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HomeMy WebLinkAbout6E(3) Blackthorn Golf Course Financing Agreementl~ ~ ~~~ SECURITY AGREEMENT THIS SECURITY AGREEMENT (this "Agreement") is made and entered into at South Bend, Indiana, as of May 7, ?010, by and between the South Bend Redevelopment Commission, for and on behalf of the City of South Bend, Department of Redevelopment, Blackthorn Golf Course, (the "Borrower"), in favor of the South Bend Redevelopment Commission, for and on behalf of the City of South Bend, Department of Redevelopment, Airport Economic Development Area (the "Secured Party"). ARTICLE I Definitions and Construction Section 1.1. Defined Terms. As used herein: "Accounts," "Deposit Accounts," "Documents," "Equipment," "Goods," "Instruments," "Inventory," "Proceeds," "Promissory Notes," and "Supporting Obligations," shall mean all of the Borrower's such property within the meanings ascribed to such terms in the Uniform Commercial Code. "Account Debtor" shall have the meaning ascribed to it in the Uniform Commercial Code. "Collateral" shall mean all of the Borrower's property or rights in which a security interest is granted hereunder. "Loan Agreement" shall mean the Promissory Note executed between the Borrower and the Secured Party of even date herewith, as amended, modified or restated fiom time to time. "Liabilities" shall mean: (a) all Obligations, including all future advances; (b) all other time to time obligations of the Borrower to the Secured Party of every type and description, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and whether or not contemplated by the Bon-ower or the Secured Party as of the date of this Agreement, including, without limitation. any modification, extension, or addition to or of the Obligations or the Loan Agreement and any overlying advances, out-of-formula advances and overdrafts made or permitted in connection with the Obligations or other Liabilities; and (c) airy duty of the Borrower to act or to refrain from acting in connection with any Liability. "Uniform Commercial Code" means the Uniform Commercial Code in effect fiom time to time in the State of Indiana or any successor law or laws of like effect. Section 1.2. Incorporation of Uniform Commercial Code Terms. All terms (whether or not capitalized) used herein and not specifically defined herein which are defined in the Uniform Commercial Code shall have the meanings ascribed to such terms in the Uniform Commmercial Code, except where the context of their use clearly requires a different interpretation. Section 1.3 Rules of Construction of Securitv Agreement. Debtor understands and agrees that: a. Loss of or damage to the goods does not release debtor; b. If a part of this agreement is held to be invalid, the remainder of the agreement is not affected; c. This writing contains the full, final and exclusive agreement between the parties; d. Notice to debtor is given to him when the notice is mailed to him at his address above set forth; e. If there is more than one signer of this agreement their obligations are joint and several; £ The term debtor includes each debtor severally. The breach of a covenant or warranty by one debtor may at the secured party's option be treated as a breach by all debtors; g. This agreement is governed by the laws of the State of Indiana. ARTICLE II Securitv Interest in Collateral As security for the payment and performance of the Liabilities, the Borrower does hereby grant to the Secured Party, to the extent permitted by law, a continuing security interest and lien in the following (collectively, the "Collateral"): See EXHIBIT "A" together with all renewals, extensions, replacements, modifications, additions, improvements, accretions, accessions, betterments, substitutions, replacements, annexations, tools, accessories, parts and the like now in, attached to or which may hereafter at any time be placed in or added to any Collateral, whether or not of like kind; and all Supporting Obligations, rights, remedies, claims and demands under or in connection with each of the foregoing. ARTICLE III Representations and Warranties To induce the Secured Party to enter into the Loan Agreement and to make the Loan and any other financial accommodation thereunder, the Borrower represents and warrants to the Secured Party that: Section 3.1. Names. The Borrower is a body corporate and politic organized under the laws of the State of Indiana. Section 3.2. Prior Combinations. The business of the Borrower has never been conducted as a partnership, limited liability company, or proprietorship; no entity has merged into the Borrower or has been consolidated with the Borrower; and no entity has sold substantially all of its assets to the Bon-ower or sold assets to the Borrower outside the ordinary course of such entity's business. Section 3.3. Chief Executive Office and Other Locations. The Borrower's chief executive office address is: Blackthorn Golf Course 227 West Jefferson Blvd. Suite 1200 South Bend, Indiana 46601 Section 3.4. Title to Collateral. Subject to Permitted Encumbrances: (a) all Collateral is lawfully owned by the Bon-ower, fi-ee and clear of any prior secw•ity interest, pledge, sale, assignment, transfer, consignment an-angement or agreement or other encumbrance; (b) the Bon•ower bas the unencwnbered right to pledge, sell, assign or transfer the Collateral to the Secured Party and to subject the Collateral to the security interest in favor of the Secured Party herein; (c) no financing statement covering all or any portion of the Collateral is on file in any public office other than in favor of the Secured Party; and (d) the security interest herein constitutes a legal and valid, first priority security interest in the Collateral. Section 3.5. Payment of Obligations. Debtor will pay its obligations to secured party promptly when due. Debtor will also repay to secured party immediately and without demand, all of