LOAN AGREEMENT
THIS LOAN AGREEMENT (hereinafter referred to as
the "Agreement") is made this 31st day of December, 1996, by and
between GENERAL ELECTRIC CAPITAL CORPORATION, a corporation
organized and existing under the laws of New York (hereinafter
referred to as "Lender"), FOUNTAIN POWERBOATS, INC., a
corporation duly organized and existing under the laws of the
State of North Carolina (hereinafter referred to as "Borrower"),
FOUNTAIN POWERBOAT INDUSTRIES, INC., a Nevada corporation (the
"Parent Corporation"), and FOUNTAIN TRUCKING, INC., a North
Carolina corporation ("Trucking"), FOUNTAIN AVIATION, INC., a
North Carolina corporation ("Aviation"), FOUNTAIN UNLIMITED,
INC., a North Carolina corporation ("Unlimited"), FOUNTAIN
SPORTSWEAR, INC., a North Carolina corporation ("Sportswear"),
and FOUNTAIN POWER, INC. a North Carolina corporation ("Power").
(Trucking, Aviation, Unlimited, Sportswear and Power are
collectively referred to as the "Present Subsidiaries." The
Parent Corporation, the Present Subsidiaries, any other present
future "Consolidated Subsidiaries" (hereinafter defined) of the
Parent Corporation, and the Borrower are hereinafter referred to
as the "Fountain Corporations").
RECITALS
The Borrower has applied to the Lender for, and
the Lender has agreed to make, subject to the terms of this
Agreement, a loan in the principal amount of up to $10,000,000.00
("the Loan"), to be evidenced by the Borrower's Promissory Note
dated December 31, 1996. The Loan shall be secured by a first
and only lien on the Property (hereinafter defined) as well as
other security hereinafter described.
AGREEMENT
Section 1. Loan Purpose; Conditions Precedent
(a) Loan Purpose; Disbursement of Proceeds. The
proceeds of the Loan may be used only for the following purposes:
(i) To satisfy existing indebtedness of the
Borrower as described in Schedule 1(a)
attached hereto.
(ii) To acquire tangible personal property
(including, but not limited to, equipment,
engines and molds) in the name of the
Borrower.
(iii) To finance the construction and
equipping of additional buildings and
facilities to be located on the real property
owned by the Borrower and located in Beaufort
County, North Carolina and described in
Exhibit A attached hereto and incorporated
herein by reference (the "Property") on which
the Borrower's existing boat manufacturing
facility is located. By the Deed of Trust,
the Borrower has encumbered the Property as
additional security for repayment of the
Loan.
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Of the $10,000,000 available for disbursement
under the Loan, $7,500,000 is being disbursed in connection with
Loan closing to satisfy existing indebtedness of the Borrower.
Upon the Lender's receipt of the Borrower's written request for
disbursement (but only once a month and for no less than
$500,000), provided there has occurred no Event of Default
hereunder and provided there has been no materially adverse
change in the financial condition of the Borrower, the Parent
Corporation and its Consolidated Subsidiaries, the remaining loan
proceeds of $2,500,000 (the "Remaining Proceeds") shall be
available for any one or more of the purposes hereinabove
described until and including January 2, 1998 (the "Funding
Deadline Date"). The Borrower shall not be entitled to borrow
any portion of the Remaining Proceeds, and the Lender shall have
no obligation to lend such Remaining Proceeds, at any time after
the Funding Deadline Date.
Upon the request of the Borrower, and with the
prior written consent of the Lender, the Remaining Proceeds may
be used to acquire tangible personal property in the name of a
Subsidiary of the Borrower, provided such Subsidiary grants to
the Lender a security interest in such assets pursuant to
documentation acceptable to the Lender.
(b) Conditions Precedent to Initial and Future
Advances. The Lender shall not be obligated to make any
disbursement until receipt by the Lender of the following items,
all in form and substance satisfactory to the Lender and the
Lender's counsel in their sole discretion:
1.01 Promissory Note. The Promissory Note ("Note") dated of
even date with this Agreement, evidencing the Loan and duly
executed by the Borrower.
1.02 Deed of Trust, Assignment of Rents and Security
Agreement. The recorded Deed of Trust, Assignment of Rents and
Security Agreement ("Deed of Trust") in which the Borrower shall
grant to a trustee for the benefit of the Lender a deed of trust
on the Property and a security interest in fixtures and other
personalty located on the property, all securing the Note.
1.03 Assignment of Rents and Leases. The assignment of
Rents and Leases in which the Borrower shall assign to Lender all
existing and thereafter arising leases on the Property and the
rents and profits therefrom.
1.04 Title Insurance. A standard ALTA non-expiring
mortgagee policy from a company or companies approved by the
Lender, providing coverage for the full principal amount of the
Note which is secured by the Deed of Trust and containing no
title exceptions unless approved by the Lender and the Lender's
counsel.
1.05 Survey. A certified copy of a recent survey of the
Property prepared by a registered land surveyor or civil
engineer, in form an substance satisfactory to the Lender.
1.06 Flood Hazard Certification. Evidence satisfactory to
the Lender and Lender's counsel as to whether the Property is
located within a 100-year flood zone or flood insurance
satisfactory to the Lender.
1.07 Environmental Audit Report. A favorable "Phase 1"
unedited environmental audit covering the Property from an
independent environmental engineering firm satisfactory to the
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Lender which reflects that no hazardous waste, toxic substance,
or other pollutants have contaminated the Property or, if the
Property has been so contaminated, that it has been
satisfactorily cleaned up in accordance with all Environmental
Laws. The Lender shall be fully authorized to discuss all
aspects of the audit with the engineering firm.
1.08 Master Security Agreement. A Master Security Agreement
(the "Security Agreement") in which the Borrower shall grant to
the Lender a first lien and security interest in the Borrower's
personal property described therein (the "Collateral") securing
the Note. A favorable opinion is required from legal counsel
acceptable to the Lender regarding the priority of the Lender's
lien position.
1.09 UCC Financing Statements. Acknowledged copies of UCC
Financing Statement (UCC-1) duly filed in all jurisdictions
necessary, or in the opinion of the Lender desirable, to perfect
the security interests granted in the Security Agreement, and
certified copies of Requests For Information (UCC-11) identifying
all previous financing statements on record for the Borrower and
any predecessors in title for the five-year period predating the
date of this Loan Agreement from all jurisdictions indicating
that no security interest has previously been granted in any of
the collateral described in the Security Agreement unless prior
approval has been given by the Lender.
1.10 Corporate Resolution. A Corporate Resolution from the
Board of Directors of each of the Fountain Corporations
authorizing the execution, delivery, and performance of the Loan
Documents to which it is a party.
1.11 Certificate of Good Standing; Charter Documents. A
certification of the Secretary of State of the State of North
Carolina as to the good standing of the Borrower and the Parent
Corporation.
1.12 By-Laws. A copy of the By-Laws of the Borrower,
certified by the Secretary of the Borrower or the Parent
Corporation (as the case may be) as to their completeness and
accuracy.
1.13 Certificate of Incumbency. A certificate of the
Secretary of each of the Fountain Corporations certifying the
names and true signatures of the officers of each of the Fountain
Corporations authorized to sign the Loan Documents.
1.14 Opinion of Counsel. A favorable opinion of counsel for
the Borrower satisfactory to the Lender and Lender's counsel.
1.15 Assignment of Life Insurance Policy. An Assignment of
Life Insurance Policy on the life of Xxxxxxxx X. Xxxxxxxx, Xx. in
the amount of $1,000,000.00 in form and substance satisfactory to
the Lender.
1.16 Appraisal(s). Two (2) copies of an appraisal of the
estimated market value of the Property and the Collateral. The
appraisal must be addressed to the Lender and must conform to the
Uniform Standards of Professional Appraisal Practice ("USPAP")
adopted by the Appraisal Standards Board of the Appraisal
Foundation. Any deviation from the USPAP must be explained in
the appraisal.
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1.17 Insurance. Evidence that the following insurance is in
place:
(a) business income coverage in amounts and from an insurer
as described in the Deed of Trust.
(b) commercial general liability insurance in amounts and
as described in the Deed of Trust.
1.18 Guaranty. A Corporate Guaranty executed by the Parent
Corporation and the Present Subsidiaries (the "Guaranty").
1.19 Additional Documents. Receipt by the Lender of other
approvals, opinions, or documents as the Lender may reasonably
request.
Section 2. Representations and Warranties.
In order to induce the Lender to enter into this Agreement
and to make the Loan, each of the Fountain Corporations
represents and warrants to the Lender (which representations and
warranties shall survive the delivery of the documents mentioned
herein and the making of the Loan contemplated hereby and shall
be deemed to have been made at any time hereafter that Loan
proceeds are disbursed) as follows:
2.01 Financial Statements. The balance sheet of the Parent
Corporation and its Consolidated Subsidiaries (as defined in
Section 9 hereof) and the related Statements of Income and
Retained Earnings of the Parent Corporation and its Consolidated
Subsidiaries, the accompanying footnotes together with the
accountant's opinion thereon, and all other financial information
previously furnished to the Lender, are true and correct and
fairly reflect the financial condition of the Parent Corporation
and its Consolidated Subsidiaries as of the dates thereof,
including all contingent liability of every type, and the
financial condition of the Parent Corporation and its
Consolidated Subsidiaries as stated therein has not changed
materially and adversely since the dates thereof.
2.02 Capacity and Standing. Each Fountain Corporation is
duly organized and validly existing under the laws of the state
in which it is incorporated, is duly qualified and in good
standing in every other state in which the nature of its business
shall require such qualification and where the failure to qualify
would have a material adverse effect, and it is duly authorized
by its board of directors to make and perform its respective
obligations under the Loan Documents.
2.03 No Violation of Other Agreements. The execution by
each Fountain Corporation of any of the Loan Documents, and other
performance by each Fountain Corporation thereunder will not
violate any provision of its certificate of incorporation or
bylaws (as amended), or of any law, other agreement, indenture,
note, or other instrument binding upon such Fountain Corporation,
or create any lien, charge or encumbrances on the Property or the
Collateral (except for the lien created by the Deed of Trust and
the Security Agreement), or give cause for the acceleration of
any of the obligations of the such Fountain Corporation.
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2.04 Authority. All authority from and approval by any
governmental body, commission, or agency, whether federal, state,
or local necessary to the making, validity, or enforceability of
this Agreement or the other Loan Documents has been obtained.
2.05 Asset Ownership. The Fountain Corporations have good
and marketable title to all of the properties and assets
reflected on the balance sheets and financial statements of the
Parent Corporation and its Consolidated Subsidiaries supplied to
the Lender, and all such properties and assets are free and clear
of mortgages, deeds of trust, pledges, liens, and all other
encumbrances except as otherwise disclosed by such financial
statements. The only asset held by the Parent Corporation is the
stock of the Borrower. The only Subsidiaries of the Parent
Corporation are the Present Subsidiaries. None of the Present
Subsidiaries owns Receivables (as defined in the Security
Agreement), Inventory (as defined in the Security Agreement) or
Tangible Personal Property (as defined in the Security Agreement)
in its own name except as disclosed in Schedule 2.05 attached
hereto. All of the Receivables and Inventory disclosed in the
Parent Corporation's financial statements are owned by the
Borrower except for those described in Schedule 2.05.
2.06 Discharge of Liens and Taxes. Each Fountain
Corporation has filed, paid and or discharged all taxes or other
claims which may become a lien on its properties or assets,
excepting to the extent that such items are being appropriately
contested in good faith and for which an adequate reserve for the
payment thereof is being maintained.
2.07 Regulation U. None of the proceeds of the Loan made
pursuant to this Agreement shall be used directly or indirectly
for the purpose of purchasing or carrying any stock in violation
of any of the provisions of Regulation U of the Board of
Governors of the Federal Reserve System.
2.08 ERISA. Each employee benefit plan, as defined by the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), maintained by any Fountain Corporation meets, as of
the date hereof, the minimum funding standards of ERISA, all
applicable requirements of ERISA and of the Internal Revenue Code
of 1986, as amended, and no "Reportable Event" nor "Prohibited
Transaction" (as defined by ERISA) has occurred with respect to
any such plan.
2.09 Litigation. Except as disclosed in Schedule 2.09
attached hereto, there is no pending or threatened action or
proceeding against or affecting the Fountain Corporations before
any court, commission, governmental agency, whether state or
federal, or arbitration which may materially adversely affect
such party's financial condition, operations, properties, or
business or the ability of such party to perform its obligations
under the Loan Documents.
2.10 Binding and Enforceable. Each of the Loan documents,
when executed, shall constitute valid and binding obligations of
the Fountain Corporations being a party thereto and are
enforceable in accordance with its terms, except as may be
limited by bankruptcy, insolvency, moratorium, or similar laws
affecting creditors' rights generally.
2.11 Insolvency. After giving effect to the execution and
delivery of the Loan Documents and the making of the Loan under
this Agreement, none of the Fountain Corporations will be
"insolvent," as defined in 101 of Title 11 of the United States
Code or Section 2 of the
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Uniform Fraudulent Transfer Act, or any other applicable state
law pertaining to fraudulent transfers, as each may be amended
from time to time, or be unable to pay its debts generally as
such debts become due, or have an unreasonably small capital to
engage in any business or transaction, whether current or
contemplated.
Section 3. Affirmative Covenants
Each of the Fountain Corporations covenants and agrees that
from the date hereof and until payment in full of the Loan and
performance of all obligations under the Loan Documents, it will:
3.01 Maintain Existence. Preserve and maintain its
existence and good standing in its state of organization, and
qualify and remain qualified as a foreign corporation, in each
jurisdiction in which such qualification is required and where
the failure to qualify would have a material adverse effect on
such Fountain Corporation. The foregoing covenant shall not
preclude mergers permitted under Section 5.03 hereof and shall
not preclude the dissolution of a corporation owning no assets or
whose assets would vest, as a result of such dissolution, in the
Borrower.
3.02 Maintain Records. Keep adequate records and books of
account, in which complete entries will be made in accordance
with GAAP, consistently applied , reflecting all financial
transactions of Fountain Corporations.
3.03 Maintain Properties. Maintain, keep and preserve all
of its properties (tangible and intangible) necessary or useful
in the conduct of its business in good working order and
condition, ordinary wear and tear excepted.
3.04 Conduct of Business. Continue to engage in an
efficient, prudent, and economical manner in a business of the
same general type as now conducted.
3.05 Maintain Insurance. Maintain insurance with
financially sound and reputable insurance companies or
associations in such amounts and covering such risks as are
usually carried by companies engaged in the same or a similar
business, which insurance may provide for a reasonable
deductible. The Lender shall be named as loss payee on all
policies which apply to the Lender's collateral and additional
insured on all such insurance, and the Borrower shall deliver
certificates of insurance at closing evidencing such insurance.
All such insurance policies shall provide, and the certificate
shall state, that no policy will be terminated without 30 days
prior written notice to Lender.
3.06 Comply with Laws. Comply in all material respects with
all applicable laws, rules, regulations, and orders including,
without limitation, all Environmental Laws and pay before any
delinquency all taxes, assessments, and governmental charges
imposed upon the Borrower or upon its property.
Provide to the Lender a copy of any written notice of a
governmental authority received by such Fountain Corporation
which indicates that such Fountain Corporation has violated a
law, rule, regulation and order, including without limitation any
Environmental Law.
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3.07 Right of Inspection. Permit the officers and
authorized agents of the Lender, at any reasonable time, to
examine and make copies of the records and books of account of
such Fountain Corporation, and visit the properties of such
Fountain Corporation, and to discuss such matters with any
officers, directors and independent accountants of such Fountain
Corporation as the Lender deems necessary.
3.08 Financial Reports and Other Data.
(a) As soon as practicable and in any event within ninety
(90) days after the end of each fiscal year, deliver, or cause to
be delivered to the Lender an audited consolidated balance sheet
of the Parent Corporation and its Consolidated Subsidiaries and
related statements of income and retained earnings and cash flow
for such fiscal year, setting forth in each case in comparative
form corresponding figures for the preceding annual period, all
satisfactory to the Lender. All annual financial statements will
be consolidated, will be prepared in conformity with generally
accepted accounting principles and will be in a form satisfactory
to the Lender. In connection with the examination, the
independent certified public accountant will issue a letter
stating any and all of the terms of this Agreement that are being
violated or that there are no violations.
(b) Deliver to the Lender as soon as practicable and in any
event within forty-five (45) days following the end of each
fiscal quarter except for the last fiscal quarter of the Parent
Corporation's fiscal year an unaudited consolidated balance sheet
for the Parent Corporation and its Consolidated Subsidiaries and
related statements of income and retained earnings and cash flow,
in each case for the period from the beginning of the then
current fiscal year to the end of such quarter, all in reasonable
detail and certified by the chief financial officer of the Parent
Corporation to provide a fair presentation of the financial
condition of the Parent Corporation and its consolidated
subsidiaries, subject to normal year end audit adjustments.
(c) As soon as available each year, copies of all state and
federal tax returns filed by each of the Fountain Corporations.
(d) With reasonable promptness, deliver such additional
financial or other data as the Lender may reasonably request
regarding each Fountain Corporation's operations, business
affairs and financial condition. The Lender is hereby authorized
by each Fountain Corporation to deliver a copy of such
information made available by such corporation to any regulatory
authority having jurisdiction over the Lender.
(e) Deliver to the Lender, on a quarterly basis, at the
time quarterly financial statements are tendered, a Certificate
of Compliance prepared by the Parent Corporation's Chief
Financial Officer and certified as to accuracy by such officer of
the Parent Corporation and the Borrower (the "Certificate of
Compliance"). The Certificate of Compliance shall set forth the
Fountain Corporations' status with respect to their compliance
with the covenants and other default provisions contained in the
Loan Documents hereinafter delivered. Any default shall be
identified with particularity, and the Borrower shall also
identify proposed action to be taken by the Borrower or such
other Fountain Corporation with respect thereto.
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(f) Deliver to Lender at least once each calendar month an
itemized list of the Borrower's "Inventory" (as defined in the
Security Agreement) and "Receivables" (as defined in the Security
Agreement) (the "Monthly Assets Report"). The Monthly Assets
Report shall identify the names and addresses of all dealers to
whom Inventory is in transit. This Monthly Assets Report shall
also describe with particularity additional equipment, molds and
other Tangible Personal Property (as defined in the Security
Agreement) acquired by the Borrower within the prior calendar
month and identify any Tangible Personal Property disposed of
within the prior calendar month and shall identify and federal
trademark registration applications and patent applications filed
during the preceding calendar month. The Borrower shall provide
serial numbers for any Tangible Personal Property having a value
of $50,000 individually and, if requested by the Lender, shall
identify the Lender's security interest in such property by
tagging such property with a written disclosure of such security
interest. The Borrower shall at all times maintain an aggregate
value of Inventory (as defined in the Security Agreement) and
Receivables (as defined in the Security Agreement) of at least
Five Million Five Hundred Thousand Dollars ($5,500,000).
Compliance with this covenant shall be established once each
month through the Monthly Assets Report and more frequently, upon
request of the Lender.
3.09 Knowledge of Certain Events. Upon an officer of any of
the Fountain Corporations obtaining knowledge of the occurrence
of any Event of Default hereunder, cause to be delivered to the
Lender, within fifteen (15) business days of such officer
obtaining such knowledge, an officer's certificate specifying the
nature thereof, the period of existence thereof and what action
is proposed to be taken with respect thereto.
3.10 Other Notices. Notify the Lender in writing within
thirty (30) business days of the occurrence of any of the
following with respect to such Fountain Corporation:
(a) the services upon such Fountain Corporation of any
action, suit or proceeding at law or in equity making a claim in
excess of $100,000;
(b) any event or condition which shall constitute an event
of default under any other agreement for borrowed money or any
known or potential material change in this or any other
contractual agreement;
(c) the loss of any patents, licenses, franchises,
trademarks, trademark rights, trade names, trade name rights and
copyrights material to its business;
(d) any event or condition which shall cause any
agreements, reports, schedules, certificates or instruments
heretofore or simultaneously with execution of this Agreement
delivered to the Lender by or on behalf of the Fountain
Corporations to become false or misleading in any material
respect with respect to this transaction;
(e) a Fountain Corporation or any other Person causes or
permits Hazardous Materials to be placed, held, located or
disposed of on, under or at real property owned, leased or
otherwise used by a Fountain Corporation or any part thereof in
violation of Environmental Laws (specifically including real
property that is not encumbered by the Deed of Trust).
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3.11 Further Assurances. Upon request of the Lender, duly
execute and deliver or cause to be duly executed and delivered to
the Lender such further instruments and do and cause to be done
such further acts that may be reasonably necessary or proper in
the opinion of the Lender to carry out more effectively the
provisions and purposes of the Loan Documents.
3.12 ERISA. Comply with all requirements of ERISA
applicable to it (including the payment of all obligations and
liabilities arising under ERISA) and furnish to the Lender as
soon as possible and in any event within 30 days after it or any
duly appointed administrator of any employee pension benefit plan
(as defined in ERISA) knows or has reason to know that a
Reportable Event (as defined in ERISA) with respect to any such
plan has occurred which is likely to result in a penalty being
imposed on the plan, a statement of the chief financial officer
of the Parent Corporation describing in reasonable detail such
Reportable Event and any action proposed to be taken with respect
thereto, together with a copy of the notice of such Reportable
Event given to the Pension Benefit Guaranty Corporation or a
statement that such notice will be filed with annual report to
the United States Department of Labor with respect to such plan
if such filing has been authorized.
3.13 Payment of Obligations. Pay when due (including any
applicable grace period) all of its obligations for indebtedness
for money borrowed, except where the same may be contested in
good faith and appropriate reserves for the accrual of the same
are maintained in amounts in accordance with GAAP.
3.14 Subsidiaries. In the event that any corporation or
other entity becomes a Subsidiary (directly or indirectly) of the
Parent Corporation, the Parent Corporation shall cause such
Subsidiary to guarantee repayment of the Note pursuant to a
guaranty in form and substance identical to the Guaranty and to
sign documentation, in form and substance satisfactory to the
Lender, agreeing to abide by the covenants and terms of the Loan
Agreement.
3.15 Assets. Each Monthly Assets Report shall disclose all
assets held in the name of the Parent Corporation and its
Consolidated Subsidiaries other than the Borrower. The value of
Tangible Personal Property, Inventory, or Receivables for any
Fountain Corporation other than the Borrower shall not exceed at
any one time $2,000,000.
