⁽¹⁾ Loan is interest-only for the first 12 months after origination.

Schedule of future minimum principal payments

2020	$	745,181
2021		979,421
2022		1,027,297
2023		1,077,500
2024		30,969,668
Thereafter		6,872,320
		41,671,387
Premium on assumed debt, net		389,285
Deferred financing costs, net		(1,080,040)
	$	40,980,632

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2019

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation—The accompanying consolidated financial statements and related notes have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the SEC applicable to annual financial information. The consolidated financial statements include the accounts of LF REIT III, the OP and its wholly-owned subsidiaries. For the controlled subsidiaries that are not wholly-owned, the interests owned by an entity other than the Company represent a noncontrolling interest, which is presented separately in the consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates—The preparation of the Company’s consolidated financial statements and the accompanying notes in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and the amounts of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

Revenue Recognition—Revenues consist of amounts derived from hotel operations, including room sales and other hotel revenues, and are presented on a disaggregated basis in the Company’s consolidated statements of operations. These revenues are recorded net of any sales and occupancy taxes collected from the hotel guests. All revenues are recorded on an accrual basis as they are earned. Any cash received prior to a guest’s arrival is recorded as an advance deposit from the guest and recognized as revenue at the time of the guest’s occupancy at the hotel property.

Investment in Hotel Properties

Investment in Hotel Properties—The Company evaluates whether each hotel property acquisition should be accounted for as an asset acquisition or a business combination. If substantially all of the fair value of the gross assets acquired is concentrated in a single asset or a group of similar identifiable assets, then the transaction is considered to be an asset acquisition. All of the Company’s acquisitions since inception have been determined to be asset acquisitions. Transaction costs associated with asset acquisitions are capitalized and transaction costs associated with business combinations would be expensed as incurred.

The Company’s acquisitions generally consist of land, land improvements, buildings, building improvements, and furniture, fixtures and equipment (“FF&E”). The Company may also acquire intangible assets or liabilities related to in-place leases, management agreements, debt, and advanced bookings. For transactions determined to be asset acquisitions, the Company allocates the purchase price among the assets acquired and the liabilities assumed on a relative fair value basis at the date of acquisition. The Company determines the fair value of assets acquired and liabilities assumed with the assistance of third-party valuation specialists, using cash flow analysis as well as available market and cost data.  The determination of fair value includes making numerous estimates and assumptions.

The difference between the fair value and the face value of debt assumed in connection with an acquisition is recorded as a premium or discount and amortized to interest expense over the remaining term of the debt assumed. The valuation of assumed debt liabilities is based on our estimate of the current market rates for similar liabilities in effect at the acquisition date.

The Company’s investments in hotel properties are carried at cost and are depreciated using the straight-line method over the estimated useful lives of 15 years for land improvements, 15 years for building improvements, 40 years for buildings and three to seven years for FF&E. Maintenance and repair costs are expensed in the period incurred and major renewals or improvements to the hotel properties are capitalized.

The Company assesses the carrying value of its hotel properties whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The recoverability is measured by comparing the carrying amount of the property to the estimated future undiscounted cash flows of the property, which take into account current market conditions and the Company’s intent with respect to holding or disposing of the hotel properties. If the Company’s analysis indicates that the carrying value is not recoverable on an undiscounted cash flow basis, the Company will recognize an impairment loss for the amount by which the carrying value exceeds the fair value. The fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions or third-party appraisals.

The use of projected future cash flows is based on assumptions that are consistent with a market participant’s future expectations for the industry and the economy in general and the Company’s expected use of the underlying hotel properties. The assumptions and estimates related to the future cash flows and the capitalization rates are complex and subjective in nature. Changes in economic and operating conditions that occur subsequent to a current impairment analysis and the Company’s ultimate use of the hotel property could impact the assumptions and result in future impairment losses to the hotel properties.

Advertising Costs

Advertising Costs—The Company expenses advertising costs as incurred. These costs represent the expense for franchise advertising and reservation systems under the terms of the hotel management and franchise agreements and expenses that are directly attributable to advertising and promotion. Advertising expense was $311,172 and $7,339 for the year ended December 31, 2019 and period ended December 31, 2018 respectively and is included in sales and marketing in the consolidated statements of operations.

Non-controlling Interests

Non-controlling Interest—Non-controlling interests represent the portion of equity in a subsidiary held by owners other than the Company. Non-controlling interests are reported in the consolidated balance sheets within equity, separate from stockholders’ equity. Revenue and expenses attributable to both the Company and the non-controlling interests are reported in the consolidated statements of operations, with net income or loss attributable to non-controlling interests reported separately from net income or loss attributable to the Company.

Cash and Cash Equivalents

Cash and Cash Equivalents—Cash and cash equivalents include cash in bank accounts as well as highly liquid investments with an original maturity of three months or less. The Company deposits cash with several high-quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to an insurance limit of $250,000. At times, the Company’s cash and cash equivalents may exceed federally insured levels.

Restricted Cash

Restricted Cash—Restricted cash primarily consists of earnest money deposits related to hotel property acquisitions, as well as certain funds maintained in escrow accounts to fund future payments for insurance, property tax obligations, and reserves for future capital expenditures, as required by our debt agreements.

Accounts Receivable

Accounts Receivable—Accounts receivable consist primarily of receivables due from hotel guests for room stays and meeting and banquet room rentals, which are uncollateralized customer obligations. Management determines the likelihood of collectability of receivables on an individual customer basis, based on the amount of time the balance has been outstanding, likelihood of collecting, and the customer’s current economic status. The carrying amount of the accounts receivables is reduced by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected.

Deferred Financing Costs

Deferred Financing Costs—Deferred financing costs represent origination fees, legal fees, and other costs associated with obtaining financing. Deferred financing costs are presented on the consolidated balance sheets as a direct deduction from the carrying amount of the related debt liability. These costs are amortized to interest expense over the terms of the respective financing agreements using the straight-line method, which approximates the effective interest method. The Company expenses unamortized deferred financing costs when the associated financing agreement is refinanced or repaid before maturity unless certain criteria are met that would allow for the carryover of such costs to the refinanced agreement. Costs incurred in connection with potential financial transactions that are not completed are expensed in the period in which it is determined the financing will not be completed.

Offering Costs

Offering Costs—The Company has incurred certain costs related directly to the Company’s private offering consisting of, among other costs, commissions, legal, due diligence costs, printing, marketing, filing fees, postage, data processing fees, and other offering related costs. These costs are capitalized and recorded as a reduction of equity proceeds on the accompanying consolidated balance sheets.

Property Operations Expenses

Property Operations Expenses—Property operations expenses consist of expenses related to room rental, food and beverage sales, telephone usage, and other miscellaneous service costs, as well as all costs of operating the Company’s hotel properties such as building repairs, maintenance, property taxes, utilities, and other related costs.