the expenses incun•ed by secured party, including reasonable attorney's fees and legal expenses, which the secured party incurs under this agreement, together with interest at the highest legal rate from the date of expenditure. Section 3.6. Representations Re~ardin~ Contracts and Leases. All leases of real or personal property and all contracts to which the Borrower purports to be party are in full force and effect. To the best of the Bo~7-ower's knowledge, no Person is challenging or disputing the validity or enforceability of any such leases or contracts, and the Bon-ower is not in material default under any such leases or contracts. Section 3.7. Representations Reaardin~ Equipment and Inventory. Schedule 3.8 is a true and coi7•ect list of all locations where Equipment and Inventory of the Bon•ower is located (except Inventory in transit) and all locations where Equipment and Inventory of the Boi7-ower have been located in the four (4) months immediately preceding the date of this Agreement. Schedule 3.8 sets forth all locations at which Equipment and Fixtures of the Bon-ower are located and the name and owner of record of the real estate at each location if the Bon•ower is not the owner of record. The Borrower has not purchased any Inventory in a transaction subject to the bulk transfer laws of any state or otherwise outside the ordinary course of business of the seller of the Inventory. If Inventory is represented or covered by Documents, the Bon-ower is the owner of the Docwuents free of all encumbrances and security interests other than the Secured Party's and warehousemen's charges, if any, not delinquent. 3 Section 3.8. Representations Regarding Commercial Tort Claims. Schedule 3.9 sets forth a true and con-ect list of al] Commercial Tort Claim and true, complete and accurate descriptions of the facts and circumstances with respect to each such claim sufficient in detail for the Secured Party to properly perfect any security interests in its favor with respect thereto. Section 3.9. Information Supplied by Debtor. The debtor represents and warrants that the information which the debtor has supplied or hereafter supplies to the secured party is true and coi-~•ect. Section 3.10. Representation Concerning Debtor's Authority. Debtor has authority to enter into this agreement, and any person signing it on debtor's behalf does so with the authority of the debtor. Section 3.11. Authorization to File Financing Statement. The debtor authorizes the secured party to file financing statements appropriate to perfect and continue the security interest created by this security agreement, provided that such financing statements state that they are filed in accordance with this security agreement. ARTICLE IV Agreements Concerning Accounts Section 4.1. Location. The Bon•ower will give the Secured Party written notice of each office of the Boi•~•ower at which records of the Bon•ower relative to Accounts are kept. Except where such notice is given, all records of the Borrower relative to Accounts are and will be kept at the chief executive offices of the Borrower. Section 4.2. Returns and Repossessions. Prior to the occurrence of a Default or Unmatured Default, the Bon•ower may grant, in the ordinary course of business, to any Account Debtor, any rebate, refund or adjustment to which such Account Debtor maybe lawfully entitled and may accept, in connection therewith, the return of Goods. the sale or lease of which shall have given rise to the obligation of the Account Debtor; provided, however, that if any material amount of Inventory, the sale of which gave rise to an Account, is returned to or repossessed by the Boi7•ower outside the ordinary course of business, the Bo17~ower shall promptly report any such return or repossession to the Secured Party, and the Bon•ower shall, unless it receives contrary instructions ti•om the Seew-ed Party, dispose of the same in accordance with sound business practices; subject, however, to the Secured Party's security interest therein and in any Proceeds arising from the disposition thereof. After the occurrence of a Default or an Unmatured Default, no discount, credit or allowance shall be granted by the Bon•ower to any Account Debtor, and no return of Goods shall be accepted by the Bon-ower, without the Secured Party's prior written consent. Section 4.3. Schedule of Accounts. Upon request by the Secured Party, the Borrower will, from time to tune, deliver to the Secured Party a schedule identifying each Account (a 4 "Schedule of Accounts"), together with such schedules and certificates and reports relative to all or any of the Collateral and the items or amounts received by the Boi-rower in full or pai~ial payment or otherwise, as Proceeds of any of the Collateral. Each Schedule of Accounts or other schedule, certificate or report shall be executed by its duly authorized officer and shall be in the form specified by the Secured Party. Airy Schedule of Accounts identifying any Account shall be accompanied, if the Secured Party requests: (a) by a true and correct copy of the invoice evidencing such Account; (b) by evidence of shipment, delivery or performance; and (c' if such request shall be made after the occurrence of a Default or an Unmatured Default, by a duly executed assignment of such Account from the Borrower to the Secured Party; provided, however, that the Borrower's failure to execute and deliver any such Schedule of Account and/or assignment shall not affect or limit the Secured Party's security interest or other rights in and to Accounts. Section 4.4. Verification of Accounts. The Secured Party and its officers, employees, agents, attorneys, and accountants, may examine, inspect or make abstracts fi•om the Borrower's books and records, and verify returned and repossessed Goods, if any, and arrange for verifica- tion of Accounts, under reasonable procedures, directly with the Account Debtors or by other methods, and the