If requested by the Lender, each of the Fountain
Corporations shall execute such documentation as the Lender deems
necessary so as to grant a first-priority security interest in
any asset held by such Fountain Corporation.
Section 4. Financial Covenants.
Unless otherwise specified herein, all terms of an
accounting character used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be
prepared in accordance with GAAP, applied on a basis consistent
(except for changes concurred in by the Parent Corporation's
independent public accounts or otherwise required by a change in
GAAP) with the most recent audited consolidated financial
statements of the Parent Corporation delivered to the Lender,
unless with respect to any such change concurred in by the Parent
Corporation's independent public accountants or required by GAAP,
in determining compliance with any of the provisions of this
Agreement or
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any of the other Loan Documents: (i) the Borrower shall have
objected to determining such compliance on such basis at the time
of delivery of such financial statements, or (ii) the Lender
shall so object in writing within 30 days after the delivery of
such financial statements, in either of which events such
calculations shall be made on a basis consistent with those used
in the preparation of the latest financial statements as to which
such objection shall not have been made.
Each of the Fountain Corporations covenants and agrees that
from the date hereof until payment in full of all indebtedness
and the performance of all obligations under the Loan Documents,
the Parent Corporation and its Consolidated Subsidiaries shall at
all times maintain the following financial position and ratios.
4.01 Current Ratio. A ratio of Consolidated Current Assets
to Consolidated Current Liabilities of not less than 1.0 to 1.0.
4.02 Tangible Net Worth. A minimum Consolidated Tangible
Net Worth of not less than $3,000,000.00 at all times.
4.03 Debt to Worth. A ratio of Consolidated Liabilities to
Consolidated Tangible Net Worth of not greater than 1.8 to 1.
4.04 Cash Flow Margin. The ratio of (I) Net Income after
taxes plus depreciation plus amortization to (ii) all long-term
debt payments (excluding interest) due within the next twelve
(12) months must exceed 2.0 to 1.0 annually. Compliance with
this ratio will be calculated on a rolling four quarter basis,
determined at the end of each fiscal quarter of the Parent
Corporation.
4.05 Capital Expenditures Limitation. Expenditures for
fixed assets in any fiscal year shall not exceed in the aggregate
for all Fountain Corporations the sum of $500,000 unless such
assets are subject to Lender's first lien position.
Section 5. Negative Covenants.
Each of the Fountain Corporations covenants and agrees that
from the date hereof and until payment in full of the Loan and
performance of all obligations under the Loan Documents, it shall
not, without the prior written consent of the Lender:
5.01 Liens. Create, incur, assume, or suffer to exist any
Lien (as defined in Section 9 hereof) upon or with respect to any
of its properties, except:
(a) Liens in favor of the Lender;
(b) Liens for taxes not yet due and payable or
otherwise being contested in good faith an for
which appropriate reserves are maintained;
(c) Other Liens imposed by law not yet due and
payable, or otherwise being contested in good
faith and for which appropriate reserves are
maintained;
(d) Purchase money Liens on any property hereafter
acquired (expressly excluding, however, Liens with
respect to any property acquired in replacement of
or
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substitution for property on which the Lender has
a security interest), provided that such purchase-
money Lien shall attach only to the property so
acquired.
5.02 Debt. Create, incur, assume, or suffer to exist any
Debt (as defined in Section 9 hereof), except:
(a) Debt to the Lender;
(b) Debt presently outstanding and shown on the most recent
financial statements of the Borrower submitted to the
Lender;
(c) Accounts payable to trade creditors incurred in the
ordinary course of business;
(d) Debt secured by purchase money Liens as outlined above
in Section 5.01(d);
(e) Additional Debt (including, but not limited to, Debt
owed to any Related Party) not to exceed $500,000.00 in
the aggregate.
5.03 Mergers. Enter into a merger or consolidate with or
sell, assign, lease, or otherwise dispose of all or substantially
all of its assets to any person or entity except for the merger
of a Consolidated Subsidiary into the Borrower where the Borrower
is the surviving corporation or a dissolution of a corporation
owing no assets or whose assets would vest, as a result of such
dissolution, in the Borrower.
5.04 Leases. Create, incur, assume, or suffer to exist any
leases, except:
(a) Leases presently outstanding and showing on the most
recent financial statement submitted to the Lender;
(b) Operating Leases for machinery and equipment which do
not in the aggregate require payments in excess of
$100,000 in any fiscal year of the Parent Corporation.
5.05 Dividends. Declare or pay any Dividends in excess of
Net Income plus depreciation less current maturities of
indebtedness in any fiscal year of the Parent Corporation.
5.06 Guaranties. Execute any Guarantee (as defined in
Section 9 hereof) or assume, Guarantee (as defined in Section 9
hereof), endorse, or otherwise be or become directly or
contingently liable for obligations of any person, or agree to
repurchase any Inventory sold to a third party except (i)
Guarantees by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of
business, (ii) Guarantees of repayment of interest accruing under
floor-plan-financed boats constituting Inventory; and (iii)
repurchase obligations arising under direct repurchase agreements
pursuant to which the Borrower agrees to repurchase boats
constituting Inventory from floor plan lenders. The aggregate
amount of all such Guarantees specified under (i), (ii) and
(iii), however, shall not exceed 200% of the net sales of the
Parent Corporation and its Consolidated Subsidiaries for the
preceding fiscal quarter.
5.07 Sale of Assets. Sell, lease, or otherwise dispose of
any of its assets or properties (exclusive of Inventory permitted
to be sold pursuant to the terms of the Security Agreement) in
excess of $200,000 in the aggregate for all Fountain Corporations
in any fiscal year of the Parent Corporation without the prior
written consent of the Lender.
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5.08 Transfer of Ownership. Transfer or sell more than 10%
of the total number of shares of stock in any Fountain
Corporation (other than the Parent Corporation) prior to the
repayment in full of the Note.
5.09 Related Party Contracts. No Fountain Corporation shall
enter into any contract (specifically including any lease or
contract for services) with any Related Party (as hereinafter
defined) without the Lender's prior review and approval of such
contract, not to be unreasonably withheld or delayed.
Section 6. Hazardous Materials and Environmental
Compliance.
6.01 Investigation. Each Fountain Corporation hereby
certifies that it has exercised due diligence to ascertain
whether its real property, including without limitation the
Property, is or has been affected by the presence of asbestos,
oil or oil products, urea formaldehyde, PCBs, hazardous or
nuclear waste, toxic chemicals and substances, or other Hazardous
Materials. Each Fountain Corporation represents and warrants
that except as disclosed in the audited financial statements for
the period ending June 30, 1996, or as disclosed in Schedule 6.01
attached hereto, there are no such materials contaminating its
real property, nor have any such materials been improperly stored
or improperly disposed of on the Property. Each Fountain
Corporation hereby agrees that it shall not permit any such
contamination as long as any indebtedness or obligations to the
Lender under the Loan Documents remain unpaid or unfulfilled. In
addition, no Fountain Corporation has or uses any underground
storage tanks on its real property which are not registered with
appropriate federal and/or state agencies and which are not
properly equipped and maintained in accordance with all
Environmental Laws. If requested by the Lender, each Fountain
Corporation shall provide the Lender with all necessary and
reasonable assistance required for purposes of determining the
existence of Hazardous Materials on real property owned by it,
including the Property, including allowing the Lender access to
such property, and access to such corporation's employees having
knowledge of, and to files and records within such corporation's
control relating to the existence, storage or discharge of
Hazardous Materials on such real property.
6.02 Compliance. Each Fountain Corporation agrees to comply
with all applicable Environmental Laws, including, without
limitation, all those relating to Hazardous Materials. Each
Fountain Corporation further agrees to provide the Lender, and
all appropriate federal and state authorities, with immediate
notice in writing of any hazardous or toxic materials released on
any property owned by it, including the Property, and to pursue
diligently to completion all appropriate and/or required remedial
action in the event of such release.
6.03 Remedial Action. The Lender shall have the right, but
not the obligation, to undertake all or any part of such remedial
action in the event of a release of hazardous or toxic materials
on the Property and to add any expenditures so made to the
principal indebtedness secured by the Deed of Trust. The
Borrower agrees to indemnify and hold the Lender harmless from
any and all loss or liability arising out of any violation of the
representations, covenants and obligations contained in this
Section 6, or resulting from the recording of the Deed of Trust.
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Section 7. Events Default.
Each of the following shall be Events of Default hereunder:
7.01 The failure to make payment of any installment of
principal or interest on the Note when due or payable after the
passage of any applicable cure period set out in the Note.
7.02 Any representation or warranty made in the Loan
Documents shall prove to be false or misleading in any material
respect.
7.03 Any report, certificate, financial statement or other
document furnished prior to the execution of or pursuant to the
terms of this Agreement shall prove to be false or misleading in
any material respect.
7.04 Any Fountain Corporation shall default in the payment
of any other obligation for money borrowed when due or in the
performance of any obligation incurred in connection with such
money borrowed. Notwithstanding the foregoing, it shall not
constitute an Event of Default hereunder if such default is with
respect to indebtedness of less than $25,000 individually and
$50,000 in the aggregate for all indebtedness of all Fountain
Corporations.
7.05 The breach of any covenant, condition, or agreement
made by any Fountain Corporation under any Loan Document after
the passage of any applicable cure period set out in such Loan
Document.
7.06 Except as expressly permitted herein, liquidation or
dissolution of any Fountain Corporation, or suspension of the
business of any Fountain Corporation or filing by any Fountain
Corporation of a voluntary petition in bankruptcy or a voluntary
petition or an answer seeking reorganization, arrangement,
readjustment of its debts or for any other relief under the
United States Bankruptcy Code, as amended, or under any other
insolvency act of law, state or federal, now or hereafter
existing, or any other action of any Fountain Corporation
indicating its consent to, approval of, or acquiescence in any
petition or proceedings; the application by any Fountain
Corporation for, or the appointment by consent or acquiescence
of, a receiver, a trustee or a custodian of such Fountain
Corporation, or an assignment for the benefit of creditors, the
inability of such Fountain Corporation or the admission by such
Fountain Corporation in writing of its inability to pay its debts
as they mature.
7.07 Filing of an involuntary petition against any Fountain
Corporation in bankruptcy or seeking reorganization, arrangement,
readjustment of its debts or for any other relief under the
United States Bankruptcy Code, as amended, or under any other
insolvency act or law, state or federal, now or hereafter
existing; or the involuntary appointment of a receiver, a trustee
or a custodian of any Fountain Corporation or for all or a
substantial part of its property; the issuance of a warrant of
attachment, execution or similar process against any substantial
part of the property of any Fountain Corporation and the
continuance of any of the events referred to in this Section 7.07
for thirty (30) days undismissed or undischarged.
7.08 Final judgment for the payment of money shall be
rendered against the Borrower or any Fountain Corporation which
is in excess of $10,000 individually and which shall remain
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undischarged for a period of 30 days unless such judgment or
execution thereon be effectively stayed under the laws of the
jurisdiction in which such judgment was rendered.
7.09 The occurrence of an Event of Default under the
Guaranty or any guaranty hereafter delivered.
7.10 Should any lien or security interest granted to the
Lender to secure payment of the Note terminate, fail for any
reason to have the priority believed by the Lender on the date
granted, or become unperfected for any reason.
Section 8. Remedies Upon Default.
Upon the occurrence of any Event of Default, the Lender may
at any time thereafter, at its option, take any or all of the
following actions at the same or at different times:
8.01 Declare the balance of the Note to be immediately due
an payable, both as to principal and interest, without
presentment, demand, protest, or notice of any kind, all of which
are hereby expressly waived by each of the Fountain Corporations,
and such balance shall accrue interest at the Default Rate (as
specified in the Note).
8.02 Take immediate possession of and foreclosure upon any
or all collateral including real and personal property which may
be granted to the Lender as security for the Loan and obligations
of the Borrower under the Loan Documents.
8.03 Exercise such other rights and remedies as the Lender
may be provided in the Loan Documents, as a secured party under
the North Carolina Uniform Commercial Code, or as otherwise
provided by law.
8.04 Any obligation of the Lender to advance funds under the
Note(s) and all other obligations (if any) of the Lender shall
immediately cease and terminate unless and until Lender shall
reinstate such obligation in writing.
8.05 Institute any action against the Borrower to collect on
sums due under the Note and institute any action against any one
or more of the Fountain Corporations that have executed the
Guaranty or any subsequent guaranty.
8.06 Take any other action permitted to be taken as
specified in the Loan Documents upon the occurrence of an Event
of Default and take any other action permitted to be taken and
available at law or in equity.
Section 9. Miscellaneous Provisions.
9.01 Definitions.
(a) "Consolidated Current Assets" and "Consolidated
Current Liabilities" mean, at any time, all assets or
liabilities, respectively, of the parent Corporation and its
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Consolidated Subsidiaries that, in accordance with GAAP, should
be classified as current assets or current liabilities,
respectively, on a consolidated balance sheet of the Parent
Corporation.
(b) "Consolidated Liabilities" means the sum of (i)
all liabilities that, in accordance with GAAP, should be
classified as liabilities on a consolidated balance sheet of
Parent Corporation, and (ii) to the extent not included in clause
(i) of this definition, all redeemable preferred stock.
(c) "Consolidated Tangible Net Worth" means, at any
time, stockholders' equity, less the sum of the value, as set
forth or reflected on the most recent consolidated balance sheet
of the Parent Corporation, prepared in accordance with GAAP, of
(A) Any surplus resulting from any write-up
of assets subsequent to June 30, 1996;
(B) All assets which would be treated as
intangible assets for balance sheet presentation
purposes under GAAP, including without limitation
goodwill (whether representing the excess of cost over
book value of assets acquired, or otherwise),
trademarks, tradenames, copyrights, patents and
technologies, and unamortized debt discount and
expenses.
(C) To the extent not included in (B) of
this definition, any, amount at which shares of capital
stock of the Parent Corporation appear as an asset on
the consolidated balance sheet of the Parent
Corporation;
(D) Loans or advances to stockholders,
directors, officers or employees; and
(E) To the extent not included in (B) of
this definition, deferred expenses.
(d) "Consolidated Subsidiary" means at any date any
Subsidiary or any other entity the accounts of which, in
accordance with GAAP, would be consolidated with those of the
Parent Corporation in its consolidated financial statements as of
such date. "Subsidiary" means any corporation or other entity of
which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time
directly or indirectly owned by the Parent Corporation.
(e) "Debt" of any Person means at any date, without
duplication, (i) all obligations of such Person for borrowed
money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all
obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable
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arising in the ordinary course of business, (iv) all obligations
of such Person as lessee under capital leases, (v) all
obligations of such Person to reimburse any bank or other Person
in respect of amounts payable under a banker's acceptance, (vi)
all redeemable preferred stock of such Person (in the event such
Person is a corporation), (vii) all obligations (absolute or
contingent) of such Person to reimburse any bank or other Person
in respect of amounts paid under a letter of credit or similar
instrument, (viii) all Debt of others secured by a Lien on any
asset of such Person, whether or not such Debt is assumed by such
Person, and (ix) all Debt of others Guaranteed by such Person.
(f) "Default Rate" shall have the meaning given such
term in the Note.
(g) "Dividends" means for any period the sum of all
dividends paid or declared during such period in respect to any
capital stock and redeemable preferred stock (other than
dividends paid or payable in the form of additional capital
stock).
(h) "Environmental Laws" shall mean all federal and
state laws, rules and regulations which affect or may affect any
real property, including Property, including without limitation
the Comprehensive Environmental Response Compensation and
Liability Act (42 U.S.C. Section 9601 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.),
the Federal Water Pollution Control Act (33 U.S.C. Section 1251
et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the
Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.),
the Sedimentation Pollution Control Act (N.C.G.S. Section 113A-5
et seq.), the Hazardous Chemicals Right to Know Act (N.C.G.S.
Section 95-173 et seq.), the Oil Pollution and Hazardous
Substances Control Act (N.C.G.S. Section 143-215.75 et seq.), the
North Carolina Solid Waste Management Act (N.C.G.S. Section 130A-
290 et seq.), and the Coastal Area Management Act (N.C.G.S.
Section 113A-100 et seq.), as such laws, rules or regulations
have been amended or may be amended.
(i) "GAAP" shall mean generally accepted accounting
principles, applied on a consistent basis.
(j) "Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly
guaranteeing any Debt or other obligation of any other Person
and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such
Person (i) to secure, purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or other obligation
(whether arising by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods, securities or
services, to provide collateral security , to take-or-pay, or to
maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the
obligee of such Debt or other obligation of the payment thereof
or to protect such obligee against loss in respect thereof (in
whole or in part), provided that the term Guarantee shall not
include endorsements for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
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(k) "Hazardous Materials" means and includes any
hazardous, toxic or dangerous waste, substance or material
(including without limitation any materials containing asbestos)
defined as such in (or for purposes of) any Environmental Laws.
(l) "Lien" means, with respect to any asset, any
mortgage, deed to secure debt, deed of trust, lien, pledge,
charge, security interest, security title, preferential
arrangement which has the practical effect of constituting a
security interest or encumbrance, servitude or encumbrance of any
kind in respect of such asset to secure or assure payment of a
Debt or a Guarantee, whether by consensual agreement or by
operation of statute or other law, or by any agreement,
contingent or otherwise, to provide any of the foregoing. For
the purposes of this Agreement, the Parent Corporation or any
Subsidiary shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
(m) "Loan Documents" shall mean this Agreement, the
Note, the Deed of Trust, the Security Agreement, all UCC-1
Financing Statements, the Guaranty, the Assignment of Rents, the
Assignment of Life Insurance Agreement, any additional guaranty
agreements hereafter executed, and all other documents,
certificates and instruments executed in connection therewith,
and all renewals, extensions, modifications, substitutions, and
replacements thereto and therefor.
(n) "Net Income" means, as applied to any Person for
any period, the aggregate amount of net income of such Person,
after taxes, for such period, as determined in accordance with
GAAP.
(o) "Person" shall mean an individual, partnership,
corporation, limited liability company, trust, incorporated
organization, association, joint venture, or a government agency
or political subdivision thereof.
(p) "Related Party" has the meaning given to such term
in the Internal Revenue Code.
9.02 Non-Impairment. If any one or more provisions
contained in the Loan Documents shall be held invalid, illegal,
or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained therein
shall not in any way be affected or impaired thereby and shall
otherwise remain in full force and effect.
9.03 Applicable Law. This Agreement shall be construed
in accordance with and governed by the laws of the State of North
Carolina.
9.04 Waiver. Neither the failure or any delay on the
part of the Lender in exercising any right, power or privilege
granted in the Loan Documents shall operate as a waiver thereof,
nor shall any single or partial exercise thereof preclude any
other or further exercise of any other right, power or privilege
which may be provided in any Loan Document or provided by law.
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9.05 Modification. No modification, amendment or
waiver of any provisions of any of the Loan Documents shall be
effective unless in writing and signed by the parties thereto.
9.06 Renewal/Modification. If the Lender elects to
modify/renew this Agreement, the Note or other Loan Documents,
the Lender reserves the right to assess a fee in consideration
for such modification/renewal.
9.07 Stamps and Fees. The Borrower shall pay all
federal or state stamps, taxes, or other fees, or changes, if any
are payable or are determined to be payable by reason of the
execution, delivery or issuance of the Loan Documents or any
security granted to the Lender (but specifically excluding any
tax on income owed by the Lender as a result of income generated
by the loan evidenced by this Agreement); and the Borrower agrees
to indemnify and hold harmless the Lender against any and all
liability in respect thereof.
9.08 Attorneys' Fees. In the event the Borrower shall
default in any of its obligations to Lender and the Lender
believes it necessary to employ an attorney to assist in the
enforcement or collection of the indebtedness of the Borrower to
the Lender, to enforce the terms and provisions of the Loan
Documents or in the event the Lender voluntarily or otherwise
should become a party to any suit or legal proceeding relating to
its obligations hereunder (including a proceeding conducted under
the United States Bankruptcy Code), the Borrower agrees to pay
the reasonable attorneys' fees of the Lender and all related
costs that may be reasonably incurred by the Lender. The
Borrower shall be liable for such attorneys' fees and costs
whether or not any suit or proceeding commences. Any attorneys'
fees, however, shall be calculated on the basis of such
attorneys' standard hourly billing rate for time in fact
incurred, without regard to any statutory presumption.
9.09 Lender Making Required Payments. In the event any
Fountain Corporation shall fail to maintain insurance, pay taxes
or assessments, costs and expenses which such Fountain
Corporation is, under any of the terms hereof or of any Loan
Document, required to pay, or shall fail to keep any of the
properties and assets constituting collateral free from new
security interests, liens, or encumbrances, except as permitted
herein, the Lender may at its election make expenditures for any
or all such purposes and the amounts expended together with
interest thereon at the Default Rate, shall become immediately
due and payable to the Lender, and shall have the benefit of and
be secured by the Collateral to the extent permitted by law. The
Lender shall be under no duty or obligation whatever with respect
to any of the foregoing expenditures.
9.10 Loan Agreement Controls. In the event of any
inconsistency between the terms of the Loan Documents (other than
this Agreement) and this Agreement, the terms of this Agreement
shall control, except in the case of the Note (which shall be
controlling in the event of a conflict with this Agreement).
9.11 Notices. All notices, requests or other
communications provided for or permitted to be given pursuant to
the Loan Agreement, the Deed of Trust, the Note or any other Loan
Document (herein called a "notice") must be in writing (which
includes by telephonic facsimile transmission) and shall be
served by personal delivery or by depositing in the United States
of America mail, postage prepaid, registered or certified, return
receipt requested, and addressed to the addresses set forth
below. All notices shall be effective upon personal delivery or
on the third (3rd) day after being deposited in the
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X#0000000.00
Xxxxxx Xxxxxx mail. Personal delivery may be accomplished
through the use of a reputable commercial courier or air freight
service or through the use of a telephone facsimile transmitter
(telecopier). Rejection or other refusal to accept or the
inability to deliver because of changed address of which no
notice was given shall be deemed to be receipt of the notice
sent. A notice shall not be ineffective solely because a non-
party to be copied on a notice, as indicated below, did not
receive such copy. By giving at least fifteen (15) days' written
notice thereof, any party hereto shall have the right to specify
as its address any other address in the United States of America.
Each notice given by telecopy shall be deemed given on the date
shown on the sender's copy thereof bearing the proper "answer
back code" for the telecopy number to which the notice is sent,
provided such telecopy number is the correct number of the
receiving party at the time such notice is sent.