Property Management Fees

Property Management Fees—Property management fees include expenses incurred for management services provided for the day-to-day operations of our hotel properties, which are generally charged at a rate of 4% of gross revenues. Property management fees also include asset management fees, which may be charged at an annual rate of up to 0.75% of gross assets and are paid to the Advisor.    For the year ended December 31, 2019 and period ended December 31, 2018, asset management fees were charged only on the value of investments in hotel properties.

Franchise Fees

Franchise Fees—The Company pays initial fees related to hotel franchise rights prior to acquiring a hotel property. The fees are included in prepaid expenses and other assets until the time the related hotel property is acquired. Initial franchise fees related to hotel properties that are acquired are amortized on a straight-line basis over the life of the agreement. Initial franchise fees related to hotel properties that are not acquired are refunded to the Company, net of any associated fees, and any fees are expensed as incurred. Franchise fees on the accompanying consolidated statements of operations include the amortization of initial franchise fees, as well as monthly fees paid to franchisors for royalty, marketing, and reservation fees and other related costs.

Acquisition Costs

Acquisition Costs—The Company incurs costs during the review of potential hotel property acquisitions including legal fees, environmental reviews, market studies, financial advisory services, and other professional service fees. If the Company does complete a property acquisition, an acquisition fee of up to 1.4% is charged by the Advisor, based on the purchase price of the property plus any estimated property improvement plan (“PIP”) costs. For transactions determined to be asset acquisitions, these costs are capitalized as part of the overall cost of the project. For transactions determined to be business combinations, these costs would be expensed in the period incurred. Acquisition-related and acquisition due diligence costs that relate to a property that is not acquired, are expensed and included in acquisition costs on the accompanying consolidated statements of operations. Prior to the ultimate determination of whether a property will be acquired or not, acquisition-related and acquisition due diligence costs are recorded as, and included in, prepaid expenses and other assets on the accompanying consolidated balance sheets.

Net Loss Per Share of Common Stock

Net Loss Per Share of Common Stock—Basic net loss per common share is computed based upon the weighted average number of shares outstanding during the period. Diluted net loss per common share is calculated after giving effect to all potential common shares that were dilutive and outstanding for the period. Basic and diluted net loss per common share were the same for the periods presented.

Income Taxes

Income Taxes—The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it distribute at least 90% of its REIT taxable income, subject to certain adjustments and excluding any net capital gain, to stockholders. The Company’s intention is to adhere to the REIT qualification requirements and to maintain its qualification for taxation as a REIT.

As a REIT, the Company is generally not subject to U.S. federal corporate income tax on the portion of taxable income that is distributed to stockholders. If the Company fails to qualify for taxation as a REIT in any taxable year, the Company will be subject to U.S. federal income taxes at regular corporate rates and it may not be able to qualify as a REIT for four subsequent taxable years. As a REIT, the Company may be subject to certain state and local taxes on its income and property, and to U.S. federal income and excise taxes on undistributed taxable income. Taxable income from non-REIT activities managed through the Company’s taxable REIT subsidiary (“TRS”) is subject to U.S. federal, state, and local income taxes at the applicable rates.

The TRS accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax basis, and for net operating loss, capital loss and tax credit carryforwards. The deferred tax assets and liabilities are measured using the enacted income tax rates in effect for the year in which those temporary differences are expected to be realized or settled. The effect on the deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company performs periodic reviews for any uncertain tax positions and, if necessary, will record the expected future tax consequences of uncertain tax positions in the consolidated financial statements.

Fair Value Measurement

Fair Value Measurement—The Company establishes fair value measures based on the fair value definition and hierarchy levels established by GAAP. These fair values are based on a three-tiered fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1—Observable inputs such as quoted prices in active markets.

Level 2—Directly or indirectly observable inputs, other than quoted prices in active markets.

Level 3—Unobservable inputs in which there is little or no market data, which require a reporting entity to develop its own assumptions.

The Company’s estimates of fair value were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to develop estimated fair value. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. The Company classifies assets and liabilities in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement.

Reclassifications

Reclassifications—Certain prior year amounts in the consolidated financial statements have been reclassified to conform to the current year presentation with no effect on previously reported net loss or equity.  In the prior year, certain earnest money deposits held in escrow accounts at the end of the period in the amount of $500,000 were included in separate line item titled deposit, and in the current year presentation this amount is included in restricted cash due to the similar nature of the earnest money deposits and the other amounts included within restricted cash.  In the prior year, the Company’s net deferred tax assets in the amount of $19,236 were presented in a separate line item titled deferred tax asset, and in the current year presentation this amount is included within prepaid expenses and other assets due to its insignificance compared to the balance sheet.

Recent Accounting Pronouncements

Recent Accounting Pronouncements—The Company, as an emerging growth company, has elected to use the extended transition period which allows us to defer the adoption of new or revised accounting standards. This allows the Company to adopt new or revised accounting standards as of the effective date for non-public business entities.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014‑09, Revenue from Contracts with Customers (Topic 606). The core principle of the new standard is that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014‑09 is effective for fiscal years beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. The Company adopted ASU 2014‑09 as of January 1, 2019 and has applied it on a modified retrospective basis. Based on the Company’s completed assessment of this updated accounting guidance, it does not materially affect the amount or timing of revenue recognition for the Company and the Company did not recognize any cumulative-effect adjustment as a result of adoption.

In February 2016, the FASB issued ASU No. 2016‑02, “Leases” (“ASU No. 2016‑02”) (Topic 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016‑02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. ASU No. 2016‑02 is effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. We plan to adopt ASU 2016‑02 for the year ending December 31, 2021. We do not anticipate any reclassifications or significant impacts on our consolidated financial statements as a result of this adoption.

In November 2016, the FASB issued ASU No. 2016‑18, Statement of Cash Flows (Topic 230), Restricted Cash, which is intended to reduce diversity in practice in the classification and presentation of changes in restricted cash in the statement of cash flows. Under this standard, restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown in the statement of cash flows. ASU 2016‑18 is effective for fiscal years beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019, and early adoption is permitted. The Company early adopted this standard as of its inception. Amounts included in restricted cash on the Company’s consolidated balance sheets are included with cash and cash equivalents in the Company’s consolidated statement of cash flows for the period presented.

In January 2017, the FASB issued ASU No. 2017‑01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU No. 2017‑01”), which changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. Under the new guidance, an entity first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set of transferred assets and activities is not a business. If it is not met, the entity then evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. ASU 2017‑01 is effective for fiscal years beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019, and early adoption is permitted. The Company early adopted this standard as of its inception and its hotel property acquisitions to date have been determined to be asset acquisitions and acquisition costs related to these asset acquisitions have been capitalized.

