Exhibit 10.1

Execution Copy

LOAN AND SECURITY AGREEMENT

By and Among

AVALON HOLDINGS CORPORATION,

AVALON RESORTS AND CLUBS, INC.,

AVALON CLUBS,   INC.,

AVALON RESORTS, INC.,

AVALON GOLF AND COUNTRY CLUB, INC.,

AVALON LAKES GOLF, INC.,

AVALON COUNTRY CLUB AT SHARON, INC.,

AVALON RESORT AND SPA LLC,

THE HAVANA CIGAR SHOP, INC.,

AVALON TRAVEL, INC.

and

TBG, INC.

and

LAUREL CAPITAL CORPORATION

Dated as of December 20, 2016  

TABLE OF   CONTENTS

EXHIBIT A – Form of 2016 Note

EXHIBIT B – Form of Disbursement Request

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (this " Agreement ") is made as of the 30th day of November, 2016 by and among AVALON HOLDINGS CORPORATION, an Ohio corporation (" Avalon Holdings "), AVALON RESORTS AND CLUBS, INC., an Ohio corporation (" Avalon Resorts and Clubs "), AVALON CLUBS, INC., an Ohio corporation (" Avalon Clubs "), AVALON RESORTS, INC., an Ohio corporation (" Avalon Resorts "), AVALON GOLF AND COUNTRY CLUB, INC., an Ohio corporation (" Avalon Golf and CC "), AVALON LAKES GOLF, INC., an Ohio corporation (" Avalon Lakes Golf "), AVALON COUNTRY CLUB AT SHARON, INC., a Pennsylvania corporation (" Avalon CC at Sharon "), AVALON RESORT AND SPA, LLC, an Ohio limited liability company (" Avalon Resort and Spa "), THE HAVANA CIGAR SHOP, INC., an Ohio corporation (" Havana "), AVALON TRAVEL, INC. an Ohio corporation (" Avalon Travel "), and TBG, INC., an Ohio corporation (" TBG " and, together with Avalon Holdings, Avalon Resorts and Clubs, Avalon Clubs, Avalon Golf and CC, Avalon Lakes Golf, Avalon CC at Sharon, Avalon Resort and Spa, Havana and Avalon Travel, the " Borrowers "), and LAUREL CAPITAL CORPORATION, a Pennsylvania business corporation (the " Lender ").

RECITALS:

A.       The Borrowers have requested that the Lender provide a term loan to the Borrowers in the principal amount of $12,000,000 (the " 2016 Loan ").

B.       The 2016 Loan will be used by the Borrowers to finance the costs of a project (the " 2016 Project ") consisting of (i) repaying and retiring the Borrowers' existing secured line of credit from Home Savings and Loan Company of Youngstown, Ohio (the " Existing Line of Credit "), (ii) paying the costs of renovating and expanding the Avalon Inn and Resort facility, and (iii) paying the transaction costs relating to the 2016 Loan.

C.        The Lender is willing to provide the 2016 Loan upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, the parties hereto, in consideration of the mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, covenant and agree as follows:

ARTICLE I DEFINITIONS

In addition to words and terms defined in the Recitals or elsewhere in this Agreement, the following terms shall have the meanings provided below:

" 2016 Mortgages " means, together, (a) the Avalon Holdings 2016 Mortgage, (b) the Avalon CC at Sharon Mortgage, (c) the Avalon Lakes Golf Mortgage, and (d) the Avalon Resort and Spa Mortgage.

" 2016 Note " means the Mortgage Note evidencing the 2016 Loan, substantially in the form of Exhibit A attached hereto, executed and delivered by the Borrowers to the Lender, as the same may be amended, renewed, replaced, or supplemented from time to time.

" Anti-Terrorism Laws " means any Laws relating to terrorism or money laundering, including Executive Order No. 13224, the USA Patriot Act, the Laws comprising or implementing the Bank Secrecy Act, and the Laws administered by the United States Treasury Department's Office of Foreign Asset Control (as any of the foregoing Laws may from time to time be amended, renewed, extended, or replaced).

" Applicable Rate " means:

(a)     For the period from the Closing Date through the date immediately preceding the Reset Date, 5.35% per annum; and (ii); and

(b)     For the period from the Reset Date through the Maturity Date, the greater of (x) 5.35% per annum and (y) the sum of the Index Rate on the date two (2) Business Days prior to the Reset Date and 3.95%, provided that the Applicable Rate shall in no event exceed 7.50% per annum.

" Avalon CC at Sharon Mortgage " means the Mortgage, Security Agreement, Assignment of Leases and Fixture Filing dated December 1, 2016 and effective as of the date hereof, executed by Avalon CC at Sharon in favor of the Lender, granting the Lender a mortgage lien on the Avalon CC at Sharon Mortgaged Property as security for the 2016 Note.

" Avalon CC at Sharon Mortgaged Property " means the Land owned by Avalon CC at Sharon and located at 1030 Forker Blvd., Hermitage, PA 16148-1566, as more particularly described on Exhibit A to the Avalon CC at Sharon Mortgage, and the other Mortgaged Property as defined in the Avalon CC at Sharon Mortgage.

" Avalon Holdings Mortgage " means the Mortgage, Security Agreement, Assignment of Leases and Fixture Filing dated December 1, 2016 and effective as of the date hereof, executed by Avalon Holdings in favor of the Lender, granting the Lender a mortgage lien on the Avalon Holdings Mortgaged Property as security for the 2016 Note.

" Avalon Holdings Mortgaged Property " means the Land owned by Avalon Holdings and located at One American Way, Warren, OH, 44484 as more particularly described on Exhibit A to the Avalon Holdings 2016 Mortgage, and the other Mortgaged Property as defined in the Avalon Holdings 2016 Mortgage.

" Avalon Lakes Golf Mortgage " means the Mortgage, Security Agreement, Assignment of Leases and Fixture Filing dated December 1, 2016 and effective as of the date hereof, executed by Avalon Lakes Golf in favor of the Lender, granting the Lender a mortgage lien on the Avalon Lakes Golf Mortgaged Property as security for the 2016 Note.

" Avalon Lakes Golf Mortgaged Property " means the Land owned by Avalon Lakes Golf and located at 5 East Market Street, Warren, OH 44484, as more particularly described on Exhibit A to the Avalon Lakes Golf Mortgage, and the other Mortgaged Property as defined in the Avalon Lakes Golf Mortgage.

" Avalon Resort and Spa Mortgage " means the Mortgage, Security Agreement, Assignment of Leases and Fixture Filing dated December 1, 2016 and effective as of the date hereof, executed by Avalon Resort and Spa in favor of the Lender, granting the Lender a mortgage lien on the Avalon Resort and Spa Mortgaged Property as security for the 2016 Note.

" Avalon Resort and Spa Mortgaged Property " means the Land owned by Avalon Resort and Spa and located at 9519 East Market Street, Warren, OH 44484, as more particularly described on Exhibit A to the Avalon Resort and Spa Mortgage, and the other Mortgaged Property as defined in the Avalon Resort and Spa Mortgage.

" Benefit Plan " means any defined benefit or defined contribution plan, including both single and multi-employer plans, subject to Title IV of ERISA and established and maintained for employees of the Borrowers or any subsidiary of the Borrowers or any ERISA Affiliate of the Borrowers.

" Blocked Person " has the meaning set forth in Section 5.14 hereof.

" Borrower Consolidated Group " means, together, the Borrowers and each other person or entity that is consolidated with the Borrowers for financial statement purposes.

" Closing Date " means December 20, 2016.

" Collateral " means all property of a Borrower or any other Person, real or personal, in or upon which the Lender is granted a security interest, mortgage, lien, pledge or encumbrance pursuant to the Loan Documents, including without limitation the Mortgaged Property and the Personal Property.

" Default Rate " shall have the meaning set forth in Section 3.6 hereof.

" ERISA " means the Employee Retirement Income Security Act of 1074, as in effect as of the date of this Agreement and as amended from time to time.

" ERISA Affiliate " means a Person that is under common control with a Borrower within the meaning of Section 414(b) of the Code including but not limited to, a subsidiary of a Borrower.

" Event of Default " shall have the meaning set forth in Section 9.1.

" Excess Interest " shall have the meaning set forth in Section 3.2(d) hereof.

" Executive Order " means the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

" Financial Statements " means, for a Borrower, a balance sheet and statement of income and cash flows prepared in accordance with GAAP (subject in the case of interim statements to normal year-end adjustments) (a) in the case of annual statements, examined and reported on by an independent certified public accountant acceptable to the Lender and (b) in the case of quarterly statements, prepared internally by such Borrower.

" Fixed Charge Coverage Ratio " means, for any fiscal year of the Borrowers, the ratio of (i) the sum of Operating Cash Flow of the Borrower Consolidated Group for such fiscal year, to (ii) the sum of Total Fixed Charges of the Borrower Consolidated Group for such fiscal year, all as determined from the Financial Statements of the Borrower Consolidated Group for such fiscal year delivered to the Lender.

" GAAP " means generally accepted accounting principles in the United States (as such principles may change from time to time), which shall include the official interpretations thereof by the Financial Accounting Standards Board, applied on a consistent basis.

" Improvements " means all buildings and other improvements located on any of the Mortgaged Property.

" Index Rate " means the Five (5) Year Interest Rate Swap rate, as published by Intercontinental Exchange (ICE) Benchmark Administration. If the Index Rate is discontinued or is no longer published as of any Reset Date, then the Lender shall select an index or statistic which most closely approximates the discontinued or unpublished index and such index or statistic shall replace such discontinued or unpublished index for all purposes hereunder.

" Interest Payment Date " means the twentieth (20th) day of each calendar month commencing January 20, 2017 and the Maturity Date.

" Land " means, collectively, the real property comprising the Mortgaged Property as more particularly described on Exhibit A to the respective Mortgages.

" Late Charge " shall have the meaning set forth in Section 3.5 hereof.

" Law " means any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of any Official Body.

" Line of Credit Collateral " means the accounts receivable now outstanding and hereafter arising, and the proceeds therefrom and all of the goods, inventory and equipment of the Borrowers, together with all present and future attachments, accessions, replacement parts, additions, exchanges and all products and proceeds thereof; provided that the Line of Credit Lender shall subordinate its security interest in all equipment or other property constituting Personal Property to the security interest granted to the Lender hereunder.

" Line of Credit Lender " means the Home Savings and Loan Company of Youngstown Ohio, or its successor or replacement lender.

" Line of Credit " means the $4,000,000 working capital line of credit provided to the Borrowers and certain of their affiliates by the Line of Credit Lender.

" Loan Documents " means this Agreement, the 2016 Notes, the Mortgages, the Assignments, the Guaranties, and all other indemnification agreements, documents, instruments, certificates and agreements now or hereafter executed in connection with the 2016 Loan, as the same may be amended, replaced, or supplemented from time to time.

" Material Adverse Change " means a material adverse change in (i) the business, operations or financial condition of the Borrowers, taken as a whole, (ii) the ability of the Borrowers to perform any of their respective payment or other obligations under this Agreement or any other Loan Document, (iii) the legality, validity or enforceability of the obligations of a Borrower under this Agreement or any other Loan Document, or (iv) the ability of the Lender to exercise its rights and remedies with respect to, or otherwise realize upon, any collateral for the Obligations.

" Material Adverse Effect " means a material and adverse effect on (i) the business, operations or financial condition of the Borrowers, taken as a whole, (ii) the ability of the Borrowers to perform any of their respective payment or other obligations under this Agreement or any other Loan Document, (iii) the legality, validity or enforceability of the obligations of a Borrower under this Agreement or any other Loan Document, or (iv) the ability of the Lender to exercise its rights and remedies with respect to, or otherwise realize upon, any security for the Obligations.

" Materials " shall mean all materials, supplies, chattels, fixtures, machinery, equipment or other articles of property furnished or to be furnished in connection with the construction of, and to be incorporated into, the renovation and expansion of the Avalon Resort and Inn Facility.

" Maturity Date " means December 20, 2026.

" Maximum Interest Rate " shall have the meaning set forth in Section 3.2(d) hereof. " Mortgaged Property " means, together, the Avalon Holdings Mortgaged Property, the

Avalon CC at Sharon Mortgaged Property, the Avalon Resort and Spa Mortgaged Property and

the Avalon Lakes Golf Mortgaged Property.

" Mortgages " means, together, the Avalon Holdings Mortgage, the Avalon CC at Sharon Mortgage, the Avalon Resort and Spa Mortgage and the Avalon Lakes Golf Mortgage.

" Obligations " means all repayment and other obligations of the Borrowers with respect to the 2016 Loan under this Agreement, the 2016 Note and the other Loan Documents.

" Official Body " means any government or political subdivision or any agency, authority, bureau, central bank, board, commission, department or instrumentality of either, or any court, tribunal, grand jury or arbitrator, in each case whether foreign or domestic.

" Operating Cash Flow " means net income after taxes, exclusive of extraordinary gains and losses and non-cash transactions, plus interest expense, depreciation, and amortization (as those terms are defined in accordance with GAAP).

" PBGC " means the Pension Benefit Guaranty Corporation established pursuant to Title IV of ERISA.

" Person " means any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated organization, joint venture, government or political subdivision or agency thereof, or any other entity.

" Personal Property " means all of the Borrowers' furniture, fixtures and equipment located on the Mortgaged Property, and all proceeds thereof.

" Potential Default " shall mean any condition, event, act or omission which, with the giving of notice or passage of time or both, would constitute an Event of Default.

" Project Fund " means the account established pursuant to Section 8.2 hereof.

" Prohibited Transaction " means any transaction which is prohibited under Section 4975 of the Code or Section 406 of ERISA and not exempt under Section 4975 of the Code or Section 408 of ERISA.

" Reportable Event " means any of the events set forth in Section 4043(b) of ERISA or the regulations thereunder, except any such event as to which the provision for thirty (30) days' notice to the PBGC is waived under applicable regulations.

" Required Deductions " shall have the meaning set forth in Section 3.7 hereof. " Reset Date " means the fifth (5 th ) anniversary of the Closing Date.

" Subordination Agreement " means the Subordination Agreement dated as of the Closing Date between the Lender and the Line of Credit Lender.

" Title Company " means Chicago Title Insurance Company.

" Total Fixed Charges " means the sum of interest expense, regularly scheduled payments of principal made on long term debt and capitalized lease obligations during the period being measured, dividends and distributions, and Unfunded Capital Expenditures.

" UCC " means the Uniform Commercial Code of the state in which any Collateral is located, as amended.

" Unfunded Capital Expenditures " means capital expenditures not funded by long-term

debt.

" USA Patriot Act " means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

ARTICLE II THE 2016 LOAN

Subject to the terms and conditions hereinafter set forth, the Lender agrees to make the 2016 Loan to the Borrowers. The Lender and the Borrowers acknowledge and agree that the Lender will disburse the proceeds of 2016 Loan only for the payment of or reimbursement for the actual costs, fees and expenses incurred by the Borrowers in connection with the 2016 Project, with all such disbursements to be made in accordance with the terms and conditions set forth in this Agreement. The Borrowers hereby jointly and severally covenant and agree to repay the 2016 Loan in accordance with the terms of the Notes and Article 3 hereof.

ARTICLE III THE 2016 NOTE

The obligation of the Borrowers to repay the 2016 Loan shall be evidenced by the 2016 Note, dated the Closing Date, in substantially the form attached hereto as Exhibit A , in the principal amount of $12,000,000, maturing on the Maturity Date, and bearing interest and having such other terms as are set forth in this Article 3 and in the 2016 Note.

(a)      Interest Rate . Amounts outstanding under the 2016 Note will bear interest at the Applicable Rate in effect from time to time, subject, however, to application of the Default Rate as provided in Section 3.6 hereof.

(b)      Calculation of Interest and Fees . Interest on the 2016 Note, unpaid fees and other sums payable thereunder shall be calculated on the basis of a 360 day year consisting of 12 thirty day months. Interest on the 2016 Note and any unpaid fees and other sums payable hereunder shall be calculated on the basis of a 360 day year consisting of 12 thirty day months.

(c)      Interest Laws . Notwithstanding any provisions to the contrary contained in this Agreement or any other Loan Document, the Borrowers shall not be required to pay, and the Lender shall not be permitted to collect, any amount of interest in excess (" Excess Interest ") of the maximum amount of interest permitted by applicable Law (the " Maximum Interest Rate "). If any Excess Interest is provided for or determined by a court of competent jurisdiction to have been provided for in this Agreement or in any other Loan Document with respect to the 2016 Loan, then in such event: (A) the provisions of this subsection shall govern and control; (B) the Borrowers shall not be obligated to pay any Excess Interest; (C) any Excess Interest that the Lender may have received hereunder shall be, at the Lender's option, (1) applied as a credit against the outstanding principal balance of the 2016 Loan or accrued and unpaid interest (not to exceed the Maximum Rate, (2) refunded to the Borrowers, or (3) any combination of the foregoing; (D) the interest rate(s) provided for herein shall be automatically reduced to the Maximum Rate, and this Agreement and the other Loan Documents shall be deemed to have been and shall be, reformed and modified to reflect such reduction; and (E) the Borrowers shall not have any action against the Lender for any damages arising out of the payment or collection of any Excess Interest. Notwithstanding the foregoing, if for any period of time interest on any Loan is calculated at the Maximum Rate rather than the Applicable Rate, and thereafter such Applicable Rate becomes less than the Maximum Rate, the rate of interest payable on such Loan shall remain at the Maximum Rate until the Lender shall have received the amount of interest which the Lender would have received during such period on the 2016 Loan had the rate of interest not been limited to the Maximum Rate during such period.

The Borrowers hereby jointly and severally covenant and agree to repay the 2016 Loan as follows:

(a)     Principal and interest on the 2016 Loan shall be due and payable as follows: (i) one hundred nineteen (119) equal monthly payments of principal and interest based on a fifteen (15) year amortization on the twentieth (20 th ) day (or in the case of February, the last day) of each calendar month commencing January 20, 2017 and ending November 20, 2026; followed by (iii) a final payment on the Maturity Date equal to the remaining outstanding principal of the 2016 Loan plus accrued unpaid interest and fees thereon.

(b)     If any payment under the 2016 Note shall become due on a Saturday, Sunday or public holiday under the laws of the Commonwealth of Pennsylvania, such payment shall be made on the next succeeding business day and such extension of time shall be included in computing interest in connection with such payment. Payments received will be applied to charges, fees and expenses (including attorneys' fees), accrued interest and principal in any order the Lender may choose, in its sole discretion.

(a)     Provided that no Event of Default has occurred or is continuing, the 2016 Note shall be subject to prepayment at the option of the Borrowers, upon at least fifteen (15) days prior written notice to the Lender, in whole or in part on any date upon payment of the principal amount of the 2016 Note to be prepaid plus accrued unpaid interest thereon to the prepayment date (and, in the case of a prepayment in whole of the 2016 Note, any other sums then due and payable under the 2016 Note), plus a prepayment penalty (" Prepayment Penalty ") equal to a percentage of the principal amount of the 2016 Note being prepaid, with the percentage determined based on the date of prepayment as set forth in the following table:

(b)     Any prepayments with respect to the 2016 Note shall be applied against scheduled installment payments due on the 2016 Note in inverse order beginning with the final scheduled installment payment.

If the Borrowers fail to make any installment of interest or principal on a Note within ten calendar

(10) days after such installment becomes due, in addition to making a payment of the installment due, the Borrowers shall pay to the Lender a late charge in an amount equal to the greater of twenty-five and 00/100 dollars ($25.00) and five percent (5.0%) of any such overdue installment (the " Late Charge "). Any Late Charge will be immediately due and payable. Such ten (10) day period shall not be construed in any way to extend the due date of such payment.

At the Lender's option, upon the occurrence of an Event of Default and during the continuance thereof, subject to all applicable cure and grace periods, under any of the Loan Documents and during the continuance thereof, the 2016 Note shall bear interest at the Applicable Rate plus five percent (5.0%), or the Maximum Interest Rate, whichever is lower (the rate applicable during the continuance of an Event of Default is referred to hereinafter as the " Default Rate "). The Default Rate may continue to apply whether or not judgment shall be entered on the applicable Note.

All payments to be made with respect to principal, interest, fees or other amounts due from the Borrowers under this Agreement or under the Notes are payable at 12:00 noon (Pittsburgh, Pennsylvania time) on the day when due, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, and an action for the payments will accrue immediately. All such payments must be made to the Lender at its office in U.S. Dollars and in funds immediately available at such office, without setoff, counterclaim or other deduction of any nature. All such payments shall be applied at the option of the Lender to accrued and unpaid interest, outstanding principal and other sums due under this Agreement in such order as the Lender, in its sole discretion, shall elect. All such payments shall be made absolutely net of, without deduction or offset, and altogether free and clear of any and all present and future taxes, levies, deductions, charges and withholdings and all liabilities with respect thereto, excluding income and franchise taxes imposed on the Lender under the Laws of the United States or any state or political subdivision thereof. If the Lender is compelled by Law to deduct any such taxes or levies (other than such excluded taxes) or to make any such other deductions, charges or withholdings (collectively, the " Required Deductions "), the Borrowers will pay to the Lender an additional amount equal to the sum of (i) the aggregate amount of all Required Deductions, and (ii) the aggregate amount of United States, federal or state income taxes required to be paid by the Lender in respect of the Required Deductions.

ARTICLE IV SECURITY

4.1     Security.

(a)     The Obligations shall be secured by, and each Borrower hereby grants to the Lender, a security interest in, (i) such Borrower's Personal Property and (ii) the Project Fund. Each Borrower hereby represents, warrants, covenants and agrees that this Agreement constitutes a security agreement with respect to its Personal Property and the Project Fund, and the Lender shall have all of the rights and remedies of a secured party under the UCC, as well as all other rights and remedies available hereunder or at law or in equity or by judicial decision. Each Borrower hereby agrees, at such Borrower's cost and expense, to execute and deliver and, if appropriate, to file with the appropriate filing officer or office, such security agreements, financing statements, continuation statements or other instruments as the Lender may request or require in order to impose, perfect or continue the perfection of, or protect, the liens and security interests created by this Agreement. Each Borrower also authorizes the Lender, at any time and from time to time, to prepare and file any such financing statements, continuation statements or other instruments without the signature of such Borrower.

(b)     As further security for the Obligations, the Borrowers shall execute and deliver, or cause to be executed and delivered to Lender, the Mortgages.

ARTICLE V REPRESENTATIONS AND WARRANTIES

The Borrowers hereby jointly and severally represent and warrant to the Lender as follows:

Each Borrower is a corporation (or, in the case of Avalon Resort and Spa, a limited liability company), duly organized, validly existing and in good standing under the laws of the State of Ohio (or, in the case of Avalon CC at Sharon, the Commonwealth of Pennsylvania), and has the power and authority to own and operate its assets and to conduct its business as now or proposed to be carried on, and is duly qualified, licensed and in good standing to do business in all jurisdictions where its ownership of property or the nature of its business requires such qualification or licensing. Each Borrower is duly authorized to execute and deliver the Loan Documents to which it is a party, all necessary action to authorize the execution and delivery of the Loan Documents by each Borrower has been properly taken, and each Borrower is duly authorized to borrow under this Agreement and to perform all of the other terms and provisions of the Loan Documents.

The Borrowers have delivered or caused to be delivered to the Lender certain financial information and Financial Statements regarding the Borrowers and the Mortgaged Property. Such financial information and Financial Statements are true, complete and accurate in all material respects and fairly present the information they purport to present. Such Financial Statements have been prepared in accordance with GAAP subject in the case of interim statements to normal year-end adjustments and to any comments and notes acceptable to the Lender in its sole discretion.

Since the date of the financial information and the Financial Statements referred to in Section 5.2 above, no Borrower has suffered any damage, destruction or loss, and no event or condition has occurred or exists, which has resulted or could result in a Material Adverse Change as to any Borrower or the Mortgaged Property, or the ability of the Borrowers to perform any of their payment or other obligations under this Agreement or any other Loan Document.

Each Borrower has full power and authority to enter into the transactions provided for in this Agreement and has been duly authorized to do so as may be required by law, such Borrower's articles of incorporation, bylaws, certificate of organization, operating agreement and other organizational documents, and any agreements to which such Borrower is a party; and the Loan Documents, when executed and delivered by such Borrower, will constitute the legal, valid and binding obligations of such Borrower enforceable against such Borrower in accordance with their respective terms.