The Borrower:
Fountain Powerboats, Inc.
Whichards Xxxxx Xxxx
X.X. Xxxxxx 000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxxxxx, Xx.
Telecopy: (000) 000-0000
The Lender:
General Electric Capital Corporation
0000 Xxxxxxxx Xxxx Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx
Telecopy: (000) 000-0000
9.12 Consent to Jurisdiction. Each Fountain
Corporation hereby irrevocably agrees that any legal action or
proceeding arising out of or relating to this Agreement or the
other Loan Documents may be instituted in the Superior Court in
Mecklenburg County, North Carolina, or the United States District
Court for the Western District of North Carolina or in such other
appropriate court and venue as the Lender may choose at its sole
discretion Each Fountain Corporation consents to the
jurisdiction of such courts and waives any objection relating to
the basis for personal or in rem jurisdiction or to venue which
such Fountain Corporation may now or hereafter have in any such
legal action or proceedings.
9.13 Arbitration. Any controversy or claim arising out
of or relating to this Loan Agreement shall be determined by
arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association. The number of
arbitrators shall be three. One arbitrator shall be appointed by
each of the parties and the third arbitrator, who shall serve as
chairman of the tribunal, shall be appointed by the American
Arbitration Association. The place of arbitration shall be
Charlotte, North Carolina. Any arbitral award arising from any
arbitration pursuant to this paragraph shall be final and binding
upon all parties hereto.
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9.14 Counterparts. This Agreement may be executed by
one or more parties on any number of separate counterparts and
all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
9.15 Entire Agreement. The Loan Documents embody the
entire agreement among the parties hereto with respect to the
Loan, and there are no oral or parol agreements existing between
the Lender and the Fountain Corporations with respect to the Loan
which is not expressly set forth in the Loan Documents.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed all as of the date first above
written.
BORROWER:
ATTEST: FOUNTAIN POWERBOATS, INC., a North Carolina
corporation
/s/Xxxxxxx X. Xxxxxxxx By: /s/Reginanld X. Xxxxxxxx, Xx.
_______ Secretary ________ President
[CORPORATE SEAL]
LENDER:
ATTEST: GENERAL ELECTRIC CAPITAL CORPORATION,
a New York corporation
/s/Xxxxx X. Xxxxxx By: /s/Xxxxxx X. Xxxxxxxxx
_______ Secretary ________ Region Credit Analyst
[CORPORATE SEAL]
PARENT CORPORATION:
ATTEST: FOUNTAIN POWERBOAT INDUSTRIES, INC.
a Nevada corporation
/s/Xxxxxxx X. Xxxxxxxx By: Xxxxxxxx X. Xxxxxxxx, Xx.
_______ Secretary ________ President
[CORPORATE SEAL]
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PRESENT SUBSIDIARIES:
ATTEST: FOUNTAIN TRUCKING, INC.
a North Carolina corporation
/s/Xxxxxxx X. Xxxxxxxx By: /s/Xxxxxxxx X. Xxxxxxxx,Xx.
_______ Secretary ________ President
[CORPORATE SEAL]
ATTEST: FOUNTAIN AVIATION, INC.
a North Carolina corporation
/s/Xxxxxxx X. Xxxxxxxx By: /s/Xxxxxxxx X. Xxxxxxxx, Xx.
_______ Secretary ________ President
[CORPORATE SEAL]
ATTEST: FOUNTAIN UNLIMITED, INC.
a North Carolina corporation
/s/Xxxxxxx X. Xxxxxxxx By: /s/Xxxxxxxx X. Xxxxxxxx, Xx.
_______ Secretary ________ President
[CORPORATE SEAL]
ATTEST: FOUNTAIN POWER, INC.
a North Carolina corporation
/s/Xxxxxxx X. Xxxxxxxx By: /s/Xxxxxxxx X. Xxxxxxxx, Xx.
_______ Secretary ________ President
[CORPORATE SEAL]
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ATTEST: FOUNTAIN SPORTSWEAR, INC.
a North Carolina corporation
/s/Xxxxxxx X. Xxxxxxxx By: /s/Xxxxxxxx X. Xxxxxxxx, Xx.
_______ Secretary ________ President
[CORPORATE SEAL]
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SCHEDULE 1(a)
FOUNTAIN POWERBOATS, INC.
SCHEDULE OF DEBTS TO BE PAID OFF FROM PROCEEDS
AS OF DECEMBER 31, 1996
1. MetLife Capital Corporation
Bellevue, Washington
Reference: Fountain Powerboats, Inc.
Loan number 2046493-001
Pay-off Amount: $5,316,563.15
2. Deutsche Financial Services
Troy Michigan
Reference: Fountain Powerboats, Inc.
Loan number 90475
Pay-off Amount: $1,234,702.96
3. General Electric Capital Corporation
Charlotte, NC
Reference: Fountain Powerboats, Inc.
Loan number 4060713-001
Pay-off Amounts: $
4. Branch Bank & Trust Leasing Corporation
Charlotte, NC
Reference: Fountain Powerboats, Inc.
Loan number 3423449-001
Pay-off Amount: $54,287.30
Loan number 3423449-002
Pay-off Amount: $4,114.40
Loan number 3423449-003
Pay-off Amount: $60,342.53
5. Waster Industries, Inc.
Raleigh, NC
Reference: Fountain Powerboats, Inc.
Loan number 019-259565
Pay-off Amount: $9,860.00
6. Toyota Acceptance Corporation
Atlanta, GA
Reference: Fountain Powerboats
Loan number 01023303300600064319
Pay-off Amount: $4,657.18
Schedule 2.05
Receivables, Inventory or Tangible Personal Property
Owned by Subsidiaries
As of November 30, 1996
X. Xxxxxxxx Aviation, Inc. - Asset Value $ 0
X. Xxxxxxxx Sportswear, Inc. - Asset Value $ 181,129.00
X. Xxxxxxxx Trucking, Inc. - Asset Value $ 67,287.00
X. Xxxxxxxx Unlimited, Inc. - Asset Value $ 0
X. Xxxxxxxx Power, Inc. - Asset Value $ 1,709,967.32
Schedule 2.09
Litigation
1. Environmental Matters - Fountain was notified by the United
State Environmental Protection Agency ("EPA") and the North
Carolina Department of Environment, Health and Natural
Resources ("NCDEHNR") that it has been identified as a
potentially responsible party ("PRP") and may incur, or may
have incurred, liability for the remediation of
contamination at the Spectron/Galaxy Waste Disposal Site
located in Elkton, Maryland, and the Seaboard Disposal Site,
located in High Point, North Carolina, also referred to as
the Jamestown, North Carolina site, respectively, resulting
from the disposal of hazardous substances at those sites by
a third party contractor. Fountain has been informed that
the EPA and NCDEHNR ultimately may identify a total of 1,000
to 2,000, or more, PRP's with respect to each site.
Fountain believes that the amounts of hazardous substances
generated by Fountain, which were disposed of at both sites,
are minimal in relation to the total amount of hazardous
substances disposed of by all PRP's at the sites. At
present, the environmental conditions at the sites and the
cost of remediation, to the best of Fountain's knowledge,
have not been determined fully by the EPA and NCDEHNR,
respectively, and Fountain is not able to determine at this
time the amount of any potential liability it may ultimately
have in connection with remediation at either site. Without
any acknowledgment or admission of liability, Fountain has
made payments as a nonperforming cash-out participant in an
EPA-supervised response and removal program at the
Spectron/Galaxy Site, and in a NCDEHNR-supervised removal
and preliminary assessment program at the Seaboard Disposal
Site. A cash-out proposal for the next phase of the project
is expected to be forthcoming from the PRP Group for the
Spectron/Galaxy Site. According to the PRP Group,
Fountain's full cash-out amount is estimated too be
approximately $10,000 for the Spectron/Galaxy Site in
Elkton, Maryland, based on an estimated 3,304 gallons of
waste disposed of at that site by Fountain. A cash-out
proposal in the approximate amount of $66,000 based on an
estimated 19,245 gallons of waste is anticipated from the
PRP Group for the Seaboard Disposal Site in North Carolina
following completion of a Remedial Investigation and
Feasibility Study in early 1998, according to the PRP Group
administrator. Any cash-out agreement will be subject to
approval by EPA and NCDEHNR, respectively.
2. Anglo American Insurance Company, Ltd. on behalf of Xxxxxxx
Xxxx x. Xxxxxxxx Powerboats, Inc. and Adventure Marine and
Outdoors, Inc. - This matter involves one federal lawsuit
and two state lawsuits, described below, all currently
pending in Louisiana. Local counsel for
Fountain's defense for all three suits is Xxxxxxxxxxx X.
Xxxxxxx of Fransen and Xxxxxx, New Orleans, Louisiana. The
federal suit was filed in the Eastern District of Louisiana
on September 28, 1995. The plaintiff alleges negligence on
the part of Fountain and its dealer co-defendant due to
damages caused by the eruption of a fire on a boat while
being trailered on the Louisiana Interstate. The plaintiff
paid $75,460.00 to Xxxxxxx X. Xxxx, the insured boat owner,
on his claim, and the insurance carrier now is seeking to
recover that amount from Fountain and its co-defendant.
Xxxxxxx X. Xxxx x. Xxxxxxxx Powerboats, Inc. and Adventure
Marine and Outdoors, Inc. - The two state court suits
involve Petitions for damages filed on October 2, 1995 in
the District Courts of both Xxxxxxxxx Xxxxxx, and Orleans
Parish, Louisiana. Xx. Xxxx claims that the value of the
boat at the time of the fire was $90,000.00, plus additional
equipment and gear in the boat of $1,500.00 He claims
negligence on the part of Fountain and its co-defendant, and
asserts claims for mental anguish and distress as a result
of the fire and loss of his boat. The petition seeks sums
"as are just and reasonable under the premises, including
attorneys' fees and all coast in bringing these proceedings
plus interest from date of judicial demand until paid."
3. Xxxxxxx Xxxxxx/Air Jordan Trademark Claim - Fountain
received a demand letter, dated February 22, 1996, from
Xxxxx Xxxx, representative and agent for Xxxxxxx Xxxxxx, for
damages in connection with an advertisement for Fountain
which used Xxxxxxx Xxxxxx'x name and the phrase "Air
Xxxxxx." The initial monetary demand was for $1 million if
the claim was resolved prior to institution of a lawsuit,
which also has been threatened. Fountain put its primary
and umbrella insurance carriers on notice.
4. M & G Electronics Corp. x. Xxxxxxxx Powerboats, Inc. - This
is a collection suit filed August 16, 1995 in Wake County,
and later moved to Beaufort County. The plaintiff alleges
that it sold and delivered certain goods to Fountain, for
which $10,960.41 remains due. The suit seeks to recover
this amount, plus costs and interest. Fountain's Answer and
Counterclaims were filed on November 15, 1995. Fountain
denies owing the plaintiff any money and asserts that the
plaintiff supplied defective and/or faulty materials, and
additionally did not provide some of the materials ordered
by Fountain.
5. Allstate Insurance Company, as subrogee of Xxxxxxx Xxxxxxxx
x. Xxxxxxxx Powerboats, Inc. - This suit was filed on
September 25, 1995 in the Superior Court of Camden County,
New Jersey. The plaintiff alleges that the boat Centanzo
bought from Fountain began to take on a considerable amount
of water while it was in use. The plaintiff further alleges
that the problem was due to a defective water pressure
fitting installed by Fountain. Plaintiff paid Centanzo
$19,234.96 on his claim for the water damage, and plaintiff
is seeking to recover this sum, plus court costs and
attorney fees. The case is being handled by New Jersey
counsel. The New Jersey counsel reports directly to
Fountain.
6. Manoocher Fateh, M.D. x. Xxxxxxxx Powerboats, Inc. - This
suit was filed on September 12, 1994, in the Superior Court
of Essex County, New Jersey. The plaintiff alleges that he
contracted in December 1993 with Fountain's dealer, Trenton
Marine, to purchase a new Fountain 47' Sport Cruiser for
$230,000, but that when the boat was delivered to him by
Trenton Marine on May 13, 1994, its cabin area filled with
water due to an alleged structural defect, extensively
damaging the interior. The plaintiff seeks trebled damages
in an unspecified amount, pursuant to the New Jersey
Consumer Fraud Act, and rescission of his contract to
purchase the boat. Fountain's Answer, filed on October 25,
1994, denied liability in the matter and asserted various
affirmative defenses. The case is being handled by New
Jersey counsel.
7. North Carolina Escheat Audit - Fountain has been audited by
the State of North Carolina under the Escheat and Unclaimed
Property Statute. The State Treasurer's audit report, dated
November 1, 1996, sets forth a total of $14,015.48 and 4,535
shares in property deemed escheatable. A response to the
audit was submitted on December 6, 1996, wherein Fountain
agrees to an amount of $480.44 and 25 shares in escheatable
property. Fountain maintains that the remaining funds and
shares are not escheatable for various reasons.
WSMAIN/205824.
Schedule 6.01
Environmental
1. Fountain was notified by the United States Environmental
Protection Agency ("EPA") and the North Carolina Department
of Environment, Health and Natural Resources ("NCDEHNR")
that it has been identified as a potentially responsible
party ("PRP") and may incur, or may have incurred, liability
for the remediation of contamination at the Spectron/Galaxy
Waste Disposal Site located in Elkton, Maryland, and the
Seaboard Disposal Site, located in High Point, North
Carolina, also referred to as the Jamestown, North Carolina
site, respectively, resulting from the disposal of hazardous
substances at those sites by a third party contractor.
Fountain has been informed that the EPA and NCDEHNR
ultimately may identify a total of 1,000 to 2,000, or more,
PRP's with respect to each site. Fountain believes that the
amounts of hazardous substances generated by Fountain, which
were disposed of at both sites, are minimal in relation to
the total amount of hazardous substances disposed of by all
PRP's at the sites. At present, the environmental
conditions at the sites and the cost of remediation, to the
best of Fountain's knowledge, have not been determined fully
by the EPA and NCDEHNR, respectively, and Fountain is not
able to determine at this time the amount of any potential
liability it may ultimately have in connection with
remediation at either site. Without any acknowledgment or
admission of liability, Fountain has made payments as a
nonperforming cash-out participant in an EPA-supervised
response and removal program at the Spectron/Galaxy Site,
and in a NCDEHNR-supervised removal and preliminary
assessment program at the Seaboard Disposal Site. A cash-
out proposal for the next phase of the project is expected
to be forthcoming from the PRP Group for the Spectron/Galaxy
Site. According to the PRP Group, Fountain's full cash-out
amount is estimated to be approximately $10,000 for the
Spectron/Galaxy Site in Elkton, Maryland, based on an
estimated 3,304 gallons of waste disposed of at that site by
Fountain. A cash-out proposal in the approximate amount of
$66,000 based on an estimated 19,245 gallons of waste is
anticipated from the PRP Group for the Seaboard Disposal
Site in North Carolina following completion of a Remedial
Investigation and Feasibility Study in early 1988, according
to the PRP Group administrator. Any cash-out agreement will
be subject to approval by EPA and NCDEHNR, respectively.
2. Fountain sustained a fire at its plant in 1989, and the fire
caused a discharge of environmental contaminants on the
Property. A clean-up operation was conducted and based on
information from the State and the engineers, it is believed
that all necessary clean-up activities were performed and
completed in accordance with the
requirements. A copy of the related correspondence is
attached hereto.
State of North Carolina
Department of Natural Resources and Community Development
Northeastern Region
0000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Xxxxx X. Xxxxxx, Governor Xxxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx, Xx., Secretary Regional Manager
DIVISION OF ENVIRONMENTAL MANAGEMENT
May 30, 1989
Xx. Xxxxxx X. Xxxxxxx
Carolina Benchmark, Inc.
00 Xxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
SUBJECT: Fountain Power Boats, Inc.
Remedial Action
Beaufort County
Dear Xx. Xxxxxxx
This office of the Division of Environmental Management has
reviewed the analytical laboratory reports submitted to us May 9,
1989. It has been determined that your proposal to mitigate the
site, pond #1 area, is acceptable. You should be made aware,
though, that if the evaporation rate of the air exchangers is
such that a discharge of treated water will result, an NPDES
permit will be required.
Please notify this office of the proposed schedule of activity
and completion date of this project . If you have any questions
or comments, please call this office at 000-0000.
Sincerely
/s/Xxx Xxxxxxxx
Xxx Xxxxxxxx
Regional Supervisor
X.X. Xxx 0000, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000 Telephone
000-000-0000
An Equal Opportunity Affirmative Action Employer
CB
CAROLINA BENCHMARK
ENGINEERS-SURVEYORS-PLANNERS
INCORPORATED
June 5, 1989
Mr. Xxxx Xxxx
Xxxx & Xxxxx
X.X. Xxx 000
Xxx Xxxx, XX 00000
RE: Fountain Powerboats, Inc.
Remedial Action
Beaufort County
Dear Sir:
Herein enclosed is the latest letter from the State on the
cleanup. This basically is their approval.
Very truly your,
/s/Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Chairman
TWH/nwd
Enclosure
Copy to: Fountain Power Boats
CAROLINA BENCHMARK 000 XXXXXXX XXXXX P.O. BOX 2687 (ECU
STATION) XXXXXXXXXX, X.X. 00000 TELEPHONE (000) 000-0000
CB
CAROLINA BENCHMARK
ENGINEERS-SURVEYORS-PLANNERS
INCORPORATED
July 13, 1989
Xx. Xxx Xxxxxxxxx
Fountain Powerboats, Inc.
X.X. Xxxxxx 000
Xxxxxxxxxx, XX 00000
RE: Fountain Powerboats, Inc.
Beaufort County
Dear Sir:
This is a report of the status of the environmental concern
involving the canal system at the Fountain Powerboats, Inc. site.
These concerns were raised by the Northeastern Regional Office of
the Division of Environmental Management, NC Department of
Natural Resources and Community Development.
Reference the attached correspondence:
a. Carolina Benchmark ltr dated January 31, 1989
b. NC Division of Environmental Management ltr dated March
15, 1989
c. Carolina Benchmark ltr dated March 28, 1989
d. Carolina Benchmark ltr dated May 1, 1989
e. NC Division of Environmental Management lrt dated May
30, 1989
f. Results of Pond #1 Acetone and 2-Butanone testing dated
May 25, 1989
In essence, as shown, the above referenced correspondence
concludes that the State (NC Division of Environmental
Management) has agreed with the proposal to mitigate the site,
Pond #1 area.
The test of May 25, 1989 shows that Acetone and 2-Butanone
levels are below the quantitation limit as is 1,1,1-
Trichlorethane in Pond #2. A retesting to confirm this
mitigation is scheduled this week. If the anticipated results of
this confirmation testing are the same as the May 25, 1989
results, a request will be made to the State (NC Division of
Environmental Management) to declare cleanup and mitigation
successfully conducted and allow final filling of Pond #1 for
which a permit has already been issued (See attached Permit #32-
87, issued May 23, 1989).
Very truly yours,
/s/Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Chairman
CAROLINA BENCHMARK 000 XXXXXXX XXXXX P.O. BOX 2687 (ECU
STATION) XXXXXXXXXX, X.X. 00000 TELEPHONE (000) 000-0000
CB
CAROLINA BENCHMARK
ENGINEERS-SURVEYORS-PLANNERS
INCORPORATED
August 13, 1990
Xx. Xxxxx X. Xxxx, Xx.
Xxxx & Xxxxx, PA
X.X. Xxx 000
Xxx Xxxx, XX 00000
RE: Fountain Powerboats, Inc.
Beaufort County, NC Plant
Dear Sir:
In accordance with Mr. Xxxx Xxxxx'x request of this date I am
enclosing copies of our letters of last year (July 13, 1989 &
August 14, 1989) concerning the status of environmental concern
involving the canal systems after the fire at the subject
facility. A plan of mitigation was approved from the state.
Reports of the sampling indicated results below the quantitation
limits after mitigation that was conducted in accordance with the
approved plan. A permit (Addenda to permit 32-87) was received
authorizing the canal fill.
To the best of my knowledge the mitigation of the chemicals
entering the canal as a direct result of the fire (ie. Acetone
and 2-Butanone) was completed. The sampling and testing program
ended and the remedial action plan was concluded. We did not
direct the cleanup operations or supervise the endeavors. We did
prepare the mitigation plan and monitored the results.
Very truly yours,
/s/Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx, PE
Copy to: Fountain Powerboats
CAROLINA BENCHMARK 000 XXXXXXX XXXXX P.O. BOX 2687 (ECU
STATION) XXXXXXXXXX, X.X. 00000 TELEPHONE (000) 000-0000
CB
CAROLINA BENCHMARK
ENGINEERS-SURVEYORS-PLANNERS
INCORPORATED
August 14, 1989
Xx. Xxxxx X. Xxxxx, Environmental Engineer
Division of Environmental Management
Water Quality Section
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
RE: Site Investigation/Remedial Action Plan
Fountain Powerboats, Inc.
References:
a. Carolina Benchmark ltr dated January 31, 1989
b. NC Division of Environmental Management ltr dated March
15, 1989
c. Carolina Benchmark ltr dated March 28, 1989
d. Carolina Benchmark ltr dated May 1, 1989
e. NC division of Environmental Management ltr dated May
30, 1989
f. Carolina Benchmark ltr dated June 5, 1989
Enclosed is the result of test of Pond #1 Acetone and 2-
Butanone dated May 25, 1989 and rechecked on July 18, 1989
(Recheck analyzed July 28, 1989 and reported August 8, 1989).
The test of May 25, 1989 shows that Acetone and 2-Butanone
levels in Pond #1 area was below the quantitation limit as was
1,1,1-Trichlorethane in Pond #2. Retesting to confirm that
result was done on July 18, 1989 and the results reported August
8, 1989. This report showed Acetone at less than 25 ug/1 and 2-
Butanone at less than 25 ug/1 also. Sampling was made by Xxxxx
X. Xxxx, Geologist of our office with testing by IEA of Research
Triangle Park NC.
In light of the above test results, it is requested that the
final filling of Pond #1 be authorized.
Very truly yours,
/s/Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Chairman
TWH/nwd
CAROLINA BENCHMARK 000 XXXXXXX XXXXX P.O. BOX 2687 (ECU
STATION) XXXXXXXXXX, X.X. 00000 TELEPHONE (000) 000-0000
State of North Carolina
Department of Environment, Health and Natural Resources
Northeastern Region
0000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Xxxxx X. Xxxxxx, Governor Xxxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx, Xx. Secretary Regional Manager
DIVISION OF ENVIRONMENTAL MANAGEMENT
August 27, 1990
Xx. Xxxxxx Xxxxxxxx
Fountain Powerboats, Inc.