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2019	Mar. 24, 2020	Jun. 30, 2019
Document and Entity Information [Abstract]
Document Type	10-K
Document Period End Date	Dec. 31, 2019
Entity Registrant Name	LODGING FUND REIT III, INC.
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Public Float			$ 3,288,371
Entity Common Stock, Shares Outstanding		6,962,813
Entity Central Index Key	0001745032
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Amendment Flag	false

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($)	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total Stockholder's Equity	Non-controlling Interest	Total
Balance - Beginning at Apr. 09, 2018
Balance - Beginning (Shares) at Apr. 09, 2018
Issuance of common stock	$ 11,298	11,034,507		11,045,805		11,045,805
Issuance of common stock (Shares)	1,129,796
Offering costs			(2,724,585)	(2,724,585)		(2,724,585)
Distributions declared			(166,458)	(166,458)	(8,744)	(175,202)
Distributions reinvested	$ 52	49,478		49,530		49,530
Distributions reinvested (Shares)	5,214
Net loss			(1,150,385)	(1,150,385)	(60,473)	(1,210,858)
Balance - Ending at Dec. 31, 2018	$ 11,350	11,083,985	(4,041,428)	7,053,907	(69,217)	6,984,690
Balance - Ending (Shares) at Dec. 31, 2018	1,135,010
Issuance of common stock	$ 47,866	47,078,824		47,126,690		47,126,690
Issuance of common stock (Shares)	4,786,614
Offering costs			(7,299,159)	(7,299,159)		(7,299,159)
Distributions declared			(2,398,663)	(2,398,663)	(126,247)	(2,524,910)
Distributions reinvested	$ 841	798,292		799,133		799,133
Distributions reinvested (Shares)	84,119
Net loss			(4,656,913)	(4,656,913)	(244,521)	(4,901,434)
Balance - Ending at Dec. 31, 2019	$ 60,057	$ 58,961,101	$ (18,396,163)	$ 40,624,995	$ (439,985)	$ 40,185,010
Balance - Ending (Shares) at Dec. 31, 2019	6,005,743

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2019

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation—The accompanying consolidated financial statements and related notes have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the SEC applicable to annual financial information. The consolidated financial statements include the accounts of LF REIT III, the OP and its wholly-owned subsidiaries. For the controlled subsidiaries that are not wholly-owned, the interests owned by an entity other than the Company represent a noncontrolling interest, which is presented separately in the consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates—The preparation of the Company’s consolidated financial statements and the accompanying notes in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and the amounts of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition—Revenues consist of amounts derived from hotel operations, including room sales and other hotel revenues, and are presented on a disaggregated basis in the Company’s consolidated statements of operations. These revenues are recorded net of any sales and occupancy taxes collected from the hotel guests. All revenues are recorded on an accrual basis as they are earned. Any cash received prior to a guest’s arrival is recorded as an advance deposit from the guest and recognized as revenue at the time of the guest’s occupancy at the hotel property.

Investment in Hotel Properties—The Company evaluates whether each hotel property acquisition should be accounted for as an asset acquisition or a business combination. If substantially all of the fair value of the gross assets acquired is concentrated in a single asset or a group of similar identifiable assets, then the transaction is considered to be an asset acquisition. All of the Company’s acquisitions since inception have been determined to be asset acquisitions. Transaction costs associated with asset acquisitions are capitalized and transaction costs associated with business combinations would be expensed as incurred.

The Company’s acquisitions generally consist of land, land improvements, buildings, building improvements, and furniture, fixtures and equipment (“FF&E”). The Company may also acquire intangible assets or liabilities related to in-place leases, management agreements, debt, and advanced bookings. For transactions determined to be asset acquisitions, the Company allocates the purchase price among the assets acquired and the liabilities assumed on a relative fair value basis at the date of acquisition. The Company determines the fair value of assets acquired and liabilities assumed with the assistance of third-party valuation specialists, using cash flow analysis as well as available market and cost data.  The determination of fair value includes making numerous estimates and assumptions.

The difference between the fair value and the face value of debt assumed in connection with an acquisition is recorded as a premium or discount and amortized to interest expense over the remaining term of the debt assumed. The valuation of assumed debt liabilities is based on our estimate of the current market rates for similar liabilities in effect at the acquisition date.

The Company’s investments in hotel properties are carried at cost and are depreciated using the straight-line method over the estimated useful lives of 15 years for land improvements, 15 years for building improvements, 40 years for buildings and three to seven years for FF&E. Maintenance and repair costs are expensed in the period incurred and major renewals or improvements to the hotel properties are capitalized.

The Company assesses the carrying value of its hotel properties whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The recoverability is measured by comparing the carrying amount of the property to the estimated future undiscounted cash flows of the property, which take into account current market conditions and the Company’s intent with respect to holding or disposing of the hotel properties. If the Company’s analysis indicates that the carrying value is not recoverable on an undiscounted cash flow basis, the Company will recognize an impairment loss for the amount by which the carrying value exceeds the fair value. The fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions or third-party appraisals.

The use of projected future cash flows is based on assumptions that are consistent with a market participant’s future expectations for the industry and the economy in general and the Company’s expected use of the underlying hotel properties. The assumptions and estimates related to the future cash flows and the capitalization rates are complex and subjective in nature. Changes in economic and operating conditions that occur subsequent to a current impairment analysis and the Company’s ultimate use of the hotel property could impact the assumptions and result in future impairment losses to the hotel properties.

Advertising Costs—The Company expenses advertising costs as incurred. These costs represent the expense for franchise advertising and reservation systems under the terms of the hotel management and franchise agreements and expenses that are directly attributable to advertising and promotion. Advertising expense was $311,172 and $7,339 for the year ended December 31, 2019 and period ended December 31, 2018 respectively and is included in sales and marketing in the consolidated statements of operations.

Non-controlling Interest—Non-controlling interests represent the portion of equity in a subsidiary held by owners other than the Company. Non-controlling interests are reported in the consolidated balance sheets within equity, separate from stockholders’ equity. Revenue and expenses attributable to both the Company and the non-controlling interests are reported in the consolidated statements of operations, with net income or loss attributable to non-controlling interests reported separately from net income or loss attributable to the Company.

Cash and Cash Equivalents—Cash and cash equivalents include cash in bank accounts as well as highly liquid investments with an original maturity of three months or less. The Company deposits cash with several high-quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to an insurance limit of $250,000. At times, the Company’s cash and cash equivalents may exceed federally insured levels.

Restricted Cash—Restricted cash primarily consists of earnest money deposits related to hotel property acquisitions, as well as certain funds maintained in escrow accounts to fund future payments for insurance, property tax obligations, and reserves for future capital expenditures, as required by our debt agreements.

Accounts Receivable—Accounts receivable consist primarily of receivables due from hotel guests for room stays and meeting and banquet room rentals, which are uncollateralized customer obligations. Management determines the likelihood of collectability of receivables on an individual customer basis, based on the amount of time the balance has been outstanding, likelihood of collecting, and the customer’s current economic status. The carrying amount of the accounts receivables is reduced by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected.