There does not exist any Event of Default or any default or violation by the Borrowers of or under any of the terms, conditions or obligations of: (a) any applicable articles or certificate of incorporation or organization, regulations, bylaws or operating agreement; (b) any material indenture, mortgage, deed of trust, franchise, permit, contract, agreement, or other instrument to which a Borrower is a party or by which it is bound; or (c) any law, regulation, ruling, order, injunction, decree, condition or other requirement applicable to or imposed upon a Borrower by any law, the action by any court or any governmental authority or agency; and the consummation of this Agreement and the transactions set forth herein will not result in any such default or violation.

There are no actions, suits, proceedings or governmental investigations pending or, to the knowledge of the Borrowers, threatened against any Borrower, which could result in a Material Adverse Change as to such Borrower or its Mortgaged Property, or the ability of such Borrower to perform any of its payment or other obligations under this Agreement or any other Loan Document, and there is no basis known to the Borrowers for any action, suit, proceeding or investigation which could result in such a Material Adverse Change.

Each Borrower owning any portion of the Mortgaged Property has clear and marketable fee simple title to the Mortgaged Property owned by such Borrower, free, clear and unencumbered, of record and in fact, except for and subject only to those matters permitted by the terms of the applicable Mortgage. Each Borrower has been granted all easements necessary or appropriate for use of the Mortgaged Property owned by such Borrower. The Land is a separately subdivided parcel or parcels under applicable laws regulating subdivision and land development. All streets necessary for the full utilization of the Land have been completed.

All utility services necessary for the use and operation of the Improvements for their intended purposes, including water, storm and sanitary sewer facilities, electric, gas, and telephone, are available at the boundaries of the Land and are installed and operating.

All surveys, plat plans and similar documents furnished by the Borrowers to the Lender are accurate and complete in all material respects as of their respective dates.

The development, construction, use and occupancy of the Improvements conform to all applicable laws, all existing governmental approvals and all covenants, conditions and restrictions contained in a deed, lease or other instrument or agreement covering or affecting all or any portion of the Mortgaged Property. All governmental approvals have been obtained and are valid and in full force and effect.

There are no contracts affecting or relating to the management or operation of the Improvements.

None of the Loan Documents contains or will contain any untrue statement of material fact or omits or will omit to state a material fact necessary in order to make the statements contained in this Agreement or the Loan Documents not misleading. There is no fact known to the Borrowers which materially adversely affects or, so far as the Borrowers can now reasonably foresee, might materially adversely affect the business, assets, operations, financial condition or results of operation of the Borrowers, taken as a whole, and which has not otherwise been fully set forth in this Agreement or in the Loan Documents.

To the best of the Borrowers' knowledge, information and belief, the Improvements and the Mortgaged Property are in compliance with the requirements of the Americans with Disabilities Act, and there are no pending or threatened claims or proceedings by the U.S. Department of Justice or any third parties against the Borrowers or any subsidiary of a Borrower arising from the Americans with Disabilities Act.

(a)        Neither the Borrowers, nor any affiliate of a Borrower, is in violation of any Anti-Terrorism Law or 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-Terrorism Law.

(b)        Neither the Borrowers nor any Guarantor, nor any Affiliate of a Borrower or any Guarantor, or respective agents acting or benefiting in any capacity in connection with the Loan or other transactions hereunder, is any of the following (each a " Blocked Person "):

(i)       A Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;

(ii)      A Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;

(iii)     A Person with which the Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;

(iv)    A Person that commits, threatens or conspires to commit or supports "terrorism" as defined in the Executive Order;

(v)     A Person that is named as a "specially designated national" on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list; or

(vi)     A Person who is affiliated or associated with a person or entity listed above.

(c)     Neither the Borrowers nor, to the knowledge of the Borrowers, any of their respective agents acting in any capacity in connection with the 2016 Loan or other transactions contemplated hereunder, (i) conduct any business or engage in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order.

The representations and warranties made herein and each and every other provision of this Agreement and the other Loan Documents shall survive the delivery thereof and shall be deemed to be made continuously until the 2016 Loan shall have been paid in full.

ARTICLE VI AFFIRMATIVE COVENANTS OF BORROWER

The Borrowers jointly and severally covenant and agree that until the Obligations are paid in full, the Borrowers shall comply with the following affirmative covenants:

The Borrowers shall use the proceeds of the 2016 Loan only to pay costs of the 2016 Project.

The Borrowers shall provide the Lender with satisfactory evidence of payment of all real estate taxes, assessments and other impositions with respect to the Mortgaged Property as set forth in the Mortgages.

Each Borrower shall make available for inspection by a duly authorized representative of the Lender any of such Borrower's books and records insofar as they relate to such Borrower or the Mortgaged Property, at such reasonable times as may be reasonably requested by the Lender upon reasonable prior written notice; and furnish to the Lender, upon reasonable notice to such Borrower by the Lender, such information regarding its business affairs and financial condition as the Lender may reasonably request.

The Borrowers shall reimburse the Lender promptly for all costs and expenses paid or incurred by the Lender in connection with the 2016 Loan, including the cost of title insurance premiums, charges and update fees, expenses and reasonable fees of the Lender's attorneys, survey costs, appraisal costs, flood search costs, environmental consultant fees, lending fees, recording fees and taxes, and all other expenses paid in connection with the preparation, closing and administration of the proceeds of the 2016 Loan, all of which the Lender is authorized to advance from the proceeds of the 2016 Loan or deduct from the proceeds of any disbursement of all or any portion of the 2016 Loan.

The Borrowers shall comply in all material respects with all applicable laws, covenants and restrictions now of record affecting all or any part of the Mortgaged Property, except for violations which are being contested by a Borrower in good faith by appropriate proceedings. Each Borrower shall comply in all material respects with all obligations under other contracts, instruments and agreements to which it is a party or to which any of its properties or assets may be subject, except for breaches which are being contested by a Borrower in good faith by appropriate proceedings. Each Borrower shall maintain all necessary licenses and permits needed to conduct its businesses, and shall notify the Lender in writing of any adverse findings of any licensing authority which cannot be corrected within thirty (30) days of such knowledge.

Each Borrower shall at its own cost and expense obtain or cause to be obtained insurance policies naming the Lender or its designee as additional insured, mortgagee and lender loss payee, as applicable, insuring against such risks, and in such amounts, as are customarily insured against by entities constructing, owning and operating facilities of like size and type, paying as the same become due and payable, all premiums in respect thereof, including but not necessarily limited to:

(a)     Fire insurance with Uniform Standard Extended Coverage Endorsements, and vandalism and malicious mischief insurance, at all times in an amount equal to at least 100% of the replacement cost of the Mortgaged Property owned by such Borrower;

(b)     Comprehensive general liability insurance, including builders' risk insurance during any construction period, with minimum limits of $1,000,000 per person and $1,000,000 per occurrence, and property damage coverage with a minimum limit of $1,000,000, with an aggregate limit of $3,000,000, together with umbrella liability coverage in the amount of $1,000,000 per person and $1,000,000 per occurrence;

(c)     Workers' compensation coverage and any other type of insurance required by the laws of the Commonwealth of Pennsylvania or the State of Ohio, as applicable;

(d)     Flood insurance, if any part of the Mortgaged Property owned by such Borrower is located in an "area of special flood hazard," as defined in the Flood Insurance Act of 1968, in an amount equal to the full and total replacement cost of the Improvements to the Mortgaged Property located within such area owned by such Borrower;

(e)     Business interruption insurance; and

(f)     Such other insurance as the Lender may reasonably require from time to time.

Each policy shall provide for written notice to the Lender, or its designee, at least thirty (30) days prior to any cancellation, nonrenewal or amendment of such insurance. Each Borrower shall provide the Lender with certificates from the insurers at such times as may be necessary (but in no event less than once each year) to show that insurance is being maintained as required by this Section 6.6.

Each Borrower will maintain and preserve all of its properties in good order and condition, ordinary wear and tear excepted, including but not limited to the Mortgaged Property and the Improvements owned by such Borrower, and shall not permit, commit or suffer any waste of any such properties, or use or permit to be used any properties for any unlawful purpose.

Each Borrower shall promptly notify the Lender in writing as soon as such Borrower has any knowledge of any threatened or pending litigation or governmental or regulatory proceeding against, or investigation of, such Borrower, the outcome of which may have a Material Adverse Effect on such Borrower or such Borrower's Mortgaged Property.

Each Borrower shall promptly notify the Lender in writing as soon as such Borrower has any knowledge of any judgments entered against it in excess of $50,000 and for which such Borrower is uninsured and has not obtained a stay of execution within sixty (60) days after the date of such judgment.

Each Borrower shall deliver or cause to be delivered to the Lender:

(a)     Copies of each annual report on SEC Form 10-K filed by the Borrowers with the Securities and Exchange Commission (the " SEC ") for a fiscal year, within five business days after the date of filing;

(b)     Copies of each quarterly report on SEC Form 10-Q filed by the Borrowers with the SEC for a fiscal quarter, within five business days after the date of filing;

(c)     Within 120 days after the end of each fiscal year of the Borrowers, evidence of the payment of all real estate taxes and assessments due and payable with respect to the Mortgaged Property owned by each Borrower and payment of all insurance premiums with respect to the insurance policies required by this Agreement; and

(d)     Such other information as may be reasonably requested by the Lender from time to time in order to enable the Lender to evaluate the financial condition and cash flow of the Borrowers and the Mortgaged Property.

The Borrower Consolidated Group shall maintain a combined Fixed Charge Coverage Ratio of at least 1.20, tested on an annual basis on December 31 of each year commencing with the fiscal year of the Borrower Consolidated Group ending December 31, 2017.

ARTICLE VII NEGATIVE COVENANTS OF BORROWERS

The Borrowers jointly and severally covenant and agree that until the Obligations are paid in full, the Borrowers shall comply with the following negative covenants:

Without the Lender's prior written consent, the Borrowers shall not cause any materials, equipment, personal property or fixtures of any kind to be purchased or acquired for installation or use in or about the Improvements under any conditional sales contract or security agreement or lease agreement.

None of the Borrowers shall liquidate, merge or consolidate with any person, firm, corporation or other entity, or sell, lease, transfer or otherwise dispose of all or any substantial part of its property or assets, whether now owned or hereafter acquired, without the Lender's prior written consent, provided that the Lender's consent shall not be required in the event of a merger or consolidation of the Borrowers with each other so long as such merger or consolidation does not involve any entity other than the Borrowers. Avalon Holdings shall not transfer its equity ownership of any other Borrower to any third party.

None of the Borrowers shall create, assume, incur or suffer to exist any mortgage, pledge, encumbrance, security interest, lien or charge of any kind upon any of its property, now owned or hereafter acquired, or acquire or agree to acquire any kind of property under conditional sales or other title retention agreements (other than those reflected in the Financial Statements); provided, however, that the foregoing restrictions shall not prevent a Borrower from:

(a)     Incurring liens for taxes, assessments or governmental charges or levies which shall not at the time be due and payable or can thereafter be paid without penalty or are being contested in good faith by appropriate proceedings diligently conducted and with respect to which it has created adequate reserves;

(b)     Making pledges or deposits to secure obligations under workers' compensation laws or similar legislation; or

(c)     Granting liens or security interests in favor of the Lender; or

(d)     Granting liens or security interests in the Line of Credit Collateral in favor of the Line of Credit Lender.

Without the prior written consent of the Lender, none of the Borrowers shall create, incur, guarantee, endorse (except endorsements in the course of collection), assume or suffer to exist any indebtedness, except (i) indebtedness to the Lender, (ii) open account trade debt incurred in the ordinary course of business and not past due, (iii) indebtedness of a Borrower existing on the Closing Date that has been disclosed by such Borrower to the Lender and is secured by assets or properties of such Borrower other than the Collateral owned by such Borrower, or (iv) indebtedness of a Borrower incurred after the Closing Date that is disclosed by such Borrower to the Lender at least ten (10) Business Days prior to the date of incurrence of such indebtedness and is secured by assets or properties of such Borrower other than the Collateral owned by such Borrower.

None of the Borrowers shall make acquisitions of all or substantially all of the equity, property or assets of any person, firm, corporation or other entity, or merge, consolidate or sell substantially all of its assets, without the prior written consent of the Lender, which shall not be unreasonably withheld, conditioned or delayed.

None of the Borrowers shall make or have outstanding any loans or advances to or otherwise extend credit to any Person (including, without limitation, loans or advances to officers, owners or affiliates), except in the ordinary course of business. None of the Borrowers shall guaranty the indebtedness of any Person.

Without the prior written consent of the Lender, which shall not be unreasonably withheld, conditioned or delayed, none of the Borrowers shall acquire, sell, lease, transfer or dispose of fixed assets during any calendar year, except in the ordinary course of business.

Without the prior written consent of the Lender, none of the Borrowers shall sell, lease, assign, transfer or otherwise dispose of, in whole or in part, the Collateral or any interest therein, including but not limited to any equity interest therein, as the case may be, provided that nothing in this Section shall prohibit a Borrower from selling any tangible Personal Property for its current market value, transferring title to and/or possession of any tangible Personal Property in exchange for a credit against the purchase of replacement property, or disposing of any tangible Personal Property which in such Borrower's reasonable judgment is obsolete, has reached the end of its useful life or has irrevocably ceased to function.

None of the Borrowers nor any of their respective affiliates and agents shall (i) conduct any business or engage in any transaction or dealing with any Blocked Person, including making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order, or (iii) 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 the Executive Order, the USA Patriot Act or any other Anti-Terrorism Law. The Borrowers shall deliver to the Lender any certification or other evidence requested from time to time by the Lender in its sole discretion, confirming the Borrowers' compliance with this Section.

ARTICLE VIII CONDITIONS OF CLOSING AND DISPOSITION OF NOTE PROCEEDS

The Lender shall not be obligated to make the 2016 Loan until the Borrowers, at their expense, shall have fulfilled, to the Lender's satisfaction, the following conditions:

(i)      Representations and Warranties . The representations and warranties of the Borrowers contained in Article 5 hereof shall be true and correct in all material respects.

(ii)      Authorizing Documents . Each Borrower shall have delivered to the Lender a certificate executed by an officer of such Borrower, dated the Closing Date, setting forth the company action taken by board of directors or members, as applicable, in connection with the 2016 Loan and the authorization of the execution, delivery and performance of the Loan Documents by such Borrower, certifying to copies of such Borrower's organizational documents as in effect on the Closing Date, and containing such other certifications as the Lender or its counsel shall deem appropriate.

(iii)      Good Standing Certificates . Each Borrower shall have delivered to the Lender a good standing certificate as to such Borrower issued as of a date not more than fifteen (15) days prior to the Closing Date by the applicable office of the state of its organization.

(iv)      Execution and Delivery of Loan Documents . The Loan Documents shall have been duly executed by the Borrowers and delivered to the Lender.

(v)      No Liens or Encumbrances . The Mortgaged Property shall be free and clear of all liens and encumbrances, other than those acceptable to the Lender or otherwise permitted by this Agreement.

(vi)     Environmental Reports . The Borrowers shall have provided to the Lender copies of all existing Phase I environmental reviews of the Mortgaged Property (" Environmental Reports "), which Environmental Reports shall be acceptable to the Lender and shall show the Mortgaged Property to be free from material environmental violations and liabilities, and completion satisfactory to the Lender of all actions, further reports and further investigations as may be recommended in any Environmental Report or otherwise reasonably required by the Lender based on such Environmental Report or other disclosures made by the Borrowers to the Lender relating to environmental matters.

(vii)      Transaction Costs and Expenses . On or before the Closing Date, all reimbursable costs and expenses of the Lender pursuant to the Loan Documents shall have been paid by the Borrowers to the Lender.

(viii)      No Damage or Taking . No portion of the Improvements shall have been damaged by fire or other casualty, and no condemnation or taking of the Mortgaged Property or the Improvements or any portion thereof shall be pending or threatened which materially impairs the Borrowers' ability to use the Improvements and the Mortgaged Property.

(ix)      No Default . No Event of Default and no Potential Event of Default shall have occurred and be continuing hereunder or under any of the other Loan Documents.

(x)      Legal Opinion . The Borrowers shall have furnished a favorable written opinion of counsel for the Borrowers, dated the Closing Date, satisfactory to the Lender and its counsel.

(xi)      Legal Matters . All legal matters incident or related to the 2016 Loan shall be in form and substance reasonably satisfactory to counsel for the Lender.

(xii)      Insurance Certificates . Each Borrower shall have delivered to the Lender a certified copy of all insurance policies, listing the Lender or its designee as additional insured, mortgagee and lender loss payee, as applicable, complying with the requirements of Section 6(f) hereof.

(xiii)      Title Insurance . Each Borrower shall have obtained one or more ALTA lender's title insurance policies for the Mortgaged Property owned by such Borrower from the Title Company, which policies shall provide for coverage in an aggregate amount of $12,000,000 and shall name the Lender or its designee as insured, and which shall insure the Lender's mortgage lien on fee simple title to the Mortgaged Property of such Borrower, without exception for filed or unfiled mechanics' liens or claims or for matters which an accurate survey would disclose, subject only to such exceptions as the Lender shall approve, with such endorsements thereto (including 100, 300, 710 and 1030).

(xiv)      Appraisals . Each Borrower shall have delivered to the Lender an appraisal (USPAP/FIRREA) of the Mortgaged Property owned by such Borrower based upon the fair market value of the Mortgaged Property owned by such Borrower, performed by an appraiser selected by or acceptable to the Lender, with all appraisals showing an aggregate appraised value of the Mortgaged Property of at least $36,370,000, and otherwise in form and substance acceptable to the Lender.

(xv)      UCC Searches . Each Borrower shall have delivered to the Lender such UCC searches of the State of Ohio or the Commonwealth of Pennsylvania, as applicable, as may be required by the Lender, evidencing the Lender's first lien priority in the Personal Property owned by such Borrower.

(xvi)      Leases . Each Borrower shall deliver to the Lender copies of all leases on the Mortgaged Property owned by such Borrower, including any lease extensions, in form and substance satisfactory to the Lender.

(xvii)      Licenses and Permits . Each Borrower shall have delivered to the Lender copies of all governmental licenses, permits and other regulatory approvals (including without limitation zoning, subdivision and related approvals and occupancy permits) necessary for conduct by such Borrower of its operations, and such Borrower shall not have received any notices of violation or revocation with respect thereto. In addition, each Borrower shall have delivered to the Lender evidence satisfactory to the Lender that each property comprising the Mortgaged Property of such Borrower has access to all required utilities.

(xviii)     Line of Credit; Subordination Agreement . The Borrowers shall have closed on the Line of Credit with the Line of Credit Lender concurrently with the closing of the 2016 Loan and the Lender and the Line of Credit Provider shall have executed and delivered the Subordination Agreement.

(xix)      Other Conditions . The Borrowers shall have complied with such other conditions as shall be reasonably required by the Lender or its counsel.

The proceeds of the 2016 Note shall be disbursed on the Closing Date and transferred by the Lender to the Title Company and applied as follows:     (1) $9,018,850 shall be applied to the refinancing of the Existing Line of Credit; (2) $76,379.28 shall be applied to payment of the transaction costs relating to the 2016 Loan; and (3) $2,904,770.72 shall be transferred to the bank or financial institution holding the Project Fund for deposit into the Project Fund. Amounts deposited in the Project Fund shall be disbursed by the Lender to the Borrowers and paid to the Borrowers or to appropriate designated payees solely for reimbursement for the payment of costs of the 2016 Project in accordance with this Section 8.2.

Each request for disbursement of proceeds of the 2016 Note hereunder is referred to hereinafter as a " Request " , and shall be made by Avalon Resorts and Clubs, on behalf of all of the Borrowers, pursuant to the form of Request for Disbursement attached as Exhibit B to this Agreement, which form shall be accompanied by all other items required by this Section 8.2.

(a)     Not less than ten (10) days prior to the date on which the Borrowers wish the Lender to disburse proceeds of the 2016 Note, Avalon Resorts and Clubs shall submit to the Lender a Request setting forth the total amount for which such disbursement is required, broken down by categories, together with receipted bills, bills, paid invoices, or other evidence reasonably satisfactory to the Lender supporting each item of cost covered by such Request (including a statement as to the retention amount, if any, applicable to such item of cost). The Lender shall not be required to make disbursements of proceeds of the 2016 Note more frequently than once each month.

(b)     The Lender shall disburse the amount requested by Avalon Resorts and Clubs in its Request by the later of (i) the date ten (10) days after receipt of the Request or (ii) the date five (5) days after the date upon which all conditions precedent to funding of such Request have been fulfilled. Each Request requested thereby shall constitute a certification by Avalon Resorts and Clubs that the representations and warranties contained herein are true and correct on the date of such Request and Avalon Resorts and Clubs hereby expressly acknowledges that the Lender will be specifically relying upon such certification in making any disbursement of proceeds of the 2016 Note pursuant to such Request.

(c)     Disbursements shall be credited to an account of the Borrowers designated in writing to the Lender, or, following the occurrence and during the continuance of an Event of Default, be paid by the Lender directly to the party or parties who have actually supplied labor, Materials or services in connection with the renovation and expansion of the Avalon Resort and Inn Facility or to the party or parties to whom payment of any other Project Costs or specified in the Request, either by separate check made payable to Person or by joint check made payable to Avalon Resorts and Clubs and such Person, as the Lender shall elect, in its sole discretion. No further direction or authorization for such direct payment shall be required, it being understood that any such payment shall be applied toward the satisfaction of the obligations of the Lender to fund disbursements hereunder and shall be deemed an advance evidenced by the 2016 Note and secured by the Loan Documents as fully as if made to Avalon Resorts and Clubs, regardless of the actual disposition thereof by the party or parties to whom such payment is made. The making of any disbursement by the Lender shall not be deemed an acceptance or approval by the Lender (for the benefit of Avalon Resorts and Clubs or any third party) of any work performed or   improvements constructed or Materials furnished or installed in connection with the renovation and expansion of the Avalon Resort and Inn Facility and shall not create any privity of contract between the Lender and any third party.

(d)     Notwithstanding any contrary provision of this Agreement, the Lender may make disbursements of proceeds of the 2016 Note at any time or from time to time, but shall be under no obligation to do so, (i) to satisfy any condition hereof or to cure any Event of Default or Potential Default, (ii) to pay interest on the 2016 Note (subject to the immediate preceding sentence), or (iii) to pay the reasonable fees and expenses of the Lender and counsel for the Lender. Any disbursements of proceeds of the 2016 Note made pursuant to this subsection shall be evidenced by the 2016 Note and secured by the Loan Documents as fully as if such disbursement had been made directly to or upon request of the Borrowers.

(e)     Each advance of proceeds of the 2016 Note shall be subject to the satisfaction by Avalon Resorts and Clubs of the conditions set forth in Section 8.1 hereof and to the satisfaction of the following terms and conditions:

(i)     The representations and warranties contained in Article V hereof or contained in any other Loan Documents shall be true and correct on and as of the date of such disbursement. By making a Request in accordance with this Section 8.2, the Borrowers shall be deemed to have certified to the Lender that all of the representations and warranties contained in Section 5 hereof and in each of the other Loan Documents are true and accurate on and as of the date of the disbursement with the same effect as though such representations and warranties had been made on and as of such date (except representations and warranties which relate solely to an earlier date or time, which representations and warranties shall be true and correct on and as of the specific dates or times referred to therein), and the Borrowers shall have performed and complied with all covenants and conditions hereof and thereof.

(ii)     On the date of such disbursement, no Event of Default and no Potential Default shall have occurred and be continuing or shall exist or shall occur and exist after giving effect to the disbursement to be made on such date.

(iii)     On the date of such disbursement, the Avalon Resort and Inn Facility shall not have been materially injured or damaged by fire or other casualty and remain unrestored, unless the proceeds of insurance are to be applied to restoration pursuant to the Mortgages.