X.X. Xxx 000
Xxxxxxxxxx, XX 00000
SUBJECT: Status of Site
Beaufort County
Dear Xx. Xxxxxxxx:
At your request, this letter is written to inform the company of
the status of the site following the fire. Fountain Powerboats,
Inc. cooperated with this Division during every phase of the
emergency, fire, and cleanup. The containment, monitoring, and
cleanup efforts were evaluated as satisfactory by staff members
of this Division.
If you have any questions or we can be of any further help,
please call.
Sincerely,
/s/Xxx Xxxxxxxx
Xxx Xxxxxxxx
Regional Supervisor
cc: Xxxxxxxx Xxxxx
Xxx Xxxxxx
Xxx Xxxxxxx
X.X. Xxx 0000, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000 Telephone
000-000-0000
An Equal Opportunity Affirmative Action Employer
CB
CAROLINA BENCHMARK
ENGINEERS-SURVEYORS-PLANNERS
INCORPORATED
September 6, 1990
Xx. Xxxx X. Xxxx, Xx.
Attorney-at-Law
Xxxx & Xxxxx, P.A.
X.X. Xxx 000
Xxx Xxxx, XX 00000
RE: Fountain Power Boats, Inc.
Dear Sir:
I have forwarded to you a copy of the August 27, 1990 letter
from the NC Division of Environmental Management concerning the
Status of Site following the fire.
In response to an inquiry by Xxxxxx of your office on
September 5, 1990, we faxed a copy of our August 14, 1989 and
July 13, 1989 letters. For the record, I am enclosing herein:
a. Carolina Benchmark letter of July 113, 1989
b. NC Division of Environment letter of May 30, 1989
c. Carolina Benchmark letter of August 14, 1989
d. Carolina Benchmark letter of June 5, 1989
e. Carolina Benchmark letter of August 13, 1990
f. NC division of Environmental letter of August 27, 1990
On August 27, 1990, the NC Division of Environmental
Management by letter stated "The containment, monitoring, and
cleanup efforts were evaluated as satisfactory by staff members
of this Division".
Regards,
/s/Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Chairman
TWH/nwd
Enclosures
CAROLINA BENCHMARK 000 XXXXXXX XXXXX P.O. BOX 2687 (ECU
STATION) XXXXXXXXXX, X.X. 00000 TELEPHONE (000) 000-0000
MASTER SECURITY AGREEMENT
THIS MASTER SECURITY AGREEMENT, made as of December 31, 1996
("Agreement"), by and between GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation with an address at 0000
Xxxxxxxx Xxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxx Xxxxxxxx ("Secured
Party"), and FOUNTAIN POWERBOATS, INC., a corporation organized
and existing under the laws of the State of North Carolina, with
its chief executive offices located at Xxxxxxxx'x Xxxxx Xxxx,
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 ("Debtor").
This Security Agreement is given simultaneously with that
certain Loan Agreement between the Debtor, the Secured Party, and
certain other parties, dated of even date herewith (the "Loan
Agreement"). In addition, to further secure the Note
(hereinafter defined), the Debtor has executed that certain Deed
of Trust, Assignment of Rents and Security Agreement, dated of
even date herewith, with respect to certain real property now
owned by the Debtor and located in Beaufort County, North
Carolina and described in Exhibit B attached hereto and
incorporated herein by reference (the "Real Property") (such deed
of trust being referred to as the "Deed of Trust") and has also
executed certain other loan documents in connection with the
Indebtedness.
In consideration of the promises herein contained and
certain other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Debtor and Secured
Party hereby agree as follows:
1. CREATION OF SECURITY INTEREST
Debtor hereby gives, grants and assigns to Secured Party,
its successors and assigns forever, a security interest in and
against any and all of the following property:
(a) Tangible Personal Property. All furniture,
furnishings, machinery, apparatus, equipment [specifically
including but not limited to that attached to any collateral
schedule (the "Collateral Schedule") now or hereafter attached
hereto as an Exhibit A], fittings, fixtures and other articles of
tangible personal property now owned or leased or hereafter
acquired by the Debtor, wherever located [but specifically
including any such property now or hereafter located on the Real
Property and any additional real property now or hereafter owned
by the Debtor (the "Additional Property") (the Real Property and
the Additional Property hereinafter referred to as the
"Property"), including but not limited to, goods, machinery,
tools, equipment (including fire, sprinkler and alarm systems;
air conditioning, heating, refrigerating, electronic monitoring,
entertainment, and recreational equipment; window or structural
cleaning rigs; maintenance equipment; equipment relating
exclusion of vermin or insects, removal of dust, refuse or
garbage; and all other equipment of every kind), elevators,
indoor and outdoor furniture (including tables, chairs, planters,
desks, sofas, shelves, lockers and cabinets), wall beds wall
safes, furniture, furnishings, appliances (including ice boxes,
refrigerators, fans, heaters, stoves, water heaters and
incinerators), rugs, carpets and other floor coverings, draperies
and drapery rods and brackets, awnings, window shades, venetian
blinds, curtains, lamps, chandeliers, and other lighting fixtures
and office maintenance and
R#0202392.04
other supplies and the proceeds and products of all of the
foregoing and all replacements and renewals thereof (the
foregoing being hereafter referred to as the "Tangible Personal
Property").
(b) Inventory. All of the Debtor's inventory now owned or
hereafter acquired, including but not limited to (i) goods
intended for sale, use or lease by the Debtor or to be furnished
by the Debtor under contracts of service, (ii) all raw materials,
goods in process, finished goods, materials and supplies of every
nature used or usable in connection with the manufacture,
packing, shopping, advertising, selling, leasing or furnishing of
such goods (specifically including, but not limited to, all
molds, metals, plastics, upholstery, windscreens, fiberglass, and
other components in boat manufacture), and any and all items
including machinery and equipment used or consumed in the
operation of the business of the Debtor or which contribute to
the finished product or to the sale, promotion, and shipment
thereof, in which the Debtor now or at any time hereafter may
have an interest, whether or not such inventory is listed on any
reports furnished to the Secured Party from time to time; (iii)
all inventory whether or not the same is in transit or in the
constructive, actual, or exclusive occupancy or possession of the
Debtor or is held by the Debtor or by others for the Receivables
(as hereafter defined), including, without limitation, all goods
covered by purchase orders, and contracts with suppliers and all
goods billed and held by suppliers; (iv) all inventory which may
be located on premises of the Debtor or of any carrier,
forwarding agents, truckers, warehousemen, vendors, selling
agents, or third parties; (v) all general intangibles relating to
or arising out of inventory; (vi) all documents evidencing or
representing the same, all documents of title, all negotiable and
non-negotiable warehouse receipts representing the same; and
(vii) all products and proceeds of the foregoing (including cash,
accounts receivable, non-cash trade ins, and non-cash-proceeds),
wherein the foregoing may be located (referred to herein
collectively as "Inventory").
(c) Insurance Policies. All rights in and to all pertinent
present and future fire and/or hazard insurance policies
(including, but not limited to, insurance proceeds) covering the
Property, and improvements thereon (the "Improvements") or the
property described in (a) and (b) above.
(d) Awards. All awards made by any public body or decreed
by any court of competent jurisdiction for a taking or for
degradation of value of the Property, the Improvements or the
property described in (a) above in any eminent domain proceeding
and all payments made in respect of a conveyance made in lieu of
any such taking.
(e) Lease Rights and Security Deposits. All of the
Debtor's rights and interests in and to all present and future
leases of the Property and Improvements or any part thereof
and/or all rental income and/or security deposits, whether
payable pursuant to any present or future lease or otherwise
growing out of any occupancy or use of the Property and the
Improvements.
(f) Accounts Receivable and General Intangibles Relating to
Debtor. (i) All obligations and indebtedness of every kind at
any time owing to the Debtor from whatever source arising, and
including (without limitation) all accounts, accounts receivable,
tax refunds, refunds, payments or proceeds under any insurance
policies, instruments, contract rights, chattel paper, general
intangibles and documents, whether secured or unsecured, now
existing or hereafter created; (ii) any and all sums and property
recovered by the Debtor or any trustee, receiver or fiduciary
acting on the
2
R#0202392.04
Debtor's behalf as a result of or arising from a fraudulent or
preferential transfer or payment (as determined under present or
future federal or state law or regulations relating to
bankruptcy, insolvency or other relief or debtors) made by the
Debtor or on the Debtor's behalf; (ii) all of the Debtor's rights
as an unpaid seller, including stoppage in transit, replevin,
detinue and reclamation; (iv) all customer lists and other
documents containing names, addresses and other information
regarding the Debtor's customers, subscribers and those to whom
the Debtor provides any services, and all supplier lists of the
Debtor; (v) all books, records, files, computer tapes, programs,
software, discs and other material or documents relating to the
recording, billing or analyzing of any of the above; (vi) all now
or hereafter existing balances, credits, deposits (general or
special, time or demand, provisional of final), accounts and all
other sums credited by, maintained with or due from the Debtor
the Debtor or any of the Debtor's affiliates to the Debtor or
subject to withdrawal by the Debtor, together with all goods,
inventory, and merchandise returned by or reclaimed by or
repossessed from customers wherever such goods, inventory and
merchandise are located, and all proceeds thereto; and (vii) all
products and proceeds of any of the foregoing in any form,
including cash, insurance proceeds, negotiable instruments and
other evidences of indebtedness, chattel paper, security
agreements and other documents (all of the foregoing being herein
referred to as "Receivables").
All trade names (specifically including without limitation,
the name "Fountain Powerboats"), symbols, logos, copyrights,
patents, patent applications, federal trademark registrations,
any trademark applications now or hereafter filed with respect
thereto and any federal trademark registrations issued or issuing
with respect thereto, and all goodwill associated with the
trademarks and patents.
All goodwill and all other general intangibles of every kind
and description now or hereafter owned by the Debtor. Together
with all items listed in Exhibit C.
(g) Motor Vehicles. All motor vehicles and trailers now or
hereafter owned by the Debtor.
(h) Proceeds. All proceeds or sums payable in lieu of or
as compensation for the loss or damage to any property described
in (a) through (g) above.
(i) Additions, Accessions, Substitutes. Any and all
additions, attachments, accessories and accessions thereto, any
and all substitutions, replacements or exchanges therefor, and
any and all insurance and/or other proceeds thereof.
All of the foregoing personal property is hereinafter
individually and collectively referred to as the "Collateral".
The foregoing security interest is given to secure the
payment and performance of any and all debts, obligations and
liabilities of any kind, nature or description whatsoever
(whether primary, secondary, direct, contingent, sole, joint or
several, or otherwise and whether due or to become due) of Debtor
to Secured Party, now existing or hereafter arising, including
but not limited to the payment and performance of a certain
Promissory Note from the Debtor to the Secured Party in the
3
R#0202392.04
principal amount of $10,000,000, dated of even date herewith
(hereinafter referred to as the Note"), and any renewals,
extensions and modifications of such Note and any other debts,
obligations and liabilities of the Debtor to the Secured Party
(all of the foregoing being hereinafter referred to as the
"Indebtedness"). Notwithstanding the foregoing, and
notwithstanding anything to the contrary contained elsewhere in
this Agreement, to the extent that Secured party asserts a
purchase money security interest in any items of the Tangible
Personal Property constituting a portion of the Collateral ("PMSI
Collateral"): (i) the PMSI Collateral shall secure only that
portion of the Indebtedness which has been advanced by Secured
Party to enable Debtor to purchase, or acquire rights in or the
use of such PMSI Collateral (the " PMSI Indebtedness"), and (ii)
no other Collateral shall secure the PMSI Indebtedness.
2. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF DEBTOR.
Debtor hereby represents, warrants and covenants as of the
date hereof and as of the date of execution of each Collateral
Schedule hereto that:
(a) Debtor is, and will remain, duly organized, existing
and in good standing under the laws of the State set forth in the
first paragraph of this Agreement, has its chief executive
offices at the location set forth in such paragraph, and is, and
will remain, duly qualified and licensed in every jurisdiction
wherever necessary to carry on its business and operations;
(b) Debtor has adequate power and capacity to enter into,
and to perform its obligations, under this Agreement, the Note
and any other documents evidencing, or given in connection with,
any of the Indebtedness (all of the foregoing being hereinafter
referred to as the "Debt Documents");
(c) This Agreement and the other Debt Documents have been
duly authorized, executed and delivered by Debt and constitute
legal, valid and binding agreements enforceable under all
applicable laws n accordance with their terms, except to the
extent that the enforcement of remedies may be limited under
applicable bankruptcy and insolvency laws;
(d) No approval, consent or withholding of objections is
required from any governmental authority or instrumentality with
respect to the entry into, or performance by, Debtor of any of
the Debt Documents, except such as may have already been
obtained;
(e) The entry into, and performance by, Debtor of the Debt
Documents will not (i) violate any of the organizational
documents of Debtor or any judgment, order, law or regulation
applicable to Debtor, or (ii) result in any breach of, constitute
a default under, or result in the creation of any lien, claim or
encumbrance on any of Debtor's property (except for liens in
favor of Secured Party) pursuant to, any indenture, mortgage,
deed of trust, bank loan, credit agreement, or other agreement or
instrument to which Debtor is a party;
(f) There are no suits or proceedings pending or threatened
in court or before any commission, board or other administrative
agency against or affecting Debtor which could, in the aggregate,
have a material adverse effect on Debtor, its business or
operations, or its ability to
4
R#0202392.04
perform its obligations under the Debt Documents, except those
disclosed in Schedules to the Loan Agreement;
(g) All financial statements delivered to Secured Party in
connection with the Indebtedness have been prepared in accordance
with generally accepted accounting principles, and since the date
of the most recent financial statement, there has been no
material adverse change;
(h) The Collateral is not, and will not be, used by Debtor
for personal, family or household purposes;
(i) The Collateral constituting Tangible Personal Property
and Inventory is, and will remain, in good condition and repair
and Debtor will not be negligent in the care and use thereof;
(j) Debtor is, and will remain, the sole and lawful owner,
and in possession of the Collateral (except for Inventory in
transit to dealers for sale and except for Inventory sold in the
ordinary course of business), and has the sole right and lawful
authority to grant the security interest described in this
Agreement; and
(k) The Collateral is, and will remain, free and clear of
all liens, claims and encumbrances of every kind, nature and
description, except for (i) liens in favor of Secured party, (ii)
liens for taxes not yet due or for taxes being contested in good
faith and which do not involve, in the reasonable judgment of
Secured Party, any risk for the sale, forfeiture or loss of any
of the Collateral, and (iii) inchoate materialmen's mechanic's,
repairmen's and similar liens arising by operation of law in the
normal course of business for amounts which are not delinquent
(all of such permitted liens being hereinafter referred to as
"Permitted Liens").
3. COLLATERAL.
(a) Until the declaration of any default hereunder, Debtor
shall remain in possession of the Collateral; provided, however,
that Secured Party shall have the right to possess (i) any
chattel paper or instrument that constitutes a part of the
Collateral, and (ii) any other Collateral which because of its
nature may require that Secured Party's security interest therein
be perfected by possession. Secured Party, its successors and
assigns, and their respective agents, shall have the right to
examine and inspect any of the Collateral at any time during
normal business hours. Upon any request from Secured Party,
Debtor shall provide Secured Party with notice of the then
current locations of the Collateral, specifically including the
names and addresses of dealers to whom Inventory is sent from
time to time.
(b) Debtor shall (i) use the Collateral only in its trade
or business, (ii) maintain all of the Collateral in good
condition and working order, (iii) use and maintain the
Collateral only in compliance with all applicable laws, and (iv)
keep all of the Collateral free and clear of all liens, claims
and encumbrances (except for Permitted Liens).
5
R#0202392.04
(c) Debtor shall not, without the prior written consent of
Secured Party, (i) part with possession of any of the Collateral
(except to dealers for sale of Inventory, to Secured Party, or
for maintenance and repair), (ii) remove any of the Collateral
from the continental United States, or (iii) sell, rent, lease,
mortgage, grant a security interest in or otherwise transfer or
encumber (except for Permitted Liens) any of the Collateral.
Notwithstanding the foregoing, the Debtor may ship Inventory to
dealers outside the continental United States for sale, provided
payment is made in full prior to shipment or is secured by an
irrevocable letter of credit from a domestic bank.
(d) Debtor shall pay promptly when due all taxes, license
fees, assessments and public and private charges levied or
assessed on any of the Collateral, on the use thereof, or on this
Agreement or any of the other Debt Documents. At its option,
Secured Party may discharge taxes, liens, security interests or
other encumbrances at any time levied or placed on the Collateral
and may pay for the maintenance, insurance and preservation of
the Collateral or to effect compliance with the terms of this
Agreement or any of the other Debt Documents. Debtor shall
reimburse Secured Party, on demand, for any and all costs and
expenses incurred by Secured Party in connection therewith and
agrees that such reimbursement obligation shall be secured
hereby.
(e) Debtor shall, at all times, keep accurate and complete
records of the Collateral, and Secured Party, its successors ad
assigns, and their respective agents, shall have the right to
examine, inspect, and make extracts from all of Debtor's books
and records relating to the Collateral at any time during normal
business hours. Such reports shall be in such detail, form and
scope as the Secured Party shall require. The Secured Party and
the Secured Party's agents and representatives may at all times
have access to, examine and inspect the Inventory, the Tangible
Personal Property, and all records pertaining thereto. The
Debtor now keeps and shall continue to keep correct and accurate
records itemizing and describing the kind, type, quality and
quantity of Inventory, the Debtor's cost therefor and the selling
price thereof, the daily withdrawals therefrom and the additions
thereto. Any equipment and molding designated by the Secured
Party shall be tagged so as to disclose the security interest of
the Secured Party in such personalty.
(f) If agreed by the parties, Secured Party may, but shall
in no event be obligated to, accept substitutions and exchanges
of property for property, and additions to the property,
constituting all or any part of the Collateral. Such
substitutions, exchanges and additions may be accomplished at any
time and from time to time, by the substitution of a revised
Collateral Schedule for the Collateral Schedule now or hereafter
annexed. Any property which may be substituted, exchanged or
added as aforesaid shall constitute a portion of the Collateral
and shall be subject to the security interest granted herein.
Additions to, reductions or exchanges of, or substitutions for,
the Collateral, payments on account of any obligation or
liability secured hereby, increases in the obligations and
liabilities secured hereby, or the creation of addition
obligations and liabilities secured hereby, may from time to time
be made or occur without affecting the provisions of this
Agreement or the provisions of any obligation or liability which
this Agreement secures.
(g) Any third person at any time and from time to time
holding all or any portion of the Collateral shall be deemed to,
and shall, hold the Collateral as the agent, and as pledge holder
for, Secured Party. At any time and from time to time, Secured
party may give notice to any third
6
R#0202392.04
person holding all or any portion of the Collateral that such
third person is holding the Collateral as the agent of, and as
pledge holder for, the Secured Party.
4. INSURANCE.
The Collateral shall at all times be held at Debtor's risk,
and Debtor shall keep it insured against loss or damage by fire
and extended coverage perils, theft, burglary, and for any or all
Collateral which are vehicles, for risk of loss by collision, and
where requested by Secured Party, against other risks as required
thereby, for the full replacement value thereof, with companies
in amounts and under policies acceptable to Secured Party.
Debtor shall, if Secured Party so requires, deliver to Secured
Party policies of certificates of insurance evidencing such
coverage. Each policy shall name Secured Party as loss payee
thereunder, shall provide for coverage to Secured Party
regardless of the breach by Debtor of any warranty or
representation made therein, shall not be subject to co-
insurance, and shall provide for thirty (30) days written notice
to Secured Party of the cancellation or material modification
thereof (unless such insurance coverage is not obtainable).
Debtor hereby appoints Secured Party as its attorney in fact to
make proof of loss, claim for insurance and adjustments with
insurers, and to execute or endorse all documents, checks or
drafts in connection with payment made as a result of any such
insurance policies. Proceeds of insurance shall be applied, at
the option of Secured Party, to repair or replace the Collateral
or to reduce any of the Indebtedness secured hereby.
5. REPORTS.
(a) Debtor shall promptly notify Secured Party in the event
of (i) any change in the name of Debtor, (ii) any relocation of
its chief executive offices, (iii) any relocation of any of the
Collateral, (iv) any of the Collateral being lost, stolen,
missing, destroyed, materially damaged or worn out, or (v) any
lien, claim or encumbrance attaching or being made against any of
the Collateral other than Permitted Liens.
(b) Debtor agrees to furnish its annual financial
statements and such interim statements as Secured Party may
require in form satisfactory to Secured Party and as required in
the Loan Agreement. Any and all financial statements submitted
and to be submitted to Secured Party have and will have been
prepared on a basis of generally accepted accounting principles,
and are and will be complete and correct and fairly present
Debtor's financial condition as at the date thereof. Secured
Party may at any reasonable time examine the books and records of
Debtor and make copies thereof.
6. FURTHER ASSURANCES.
(a) Debtor shall, upon request of Secured Party, furnish to
Secured Party such further information, execute and deliver to
Secured Party such documents and instruments (including, without
limitation, Uniform Commercial Code financing statements) and do
such other acts and things, as Secured Party may at any time
reasonably request relating to the perfection or protection of
the security interest created by this Agreement or for the
purpose of carrying out the intent of this
7
R#0202392.04
Agreement. Without limiting the foregoing, Debtor shall
cooperate and do all acts deemed necessary or advisable by
Secured Party to continue in Secured Party a perfected first
security interest in the Collateral, and shall obtain and furnish
to Secured Party any subordinations, releases, landlord, lessor,
or mortgagee waivers, and similar documents as may be from time
to time requested by, and which are in form and substance
satisfactory to, Secured Party.
The Debtor shall provide to the Secured Party a schedule of
all Receivables, Tangible Personal Property, and Inventory at
least once every fiscal quarter, as described in the Loan
Agreement. The Debtor shall also notify the Secured Party of any
patent and trademark applications filed each fiscal quarter and
take such measures as the Secured Party may require to confirm
the assignment and to perfect the security interests granted
hereby.
If any Inventory is in the possession or control of any of
the Debtor's agents or processors, the Debtor shall notify them
of the Secured Party's security interest therein, and upon the
Secured Party's request, instruct them to hold all such Inventory
for the Secured Party's account and subject them to the Secured
Party's instructions.