Deferred Financing Costs—Deferred financing costs represent origination fees, legal fees, and other costs associated with obtaining financing. Deferred financing costs are presented on the consolidated balance sheets as a direct deduction from the carrying amount of the related debt liability. These costs are amortized to interest expense over the terms of the respective financing agreements using the straight-line method, which approximates the effective interest method. The Company expenses unamortized deferred financing costs when the associated financing agreement is refinanced or repaid before maturity unless certain criteria are met that would allow for the carryover of such costs to the refinanced agreement. Costs incurred in connection with potential financial transactions that are not completed are expensed in the period in which it is determined the financing will not be completed.

Offering Costs—The Company has incurred certain costs related directly to the Company’s private offering consisting of, among other costs, commissions, legal, due diligence costs, printing, marketing, filing fees, postage, data processing fees, and other offering related costs. These costs are capitalized and recorded as a reduction of equity proceeds on the accompanying consolidated balance sheets.

Property Operations Expenses—Property operations expenses consist of expenses related to room rental, food and beverage sales, telephone usage, and other miscellaneous service costs, as well as all costs of operating the Company’s hotel properties such as building repairs, maintenance, property taxes, utilities, and other related costs.

Property Management Fees—Property management fees include expenses incurred for management services provided for the day-to-day operations of our hotel properties, which are generally charged at a rate of 4% of gross revenues. Property management fees also include asset management fees, which may be charged at an annual rate of up to 0.75% of gross assets and are paid to the Advisor.    For the year ended December 31, 2019 and period ended December 31, 2018, asset management fees were charged only on the value of investments in hotel properties.

Franchise Fees—The Company pays initial fees related to hotel franchise rights prior to acquiring a hotel property. The fees are included in prepaid expenses and other assets until the time the related hotel property is acquired. Initial franchise fees related to hotel properties that are acquired are amortized on a straight-line basis over the life of the agreement. Initial franchise fees related to hotel properties that are not acquired are refunded to the Company, net of any associated fees, and any fees are expensed as incurred. Franchise fees on the accompanying consolidated statements of operations include the amortization of initial franchise fees, as well as monthly fees paid to franchisors for royalty, marketing, and reservation fees and other related costs.

Acquisition Costs—The Company incurs costs during the review of potential hotel property acquisitions including legal fees, environmental reviews, market studies, financial advisory services, and other professional service fees. If the Company does complete a property acquisition, an acquisition fee of up to 1.4% is charged by the Advisor, based on the purchase price of the property plus any estimated property improvement plan (“PIP”) costs. For transactions determined to be asset acquisitions, these costs are capitalized as part of the overall cost of the project. For transactions determined to be business combinations, these costs would be expensed in the period incurred. Acquisition-related and acquisition due diligence costs that relate to a property that is not acquired, are expensed and included in acquisition costs on the accompanying consolidated statements of operations. Prior to the ultimate determination of whether a property will be acquired or not, acquisition-related and acquisition due diligence costs are recorded as, and included in, prepaid expenses and other assets on the accompanying consolidated balance sheets.

Net Loss Per Share of Common Stock—Basic net loss per common share is computed based upon the weighted average number of shares outstanding during the period. Diluted net loss per common share is calculated after giving effect to all potential common shares that were dilutive and outstanding for the period. Basic and diluted net loss per common share were the same for the periods presented.

Income Taxes—The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it distribute at least 90% of its REIT taxable income, subject to certain adjustments and excluding any net capital gain, to stockholders. The Company’s intention is to adhere to the REIT qualification requirements and to maintain its qualification for taxation as a REIT.

As a REIT, the Company is generally not subject to U.S. federal corporate income tax on the portion of taxable income that is distributed to stockholders. If the Company fails to qualify for taxation as a REIT in any taxable year, the Company will be subject to U.S. federal income taxes at regular corporate rates and it may not be able to qualify as a REIT for four subsequent taxable years. As a REIT, the Company may be subject to certain state and local taxes on its income and property, and to U.S. federal income and excise taxes on undistributed taxable income. Taxable income from non-REIT activities managed through the Company’s taxable REIT subsidiary (“TRS”) is subject to U.S. federal, state, and local income taxes at the applicable rates.

The TRS accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax basis, and for net operating loss, capital loss and tax credit carryforwards. The deferred tax assets and liabilities are measured using the enacted income tax rates in effect for the year in which those temporary differences are expected to be realized or settled. The effect on the deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company performs periodic reviews for any uncertain tax positions and, if necessary, will record the expected future tax consequences of uncertain tax positions in the consolidated financial statements.

Fair Value Measurement—The Company establishes fair value measures based on the fair value definition and hierarchy levels established by GAAP. These fair values are based on a three-tiered fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1—Observable inputs such as quoted prices in active markets.

Level 2—Directly or indirectly observable inputs, other than quoted prices in active markets.

Level 3—Unobservable inputs in which there is little or no market data, which require a reporting entity to develop its own assumptions.

The Company’s estimates of fair value were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to develop estimated fair value. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. The Company classifies assets and liabilities in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement.

Reclassifications—Certain prior year amounts in the consolidated financial statements have been reclassified to conform to the current year presentation with no effect on previously reported net loss or equity.  In the prior year, certain earnest money deposits held in escrow accounts at the end of the period in the amount of $500,000 were included in separate line item titled deposit, and in the current year presentation this amount is included in restricted cash due to the similar nature of the earnest money deposits and the other amounts included within restricted cash.  In the prior year, the Company’s net deferred tax assets in the amount of $19,236 were presented in a separate line item titled deferred tax asset, and in the current year presentation this amount is included within prepaid expenses and other assets due to its insignificance compared to the balance sheet.

Recent Accounting Pronouncements—The Company, as an emerging growth company, has elected to use the extended transition period which allows us to defer the adoption of new or revised accounting standards. This allows the Company to adopt new or revised accounting standards as of the effective date for non-public business entities.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014‑09, Revenue from Contracts with Customers (Topic 606). The core principle of the new standard is that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014‑09 is effective for fiscal years beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. The Company adopted ASU 2014‑09 as of January 1, 2019 and has applied it on a modified retrospective basis. Based on the Company’s completed assessment of this updated accounting guidance, it does not materially affect the amount or timing of revenue recognition for the Company and the Company did not recognize any cumulative-effect adjustment as a result of adoption.

In February 2016, the FASB issued ASU No. 2016‑02, “Leases” (“ASU No. 2016‑02”) (Topic 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016‑02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. ASU No. 2016‑02 is effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. We plan to adopt ASU 2016‑02 for the year ending December 31, 2021. We do not anticipate any reclassifications or significant impacts on our consolidated financial statements as a result of this adoption.