Borrower shall furnish to the Secured Party upon request additional Schedules of Accounts, together with all notes or other papers evidencing the same and any guaranty, securities or other information relating thereto, and shall do, make and deliver all such additional and further acts, things, deeds, assurances and instruments as the Secured Party may reasonably require. A RTi('1 F V Agreements Concerning Equipment Section 5.1. Locations. The Borrower will give the Secured Party written notice of each location at which Equipment is or will be kept at all times. Section 5.2. Condition. The Borrower will keep the Equipment in good order and repair, ordinary wear and tear excepted, and will not waste or destroy the Equipment or any portion thereof,. except in the case of obsolete Equipment which is no longer used or useful in the Borrower's business. Section 5.3. Titled Equipment. Upon request by the Secured Party, made at any time after the occurrence and during the continuance of any Default or Unmatured Default, the Borrower shall immediately deliver to the Secured Party any or all certificates of title issued by any Governmental Authority relating to any Equipment of the Borrower, and all applications therefor, properly endorsed, and shall take all actions necessary to have the Secured Panty's security interest properly recorded on each such certificates of title and shall take all other steps necessary to perfect the Secured Party's security interest in such Equipment. Section 5.4. Compliance ~~~ith La~i~s. The Borrower will not use the Equipment in violation of any statute, rule, regulation or ordinance or any policy of insurance thereon. The 5 Boi7•ower will neither use the Equipment nor permit the Equipment to be used, for any unlawful purpose or contrary to any statute, law, ordinance or regulation relating to the registration, use, operation or control of the Equipment. Section 5.5. Transfers of Equipment. The Borrower may from time to time substitute Equipment; provided that: (a) the substituted Equipment is not subject to any lien or other encumbrance and has a fair market value at least equal to the fair market of the Equipment for which it is substituted; (b) the marketability and operating intefn•ity of the Bonrower's Equipment after such substitution is not impaired; (c) the Equipment substituted for is no longer used or useful in the operation of the Borrower's business and is sold in arm's length transaction in exchange for money or monies' worth at least equal to the fair market value of such Equipment substituted for; and (d) no Default or Unmatured Default has occu~-~•ed and is continuing. ARTICLE VI General Provisions Concerning Collateral Section 6.1. Title to Collateral. All Collateral acquired after the date hereof will be acquired by the Borrower fi•ee of any lien, security interest or encumbrance. Debtor will defend the collateral against claims and demands made by all persons claiming either the collateral or any interest in it. Section 6.2. Further Assurances. The Bon•ower agrees to do such reasonable acts and things and deliver or cause to be delivered such• other documents as the Secured Party may deem necessary to establish and maintain a valid security interest in the Collateral (fi•ee of all other liens and claims except Pe~7nitted Encumbrances) to secure the payment and performance of the Liabilities and to defend title to the Collateral against any Person claiming any interest therein adverse to the Secured Party. The Boi7•ower authorizes and appoints the Secured Party its attorney-in-fact, at the expense of the Borrower, to execute and file a financing statement or statements on its behalf in those public offices deemed advisable or necessary by the Secured Party to protect the security interests of the Secured Party herein granted. The Borrower further authorizes and appoints the Secured Party its attorney-in-fact, at the expense of the Bon•ower, to execute and file a financing statement or statements on its behalf in those public offices deemed advisable or necessary by the Secured Party describing any Abn•icultural Liens or other statutory liens granted by the Bon•ower to the Secured Party hereunder. If permitted by law, the Borrower agrees that a carbon, photographic or other reproduction of this Agreement or of a financing statement may be tiled as a financing statement. Section 6.3. Insurance and Risk of Loss. The risk of loss of the collateral is on the debtor. The debtor shall maintain insurance at all times on the collateral against risks of fire, (including extended coverage), theft and such other risk as the secw•ed party requires. In the case of mobile goods, the debtor shall also maintain collision coverage. The secured party has the authority to specify the teens of the policy, the fo17n of the policy, the underwriter, and the length of te17n of the policy. Each policy shall be endorsed with a standard mortgagee or security interest clause for the benefit of the secured party. If the secured party demands it, debtor shall 6 funlish secured party with certificates or other evidence of insurance in form satisfactory to secured party. Debtor authorizes and appoints the secured party to act as debtor's agent in obtaining and cancelling insurance or in adjusting and settling losses under the insurance on the collateral. Section 6.4. Risk of Loss-Accidental Loss. The risk of loss of or damage to the collateral due to accident is on the debtor to the extent of any deficiency in insurance coverage on the collateral protecting or benefitting the secured party. Section 6.5. Insurance. (a) The Borrower shall have and maintain at all trines, with respect to the Equipment, insurance written by companies acceptable to the Secured Party covering risks customarily insured against by companies engaged in business similar to that of the Bon•ower in reasonable amounts, containing such tenl~s, in such form, and for such periods