If at any time the Secured Party determines that the Secured
Party's security interest in any boat constituting a portion of
Inventory is required to be perfected by the filing of a marine
vessel mortgage, the Debtor agrees to execute such a vessel
mortgage (in form and substance satisfactory to the Secured
Party) and cause such mortgage to be filed in appropriate
governmental offices so as to perfect the Secured Party's
security interests in such vessel.
(b) Debtor hereby grants to Secured Party the power to sign
Debtor's name and generally to act on behalf of Debtor to execute
and file applications for title, transfers of title, financing
statements, notices of lien and other documents pertaining to any
or all of the Collateral. Debtor shall, if any certificate of
title be required or permitted by law for any of the Collateral,
obtain such certificate showing the lien hereof with respect to
the Collateral and promptly deliver same to Secured Party.
(c) Debtor shall indemnify and defend the Secured Party,
its successors and assigns, and their respective directors,
officers and employees, from and against any and all claims,
actions and suits (including, without limitation, related
attorneys' fees) of any kind, nature or description whatsoever
arising, directly or indirectly, in connection with any of the
Collateral.
(d) The Secured Party shall have no duty or care with
respect to the Collateral, except that the Secured Party shall
exercise reasonable care with respect to Collateral in its
custody, but shall be deemed to have exercised reasonable care if
such property is accorded treatment substantially equal to that
which it accords its own property, or if it takes such action
with respect to the Collateral as the Debtor shall request in
writing. No failure to comply with any such request nor any
omission to do any such act requested by the Debtor shall be
deemed a failure to exercise reasonable care, nor shall the
Secured Party's failure to take steps to preserve rights against
any parties or property be deemed a failure to have exercised
reasonable care with respect to Collateral in its custody.
8
R#0202392.04
7. EVENTS OF DEFAULT
Debtor shall be in default under this Agreement and each of
the other Debt Documents upon the occurrence of any of the
following "Event(s) of Default":
(a) Debtor fails to pay any installment or other amount due
or coming due under any of the Debt Documents within ten (10)
days after its due date;
(b) Any attempt by Debtor, without the prior written
consent of Secured Party, to sell, rent, lease, mortgage, grant a
security interest in, or otherwise transfer or encumber (except
for Permitted Liens and except as elsewhere permitted herein) any
of the Collateral;
(c) Debtor fails to procure, or maintain in effect at all
times, any of the insurance on the Collateral in accordance with
Section 4 of this Agreement;
(d) Debtor breaches any of its other obligations under any
of the Debt Documents and fails to cure the same within thirty
(30) days after written notice thereof;
(e) Any warranty, representation or statement made by
Debtor in any of the Debt Documents or otherwise in connection
with any of the Indebtedness shall be false or misleading in any
material respect;
(f) Any of the Collateral being subjected to, or being
threatened with, attachment, execution, levy, seizure or
confiscation in any legal proceeding or otherwise;
(g) The occurrence of an "Event of Default" under the Deed
of Trust or the Loan Agreement; or any default by Debtor under
any other agreement between Debtor and Secured Party after the
passage of any applicable cure period set out in such agreement;
(h) Any dissolution, termination of existence, merger,
consolidation, change in controlling ownership, insolvency, or
business failure of Debtor or any guarantor or other obligor for
any of the Indebtedness (collectively "Guarantor"), except as
permitted in the Loan Agreement, or if Debtor or any Guarantor is
a natural person, any death or incompetency of Debtor or such
Guarantor;
(i) The appointment of a receiver for all or any part of
the property of Debtor or any Guarantor, or any assignment for
the benefit of creditors by Debtor or any Guarantor; or
(j) The filing of a petition by Debtor or any Guarantor
under any bankruptcy, insolvency or similar law, or the filing of
any such petition against Debtor or any Guarantor if the same is
not dismissed within thirty (30) days of such filing.
9
R#0202392.04
8. REMEDIES ON DEFAULT.
(a) Upon the occurrence of an Event of Default under this
Agreement, the Secured Party, at its option, may declare any or
all of the Indebtedness, including without limitation the Note,
to be immediately due and payable, without demand or notice to
Debtor or any Guarantor. The obligations and liabilities
accelerated thereby shall bear interest (both before and after
any judgment) until paid in full at the lower of eighteen percent
(18%) per annum or the maximum rate not prohibited by applicable
law.
(b) Upon such declaration of default, Secured Party shall
have all of the rights and remedies of a Secured Party under the
Uniform Commercial Code, and under any other applicable law.
Without limiting the foregoing, Secured Party shall have the
right to (i) notify any account debtor of Debtor or any obligor
on any instrument which constitutes part of the Collateral to
make payment to the Secured party, (ii) with or without legal
process, enter any premises, where the Collateral may be and take
possession and/or remove said Collateral from said premises,
(iii) sell the Collateral at public or private sale, in whole or
in part, and have the right to bid and purchase at said sale,
(iv) lease or otherwise dispose of all or part of the Collateral,
applying proceeds therefrom to the obligations then in default,
and/or (v) use, without charge or liability to the Secured Party,
any of the Debtor's labels, trade names, trademarks, patents,
patent applications, licenses, certificates of authority,
advertising materials, or any of the Debtor's other properties or
interests in properties of similar nature in advertising for
sale, selling or otherwise realizing upon any of the Collateral.
If requested by Secured Party, Debtor shall promptly assemble the
Collateral and make it available to Secured Party at a place to
be designated by Secured Party which is reasonably convenient to
both parties. Secured Party may also render any or all of the
Collateral unusable at the Debtor's premises and may dispose of
such Collateral on such premises without liability for rent or
costs. Any notice which Secured Party is required to give to
Debtor under the Uniform Commercial Code of the time and place of
any public sale or the time after which any private sale or other
intended disposition of the collateral is to be made shall be
deemed to constitute reasonable notice if such notice is given to
the last known address of Debtor at least five (5) days prior to
such action.
(c) Proceeds from any sale or lease or other disposition
shall be applied: first, to all costs of repossession, storage,
and disposition including without limitation attorneys',
appraisers', and auctioneers' fees; second, to discharge the
obligations then in default; third, to discharge any other
Indebtedness of Debtor to Secured Party, whether as obligor,
endorser, guarantor, surety or indemnitor; fourth, to expenses
incurred in paying or settling liens and claims against the
Collateral; and lastly, to Debtor, if there exists any surplus.
Debtor shall remain fully liable for any deficiency.
(d) In the event this Agreement, any Note or any other Debt
Documents are placed in the hands of an attorney for collection
of money due or to become due or to obtain performance of any
provision thereof, Debtor agrees to pay all reasonable attorneys'
fees incurred by Secured Party at such attorneys' standard hourly
rates for time in fact incurred (without regard to any statutory
presumption), and further agrees that payment of such fees is
secured hereunder. Debtor and Secured Party agree that such fees
to the extent not in excess of fifteen percent (15%) of subject
amount owing after default (if permitted by law, or such lesser
sum as may otherwise be permitted by law) shall be deemed
reasonable.
10
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(e) Secured Party's rights and remedies hereunder or
otherwise are cumulative and may be exercised singularly or
concurrently. Neither the failure nor any delay on the part of
the Secured Party to exercise any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or privilege preclude any
other or further exercise thereof or the exercise of any other
right power or privilege. Secured Party shall not be deemed to
have waived any of its rights hereunder or under any other
agreement, instrument or paper signed by Debtor unless such
waiver be in writing and signed by Secured Party. A waiver on
any one occasion shall not be construed as a bar to or waiver of
any right or remedy on any future occasion.
(f) Any controversy or claim arising out of or relating to
this Master Security Agreement shall be determined by arbitration
in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The number of arbitrators
shall be three. One Arbitrator shall be appointed by each of the
parties and the third arbitrator, who shall serve as chairman of
the tribunal, shall be appointed by the American Arbitration
Association. The place of arbitration shall be Charlotte, North
Carolina. Any arbitral award arising from any arbitration
pursuant to this paragraph shall be final and binding upon all
parties hereto.
9. INVENTORY AND RECEIVABLES COVENANTS.
The following are covenants applicable to Inventory and
Receivables generally:
(a) The Secured Party's security interest in the Inventory
will continue through all stages of manufacturing and will,
without further act, attach to raw materials, to goods in
process, to finished goods, to all products of the foregoing, to
the Receivables (as defined in the Agreement) and all other
proceeds resulting from the sale or other disposition thereof and
to all such Inventory that may be rejected, returned, reclaimed,
repossessed or stopped in transit.
(b) Inventory shall be kept only at the address identified
on the first page of this Security Agreement, and shall not be
removed therefrom except for purposes of sale and promotion in
the regular course of the Debtor's business.
(c) No Inventory has been or shall be consigned without the
Secured Party's prior written consent; no Inventory is or shall
ever be stored with a bailee, warehouseman or similar party
without the Secured Party's prior written consent, and in such
event the Debtor will, concurrently with delivery to such party,
cause any such party to issue and deliver to the Secured Party,
in form acceptable to the Secured Party, warehouse receipts in
the Secured Party's name evidencing the storage of such
Inventory.
(d) Until the occurrence of an Event of Default, the Debtor
may, subject to the provisions of this Agreement, sell finished
Inventory, but only in the ordinary course of the Debtor's
business; however, in no event shall the Debtor make any sale of
Inventory which would cause a breach of the Debtor's warranties,
representations and covenants under this Agreement. A sale of
Inventory in the ordinary course of the Debtor's business does
not include a transfer in partial or total satisfaction of a debt
owing by the Debtor. The Debtor agrees to report the receipt or
creation of all sales or other dispositions of Inventory to the
Secured Party. The Debtor hereby agrees to execute
11
R#0202392.04
and deliver to the Secured Party, in form satisfactory to the
Secured Party, a formal assignment or schedule of accounts
receivable or other proceeds resulting from the sale or other
disposition of Inventory but in the absence of such assignment or
schedule this Agreement shall constitute such assignment or
schedule and the grant of a security interest therein.
(e) The Secured Party shall not, under any circumstance, be
liable for any error or omission or delay of any kind occurring
in the settlement, collection or payment of any Receivables or
any instrument received in payment thereof or for any damage
resulting therefrom. The Secured Party shall not be liable for
or prejudiced by any loss, depreciation or other damage to
Receivables or other Collateral unless caused by the Secured
Party's willful and malicious act, and the Secured Party shall
have no duty to take any action to preserve or collect any
Receivable or other Collateral.
(f) The Secured Party may notify customers at any time that
Receivables have been assigned to the Secured Party and collect
them directly in the Secured Party's own name but, unless and
until the Secured party does so or gives the Debtor other
instructions, the Debtor shall, at its cost and expense, collect
and otherwise hold for the Secured party as trustee of an express
trust for the Secured party's benefit all amounts of unpaid
Receivables, and, if so requested by the Secured Party, shall not
commingle such collections with the Debtor's own funds or use the
same for any purpose.
(g) As to any Receivable forming part of the Collateral,
unless the Secured Party otherwise consents in writing: (i) all
Receivables are and will be bona fide existing obligations of the
customer named therein, for a fixed sum as set forth in the
invoice relating thereto, created by the sale and actual delivery
of goods or other property or the rendition of services or the
furnishing of other good and sufficient consideration to the
customer in the regular course of business; (ii) all unpaid
balances appearing on the Debtor's books and records and any
invoice or statement delivered or to be delivered to the Secured
Party relating to any Receivable are and shall be true and
correct in all respects; (iii) all shipping or delivery receipts
and other documents furnished or to be furnished to the Secured
Party in connection therewith are all and will be genuine,
complete, correct, valid and enforceable in accordance with the
Debtor's terms; and (vi) no Receivable has arisen or shall arise
out of a contract or purchase order containing provisions
prohibiting assignment thereof or the creation of a security
interest therein and the Debtor has not received and shall not
accept any note, or other instrument with respect to any
Receivable or in payment thereof which is not assigned and
delivered to the Secured Party immediately.
(h) To facilitate the maintenance of the Secured party's
records, the Debtor shall: (I) hold in trust for the Secured
party's benefit all items constituting proof of shipment or
delivery of all goods sold and services rendered together with
copies of all of the Debtor's invoices to customers; and (ii)
furnish the Secured party promptly with copies of such
information as the Secured Party may reasonable require. The
Debtor's billing of customers on such invoices or otherwise shall
by conclusive evidence of the assignment to the Secured Party of
the Receivables represented thereby whether or not the Debtor
executes any other document. The items to be provided under this
paragraph are to be in form satisfactory to the Secured Party and
are executed and delivered to the Secured Party from time to time
solely for the Secured Party convenience in maintaining records
of the Collateral; the Debtor's failure to give any of such items
to the Secured Party shall not affect, terminate, modify or
otherwise limit the Secured party's lien or security interest in
the Collateral.
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10. MISCELLANEOUS
(a) This Agreement, the Note and/or any of the other Debt
Documents may be assigned, in whole or in part, by Secured Party
without notice to Debtor, and Debtor hereby waives any defense,
counterclaim or cross-complaint by Debtor against any assignee,
agreeing that Secured Party shall be solely responsible therefor.
(b) All notices to be given in connection with this
Agreement shall be in writing, shall be addressed to the parties
at their respective addresses set forth hereinabove (unless and
until a different address may be specified in a written notice to
the other party), and shall be deemed given when given in the
manner prescribed by the Deed of Trust.
(c) Secured Party may correct patent errors herein and fill
in all blanks herein or in any Collateral Schedule consistent
with agreement of the parties.
(d) Time is of the essence hereof. This Agreement shall be
binding, jointly and severally, upon all parties described as the
"Debtor" and their respective heirs, executors, representatives,
successors and assigns, and shall inure to the benefit of Secured
Party, its successors and assigns.
(e) This Agreement and its Collateral Schedules, the Note
and the other loan documents executed on the date hereof
constitute the entire agreement between the parties with respect
to the subject matter hereof and supersede all prior
understandings (whether written, verbal, or implied) with respect
thereto. This Agreement and its Collateral Schedules shall not
be changed or terminated orally or by course of conduct, but only
by a writing signed by both parties hereto. Section headings
contained in this Agreement have been included for convenience
only, and shall not affect the construction or interpretation
hereof.
(f) This Agreement shall continue in full force and effect
until all of the Indebtedness has been indefeasibly paid in full
to Secured Party. The surrender, upon payment or otherwise, of
the Note or any of the other documents evidencing any of the
Indebtedness shall not affect the right of Secured Party to
retain the Collateral for such other Indebtedness as may then
exist or (with the consent of the Borrower) as it may be
reasonably contemplated will exist in the future. This Agreement
shall automatically be reinstated in the event that Secured Party
is ever required to return or restore the payment of all or any
portion of the Indebtedness (all as though such payment had never
been made).
13
R#0202392.04
IN WITNESS WHEREOF, Debtor and Secured Party, intending to be
legally bound hereby, have duly executed this Agreement in one or
more counterparts, each of which shall be deemed to be an
original, as of the day and year first aforesaid.
DEBTOR:
FOUNTAIN POWERBOATS, INC.,
a North Carolina corporation
ATTEST:
/s/Xxxxxxx X. Williams________________ By: /s/Xxxxxxxx X.
Xxxxxxxx, Xx.
____________ Secretary ___________ President
SECURED PARTY:
GENERAL ELECTRIC CAPITAL CORPORATION,
a New York corporation
By: /s/Xxxxxx X. Xxxxxxxxx
Region Credit Analyst
14
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EXHIBIT A
Description Year/Model Serial Number Location
Fountain Asset # 27' Fever Sport Boat: Washington, NC
721 27' II Fixture Molds
845 27' Vent Mold
857 27' Proto Dev
1088 27' SB Dash Mold
1096 27' SB Dash Mold/Plug
1106 27' Hull Mold
1237 XXX.XX. 27' XX Xxxx 2
1283 27' SB Deck Splash
1322 27' SB Deck Splash
1397 Pos. Lift 27' SB
32' Fever Sport Boat
1093 Mold Maint/32SB Hull
1100 27'/32' Dash Mld/Plg
1142 29'/32' SB Eng. Vent
1178 Mold Maint/32' SB DK
1390 Mold Maint/32' SB
1401 Pos. Lift 32' SB
35' Lightning Sport Boat
722 33' Radar Arch Mold
730 27 II Footbox Mold
736 27 SB Deck & Hull
740 33LB Dec & Xxxx
000 00XX Deck & Hull
1077 35' Fuel Fill Mold
1099 35' Eng. Hatch Plug
1162 Mold Maint/35' Deck
1203 35' L Deck & Mold
1380 Mold Maint. 35' X.X.
0000 Xxxx Maint. 35' S.B.
1392 Mold Maint. 35' S.B.
1402 Pos. Lift 35' S.B.
38' Sport Boat and Sport Cruiser:
742 36 Radar Arch
743 36 Windscreen Brkt
744 36 Deck Mold
745 36SB Deck & Xxxx
000 00XX Mold Foot Boxes
754 36 Radar Arch Xxxxxx
000 00X Deck Splashes
841 33SC Deck Prep
876 38' Radar Arch Tool
877 38' S.C. Patterns
891 38' S.C. Deck Mold
893 38' X.X. Xxxxxxx Mold
1008 38' S.C. Side Store
1104 38' SB Eng. Hatch Mld.
1164 Mold Maint/38' SC HL
1179 Mold Maint/38' SC HL
1236 XXX.XX 38' Deck #2
1240 XXX.XX 38' SC Deck
1246 38' SC Windshld Mold
1268 38' SC Eng. Vent
1300 38' SC Step Insert
1371 38' SC Step Insert
1393 Mold Maint. 38' X.X.
0000 Xxxx Maint. 38' S.B.
1403 Pos. Lift 38' S.B.
1404 38' S.C. Deck & Liner
1455 38' S.C. Tooling
1479 38' Lightning Deck
31' Fishboats (All Models)
725 31' Liner Plug
739 31SF Deck & Hull
838 31SF Hull
840 31SF LNR Strge Bx
846 31SF Seat Box Doors
847 31SF Lnr Strge Bx Mo
875 31' Cuddy Splash Plug
902 31' Cuddy Splash Plug
931 31' Cuddy Int. Pattrn
933 31' Cuddy Liner Mold
934 31' Cuddy Liner Plug
947 31' 32' S.F. Liner/Deck/Pl
948 31' S.F. Cab. Deck Mold
949 31' S.F. Cab. Deck Plug
951 31' S.F. Cab. Linr Plug
964 31' S.F. Cab. Design RT
975 31' X.X. Xxxxx Design
976 31' X.X. Xxxxx Molds
998 31' X.X. Xxxxx Design
1009 31' X.X. Xxxxx Parts
1010 31' X.X. Xxxxx Store
1024 31' X.X. Xxxxx Deck Mold
1025 31' X.X. Xxxxx I/B Dk Mld
1140 31' X.X. Xxxxx I/B Dk Plg
1141 31' I/B Liner Plug
1152 32' Deck & Liner Mld.
1195 32' Cuddy I/B Dk. Mld
1196 31' I/B Liner Mold
1199 31' SF Fuel Tank Lid
1202 Modify 32' Liner MLD
1238 XXX.XX 31' SF Liner
1239 XXX.XX. 31' SF Deck
1244 31' SF Eng. Box Mld
1247 31' SF Liverwell Mold
1265 32" I/O S.F.C. Plug
1269 31' S.F. Livewell
1271 35' S.B. Deck Splash
1284 31' SF Livewell
1299 31' SF Livewell Mold
1325 31' SF Livewell Mold
1326 31' SF Eng. Box Lid
1346 Mold Maint. 31' S.F.
1351 31' C.C. Open Bow Mold
EXHIBIT B
TRACT I:
All that certain tract or parcel of land lying and being situate in
Chocowinity Township, Beaufort County, North Carolina, and being
more particularly described as follows:
Beginning at a point in the southern right-of-way line of NCSR 1166
(Whichards Beach Road); said point being located the following
courses and distances from a concrete monument located at the
southeasterly corner of the subdivision known as Harbor Estates, as
shown on a plat thereof recorded in Plat Cabinet A, Slide 113A in
the office of the Register of Deeds of Beaufort County, North
Carolina (said concrete monument also being the southwesterly
corner of Tract II described below): South 35- 52' 54" East 62.93
feet; South 36- 20' 33" West 30.61 feet; and South 64- 01' 09" East
16.66 feet to a point. THENCE FROM SAID POINT OF BEGINNING BEING
SO LOCATED, along and with the southern right-of-way line of
Whichards Beach Road South 64- 01' 03" East 132.39 feet to a point;
thence South 64- 00' 52" East 49.07 feet to a point; thence South
64- 01' 18" East 50.66 feet to a point; thence South 64- 01' 12"
East 220.27 feet to a point; thence South 64- 01' 09" East 45.61
feet to a point; thence continuing along and with the southern
right-of-way line of NCSR 1166 with a curve to the right in a
southeastwardly direction which has a chord bearing and distance of
South 57- 55' 13" East 341.99 feet to a point; thence South 51- 52'
17" East 22.40 feet to a point; thence continuing South 51- 52' 17"
East 300.00 feet to a point in the southern right-of-way line of
NCSR 1166 (all previous calls being along and with the southern
right-of-way line of NCSR 1166); thence leaving NCSR 1166 South 38-
00' 08" West 140.26 feet to a point; thence South 51- 52' 37" East
31.00 feet to a point; thence South 51- 52' 19" East 131.00 feet to
a point; thence South 38- 00' 08" West 50.00 feet to a point;
thence North 51- 59' 55" West 21.00 feet to a point; thence South
37- 59' 26" West 137.56 feet to a point; thence South 52- 57' 27"
East 107.66 feet to a point; thence South 35- 48' 31" West 49.16
feet to a point; thence South 37- 39' 39" West 149.73 feet to a
point; thence continuing South 37- 39' 39" West 18.38 feet to a
point in a ditch; thence along and with said ditch the following
courses: North 56- 10' 32" West 114.97 feet to a point; North 57-
56' 27" West 120.08 feet to a point; thence North 59- 09' 12" West
105.20 feet to a point; thence North 57- 02' 11" West 105.33 feet
to a point; thence North 64- 27' 40" West 506.54 feet to a point;
thence North 56- 33' 24" West 99.24 feet to a point; thence North
48- 59' 54" West 220.23 feet to a point; thence North 47- 02' 51"
West 145.55 feet to a point; thence North 36- 19' 37" East 158.65
feet to a point; thence North 36- 20' 38" East 20.00 feet to a
point; thence North 36- 19' 33" East 51.10 feet to a point; thence
North 36- 20' 24" East 24.66 feet to a point; thence North 36- 20'
20" East 100.34 feet to a point; thence North 36- 20' 41" East
166.95 feet to a point; thence with a curve to the right (which
curve has radius of 20 feet, a chord bearing
and distance of North 76- 08' 47" East 25.60 feet, and an arc
distance of 27.78 feet) to the point of beginning.