(f)     The Lender shall make the final advance with respect to the 2016 Note only upon Request from the Borrowers, compliance with the applicable requirements of Section 8.2(a) through (e) above, and the Lender's receipt of the following: (i) copies of final lien releases from the general contractor and all subcontractors with respect to the work performed in connection with the renovation and expansion of the Avalon Resort and Inn Facility; (ii) satisfactory evidence from Avalon Resorts and Clubs that all occupancy permits and governmental approvals required with respect to the renovation and expansion of the Avalon Resort and Inn Facility have been received; (iii) a certificate of Avalon Resorts and Clubs certifying that completion of the renovation and expansion of the Avalon Resort and Inn Facility has occurred; and (iv) an endorsement to the Title Policy in form approved by the Lender insuring that no encroachments exist over any building line, right of way or property boundary lines.

ARTICLE IX DEFAULTS AND REMEDIES

The occurrence of any one or more of the following events (each, an " Event of Default ") shall constitute a default hereunder:

(a)     The Borrowers shall fail to comply with any covenant contained in this Agreement or any of the other Loan Documents which calls for the payment of money within ten

(10) calendar days of when such payment is due; or

(b)     If the Borrowers fail to keep, observe or perform any of the other undertakings, conditions, stipulations, agreements, covenants or obligations of the Borrowers as set forth in this Agreement, which do not have a specified grace or cure period, and continuance of such failure for thirty (30) days after the earlier of written notice from the Lender to the Borrowers or the date on which the Borrowers have knowledge that such failure has occurred, or such longer period to which the Lender may agree in the case of a default not curable by the exercise of due diligence within such thirty (30) day period, provided that the Borrowers shall have commenced to cure such default within such thirty (30) day period and shall complete such cure as quickly as reasonably possible with the exercise of due diligence; or

(c)     If any of the representations or warranties made by the Borrowers under this Agreement or under any of the other Loan Documents shall be untrue in any material respect; or

(d)     The Lender's security interest in any of the Collateral shall be or become unperfected, unless as a result of an error or omission on the part of the Lender, and such default is not cured within thirty (30) days; or

(e)     A Borrower shall (i) default (as principal or guarantor or other surety) in any payment of principal of or interest on any obligation (or set of related obligations) for borrowed money, beyond any period of grace or cure with respect to the payment or, if any obligation (or set of related obligations) is payable or repayable on demand, fails to pay or repay such obligation or obligations when demanded, in each case where such payment default has a Material Adverse Effect upon the Borrower or (ii) default in the observance of any other covenant, term or condition contained in any agreement or instrument by which an obligation (or set of related obligations) is or are created, secured or evidenced, if the effect of such default is to cause, or commit the holder or holders of such obligation or obligations (or a trustee or agent on behalf of such holder or holders) to cause, all or part of such obligation or obligations to become due before its or their otherwise stated maturity, and the same shall continue for the later of thirty (30) calendar days or until all cure periods have expired, in each case, where such default will have a Material Adverse Effect upon the Borrower; or

(f)     One or more judgments for the payment of money in the aggregate amount of $50,000 shall have been entered against a Borrower and such Borrower has failed to discharge or stay the same; or

(g)     The occurrence of any default or Event of Default under any of the Loan Documents or under any other instruments relating thereto delivered by the Borrowers to the Lender under this Agreement, subject to any applicable grace and cure periods; or

(h)     A writ or warrant of attachment, garnishment, execution, distraint or similar process shall have been issued against a Borrower or any of its properties, and such Borrower has failed to discharge or stay the same within sixty (60) calendar days after such issuance; or

(i)      The occurrence or existence of any of the following events or conditions:

(i)     An event causing an involuntary termination with respect to a Benefit Plan shall occur;

(ii)     Any Person shall engage in any Prohibited Transaction or Reportable Event involving any Benefit Plan,

(iii)     An accumulated funding deficiency, whether or not waived, shall exist with respect to any Benefit Plan,

(iv)     A Borrower or any ERISA Affiliate shall be in "Default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments due to a multi-employer Plan resulting from a Borrower's or any ERISA Affiliate's, complete or partial withdrawal (as described in Section 4203 or 4205 of ERISA) from such Benefit Plan, or

(v)     Any other event or condition shall occur or exist with respect to a single employer Benefit Plan;

provided , however , that no such event or condition shall constitute an Event of Default if it, together with all other events or conditions at the time existing, would not subject a Borrower to any tax, penalty, debt or liability which, alone or in the aggregate, would have a Material Adverse Effect as to such Borrower or the Mortgaged Property owned by such Borrower, or the ability of such Borrower to perform any of its payment or other obligations under this Agreement or any other Loan Document; or

(j)      A proceeding shall be instituted in respect of a Borrower:

(i)     seeking to have an order for relief entered in respect of such Borrower, or seeking a declaration or entailing a finding that such Borrower is insolvent or a similar declaration or finding, or seeking dissolution, winding-up, charter revocation or forfeiture, liquidation, reorganization, arrangement, adjustment, composition or other similar relief with respect to such Borrower, its assets or debts under any Law relating to bankruptcy, insolvency, relief of debtors or protection of creditors, termination of legal entities or any other similar Law now or hereinafter in effect which shall not have been dismissed or stayed within sixty (60) calendar days after such proceedings were instituted; or

(ii)     seeking appointment of a receiver, trustee, custodian, liquidator, assignee, sequestrator or other similar official for such Borrower or for all or any substantial part of its property which shall not have been dismissed or stayed within sixty

(60) calendar days after such proceedings were instituted; or

(k)     A Borrower shall become insolvent, shall become generally unable to pay its debts as they become due, shall voluntarily suspend transaction of its business, shall make a general assignment for the benefit of creditors, shall institute a proceeding described in Section 9.1(j)(i) hereof or shall consent to any order for relief, declaration, finding or relief described in   Section 9.1(j) hereof, shall institute a proceeding described in Section 9.1(j)(ii) hereof or shall consent to the appointment or to the taking of possession by any such official of all or any substantial part of its property whether or not any proceeding is instituted, dissolve, wind-up or liquidate itself or any substantial part of its property, or shall take any action in furtherance of any of the foregoing.

Upon the occurrence of any one or more of the Events of Default, and the continuance thereof, at the Lender's option, all obligations on the Lender's part to make the 2016 Loan, or to make any further disbursements thereunder shall cease and terminate, and the 2016 Loan and all sums then or thereafter due under any and all of the Loan Documents shall thereupon become immediately due and payable. Upon the occurrence of an Event of Default and continuance thereof, the Lender may enforce any or all of its rights hereunder or under any other Loan Documents, or at law or in equity.

If the unpaid principal amount of the 2016 Note, interest accrued on the unpaid principal amount or other amount owing by the Borrowers under this Agreement, the 2016 Note or the other Loan Documents shall have become due and payable (at maturity, by acceleration or otherwise), the Lender, any assignee of the Lender and the holder of any participation in the 2016 Loan, will each have the right, in addition to all other rights and remedies available to it, without notice to the Borrowers, to set-off against and to appropriate and apply to such due and payable amounts any debt owing to, and any other funds held in any manner for the account of, the Borrowers by the Lender or by such holder including, without limitation, all funds in all deposit accounts (whether time or demand, general or special, provisionally credited or finally credited, or otherwise) now or in the future maintained by the Borrowers with the Lender or such holder. The Borrowers consent to and confirm the foregoing arrangements and confirm the Lender's rights, such assignee's rights and such holder's rights of banker's lien and set-off. Nothing in this Agreement will be deemed a waiver or prohibition of or restriction on the Lender's rights, such assignee's rights or any such holder's rights of banker's lien or set-off.

ARTICLE X MISCELLANEOUS

All notices, demands, requests, consents, approvals and other communications required or permitted hereunder must be in writing and will be effective upon receipt. Such notices and other communications may be hand-delivered, sent by facsimile transmission with confirmation of delivery and a copy sent by first-class mail, or sent by nationally recognized overnight courier service, to a party's address set forth below or to such other address as any party may give to the other in writing for such purpose:

To the Lender:                                      Laurel Capital Corporation

6600 Brooktree Court, Suite 3000

Wexford, PA 15090-0839

Attn.: William C. Zopf, Jr.

With a copy to:

Campbell & Levine, LLC

1700 Grant Building

Pittsburgh, PA 15219-2399

Attn: Christopher J. Rayl, Esquire

To the Borrowers:                               Avalon Holdings Corporation

One American Way

Warren, OH 44484

Attn: Bryan P. Saksa

Fax No.: 330-856-8480

Phone No.: 330-856-8853

With a copy to:

Brouse McDowell

6550 Seville Drive, Suite B

Canfield Ohio 44406

Attn: Jay M. Skolnick

Fax No.: 330-533-6198.

Phone No.: 330-533-6195

No delay or omission on the Lender's part to exercise any right or power arising hereunder will impair any such right or power or be considered a waiver of any such right or power, nor will the Lender's action or inaction impair any such right or power. The Lender's rights and remedies hereunder are cumulative and not exclusive of any other rights or remedies which the Lender may have under other agreements, at law or in equity.

In case any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

No modification, amendment or waiver of any provision of this Agreement nor consent to any departure by the Borrowers therefrom will be effective unless made in a writing signed by the Lender, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on the Borrowers in any case will entitle the Borrowers to any other or further notice or demand in the same, similar or other circumstance.

This Agreement (including the documents and instruments referred to herein) constitutes the entire agreement and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof.

This Agreement may be signed in any number of counterpart copies and by the parties hereto on separate counterparts, but all such copies shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart. Any party so executing this Agreement by facsimile transmission shall promptly deliver a manually executed counterpart, provided that any failure to do so shall not affect the validity of the counterpart executed by facsimile transmission.

This Agreement will be binding upon and inure to the benefit of the Borrowers and the Lender and their respective successors and assigns; provided, however, that the Borrowers may not assign this Agreement in whole or in part without the Lender's prior written consent and the Lender at any time may assign this Agreement in whole or in part.

In this Agreement, unless the Lender and the Borrowers otherwise agree in writing, the singular includes the plural and the plural the singular; references to statutes are to be construed as including all statutory provisions consolidating, amending or replacing the statute referred to; the word "or" shall be deemed to include "and/or", the words "including", "includes" and "include" shall be deemed to be followed by the words "without limitation"; references to articles, sections (or subdivisions of sections) or exhibits are to those of this Agreement unless otherwise indicated; and references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications to such instruments, but only to the extent such amendments and other modifications are not prohibited by the terms of this Agreement. Section headings in this Agreement are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. Unless otherwise specified in this Agreement, all accounting terms shall be interpreted and all accounting determinations shall be made in accordance with GAAP. If this Agreement is executed by more than one party as Borrower, the obligations of such persons or entities will be joint and several.

The Borrowers hereby relieve and discharge the Lender from any and all liability and responsibility whatsoever, except for Lender's gross negligence, arising out of the disbursement of proceeds of the 2016 Loan hereunder and agree and acknowledge that the Lender does not assume any responsibility whatsoever for the method of disbursement, the application or use of proceeds of the 2016 Loan disbursed hereunder or as to any liens or claims whatsoever which might attach to or be filed against the Mortgaged Property.

The Borrowers jointly and severally agree to indemnify each of the Lender, its directors, officers and employees and each legal entity, if any, which controls the Lender (collectively, the " Indemnified Parties ") and to hold each Indemnified Party harmless from and against any and all claims, damages, losses, liabilities and expenses (including all fees and charges of internal or external counsel with whom any Indemnified Party may consult and all expenses of litigation or preparation therefor, at trial and on appeal) which any Indemnified Party may incur or which may be asserted against any Indemnified Party in connection with or arising out of the matters referred to in this Agreement or in the other Loan Documents, (including, but not limited to, actions taken by Lender to amend or cancel any funds transfer instructions or any decision by Lender to effect or not to effect a transfer as provided in this Agreement, or any other action taken by Lender in good faith pursuant to its responsibilities under this Agreement) by any person, entity or governmental authority (including any person or entity claiming derivatively on behalf of the Borrowers), whether (a) arising from or incurred in connection with any breach of a representation, warranty or covenant by the Borrowers, or (b) arising out of or resulting from any suit, action, claim, proceeding or governmental investigation, pending or threatened, whether based on statute, regulation or order, or tort, or contract or otherwise, before any court or governmental authority, which arises out of or relates to this Agreement, any other Loan Document, or the use of the proceeds of the 2016 Loan; provided, however, that the foregoing indemnity agreement shall not apply to claims, damages, losses, liabilities and expenses solely attributable to an Indemnified Party's gross negligence or willful misconduct. In no event shall Lender be responsible for any loss, claim, liability, damage, or other amount arising in any way, directly or indirectly, from any error, failure, or delay in the performance of any of the Lender's obligations under this Agreement caused by natural disaster, fire, war, strike, civil unrest, error in or inoperability of communication equipment or lines, or any other circumstances beyond the reasonable control of the Lender. The indemnity agreement contained in this section shall survive the termination of this Agreement, payment of any Loan and assignment of any rights hereunder. The Borrowers may participate at their expense in the defense of any such action or claim.

At any time, without any notice to the Borrowers, the Lender may sell, assign, transfer, negotiate, grant participations in, or otherwise dispose of all or any part of the Lender's interest in the 2016 Loan. The Borrowers hereby authorize the Lender to provide, without any notice to the Borrowers, any information concerning the Borrowers, including information pertaining to any of the Borrowers' or financial condition, business operations or general creditworthiness, to any institutional provider of funds which may succeed to or participate in all or any part of the Lender's interest in the 2016 Loan.

This Agreement has been delivered to and accepted by the Lender and will be deemed to be made in Pennsylvania. THIS AGREEMENT WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA. The Borrowers hereby irrevocably consent to the exclusive jurisdiction of any state or federal court in Allegheny County, Pennsylvania, provided that nothing contained in this Agreement will prevent the Lender from bringing any action, enforcing any award or judgment or exercising any rights against the Borrowers individually, against any security or against any property of the Borrowers within any other county, state or other foreign or domestic jurisdiction. The Lender and the Borrowers agree that the venue provided above is the most convenient forum for both the Lender and the Borrowers. The Borrowers waive any objection to venue and any objection based on a more convenient forum in any action instituted under this Agreement.

EACH OF THE BORROWERS AND THE LENDER IRREVOCABLY WAIVES ANY AND ALL RIGHT IT OR THEY MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. EACH OF THE BORROWERS AND THE LENDER ACKNOWLEDGE THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.

This Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and their respective heirs, executors, legal personal representatives, successors and permitted assigns.

Each of the Borrowers acknowledge that it has read and understands all the provisions of this Agreement, including the waiver of jury trial, and has been advised by counsel as necessary or appropriate.

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[Signature Page to Loan and Security Agreement]

WITNESS the due execution of this Loan and Security Agreement as a document under seal, as of the date first written above.

EXHIBIT A

Form of 2016 Note

EXHIBIT B

Request for Disbursement

Project known as: Avalon 2016 Project

Ladies and Gentlemen:

In accordance with the terms of the above-referenced Agreement, you are hereby authorized and requested to make disbursement of proceeds of the Loan from the Project Fund in the amount shown on Schedule 1 hereto for costs incurred in connection with the renovation and expansion of the Avalon Resort and Inn Facility (" Facility ") from which funds are requested to pay each cost item listed on Schedule 1. Attached hereto are invoices, lien releases and waivers supporting the disbursement requested. All capitalized terms herein have the meaning ascribed to them in the Agreement.

The undersigned hereby certifies, on behalf of all of the Borrowers, that:

AMOUNT:               $                           

OR

AMOUNT:             $                            

	Wired to Bank:
	ABA Routing:
	Further Credit to DDA:
	Account Name:
	Reference:

 

[Remainder of page intentionally left blank]

  [Signature page to Request for Disbursement No       dated       ]

Schedule 1 to Request for Disbursement No.

Exhibit 10.2

MORTGAGE NOTE

FOR VALUE RECEIVED , AVALON HOLDINGS CORPORATION , an Ohio corporation (" Avalon Holdings "), AVALON RESORTS AND CLUBS, INC., an Ohio corporation (" Avalon Resorts and Clubs "), AVALON CLUBS, INC., an Ohio corporation (" Avalon Clubs "), AVALON RESORTS, INC., an Ohio corporation (" Avalon Resorts "), AVALON GOLF AND COUNTRY CLUB, INC., an Ohio corporation (" Avalon Golf and CC "), AVALON LAKES GOLF, INC., an Ohio corporation (" Avalon Lakes Golf "), AVALON COUNTRY CLUB AT SHARON, INC., a Pennsylvania corporation (" Avalon CC at Sharon "), AVALON RESORT AND SPA, LLC, an Ohio limited liability company (" Avalon Resort and Spa "), THE HAVANA CIGAR SHOP, INC., an Ohio corporation (" Havana "), AVALON TRAVEL, INC. an Ohio corporation (" Avalon Travel "), and TBG, INC., an Ohio corporation (" TBG " and, together with Avalon Holdings, Avalon Resorts and Clubs, Avalon Clubs, Avalon Golf and CC, Avalon Lakes Golf, Avalon CC at Sharon, Avalon Resort and Spa, Havana and Avalon Travel, the " Borrower s "), jointly and severally promise to pay to the order of LAUREL CAPITAL CORPORATION (the " Lender "), in lawful money of the United States of America in immediately available funds at its offices located at 6600 Brooktree Court, Suite 3000, Wexford, PA 15090-0839, or at such other location as the Lender may designate from time to time, the principal sum of Twelve Million and no/100 Dollars ($ 12,000,000 .00) , together with interest accruing on the outstanding principal balance from the date hereof (the " Closing Date "), as provided herein. Capitalized terms used, but not defined, herein shall have the meanings assigned to such terms in this Loan and Security Agreement of even date herewith among the Borrowers and the Lender (the " Loan Agreement ").

1.       Interest Rate . Amounts outstanding under this Note will bear interest at the Applicable Rate (as defined below) in effect from time to time. Interest on this Note and any unpaid fees and other sums payable hereunder shall be calculated on the basis of a 360 day year consisting of 12 thirty day months. As used herein, the following capitalized terms shall have the following meanings:

" Applicable Rate " means:

(a)      For the period from the Closing Date through the date immediately preceding the Reset Date, 5.35% per annum; and (ii); and

(b)      For the period from the Reset Date through the Maturity Date, the greater of (x) 5.35% per annum and (y) the sum of the Index Rate on the date two (2) Business Days prior to the Reset Date and 3.95%, provided that the Applicable Rate shall in no event exceed 7.50% per annum.

" Index Rate " means the 5 Year Interest Rate Swap rate, as published by Intercontinental Exchange (ICE) Benchmark Administration. If the Index Rate is discontinued or is no longer published as of any Reset Date, then the Lender shall select an index or statistic which most closely approximates the discontinued or unpublished index and such index or statistic shall replace such discontinued or unpublished index for all purposes hereunder.

" Interest Payment Date " means the twentieth (20 ^th ) day of each calendar month commencing January 20, 2017 and the Maturity Date.

" Maturity Date " means December 20, 2026.

" Reset Date " means the fifth (5 ^th ) anniversary of the Closing Date.

2.       Payment Terms . The Borrowers hereby jointly and severally covenant and agree to repay this Note as follows:

(a)      Principal and interest on this Note shall be due and payable as follows: (i) one hundred nineteen (119) equal monthly payments of principal and interest based on a fifteen (15) year amortization on each Interest Payment Date commencing January 20, 2017 and ending November 20, 2026; followed by (iii) a final payment on the Maturity Date equal to the remaining outstanding principal of this Note plus accrued unpaid interest and fees thereon.

(b)      If any payment under this Note shall become due on a Saturday, Sunday or public holiday under the laws of the Commonwealth of Pennsylvania, such payment shall be made on the next succeeding business day and such extension of time shall be included in computing interest in connection with such payment. 'Payments received will be applied to charges, fees and expenses (including attorneys' fees), accrued interest and principal in any order the Lender may choose, in its sole discretion.

3.       Late Payments; Default Rate . If the Borrowers fail to make any payment of principal, interest or other amount coming due pursuant to the provisions of this Note within ten (10) calendar days of the date due and payable, the Borrowers also shall pay to the Lender a late charge equal to five percent (5.00%) of any overdue installment (the " Late Charge "). The minimum Late Charge amount is Twenty-Five and 00/100 Dollars ($25.00). Any Late Charge will be immediately due and payable. Such ten-day period shall not be construed in any way to extend the due date of any such payment. Upon maturity, whether by acceleration, demand or otherwise, and at the Lender's option upon the occurrence of any Event of Default (as hereinafter defined) and during the continuance thereof, subject to all applicable cure and grace periods, this Note shall bear interest at a rate per annum which shall be five percentage points (5.00%) in excess of the interest rate in effect from time to time under this Note but not more than the maximum rate allowed by law (the " Default Rate "). The Default Rate shall continue to apply whether or not judgment shall be entered on this Note.

4.       Prepayment .

(a)     Provided that no Event of Default has occurred or is continuing, this Note shall be subject to prepayment at the option of the Borrowers, upon at least fifteen (15) days prior written notice to the Lender, in whole or in part on any date upon payment of the principal amount of this Note to be prepaid plus accrued unpaid interest thereon to the prepayment date (and, in the case of a prepayment in whole of this Note, any other sums then due and payable under this Note), plus a prepayment penalty (" Prepayment Penalty ") equal to a percentage of the principal amount being prepaid, with the percentage determined based on the date of prepayment as set forth in the following table:

(b)     Any prepayments shall be applied against scheduled installment payments due on this Note in inverse order beginning with the final scheduled installment payment.

5.      Other Loan Documents . This Note is issued in connection with, among other things, the Loan Agreement, the Mortgages (as defined in the Loan Agreement), and the other agreements and documents executed in connection therewith or referred to therein (collectively, the " Loan Documents "), the terms of which are incorporated herein by reference.

6.       Events of Default . In case any Event of Default (as defined in the Loan Agreement) occurs and is continuing, the principal amount of this Note together with accrued interest may become or be declared immediately due and payable in the manner and with the effect provided in the Loan Agreement.

7.       Power to Confess Judgment . AFTER THE OCCURRENCE OF ANY EVENT OF DEFAULT HEREUNDER AND DURING THE CONTINUANCE THEREOF, EACH BORROWER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR THE PROTHONOTARY OF CLERK OF ANY COURT IN THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, TO APPEAR AT ANY TIME FOR SUCH BORROWER AND, WITH OR WITHOUT COMPLAINT FILED, AS OF ANY TERM, CONFESS OR ENTER JUDGMENT AGAINST such Borrower FOR THE ENTIRE PRINCIPAL BALANCE OF THIS NOTE AND ALL ACCRUED INTEREST, TOGETHER WITH COSTS OF SUIT, AND A REASONABLE ATTORNEY'S FEES FOR COLLECTION, BUT IN ANY EVENT NOT LESS THAN FIVE HUNDRED DOLLARS ($500); AND FOR SO DOING, THIS NOTE OR A COPY OF THIS NOTE VERIFIED BY AFFIDAVIT SHALL BE SUFFICIENT WARRANT. THE AUTHORITY GRANTED IN THIS NOTE TO CONFESS JUDGMENT AGAINST A BORROWER SHALL NOT BE EXHAUSTED BY ANY EXERCISE OF THAT AUTHORITY, BUT SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL PAYMENT IN FULL OF ALL AMOUNTS DUE UNDER THIS NOTE.

8.       Right of Setoff . In addition to all liens upon and rights of setoff against the Borrowers' money, securities or other property given to the Lender by law, the Lender shall have, with respect to the Borrowers' obligations to the Lender under this Note and to the extent permitted by law, a contractual possessory security interest in and a contractual right of setoff against, and each Borrower hereby assigns, conveys, delivers, pledges and transfers to the Lender all of the Borrowers' right, title and interest in and to, all of the Borrowers' deposits, moneys, securities and other property now or hereafter in the possession of or on deposit with, or in transit to, the Lender or any other direct or indirect subsidiary of the Lender, whether held in a general or special account or deposit, whether held jointly with someone else, or whether held for safekeeping or otherwise, excluding, however, all trust accounts. Every such security interest and right of setoff may be exercised without demand upon or notice to the Borrowers. Every such right of setoff shall be deemed to have been exercised immediately upon the occurrence of an Event of Default hereunder without any action of the Lender, although the Lender may enter such setoff on its books and records at a later time.