customarily maintained by companies engaged in business similar to drat of the Bon-ower. All such casualty insurance policies shall be payable to the Borrower and the Secured Party, as their interests may appear and the Secured Party's interest shall be covered through a standard non-contributory the Secured Party's loss payable clause. All such liability insurance policies shall name the Secured Party as an additional insured. The insurance certificates evidencing the Bon-ower's compliance with the above shall be deposited with the Secured Party, and in the event the Borrower fails to file and maintain such insurance, the Secured Party may, at its option, purchase such insurance and the cost of such insurance shall become a Liability secured by these presents and all sums expended shall bear interest at the default rate of interest set forth in the Note until paid. (b) In addition to the insurance requirements set forth herein, the Bon-ower will cant' any other insurance and amounts for periods as maybe reasonably required by the Secured Party, and will deliver to the Secw-ed Party, not less than ten (10) Business Days prior to the expiration of any such policy of insurance, renewals or new policies in like amounts covering the same risks. All such insurance policies shall cant' standard, non-contributory the Secured Party's loss payable clauses and breach of wan-anty endorsements, in favor of the Secured Party. The Borrower shall deliver certified copies of such policies to the Secured Party and shall pay all premiums thereon promptly when due and shall provide substitute policies of insurance should the Secured Party at any time reject, for reasonable cause, any such policies of insurance furnished by the Bon-ower. The Borrower hereby collaterally assigns to the Secured Party, the proceeds of all such insurance, including, without limitation, any premium refunds, to the extent of the Liabilities and appoints the Secured Party its attorney-in fact to endorse any draft, check or other form of payment made by such insurer. If a Default or Unmatured Default shall have occun-ed and be continuing unremedied, the Secured Party may, as attorney-in-fact, direct the insurer to make payment of any losses or refunds directly to the Secured Party. Section 6.6. Taxes and Encumbrances. Debtor will promptly pay when due all taxes, assessments, liens and encumbrances levied against the collateral or upon the use of the collateral or upon operations in which the collateral is used, or those levied against the note or evidence of the obligation secured by this agreement Secured party may discharge an encumbrance at any time it is levied or placed upon the collateral. Section 6.7. Location and Identification of Collateral. Debtor will keep the collateral 7 separate and identifiable and at the location described in this agreement. Debtor agrees not to remove the collateral fi•om the location specified without the secured party's written consent. Section 6.8. Collection of Collateral. The Borrower shall, at its own expense, endeavor to collect, as and when due, all amounts due with respect to any Collateral including the taking of such action with respect to such collection as the Secured Party may reasonably request or, in the absence of such request, as the Borrower may deem advisable. Section 6.9. Se~re~ation of Collateral. The secured party shall at all times keep the collateral in his possession segregated and marked in an appropriate way so that it can be reasonably identified. Section 6.10. The Secured Party May Defend Title. In the event the Boi-~•ower fails to pay any taxes, assessments or premiums, or fails to discharge any material liens or claims against the Collateral required to be paid or discharged by the Borrower, or fails to purchase, maintain and file with the Secured Party any insurance required by this Agreement, in the Secured Party's reasonable discretion, the Secured Party may, without demand or notice, pay any such taxes, assessments or premiums, or pay, acquire, satisfy or discharge any liens or claims asserted against the Collateral (without any obligation to determine the validity thereof), or purchase any such insurance. All sums so expended by the Secured Party shall become a Liability secured by these presents and shall bear interest at the highest Default rate of interest set forth in the Note until paid. Section 6.11. Contracts. The Borrower shall remain liable to perform its obligations under any contracts included in the Collateral to the extent as though this Agreement had not been entered into, and the Secured Party shall not have any obligation under any such contracts by reason of this Agreement. Section 6.12. Accounting Svstem. The Bor•ower shall maintain a standard and modern system of accounting in accordance with GAAP which contains information pertaining to the Collateral that may ti•om time to time be requested by the Secured Party. Section 6.13. Inspection of Collateral and Records. During the Borrower's usual business hours, the Secured Party may inspect and examine the Collateral and check and test the same as to quality, quantity, value, and condition. The Secured Party shall also have the 1-ight at any time or times hereafter, during the Borrower's usual business hours or during the usual business hours of any third party having control over the records of the Borrower (including the Borrower's accountants), to inspect the Borrower's books and records in order to verify the amount or condition of, or any other matter relatin~~ to, the Collateral and the Borrower's financial condition and to copy and make exh•acts from such books and records. Section 6.14. Transfer of Collateral The Borrower shall not sell, lease, license, transfer or otherwise dispose of any interest in any Collateral. Section 6.15. Possession, Use, Maintenance and Lispection of Collateral Until default, debtor may have possession of the collateral. Debtor may