Together with a perpetual non-exclusive easement for ingress,
egress and regress across a 60-foot wide private right-of-way
running southwardly from NCSR 1166 at point (C) in the Xxxxx X.
Xxxxx line as shown on the plat entitled "Plan of Land surveyed for
Xxxxxx X. Xxxxx" recorded in Plat Cabinet A, Slide 42A, in the
Beaufort County Registry.
TRACT II:
All that certain tract or parcel of land lying and being situate in
Chocowinity Township, Beaufort County, North Carolina, and being
more particularly described as follows:
Beginning at an existing concrete monument in the northern right-
of-way line of NCSR 1166 (Whichards Beach Road), said concrete
monument being also the southeasterly corner of the subdivision
known as Harbor Estates, as shown on a plat thereof recorded in
Plat Cabinet A, Slide 113A in the office of the Register of Deeds
of Beaufort County, North Carolina. THENCE FROM SAID POINT OF
BEGINNING BEING SO LOCATED, North 30- 36' 00" East 375.64 feet to a
point; thence North 30- 36' 00" East 17.0 feet to a point in a
canal; thence continuing with the canal North 48- 42' 00" East
23.43 feet to a point; thence continuing with the canal North 30-
26' 00" East 476.44 feet to a point; thence North 31- 42' 00" East
427.85 feet to a point in the mean high water line of the Pamlico
River; thence along and with the mean high water line of the
Pamlico River the following courses and distances; North 71- 11'
00" East 88.88 feet to a point; thence North 78- 57' 00" East 77.78
feet to a point; thence North 51- 09' 00" East 53.88 feet to a
point; thence South 21- 39' 00" East 42.48 feet to a point; thence
South 55" 23' 00" East 82.19 feet to a point; thence North 65- 06'
00" East 38.64 feet to a point; thence South 45- 07' 00" East
146.64 feet to a point; thence South 59- 32' 00" East 106.73 feet
to a point; thence South 65- 55' 46" East 91.98 feet to a point;
thence South 87- 44' 21" East 82.14 feet to a point; thence South
83- 21' 00" East 96.80 feet to a point; thence North 78- 56' 00"
East 251.10 feet to a point; thence South 63- 13' 00" East 91.37
feet to a point; thence South 63- 13' 00" East 182.56 feet to a
point; thence South 63- 13' 00" East 107.00 feet to a point; thence
leaving said river South 38- 18' 41 " West 21.94 feet to a concrete
monument; thence continuing South 38- 18' 41" West 701.64 feet to a
concrete monument; thence continuing South 38- 18' 41" West 64.72
feet to a concrete monument; thence continuing South 38- 18' 41"
West 108.03 feet to a concrete monument; thence South 38- 18' 41"
West 106.26 feet to a concrete monument; thence continuing South
38- 18' 41" West 104.29 feet to a concrete monument; thence
continuing South 38- 18' 41" West 102.43 feet to a concrete
monument; thence South 38- 18' 41" West 127.21 feet to a concrete
monument; thence South 38- 18' 41" West 35.74 feet to a concrete
monument; thence South 38- 18' 41" West 63.98 feet to a concrete
monument; thence continuing South 38- 18' 41" West 99.54 feet to a
concrete monument; thence continuing South 38- 18' 41" West 99.16
feet to a concrete monument; thence conitinuing South 38- 18' 41'
West 106.40 feet to a concrete monument in the northern right-of-
way line of NCSR 1166; thence continuing along and with the
northern right-of-way line of NCSR 1166 along a curve to the left
in a northwestwardly direction to a point (which curve has a chord
bearing and distance of North 51- 41' 19" West 100.00 feet); thence
continuing along and with the northern right-of-way line of NCSR
1166 along a curve to the left in a northwestwardly direction to a
point (which curve has a chord bearing and distance of North 55-
31' 51" West 396.18 feet); thence continuing along and with the
northern right-of-way line of NCSR 1166 North 62- 36' 41" West
58.52 feet to a point; thence continuing along and with the
northern right-of-way line of NCSR 1166 North 63- 28' 00" West
100.00 feet to a point; ;thence continuing along and with the
northern right-of-way line of NCSR 1166 North 64- 04' 00" West
470.44 feet to the point or place of beginning.
Together with all property lying between the northern property line
of the above-described property, the eastern and western property
line of the above-described property extended in a northeasterly
direction to the mean high water line of the Pamlico River and the
mean high water line of the southern shore of the Pamlico River.
81-0242 (DV)
12/28/96
CDR/DCR
WSMAIN/205631
EXHIBIT C
Northwestern Mutual Life Insurance Policy #00-000-000 on the life
of Xxxxxxxx X. Xxxxxxxx, Xx. and all claims, options, privileges,
rights, title, and interest therein and thereunder.
The aircraft hangar (60 feet x 80 feet) and all personal property
owned by Fountain Powerboats, Inc. which is located in or about the
aircraft hangar which is located on the Washington Airport in
Beaufort County, North Carolina on an area of land 200 feet x 200
feet being immediately adjacent to and south of the Xxxxxxx Hangar
Site, said site leased to Fountain Powerboats, Inc. by lease
recorded in Book 922, Page 236 in the office of the Register of
Deeds of Beaufort County, North Carolina. The record owner of the
real property on which the aircraft hangar is located is Xxxxxx
Field Airport Commission of Beaufort County, North Carolina. The
real property upon which the aircraft hangar is located on or used
in connection with or otherwise pertaining to is described in
Exhibit D attached hereto and incorporated herein by reference.
EXHIBIT D
Being an area 200 feet by 200 feet being immediately adjacent
to and to the South of the Xxxxxxx Hangar Site and being more
particularly described according to the general airport plan as
follows:
Beginning at the easternmost corner of that parcel of land
leased to X. X. Xxxxxxx & Sons Inc. from Xxxxxx Field Airport
Commission by lease dated 8-1-71, recorded in Book G72, Page
416, Beaufort County Registry; running, thence S. 70- 30' W.
200 feet; thence S. 19- 30' E. 200 feet; thence N. 70--30' E.
200 feet; thence N. 19--30' W. 200 feet to the point of
beginning.
PROMISSORY NOTE
December 31, 0000
Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx
FOR VALUE RECEIVED, FOUNTAIN POWERBOATS, INC., a North Carolina
corporation ("Maker"), promises, jointly and severally if more then
one, to pay to the order of GENERAL ELECTRIC CAPITAL CORPORATION or
any subsequent holder hereof (each, a "Payee") at its office
located at 0000 Xxxxxxxx Xxxx, Xxxxx 0000, Xxxxxxxxx, XX 00000 or
at such other place as Payee of the holder hereof may designate,
the principal sum of TEN MILLION AND NO/100 DOLLARS
($10,000,000.00), or so much thereof as shall have been disbursed
from time to time and remains unpaid, with interest hereon in
arrears, from the date hereof through and including dates of
payment, at a floating per annum simple interest rate ("Contract
Rate") as hereinafter calculated.
Until the Option to Convert (as defined below) is exercised, the
Contract Rate for a given period (the "Effective Period") shall be
equal to the sum of (i) two and 68/100 percent (2.68%) per annum
plus (ii) a variable per annum interest rate ("Current CPR") which
shall be equal to the rate listed for "1-Month" Commercial Paper
under the column indicating an average rate for the second calendar
month preceding the month in which the Effective Period ends, as
stated in the Federal Reserve Statistical Release H.15 (519)
published in the calendar month preceding the month in which the
Effective Period ends. The first Effective Period shall begin on
the date hereof, an shall continue through the earlier of (w) the
date the first Periodic Installment (or part thereof) is received
by Payee or (x) the date on which the first Periodic Installment is
due. Each subsequent Effective Period shall begin on the day after
the last day of the previous Effective Period and shall continue
through the earlier of (y) the date the earliest due and unpaid
Periodic Installment (or part thereof) is received by Payee of (z)
the date on which the next Periodic Installment is due after the
beginning of the current Effective Period.
If, for any reason whatsoever, the Federal Reserve Statistical
Release H.15 (519) is no longer published, the Current CPR shall be
equal to the latest Commercial Paper Rate for high grade unsecured
notes of 30 days maturity sold through dealers by major
corporations in multiples of $1,000, as indicated in the "Money
Rates" column of the Wall Street Journal, Eastern Edition,
published on the first Business Day of the calendar month in which
the Effective Period ends. As used herein, the term "Business Day"
shall mean and include any calendar day other than a day on which
all commercial banks in the City of New York, New York, are
required or authorized to be closed.
So long as no default exists hereunder and all of the terms and
conditions of this Note are fulfilled, Maker may elect to convert
(the "Option to Convert") the Contract Rate to a fixed per annum
simple interest rate (which, determined as hereinafter set out, is
referred to as the `Fixed Contract Rate") as of any date on which a
Periodic Installment is due upon at least 30 but no more than 60
days prior
R#0202454.04
written notice (the "Notice Date") to Payee accompanied by a
Conversion Fee of $500.00 (which notice shall be irrevocable and
shall be sent to the attention of Payee's Business Center Manager,
00 Xxx Xxxxxxxxx Xxxx, Xxxxxxx, XX 00000-0000). Such notice shall
state the due date of a Periodic Installment on which Maker elects
the Fixed Contract Rate to apply (the "Fixed Contract Rate
Effective Date"). Upon receipt of notice of such Option to
Convert, and the accompanying sums due, the Payee shall calculate
the amount of the Periodic Installments thereafter due commencing
on the Fixed Contract Rate Effective Date using the following: (i)
the outstanding principal balance of this Note on the date the
Periodic Installment is recalculated, (ii) the Fixed Contract Rate
(determined as hereinafter set out), and (iii) the balance of the
original Amortization Period (hereinafter defined). In addition,
Maker shall pay to Payee, if necessary, prior to the Fixed Contract
Rate Effective Date, an additional sum sufficient to amortize the
then-unpaid principal over the balance of the Amortization Period
at the Contract Rate applicable for the first Periodic Installment.
If the Option to Convert is elected prior to the date on which
additional loan proceeds can no longer be advanced under the Loan
Agreement, the Periodic Installment shall be recalculated by the
Lender on each occasion that additional principal is advanced, but
using the Fixed Contract Rate determined initially.
If Maker elects to exercise this Option to Convert, the Fixed
Contract Rate shall be equal to the sum of
(i) Two and 93/100 percent (2.93%) per annum plus
(ii) the applicable Current Rate (as defined below):
(a) If there are eighteen (18) months or less than eighteen
(18) months remaining before the Final Installment of
this Note is due, the "Current Rate" shall be the per
annum interest rate listed for "1-Year" Treasury,
constant maturity, under the column indicating an average
rate as stated in the Federal Reserve Statistical Release
H.15 (519) for the second calendar month preceding the
calendar month in which the Fixed Contract Rate will be
effective. If, for any reason whatsoever the Federal
Reserve Statistical Release H.15 (519) is no longer
published, the Current Rate shall be equal to the latest
annualized interest rate for "one year" U.S. Treasury
Bills as reported by the Federal Reserve Board on a
weekly-average basis, adjusted for constant maturity as
indicated in the "Money Rates" column of the Wall Street
Journal, Eastern Edition, published on the first Business
Day of the calendar month preceding the month in which
the fixed Contract Rate will be effective.
(b) If there are more than eighteen (18) months but either
(42) forty-two months or less than forty-two (42) months
remaining before the Final Installment of this Note is
due, the "Current Rate" shall be determined in the same
manner as noted in subparagraph (a) above except it shall
be based upon the rate listed for "2-Year" Treasury
bills.
2
R#0202454.04
(c) If there are forty-three (43) months or more than forty-
three (43) months remaining before the Final Installment
of this Note is due, the "Current Rate" shall be
determined in the same manner as noted in subparagraph
(a) above except it shall be based upon the rate listed
for "3-Year" Treasury bills.
Subject to the other provisions hereof, the principal and interest
on this Note is payable in lawful money of the United States in
fifty-nine (59) consecutive monthly installments of Ninety-One
Thousand Two Hundred Seventy-Three and 30/100 Dollars ($91,273.30)
(each, whether or not increased as described below, a "Periodic
Installment") and a final installment ("Final Installment") in the
amount of the total outstanding unpaid principal and accrued but
unpaid interest. THIS IS A BALLOON NOTE, AND ON THE MATURITY DATE
A SUBSTANTIAL PORTION OF THE PRINCIPAL AMOUNT OF THIS NOTE WILL
REMAIN UNPAID BY THE MONTHLY PAYMENTS HEREIN REQUIRED. The first
Periodic Installment shall be due and payable on February 1, 1997,
and the following Periodic Installments shall be due and payable on
the same day of each succeeding month (each, a "Payment Date").
All payments shall be applied first to interest and then to
principal The acceptance by Payee of any payment which is less
than payment in full of all amounts due and owing at such time
shall not constitute a waiver of Payee's right to receive payment
in full at such time or at any prior or subsequent time. Interest
shall be calculated on the basis of a 365 day year ( 366 day leap
year) and will be charged at the Contract Rate for principal
outstanding hereunder for each calendar day on which any principal
is outstanding.
The amount of the foregoing Periodic Installment is based upon
(i) the outstanding principal balance of this Note on the date
hereof ($7,500,000), (ii) a per annum interest rate of eight and
07/100 percent (the "Payment Rate"), and (iii) a ten year
amortization period (the "Amortization Period"). The amount of
each future Periodic Installment shall be recalculated from time to
time as and if additional principal is advanced under this Note,
using the Payment Rate, the remaining term of the Amortization
period, and the then-outstanding principal balance of the Note in
such computations. In the absence of any additional principal
being advanced under this Note or the Borrower's election of the
Option to Convert, the amount of the Periodic Installments will not
change.
The amount and number of the Periodic Installments, moreover, will
not change with fluctuations in the Contract Rate. Any increase in
the Contract Rate shall be reflected by a corresponding decrease in
the portion of the Periodic Installment credited to the remaining
unpaid principal balance. Any decrease in the Contract Rate shall
be reflected as a corresponding increase in the portion of the
Periodic Installment credited to the remaining unpaid principal
balance. Notwithstanding the foregoing, at the end of each three
(3) month period commencing with the first Payment Date hereof,
Maker agrees to pay to Payee forthwith an additional sum
("Quarterly Payment") sufficient to amortize the then-unpaid
principal over the balance of the original Amortization Period
hereof at the Contract Rate applicable for the first Periodic
Installment.
If, and for so long as, the amount of interest due exceeds the
amount of the Periodic Installment, Maker agrees to pay forthwith,
in addition to (i) any Periodic Installment then due and (ii) any
Quarterly Payment, the amount by which said interest exceeds the
Periodic Installment. In the event
3
R#0202454.04
interest only is required to be paid during any period, the
interest for such period shall be due and payable monthly as it
accrues in arrears and the amount of such "interest only"
installment shall be calculated on the unpaid principal balance
existing at the commencement of such period but the amount of such
installment in excess of interest due at the Contract Rate o the
principal balance during such period shall be applied to repayment
of principal.
This Note is secured by a deed of trust, by an assignment of rents
and by a security agreement, chattel mortgage, or like instrument
and certain other loan documents (each of which is hereinafter
called a "Security Agreement").
Time is of the essence hereof. If any installment or any other sum
due under this Note or any Security Agreement is not received
within fifteen (15) days after its due date, the Maker agrees to
pay, in addition to the amount of each such installment or other
sum, a late payment charge of four percent (4%) of said installment
or other sum in order to compensate the Payee for extra costs and
expenses caused by such late payment.
If (i) Maker fails to make payment of any amount due hereunder
within ten (10) days after the same becomes due and payable; or
(ii) maker is in default, or fails to perform after the passage of
any applicable cure period, under any term or condition contained
in any Security Agreement or in any Loan Agreement between the
Maker and the Payee, then the entire principal sum remaining
unpaid, together with all interest thereon and any other sum
payable under this Note or the Security Agreement, at the election
of payee, shall immediately become due and payable, with interest
thereon at the lesser of 18% per annum or the highest rate not
prohibited by applicable law from the date of such accelerated
maturity until paid (both before and after an judgment).
The Maker may prepay in full, but not in part, its entire
indebtedness hereunder upon payment of an additional sum as a
premium equal to the following percentages of the original
principal balance for the indicated period:
Prior to the first annual anniversary date of
this Note: two percent (2%)
Thereafter and prior to the second annual anniversary date of
this Note: two percent (2%)
Thereafter and prior to the third annual anniversary date
of this Note: one percent (1%)
and zero percent (0%) thereafter, plus all other sums due hereunder
or under any Security Agreement.
It is the intention of the parties hereto to comply with the
applicable usury laws; accordingly, it is agreed that,
notwithstanding any provision to the contrary in this Note or any
Security Agreement, in no event shall this Note or any Security
Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. If
any such excess interest is contracted for, charged or received
under this Note or any Security Agreement, or if all of the
principal balance shall be prepaid, so that under any of such
circumstances the amount of interest contracted for, charged or
received under this Note or the Security Agreement on the principal
balance shall exceed the maximum amount of interest permitted by
applicable law, then in such event (a) the provisions of this
paragraph shall govern and control, (b) neither Maker nor any
4
R#0202454.04
other person or entity now or hereafter liable for the payment
hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of interest
permitted by applicable law, (c) any such excess which may have
been collected shall be either applied as a credit against the then
unpaid principal balance or refunded to maker, at the option of the
Payee, and (d) the effective rate of interest shall be
automatically reduced to the maximum lawful contract rate allowed
under applicable law as now or hereafter construed by the courts
having jurisdiction thereof. It is further agreed that without
limitation of the foregoing, all calculations of the rate of
interest contracted for, charged or received under this Note or the
Security Agreement which are made for the purpose of determining
whether such rate exceeds the maximum lawful contract rate, shall
be made, to the extent permitted by applicable law, by amortizing,
prorating, allocating and spreading in equal parts during the
period of the full stated term of the indebtedness evidenced
hereby, all interest at any time contracted for, charged or
received from Maker or otherwise by Payee in connection with such
indebtedness; provided, however, that if any applicable state law
is amended or the law of the United States of America preempts any
applicable state law, so that it becomes lawful for the Payee to
receive a greater interest per annum rate than is presently
allowed, the Maker agrees that, on the effective date of such
amendment or preemption, as the case may be, the lawful maximum
hereunder shall be increased to the maximum interest per annum rate
allowed by the amended state law or the law of the United States of
America.
The Maker and all sureties, endorsers, guarantors or any others
(each such person, other than the Maker, an "Obligor") who may at
any time become liable for the payment hereof jointly and severally
consent hereby to any and all extensions of time, renewals, waivers
or modifications of, and all substitutions or release of, security
or of any party primarily or secondarily liable on this Note or any
Security Agreement or any term and provision of either, which may
be made, granted or consented to by Payee and agree that suit may
be brought and maintained against any one or more of them, at the
election of Payee without joinder of any other as a party thereto,
and that Payee shall not be required first to foreclose, proceed
against, or exhaust any security hereof in order to enforce payment
of this Note. The Maker and each Obligor hereby waive presentment
demand for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, and all other notices in connection
herewith, as well as filing of suit (if permitted by law) and
diligence in collecting this Note or enforcing any of the security
hereof, and agree to pay (if permitted by law) all expenses
incurred in collection, including Payee's actual attorneys' fees
for time in fact incurred at such attorneys' standard hourly
billing rates, without regard to any statutory presumption.
Any controversy or claim arising out of or relating to this Note
shall be determined by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association. The number of arbitrators shall be three. On
arbitrator shall be appointed by each of the parties and the third
arbitrator, who shall serve as chairman of the tribunal, shall be
appointed by the American Arbitration Association. The place of
arbitration shall be Charlotte, North Carolina. Any arbitral award
arising from any arbitration pursuant to this paragraph shall be
final and binding upon all parties hereto.
This Note and any Security Agreement constitute the entire
agreement of the Maker and Payee with respect to the subject matter
hereof and supersedes all prior understandings, agreements and
representations, express or implied.
5
R#0202454.04
THIS NOTE SHALL BE GOVERNED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NORTH CAROLINA.
No variation or modification of this Note, or any waiver of any of
its provisions or conditions, shall be valid unless in writing and
signed by an authorized representative of Maker and payee. Any
such waiver, consent, modification or change shall be effective
only in the specific instance and for the specific purpose given.
Any provisions in this Note or any Security Agreement which is in
conflict with an statute, law or applicable rule shall be deemed
omitted, modified or altered to conform thereto.
IN WITNESS WHEREOF, this Note has been executed, UNDER SEAL, the
day and year first above written.
FOUNTAIN POWERBOATS, INC.
ATTEST:
By: /s/Xxxxxxxx X. Xxxxxxxx, Xx.
_______________ President
/s/Xxxxxxx X. Xxxxxxxx
_____________Secretary
[CORPORATE SEAL]
6
R#0202454.04
BK 1063 PG 337
This document prepared by (and return to):
Xxxxxxx X. Xxxxxxxx, Xx.
Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, P.L.L.C.