9.      Miscellaneous . All notices, demands, requests, consents, approvals and other communications required or permitted hereunder shall be given in accordance with the notice provisions set forth in the Loan Agreement. No delay or omission on the Lender's part to exercise any right or power arising hereunder will impair any such right or power or be considered a waiver of any such right or power, nor will the Lender's action or inaction impair any such right or power. No modification, amendment or waiver of any provision of this Note nor consent to any departure by the Borrowers therefrom will be effective unless made in a writing signed by the Lender. The Borrowers jointly and severally agree to pay on demand, to the extent permitted by law, all costs and expenses incurred by the Lender in the enforcement of its rights in this Note and in any security therefor, including, without limitation, reasonable fees and expenses of the Lender's counsel. If any provision of this Note is found to be invalid by a court, all the other provisions of this Note will remain in full force and effect. The Borrowers and all other makers and endorsers of this Note hereby forever waive presentment, protest, notice of dishonor and notice of non-payment. The Borrowers also waive all defenses based on suretyship or impairment of collateral. If this Note is executed by more than one Borrower, the obligations of such persons or entities hereunder will be joint and several. This Note shall bind the Borrowers and their respective successors and assigns, and the benefits hereof shall inure to the benefit of the Lender and its successors and assigns; provided, however, that the Borrowers may not assign this Note in whole or in part without the Lender's written consent and the Lender at any time may assign this Note in whole or in part at any time.

This Note has been delivered to and accepted by the Lender and will be deemed to be made in the Commonwealth of Pennsylvania. THIS NOTE WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE LENDER AND THE BORROWERS DETERMINED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA. The Borrowers hereby irrevocably consent to the jurisdiction of any state or federal court in the county or judicial district where the Lender's office indicated above is located; provided that nothing contained in this Note will prevent the Lender from bringing any action, enforcing any award or judgment or exercising any rights against the Borrowers, against any security or against any property of the Borrowers within the other county, state or other foreign or domestic jurisdiction. The Borrowers acknowledge and agree that the venue provided above is the most convenient forum for both the Lender and the Borrowers. The Borrowers waive any objection to venue and any objection based on a more convenient forum in any action instituted under this Note.

10.       WAIVER OF JURY TRIAL . The BorrowerS irrevocably waive any and all rights the BorrowerS may have to a trial by jury in any action, proceeding or claim of any nature relating to this Note, any documents executed in connection with this Note or any transaction contemplated in any of such documents. The BorrowerS acknowledge that the foregoing waiver is knowing and voluntary.

The Borrowers acknowledge that they have read and understand all the provisions of this Note, including the waiver of jury trial, and have been advised by counsel as necessary or appropriate.

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[Signature Page to Mortgage Note ]

WITNESS the due execution hereof as a document under seal, as of the date first written above, with the intent to be legally bound hereby.

Exhibit 10.3

OPEN-END MORTGAGE, ASSIGNMENT OF LEASES,

SECURITY AGREEMENT AND FIXTURE FILING

AVALON HOLDINGS CORPORATION ,

MORTGAGOR ,

AND

LAUREL CAPITAL CORPORATION ,

MORTGAGEE

Dated as of December 1, 2016

and Effective as of December 20, 2016

OPEN-END MORTGAGE , ASSIGNMENT OF LEASES,

SECURITY AGREEMENT AND FIXTURE FILING

THIS MORTGAGE SECURES FUTURE ADVANCES

(All notices to be given to Mortgagee pursuant to

53 O.R.C. §5301.232 shall be given as set forth in

Section 9.1 of this Mortgage.)

This Open-End Mortgage, Assignment of Leases, Security Agreement and Fixture Filing (this " Mortgage ") dated as of December 1, 2016 and effective as of December 20, 2016 (the " Effective Date ") by AVALON HOLDINGS CORPORATION , an Ohio corporation, with an address at One American Way, Warren, OH 44484 (" Mortgagor "), in favor of LAUREL CAPITAL CORPORATION , with an address at 6600 Brooktree Court, Suite 3000, Wexford, PA 15090-0839 (" Mortgagee ").

This Mortgage is an "Open-End Mortgage" as set forth in 53 O.R.C. §5301.232 and secures obligations up to a maximum amount of indebtedness outstanding at any time equal to double the face amount of the Note (as hereinafter defined), plus accrued and unpaid interest, including, but not limited to, advances for the payment of taxes and municipal assessments, maintenance charges, insurance premiums, costs incurred for the protection of the Mortgaged Property or the lien of this Mortgage, expenses incurred by Mortgagee by reason of default by Mortgagor under this Mortgage and advances for construction, alteration or renovation on the Mortgaged Property or for any other purpose, together with all other sums due hereunder or secured hereby.

WITNESSETH:

WHEREAS, Mortgagor is the owner of certain real estate situate in the City of Warren, Trumbull County, Ohio, as more fully described in Exhibit A attached hereto and made a part hereof (the " Premises "), together with the improvements now or hereafter erected thereon.

NOW, THEREFORE, for the purpose of securing the payment and performance of the following obligations (collectively called the " Secured Obligations "):

(A)     All indebtedness, together with all interest thereon, evidenced by that certain Mortgage Note dated the Effective Date from Mortgagor, Avalon Country Club at Sharon, Inc. , Avalon Resorts and Clubs, Inc., Avalon Clubs, Inc., Avalon Resorts, Inc., Avalon Golf and Country Club, Inc., Avalon Lakes Golf, Inc., Avalon Resort and Spa, LLC, The Havana Cigar Shop, Inc., Avalon Travel, Inc. and TBG, Inc. (together with Mortgagor, the " Borrower s ") to Mortgagee in the principal face amount of $12,000,000 (as the same may be amended, supplemented or replaced from time to time, the " Note "), the provisions of the Note being incorporated herein by this reference, and all other Obligations (as such term is defined in the Loan Agreement dated the effective date hereof among the Borrowers and Mortgagee (as the same may be amended, supplemented or replaced from time to time, the " Loan Agreement "));

(B)     Any sums advanced by Mortgagee or which may otherwise become due pursuant to the provisions of the Note, this Mortgage or pursuant to any other document or instrument at any time delivered to Mortgagee to evidence or secure any of the Secured Obligations or which otherwise relate to any of the Secured Obligations or the Loan Documents (as such term is defined in the Loan Agreement).

Mortgagor, for good and valuable consideration, receipt of which is hereby acknowledged, and intending to be legally bound hereby, does hereby give, grant, bargain, sell, convey, mortgage, pledge and confirm unto Mortgagee and does agree that Mortgagee shall have a mortgage and security interest in, and lien upon, the following described property (collectively, the " Mortgaged Property "), now owned or held or hereafter acquired, to wit:

(i)     All of Mortgagor's estate in the Premises, together with all of the easements, rights of way, privileges, liberties, hereditaments, rights and appurtenances thereunto belonging and all of the estate, right, title, interest, claim and demand whatsoever of Mortgagor therein and in the public streets and ways adjacent thereto, either in law or in equity, in possession or expectancy (collectively, the " Realty ");

(ii)     The structures and buildings, and all additions and improvements thereto, now or hereafter erected upon the Realty (including all Equipment, as hereinafter defined, constituting fixtures) (collectively, the " Improvements ");

(iii)     All present and future leases, subleases licenses and concessions or grants of any possessory interest covering all or any portion of the Mortgaged Property whether written or oral; all agreements for use, occupancy or enjoyment of any portion of the Mortgaged Property and any leases, lettings or agreements (including rights in respect of tenants holding over and tenancies following attornment) of all or any part of the Mortgaged Property; any and all guarantees of the performance of any lessee under any lease; and any extensions, amendments, modifications, substitutions or supplements to any lease (collectively, the " Leases " or singularly, a " Lease "), and including further, the right to receive and collect the rents (the " Rents ") thereunder and all guaranties thereof;

(iv)     All machinery, apparatus, equipment, fittings, appliances and fixtures of every kind and nature whatsoever, and regardless of whether the same may now or hereafter be attached or affixed to the Realty or the Improvements (collectively, the " Equipment ");

TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee, its successors and assigns, to its own use forever in accordance with the provisions hereof,

Article 1

Representations and Warranties

Mortgagor represents and warrants to Mortgagee as follows:

1.1       Warranty of Title . Mortgagor has good and marketable title to an estate in fee simple absolute in the Realty and Improvements and has all right, title and interest in all other property constituting a part of the Mortgaged Property, in each case free and clear of all liens and encumbrances, except as set forth on Schedule 1.1 hereto or as may otherwise be approved in writing by Mortgagee. This Mortgage is a valid and enforceable first lien on the Mortgaged Property, and Mortgagee shall, subject to Mortgagor's right of possession prior to an Event of Default, quietly enjoy and possess the Mortgaged Property. Mortgagor shall preserve such title as it warrants herein and the validity and priority of the lien hereof and shall forever warrant and defend the same to Mortgagee against the claims of all persons and parties whomsoever.

Article 2

Affirmative Covenants

2.1      Payment and Performance of Secured Obligations . Mortgagor shall pay and perform all Secured Obligations when due as provided in the Loan Documents.

2.2      Legal Requirements . Mortgagor shall promptly comply with and conform to all present and future laws, statutes, codes, ordinances, orders and regulations and all covenants, restrictions and conditions which may be applicable to Mortgagor or to any of the Mortgaged Property where the failure to do so would have a material adverse effect upon the Mortgagor or the Mortgaged Property (collectively, the " Legal Requirements ").

2.3        Impositions .

(a)      Before interest or penalties are due thereon and otherwise when due, Mortgagor shall pay all taxes of every kind and nature, all charges for any easement or agreement maintained for the benefit of any of the Mortgaged Property, all general and special assessments (including, without limitation, any condominium or planned unit development assessments, if any), levies, permits, inspection and license fees, all water and sewer rents and charges, and all other charges and liens, whether of a like or different nature, imposed upon or assessed against Mortgagor or any of the Mortgaged Property. The obligations referred to in this Section are hereinafter collectively referred to as the " Impositions ." Promptly upon request, Mortgagor shall deliver to Mortgagee evidence acceptable to Mortgagee of such payment.

(b)      If Mortgagor shall fail to do so after written demand from Mortgagee, Mortgagee may pay or perform any Imposition not paid by Mortgagor within 30 days of the due date and add the amount so paid or the cost incurred to the Secured Obligations, and all such amounts shall on demand be due and payable.

2.4       Maintenance and Impairment of Security . Mortgagor shall keep the Mortgaged Property in such condition, order and state of repair as is necessary for the operation of Mortgagor's business in the ordinary course as currently being conducted and will make or cause to be made, as and when necessary, all repairs, renewals, and replacements, structural and nonstructural, exterior and interior, foreseen and unforeseen, ordinary and extraordinary. Mortgagor shall not remove, demolish or alter the Mortgaged Property nor commit or suffer waste with respect thereto, nor permit the Mortgaged Property to become deserted or abandoned. Mortgagor shall permit Mortgagee and its agents at any time, and from time to time upon reasonable prior notice, to enter upon and visit the Mortgaged Property for the purpose of inspecting and appraising the same. Mortgagor covenants and agrees not to take or permit any action with respect to the Mortgaged Property which will in any manner impair the security of this Mortgage.

2.5       Use of Mortgaged Property . Mortgagor shall use, and permit others to use, the Mortgaged Property only for uses permitted under applicable laws.

2.6       Books and Records . Mortgagor shall maintain and Mortgagee shall have access to complete and adequate books of account and other records relating to the Mortgaged Property as Mortgagee may reasonably require. Mortgagor shall permit Mortgagee to photocopy such books and records.

Article 3

Negative Covenants

Until all of the Secured Obligations shall have been fully paid, satisfied and discharged:

3.1      Leases . Mortgagor shall not (a) execute an assignment or pledge of the Rents and/or the Leases other than in favor of Mortgagee; (b) accept any prepayment of an installment of any Rents prior to the due date of such installment in excess of 30 days in advance; or (c) except in the ordinary course of Mortgagor's business (which shall include customary rental arrangements relating to the hotel and banquet facilities operated on the Mortgaged Property) enter into any lease; or (d) amend any of the material terms of any of the Leases without Mortgagee's prior written consent, which consent shall not be withheld if to do so would be detrimental to the Project or the Mortgagor.

3.2      Sale of Mortgaged Property, Etc . Mortgagor shall not sell, assign, give, mortgage, pledge, hypothecate, encumber, lease or otherwise transfer the Mortgaged Property, or any part thereof or interest therein, voluntarily or involuntarily, without Mortgagee's prior written consent, which consent shall not be unreasonably withheld.

Article 4

Insurance, Condemnation and Restoration

4.1       Insurance .

(a)      Mortgagor shall maintain comprehensive public liability insurance, fire insurance with extended coverage, builder's risk insurance with respect to any construction, renovation or reconstruction, contractual liability insurance for all indemnification obligations of Mortgagor under all Leases and such other insurance as shall be required under Section 6.6 of the Loan Agreement or as otherwise may be required from time to time by Mortgagee. The amounts, coverages and other terms and conditions of the insurance policies shall at all times be reasonably satisfactory to Mortgagee and shall satisfy any coinsurance requirements of Mortgagee. Mortgagor shall pay as they become due all premiums for such insurance, shall keep each policy in full force and effect, shall deliver to Mortgagee evidence of the payment of the full premium therefor at least twenty (20) days prior to the expiration date of each policy and shall deliver to Mortgagee original policies of insurance, with noncontributory mortgagee clause, and lender loss payee endorsement in favor of and acceptable to Mortgagee. Mortgagor's liability insurance policy shall specifically name Mortgagee as an additional insured, and Mortgagor's fire and builder's risk insurance shall name Mortgagee as mortgagee. Each policy shall provide for written notice to Mortgagee at least thirty (30) days prior to any cancellation, nonrenewal or amendment of such insurance.

(b)      If the Mortgaged Property is located in an area which has been identified by any governmental agency, authority or body as a flood hazard area or the like, then Mortgagor shall maintain a flood insurance policy covering the improvements to the affected portion of the Mortgaged Property (or, if the portion of the Mortgaged Property located in such flood hazard area is part of the golf course, the land within the flood hazard area) in an amount not less than the full replacement value of the Mortgaged Property or the maximum limit of coverage available under the federal program, whichever amount is less.

(c)      If Mortgagor shall not at any time comply with the terms of this Section, irrespective of the passage of any grace period, Mortgagee may cure such non-compliance and may purchase such insurance as it may elect. Mortgagor shall reimburse Mortgagee on demand for any costs incurred by Mortgagee in connection with any such actions, together with interest at the Default Rate (as defined in the Loan Agreement). Any such actions by Mortgagee shall not constitute a waiver of any non-compliance of the terms of this Mortgage by Mortgagor.

4.2       Rights of Mortgagee to Proceeds . In the event of loss, Mortgagee shall have the exclusive right to adjust, collect and compromise all insurance claims, and Mortgagor shall not adjust, collect or compromise any claims under such policies without the prior written consent of Mortgagee, which shall not be unreasonably withheld. Each insurer is hereby authorized and directed to make payment under such policies, including return of unearned premiums, directly to Mortgagee instead of to Mortgagor and Mortgagee jointly, and Mortgagor appoints Mortgagee as Mortgagor's attorney-in-fact to endorse any draft therefor. All insurance proceeds shall be payable to Mortgagee and such proceeds may, at Mortgagor's sole option (or, if an Event of Default has occurred and is continuing, Mortgagee's sole option), be applied to all or any part of the Secured Obligations and in any order (notwithstanding that such Secured Obligations may not then otherwise be due and payable) or to the repair and restoration of any of the Mortgaged Property under such terms and conditions as Mortgagee may reasonably impose, provided that such proceeds may be applied to repair and restoration if Mortgagor demonstrates to Mortgagee's reasonable satisfaction that repair and restoration of the affected portion of the Mortgaged Property is feasible and Mortgagor has deposited with Mortgagee any amounts required in addition to such proceeds to complete such repair and restoration. Mortgagor shall not be deemed to have elected such option until such option is elected specifically in writing. Until so elected, Mortgagor shall not in any circumstances be deemed to have waived its right to make such election.

4.3       Condemnation . Mortgagor, immediately upon obtaining knowledge of the institution of any proceedings for the condemnation or taking by eminent domain of any of the Mortgaged Property, shall notify Mortgagee of the pendency of such proceedings. Mortgagee may participate in any such proceedings and Mortgagor shall deliver to Mortgagee all instruments requested by it to permit such participation. Any award or compensation for property taken or for damage to property not taken, whether as a result of such proceedings or in lieu thereof, is hereby assigned to and shall be received and collected directly by Mortgagee, and any award or compensation shall be applied, at Mortgagor's sole option (or, if an Event of Default has occurred and is continuing, Mortgagee's sole option), to all or any part of the Secured Obligations and in any order (notwithstanding that such Secured Obligations may not then otherwise be due and payable) or to the repair and restoration of any of the Mortgaged Property under such terms and conditions as Mortgagee may reasonably impose, provided that such proceeds may be applied to repair and restoration if Mortgagor demonstrates to Mortgagee's reasonable satisfaction that repair and restoration of the affected portion of the Mortgaged Property is feasible and Mortgagor has deposited with Mortgagee any amounts required in addition to such proceeds to complete such repair and restoration. Mortgagor shall not be deemed to have elected such option until such option is elected specifically in writing. Until so elected, Mortgagor shall not in any circumstances be deemed to have waived its right to make such election.

Article 5

Assignment of Leases

5.1      Assignment . Mortgagor hereby absolutely and unconditionally conveys, grants, bargains, sells, assigns, transfers, sets over and delivers to Mortgagee, and its successors and assigns, as of the date hereof, all of Mortgagor's rights, title, interests and privileges in all present and future Leases, including without limitation the following:

(i)     All rents, revenues, issues, income, receipts, profits and other amounts now or hereafter becoming due to Mortgagor under the Leases (whether due for the letting of space, for services, materials or installations supplied by Mortgagor, or for any other reason whatsoever), including without limitation all insurance, tax and other contributions, insurance proceeds, condemnation awards, damages following defaults by tenants under the Leases (hereinafter collectively referred to as the " Tenants ", and singularly as a " Tenant "), cash or securities deposited by Tenants to secure performance of their obligations under the Leases, minimum rents, additional rents, percentage rents, concession rents, room receipt revenues, and all other extraordinary receipts, and all proceeds thereof, both cash and non-cash (all of the foregoing are hereinafter collectively referred to as the " Rents ") and all rights to make claim for, collect, receive and receipt for the Rents;

(ii)     Any sums to which Mortgagor may become entitled in any court proceeding involving the bankruptcy, insolvency or reorganization of any Tenant;

(iii)     All claims, rights, privileges and remedies on the part of Mortgagor, whether arising under the Leases or by statute or at Law or in equity or otherwise, arising out of or in connection with any failure by any Tenant to pay the Rents or to perform any other obligation under any of the Leases;

(iv)     All rights, powers and privileges of Mortgagor to exercise any election or option or to give or receive any notice, consent, waiver or approval under or with respect to the Leases;

(v)     Any payments made by any of the Tenants in lieu of Rents; and

(vi)     All other claims, rights, powers, privileges and remedies of Mortgagor under or with respect to the Leases, including without limitation the right, power and privilege (but not the obligation) to do any and all acts, matters and other things that Mortgagor is entitled to do thereunder or with respect thereto.

The foregoing assignment by Mortgagor to Mortgagee is referred to hereinafter as the " Assignment ".

Notwithstanding the foregoing Assignment, however, Mortgagee hereby grants to Mortgagor a revocable license to receive and use the Rents, and to exercise all of Mortgagor's rights, powers, privileges and remedies under the Leases to the extent an Event of Default is not then existing.

Notwithstanding any provision herein to the contrary, the Assignment set forth herein is an absolute assignment from Mortgagor to Mortgagee of all of Mortgagor's right, title and interest in and to the Leases and the Rents. It is the express intent of the parties hereto that the Assignment is not merely the granting of a security interest as additional collateral, but is an absolute assignment, vesting Mortgagee with full and clear title to the Leases and the Rents as of the date hereof, subject only to the terms and provisions of the Assignment, including the license of Mortgagor to collect rents and operate the Mortgaged Property so long as no Event of Default shall exist hereunder.

5.2      Warranties of Mortgagor . Mortgagor hereby represents and warrants to Mortgagee, as a material inducement to Mortgagee to accept the Assignment, that:

(i)     Mortgagor has full right and power to assign the Leases and Rents and Mortgagor has not assigned, transferred, mortgaged, pledged or otherwise encumbered any of its right, title and interest in, to or under the Leases or the Rents (which prior assignment will not be terminated with the proceeds from the loan evidenced by the Note) and no part of such right, title and interest is subject to any lien or other encumbrance, except in favor of Mortgagee;

(ii)     To its knowledge, Mortgagor has not done anything which might prevent Mortgagee from or limit Mortgagee in operating under any of the provisions hereof;

(iii)     To its knowledge, each of the Leases is a legal, valid and binding obligation of each of the Tenants thereof, enforceable in accordance with its terms;

(iv)     To its knowledge, no material default exists by Mortgagor or any of the Tenants under any of the Leases;

(v)     No Rents have been received by Mortgagor more than thirty (30) days in advance of the time when the same became or becomes due under the terms of the Leases; and

(vi)     There are, as of the date hereof, no Leases in existence which affect all or any portion of the Mortgaged Property other than as disclosed in writing by Mortgagor to Mortgagee prior to the date hereof. Mortgagor covenants and agrees that all future Leases will be subordinate to the lien of this Mortgage.

5.3      Affirmative Covenants of Mortgagor . Mortgagor shall promptly (i) perform all of the material provisions of the Leases on the part of the landlord thereunder to be performed; (ii) where commercially reasonable to do so, enforce all of the material provisions of the Leases on the part of the Tenants thereunder to be performed; (iii) appear in and defend any action or proceeding arising under, growing out of or in any manner connected with the Leases or the obligations of Mortgagor as landlord or of the tenants thereunder; (iv) deliver to Mortgagee, within ten (10) days after a request by Mortgagee, but not more frequently than once in each year unless Mortgagor is in default hereunder, a written statement containing the names of all tenants, the terms of all Leases and the spaces occupied and rentals payable thereunder, and a statement of all Leases which are then in default, including the nature and magnitude of the default, and including such other information as Mortgagee may reasonably request; (v) following the request of Mortgagee for the same, deliver fully executed copies of any future Lease or Leases to the Mortgagee within five (5) days of the execution and delivery of said Lease or Leases; and (vi) upon the occurrence and during the continuance of an Event of Default hereunder, to deposit in a special account with the Mortgagee any and all Rents derived from the Mortgaged Property and hereby assigns, grants, conveys and transfers to Mortgagee a security interest in such account.

5.4      Attornment . Following the occurrence and during the continuance of an Event of Default by Mortgagor and Mortgagee's exercise of any remedy under this Mortgage, the Tenant under each Lease shall at Mortgagee's request attorn in writing to Mortgagee or any other person succeeding to the interest of Mortgagee as a result of such enforcement and shall recognize Mortgagee or such successor in interest as landlord under the Lease without change in the provisions thereof; provided, however, that Mortgagee or such successor in interest shall not be bound by any payment of an installment of rent or additional rent which may have been made more than thirty (30) days before the due date of such installment or sixty (60) days before the end of the period covered by such installment, unless received by Mortgagee.

5.5     Notice of Lease Defaults . Mortgagor shall notify Mortgagee immediately of any default of Mortgagor asserted by any Tenant under a Lease. If Mortgagor fails to contest or cure such default within a reasonable period after notice of such default then Mortgagor expressly authorizes Mortgagee, at its option, to cure such default in order to prevent termination of any Lease by any tenant. If any such Lease is assigned to Mortgagee by separate instrument of assignment, and if, by reason of default of Mortgagor in the performance of any such Lease, the Tenant has the right to cancel such Lease or to claim any diminution of or offset against future rents, then, at the option of Mortgagee, such default shall be an Event of Default hereunder.

5.6      Statement of Receipts and Disbursements . Mortgagor will render to Mortgagee, within twenty (20) days after written demand therefor, a detailed certified statement specifying the rents and profits received from the Mortgaged Property for the period specified in such demand, the disbursements made for such period and the names of all tenants of the Mortgaged Property, together with true and correct copies of all Leases for which rent is so accounted, and including such other information as Mortgagee may reasonably request.