use the collateral in any 8 lawful manner which is not inconsistent with this agreement, any policy of insurance upon the collateral, or the laws and regulations of this state. Debtor will maintain and keep the collateral in good order and repair, and agrees not to use the collateral in any manner which results in waste, unreasonable deterioration or depreciation. Secured party may enter upon the debtor's property and inspect the collateral at any reasonable time. Section 6.16. Possession of Collateral The Boi-~•ower shall have possession of the Collateral, except where expressly otherwise provided in this Agreement or where the Secured Party chooses to perfect its security interest by possession in addition to the filing of a financing statement. Where Collateral is in the possession of a third party, the Borrower shall, at the Bon•ower's expense, join with the Secw•ed Party in notifying the third party of the Secured Party's security interest and obtaining an acknowledgment, in a foi7n and substance satisfactory to the Secured Party, fi•om the third party that it is holding such Collateral for the benefit of the Secured Party. Section 6.17. Enforcement and Adjustment of Claims by Debtor Against Third Persons. The debtor shall have unrestricted ti•eedom to enforce any claim against any third person arising in connection with the collateral. The debtor in his discretion and in the exercise of good faith and the observance of reasonable commercial standards may determine whether or not to enforce, compromise, or forego the enforcement of any such claim whether based upon an account, contract, or chattel paper or with respect to goods which have been or may be retw•ned to or repossessed by the debtor. Section 6.18. Care of Collateral. Debtor represents and warrants that the collateral will be kept in the State of Indiana where the collateral is now located and agrees that the collateral will not be removed from said State. ARTICLE VII Default Section 7.1. Events of Default. Debtor is in default wider this agreement upon the happening of one or more of the following events or conditions: a. Default in the payment or performance of the obligation; b. If a warranty, representation or statement made or furnished by debtor to the secw•ed party is false or proves to have been false in any material respect when it was made; c. Loss, theft, damage, destruction, sale or encumbrance of the collateral or any part of it, or a levy, seizure, or attachment of the collateral or any part of it; d. Debtor's failure to perform any covenant in this agreement or the taking of action by debtor which is inconsistent with or in violation of this agreement: or which endangers the safety or integrity of the collateral or the security interest of secw•ed party; e. Death, dissolution, termination of existence, insolvency, business failure, appointment of a receiver for any part of any property belonging to debtor whether or not it is 9 collateral under this agn•eement, assignment for the benefit of creditors, or the commencement of proceedings under a bankruptcy or insolvency law by or against the debtor or a guarantor or surety for the debtor; f. If the secured party in good faith deems itself insecure, either because the prospect of payment is impaired, the prospect of performance of any covenant or agreement is impaired or the value or priority of the secured party's security interest is impaired. ARTICLE VIII Remedy Section 8.1. Rights and Remedies of Secured Party Upon the occurrence of any event of default, and at any time thereafter, such default not having previously been cured, the Secured Party may declare the obligations secured hereunder immediately due and payable, and the Secured Party shall have, in addition to all other rights and remedies, the remedies of a Secured Party under ~ 9.1-601, et seq. Such remedies shall include, without limitation: a. The right of the Secw•ed Party to require the Debtor to assemble the collateral and make it available to the secured party at a place designated by the Secured Party that is reasonably convenient to both parties; b. If the Secured Party elects to sell or lease the collateral, and the collateral is not perishable or does not threaten to decline speedily in value or is not of a type customarily sold on a recognized market, the Secured Party, on giving the Debtor not less than five days' written notice of the time and place of any public sale or collateral or of the time after which any private sale or any other intended disposition is to be made, shall have the right to sell or otherwise dispose of the collateral at public or private sale. For the purpose of taking possession of the collateral, the Secured Party shall have the ri~~ht to enter upon, with or without legal process, any premises on which the collateral or any part thereof may be situated, and remove the same therefrom. c. Debtor shall pay to the secured party on demand all expenses, including legal expenses and reasonable attorney's fees, incurred by the Secured Party in protecting or enforcing the obligations and other rights of the Secured Party under this agreement, including its right to take possession of the collateral and proceeds and expenses of holding, preparing for sale, or selling the collateral. Section 8.2. Acceleration Upon Attachment, Levv or Garnishment Upon Debtor's Interest. In the event that any attachment, levy, garnishment or other judicial process be made or directed against the collateral hereunder, the Secured Party may, notwithstanding any other provision or provisions hereof, at its option and without notice, declare to be forthwith due and payable, all unpaid installments of principal or interest. Section 8.3. Remedies Generally; Po~~~er of Sale. Upon the occurrence of any Default and at any time thereafter. the Secured Party shall have all rights and remedies available at law or in equity including, without limitation, the rights and