In November 2016, the FASB issued ASU No. 2016‑18, Statement of Cash Flows (Topic 230), Restricted Cash, which is intended to reduce diversity in practice in the classification and presentation of changes in restricted cash in the statement of cash flows. Under this standard, restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown in the statement of cash flows. ASU 2016‑18 is effective for fiscal years beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019, and early adoption is permitted. The Company early adopted this standard as of its inception. Amounts included in restricted cash on the Company’s consolidated balance sheets are included with cash and cash equivalents in the Company’s consolidated statement of cash flows for the period presented.

In January 2017, the FASB issued ASU No. 2017‑01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU No. 2017‑01”), which changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. Under the new guidance, an entity first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set of transferred assets and activities is not a business. If it is not met, the entity then evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. ASU 2017‑01 is effective for fiscal years beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019, and early adoption is permitted. The Company early adopted this standard as of its inception and its hotel property acquisitions to date have been determined to be asset acquisitions and acquisition costs related to these asset acquisitions have been capitalized.

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INVESTMENT IN HOTEL PROPERTIES - Purchase Price Allocation (Details) - Nonrecurring - USD ($)	Dec. 31, 2019	Dec. 31, 2018
2019 Acquisitions
INVESTMENT IN HOTEL PROPERTIES
Land and land improvements	$ 6,201,529
Building and building improvements	47,412,115
Furniture, fixtures, and equipment	4,772,707
Total assets acquired	58,386,351
Premium on assumed debt	(416,126)
Total liabilities assumed	(416,126)
Total purchase price	57,970,225
Assumed mortgage debt	17,283,415
Net purchase price	$ 40,686,810
2018 Acquisitions
INVESTMENT IN HOTEL PROPERTIES
Land and land improvements		$ 1,536,966
Building and building improvements		5,558,997
Furniture, fixtures, and equipment		762,370
Total assets acquired		7,858,333
Total purchase price		7,858,333
Net purchase price		$ 7,858,333

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DEBT - Mortgage Debt (Details)	12 Months Ended
	Dec. 31, 2019 USD ($) property	Dec. 31, 2018 USD ($)
Outstanding Mortgage Debt:
Outstanding balance	$ 41,671,387
Premium on assumed debt, net	389,285
Deferred financing costs, net	(1,080,040)
Debt, net	40,980,632
Interest payable	$ 136,960	$ 26,018
Mortgage Debt
Debt
Number of properties as security for mortgage debt | property	5
Weighted-average interest rate (as a percent)	4.72%
Outstanding Mortgage Debt:
Outstanding balance	$ 41,671,387
Premium on assumed debt, net	389,285
Deferred financing costs, net	(1,080,040)
Debt, net	$ 40,980,632
Mortgage Debt | Minimum
Debt
Fixed interest rate (as a percent)	4.13%
Mortgage Debt | Maximum
Debt
Fixed interest rate (as a percent)	5.33%
Holiday Inn Express (the "Cedar Rapids Property") | Mortgage Debt
Outstanding Mortgage Debt:
Outstanding balance	$ 5,527,392
Interest rate (as a percent)	5.33%
Hampton Inn & Suites(the "Pineville Property") | Mortgage Debt
Outstanding Mortgage Debt:
Outstanding balance	$ 9,154,289
Interest rate (as a percent)	5.13%
Hampton Inn (the "Eagan Property") | Mortgage Debt
Outstanding Mortgage Debt:
Outstanding balance	$ 9,369,276
Interest rate (as a percent)	4.60%
Home2 Suites (the "Prattville Property") | Mortgage Debt
Outstanding Mortgage Debt:
Outstanding balance	$ 9,620,000
Interest rate (as a percent)	4.13%
Loan interest applicable term	12 years
Home2 Suites (the “Lubbock Home2 Property”) | Mortgage Debt
Outstanding Mortgage Debt:
Outstanding balance	$ 8,000,430
Interest rate (as a percent)	4.69%

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FAIR VALUE OF FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2019

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

7.    FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments as of December 31, 2019 and 2018 consisted of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, lines of credit, and mortgage debt. With the exception of the Company’s mortgage debt, the carrying amounts of the financial instruments presented in the consolidated financial statements approximate their fair value as of December 31, 2019. The fair value of the Company’s mortgage debt was estimated by discounting each loan’s future cash flows over the remaining term of the mortgage using an estimate of current borrowing rates for debt instruments with similar terms and maturities, which are Level 3 inputs in the fair value hierarchy.  As of December 31, 2019, the estimated fair value of the Company’s mortgage debt was $42.7 million, compared to the gross carrying value $41.7 million. As of December 31, 2018, the carrying amounts of all of the financial instruments presented in the consolidated financial statements approximate their fair value.

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INVESTMENT IN HOTEL PROPERTIES

12 Months Ended

Dec. 31, 2019

INVESTMENT IN HOTEL PROPERTIES

INVESTMENT IN HOTEL PROPERTIES

3.    INVESTMENT IN HOTEL PROPERTIES

Investment in hotel properties as of December 31, 2019 and 2018 consisted of the following:

	December 31,
	2019		2018
Land and land improvements	$	7,738,495	$	1,536,966
Building and building improvements		53,238,276		5,558,557
Furniture, fixtures, and equipment		5,687,249		764,032
Investment in hotel properties, at cost		66,664,020		7,859,555
Less: accumulated depreciation		(1,255,712)		(43,810)
Investment in hotel properties, net	$	65,408,308	$	7,815,745

As of December 31, 2019, the Company owned five hotel properties with an aggregate of 506 rooms located in five states.

Acquisitions of Hotel Properties

The Company acquired four properties during the year ended December 31, 2019 and one property during the period ended December 31, 2018. Each of the Company’s hotel acquisitions to date have been determined to be asset acquisitions. The table below outlines the details of the properties acquired during the years ended December 31, 2019 and 2018, respectively.

2019 Acquisitions
				Number
			Date	of Guest	Purchase		Transaction				%
Hotel	Property Type	Location	Purchased	Rooms	Price		Costs		Total		Interest
Hampton Inn & Suites (the "Pineville Property")	Limited Service	Pineville, NC	March 19, 2019	111	$	13,897,358	$	303,744	$	14,201,102	100	%
Hampton Inn (the "Eagan Property")	Limited Service	Eagan, MN	June 19, 2019	122		13,950,000		278,333		14,228,333	100	%
Home2 Suites (the "Prattville Property")	Extended Stay	Prattville, AL	July 11, 2019	90		14,750,000		356,014		15,106,014	100	%
Home2 Suites (the “Lubbock Home2 Property”)	Extended Stay	Lubbock, TX	December 30, 2019	100		14,150,000		284,776		14,434,776	100	%
				423	$	56,747,358	$	1,222,867	$	57,970,225

2018 Acquisitions
				Number
			Date	of Guest	Purchase		Transaction				%
Hotel	Property Type	Location	Purchased	Rooms	Price		Costs		Total		Interest
Holiday Inn Express (the "Cedar Rapids Property")	Limited Service	Cedar Rapids, IA	November 30, 2018	83	$	7,700,000	$	158,333	$	7,858,333	100	%
				83	$	7,700,000	$	158,333	$	7,858,333

Each of the hotel properties listed above is subject to a management agreement with NHS, LLC dba National Hospitality Services (“NHS”) with an initial term expiring on December 31st of the fifth full calendar year following the effective date of the agreement, which will automatically renew for successive 5‑year periods unless terminated earlier in accordance with its terms. The Pineville Property is currently being managed on a day-to-day basis by Beacon IMG, Inc. (“Beacon”), an affiliate of the seller of the Pineville Property, pursuant to a sub-management agreement.