5.7      Management Agreements . Mortgagor shall not enter into any agreement for the management or operation of all or part of the Mortgaged Property (a " Management Agreement ") without (i) furnishing to Mortgagee a copy of such Management Agreement together with such information with respect to the managing party as Mortgagee may reasonably request, (ii) receiving Mortgagee's prior written consent thereto, which consent shall not be unreasonably withheld, (iii) executing an assignment of such Management Agreement in favor of Mortgagee of all of Mortgagor's rights under such Management Agreement, and (iv) delivering a subordination and attornment agreement executed by Mortgagor and Mortgagor's managing agent in favor of Mortgagee, with all documentation described in clauses (i) through (iv) above to be in form and content satisfactory to Mortgagee.

5.8      Negative Covenants of Mortgagor . Mortgagor hereby covenants with Mortgagee that Mortgagor shall not without the consent of Mortgagee (which consent shall not be unreasonably withheld, conditioned or delayed): (i) assign, transfer, mortgage, pledge or otherwise encumber, or permit to accrue or suffer to exist any lien or other encumbrance on or in any of the right, title or interest of Mortgagor in, to or under the Leases or the Rents, except in favor of Mortgagee or as otherwise permitted under the Loan Agreement; (ii) accept any prepayment of Rents under any of the Leases earlier than one (1) month in advance of its due date; (iii) settle or compromise any claim against any Tenant arising out of or in respect of any Lease with respect to a claim against Mortgagor in excess of $50,000 which is not covered by insurance; or (vii) take any other action in connection with any Lease which would materially impair the value of the rights or interest of Mortgagor or Mortgagee thereunder or therein.

5.9      Obligations u nder Leases . Notwithstanding any presumption or any provision contained herein or in the Leases to the contrary, until such time, if any, that Mortgagee takes title to, or control of, the Mortgaged Property, or any part thereof: (i) Mortgagor shall at all times remain solely liable under the Leases to perform all of the obligations of Mortgagor thereunder to the same extent as if the Assignment had not been executed; (ii) neither the Assignment nor any action or inaction on the part of Mortgagor or Mortgagee shall release Mortgagor from any of its obligations under the Leases or constitute an assumption of any such obligations by Mortgagee; and (iii) Mortgagee shall not have any obligation or liability under the Leases or otherwise by reason of or arising out of the Assignment, nor shall Mortgagee be required or obligated in any manner to make any payment or perform any other obligation of Mortgagor under or pursuant to the Leases, or to make any inquiry as to the nature or sufficiency of any payment received by Mortgagee, or to present or file any claim, or to take any action to collect or enforce the payment of any amounts which have been assigned to Mortgagee or to which it may be entitled at any time or times. The exercise of any rights under the Assignment by Mortgagee shall not be deemed or construed to constitute Mortgagee as a mortgagee-in-possession as to the Mortgaged Property nor obligate Mortgagee to take any action hereunder, nor to incur any expenses or perform or discharge any obligation, duty or liability hereunder the Leases.

Article 6

Default

6.1      Events of Default . The occurrence of any one or more of the following events shall constitute an " Event of Default " hereunder:

(a)     A failure to pay any Secured Obligations when due in accordance with the terms thereof, subject to all applicable grace, notice and cure periods; or

(b)     Mortgagor shall fail to perform or observe any of the obligations in Article 3 or 4 of this Mortgage, subject to all applicable grace, notice and cure periods; or

(c)     A failure by Mortgagor to duly perform and observe any other provision in this Mortgage, and such failure shall continue for a period of thirty (30) days after written notice from Mortgagee to Mortgagor, or Mortgagor has knowledge that such failure has occurred, or such longer period as may be reasonably necessary in the case of a default not curable by the exercise of due diligence within such thirty (30) day period, provided that Mortgagor shall have commenced to cure such default within such thirty (30) day period and shall complete such cure as quickly as reasonably possible with the exercise of due diligence; or

(d)     Any representation or warranty made by Mortgagor herein or in any of the Loan Documents or in any other instrument or document which pertains to or is delivered in connection with any of the Secured Obligations proves to be incorrect, now or hereafter, in any material respect; or

(e)     An Event of Default (as defined in the Loan Agreement) shall occur; or

(f)     Mortgagor, or any other obligor or guarantor of any of the Secured Obligations, shall become insolvent or unable to pay its or his or her debts as the same mature, or a petition shall be filed by or against Mortgagor or any such party in bankruptcy or seeking the appointment of a receiver, trustee or conservator for Mortgagor or any such party or for any portion of its or his or her property which shall not have been stayed or dismissed within sixty (60) days after such proceedings were instituted, or for reorganization or to effect a plan or other arrangement with or for the benefit of creditors or Mortgagor or any such party shall consent to the appointment of a receiver, trustee or conservator for Mortgagor or any such party or for any portion of its or his or her property which shall not have been dismissed or stayed within sixty (60) calendar days after such proceedings were instituted; or

(g)     Foreclosure proceedings are instituted against the Mortgaged Property upon any other lien or claim, whether alleged to be superior or junior to the lien of this Mortgage, which shall not have been stayed or dismissed within sixty (60) days after such proceedings were instituted; or

(h)     Mortgagor shall fail to comply with any duty or obligation imposed pursuant to Article 7 hereof or any warranty or representation contained therein shall be incorrect or misleading; or

(i)     Mortgagor shall at any time deliver or cause to be delivered to Mortgagee a notice pursuant to 53 O.R.C. §5301.232 electing to limit the indebtedness secured by this Mortgage.

Article 7

Remedies

7.1      Rights and Remedies of Mortgagee . If an Event of Default occurs, Mortgagee may, at its option and notwithstanding any contrary provisions in the Loan Documents, without demand, notice or delay, do one or more of the following:

(a)     Mortgagee may declare the entire unpaid principal balance of the Secured Obligations, together with all interest thereon, to be due and payable immediately (and in the case of an Event of Default under subsection 5.1(e), all such indebtedness shall automatically and immediately become due and payable without notice or any other act).

(b)     Mortgagee may (i) institute and maintain an action of mortgage foreclosure against the Mortgaged Property and the interests of Mortgagor therein, (ii) institute and maintain an action on any instruments evidencing the Secured Obligations or any portion thereof, and (iii) take such other action at law or in equity for the enforcement of any of the Loan Documents as the law may allow, and in each such action Mortgagee shall be entitled to all costs of suit and attorneys' fees.

(c)     Mortgagee may, in its sole and absolute discretion, and without releasing Mortgagor or any other obligor or guarantor from any obligation under any of the Loan Documents and without waiving any Event of Default: (i) collect any or all of the Rents, including any Rents past due and unpaid, (ii) perform any obligation or exercise any right or remedy of Mortgagor under any Lease, or (iii) enforce any obligation of any tenant of any of the Mortgaged Property. Mortgagee may exercise any right under this subsection (c), whether or not Mortgagee shall have entered into possession of any of the Mortgaged Property, and nothing herein contained shall be construed as constituting Mortgagee a "mortgagee in possession," unless Mortgagee shall have entered into and shall continue to be in actual possession of the Mortgaged Property. Mortgagor hereby authorizes and directs each and every present and future tenant of any of the Mortgaged Property to pay all Rents directly to Mortgagee and to perform all other obligations of that tenant for the direct benefit of Mortgagee, as if Mortgagee were the landlord under the Lease with that tenant, immediately upon receipt of a demand by Mortgagee to make such payment or perform such obligations. Mortgagor hereby waives any right, claim or demand it may now or hereafter have against any such tenant by reason of such payment of Rents or performance of obligations to Mortgagee, and any such payment or performance to Mortgagee shall discharge the obligations of the tenant to make such payment or performance to Mortgagor.

7.2      Sale in Parcels or Units . In case any sale under this Mortgage occurs by virtue of judicial proceedings, the Mortgaged Property may be sold in one parcel or unit and as an entity, or in such parcels or units, and in such manner or order, as Mortgagee in its sole discretion may elect.

7.3     [Omitted.]

7.4      Remedies Cumulative . All remedies contained in this Mortgage are cumulative and Mortgagee also has all other remedies provided by law or in equity or in any of the other Loan Documents. No delay or failure by Mortgagee to exercise any right or remedy under this Mortgage will be construed to be a waiver of that right or remedy or a waiver of any Event of Default. Mortgagee may exercise any one or more of its rights and remedies without regard to the adequacy of its security.

Article 8

Environmental Matters

8.1       Environmental Warranty . Mortgagor represents and warrants to Mortgagee that, except as set forth in any environmental site assessment provided to Mortgagee:

(a)     Neither Mortgagor nor, to the best of Mortgagor's knowledge, any previous owner, lessee, or other occupant of all or any part of the Mortgaged Property, nor any third party, has used, generated, released, discharged, spilled, emitted, stored or otherwise managed any hazardous waste, toxic substances or other regulated materials (all of which are collectively called " Regulated Substances ") on any part of the Mortgaged Property, except in compliance with Environmental Laws (as hereinafter defined). For purposes of this representation and warranty, Regulated Substances shall include (but are not necessarily limited to) any substances that are defined as "hazardous" or "toxic" or otherwise regulated under any local, state or federal Environmental Law (as hereinafter defined).

(b)      Neither the Mortgagor, nor, to the best of Mortgagor's knowledge, any previous owner, Lessee, or other occupant of all or any part of the Mortgaged Property, nor any third party, has disposed of any Regulated Substances on any part of the Mortgaged Property.

(c)      To the best of Mortgagor's knowledge, there is no asbestos or asbestos-containing material located on any part of the Mortgaged Property.

(d)      To the best of Mortgagor's knowledge, the Mortgaged Property is being operated in compliance with all applicable Environmental Laws relating to sewage systems and treatment. If there is on-site sewage treatment, all necessary permits have been obtained and remain in effect with respect to those treatment facilities, and no discharge of raw, untreated or inadequately treated sewage from the Mortgaged Property has occurred or will occur at any time that this Mortgage remains in effect.

(e)      No part of the Mortgaged Property, nor any property adjoining, or in the proximity of, the Mortgaged Property is presently listed as a Superfund Site on the National Priorities List, has been listed on CERCLIS, or has been identified on any similar list compiled by any governmental agency.

(f)      To the best of Mortgagor's knowledge, there are no underground storage tanks located on the Mortgaged Property. Any underground storage tanks located on the Mortgaged Property shall be properly registered under, and all tanks, fuel lines and dispensing equipment shall be maintained in compliance with, all Environmental Laws pertaining to underground storage tanks and dispensing of any product therefrom.

(g)      Mortgagor shall promptly notify Mortgagee in writing of any pending or threatened investigation or litigation by any governmental authority or by any third party relating to the Mortgaged Property and arising under any Environmental Law or alleging a common law or statutory nuisance. Mortgagor shall, within two (2) business days of receipt, deliver to Mortgagee a copy of all notices, pleadings or other materials of any kind received from any public authority or any third party relating in any manner to any of the matters set forth in this Section 7.1.

(h)      Mortgagee shall, within two (2) business days after becoming aware of the release, discharge, spill, or other disposal of any Regulated Substances on any part of the Mortgaged Property, notify Mortgagee in writing as to such occurrence, and Mortgagor shall forthwith proceed to correct or remedy such condition as expeditiously as possible in compliance with all applicable Environmental Laws and in full cooperation with any appropriate governmental authority.

(i)      For purposes of this Section 8.1, the term " Environmental Laws " shall mean all federal, state and local laws, statutes, codes, and ordinances pertaining to the protection of human health or the environment, together with any administrative regulations promulgated under any of the foregoing, including those statutes previously identified above, and further including, but not limited to, the Comprehensive Environmental Response Compensation and Liability Act of 1980, 42 U.S.C.A. 9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.A. 6901, et seq., and ORC Chapters 1511 (Water Pollution), 3704 (Air Pollution), 3734 (Solid & Hazardous Waste), 3747 (Radioactive Waste), and 3751 (Hazardous Substances), all as amended from time to time.

8.2      Environmental Indemnification . Mortgagor covenants and agrees, at its sole cost and expense, to indemnify, protect and hold Mortgagee harmless against and from all claims, damages, losses, liabilities, penalties, fines or judgments, including any attorney's fees, expert fees or costs incurred, arising in any manner out of any of the matters set forth in Section 7.1 above or otherwise arising under any Environmental Law, whether such matters arise before or after the exercise of any remedies by Mortgagee under this Mortgage or the taking of title by Mortgagee to all or any portion of the Mortgaged Property. Indemnified matters shall include, without limitation, all of the following: (i) the costs of removal of any and all Regulated Substances from all or any portion of the Mortgaged Property or any surrounding areas, (ii) additional costs required to take necessary precautions to protect against the release of Regulated Substances on, in, under or affecting the Mortgaged Property onto the land and into the air, any body of water, any other public domain or any surrounding areas and (iii) costs incurred to comply, in connection with all or any portion of the Mortgaged Property or any surrounding areas, with all Environmental Laws with respect to Regulated Substances. The indemnification obligations of this Section 7.2 shall survive repayment of the Secured Obligations and satisfaction of this Mortgage.

Article 9

Additional Rights and Obligations

9.1      Installments for Insurance, Taxes and Other Charges . Without limiting the effect of any other provision of this Mortgage, upon the occurrence and existence of an Event of Default, Mortgagor shall pay to Mortgagee monthly with its payment on the Note, an amount equal to one-twelfth (1/12) of the annual premiums for the insurance policies referred to hereinabove and the annual Impositions and any other item which at any time may be or become a lien upon the Mortgaged Property (the " Escrow Charges "); and on demand, from time to time, Mortgagor shall pay to Mortgagee any additional sums necessary to pay when due all Escrow Charges. Upon the cure of any such Event of Default, the funds held in escrow shall be returned to Mortgagor. No amount so paid to Mortgagee shall be deemed to be trust funds but may be commingled with general funds of Mortgagee, nor shall any sums paid bear interest. Mortgagee shall have the right, upon any exercise of remedies following an Event of Default, at its election, to apply any amount so held against the Secured Obligations due and payable in such order as Mortgagee may deem fit, and Mortgagor hereby grants to Mortgagee a lien upon and security interest in such amounts for such purpose.

9.2      Mortgagee ' s Right to Protect Security . If Mortgagor shall fail to do so, Mortgagee is hereby authorized to do any one or more of the following, irrespective of whether an Event of Default has occurred: (a) appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Mortgagee hereunder; (b) take such action as Mortgagee may determine to pay, perform or comply with any applicable laws, to cure any Events of Default and to protect its security in the Mortgaged Property.

9.3      Mortgagee ' s Costs and Expenses . In the event of an Event of Default or the exercise by Mortgagee of any of its rights hereunder, or if Mortgagee shall become a party, either as plaintiff or defendant or otherwise, to any suit or legal proceeding affecting any of the Mortgaged Property or the Secured Obligations, or if review and approval of any document, or any other matter related to any of the Secured Obligations, is required by, or requested of, Mortgagee, Mortgagor shall pay to Mortgagee on demand its costs, expenses and reasonable attorneys' fees incurred in connection therewith. If such amounts are not paid, they shall be added to the principal secured hereby, shall be included as part of the Secured Obligations and shall bear interest at the Default Rate (as defined in the Loan Agreement) from the date of demand.

9.4     Further Assurances . Mortgagor agrees to execute such further assurances, documents and instruments as may be desirable by Mortgagee for the purposes of further evidencing, carrying out and/or confirming this Mortgage and for all other purposes intended by this Mortgage.

Article 10

Miscellaneous Matters

10.1      Notice .

(a)     Except as otherwise provided in this Mortgage, all notices hereunder shall be in writing and shall be deemed to have been duly given for all purposes when delivered in person, or when deposited in the United States mail, by registered or certified mail, return receipt requested, or delivered to an express courier service for delivery on the next business day, directed in each case to the party to receive the same at the addresses set forth at the beginning of this Mortgage or at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived.

(b)     All notices given by Mortgagor to Mortgagee pursuant to 53 O.R.C. §5301.232shall be given to Mortgagee in accordance with this Section 9.1 and must be signed by all parties necessary to bind Mortgagor in accordance with the applicable documents of formation of Mortgagor and all applicable laws.

10.2      Severability . In the event any one or more of the provisions contained in this Mortgage shall for any reason be held to be inapplicable, invalid, illegal, or unenforceable in any respect, such inapplicability, invalidity, illegality or unenforceability shall not affect any other provision of this Mortgage, but this Mortgage shall be construed as if such inapplicable, invalid, illegal or unenforceable provision had never been contained herein.

10.3      Successors and Assigns . All of the grants, covenants, terms, provisions and conditions herein shall run with the land and shall apply to, bind and inure to the benefit of the successors and assigns of Mortgagor and Mortgagee.

10.4      No Oral Modification . This Mortgage may be modified, amended, discharged or waived only by an agreement in writing, signed by all of the parties hereto.

10.5      Defeasance . If Mortgagor pays to Mortgagee in full the Secured Obligations, then this Mortgage shall become void. Mortgagee shall, upon request and at no cost to Mortgagor, execute and deliver to Mortgagor a satisfaction of this Mortgage, in form and substance suitable for recording, with Mortgagor being solely responsible for the cost of recording such satisfaction.

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[Signature Page to Open-End Mortgage and Security Agreement]

IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly executed the day and year first above written.

On this, the  15th day of December, 2016, before me, the undersigned officer, personally appeared Bryan P. Saksa , who acknowledged himself to be the Treasurer/Secretary of AVALON HOLDINGS CORPORATION , an Ohio corporation, and that as such officer being authorized to do so, executed the foregoing document on behalf of such corporation.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

	/s/ Kevin L. Bradford
	Notary Public

My commission expires:

Exhibit A

Legal Description

Exhibit 10.4

OPEN-END MORTGAGE, ASSIGNMENT OF LEASES,

SECURITY AGREEMENT AND FIXTURE FILING

AVALON LAKES GOLF, INC. ,

MORTGAGOR ,

AND

LAUREL CAPITAL CORPORATION ,

MORTGAGEE

Dated as of December 1, 2016

and Effective as of December 20, 2016

OPEN-END MORTGAGE , ASSIGNMENT OF LEASES,

SECURITY AGREEMENT AND FIXTURE FILING

THIS MORTGAGE SECURES FUTURE ADVANCES

(All notices to be given to Mortgagee pursuant to

53 O.R.C. §5301.232 shall be given as set forth in

Section 9.1 of this Mortgage.)

This Open-End Mortgage, Assignment of Leases, Security Agreement and Fixture Filing (this " Mortgage ") dated as of December 1, 2016 and effective as of December 20, 2016 (the " Effective Date ") by AVALON LAKES GOLF, INC. , an Ohio corporation, with an address at 5 East Market Street, Warren, OH 44484 (" Mortgagor "), in favor of LAUREL CAPITAL CORPORATION , with an address at 6600 Brooktree Court, Suite 3000, Wexford, PA 15090-0839 (" Mortgagee ").

This Mortgage is an "Open-End Mortgage" as set forth in 53 O.R.C. §5301.232 and secures obligations up to a maximum amount of indebtedness outstanding at any time equal to double the face amount of the Note (as hereinafter defined), plus accrued and unpaid interest, including, but not limited to, advances for the payment of taxes and municipal assessments, maintenance charges, insurance premiums, costs incurred for the protection of the Mortgaged Property or the lien of this Mortgage, expenses incurred by Mortgagee by reason of default by Mortgagor under this Mortgage and advances for construction, alteration or renovation on the Mortgaged Property or for any other purpose, together with all other sums due hereunder or secured hereby.

WITNESSETH:

WHEREAS, Mortgagor is the owner of certain real estate situate in the City of Warren, Trumbull County, Ohio, as more fully described in Exhibit A attached hereto and made a part hereof (the " Premises "), together with the improvements now or hereafter erected thereon.

NOW, THEREFORE, for the purpose of securing the payment and performance of the following obligations (collectively called the " Secured Obligations "):

(A)     All indebtedness, together with all interest thereon, evidenced by that certain Mortgage Note dated the Effective Date from Mortgagor, Avalon Holdings Corporation, Avalon Country Club at Sharon, Inc. , Avalon Resorts and Clubs, Inc., Avalon Clubs, Inc., Avalon Resorts, Inc., Avalon Golf and Country Club, Inc., Avalon Resort and Spa, LLC, The Havana Cigar Shop, Inc., Avalon Travel, Inc. and TBG, Inc. (together with Mortgagor, the " Borrower s ") to Mortgagee in the principal face amount of $12,000,000 (as the same may be amended, supplemented or replaced from time to time, the " Note "), the provisions of the Note being incorporated herein by this reference, and all other Obligations (as such term is defined in the Loan Agreement dated the effective date hereof among the Borrowers and Mortgagee (as the same may be amended, supplemented or replaced from time to time, the " Loan Agreement "));

(B)     Any sums advanced by Mortgagee or which may otherwise become due pursuant to the provisions of the Note, this Mortgage or pursuant to any other document or instrument at any time delivered to Mortgagee to evidence or secure any of the Secured Obligations or which otherwise relate to any of the Secured Obligations or the Loan Documents (as such term is defined in the Loan Agreement).

Mortgagor, for good and valuable consideration, receipt of which is hereby acknowledged, and intending to be legally bound hereby, does hereby give, grant, bargain, sell, convey, mortgage, pledge and confirm unto Mortgagee and does agree that Mortgagee shall have a mortgage and security interest in, and lien upon, the following described property (collectively, the " Mortgaged Property "), now owned or held or hereafter acquired, to wit:

(i)     All of Mortgagor's estate in the Premises, together with all of the easements, rights of way, privileges, liberties, hereditaments, rights and appurtenances thereunto belonging and all of the estate, right, title, interest, claim and demand whatsoever of Mortgagor therein and in the public streets and ways adjacent thereto, either in law or in equity, in possession or expectancy (collectively, the " Realty ");

(ii)     The structures and buildings, and all additions and improvements thereto, now or hereafter erected upon the Realty (including all Equipment, as hereinafter defined, constituting fixtures) (collectively, the " Improvements ");

(iii)    All present and future leases, subleases licenses and concessions or grants of any possessory interest covering all or any portion of the Mortgaged Property whether written or oral; all agreements for use, occupancy or enjoyment of any portion of the Mortgaged Property and any leases, lettings or agreements (including rights in respect of tenants holding over and tenancies following attornment) of all or any part of the Mortgaged Property; any and all guarantees of the performance of any lessee under any lease; and any extensions, amendments, modifications, substitutions or supplements to any lease (collectively, the " Leases " or singularly, a " Lease "), and including further, the right to receive and collect the rents (the " Rents ") thereunder and all guaranties thereof;

(iv)    All machinery, apparatus, equipment, fittings, appliances and fixtures of every kind and nature whatsoever, and regardless of whether the same may now or hereafter be attached or affixed to the Realty or the Improvements (collectively, the " Equipment ");

TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee, its successors and assigns, to its own use forever in accordance with the provisions hereof,

Article 1

Representations and Warranties

Mortgagor represents and warrants to Mortgagee as follows:

1.1       Warranty of Title . Mortgagor has good and marketable title to an estate in fee simple absolute in the Realty and Improvements and has all right, title and interest in all other property constituting a part of the Mortgaged Property, in each case free and clear of all liens and encumbrances, except as set forth on Schedule 1.1 hereto or as may otherwise be approved in writing by Mortgagee. This Mortgage is a valid and enforceable first lien on the Mortgaged Property, and Mortgagee shall, subject to Mortgagor's right of possession prior to an Event of Default, quietly enjoy and possess the Mortgaged Property. Mortgagor shall preserve such title as it warrants herein and the validity and priority of the lien hereof and shall forever warrant and defend the same to Mortgagee against the claims of all persons and parties whomsoever.

Article 2

Affirmative Covenants

2.1       Payment and Performance of Secured Obligations . Mortgagor shall pay and perform all Secured Obligations when due as provided in the Loan Documents.

2.2       Legal Requirements . Mortgagor shall promptly comply with and conform to all present and future laws, statutes, codes, ordinances, orders and regulations and all covenants, restrictions and conditions which may be applicable to Mortgagor or to any of the Mortgaged Property where the failure to do so would have a material adverse effect upon the Mortgagor or the Mortgaged Property (collectively, the " Legal Requirements ").