remedies of a secured party under the ]0 Unifoi7n Commercial Code (regardless of whether the Code has been enacted in the jurisdiction where rights or remedies are asserted), including, without limitation, the right to take possession of the Collateral, and for that purpose the Secured Party may, so far as the Borrower can give authority therefor, enter upon any premises on which the Collateral may be situated and remove the same therefrom. The Secured Party shall give to the Bon-ower at least ten (10) days' prior written notice of the tune and place of any public sale of Collateral or of the time after which any private sale or any other intended disposition is to be made; provided, however, i£ (a) the Collateral is perishable; (b) the Collateral threatens to decline speedily in value; or (c) the Collateral is of a type sold on a recognized market; no such notice shall be required. The Secured Party may in its discretion h•ansfer any securities or other property constituting Collateral into its own name or that of its nominee and receive the income thereon and hold the same as security for Liabilities or apply it on principal or interest due on Liabilities. Upon default of the debtor, the secured party may bring any action or proceeding to enforce the debt of the debtor, without regard to whether he takes any proceedings with respect to the collateral. Section 8.4. Reasonableness of Notice. The secured party shall give debtor notice of the time and place of any public sale of any of the collateral or of the time after which any private sale or any other intended disposition thereof is to be made by sending notice, first class postage prepaid and addressed to the debtor as provided below, at least five days before the time of the sale or other disposition, which provisions for notice the debtor and the secured party agree are reasonable. Section 8.5. Conunercially Reasonable Method of Sale. Debtor agrees that any sale of the collateral through a broker or person regularly dealing in secondhand goods or used goods of the same type as the collateral is a commercially reasonable method of sale. Section 8.6. Deposits. Any and all Deposit Accounts, deposits or other sums at any time credited by or due from the Secured Party to the Bon-ower shall at all times constitute security for any and all Liabilities, and the Secured Party may apply or set off such deposits or other sums against Liabilities at any time after a Default or Unmatured Default has occui-~-ed and is continuing whether or not the Liabilities are then due or other Collateral is considered by the Secured Party to be adequate. Section 8.7. Waiver and Amendment. Except as otherwise expressly set forth herein, to the extent permitted by law, the Bo~7•ower waives demand, notice, protest, notice of acceptance of this Agreement, notice of loans made, credit extended, Collateral received or delivered or other action taken in reliance hereon and all other demands and notices of any description. With respect to both Liabilities and Collateral, the Borrower assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange, or release of Collateral, to the addition or release of any Person primarily or secondarily liable, to the acceptance of partial payments thereon and the settlement, compromise or adjustment of any thereof, all in such manner and at such time or times as the Secured Party may deem advisable. Except as otherwise provided by law, the Secured Party shall not have any duty as to the collection or protection of the Collateral, or any income therefrom, or as to the preservation of rights against prior parties or as to the preservation of any rights pertaining thereto beyond the safe custody thereof. The Secured Party may exercise its rights with respect to Collateral without resorting to or regard to other Collateral or sources of reimbursement for any Liability. The Secured Party shall not have any duty to clean, repair or otherwise prepare any of the Collateral for sale, and the Secured Party may specifically disclaim any wai-~•anties of title or the like. The Secured Party shall not be deemed to have waived any of these rights upon or under the Liabilities or Collateral unless such waiver be in writing and signed by the Secured Party. No delay or omission on the part of the Secured Party in exercising any right shall operate as a waiver of such right or any other right. A waiver on anyone occasion shall not be construed as a bar to the exercise of any right on any future occasion. All rights and remedies of the Secured Party as to the Liabilities or Collateral set forth herein, in the other Loan Documents, or available at law shall be cumulative and may be exercised singly, successively or together. The Secured Party may, from time to time, without notice to the Boi7•ower: (a) retain or obtain a security interest in any property of any other Person, in addition to the Collateral, to secure any of the Liabilities; (b) retain or obtain the primary or secondary liability of any Person, in addition to the Boi-~•ower with respect to any of the Liabilities; (c) extend or renew for any period (whether or not longer than the original period) or release or compromise any liability of any party or parties primarily or secondarily liable to the Secured Party under the Loan Agreement; (d) release its security interest in any of the property securing any of the Liabilities and pet-~Iiit any substitution or exchange for any such property; and (e) resort to the Collateral for the payment of any of the Liabilities whether or not it shall have resorted to any other property or shall have proceeded against any party primarily or secondarily liable for any of the Liabilities. The Secured Party shall not, under any circumstances, or in any event whatsoever, have any liability for any error or omission or delay of any kind occu~7•ing in the liquidation of any Collateral, including the settle- ment or collection of any