The seller of the Pineville Property, an affiliate of Beacon, may be entitled to additional cash consideration if the property exceeds certain performance criteria based on increases in the property’s net operating income (“NOI”) for a selected 12‑month period of time. At any time during the period beginning April 1, 2021 through the date of the final NOI determination (on or about April 30, 2023), the seller of the property may make a one-time election to receive the additional consideration. The variable amount of the additional consideration, if any, is based on the excess of the property’s actual NOI over a base NOI for the applicable 12‑month calculation period divided by the stated cap rate for such calculation period. Further, if the Company sells the Pineville Property or terminates the Beacon sub-management agreement without cause prior to March 31, 2021, the Company will be required to pay liquidated damages of at least $1.0 million unless the seller elects to receive the additional consideration described above.  As of December 31, 2019, no amounts were owed or paid to the seller of the Pineville Property, and no election to receive the additional consideration had been made.

The aggregate purchase price for the hotel properties acquired during the years ended December 31, 2019 and 2018 were allocated as follows:

	December 31,
	2019		2018
Land and land improvements	$	6,201,529	$	1,536,966
Building and building improvements		47,412,115		5,558,997
Furniture, fixtures, and equipment		4,772,707		762,370
Total assets acquired		58,386,351		7,858,333
Premium on assumed debt		(416,126)		—
Total liabilities assumed		(416,126)		—
Total purchase price(1)		57,970,225		7,858,333
Assumed mortgage debt		17,283,415		—
Net purchase price	$	40,686,810	$	7,858,333

(1) Total purchase price includes purchase price plus all transaction costs.

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STOCKHOLDERS’ EQUITY

12 Months Ended

Dec. 31, 2019

STOCKHOLDERS’ EQUITY

STOCKHOLDERS’ EQUITY

11.    STOCKHOLDERS’ EQUITY

The Company is authorized to issue 900,000,000 shares of common stock and 100,000,000 shares of preferred stock. Each share of common stock entitles the holder to one vote per share on all matters upon which stockholders are entitled to vote and to receive distributions as authorized by the Company’s board of directors. The rights of the holders of shares of preferred stock may be defined at such time any series of preferred shares are issued.

Initial Offering

On June 1, 2018, the Company commenced a private offering of shares of common stock, $0.01 par value per share, at a price of $10.00 per share, with a maximum offering of $100,000,000, to accredited investors only pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended.

Dividend Reinvestment Plan

The Company has adopted a dividend reinvestment plan (“DRIP”), which permits stockholders to reinvest their distributions back into the Company, purchasing shares of common stock at 95% of the then-current share net asset value (“NAV”).

Distributions

Distributions are determined by the board of directors based on the Company’s financial condition and other relevant factors. Effective the first day of each fiscal quarter since inception, the board of directors declared a cash distribution at a daily rate of $0.00191781 per share of common stock to the stockholders of record on the last day of each calendar month within the respective quarter, up to, and including the period ended December 31, 2019.  

Share Repurchase Plan

The board of directors has adopted a share repurchase plan that may enable its stockholders to have their shares repurchased in limited circumstances. In its sole discretion, the board of directors could choose to terminate or suspend the plan or to amend its provisions without stockholder approval. The repurchase plan may be reviewed and modified by the board of directors as it deems necessary in its sole discretion.  The price at which the Company will repurchase shares is dependent on the amount of time the holder has owned the shares, and the then current value of the shares.  There are several limitations on the Company’s ability to repurchase shares under the share repurchase plan, including, but not limited to, a limitation that during any calendar year, the maximum number of shares potentially eligible for repurchase can only be the number of shares that the Company could purchase with the amount of net proceeds from the sale of shares under the Company’s dividend reinvestment plan during the prior calendar year. The board of directors may, in its sole discretion, reject any request for repurchase and may, at any time and without stockholder approval, upon 10 business days’ written notice to the stockholders (i) amend, suspend or terminate its share repurchase plan and (ii) increase or decrease the funding available for the repurchase of shares pursuant to our share repurchase plan.  At December 31, 2019 and 2018, the Company had $799,133 and $49,530, respectively, available for eligible repurchases.

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INVESTMENT IN HOTEL PROPERTIES - Acquisitions (Details)						12 Months Ended
	Dec. 30, 2019 USD ($) room	Jul. 11, 2019 USD ($) room	Jun. 19, 2019 USD ($) room	Mar. 19, 2019 USD ($) room	Nov. 30, 2018 USD ($) room	Dec. 31, 2019 USD ($) property room	Dec. 31, 2018 USD ($) property room
Acquisitions
Number of Rooms | room						423	83
Purchase Price						$ 56,747,358	$ 7,700,000
Transaction Costs						1,222,867	158,333
Total						$ 57,970,225	$ 7,858,333
Other disclosures
Management agreement, automatic renewal term						5 years
Hampton Inn & Suites(the "Pineville Property")
Acquisitions
Number of Rooms | room				111
Purchase Price				$ 13,897,358
Transaction Costs				303,744
Total				$ 14,201,102
Interest (as a percent)				100.00%
Other disclosures
Liquidated damage payable				$ 1,000,000
Hampton Inn (the "Eagan Property")
Acquisitions
Number of Rooms | room			122
Purchase Price			$ 13,950,000
Transaction Costs			278,333
Total			$ 14,228,333
Interest (as a percent)			100.00%
Holiday Inn Express (the "Cedar Rapids Property")
Acquisitions
Number of Rooms | room					83
Purchase Price					$ 7,700,000
Transaction Costs					158,333
Total					$ 7,858,333
Interest (as a percent)					100.00%
Home2 Suites (the "Prattville Property")
Acquisitions
Number of Rooms | room		90
Purchase Price		$ 14,750,000
Transaction Costs		356,014
Total		$ 15,106,014
Interest (as a percent)		100.00%
Home2 Suites (the “Lubbock Home2 Property”)
Acquisitions
Number of Rooms | room	100
Purchase Price	$ 14,150,000
Transaction Costs	284,776
Total	$ 14,434,776
Interest (as a percent)	100.00%
Asset Acquisitions 2019
Other disclosures
Number of properties acquired | property						4
Asset Acquisitions 2018
Other disclosures
Number of properties acquired | property							1