X.X. Xxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
STATE OF NORTH CAROLINA )
) DEED OF TRUST, ASSIGNMENT
COUNTY OF BEAUFORT ) OF RENTS AND SECURITY AGREEMENT
COLLATERAL INCLUDES FIXTURES
THIS DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
(hereinafter referred to as this "Deed of Trust"), made this 31st
day of December, 1996, by and among FOUNTAIN POWERBOATS, INC., a
North Carolina corporation, whose address is Xxxxxxxx'x Xxxxx Xxxx,
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 (hereinafter referred to as the
"Grantor"), XXXXXXX X. XXXXXXXX, XX., the Trustee, a resident of
Wake County, North Carolina, whose address is Xxxxxx Xxxxxxx
Xxxxxxxxx & Xxxx, P.L.L.C., 0000 Xxxxx Xxxxx Xxxxxxx Xxxxxx,
Xxxxxxx, Xxxxx Xxxxxxxx 00000 (hereinafter referred to as the
"Trustee"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation whose address is 0000 Xxxxxxxx Xxxx, Xxxxx 0000,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000 (hereinafter referred to as the
"Beneficiary");
W I T N E S S E T H
Grantor has requested the Beneficiary make available to the
Grantor credit, and the Beneficiary has agreed to extend to the
Grantor, subject to the terms and provisions of that certain Loan
Agreement between the Grantor, the Beneficiary, and certain other
parties, dated of even date herewith (the "Loan Agreement"), and
any modifications, extensions or replacements thereof, credit of up
to the sum of TEN MILLION AND NO/100 DOLLARS ($10,000,000.00);
The Grantor therefore is indebted to the Beneficiary in the
principal amount of up to TEN MILLION AND NO/100 DOLLARS
($10,000,000.00), or so much thereof as shall be advanced from time
to time and remain outstanding, as evidenced by its promissory
note, in such principal amount, of even date herewith (which,
together with any amendments, renewals, and extensions hereof, is
hereinafter referred to as the "Note"), reference to which is
hereby made and which is payable in installments and with interest
as set out therein;
This Deed of Trust is given to secure all present and future
obligations of Grantor to Beneficiary. The period in which future
obligations may be incurred and secured by this Deed of Trust is
the period between the date hereof and that date which is fifteen
(15) years from the date hereof. The amount of present obligations
secured by this Deed of Trust is SEVEN MILLION FIVE HUNDRED
THOUSAND DOLLARS ($7,500,000.00). and the maximum principal amount,
including present and future obligations, which may be secured by
this Deed of Trust at any one time is TEN MILLION AND
R#0202455.04
BK 1063 PG 338
NO/100 DOLLARS ($10,000,000.00). Grantor need not sign any
instrument or notation evidencing or stipulating that future
advances are secured by this Deed of Trust.
The Grantor desires to secure the payment of the Note with
interest and any renewals or extensions thereof, in whole or in
part, and of the additional payments hereinafter agreed to be made,
by a conveyance of the lands and a grant of the security interests
hereinafter described;
NOW, THEREFORE, to secure the repayment of the indebtedness
evidenced by the Note and any extensions or renewals thereof, the
performance of such other obligations of the Grantor as are set
forth herein and the payment of all other sums herein covenanted to
be paid, the Grantor hereby irrevocably grants, transfers, conveys
and assigns to the Trustee, successors and assigns IN TRUST, WITH
POWER OF SALE, for the benefit and security of the Beneficiary,
under and subject to the terms and conditions herein after set
forth, the real property located in the County of Beaufort, State
of North Carolina, described in EXHIBIT A attached hereto and by
this reference incorporated herein (the "Property");
TOGETHER WITH all rents, issues, profits, royalties, income
and other benefits derived from the Property (collectively the
"Rents"), subject to the right, power and authority hereinafter
given to the Grantor to collect and apply such Rents. The Rents
have also been assigned to the Beneficiary pursuant to a separate
Assignment of Rents and Leases of even date herewith (the
"Assignment of Rents");
TOGETHER WITH all leasehold estate, right, title and interest
of the Grantor in and to all leases or subleases covering the
Property or any portion thereof now or hereafter existing or
entered into, and all right, title and interest of the Grantor
thereunder, including, without limitation, all cash or security
deposits, advance rentals and deposits or payments of similar
nature;
TOGETHER WITH all right, title and interest of the Grantor in
and to all options to purchase or lease the Property or any portion
thereof or interest therein, and any greater estate in the Property
owned or hereafter acquired;
TOGETHER WITH all interests, estates or other claims, both in
law and in equity, which the Grantor now has or may hereafter
acquire in the Property;
TOGETHER WITH all easements, rights-of-way and rights used in
connection therewith or as a means of access thereto and all
tenements, hereditaments and appurtenances thereof and thereto;
TOGETHER WITH all right, title and interest of the Grantor,
now owned or hereafter acquired, in and to any land lying within
the right-of-way of any street, open or proposed, adjoining the
Property, and any and all sidewalks, alleys and strips and gores of
land adjacent to or used in connection with the Property;
TOGETHER WITH any and all buildings and improvements now or
hereafter erected thereon, including, but not limited to, all the
Grantor's right, title and interest in and to the fixtures,
attachments, appliances, equipment, machinery, and other articles
attached to the buildings and other improvements on the Property
(hereinafter called the "Improvements");
2
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BK 1063 PG 339
EXHIBIT A
TRACT I:
All that certain tract or parcel of land lying and being situate in
Chocowinity Township, Beaufort County, North Carolina, and being
more particularly described as follows:
Beginning at a point in the southern right-of-way line of NCSR 1166
(Whichards Beach Road); said point being located the following
courses and distances from a concrete monument located at the
southeasternly corner of the subdivision known as Harbor Estates,
as shown on a plat thereof recorded in Plat Cabinet A, Slide 113A
in the office of the Register of Deeds of Beaufort County, North
Carolina (said concrete monument also being the southwesterly
corner of Tract II described below): South 35- 52' 54" East 62.93
feet; South 36- 20' 33" West 30.61 feet; and South 64- 01' 09" East
16.66 feet to a point. THENCE FROM SAID POINT OF BEGINNING BEING
SO LOCATED, along and with the southern right-of-way line of
Whichards Beach Road South 64- 01' 03" East 132.39 feet to a point;
thence South 64- 00' 52" East 49.07 feet to a point; thence South
64- 01' 18" East 50.66 feet to a point; thence South 64- 01' 12"
East 220.27 feet to a point; thence South 64- 01' 09" East 45.61
feet to a point; thence continuing along and with the southern
right-of-way line of NCSR 1166 with a curve to the right in a
southeastwardly direction which has a chord bearing and distance of
South 57- 55' 13" East 341.99 feet to a point; thence South 51- 52'
17" East 22.40 feet to a point; thence continuing South 51- 52' 17"
East 300.00 feet to a point in the southern right-of-way line of
NCSR 1166 (all previous calls being along and with the southern
right-of-way line of NCSR 1166); thence leaving NCSR 1166 South 38-
00' 08" West 140.26 feet to a point; thence South 51- 52' 37" East
31.00 feet to a point; thence South 51- 52' 19" East 131.00 feet to
a point; thence South 38- 00' 08" West 50.00 feet to a point;
thence North 51- 59' 55" West 21.00 feet to a point; thence South
37- 59' 26" West 137.56 feet to a point; thence South 52- 57' 27"
East 107.66 feet to a point; thence South 35- 48' 31" West 49.16
feet to a point; thence South 37- 39' 39" West 149.73 feet to a
point; thence continuing South 37- 39' 39" West 18.38 feet to a
point in a ditch; thence along and with said ditch the following
courses: North 56- 10' 32" West 114.97 feet to a point; North 57-
56' 27" West 120.08 feet to a point; thence North 59- 09' 12" West
105.20 feet to a point; thence North 57- 02' 11" West 105.33 feet
to a point; thence North 64- 27' 40" West 506.54 feet to a point;
thence North 56- 33' 24" West 99.24 feet to a point; thence North
48- 59' 54" West 220.23 feet to a point; thence North 47- 02' 51"
West 145.55 feet to a point; thence North 36- 19' 37" East 158.65
feet to a point; thence North 36- 19' 33" East 51.10 feet to a
point; thence North 36- 20' 24" East 24.66 feet to a point; thence
North 36- 20' 24" East 24.66 feet to a point; thence North 36- 20'
20" East 100.34 feet to a point; thence North 36- 20' 41" East
166.95 feet to a point; thence with a curve to the right (which
curve has radius of 20 feet, a chord bearing
BK 1063 PG 340
and distance of North 76- 08' 47" East 25.60 feet, and an arc
distance of 27.78 feet) to the point of beginning.
Together with a perpetual non-exclusive easement for ingress,
egress and regress across a 60-foot wide private right-of-way
running southwardly from NCSR 1166 at point (C) in the Xxxxx X.
Xxxxx line as shown on the plat entitled "Plan of Land surveyed for
Xxxxxx X. Xxxxx" recorded in Plat Cabinet A, Slide 42A, in the
Beaufort County Registry.
TRACT II:
All that certain tract or parcel of land lying and being situate in
Chocowinity Township, Beaufort County, North Carolina, and being
more particularly described as follows:
Beginning at an existing concrete monument in the northern right-
of-way line of NCSR 1166 (Whichards Beach Road), said concrete
monument being also the southeasterly corner of the subdivision
known as Harbor Estates, as shown on a plat thereof recorded in
Plat Cabinet A, Slide 113A in the office of the Register of Deeds
of Beaufort County, North Carolina. THENCE FROM SAID POINT OF
BEGINNING BEING SO LOCATED, North 30- 36' 00" East 375.64 feet to a
point; thence North 30- 36' 00" East 17.0 feet to a point in a
canal; thence continuing with the canal North 48- 42' 00" East
23.43 feet to a point; thence continuing with the canal North 30-
26' 00" East 476.44 feet to a point; thence North 31- 42' 00" East
427.85 feet to a point in the mean high water line of the Pamlico
River; thence along and with the mean high water line of the
Pamlico River the following courses and distances; North 71- 11'
00" East 88.88 feet to a point; thence North 78- 57' 00" East 77.78
feet to a point; thence North 51- 09' 00" East 53.88 feet to a
point; thence South 21- 39' 00" East 42.48 feet to a point; thence
South 55" 23' 00" East 82.19 feet to a point; thence North 65- 06'
00" East 38.64 feet to a point; thence South 45- 07' 00" East
146.64 feet to a point; thence South 59- 32' 00" East 106.73 feet
to a point; thence South 65- 55' 46" East 91.98 feet to a point;
thence South 87- 44' 21" East 82.14 feet to a point; thence South
83- 21' 00" East 96.80 feet to a point; thence North 78- 56' 00"
East 251.10 feet to a point; thence South 63- 13' 00" East 91.37
feet to a point; thence South 63- 13' 00" East 182.56 feet to a
point; thence South 63- 13' 00" East 107.00 feet to a point; thence
leaving said river South 38- 18' 41 " West 21.94 feet to a concrete
monument; thence continuing South 38- 18' 41" West 701.64 feet to a
concrete monument; thence continuing South 38- 18' 41" West 64.72
feet to a concrete monument; thence continuing South 38- 18' 41"
West 108.03 feet to a concrete monument; thence South 38- 18' 41"
West 106.26 feet to a concrete monument; thence continuing South
38- 18' 41" West 104.29 feet to a concrete monument; thence
continuing South 38- 18' 41" West 102.43 feet to a concrete
monument; thence South 38- 18' 41" West 127.21 feet to a concrete
monument; thence South 38- 18' 41" West 35.74 feet to a concrete
BK 1063 PG 341
monument; thence South 38- 18' 41" West 63.98 feet to a concrete
monument; thence continuing South 38- 18' 41" West 99.54 feet to a
concrete monument; thence continuing South 38- 18' 41" West 99.16
feet to a concrete monument in the northern right-of-way line of
NCSR 1166; thence continuing South 38- 18' 41" West 106.40 feet to
a concrete monument along and with the northern right-of-way line
of NCSR 1166 along a curve to the left in a northwestwardly
direction to a point (which curve has a chord bearing and distance
of North 51- 41' 19" West 100.00 feet); thence continuing along and
with the northern right-of-way line of NCSR 1166 along a curve to
the left in a northwestwardly direction to a point (which curve has
a chord bearing and distance of North 55- 31' 51" West 396.18
feet); thence continuing along and with the northern right-of-way
line of NCSR 1166 North 62- 36' 41" West 58.52 feet to a point;
thence continuing along and with the northern right-of-way line of
NCSR 1166 North 63- 28' 00" West 100.00 feet to a point; ;thence
continuing along and with the northern right-of-way line of NCSR
1166 North 64- 04' 00" West 470.44 feet to the point or place of
beginning.
Together with all property lying between the northern property line
of the above-described property, the eastern and western property
line of the above-described property extended in a northeasterly
direction to the mean high water line of the Pamlico River and the
mean high water line of the southern shore of the Pamlico River.
81-0242 (DV)
12/28/96
XXX/XXX
XXXXXX/000000
BK 1063 PG 342
TOGETHER WITH all right, title and interest of the Grantor in
and to all tangible and intangible personal property now or
hereafter owned or leased by the Grantor relating to or associated
with the property, including, without limitation, all the Grantor's
right, title and interest in, to and under (a) all furniture,
furnishings, machinery, apparatus, equipment, fittings, fixtures
and other articles of tangible personal property now owned or
leased or hereafter acquired by the Grantor and now or at any time
hereafter located on or at the Property and the Improvements now or
hereafter erected thereon or used in connection with the Property
and/or the Improvements, and the operation and maintenance thereof;
(b) all proceeds or sums payable in lieu of or as compensation for
the loss or damage to any property described in (a) above or to the
Property or the Improvements; (c) all rights in and to all
pertinent present and future fire and/or hazard insurance policies
(including, but not limited to, insurance proceeds) covering the
Property, the Improvements or the property described in (a) above;
(d) all awards made by any public body or decreed by any court of
competent jurisdiction for a taking or for degradation of value of
the Property, the Improvements or the property described in (a)
above in any eminent domain proceeding and all payments made in
respect of a conveyance made in lieu of any such taking; (e) all
proceeds of every kind and description of the property described in
clauses (a) through (d) above (all of the foregoing is referred to
herein collectively as the "Personal Property");
TOGETHER WITH all other interest of every kind and character
which the Grantor now has or at any time hereafter acquires, in and
to the real and personal property described herein, and all
property which is used or useful in connection therewith, including
rights of ingress and egress and all reversionary rights or
interests of the Grantor with respect to such property; and any
proceeds thereof (including insurance proceeds), any additions and
accessions thereto, and any replacements or renewals of all of the
foregoing;
TOGETHER WITH all the estate, interest, right, title, other
claim or demand, including claims or demands with respect to the
proceeds (including premium refunds) of insurance in effect with
respect to the Trust Estate, as herein defined, which the Grantor
now has or may hereafter acquire in the Property and Improvements,
and any and all awards made for the taking by eminent domain, or by
any proceeding or purchase in lieu thereof, of the whole or any
part of the Trust Estate (as hereinafter defined), including
without limitation, any awards resulting from a change of grade of
streets and awards for severance damages;
TOGETHER WITH all (to the full extent legally assignable)
licenses, permits and authorizations (issued in the name of the
Grantor) necessary for the operation of the Property and
Improvements as a boat manufacturing facility;
The entire estate, property and interest hereby conveyed to
the Trustee may be hereinafter referred to as the "Trust Estate".
TO HAVE AND TO HOLD the Property and Improvements, with all
rights, privileges and appurtenances thereunto belonging or
appertaining, as hereinabove described, to the Trustee, his heirs,
successors and assigns in fee simple forever, upon the trusts and
for the uses and purposes hereinafter set forth;
AND THE GRANTOR COVENANTS WITH THE TRUSTEE that it is seized
of the Property and Improvements in fee simple and has the right to
convey the same; that it will warrant and
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BK 1063 PG 343
defend the title to the Trust Estate against the lawful claims of
all persons whomsoever and that the Property and Improvements are
free and clear of all liens and encumbrances, except those set
forth in EXHIBIT B attached hereto and incorporated herein by
reference.
THIS CONVEYANCE IS MADE IN TRUST
FOR THE PURPOSES OF SECURING
a. Payment of the indebtedness in the maximum principal
amount of $10,000,000.00, with interest thereon, evidenced by the
Note executed by the Grantor, which has been delivered to and is
payable to the order of the Beneficiary, and which by this
reference is hereby made a part hereof, and any and all
modifications, extensions and renewals thereof. This Deed of Trust
also secures all attorney's fees, court costs and expenses of
whatever kind incident to the collection of the indebtedness and
the enforcement or protection of the Beneficiary's interest under
this Deed of Trust;
b. Payment of all sums advanced by the Beneficiary to protect
the Trust Estate, with interest thereon at the Default Rate, as
defined in the Note;
c. Performance of the Grantor's obligations and agreements
contained in this Deed of Trust, the Note, the Assignment of Rents,
that certain Master Security Agreement of even date herewith
between the Grantor and the beneficiary (the "Security Agreement"),
the Loan Agreement and any other instrument or modifications or
amendments thereof given to evidence or further secure the payment
and performance of any obligation secured hereby.
This Deed of Trust, the Note, the Assignment of Rents, the
Security Agreement, the Loan Agreement, and any other instrument
given to evidence or further secure the payment and performance of
any obligation secured hereby may hereafter be referred to herein
as the "Loan Instruments."
PROVIDED, HOWEVER, if the Grantor shall pay the Note secured
hereby in accordance with its terms, together with interest
thereon, and any renewals or extensions thereof, and any advances
made by the Beneficiary for the protection of the Trust Estate, and
shall comply with all of the Grantor's covenants, terms and
conditions contained in this Deed of Trust, then this conveyance
shall be null and void and shall be canceled of record by the
Beneficiary at the request and at the cost of the Grantor.
TO PROTECT THE SECURITY OF THIS DEED OF TRUST, THE GRANTOR
HEREBY COVENANTS AND AGREES AS FOLLOWS:
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BK 1063 PG 344
EXHIBIT B
Permitted Exceptions
Permitted Exceptions consist of the exceptions set forth in
Schedule B - Section 2 (Exceptions) in the title insurance
commitment issued by Fidelity National Title Insurance Company of
Pennsylvania for this loan.
WSMAIN/205912
BK 1063 PG 345
ARTICLE I
COVENANTS AND AGREEMENTS OF THE GRANTOR
1.01 Payment of Secured Obligations. The Grantor covenants
and agrees to pay when due the principal of, and the interest on,
the indebtedness evidenced by the Note, charges, fees and all
other sums as provided in the Loan Instruments, and the principal
of, and interest on, any advances made by the Beneficiary to
protect the Property or the Improvements, the repayment of which
is secured by this Deed of Trust.
1.02 Maintenance, Repair, Alterations. The Grantor
covenants and agrees to keep the Trust Estate in good conditions
and repair; not to remove, demolish or substantially alter
(except such alterations as may be required by laws, ordinances
or regulations or as may not materially adversely affect the
value of the Improvements and except such non-structural
demolition and renovation of tenant space as may be deemed
necessary or appropriate by the Grantor in connection with
preparing such space for leasing) any of the Improvements; to
complete promptly and in a good and workmanlike manner any
Improvements and to promptly restore in like manner any of the
Improvements which may be damaged or destroyed and to pay when
due all claims for labor performed and materials furnished
therefor; to comply with all laws, ordinances, regulations,
covenants, conditions and restrictions now or hereafter affecting
the Trust Estate or any part thereof or requiring any alterations
or improvements; not to commit or permit any waste or
deterioration of the Trust Estate; to keep and maintain grounds,
sidewalks, and landscape areas located on the Property in good
and neat order and repair; to comply with the provisions of any
lease, if this Deed of trust is on a leasehold; not to commit,
suffer or permit any act to be done in or upon the Trust Estate
in violation of any law, ordinance or regulation or provision of
any lease the violation of which could result in a termination of
such leasehold. Notwithstanding the foregoing, the Grantor's
obligation to repair and restore the Improvements following any
casualty damage or any Condemnation (as defined in Section 1.14
below) shall be subject to the terms and provisions in Sections
1.05 and 1.14 below.
1.03 Required Insurance. The Grantor covenants and agrees
at all times to provide, maintain and keep in force (or to cause
to be provided, maintained, and kept in force) the following
policies of insurance:
(a) Insurance against loss or damage to the Improvements by
fire and any of the risks covered by insurance of the type now
known as "special cause of loss," in an amount not less than (1)
the original principal amount of the Note or (2) the full
insurable value of the Improvements, including cost of the debris
removal (exclusive of the cost of excavations, foundations, and
footings below the lowest basement floor), whichever is greater,
with not more than a $50,000 deductible from the loss payable for
any casualty. The policies of insurance carried in accordance
with this subparagraph (a) shall contain the "Replacement Cost
Endorsement";
(b) Commercial general liability insurance (including
coverage for elevators and escalators, if any, on the Trust
Estate) on an "occurrence basis" against claims for "personal
injury," including, without limitation, bodily injury, death or
property damage occurring on, in or about the Trust Estate and
the adjoining streets, sidewalks and passageways, such insurance
to afford immediate minimum protection to a limit of not less
than $3 million for personal injury or death to any one or more
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persons or damage to property with respect to any one or more
occurrences and $4 million for all such occurrences in the
aggregate;
(c) During the course of any construction or repair of
Improvements on the Property, workers' compensation insurance
(including employer's liability insurance, if requested by the
Beneficiary) for all employees of the Grantor engaged on or with
respect to the Trust Estate in such amount as is reasonably
satisfactory to the Beneficiary, or, if such limits are
established by law, in such amounts;
(d) During the course of any construction or repair of
Improvements on the Property, builder's completed value insurance
against those risks of loss covered by the "special cause of
Loss" form, including collapse and transit coverage, during
construction of such Improvements, with deductibles not to exceed
$50,000, in nonreporting form, covering the total insurable value
of work performed and equipment, supplies and materials
furnished, with the policy of insurance to contain the
"permission to occupy upon completion of work or occupancy"
endorsement;
(e) Boiler and machinery insurance covering pressure
vessels, air tanks, boilers, machinery, pressure piping, heating,
air conditioning and elevator equipment and escalator equipment,
provided the improvements contain equipment of such nature, and
insurance against loss of occupancy or use arising from any
breakdown of any of the items referred to in this subparagraph
(e), in such amounts as are reasonably satisfactory to the
Beneficiary;
(f) Insurance against loss or damage to the Personal
Property by fire and other risks covered by insurance of the type
now known as "special cause of loss,"
(g) Business income insurance and/or loss of "rental value"
insurance in such amounts as are reasonably acceptable to the
Beneficiary; and
(h) Such other insurance and in such amounts as may from
time to time be maintained by similar businesses using prudent,
commercially reasonable judgment.
All policies of insurance required by the terms of this Deed
of Trust shall contain an endorsement or agreement by the
insurer, if such an endorsement is generally obtainable from
insurance companies, that any loss shall be payable in accordance
with the terms of such policy notwithstanding any act or
negligence of the Grantor which might otherwise result in
forfeiture of such insurance and the further agreement of the
insurer waiving all rights of setoff, counterclaim or deductions
against the Grantor.