Account or for any damage resulting therefrom, absent a showing of gross negligence, bad faith or willful misconduct. This Agn•eement may be amended only by a writing duly signed by the Secured Party and the Borrower. Section 8.8. Expenses; Proceeds of Collateral. The Borrower shall pay to the Secured Party on demand any and all reasonable out-of-pocket expenses, including reasonable attorneys' fees, incun•ed or paid by the Secured Party in protecting or enforcing its rights upon or under the Liabilities or the Collateral or the existence, perfection or priority of the Secured Party's security interest therein. The. proceeds from the disposition made by the secured party of any collateral after the debtor's default shall be applied to: a. the reimbursement of the secured party for the reasonable expenses of retaking, holding, preparing the collateral for disposition, the effecting of the disposition and similar charges; b. the satisfaction of the debt secured by the secured interest under which the disposition of the collateral has been made; c. the satisfaction of the debt secured by any subordinate interest in the collateral provided the subordinate security holder has given the secured party who is disposing of the collateral notice of his claim to share in the proceeds of the disposition prior to the completion of such distribution by the secured party; and d. a retw•n to the debtor of any balance. 12 If the proceeds of any sale or other disposition of collateral are insufficient to pay all expenses of sale, principal, interest and any other sum for which Debtor maybe liable hereunder, Debtor agrees to forthwith pay the amount of any deficiency. Section 8.9. Power of Attorney. Debtor authorizes and appoints secured party as debtor's attorney in fact to do any act which the debtor is obligated to do under this agreement and to exercise rights under this agreement which the debtor is entitled to exercise and to use the collateral in the manner in which the debtor may use it. In addition, debtor authorizes secured party to collect proceeds from the sale of collateral in the same wanner that the debtor may collect proceeds. The parties understand and agree that this authorization and appointment of secured party as debtor's attorney in fact is given to secured party to enable it to protect and preserve its rights under this agn•eement. Debtor agrees to reimburse secured party for expenses which it incurs while acting as debtor°s atto171ey in fact. Section 8.10. Reinstatement. To the extent that the Borrower makes a payment or payments to the Secured Party or the Secured Party enforces its security interest and lien or exercises its right of setoff, and such payments or the Proceeds of such enforcement are set off or any part thereof are subsequently im~alidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee or receiver or any other party under any insolvency law, state or federal law, common law or equitable cause, then to the extent of such recovery, the liability or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred and shall be Liabilities secured by the Collateral. The Secured Party may, at any time or times, pay, acquire, satisfy, or discharge any security interest, lien, encumbrance or claim asserted by any Person against the Collateral; provided, however, that the Secured Party shall take reasonable measures to notify the Bon-ower of its intention to pay any such claim but the failure to give such notice shall not invalidate any action taken by the Secured Party. The Secured Party shall not have any obligation to determine the validity thereof. All sums paid by the Secured Party under the provisions of this Section 9.7 and any existing or other charges relating thereto shall be repaid to the Secured Party by the Boi-~-ower on demand, shall be deemed an advance under the Agreement and shall bear interest at the default rate set forth in the Note. Section 8.11. No Marshaling. The Bor-ower, on its own behalf and on behalf of its successors and assigns. hereby expressly waives all rights, if any, to require a marshaling of assets by the Secured Party or to require the Secw•ed Party to first resort to some or any portion of the Collateral before foreclosing upon, selling or otherwise realizing on any other portion thereof. ARTICLE IX Miscellaneous Provisions Section 9.1. Priority. Unless otherwise expressly provided, the security interest hereby created shall be pro rata on par with any prior security interests in the Collateral now or hereafter 13 existing in favor of the Secured Party. Section 9.2. Governing Law. This Agreement and all rights and obligations hereunder, including matters of construction, validity and perfoitinance, shall be governed by the Unifo~-~n Commercial Code and other applicable laws of the State of Indiana, without regard to conflict of law principles, except to the extent that federal law or the law of any other state or jurisdiction necessarily governs perfection or the effect of perfection or nonperfection of the security interests of the Secured Party in the Collateral. Section 9.3. Severability. Whenever possible each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition without invalidating the remainder of such provision or the remaining provisions of this Agreement. The Boi-~-ower recognizes that the Secured Party has relied on this Agreement in extending credit to the Borrower and agrees that such reliance by the Secured Party shall be sufficient consideration for this Agreement. Section 9.4. Binding on Successors. The rights and privileges of the Secured Party shall inure to the benefit of its respective successors and assigns. Section 9.5. Chattel Mortgage. This Agreement shall also constitute a chattel mortgage and an assignment of rents. Section 9.6. Consent to Jurisdiction. THE BORROWER AND THE SECURED PARTY BY ACCEPTANCE HEREOF EACH HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN ST. JOSEPH