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DEBT - Lines of Credit (Details) - Revolving line of credit - USD ($) $ in Millions			12 Months Ended
	Nov. 15, 2018	Aug. 22, 2018	Dec. 31, 2018	Dec. 31, 2019	Nov. 30, 2019	Oct. 31, 2019
Lender One
Debt
Revolving line of credit		$ 3.0
Partnership units pledged		300,000
Variable interest rate (as a percent)			6.50%	5.75%
Outstanding amount			$ 0.0	$ 0.0
Lender One | Corey Maple
Debt
Line of credit guarantee amount				1.2
Lender One | Norman Leslie
Debt
Line of credit guarantee amount				$ 1.2
Lender One | Minimum
Debt
Variable interest rate (as a percent)		5.00%			5.00%	6.00%
Lender One | U.S. Prime Rate
Debt
Basis spread (as a percent)		1.00%
Lender Two
Debt
Revolving line of credit	$ 25.0
Variable interest rate (as a percent)			5.60%
Initial term	12 months
Amount drew from line of credit			$ 5.2
Lender Two | 30‑day LIBOR
Debt
Basis spread (as a percent)	3.25%

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2019

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

12.    COMMITMENTS AND CONTINGENCIES

Legal Matters—From time to time, the Company may become party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on the Company’s results of operations, cash flows or financial condition.

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INCOME TAXES

12 Months Ended

Dec. 31, 2019

INCOME TAXES

INCOME TAXES

8.    INCOME TAXES

The Company’s earnings (losses), other than those generated by the Company’s TRS, are not generally subject to federal corporate and state income taxes due to the Company’s REIT election. The Company did not pay any federal and state income taxes for the periods ended December 31, 2019 and 2018. The Company did not have any uncertain tax positions as of December 31, 2019 and 2018, respectively.  For the year ended December 31, 2019 and period ended December 31, 2018, all distributions paid were determined to be 100% returns of capital distributions.

The Company’s TRS generated a net operating loss (“NOL”) for the year ended December 31, 2019 and period ended December 31, 2018, which can be carried forward to offset future taxable income. As of December 31, 2019 and 2018, the Company had recorded net deferred tax assets of $205,808 and $19,236, respectively, primarily attributable to its NOLs generated in the current year and prior periods, net of temporary differences primarily related to deprecation. The Company’s NOLs will expire in 2038‑2039 for state tax purposes and will not expire for federal tax purposes. As of December 31, 2019 and 2018, the Company had NOL carryforwards for federal income tax purposes of $1.1 million and $14,263, respectively, and NOL carryforwards for state income tax purposes of $268,502 and $4,973, respectively.  The Company expects to fully utilize the NOLs to offset future taxable income. As of December 31, 2019, the tax years 2018 and 2019 remain subject to examination by the U.S. Internal Revenue Service (“IRS”) and various state tax jurisdictions.

The components of the Company’s income tax benefit are as follows:

	For the Year Ended December 31,
	2019		2018
Federal:
Deferred	$	143,746	$	14,263
State:
Deferred		42,826		4,973
Income tax benefit	$	186,572	$	19,236

The provision for income taxes is difference from the income tax expense that is determined by applying the applicable U.S. statutory federal income tax rate to pretax income as a result of the following differences:

	For the Year Ended December 31,
	2019		%	2018		%
Expected income tax benefit at  U.S. Federal statutory rate	$	1,068,481	-21.0%	$	258,320	-21.0%
Tax impact of REIT election		(927,264)	18.2%		(242,363)	19.7%
Expected tax benefit at TRS		141,217	-2.8%		15,957	-1.3%
State income tax benefit, net		42,826	-0.8%		4,956	-0.4%
Temporary differences - deprecation		2,529	-0.1%		(1,677)	0.1%
Income tax benefit	$	186,572	-3.7%	$	19,236	-1.6%

As of December 31, 2019 and 2018, the Company’s deferred tax assets and liabilities consisted of the following:

	December 31,
	2019		2018
Deferred Tax Assets:
Net operating loss carryforwards - Federal	$	1,148,996	$	14,263
Net operating loss carryforwards - State		268,502		4,973
		1,417,498		19,236
Deferred Tax Liabilities:
Tax FF&E basis less than book basis - Federal		(990,986)		-
Tax FF&E basis less than book basis - State		(220,704)		-
		(1,211,690)		-
Deferred tax assets, net	$	205,808	$	19,236

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PREPAID EXPENSES AND OTHER ASSETS

12 Months Ended

Dec. 31, 2019

PREPAID EXPENSES AND OTHER ASSETS

PREPAID EXPENSES AND OTHER ASSETS

4.    PREPAID EXPENSES AND OTHER ASSETS

Prepaid expenses and other assets consisted of the following:

	December 31,
	2019		2018
Franchise fees	$	475,000	$	392,500
Acquisition costs		472,569		158,575
Deferred tax assets, net		205,808		19,236
Insurance		113,571		22,495
Other		356,636		192,362
	$	1,623,584	$	785,168

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INCOME TAXES - Reconciliation (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Effective income tax reconciliation, amount
Expected income tax benefit at U.S. Federal statutory rate	$ 1,068,481	$ 258,320
Tax impact of REIT election	(927,264)	(242,363)
Expected tax benefit at TRS	141,217	15,957
State income tax benefit, net	42,826	4,956
Temporary differences - depreciation	2,529	(1,677)
Income tax benefit	$ 186,572	$ 19,236
Effective income tax reconciliation, percent
Expected income tax benefit at U.S. Federal statutory rate (as a percent)	(21.00%)	(21.00%)
Tax impact of REIT election (as a percent)	18.20%	19.70%
State income tax benefit, net (as a percent)	(0.80%)	(0.40%)
Temporary differences - depreciation (as a percent)	(0.10%)	0.10%
Income tax benefit (as a percent)	(3.70%)	(1.60%)

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RELATED PARTY TRANSACTIONS - NHS (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Related Party Transactions
Amounts due and payable	$ 966,379	$ 713,350
NHS
Related Party Transactions
Reimbursements	227,398	10,588
Amounts due and payable	47,516	15,360
NHS
Related Party Transactions
Management fees	342,101	4,950
Administrative fees	52,605	687
Accounting fees	49,028	2,324
Total fees	$ 443,734	$ 7,961

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INCOME TAXES - (Tables)

12 Months Ended

Dec. 31, 2019

INCOME TAXES

Schedule of the components of the Company's income tax benefit

	For the Year Ended December 31,
	2019		2018
Federal:
Deferred	$	143,746	$	14,263
State:
Deferred		42,826		4,973
Income tax benefit	$	186,572	$	19,236

Schedule of reconciliation of income taxes at U.S statutory federal income tax rate