2.3       Impositions .

(a)      Before interest or penalties are due thereon and otherwise when due, Mortgagor shall pay all taxes of every kind and nature, all charges for any easement or agreement maintained for the benefit of any of the Mortgaged Property, all general and special assessments (including, without limitation, any condominium or planned unit development assessments, if any), levies, permits, inspection and license fees, all water and sewer rents and charges, and all other charges and liens, whether of a like or different nature, imposed upon or assessed against Mortgagor or any of the Mortgaged Property. The obligations referred to in this Section are hereinafter collectively referred to as the " Impositions ." Promptly upon request, Mortgagor shall deliver to Mortgagee evidence acceptable to Mortgagee of such payment.

(b)      If Mortgagor shall fail to do so after written demand from Mortgagee, Mortgagee may pay or perform any Imposition not paid by Mortgagor within 30 days of the due date and add the amount so paid or the cost incurred to the Secured Obligations, and all such amounts shall on demand be due and payable.

2.4       Maintenance and Impairment of Security . Mortgagor shall keep the Mortgaged Property in such condition, order and state of repair as is necessary for the operation of Mortgagor's business in the ordinary course as currently being conducted and will make or cause to be made, as and when necessary, all repairs, renewals, and replacements, structural and nonstructural, exterior and interior, foreseen and unforeseen, ordinary and extraordinary. Mortgagor shall not remove, demolish or alter the Mortgaged Property nor commit or suffer waste with respect thereto, nor permit the Mortgaged Property to become deserted or abandoned. Mortgagor shall permit Mortgagee and its agents at any time, and from time to time upon reasonable prior notice, to enter upon and visit the Mortgaged Property for the purpose of inspecting and appraising the same. Mortgagor covenants and agrees not to take or permit any action with respect to the Mortgaged Property which will in any manner impair the security of this Mortgage.

2.5       Use of Mortgaged Property . Mortgagor shall use, and permit others to use, the Mortgaged Property only for uses permitted under applicable laws.

2.6       Books and Records . Mortgagor shall maintain and Mortgagee shall have access to complete and adequate books of account and other records relating to the Mortgaged Property as Mortgagee may reasonably require. Mortgagor shall permit Mortgagee to photocopy such books and records.

Article 3

Negative Covenants

Until all of the Secured Obligations shall have been fully paid, satisfied and discharged:

3.1       Leases . Mortgagor shall not (a) execute an assignment or pledge of the Rents and/or the Leases other than in favor of Mortgagee; (b) accept any prepayment of an installment of any Rents prior to the due date of such installment in excess of 30 days in advance; or (c) except in the ordinary course of Mortgagor's business (which shall include customary rental arrangements relating to the hotel and banquet facilities operated on the Mortgaged Property) enter into any lease; or (d) amend any of the material terms of any of the Leases without Mortgagee's prior written consent, which consent shall not be withheld if to do so would be detrimental to the Project or the Mortgagor.

3.2       Sale of Mortgaged Property, Etc . Mortgagor shall not sell, assign, give, mortgage, pledge, hypothecate, encumber, lease or otherwise transfer the Mortgaged Property, or any part thereof or interest therein, voluntarily or involuntarily, without Mortgagee's prior written consent, which consent shall not be unreasonably withheld.

Article 4

Insurance, Condemnation and Restoration

4.1       Insurance .

(a)      Mortgagor shall maintain comprehensive public liability insurance, fire insurance with extended coverage, builder's risk insurance with respect to any construction, renovation or reconstruction, contractual liability insurance for all indemnification obligations of Mortgagor under all Leases and such other insurance as shall be required under Section 6.6 of the Loan Agreement or as otherwise may be required from time to time by Mortgagee. The amounts, coverages and other terms and conditions of the insurance policies shall at all times be reasonably satisfactory to Mortgagee and shall satisfy any coinsurance requirements of Mortgagee. Mortgagor shall pay as they become due all premiums for such insurance, shall keep each policy in full force and effect, shall deliver to Mortgagee evidence of the payment of the full premium therefor at least twenty (20) days prior to the expiration date of each policy and shall deliver to Mortgagee original policies of insurance, with noncontributory mortgagee clause, and lender loss payee endorsement in favor of and acceptable to Mortgagee. Mortgagor's liability insurance policy shall specifically name Mortgagee as an additional insured, and Mortgagor's fire and builder's risk insurance shall name Mortgagee as mortgagee. Each policy shall provide for written notice to Mortgagee at least thirty (30) days prior to any cancellation, nonrenewal or amendment of such insurance.

(b)      If the Mortgaged Property is located in an area which has been identified by any governmental agency, authority or body as a flood hazard area or the like, then Mortgagor shall maintain a flood insurance policy covering the improvements to the affected portion of the Mortgaged Property (or, if the portion of the Mortgaged Property located in such flood hazard area is part of the golf course, the land within the flood hazard area) in an amount not less than the full replacement value of the Mortgaged Property or the maximum limit of coverage available under the federal program, whichever amount is less.

(c)      If Mortgagor shall not at any time comply with the terms of this Section, irrespective of the passage of any grace period, Mortgagee may cure such non-compliance and may purchase such insurance as it may elect. Mortgagor shall reimburse Mortgagee on demand for any costs incurred by Mortgagee in connection with any such actions, together with interest at the Default Rate (as defined in the Loan Agreement). Any such actions by Mortgagee shall not constitute a waiver of any non-compliance of the terms of this Mortgage by Mortgagor.

4.2       Rights of Mortgagee to Proceeds . In the event of loss, Mortgagee shall have the exclusive right to adjust, collect and compromise all insurance claims, and Mortgagor shall not adjust, collect or compromise any claims under such policies without the prior written consent of Mortgagee, which shall not be unreasonably withheld. Each insurer is hereby authorized and directed to make payment under such policies, including return of unearned premiums, directly to Mortgagee instead of to Mortgagor and Mortgagee jointly, and Mortgagor appoints Mortgagee as Mortgagor's attorney-in-fact to endorse any draft therefor. All insurance proceeds shall be payable to Mortgagee and such proceeds may, at Mortgagor's sole option (or, if an Event of Default has occurred and is continuing, Mortgagee's sole option), be applied to all or any part of the Secured Obligations and in any order (notwithstanding that such Secured Obligations may not then otherwise be due and payable) or to the repair and restoration of any of the Mortgaged Property under such terms and conditions as Mortgagee may reasonably impose, provided that such proceeds may be applied to repair and restoration if Mortgagor demonstrates to Mortgagee's reasonable satisfaction that repair and restoration of the affected portion of the Mortgaged Property is feasible and Mortgagor has deposited with Mortgagee any amounts required in addition to such proceeds to complete such repair and restoration. Mortgagor shall not be deemed to have elected such option until such option is elected specifically in writing. Until so elected, Mortgagor shall not in any circumstances be deemed to have waived its right to make such election.

4.3       Condemnation . Mortgagor, immediately upon obtaining knowledge of the institution of any proceedings for the condemnation or taking by eminent domain of any of the Mortgaged Property, shall notify Mortgagee of the pendency of such proceedings. Mortgagee may participate in any such proceedings and Mortgagor shall deliver to Mortgagee all instruments requested by it to permit such participation. Any award or compensation for property taken or for damage to property not taken, whether as a result of such proceedings or in lieu thereof, is hereby assigned to and shall be received and collected directly by Mortgagee, and any award or compensation shall be applied, at Mortgagor's sole option (or, if an Event of Default has occurred and is continuing, Mortgagee's sole option), to all or any part of the Secured Obligations and in any order (notwithstanding that such Secured Obligations may not then otherwise be due and payable) or to the repair and restoration of any of the Mortgaged Property under such terms and conditions as Mortgagee may reasonably impose, provided that such proceeds may be applied to repair and restoration if Mortgagor demonstrates to Mortgagee's reasonable satisfaction that repair and restoration of the affected portion of the Mortgaged Property is feasible and Mortgagor has deposited with Mortgagee any amounts required in addition to such proceeds to complete such repair and restoration. Mortgagor shall not be deemed to have elected such option until such option is elected specifically in writing. Until so elected, Mortgagor shall not in any circumstances be deemed to have waived its right to make such election.

Article 5

Assignment of Leases

5.1      Assignment . Mortgagor hereby absolutely and unconditionally conveys, grants, bargains, sells, assigns, transfers, sets over and delivers to Mortgagee, and its successors and assigns, as of the date hereof, all of Mortgagor's rights, title, interests and privileges in all present and future Leases, including without limitation the following:

(i)     All rents, revenues, issues, income, receipts, profits and other amounts now or hereafter becoming due to Mortgagor under the Leases (whether due for the letting of space, for services, materials or installations supplied by Mortgagor, or for any other reason whatsoever), including without limitation all insurance, tax and other contributions, insurance proceeds, condemnation awards, damages following defaults by tenants under the Leases (hereinafter collectively referred to as the " Tenants ", and singularly as a " Tenant "), cash or securities deposited by Tenants to secure performance of their obligations under the Leases, minimum rents, additional rents, percentage rents, concession rents, room receipt revenues, and all other extraordinary receipts, and all proceeds thereof, both cash and non-cash (all of the foregoing are hereinafter collectively referred to as the " Rents ") and all rights to make claim for, collect, receive and receipt for the Rents;

(ii)     Any sums to which Mortgagor may become entitled in any court proceeding involving the bankruptcy, insolvency or reorganization of any Tenant;

(iii)     All claims, rights, privileges and remedies on the part of Mortgagor, whether arising under the Leases or by statute or at Law or in equity or otherwise, arising out of or in connection with any failure by any Tenant to pay the Rents or to perform any other obligation under any of the Leases;

(iv)     All rights, powers and privileges of Mortgagor to exercise any election or option or to give or receive any notice, consent, waiver or approval under or with respect to the Leases;

(v)     Any payments made by any of the Tenants in lieu of Rents; and

(vi)     All other claims, rights, powers, privileges and remedies of Mortgagor under or with respect to the Leases, including without limitation the right, power and privilege (but not the obligation) to do any and all acts, matters and other things that Mortgagor is entitled to do thereunder or with respect thereto.

The foregoing assignment by Mortgagor to Mortgagee is referred to hereinafter as the " Assignment ".

Notwithstanding the foregoing Assignment, however, Mortgagee hereby grants to Mortgagor a revocable license to receive and use the Rents, and to exercise all of Mortgagor's rights, powers, privileges and remedies under the Leases to the extent an Event of Default is not then existing.

Notwithstanding any provision herein to the contrary, the Assignment set forth herein is an absolute assignment from Mortgagor to Mortgagee of all of Mortgagor's right, title and interest in and to the Leases and the Rents. It is the express intent of the parties hereto that the Assignment is not merely the granting of a security interest as additional collateral, but is an absolute assignment, vesting Mortgagee with full and clear title to the Leases and the Rents as of the date hereof, subject only to the terms and provisions of the Assignment, including the license of Mortgagor to collect rents and operate the Mortgaged Property so long as no Event of Default shall exist hereunder.

5.2      Warranties of Mortgagor . Mortgagor hereby represents and warrants to Mortgagee, as a material inducement to Mortgagee to accept the Assignment, that:

(i)     Mortgagor has full right and power to assign the Leases and Rents and Mortgagor has not assigned, transferred, mortgaged, pledged or otherwise encumbered any of its right, title and interest in, to or under the Leases or the Rents (which prior assignment will not be terminated with the proceeds from the loan evidenced by the Note) and no part of such right, title and interest is subject to any lien or other encumbrance, except in favor of Mortgagee;

(ii)     To its knowledge, Mortgagor has not done anything which might prevent Mortgagee from or limit Mortgagee in operating under any of the provisions hereof;

(iii)     To its knowledge, each of the Leases is a legal, valid and binding obligation of each of the Tenants thereof, enforceable in accordance with its terms;

(iv)     To its knowledge, no material default exists by Mortgagor or any of the Tenants under any of the Leases;

(v)      No Rents have been received by Mortgagor more than thirty (30) days in advance of the time when the same became or becomes due under the terms of the Leases; and

(vi)     There are, as of the date hereof, no Leases in existence which affect all or any portion of the Mortgaged Property other than as disclosed in writing by Mortgagor to Mortgagee prior to the date hereof. Mortgagor covenants and agrees that all future Leases will be subordinate to the lien of this Mortgage.

5.3      Affirmative Covenants of Mortgagor . Mortgagor shall promptly (i) perform all of the material provisions of the Leases on the part of the landlord thereunder to be performed; (ii) where commercially reasonable to do so, enforce all of the material provisions of the Leases on the part of the Tenants thereunder to be performed; (iii) appear in and defend any action or proceeding arising under, growing out of or in any manner connected with the Leases or the obligations of Mortgagor as landlord or of the tenants thereunder; (iv) deliver to Mortgagee, within ten (10) days after a request by Mortgagee, but not more frequently than once in each year unless Mortgagor is in default hereunder, a written statement containing the names of all tenants, the terms of all Leases and the spaces occupied and rentals payable thereunder, and a statement of all Leases which are then in default, including the nature and magnitude of the default, and including such other information as Mortgagee may reasonably request; (v) following the request of Mortgagee for the same, deliver fully executed copies of any future Lease or Leases to the Mortgagee within five (5) days of the execution and delivery of said Lease or Leases; and (vi) upon the occurrence and during the continuance of an Event of Default hereunder, to deposit in a special account with the Mortgagee any and all Rents derived from the Mortgaged Property and hereby assigns, grants, conveys and transfers to Mortgagee a security interest in such account.

5.4      Attornment . Following the occurrence and during the continuance of an Event of Default by Mortgagor and Mortgagee's exercise of any remedy under this Mortgage, the Tenant under each Lease shall at Mortgagee's request attorn in writing to Mortgagee or any other person succeeding to the interest of Mortgagee as a result of such enforcement and shall recognize Mortgagee or such successor in interest as landlord under the Lease without change in the provisions thereof; provided, however, that Mortgagee or such successor in interest shall not be bound by any payment of an installment of rent or additional rent which may have been made more than thirty (30) days before the due date of such installment or sixty (60) days before the end of the period covered by such installment, unless received by Mortgagee.

5.5     Notice of Lease Defaults . Mortgagor shall notify Mortgagee immediately of any default of Mortgagor asserted by any Tenant under a Lease. If Mortgagor fails to contest or cure such default within a reasonable period after notice of such default then Mortgagor expressly authorizes Mortgagee, at its option, to cure such default in order to prevent termination of any Lease by any tenant. If any such Lease is assigned to Mortgagee by separate instrument of assignment, and if, by reason of default of Mortgagor in the performance of any such Lease, the Tenant has the right to cancel such Lease or to claim any diminution of or offset against future rents, then, at the option of Mortgagee, such default shall be an Event of Default hereunder.

5.6      Statement of Receipts and Disbursements . Mortgagor will render to Mortgagee, within twenty (20) days after written demand therefor, a detailed certified statement specifying the rents and profits received from the Mortgaged Property for the period specified in such demand, the disbursements made for such period and the names of all tenants of the Mortgaged Property, together with true and correct copies of all Leases for which rent is so accounted, and including such other information as Mortgagee may reasonably request.

5.7      Management Agreements . Mortgagor shall not enter into any agreement for the management or operation of all or part of the Mortgaged Property (a " Management Agreement ") without (i) furnishing to Mortgagee a copy of such Management Agreement together with such information with respect to the managing party as Mortgagee may reasonably request, (ii) receiving Mortgagee's prior written consent thereto, which consent shall not be unreasonably withheld, (iii) executing an assignment of such Management Agreement in favor of Mortgagee of all of Mortgagor's rights under such Management Agreement, and (iv) delivering a subordination and attornment agreement executed by Mortgagor and Mortgagor's managing agent in favor of Mortgagee, with all documentation described in clauses (i) through (iv) above to be in form and content satisfactory to Mortgagee.

5.8      Negative Covenants of Mortgagor . Mortgagor hereby covenants with Mortgagee that Mortgagor shall not without the consent of Mortgagee (which consent shall not be unreasonably withheld, conditioned or delayed): (i) assign, transfer, mortgage, pledge or otherwise encumber, or permit to accrue or suffer to exist any lien or other encumbrance on or in any of the right, title or interest of Mortgagor in, to or under the Leases or the Rents, except in favor of Mortgagee or as otherwise permitted under the Loan Agreement; (ii) accept any prepayment of Rents under any of the Leases earlier than one (1) month in advance of its due date; (iii) settle or compromise any claim against any Tenant arising out of or in respect of any Lease with respect to a claim against Mortgagor in excess of $50,000 which is not covered by insurance; or (vii) take any other action in connection with any Lease which would materially impair the value of the rights or interest of Mortgagor or Mortgagee thereunder or therein.

5.9      Obligations u nder Leases . Notwithstanding any presumption or any provision contained herein or in the Leases to the contrary, until such time, if any, that Mortgagee takes title to, or control of, the Mortgaged Property, or any part thereof: (i) Mortgagor shall at all times remain solely liable under the Leases to perform all of the obligations of Mortgagor thereunder to the same extent as if the Assignment had not been executed; (ii) neither the Assignment nor any action or inaction on the part of Mortgagor or Mortgagee shall release Mortgagor from any of its obligations under the Leases or constitute an assumption of any such obligations by Mortgagee; and (iii) Mortgagee shall not have any obligation or liability under the Leases or otherwise by reason of or arising out of the Assignment, nor shall Mortgagee be required or obligated in any manner to make any payment or perform any other obligation of Mortgagor under or pursuant to the Leases, or to make any inquiry as to the nature or sufficiency of any payment received by Mortgagee, or to present or file any claim, or to take any action to collect or enforce the payment of any amounts which have been assigned to Mortgagee or to which it may be entitled at any time or times. The exercise of any rights under the Assignment by Mortgagee shall not be deemed or construed to constitute Mortgagee as a mortgagee-in-possession as to the Mortgaged Property nor obligate Mortgagee to take any action hereunder, nor to incur any expenses or perform or discharge any obligation, duty or liability hereunder the Leases.

Article 6

Default

6.1            Events of Default . The occurrence of any one or more of the following events shall constitute an " Event of Default " hereunder:

(a)     A failure to pay any Secured Obligations when due in accordance with the terms thereof, subject to all applicable grace, notice and cure periods; or

(b)     Mortgagor shall fail to perform or observe any of the obligations in Article 3 or 4 of this Mortgage, subject to all applicable grace, notice and cure periods; or

(c)     A failure by Mortgagor to duly perform and observe any other provision in this Mortgage, and such failure shall continue for a period of thirty (30) days after written notice from Mortgagee to Mortgagor, or Mortgagor has knowledge that such failure has occurred, or such longer period as may be reasonably necessary in the case of a default not curable by the exercise of due diligence within such thirty (30) day period, provided that Mortgagor shall have commenced to cure such default within such thirty (30) day period and shall complete such cure as quickly as reasonably possible with the exercise of due diligence; or

(d)     Any representation or warranty made by Mortgagor herein or in any of the Loan Documents or in any other instrument or document which pertains to or is delivered in connection with any of the Secured Obligations proves to be incorrect, now or hereafter, in any material respect; or

(e)     An Event of Default (as defined in the Loan Agreement) shall occur; or

(f)     Mortgagor, or any other obligor or guarantor of any of the Secured Obligations, shall become insolvent or unable to pay its or his or her debts as the same mature, or a petition shall be filed by or against Mortgagor or any such party in bankruptcy or seeking the appointment of a receiver, trustee or conservator for Mortgagor or any such party or for any portion of its or his or her property which shall not have been stayed or dismissed within sixty (60) days after such proceedings were instituted, or for reorganization or to effect a plan or other arrangement with or for the benefit of creditors or Mortgagor or any such party shall consent to the appointment of a receiver, trustee or conservator for Mortgagor or any such party or for any portion of its or his or her property which shall not have been dismissed or stayed within sixty (60) calendar days after such proceedings were instituted; or

(g)     Foreclosure proceedings are instituted against the Mortgaged Property upon any other lien or claim, whether alleged to be superior or junior to the lien of this Mortgage, which shall not have been stayed or dismissed within sixty (60) days after such proceedings were instituted; or

(h)     Mortgagor shall fail to comply with any duty or obligation imposed pursuant to Article 7 hereof or any warranty or representation contained therein shall be incorrect or misleading; or

(i)     Mortgagor shall at any time deliver or cause to be delivered to Mortgagee a notice pursuant to 53 O.R.C. §5301.232 electing to limit the indebtedness secured by this Mortgage.

Article 7

Remedies

7.1      Rights and Remedies of Mortgagee . If an Event of Default occurs, Mortgagee may, at its option and notwithstanding any contrary provisions in the Loan Documents, without demand, notice or delay, do one or more of the following:

(a)     Mortgagee may declare the entire unpaid principal balance of the Secured Obligations, together with all interest thereon, to be due and payable immediately (and in the case of an Event of Default under subsection 5.1(e), all such indebtedness shall automatically and immediately become due and payable without notice or any other act).

(b)     Mortgagee may (i) institute and maintain an action of mortgage foreclosure against the Mortgaged Property and the interests of Mortgagor therein, (ii) institute and maintain an action on any instruments evidencing the Secured Obligations or any portion thereof, and (iii) take such other action at law or in equity for the enforcement of any of the Loan Documents as the law may allow, and in each such action Mortgagee shall be entitled to all costs of suit and attorneys' fees.

(c)     Mortgagee may, in its sole and absolute discretion, and without releasing Mortgagor or any other obligor or guarantor from any obligation under any of the Loan Documents and without waiving any Event of Default: (i) collect any or all of the Rents, including any Rents past due and unpaid, (ii) perform any obligation or exercise any right or remedy of Mortgagor under any Lease, or (iii) enforce any obligation of any tenant of any of the Mortgaged Property. Mortgagee may exercise any right under this subsection (c), whether or not Mortgagee shall have entered into possession of any of the Mortgaged Property, and nothing herein contained shall be construed as constituting Mortgagee a "mortgagee in possession," unless Mortgagee shall have entered into and shall continue to be in actual possession of the Mortgaged Property. Mortgagor hereby authorizes and directs each and every present and future tenant of any of the Mortgaged Property to pay all Rents directly to Mortgagee and to perform all other obligations of that tenant for the direct benefit of Mortgagee, as if Mortgagee were the landlord under the Lease with that tenant, immediately upon receipt of a demand by Mortgagee to make such payment or perform such obligations. Mortgagor hereby waives any right, claim or demand it may now or hereafter have against any such tenant by reason of such payment of Rents or performance of obligations to Mortgagee, and any such payment or performance to Mortgagee shall discharge the obligations of the tenant to make such payment or performance to Mortgagor.

7.2      Sale in Parcels or Units . In case any sale under this Mortgage occurs by virtue of judicial proceedings, the Mortgaged Property may be sold in one parcel or unit and as an entity, or in such parcels or units, and in such manner or order, as Mortgagee in its sole discretion may elect.

7.3     [Omitted.]

7.4      Remedies Cumulative . All remedies contained in this Mortgage are cumulative and Mortgagee also has all other remedies provided by law or in equity or in any of the other Loan Documents. No delay or failure by Mortgagee to exercise any right or remedy under this Mortgage will be construed to be a waiver of that right or remedy or a waiver of any Event of Default. Mortgagee may exercise any one or more of its rights and remedies without regard to the adequacy of its security.

Article 8

Environmental Matters

8.1       Environmental Warranty . Mortgagor represents and warrants to Mortgagee that, except as set forth in any environmental site assessment provided to Mortgagee:

(a)     Neither Mortgagor nor, to the best of Mortgagor's knowledge, any previous owner, lessee, or other occupant of all or any part of the Mortgaged Property, nor any third party, has used, generated, released, discharged, spilled, emitted, stored or otherwise managed any hazardous waste, toxic substances or other regulated materials (all of which are collectively called " Regulated Substances ") on any part of the Mortgaged Property, except in compliance with Environmental Laws (as hereinafter defined). For purposes of this representation and warranty, Regulated Substances shall include (but are not necessarily limited to) any substances that are defined as "hazardous" or "toxic" or otherwise regulated under any local, state or federal Environmental Law (as hereinafter defined).