COUNTY, INDIANA. ALL SERVICE OF PROCESS MAY BE MADE BY MESSENGER, CERTIFIED MAIL, RETURN RECEIPT REQUESTED OR BY REGISTERED MAIL DIRECTED TO THE BORROWER OR THE SECURED PARTY AT THE ADDRESS INDICATED OPPOSITE OR BELOW ITS SIGNATURE TO THE LOAN AGREEMENT, AND THE BORROWER AND THE SECURED PARTY OTHERWISE WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS MADE UPON IT. THE BORROWER AND THE SECURED PARTY EACH HEREBY WAIVE ANY OBJECTION WHICH IT MAY HAVE TO ANY PROCEEDING COMMENCED IN A FEDERAL OR STATE COURT LOCATED WITHIN ST. JOSEPH COUNTY, INDIANA, BASED UPON IMPROPER VENUE OR FORUM NON CONVENIENS. NOTHING CONTAINED IN THIS SECTION SHALL AFFECT THE RIGHT OF EITHER PARTY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING ANY ACTION OR PROCEEDING AGAINST THE OTHER PARTY OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION. Section 9.7. Waiver of Jurv Trial. THE BORROWER AND THE SECURED PARTY BY ACCEPTANCE HEREOF, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT 14 OR ANY OTHER LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF EITHER OF THEM. NEITHER THE SECURED PARTY NOR THE BORROWER SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY EITHER THE SECURED PARTY OR THE BORROWER EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY THE SECURED PARTY AND THE BORROWER. (Renuri~ldcr ofPa~e Irttc~ntionully Left Blunl~) 15 IN WITNESS WHEREOF, the Boi7-ower has caused this Agn-eement to be executed by its duly authorized officers as of the date first above written. ATTEST: S~,~nu~,n~r Prinlyd V'nmr and %~id~° South Bend Redevelopment Commission STATE OF INDIANA ) SS: ST. JOSEPH COUNTY ) CITY OF SOUTH BEND, DEPARTMENT OF REDEVELOPMENT BLACKTHORN GOLF COURSE S; ~ nr,,, n~r l'rinlyd atrnu and lirli~ South Bend Redevelopment Commission Before me, the undersigned, a Notary Public for and in said County and State this day of ?010, personally appeared and President and Secretary, respectively, of the South Bend Redevelopment Commission, a body corporate and politic in the State of Indiana, and acknowledged execution of the foregoing Security Agreement. IN WITNESS WHEREOF. I have hereunto subscribed my name and affixed my official seal. (SEAL) Notary Public Commission expires: Resident of St. Joseph County, Indiana 16 EXHIBIT A Schedule of Equipment Lastec 721 XR Articulated Mower Tru-Turf Roll-n-Spike Greens Roller Blue Eagle H/D Ballwasher 17 PROMISSORY NOTE (Secured By Purchase Money Security Interest) $31,032.00 South Bend, Indiana May 7, 2010 For value received, the undersigned promises to pay to the order of: The City of South Bend, Department of Redevelopment, Airport Economic Development Area TIF Fund, the sum of Thirty One Thousand Thirty Two Dollars ($31,032.00), in forty-eight (48) instalhuents of Six Hundred Forty Six and 50/100 Dollars ($646.50) each, convnencing on May 15, 2010, and continuing on the 15'x' of each month, during the months of May through October of each year, without interest during such period when there shall be no delinquency or default in the payment of any moneys to be paid on this obligation, but with interest at the rate of eight percent per annual computed monthly when there shall be any delinquency or default in the payment of any moneys to be paid on this obligation and to be computed to the next interest period following such delinquency or default, and such rate shall continue to be paid until all delinquencies and defaults are removed by the beginning of a succeeding interest period, all without relief ti•om Valuation or Appraisement Laws. and with attorney"s fees. Failure on the part of any holder to collect or charge the additional interest rate during any delinquency or default shall at no time constitute a waiver of his ri~~ht. or any holder's right. to demand and receive interest as provided herein. hlstalhnent payments hereinabove provided shall be applied to the payment of any unpaid interest, secondly to the unpaid balance of any other unpaid debt on account of this obligation, and thirdly the remainder to be applied on the unpaid principal of the debt until the same is paid in full. Upon default in the payment of any installment or other pa}nnent herein required when the same shall become due, the entire unpaid principal, interest and other indebtedness on account of this obligation and secw-ity interest securing the same shall, at the sole option of the holder thereof, become due and payable immediately without notice of non-payment or demand for payment, and the entire indebtedness may be collected by appropriate proceedings. No failure on the part of the holder of this obligation in exercising said option to declare the whole of said indebtedness due or to proceed to collect the same shall operate as a waiver of the right to do so or preclude the exercise of such option at any time during the continuance of such default or the occun-ence of a succeeding default. Advance payments may be made in any amount. The holder of this obligation may renew the same or extend time of payment of the indebtedness or any part thereof or reduce the payments thereon; any and such renewal, extension or reduction shall not release any maker, endorser or guarantor from any liability on said obligation. The drawers, sureties, guarantors and endorsers severally waive presenhnent for payment, protest, notice of protest and non-payment of this note. The receipt of interest in advance or the extension of time shall not release or discharge any surety, guarantor or endorser on this note. DATED this 7`~' day of May, ?010. ATTEST: Pi'in~i•t :A'um~~ un~l 7~i~ c° South Bend Redevelopment Commission CITY OF SOUTH BEND, DEPARTMENT OF REDEVELOPMENT BLACKTI-TORN GOLF COURSE sr,,~~~,~,,,~~~ l'rintrd .A'umi• unrl Ti~lr South Bend Redevelopment Commission This instrument ~~'as prepared b~ La~~renee I. ~1eteiccr. Assistant Cite Auorne}. I-1(ul Counh~-Cit}~ Building*. ""7 W. Jcilcr.on Bh~d., South Bend. Indiana }6601. (~7~31'-?J-~>~'9-I.