	For the Year Ended December 31,
	2019		%	2018		%
Expected income tax benefit at  U.S. Federal statutory rate	$	1,068,481	-21.0%	$	258,320	-21.0%
Tax impact of REIT election		(927,264)	18.2%		(242,363)	19.7%
Expected tax benefit at TRS		141,217	-2.8%		15,957	-1.3%
State income tax benefit, net		42,826	-0.8%		4,956	-0.4%
Temporary differences - deprecation		2,529	-0.1%		(1,677)	0.1%
Income tax benefit	$	186,572	-3.7%	$	19,236	-1.6%

Schedule of the Company's deferred tax assets and liabilities

	December 31,
	2019		2018
Deferred Tax Assets:
Net operating loss carryforwards - Federal	$	1,148,996	$	14,263
Net operating loss carryforwards - State		268,502		4,973
		1,417,498		19,236
Deferred Tax Liabilities:
Tax FF&E basis less than book basis - Federal		(990,986)		-
Tax FF&E basis less than book basis - State		(220,704)		-
		(1,211,690)		-
Deferred tax assets, net	$	205,808	$	19,236

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INVESTMENT IN HOTEL PROPERTIES (Tables)

12 Months Ended

Dec. 31, 2019

INVESTMENT IN HOTEL PROPERTIES

Schedule of investment in hotel properties

	December 31,
	2019		2018
Land and land improvements	$	7,738,495	$	1,536,966
Building and building improvements		53,238,276		5,558,557
Furniture, fixtures, and equipment		5,687,249		764,032
Investment in hotel properties, at cost		66,664,020		7,859,555
Less: accumulated depreciation		(1,255,712)		(43,810)
Investment in hotel properties, net	$	65,408,308	$	7,815,745

Schedule of acquisitions of hotel properties

2019 Acquisitions
				Number
			Date	of Guest	Purchase		Transaction				%
Hotel	Property Type	Location	Purchased	Rooms	Price		Costs		Total		Interest
Hampton Inn & Suites (the "Pineville Property")	Limited Service	Pineville, NC	March 19, 2019	111	$	13,897,358	$	303,744	$	14,201,102	100	%
Hampton Inn (the "Eagan Property")	Limited Service	Eagan, MN	June 19, 2019	122		13,950,000		278,333		14,228,333	100	%
Home2 Suites (the "Prattville Property")	Extended Stay	Prattville, AL	July 11, 2019	90		14,750,000		356,014		15,106,014	100	%
Home2 Suites (the “Lubbock Home2 Property”)	Extended Stay	Lubbock, TX	December 30, 2019	100		14,150,000		284,776		14,434,776	100	%
				423	$	56,747,358	$	1,222,867	$	57,970,225

2018 Acquisitions
				Number
			Date	of Guest	Purchase		Transaction				%
Hotel	Property Type	Location	Purchased	Rooms	Price		Costs		Total		Interest
Holiday Inn Express (the "Cedar Rapids Property")	Limited Service	Cedar Rapids, IA	November 30, 2018	83	$	7,700,000	$	158,333	$	7,858,333	100	%
				83	$	7,700,000	$	158,333	$	7,858,333

Schedule of aggregate purchase price for the hotel properties

	December 31,
	2019		2018
Land and land improvements	$	6,201,529	$	1,536,966
Building and building improvements		47,412,115		5,558,997
Furniture, fixtures, and equipment		4,772,707		762,370
Total assets acquired		58,386,351		7,858,333
Premium on assumed debt		(416,126)		—
Total liabilities assumed		(416,126)		—
Total purchase price(1)		57,970,225		7,858,333
Assumed mortgage debt		17,283,415		—
Net purchase price	$	40,686,810	$	7,858,333

(1) Total purchase price includes purchase price plus all transaction costs.

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ORGANIZATION

12 Months Ended

Dec. 31, 2019

ORGANIZATION

ORGANIZATION

1.    ORGANIZATION

Lodging Fund REIT III, Inc. (“LF REIT III”), was formed on April 9, 2018 as a Maryland corporation. LF REIT III, together with its subsidiaries (the “Company”), was formed for the principal purpose of acquiring, through purchase or contribution, direct or indirect ownership interests in a diverse portfolio of limited-service, select-service and extended stay hotel properties located primarily in “America’s Heartland,” which the Company defines as the geographic area from North Dakota to Texas and the Appalachian Mountains to the Rocky Mountains. LF REIT III has elected to be treated as a real estate investment trust, or REIT, for federal income tax purposes beginning with the taxable year ended December 31, 2018. The Company’s business activities are directed and managed by Legendary Capital REIT III, LLC (the “Advisor”) and its affiliates, which are related parties through common management, pursuant to the Amended and Restated Advisory Agreement (the “Advisory Agreement”), dated June 1, 2018. The Company has no foreign operations or assets and its operating structure includes only one operating and reportable segment.

Substantially all of the Company’s assets and liabilities are held by, and substantially all of its operations are conducted through, Lodging Fund REIT III OP, LP (the “Operating Partnership,” or “OP”), a wholly-owned subsidiary of LF REIT III. The OP has two voting classes of partnership units, General Partnership Units and Common Limited Partnership Units, and one class of non-voting partnership units, Series B Limited Partnership Units.  LF REIT III was the sole general partner of the OP, as of December 31, 2019 and 2018. As of December 31, 2019 and 2018, there were no outstanding Common Partnership Units, and there were 1,000 outstanding Series B Limited Partnership Units, all of which were owned by the Advisor.

On June 1, 2018, the Company commenced a private offering of shares of common stock, $0.01 par value per share, with a maximum offering of $100,000,000 (the “Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. In addition to sales of common shares for cash, the Company has adopted a dividend reinvestment plan (“DRIP”), which permits stockholders to reinvest their distributions back into the Company. As of December 31, 2019, the Company had issued and sold 6,005,743 shares of common stock, including 89,333 shares attributable to the DRIP, and received aggregate proceeds of $59.0 million.

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Revenues
Revenues	$ 8,575,470	$ 123,730
Expenses
General and administrative	4,553,432	589,427
Sales and marketing	997,080	334,442
Property operations	3,364,836	65,059
Franchise fees	826,843	11,412
Property management fees	818,315	22,446
Acquisition expense	470,786	212,464
Depreciation	1,211,902	43,810
Total expenses	12,243,194	1,279,060
Other Income (Expense)
Other income (expense), net	(53,749)	94
Interest expense	(1,366,533)	(74,858)
Total other income (expense)	(1,420,282)	(74,764)
Net Loss Before Income Taxes	(5,088,006)	(1,230,094)
Income tax benefit	186,572	19,236
Net loss	(4,901,434)	(1,210,858)
Net loss attributable to non-controlling interest	(244,521)	(60,473)
Net Loss Attributable to Common Stockholders	$ (4,656,913)	$ (1,150,385)
Basic and Diluted Net Loss Per Share of Common Stock	$ (1.36)	$ (3.45)
Weighted-average Shares of Common Stock Outstanding, Basic and Diluted	3,432,099	332,971
Room
Revenues
Revenues	$ 8,460,842	$ 123,024
Other
Revenues
Revenues	$ 114,628	$ 706