(b)      Neither the Mortgagor, nor, to the best of Mortgagor's knowledge, any previous owner, Lessee, or other occupant of all or any part of the Mortgaged Property, nor any third party, has disposed of any Regulated Substances on any part of the Mortgaged Property.

(c)      To the best of Mortgagor's knowledge, there is no asbestos or asbestos-containing material located on any part of the Mortgaged Property.

(d)      To the best of Mortgagor's knowledge, the Mortgaged Property is being operated in compliance with all applicable Environmental Laws relating to sewage systems and treatment. If there is on-site sewage treatment, all necessary permits have been obtained and remain in effect with respect to those treatment facilities, and no discharge of raw, untreated or inadequately treated sewage from the Mortgaged Property has occurred or will occur at any time that this Mortgage remains in effect.

(e)      No part of the Mortgaged Property, nor any property adjoining, or in the proximity of, the Mortgaged Property is presently listed as a Superfund Site on the National Priorities List, has been listed on CERCLIS, or has been identified on any similar list compiled by any governmental agency.

(f)      To the best of Mortgagor's knowledge, there are no underground storage tanks located on the Mortgaged Property. Any underground storage tanks located on the Mortgaged Property shall be properly registered under, and all tanks, fuel lines and dispensing equipment shall be maintained in compliance with, all Environmental Laws pertaining to underground storage tanks and dispensing of any product therefrom.

(g)      Mortgagor shall promptly notify Mortgagee in writing of any pending or threatened investigation or litigation by any governmental authority or by any third party relating to the Mortgaged Property and arising under any Environmental Law or alleging a common law or statutory nuisance. Mortgagor shall, within two (2) business days of receipt, deliver to Mortgagee a copy of all notices, pleadings or other materials of any kind received from any public authority or any third party relating in any manner to any of the matters set forth in this Section 7.1.

(h)      Mortgagee shall, within two (2) business days after becoming aware of the release, discharge, spill, or other disposal of any Regulated Substances on any part of the Mortgaged Property, notify Mortgagee in writing as to such occurrence, and Mortgagor shall forthwith proceed to correct or remedy such condition as expeditiously as possible in compliance with all applicable Environmental Laws and in full cooperation with any appropriate governmental authority.

(i)      For purposes of this Section 8.1, the term " Environmental Laws " shall mean all federal, state and local laws, statutes, codes, and ordinances pertaining to the protection of human health or the environment, together with any administrative regulations promulgated under any of the foregoing, including those statutes previously identified above, and further including, but not limited to, the Comprehensive Environmental Response Compensation and Liability Act of 1980, 42 U.S.C.A. 9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.A. 6901, et seq., and ORC Chapters 1511 (Water Pollution), 3704 (Air Pollution), 3734 (Solid & Hazardous Waste), 3747 (Radioactive Waste), and 3751 (Hazardous Substances), all as amended from time to time.

8.2      Environmental Indemnification . Mortgagor covenants and agrees, at its sole cost and expense, to indemnify, protect and hold Mortgagee harmless against and from all claims, damages, losses, liabilities, penalties, fines or judgments, including any attorney's fees, expert fees or costs incurred, arising in any manner out of any of the matters set forth in Section 7.1 above or otherwise arising under any Environmental Law, whether such matters arise before or after the exercise of any remedies by Mortgagee under this Mortgage or the taking of title by Mortgagee to all or any portion of the Mortgaged Property. Indemnified matters shall include, without limitation, all of the following: (i) the costs of removal of any and all Regulated Substances from all or any portion of the Mortgaged Property or any surrounding areas, (ii) additional costs required to take necessary precautions to protect against the release of Regulated Substances on, in, under or affecting the Mortgaged Property onto the land and into the air, any body of water, any other public domain or any surrounding areas and (iii) costs incurred to comply, in connection with all or any portion of the Mortgaged Property or any surrounding areas, with all Environmental Laws with respect to Regulated Substances. The indemnification obligations of this Section 7.2 shall survive repayment of the Secured Obligations and satisfaction of this Mortgage.

Article 9

Additional Rights and Obligations

9.1      Installments for Insurance, Taxes and Other Charges . Without limiting the effect of any other provision of this Mortgage, upon the occurrence and existence of an Event of Default, Mortgagor shall pay to Mortgagee monthly with its payment on the Note, an amount equal to one-twelfth (1/12) of the annual premiums for the insurance policies referred to hereinabove and the annual Impositions and any other item which at any time may be or become a lien upon the Mortgaged Property (the " Escrow Charges "); and on demand, from time to time, Mortgagor shall pay to Mortgagee any additional sums necessary to pay when due all Escrow Charges. Upon the cure of any such Event of Default, the funds held in escrow shall be returned to Mortgagor. No amount so paid to Mortgagee shall be deemed to be trust funds but may be commingled with general funds of Mortgagee, nor shall any sums paid bear interest. Mortgagee shall have the right, upon any exercise of remedies following an Event of Default, at its election, to apply any amount so held against the Secured Obligations due and payable in such order as Mortgagee may deem fit, and Mortgagor hereby grants to Mortgagee a lien upon and security interest in such amounts for such purpose.

9.2      Mortgagee ' s Right to Protect Security . If Mortgagor shall fail to do so, Mortgagee is hereby authorized to do any one or more of the following, irrespective of whether an Event of Default has occurred: (a) appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Mortgagee hereunder; (b) take such action as Mortgagee may determine to pay, perform or comply with any applicable laws, to cure any Events of Default and to protect its security in the Mortgaged Property.

9.3      Mortgagee ' s Costs and Expenses . In the event of an Event of Default or the exercise by Mortgagee of any of its rights hereunder, or if Mortgagee shall become a party, either as plaintiff or defendant or otherwise, to any suit or legal proceeding affecting any of the Mortgaged Property or the Secured Obligations, or if review and approval of any document, or any other matter related to any of the Secured Obligations, is required by, or requested of, Mortgagee, Mortgagor shall pay to Mortgagee on demand its costs, expenses and reasonable attorneys' fees incurred in connection therewith. If such amounts are not paid, they shall be added to the principal secured hereby, shall be included as part of the Secured Obligations and shall bear interest at the Default Rate (as defined in the Loan Agreement) from the date of demand.

9.4      Further Assurances . Mortgagor agrees to execute such further assurances, documents and instruments as may be desirable by Mortgagee for the purposes of further evidencing, carrying out and/or confirming this Mortgage and for all other purposes intended by this Mortgage.

Article 10

Miscellaneous Matters

10.1      Notice .

(a)     Except as otherwise provided in this Mortgage, all notices hereunder shall be in writing and shall be deemed to have been duly given for all purposes when delivered in person, or when deposited in the United States mail, by registered or certified mail, return receipt requested, or delivered to an express courier service for delivery on the next business day, directed in each case to the party to receive the same at the addresses set forth at the beginning of this Mortgage or at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived.

(b)     All notices given by Mortgagor to Mortgagee pursuant to 53 O.R.C. §5301.232shall be given to Mortgagee in accordance with this Section 9.1 and must be signed by all parties necessary to bind Mortgagor in accordance with the applicable documents of formation of Mortgagor and all applicable laws.

10.2      Severability . In the event any one or more of the provisions contained in this Mortgage shall for any reason be held to be inapplicable, invalid, illegal, or unenforceable in any respect, such inapplicability, invalidity, illegality or unenforceability shall not affect any other provision of this Mortgage, but this Mortgage shall be construed as if such inapplicable, invalid, illegal or unenforceable provision had never been contained herein.

10.3      Successors and Assigns . All of the grants, covenants, terms, provisions and conditions herein shall run with the land and shall apply to, bind and inure to the benefit of the successors and assigns of Mortgagor and Mortgagee.

10.4      No Oral Modification . This Mortgage may be modified, amended, discharged or waived only by an agreement in writing, signed by all of the parties hereto.

10.5      Defeasance . If Mortgagor pays to Mortgagee in full the Secured Obligations, then this Mortgage shall become void. Mortgagee shall, upon request and at no cost to Mortgagor, execute and deliver to Mortgagor a satisfaction of this Mortgage, in form and substance suitable for recording, with Mortgagor being solely responsible for the cost of recording such satisfaction.

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[Signature Page to Open-End Mortgage and Security Agreement]

IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly executed the day and year first above written.

STATE OF OHIO	)
	)     SS:
COUNTY OF  TRUMBULL	)

On this, the  15th day of December, 2016, before me, the undersigned officer, personally appeared Bryan P. Saksa , who acknowledged himself to be the  Treasurer/Secretary of AVALON LAKES GOLF, INC. , an Ohio corporation, and that as such officer being authorized to do so, executed the foregoing document on behalf of such corporation.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

	/s/ Kevin L. Bradford
	Notary Public

My commission expires:

Exhibit A

Legal Description

Exhibit 10.5

OPEN-END MORTGAGE, ASSIGNMENT OF LEASES,

SECURITY AGREEMENT AND FIXTURE FILING

AVALON RESORT AND SPA, LLC ,

MORTGAGOR ,

AND

LAUREL CAPITAL CORPORATION ,

MORTGAGEE

Dated as of December 1, 2016

and Effective as of December 20, 2016

OPEN-END MORTGAGE , ASSIGNMENT OF LEASES,

SECURITY AGREEMENT AND FIXTURE FILING

THIS MORTGAGE SECURES FUTURE ADVANCES

(All notices to be given to Mortgagee pursuant to

53 O.R.C. §5301.232 shall be given as set forth in

Section 9.1 of this Mortgage.)

This Open-End Mortgage, Assignment of Leases, Security Agreement and Fixture Filing (this " Mortgage ") dated as of December 1, 2016 and effective as of December 20, 2016 (the " Effective Date ") by AVALON RESORT AND SPA, LLC , an Ohio limited liability company, with an address at 9519 East Market Street, Warren, OH 44484 (" Mortgagor "), in favor of LAUREL CAPITAL CORPORATION , with an address at 6600 Brooktree Court, Suite 3000, Wexford, PA 15090-0839 (" Mortgagee ").

This Mortgage is an "Open-End Mortgage" as set forth in 53 O.R.C. §5301.232 and secures obligations up to a maximum amount of indebtedness outstanding at any time equal to double the face amount of the Note (as hereinafter defined), plus accrued and unpaid interest, including, but not limited to, advances for the payment of taxes and municipal assessments, maintenance charges, insurance premiums, costs incurred for the protection of the Mortgaged Property or the lien of this Mortgage, expenses incurred by Mortgagee by reason of default by Mortgagor under this Mortgage and advances for construction, alteration or renovation on the Mortgaged Property or for any other purpose, together with all other sums due hereunder or secured hereby.

WITNESSETH:

WHEREAS, Mortgagor is the owner of certain real estate situate in the City of Warren, Trumbull County, Ohio, as more fully described in Exhibit A attached hereto and made a part hereof (the " Premises "), together with the improvements now or hereafter erected thereon.

NOW, THEREFORE, for the purpose of securing the payment and performance of the following obligations (collectively called the " Secured Obligations "):

(A)     All indebtedness, together with all interest thereon, evidenced by that certain Mortgage Note dated the Effective Date from Mortgagor, Avalon Holdings Corporation, Avalon Country Club at Sharon, Inc. , Avalon Resorts and Clubs, Inc., Avalon Clubs, Inc., Avalon Resorts, Inc., Avalon Golf and Country Club, Inc., Avalon Lakes Golf, Inc., The Havana Cigar Shop, Inc., Avalon Travel, Inc. and TBG, Inc. (together with Mortgagor, the " Borrower s ") to Mortgagee in the principal face amount of $12,000,000 (as the same may be amended, supplemented or replaced from time to time, the " Note "), the provisions of the Note being incorporated herein by this reference, and all other Obligations (as such term is defined in the Loan Agreement dated the effective date hereof among the Borrowers and Mortgagee (as the same may be amended, supplemented or replaced from time to time, the " Loan Agreement "));

(B)     Any sums advanced by Mortgagee or which may otherwise become due pursuant to the provisions of the Note, this Mortgage or pursuant to any other document or instrument at any time delivered to Mortgagee to evidence or secure any of the Secured Obligations or which otherwise relate to any of the Secured Obligations or the Loan Documents (as such term is defined in the Loan Agreement).

Mortgagor, for good and valuable consideration, receipt of which is hereby acknowledged, and intending to be legally bound hereby, does hereby give, grant, bargain, sell, convey, mortgage, pledge and confirm unto Mortgagee and does agree that Mortgagee shall have a mortgage and security interest in, and lien upon, the following described property (collectively, the " Mortgaged Property "), now owned or held or hereafter acquired, to wit:

(i)     All of Mortgagor's estate in the Premises, together with all of the easements, rights of way, privileges, liberties, hereditaments, rights and appurtenances thereunto belonging and all of the estate, right, title, interest, claim and demand whatsoever of Mortgagor therein and in the public streets and ways adjacent thereto, either in law or in equity, in possession or expectancy (collectively, the " Realty ");

(ii)     The structures and buildings, and all additions and improvements thereto, now or hereafter erected upon the Realty (including all Equipment, as hereinafter defined, constituting fixtures) (collectively, the " Improvements ");

(iii)     All present and future leases, subleases licenses and concessions or grants of any possessory interest covering all or any portion of the Mortgaged Property whether written or oral; all agreements for use, occupancy or enjoyment of any portion of the Mortgaged Property and any leases, lettings or agreements (including rights in respect of tenants holding over and tenancies following attornment) of all or any part of the Mortgaged Property; any and all guarantees of the performance of any lessee under any lease; and any extensions, amendments, modifications, substitutions or supplements to any lease (collectively, the " Leases " or singularly, a " Lease "), and including further, the right to receive and collect the rents (the " Rents ") thereunder and all guaranties thereof;

(iv)     All machinery, apparatus, equipment, fittings, appliances and fixtures of every kind and nature whatsoever, and regardless of whether the same may now or hereafter be attached or affixed to the Realty or the Improvements (collectively, the " Equipment ");

TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee, its successors and assigns, to its own use forever in accordance with the provisions hereof,

Article 1

Representations and Warranties

Mortgagor represents and warrants to Mortgagee as follows:

1.1       Warranty of Title . Mortgagor has good and marketable title to an estate in fee simple absolute in the Realty and Improvements and has all right, title and interest in all other property constituting a part of the Mortgaged Property, in each case free and clear of all liens and encumbrances, except as set forth on Schedule 1.1 hereto or as may otherwise be approved in writing by Mortgagee. This Mortgage is a valid and enforceable first lien on the Mortgaged Property, and Mortgagee shall, subject to Mortgagor's right of possession prior to an Event of Default, quietly enjoy and possess the Mortgaged Property. Mortgagor shall preserve such title as it warrants herein and the validity and priority of the lien hereof and shall forever warrant and defend the same to Mortgagee against the claims of all persons and parties whomsoever.

Article 2

Affirmative Covenants

2.1      Payment and Performance of Secured Obligations . Mortgagor shall pay and perform all Secured Obligations when due as provided in the Loan Documents.

2.2      Legal Requirements . Mortgagor shall promptly comply with and conform to all present and future laws, statutes, codes, ordinances, orders and regulations and all covenants, restrictions and conditions which may be applicable to Mortgagor or to any of the Mortgaged Property where the failure to do so would have a material adverse effect upon the Mortgagor or the Mortgaged Property (collectively, the " Legal Requirements ").

2.3       Impositions .

(a)      Before interest or penalties are due thereon and otherwise when due, Mortgagor shall pay all taxes of every kind and nature, all charges for any easement or agreement maintained for the benefit of any of the Mortgaged Property, all general and special assessments (including, without limitation, any condominium or planned unit development assessments, if any), levies, permits, inspection and license fees, all water and sewer rents and charges, and all other charges and liens, whether of a like or different nature, imposed upon or assessed against Mortgagor or any of the Mortgaged Property. The obligations referred to in this Section are hereinafter collectively referred to as the " Impositions ." Promptly upon request, Mortgagor shall deliver to Mortgagee evidence acceptable to Mortgagee of such payment.

(b)      If Mortgagor shall fail to do so after written demand from Mortgagee, Mortgagee may pay or perform any Imposition not paid by Mortgagor within 30 days of the due date and add the amount so paid or the cost incurred to the Secured Obligations, and all such amounts shall on demand be due and payable.

2.4       Maintenance and Impairment of Security . Mortgagor shall keep the Mortgaged Property in such condition, order and state of repair as is necessary for the operation of Mortgagor's business in the ordinary course as currently being conducted and will make or cause to be made, as and when necessary, all repairs, renewals, and replacements, structural and nonstructural, exterior and interior, foreseen and unforeseen, ordinary and extraordinary. Mortgagor shall not remove, demolish or alter the Mortgaged Property nor commit or suffer waste with respect thereto, nor permit the Mortgaged Property to become deserted or abandoned. Mortgagor shall permit Mortgagee and its agents at any time, and from time to time upon reasonable prior notice, to enter upon and visit the Mortgaged Property for the purpose of inspecting and appraising the same. Mortgagor covenants and agrees not to take or permit any action with respect to the Mortgaged Property which will in any manner impair the security of this Mortgage.

2.5       Use of Mortgaged Property . Mortgagor shall use, and permit others to use, the Mortgaged Property only for uses permitted under applicable laws.

2.6       Books and Records . Mortgagor shall maintain and Mortgagee shall have access to complete and adequate books of account and other records relating to the Mortgaged Property as Mortgagee may reasonably require. Mortgagor shall permit Mortgagee to photocopy such books and records.

Article 3

Negative Covenants

Until all of the Secured Obligations shall have been fully paid, satisfied and discharged:

3.1       Leases . Mortgagor shall not (a) execute an assignment or pledge of the Rents and/or the Leases other than in favor of Mortgagee; (b) accept any prepayment of an installment of any Rents prior to the due date of such installment in excess of 30 days in advance; or (c) except in the ordinary course of Mortgagor's business (which shall include customary rental arrangements relating to the hotel and banquet facilities operated on the Mortgaged Property) enter into any lease; or (d) amend any of the material terms of any of the Leases without Mortgagee's prior written consent, which consent shall not be withheld if to do so would be detrimental to the Project or the Mortgagor.

3.2       Sale of Mortgaged Property, Etc . Mortgagor shall not sell, assign, give, mortgage, pledge, hypothecate, encumber, lease or otherwise transfer the Mortgaged Property, or any part thereof or interest therein, voluntarily or involuntarily, without Mortgagee's prior written consent, which consent shall not be unreasonably withheld.

Article 4

Insurance, Condemnation and Restoration

4.1       Insurance .

(a)      Mortgagor shall maintain comprehensive public liability insurance, fire insurance with extended coverage, builder's risk insurance with respect to any construction, renovation or reconstruction, contractual liability insurance for all indemnification obligations of Mortgagor under all Leases and such other insurance as shall be required under Section 6.6 of the Loan Agreement or as otherwise may be required from time to time by Mortgagee. The amounts, coverages and other terms and conditions of the insurance policies shall at all times be reasonably satisfactory to Mortgagee and shall satisfy any coinsurance requirements of Mortgagee. Mortgagor shall pay as they become due all premiums for such insurance, shall keep each policy in full force and effect, shall deliver to Mortgagee evidence of the payment of the full premium therefor at least twenty (20) days prior to the expiration date of each policy and shall deliver to Mortgagee original policies of insurance, with noncontributory mortgagee clause, and lender loss payee endorsement in favor of and acceptable to Mortgagee. Mortgagor's liability insurance policy shall specifically name Mortgagee as an additional insured, and Mortgagor's fire and builder's risk insurance shall name Mortgagee as mortgagee. Each policy shall provide for written notice to Mortgagee at least thirty (30) days prior to any cancellation, nonrenewal or amendment of such insurance.

(b)      If the Mortgaged Property is located in an area which has been identified by any governmental agency, authority or body as a flood hazard area or the like, then Mortgagor shall maintain a flood insurance policy covering the improvements to the affected portion of the Mortgaged Property (or, if the portion of the Mortgaged Property located in such flood hazard area is part of the golf course, the land within the flood hazard area) in an amount not less than the full replacement value of the Mortgaged Property or the maximum limit of coverage available under the federal program, whichever amount is less.

(c)      If Mortgagor shall not at any time comply with the terms of this Section, irrespective of the passage of any grace period, Mortgagee may cure such non-compliance and may purchase such insurance as it may elect. Mortgagor shall reimburse Mortgagee on demand for any costs incurred by Mortgagee in connection with any such actions, together with interest at the Default Rate (as defined in the Loan Agreement). Any such actions by Mortgagee shall not constitute a waiver of any non-compliance of the terms of this Mortgage by Mortgagor.

4.2       Rights of Mortgagee to Proceeds . In the event of loss, Mortgagee shall have the exclusive right to adjust, collect and compromise all insurance claims, and Mortgagor shall not adjust, collect or compromise any claims under such policies without the prior written consent of Mortgagee, which shall not be unreasonably withheld. Each insurer is hereby authorized and directed to make payment under such policies, including return of unearned premiums, directly to Mortgagee instead of to Mortgagor and Mortgagee jointly, and Mortgagor appoints Mortgagee as Mortgagor's attorney-in-fact to endorse any draft therefor. All insurance proceeds shall be payable to Mortgagee and such proceeds may, at Mortgagor's sole option (or, if an Event of Default has occurred and is continuing, Mortgagee's sole option), be applied to all or any part of the Secured Obligations and in any order (notwithstanding that such Secured Obligations may not then otherwise be due and payable) or to the repair and restoration of any of the Mortgaged Property under such terms and conditions as Mortgagee may reasonably impose, provided that such proceeds may be applied to repair and restoration if Mortgagor demonstrates to Mortgagee's reasonable satisfaction that repair and restoration of the affected portion of the Mortgaged Property is feasible and Mortgagor has deposited with Mortgagee any amounts required in addition to such proceeds to complete such repair and restoration. Mortgagor shall not be deemed to have elected such option until such option is elected specifically in writing. Until so elected, Mortgagor shall not in any circumstances be deemed to have waived its right to make such election.

4.3       Condemnation . Mortgagor, immediately upon obtaining knowledge of the institution of any proceedings for the condemnation or taking by eminent domain of any of the Mortgaged Property, shall notify Mortgagee of the pendency of such proceedings. Mortgagee may participate in any such proceedings and Mortgagor shall deliver to Mortgagee all instruments requested by it to permit such participation. Any award or compensation for property taken or for damage to property not taken, whether as a result of such proceedings or in lieu thereof, is hereby assigned to and shall be received and collected directly by Mortgagee, and any award or compensation shall be applied, at Mortgagor's sole option (or, if an Event of Default has occurred and is continuing, Mortgagee's sole option), to all or any part of the Secured Obligations and in any order (notwithstanding that such Secured Obligations may not then otherwise be due and payable) or to the repair and restoration of any of the Mortgaged Property under such terms and conditions as Mortgagee may reasonably impose, provided that such proceeds may be applied to repair and restoration if Mortgagor demonstrates to Mortgagee's reasonable satisfaction that repair and restoration of the affected portion of the Mortgaged Property is feasible and Mortgagor has deposited with Mortgagee any amounts required in addition to such proceeds to complete such repair and restoration. Mortgagor shall not be deemed to have elected such option until such option is elected specifically in writing. Until so elected, Mortgagor shall not in any circumstances be deemed to have waived its right to make such election.

Article 5

Assignment of Leases

5.1      Assignment . Mortgagor hereby absolutely and unconditionally conveys, grants, bargains, sells, assigns, transfers, sets over and delivers to Mortgagee, and its successors and assigns, as of the date hereof, all of Mortgagor's rights, title, interests and privileges in all present and future Leases, including without limitation the following:

(i)     All rents, revenues, issues, income, receipts, profits and other amounts now or hereafter becoming due to Mortgagor under the Leases (whether due for the letting of space, for services, materials or installations supplied by Mortgagor, or for any other reason whatsoever), including without limitation all insurance, tax and other contributions, insurance proceeds, condemnation awards, damages following defaults by tenants under the Leases (hereinafter collectively referred to as the " Tenants ", and singularly as a " Tenant "), cash or securities deposited by Tenants to secure performance of their obligations under the Leases, minimum rents, additional rents, percentage rents, concession rents, room receipt revenues, and all other extraordinary receipts, and all proceeds thereof, both cash and non-cash (all of the foregoing are hereinafter collectively referred to as the " Rents ") and all rights to make claim for, collect, receive and receipt for the Rents;

(ii)     Any sums to which Mortgagor may become entitled in any court proceeding involving the bankruptcy, insolvency or reorganization of any Tenant;

(iii)    All claims, rights, privileges and remedies on the part of Mortgagor, whether arising under the Leases or by statute or at Law or in equity or otherwise, arising out of or in connection with any failure by any Tenant to pay the Rents or to perform any other obligation under any of the Leases;

(iv)     All rights, powers and privileges of Mortgagor to exercise any election or option or to give or receive any notice, consent, waiver or approval under or with respect to the Leases;

(v)     Any payments made by any of the Tenants in lieu of Rents; and

(vi)    All other claims, rights, powers, privileges and remedies of Mortgagor under or with respect to the Leases, including without limitation the right, power and privilege (but not the obligation) to do any and all acts, matters and other things that Mortgagor is entitled to do thereunder or with respect thereto.

The foregoing assignment by Mortgagor to Mortgagee is referred to hereinafter as the " Assignment ".

Notwithstanding the foregoing Assignment, however, Mortgagee hereby grants to Mortgagor a revocable license to receive and use the Rents, and to exercise all of Mortgagor's rights, powers, privileges and remedies under the Leases to the extent an Event of Default is not then existing.

Notwithstanding any provision herein to the contrary, the Assignment set forth herein is an absolute assignment from Mortgagor to Mortgagee of all of Mortgagor's right, title and interest in and to the Leases and the Rents. It is the express intent of the parties hereto that the Assignment is not merely the granting of a security interest as additional collateral, but is an absolute assignment, vesting Mortgagee with full and clear title to the Leases and the Rents as of the date hereof, subject only to the terms and provisions of the Assignment, including the license of Mortgagor to collect rents and operate the Mortgaged Property so long as no Event of Default shall exist hereunder.

5.2      Warranties of Mortgagor . Mortgagor hereby represents and warrants to Mortgagee, as a material inducement to Mortgagee to accept the Assignment, that:

(i)     Mortgagor has full right and power to assign the Leases and Rents and Mortgagor has not assigned, transferred, mortgaged, pledged or otherwise encumbered any of its right, title and interest in, to or under the Leases or the Rents (which prior assignment will not be terminated with the proceeds from the loan evidenced by the Note) and no part of such right, title and interest is subject to any lien or other encumbrance, except in favor of Mortgagee;

(ii)     To its knowledge, Mortgagor has not done anything which might prevent Mortgagee from or limit Mortgagee in operating under any of the provisions hereof;

(iii)     To its knowledge, each of the Leases is a legal, valid and binding obligation of each of the Tenants thereof, enforceable in accordance with its terms;

(iv)     To its knowledge, no material default exists by Mortgagor or any of the Tenants under any of the Leases;

(v)      No Rents have been received by Mortgagor more than thirty (30) days in advance of the time when the same became or becomes due under the terms of the Leases; and

(vi)     There are, as of the date hereof, no Leases in existence which affect all or any portion of the Mortgaged Property other than as disclosed in writing by Mortgagor to Mortgagee prior to the date hereof. Mortgagor covenants and agrees that all future Leases will be subordinate to the lien of this Mortgage.

5.3      Affirmative Covenants of Mortgagor . Mortgagor shall promptly (i) perform all of the material provisions of the Leases on the part of the landlord thereunder to be performed; (ii) where commercially reasonable to do so, enforce all of the material provisions of the Leases on the part of the Tenants thereunder to be performed; (iii) appear in and defend any action or proceeding arising under, growing out of or in any manner connected with the Leases or the obligations of Mortgagor as landlord or of the tenants thereunder; (iv) deliver to Mortgagee, within ten (10) days after a request by Mortgagee, but not more frequently than once in each year unless Mortgagor is in default hereunder, a written statement containing the names of all tenants, the terms of all Leases and the spaces occupied and rentals payable thereunder, and a statement of all Leases which are then in default, including the nature and magnitude of the default, and including such other information as Mortgagee may reasonably request; (v) following the request of Mortgagee for the same, deliver fully executed copies of any future Lease or Leases to the Mortgagee within five (5) days of the execution and delivery of said Lease or Leases; and (vi) upon the occurrence and during the continuance of an Event of Default hereunder, to deposit in a special account with the Mortgagee any and all Rents derived from the Mortgaged Property and hereby assigns, grants, conveys and transfers to Mortgagee a security interest in such account.

5.4      Attornment . Following the occurrence and during the continuance of an Event of Default by Mortgagor and Mortgagee's exercise of any remedy under this Mortgage, the Tenant under each Lease shall at Mortgagee's request attorn in writing to Mortgagee or any other person succeeding to the interest of Mortgagee as a result of such enforcement and shall recognize Mortgagee or such successor in interest as landlord under the Lease without change in the provisions thereof; provided, however, that Mortgagee or such successor in interest shall not be bound by any payment of an installment of rent or additional rent which may have been made more than thirty (30) days before the due date of such installment or sixty (60) days before the end of the period covered by such installment, unless received by Mortgagee.

5.5     Notice of Lease Defaults . Mortgagor shall notify Mortgagee immediately of any default of Mortgagor asserted by any Tenant under a Lease. If Mortgagor fails to contest or cure such default within a reasonable period after notice of such default then Mortgagor expressly authorizes Mortgagee, at its option, to cure such default in order to prevent termination of any Lease by any tenant. If any such Lease is assigned to Mortgagee by separate instrument of assignment, and if, by reason of default of Mortgagor in the performance of any such Lease, the Tenant has the right to cancel such Lease or to claim any diminution of or offset against future rents, then, at the option of Mortgagee, such default shall be an Event of Default hereunder.

5.6      Statement of Receipts and Disbursements . Mortgagor will render to Mortgagee, within twenty (20) days after written demand therefor, a detailed certified statement specifying the rents and profits received from the Mortgaged Property for the period specified in such demand, the disbursements made for such period and the names of all tenants of the Mortgaged Property, together with true and correct copies of all Leases for which rent is so accounted, and including such other information as Mortgagee may reasonably request.

5.7      Management Agreements . Mortgagor shall not enter into any agreement for the management or operation of all or part of the Mortgaged Property (a " Management Agreement ") without (i) furnishing to Mortgagee a copy of such Management Agreement together with such information with respect to the managing party as Mortgagee may reasonably request, (ii) receiving Mortgagee's prior written consent thereto, which consent shall not be unreasonably withheld, (iii) executing an assignment of such Management Agreement in favor of Mortgagee of all of Mortgagor's rights under such Management Agreement, and (iv) delivering a subordination and attornment agreement executed by Mortgagor and Mortgagor's managing agent in favor of Mortgagee, with all documentation described in clauses (i) through (iv) above to be in form and content satisfactory to Mortgagee.

5.8      Negative Covenants of Mortgagor . Mortgagor hereby covenants with Mortgagee that Mortgagor shall not without the consent of Mortgagee (which consent shall not be unreasonably withheld, conditioned or delayed): (i) assign, transfer, mortgage, pledge or otherwise encumber, or permit to accrue or suffer to exist any lien or other encumbrance on or in any of the right, title or interest of Mortgagor in, to or under the Leases or the Rents, except in favor of Mortgagee or as otherwise permitted under the Loan Agreement; (ii) accept any prepayment of Rents under any of the Leases earlier than one (1) month in advance of its due date; (iii) settle or compromise any claim against any Tenant arising out of or in respect of any Lease with respect to a claim against Mortgagor in excess of $50,000 which is not covered by insurance; or (vii) take any other action in connection with any Lease which would materially impair the value of the rights or interest of Mortgagor or Mortgagee thereunder or therein.

5.9      Obligations u nder Leases . Notwithstanding any presumption or any provision contained herein or in the Leases to the contrary, until such time, if any, that Mortgagee takes title to, or control of, the Mortgaged Property, or any part thereof: (i) Mortgagor shall at all times remain solely liable under the Leases to perform all of the obligations of Mortgagor thereunder to the same extent as if the Assignment had not been executed; (ii) neither the Assignment nor any action or inaction on the part of Mortgagor or Mortgagee shall release Mortgagor from any of its obligations under the Leases or constitute an assumption of any such obligations by Mortgagee; and (iii) Mortgagee shall not have any obligation or liability under the Leases or otherwise by reason of or arising out of the Assignment, nor shall Mortgagee be required or obligated in any manner to make any payment or perform any other obligation of Mortgagor under or pursuant to the Leases, or to make any inquiry as to the nature or sufficiency of any payment received by Mortgagee, or to present or file any claim, or to take any action to collect or enforce the payment of any amounts which have been assigned to Mortgagee or to which it may be entitled at any time or times. The exercise of any rights under the Assignment by Mortgagee shall not be deemed or construed to constitute Mortgagee as a mortgagee-in-possession as to the Mortgaged Property nor obligate Mortgagee to take any action hereunder, nor to incur any expenses or perform or discharge any obligation, duty or liability hereunder the Leases.

Article 6

Default

6.1      Events of Default . The occurrence of any one or more of the following events shall constitute an " Event of Default " hereunder:

(a)     A failure to pay any Secured Obligations when due in accordance with the terms thereof, subject to all applicable grace, notice and cure periods; or

(b)     Mortgagor shall fail to perform or observe any of the obligations in Article 3 or 4 of this Mortgage, subject to all applicable grace, notice and cure periods; or

(c)     A failure by Mortgagor to duly perform and observe any other provision in this Mortgage, and such failure shall continue for a period of thirty (30) days after written notice from Mortgagee to Mortgagor, or Mortgagor has knowledge that such failure has occurred, or such longer period as may be reasonably necessary in the case of a default not curable by the exercise of due diligence within such thirty (30) day period, provided that Mortgagor shall have commenced to cure such default within such thirty (30) day period and shall complete such cure as quickly as reasonably possible with the exercise of due diligence; or

(d)     Any representation or warranty made by Mortgagor herein or in any of the Loan Documents or in any other instrument or document which pertains to or is delivered in connection with any of the Secured Obligations proves to be incorrect, now or hereafter, in any material respect; or

(e)     An Event of Default (as defined in the Loan Agreement) shall occur; or

(f)     Mortgagor, or any other obligor or guarantor of any of the Secured Obligations, shall become insolvent or unable to pay its or his or her debts as the same mature, or a petition shall be filed by or against Mortgagor or any such party in bankruptcy or seeking the appointment of a receiver, trustee or conservator for Mortgagor or any such party or for any portion of its or his or her property which shall not have been stayed or dismissed within sixty (60) days after such proceedings were instituted, or for reorganization or to effect a plan or other arrangement with or for the benefit of creditors or Mortgagor or any such party shall consent to the appointment of a receiver, trustee or conservator for Mortgagor or any such party or for any portion of its or his or her property which shall not have been dismissed or stayed within sixty (60) calendar days after such proceedings were instituted; or

(g)     Foreclosure proceedings are instituted against the Mortgaged Property upon any other lien or claim, whether alleged to be superior or junior to the lien of this Mortgage, which shall not have been stayed or dismissed within sixty (60) days after such proceedings were instituted; or

(h)     Mortgagor shall fail to comply with any duty or obligation imposed pursuant to Article 7 hereof or any warranty or representation contained therein shall be incorrect or misleading; or

(i)     Mortgagor shall at any time deliver or cause to be delivered to Mortgagee a notice pursuant to 53 O.R.C. §5301.232 electing to limit the indebtedness secured by this Mortgage.

Article 7

Remedies

7.1      Rights and Remedies of Mortgagee . If an Event of Default occurs, Mortgagee may, at its option and notwithstanding any contrary provisions in the Loan Documents, without demand, notice or delay, do one or more of the following:

(a)     Mortgagee may declare the entire unpaid principal balance of the Secured Obligations, together with all interest thereon, to be due and payable immediately (and in the case of an Event of Default under subsection 5.1(e), all such indebtedness shall automatically and immediately become due and payable without notice or any other act).

(b)     Mortgagee may (i) institute and maintain an action of mortgage foreclosure against the Mortgaged Property and the interests of Mortgagor therein, (ii) institute and maintain an action on any instruments evidencing the Secured Obligations or any portion thereof, and (iii) take such other action at law or in equity for the enforcement of any of the Loan Documents as the law may allow, and in each such action Mortgagee shall be entitled to all costs of suit and attorneys' fees.

(c)     Mortgagee may, in its sole and absolute discretion, and without releasing Mortgagor or any other obligor or guarantor from any obligation under any of the Loan Documents and without waiving any Event of Default: (i) collect any or all of the Rents, including any Rents past due and unpaid, (ii) perform any obligation or exercise any right or remedy of Mortgagor under any Lease, or (iii) enforce any obligation of any tenant of any of the Mortgaged Property. Mortgagee may exercise any right under this subsection (c), whether or not Mortgagee shall have entered into possession of any of the Mortgaged Property, and nothing herein contained shall be construed as constituting Mortgagee a "mortgagee in possession," unless Mortgagee shall have entered into and shall continue to be in actual possession of the Mortgaged Property. Mortgagor hereby authorizes and directs each and every present and future tenant of any of the Mortgaged Property to pay all Rents directly to Mortgagee and to perform all other obligations of that tenant for the direct benefit of Mortgagee, as if Mortgagee were the landlord under the Lease with that tenant, immediately upon receipt of a demand by Mortgagee to make such payment or perform such obligations. Mortgagor hereby waives any right, claim or demand it may now or hereafter have against any such tenant by reason of such payment of Rents or performance of obligations to Mortgagee, and any such payment or performance to Mortgagee shall discharge the obligations of the tenant to make such payment or performance to Mortgagor.

7.2      Sale in Parcels or Units . In case any sale under this Mortgage occurs by virtue of judicial proceedings, the Mortgaged Property may be sold in one parcel or unit and as an entity, or in such parcels or units, and in such manner or order, as Mortgagee in its sole discretion may elect.

7.3     [Omitted.]

7.4      Remedies Cumulative . All remedies contained in this Mortgage are cumulative and Mortgagee also has all other remedies provided by law or in equity or in any of the other Loan Documents. No delay or failure by Mortgagee to exercise any right or remedy under this Mortgage will be construed to be a waiver of that right or remedy or a waiver of any Event of Default. Mortgagee may exercise any one or more of its rights and remedies without regard to the adequacy of its security.

Article 8

Environmental Matters

8.1       Environmental Warranty . Mortgagor represents and warrants to Mortgagee that, except as set forth in any environmental site assessment provided to Mortgagee:

(a)     Neither Mortgagor nor, to the best of Mortgagor's knowledge, any previous owner, lessee, or other occupant of all or any part of the Mortgaged Property, nor any third party, has used, generated, released, discharged, spilled, emitted, stored or otherwise managed any hazardous waste, toxic substances or other regulated materials (all of which are collectively called " Regulated Substances ") on any part of the Mortgaged Property, except in compliance with Environmental Laws (as hereinafter defined). For purposes of this representation and warranty, Regulated Substances shall include (but are not necessarily limited to) any substances that are defined as "hazardous" or "toxic" or otherwise regulated under any local, state or federal Environmental Law (as hereinafter defined).

(b)      Neither the Mortgagor, nor, to the best of Mortgagor's knowledge, any previous owner, Lessee, or other occupant of all or any part of the Mortgaged Property, nor any third party, has disposed of any Regulated Substances on any part of the Mortgaged Property.

(c)      To the best of Mortgagor's knowledge, there is no asbestos or asbestos-containing material located on any part of the Mortgaged Property.

(d)      To the best of Mortgagor's knowledge, the Mortgaged Property is being operated in compliance with all applicable Environmental Laws relating to sewage systems and treatment. If there is on-site sewage treatment, all necessary permits have been obtained and remain in effect with respect to those treatment facilities, and no discharge of raw, untreated or inadequately treated sewage from the Mortgaged Property has occurred or will occur at any time that this Mortgage remains in effect.

(e)      No part of the Mortgaged Property, nor any property adjoining, or in the proximity of, the Mortgaged Property is presently listed as a Superfund Site on the National Priorities List, has been listed on CERCLIS, or has been identified on any similar list compiled by any governmental agency.

(f)      To the best of Mortgagor's knowledge, there are no underground storage tanks located on the Mortgaged Property. Any underground storage tanks located on the Mortgaged Property shall be properly registered under, and all tanks, fuel lines and dispensing equipment shall be maintained in compliance with, all Environmental Laws pertaining to underground storage tanks and dispensing of any product therefrom.

(g)      Mortgagor shall promptly notify Mortgagee in writing of any pending or threatened investigation or litigation by any governmental authority or by any third party relating to the Mortgaged Property and arising under any Environmental Law or alleging a common law or statutory nuisance. Mortgagor shall, within two (2) business days of receipt, deliver to Mortgagee a copy of all notices, pleadings or other materials of any kind received from any public authority or any third party relating in any manner to any of the matters set forth in this Section 7.1.

(h)      Mortgagee shall, within two (2) business days after becoming aware of the release, discharge, spill, or other disposal of any Regulated Substances on any part of the Mortgaged Property, notify Mortgagee in writing as to such occurrence, and Mortgagor shall forthwith proceed to correct or remedy such condition as expeditiously as possible in compliance with all applicable Environmental Laws and in full cooperation with any appropriate governmental authority.

(i)      For purposes of this Section 8.1, the term " Environmental Laws " shall mean all federal, state and local laws, statutes, codes, and ordinances pertaining to the protection of human health or the environment, together with any administrative regulations promulgated under any of the foregoing, including those statutes previously identified above, and further including, but not limited to, the Comprehensive Environmental Response Compensation and Liability Act of 1980, 42 U.S.C.A. 9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.A. 6901, et seq., and ORC Chapters 1511 (Water Pollution), 3704 (Air Pollution), 3734 (Solid & Hazardous Waste), 3747 (Radioactive Waste), and 3751 (Hazardous Substances), all as amended from time to time.

8.2      Environmental Indemnification . Mortgagor covenants and agrees, at its sole cost and expense, to indemnify, protect and hold Mortgagee harmless against and from all claims, damages, losses, liabilities, penalties, fines or judgments, including any attorney's fees, expert fees or costs incurred, arising in any manner out of any of the matters set forth in Section 7.1 above or otherwise arising under any Environmental Law, whether such matters arise before or after the exercise of any remedies by Mortgagee under this Mortgage or the taking of title by Mortgagee to all or any portion of the Mortgaged Property. Indemnified matters shall include, without limitation, all of the following: (i) the costs of removal of any and all Regulated Substances from all or any portion of the Mortgaged Property or any surrounding areas, (ii) additional costs required to take necessary precautions to protect against the release of Regulated Substances on, in, under or affecting the Mortgaged Property onto the land and into the air, any body of water, any other public domain or any surrounding areas and (iii) costs incurred to comply, in connection with all or any portion of the Mortgaged Property or any surrounding areas, with all Environmental Laws with respect to Regulated Substances. The indemnification obligations of this Section 7.2 shall survive repayment of the Secured Obligations and satisfaction of this Mortgage.

Article 9

Additional Rights and Obligations

9.1      Installments for Insurance, Taxes and Other Charges . Without limiting the effect of any other provision of this Mortgage, upon the occurrence and existence of an Event of Default, Mortgagor shall pay to Mortgagee monthly with its payment on the Note, an amount equal to one-twelfth (1/12) of the annual premiums for the insurance policies referred to hereinabove and the annual Impositions and any other item which at any time may be or become a lien upon the Mortgaged Property (the " Escrow Charges "); and on demand, from time to time, Mortgagor shall pay to Mortgagee any additional sums necessary to pay when due all Escrow Charges. Upon the cure of any such Event of Default, the funds held in escrow shall be returned to Mortgagor. No amount so paid to Mortgagee shall be deemed to be trust funds but may be commingled with general funds of Mortgagee, nor shall any sums paid bear interest. Mortgagee shall have the right, upon any exercise of remedies following an Event of Default, at its election, to apply any amount so held against the Secured Obligations due and payable in such order as Mortgagee may deem fit, and Mortgagor hereby grants to Mortgagee a lien upon and security interest in such amounts for such purpose.

9.2      Mortgagee ' s Right to Protect Security . If Mortgagor shall fail to do so, Mortgagee is hereby authorized to do any one or more of the following, irrespective of whether an Event of Default has occurred: (a) appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Mortgagee hereunder; (b) take such action as Mortgagee may determine to pay, perform or comply with any applicable laws, to cure any Events of Default and to protect its security in the Mortgaged Property.

9.3      Mortgagee ' s Costs and Expenses . In the event of an Event of Default or the exercise by Mortgagee of any of its rights hereunder, or if Mortgagee shall become a party, either as plaintiff or defendant or otherwise, to any suit or legal proceeding affecting any of the Mortgaged Property or the Secured Obligations, or if review and approval of any document, or any other matter related to any of the Secured Obligations, is required by, or requested of, Mortgagee, Mortgagor shall pay to Mortgagee on demand its costs, expenses and reasonable attorneys' fees incurred in connection therewith. If such amounts are not paid, they shall be added to the principal secured hereby, shall be included as part of the Secured Obligations and shall bear interest at the Default Rate (as defined in the Loan Agreement) from the date of demand.

9.4      Further Assurances . Mortgagor agrees to execute such further assurances, documents and instruments as may be desirable by Mortgagee for the purposes of further evidencing, carrying out and/or confirming this Mortgage and for all other purposes intended by this Mortgage.

Article 10

Miscellaneous Matters

10.1      Notice .

(a)       Except as otherwise provided in this Mortgage, all notices hereunder shall be in writing and shall be deemed to have been duly given for all purposes when delivered in person, or when deposited in the United States mail, by registered or certified mail, return receipt requested, or delivered to an express courier service for delivery on the next business day, directed in each case to the party to receive the same at the addresses set forth at the beginning of this Mortgage or at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived.

(b)      All notices given by Mortgagor to Mortgagee pursuant to 53 O.R.C. §5301.232shall be given to Mortgagee in accordance with this Section 9.1 and must be signed by all parties necessary to bind Mortgagor in accordance with the applicable documents of formation of Mortgagor and all applicable laws.

10.2      Severability . In the event any one or more of the provisions contained in this Mortgage shall for any reason be held to be inapplicable, invalid, illegal, or unenforceable in any respect, such inapplicability, invalidity, illegality or unenforceability shall not affect any other provision of this Mortgage, but this Mortgage shall be construed as if such inapplicable, invalid, illegal or unenforceable provision had never been contained herein.

10.3      Successors and Assigns . All of the grants, covenants, terms, provisions and conditions herein shall run with the land and shall apply to, bind and inure to the benefit of the successors and assigns of Mortgagor and Mortgagee.

10.4      No Oral Modification . This Mortgage may be modified, amended, discharged or waived only by an agreement in writing, signed by all of the parties hereto.

10.5      Defeasance . If Mortgagor pays to Mortgagee in full the Secured Obligations, then this Mortgage shall become void. Mortgagee shall, upon request and at no cost to Mortgagor, execute and deliver to Mortgagor a satisfaction of this Mortgage, in form and substance suitable for recording, with Mortgagor being solely responsible for the cost of recording such satisfaction.

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[Signature Page to Open-End Mortgage and Security Agreement]

IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly executed the day and year first above written.

 

STATE OF OHIO	)
	)     SS:
COUNTY OF  TRUMBULL	)

On this, the  15th day of December, 2016, before me, the undersigned officer, personally appeared Bryan P. Saksa , who acknowledged himself to be the  Treasurer/Secretary of AVALON RESORT AND SPA, LLC , an Ohio limited liability company, and that as such officer being authorized to do so, executed the foregoing document on behalf of such limited liability company.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

	/s/ Kevin L. Bradford
	Notary Public

My commission expires:

Exhibit A

Legal Description

Exhibit 10.6

OPEN-END MORTGAGE , ASSIGNMENT OF LEASES,

SECURITY AGREEMENT AND FIXTURE FILING

AVALON COUNTRY CLUB AT SHARON, INC. ,

MORTGAGOR ,

AND

LAUREL CAPITAL CORPORATION ,

MORTGAGEE

Dated as of December 1, 2016