1.04 Delivery of Policies, Payment of Premiums. All
policies of insurance shall be issued by companies and in amounts
in each company satisfactory to the Beneficiary in its sole
discretion. All policies of insurance [except for that required
in Section 1.03(b)] shall have attached thereto a lender's loss
payable endorsement for the benefit of the Beneficiary in a form
satisfactory to the Beneficiary. The grantor shall provide to
the Beneficiary certificates of insurance with respect to the
policies required hereunder. If requested by the Beneficiary,
the Grantor shall furnish the Beneficiary with an original policy
of all policies of required insurance or certified copies of such
policies. If the Beneficiary consents to the Grantor providing
any of the required insurance through blanket policies
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BK 1063 PG 347
carried by the Grantor and covering more than one location, then
the Grantor shall furnish the Beneficiary with a certificate of
insurance for each such policy setting forth the coverage, the
limits of liability as to the Trust Estate, the name of the
carrier, the policy number, and the expiration date. At least
fifteen (15) days prior to the expiration of each such policy,
the Grantor shall furnish the Beneficiary with evidence
satisfactory to the Beneficiary of the reissuance of continuation
of a policy continuing insurance in force as required by this
Deed of Trust. The Grantor shall pay al insurance premiums
promptly as billed by the issuing insurance companies, and in any
event prior to delinquency; and the Grantor shall furnish the
Beneficiary with evidence satisfactory to the Beneficiary of the
timely payment of such insurance premiums. To the extent such
endorsements can be generally obtained from insurance companies,
all such policies shall contain a provision that such policies
will not be canceled including any reduction in the scope or
limits of coverage) without at least thirty (30) days prior
written notice to the Beneficiary. In the event the Grantor
fails to provide, maintain, keep in force or deliver and furnish
to the Beneficiary the polices of insurance required by this Deed
of Trust, the Beneficiary may procure such insurance or single-
interest insurance for such risks covering the Beneficiary's
interest. The Grantor will pay all premiums thereon promptly
upon demand by the Beneficiary. Until the Grantor makes such
payment, the amount of all such premiums, together with interest
thereon at the Default Rate, shall be secured by this Deed of
Trust.
Upon written request by the Beneficiary, the Grantor shall
deposit with an escrow agent selected by the Beneficiary (such
party being hereinafter referred to as the "Escrow Agent") in
monthly installments an amount equal to one-twelfth (1/12) of the
estimated aggregate annual insurance premiums on all policies of
insurance required by this Deed of Trust in order to accumulate
sufficient funds to pay such premiums 30 days prior to their due
date. In such case, should the Grantor fail to deposit sums
sufficient to fully pay such insurance premiums at least thirty
(30) days before delinquency thereof, the Beneficiary may, at the
Beneficiary's election (but shall not be obligated to), advance
any amounts required to make up the deficiency. Such advances,
if any, shall be secured hereby and, together with interest
thereon, shall be repayable to the Beneficiary in like manner as
herein elsewhere provided for the repayment on sums advanced by
the Beneficiary to pay insurance premiums. At the option of the
Beneficiary, if the Grantor has failed to deposit sufficient
funds to fully pay such insurance, the Beneficiary instead may,
without making any advance whatever, apply any sums held by the
Escrow Agent upon any obligation of the Grantor secured hereby
following the occurrence of an Event of Default. Should any
Event of Default (as hereinafter defined) occur or exist on the
part of the Grantor in the payment or performance of any of the
Grantor's obligations under the terms of the Loan Instruments,
the Beneficiary may apply any sums or amounts in its hands
received as rents or income of the Trust Estate, or otherwise,
upon any indebtedness or obligation of the Grantor secured hereby
in such manner and order as the Beneficiary may elect. The
receipt, use or application of any such sums paid by the Grantor
to the Escrow Agent hereunder shall not be construed to affect
the maturity of any indebtedness secured by this Deed of Trust or
any of the rights or powers of the Beneficiary or the Trustee
under the terms of the Loan Instruments or any of the obligations
of the Grantor.
The Grantor further agrees, upon the Beneficiary's request,
to cause originals or true and complete copies of all bills,
statements and other documents relating to the foregoing
insurance premiums to be sent or mailed directly to the
Beneficiary. Upon receipt of such bills, statements or other
documents, and provided the Grantor has deposited sufficient
funds pursuant to this Section 1.04, the Escrow Agent, upon
instructions from the Beneficiary, shall pay such amounts as may
be due thereunder out of the funds so deposited. If at any time
and for any reason such funds are or will be insufficient to
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pay such amounts as may then or subsequently be due, the
Beneficiary shall so notify the Grantor, and the Grantor shall
immediately deposit an amount equal to such deficiency with the
Escrow Agent. Notwithstanding the foregoing, nothing contained
herein shall cause the Beneficiary or the Escrow Agent to be
obligated to pay any amounts in excess of the amount of funds
deposited with the Escrow Agent pursuant to this Section 1.04.
The Escrow Agent may commingle the reserve with its own funds,
and the Grantor shall be entitled to no interest thereon.
1.05 Insurance Proceeds. After the happening of any
casualty to the Trust Estate or any part thereof, the Grantor
shall give prompt written notice thereof to the Beneficiary and
shall, whether or not any insurance proceeds are available or
adequate for such purpose and regardless of the dollar amount of
such damage or loss, with reasonable diligence, at the Grantor's
own sole cost and expense, repair, restore or reconstruct the
Improvements or the portion thereof so damaged.
(a) In the event of any damage or destruction of the
Improvements, the Beneficiary shall have the option in its sole
discretion of applying all or part of the insurance proceeds (i)
to any indebtedness secured hereby and in such order as the
Beneficiary may determine, or (ii) to the restoration of the
Improvements, or (iii) to the Grantor.
(b) In the event of such loss or damage, all proceeds of
insurance shall be payable to the Beneficiary. The Grantor
hereby authorizes and directs any affected insurance company to
make payment of such proceeds directly to the Beneficiary. The
Grantor hereby authorizes and empowers the Beneficiary to settle,
adjust or compromise any claims for loss, damage or destruction
under any policy or policies of insurance.
(c) The Grantor's obligation under this Deed of Trust to
repair and restore the Trust Estate following any casualty damage
shall be limited to the extent that, pursuant to Section 1.05(a)
above or any other Loan Instrument, the Beneficiary elects not to
make the insurance proceeds available to the Grantor to fund such
repair and restoration. Except to the extent that insurance
proceeds are received by the Beneficiary and applied to the
indebtedness secured hereby, nothing herein contained shall be
deemed to excuse the Grantor from repairing or maintaining the
Trust Estate as provided in Section 1.02 hereof or restoring all
damage or destruction to the Trust Estate, regardless of the
availability or sufficiency of insurance proceeds.
(d) The application or release by the Beneficiary of any
insurance proceeds pursuant to this Deed of Trust shall not cure
or waive any default or notice of default under this Deed of
Trust or invalidate any act done pursuant to such notice.
1.06 Assignment of Policies upon Foreclosure. In the event
of foreclosure of this Deed of Trust or other transfer of title
or assignment of the Trust Estate in extinguishment, in whole or
in part, of the debt secured hereby, all right, title and
interest of the Grantor in and to all policies of insurance
required by this Deed of Trust, including refunds of premiums
thereon, (unless insurance is provided by a so-called "blanket"
policy covering multiple property locations) shall inure to the
benefit of and pass to the successor in interest to the Grantor
or the purchaser or grantee of the Trust Estate. To the extent
that the policies will not permit such rights and benefits to
pass automatically, the Grantor shall execute such documentation
(and forward such refunds of premiums for such policies) to
effectuate the intent of this Section.
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1.07 Indemnification; Subrogation; Waiver of Offset.
(a) If the Beneficiary is made a party defendant to any
proceeding or litigation concerning this Deed of Trust or the
Trust Estate or any part thereof or interest therein, or the
occupancy thereof by the Grantor, then the Grantor shall
indemnify, defend and hold the Beneficiary and the Trustee
harmless from all liability by reason of such proceeding or
litigation, including attorneys' fees and expenses incurred by
the Beneficiary or the Trustee in any such proceeding or
litigation, whether or not any such proceeding or litigation is
prosecuted to judgment. If the Beneficiary or the Trustee
commences an action against the Grantor to enforce any of the
terms hereof or because of the breach by the Grantor of any of
the terms hereof, or for the recovery of any sum secured hereby,
the Grantor shall pay to the Beneficiary or the Trustee, as the
case may be, attorneys' fees and expenses. The right to such
attorneys' fees and expenses shall be deemed to have accrued on
the commencement of such action and shall be enforceable whether
or not such action is prosecuted to judgment or otherwise
completed. If the Grantor breaches any term of this Deed of
Trust, the Beneficiary or the Trustee may employ an attorney or
attorneys to protect its rights hereunder. In the event of such
employment following any breach by the Grantor, the Grantor shall
pay the Beneficiary or the Trustee, as the case may be,
attorneys' fees and expenses incurred by such party, whether or
not an action is actually commenced against the Grantor by reason
of such breach.
(b) The Grantor waives any and all right to claim or
recover against the Trust and the Beneficiary, its officers,
employees, agents and representatives, for loss of or damage to
the Grantor, the Trust Estate, the Grantor's property or the
property of others under the Grantors control from any cause
insured against or required to be insured against by the
provisions of this Deed of Trust.
(c) All sums payable by the Grantor hereunder shall be paid
without notice, demand, counterclaim, setoff, deduction or
defense and without abatement, suspension, deferment, diminution
or reduction. The obligations and liabilities of the Grantor
hereunder shall in no way be released, discharged or otherwise
affected (except as expressly provided herein) by reason of: (i)
any damage to or destruction of or any condemnation or similar
taking of the Trust Estate or any part thereof; (ii) any
restriction or prevention of or interference with any use of the
Trust Estate or any part thereof; (iii) any title defect or
encumbrance or any eviction from the Property or the Improvements
or any part thereof by title paramount or otherwise; (iv) any
bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation, or other like proceeding relating to
the Beneficiary or the Grantor, or any action taken with respect
to this Deed of Trust by any trustee or receiver of the
Beneficiary or the Grantor, or by any court, in any such
proceeding; (v) any claim which the Grantor has, or might have,
against the Beneficiary; (vi) any default or failure on the part
of the Beneficiary to perform or comply with any of the terms
hereof or of any other agreement with the Grantor; or (vii) any
other occurrence whatsoever, whether similar or dissimilar to the
foregoing, whether or not the Grantor shall have notice or
knowledge of any of the foregoing. Except as expressly provided
herein and to the extent waivable by the Grantor, the Grantor
waives all rights now or hereafter conferred by statute or
otherwise to any abatement, suspension, deferment, diminution, or
reduction of any sum secured hereby and payable by the Grantor.
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1.08 Taxes and Impositions.
(a) Subject to its obligations under Section 1.08(e) below,
the Grantor agrees to pay, at least ten days prior to
delinquency, all applicable real property and personal property
taxes and assessments, general and special; all applicable
payments in lieu of taxes; and all other applicable taxes, fees
and assessments of any kind or nature whatsoever (including,
without limitation, nongovernmental review or assessments such as
maintenance charges; owner association dues, charges or fees;
levies or charges resulting from covenants, conditions and
restrictions affecting the Trust Estate) which are assessed or
imposed upon the Trust Estate, or become due and payable, and
which create, may create or appear to create a lien upon the
Trust Estate, or any part thereof, or upon any Personal Property,
equipment or other facility used in the operation or maintenance
thereof (all of which taxes, assessments and other governmental
and nongovernmental charges of like nature are hereinafter
referred to as "Impositions"). If, by law, any such Imposition
is payable, of may, at the option of the taxpayer, be paid in
installments, the Grantor may pay the same, together with any
accrued interest on the unpaid balance of such Impositions, in
installments as the same become due and before any fine, penalty,
interest or cost may be added thereto for the nonpayment of any
such installment and interest.
(b) If at any time after the date hereof there shall be
assessed or imposed (i) a tax or assessment on the Trust Estate
in lieu of or in addition to the Imposition payable by the
Grantor pursuant to subparagraph (a) hereof, or (ii) a license,
fee, tax or assessment imposed on the Beneficiary and measured by
or based in whole or in part upon the amount of the outstanding
obligations secured hereby, then all such taxes, assessments or
fees shall be deemed to be included within the term "Impositions"
as defined in subparagraph (a) hereof. The Grantor shall pay and
discharge such Impositions as herein provided with respect to the
payment of other Impositions. Anything to the contrary herein
not withstanding, the Grantor shall have no obligation to pay any
franchise, estate, inheritance, income, excess profits or similar
tax levied on the Beneficiary or on the obligations secured
hereby.
(c) Subject to the provisions of Section 1.08(d) below, the
Grantor covenants to furnish the Beneficiary, within thirty (30)
days after the date upon which any such Imposition must be paid
by the Grantor in order to avoid a delinquency, official receipts
of the appropriate taxing authority, or other proof satisfactory
to the Beneficiary, evidencing the payments thereof.
(d) The Grantor shall have the right before any delinquency
occurs to contest or object to the amount or validity of any such
Imposition by appropriate legal proceedings. This right shall
not be deemed or construed in any way as relieving, modifying or
extending the Grantor's covenant to pay any such Imposition at
the time and in the manner provided in this Section 1.08, (1)
unless the Grantor gives prior written notice to the Beneficiary
of the Grantor's contest of any Imposition within three (3) days
of filing such contest, and (2) unless, at the Beneficiary's sole
option, (i) the Grantor demonstrates to the Beneficiary's sole
satisfaction that the legal proceedings shall conclusively
operate to prevent the sale of the Trust Estate or any part
thereof to satisfy such Imposition prior to final determination
of such proceedings; or (ii) the Grantor shall furnish a good and
sufficient bond or surety as requested by and satisfactory to the
Beneficiary; or (iii) the Grantor shall have provided a good and
sufficient undertaking as may be required or permitted by law to
accomplish a stay of such proceedings.
(e) The Grantor shall pay to the Escrow Agent on the day
monthly installments of principal and interest are payable under
the Note, until the Note is paid in full, an amount equal to one-
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twelfth of the annual Impositions reasonably estimated by the
Beneficiary to pay at least thirty (30) days prior to their
delinquency the installment of taxes (or payment due in lieu of
taxes) next due on the Trust Estate. The Grantor further agrees
to cause originals or true and complete copies of all bills,
statements, and other documents relating to Impositions to be
sent or mailed directly to the Beneficiary. Upon receipt of such
bills, statements and other documents, and provided the Grantor
has deposited sufficient funds with the Escrow Agent pursuant to
this Section 1.08, the Escrow Agent, upon instructions from the
Beneficiary, shall pay such amounts as may be due thereunder out
of the funds so deposited. If at any time and for any reason
such funds deposited are or will be insufficient to pay such
amounts as may then or subsequently be due, the Beneficiary shall
so notify the Grantor and the Grantor shall immediately deposit
an amount equal to such deficiency with the Escrow Agent.
Notwithstanding the foregoing, nothing contained herein shall
cause the Beneficiary or the Escrow Agent to be obligated to pay
any amounts in excess of the amount of funds so deposited
pursuant to this Section 1.08. The Escrow Agent may commingle
the reserve with its own funds and shall not be obligated to pay
or allow any interest on any sums so held pending disbursement or
application hereunder. Should the Grantor fail to deposit with
the Escrow Agent sums sufficient to fully pay such Impositions at
least thirty (30) days before delinquency thereof, the
Beneficiary may, at the Beneficiary's election (but shall not be
obligated to), advance any amounts required to make up the
deficiency. Such advances, if any, shall be secured hereby and,
together with interest thereon, shall be repayable to the
Beneficiary in like manner as herein elsewhere provided for the
repayment on sums advanced by the Beneficiary to pay insurance
premiums. At the option of the Beneficiary, if the Grantor has
failed to deposit such funds sufficient to fully satisfy the
Impositions, the Beneficiary instead may, without making any
advance whatever, apply any sums held by the Escrow Agent upon
any obligation of the Grantor secured hereby following the
occurrence of an Event of Default. Should any Event of Default
occur or exist on the part of the Grantor in the payment or
performance of any of the Grantor's obligations under the terms
of the Loan Instruments, the Beneficiary may apply any sums or
amounts in its hands received as rents or income of the Trust
Estate, or otherwise, upon an indebtedness or obligation of the
Grantor secured hereby in such manner and order as the
Beneficiary may elect. The receipt, use or application of any
sums paid by the Grantor to the Escrow Agent hereunder shall not
be construed to affect the maturity of any indebtedness secured
by this Deed of Trust or any of the rights or powers of the
Beneficiary or the Trustee under the terms of the Loan
Instruments or any of the obligations of the Grantor under any of
the Loan Instruments.
(f) The Grantor covenants and agrees not to suffer, permit
or initiate the joint assessment of the real and personal
property herein described as the Trust Estate with any other real
and personal property of the Grantor or any other procedure
whereby the lien of the real property and personal property taxes
shall be assessed, levied or charged to the Trust Estate and
other real and personal property of the Grantor as a single lien.
The Grantor agrees to furnish to the Beneficiary documentation
establishing to the Beneficiary's satisfaction that the Trust
Estate is not taxed together with other real or personal
property.
1.09 Utilities. The Grantor covenants and agrees to pay
when due all utility charges which are incurred by the Grantor
for the benefit of the Trust Estate or which may become a charge
or lien against the Trust Estate for gas, electricity, water or
sewer services furnished to the Trust Estate and all other
assessments or charges of a similar nature, whether public or
private, affecting the Trust Estate or any portion thereof,
whether or not such taxes, assessments or charges are liens
thereon.
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1.10 Licenses, Permits and Authorizations. The Grantor
covenants and agrees to apply for, obtain and continue in full
force all licenses, authorizations and permits necessary for the
operation of the Property and Improvements as a boat
manufacturing facility.
1.11 Actions Affecting Trust Estate. The Grantor covenants
and agrees to appear in and contest any action or proceeding
purporting to affect the security hereof or the rights or powers
of the Beneficiary or the Trustee, and to pay all costs and
expenses (including cost of evidence of title and attorneys'
fees) in any such action or proceeding in which the Beneficiary
or the Trustee may appear.
1.12 Actions By the Trustee and/or the Beneficiary to
Preserve Trust Estate. Should the Grantor fail to make any
payment or to do any act as and in the manner provided in any of
the Loan Instruments, the Beneficiary and/or the Trustee, each in
its own discretion, without notice to or demand upon the Grantor
(except as may be otherwise provided herein) and without
releasing the Grantor from any obligation, may (but shall not be
obligated to) make or do the same in such manner and to such
extent as either may deem necessary to protect to security
hereof. In connection therewith (without limiting their general
powers), the Beneficiary and/or the Trustee shall have, and are
hereby given, the right, but not the obligation, upon the
occurrence of such a failure as hereinabove described, (i) to
enter upon and take possession of the Trust Estate (ii) to make
additions, alterations, repairs and improvements to the Trust
Estate which they or either of them may consider necessary or
proper to keep the Trust Estate in good condition and repair;
(iii) to appear and participate in any action or proceeding
affecting or which may affect the security hereof or the rights
or powers of the Beneficiary or the Trustee; (iv) to pay,
purchase, contest, or compromise any encumbrance, claim, charge,
lien or debt which in the sole judgment of either affects the
security of this Deed of Trust or is prior or superior hereto
(excluding easements, encroachments, leases and subleases
existing as of the date of this Deed of Trust which have been
disclosed to the Beneficiary); and (v) in exercising such powers,
to pay necessary expenses, including employment of counsel or
other necessary or desirable consultants. the Grantor shall,
immediately upon demand therefor by the Beneficiary or the
Trustee, as the case may be, pay all costs and expenses incurred
by such party in connection with the exercise by such party of
the foregoing rights, including without limitation, costs of
evidence of title, court costs, appraisals, surveys and
attorneys' fees.
1.13 Further Assurances. At any time, and from time to
time, upon request by the Beneficiary, and provided the request
does not increase the Grantor's obligations under the Loan
Instruments, the Grantor will execute and deliver to the
Beneficiary and, where appropriate, cause to be recorded and/or
filed and from time to time thereafter to be re-recorded and or
refiled at such time and in such offices and places as shall be
reasonably required by the Beneficiary, any and all such other
and further deeds of trust, security agreements, financing
statements, continuation statements, instruments of further
assurance, certificates and other documents as may, in the
reasonable opinion of the Beneficiary, be necessary or desirable
in order to effectuate, complete or perfect , or to continue and
preserve (i) the obligation of the Grantor under the Note and
under this Deed of Trust and (ii) the security interest created
by this Deed of Trust as a first and prior security interest upon
security title in and to all of the Trust Estate, whether now
owned or hereafter acquired by the Grantor. Upon any failure by
the Grantor so to do, the Beneficiary may execute, record, file,
re-record and/or refile any and all such deeds of trust, security
agreements, financing statements, continuation statements,
instruments, certificates and documents for and in the name of
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the Grantor, and the Grantor hereby irrevocable appoints the
Beneficiary the agent and attorney-in-fact of the Grantor so to
do.
1.14 Eminent Domain. Should the Trust Estate, or any part
thereof or interest therein, be taken or damaged by reason of any
public improvement or condemnation proceeding, or in any other
manner ("Condemnation"), or should the Grantor receive any notice
or other information regarding such proceeding, the Grantor shall
give prompt written notice thereof to the Beneficiary.
(a) The Beneficiary shall be entitled to all compensation,
awards and other payments or relief for Condemnation to the
extent of the outstanding indebtedness and unpaid interest
thereon and all other sums secured by this Deed of Trust. The
Beneficiary shall be entitled, at its option, to commence, appear
in and prosecute in its own name any action or proceedings (and
shall also be entitled to make any compromise or settlement) in
connection with such taking or damage. All such compensation,
awards, damages, rights of action and proceeds awarded to the
Grantor (the "Proceeds") are hereby assigned to the Beneficiary.
The Grantor covenants and agrees to execute such further
assignments of the Proceeds as the Beneficiary or the Trustee may
require.
(b) In the event any portion of the Trust Estate is so
taken or damaged, the Beneficiary shall have the option, in its
sole and absolute discretion (with or without causing the entire
indebtedness evidenced by the Note to be accelerated) to apply
all such Proceeds, after deducting therefrom all costs and
expenses (regardless of the particular nature thereof and whether
incurred with or without suit), including attorneys' fees,
incurred by it in connection with such Proceeds, upon any
indebtedness secured hereby and in such order as the Beneficiary
may determine, or (without accelerating the indebtedness) to
apply all such Proceeds after such deductions, to the restoration
of the Trust Estate upon such conditions as the Beneficiary may
determine.
(c) If less than the entire Trust Estate is taken in the
Condemnation and if the Trust Estate remaining after the
Condemnation is capable of being repaired and restored to an
architectural, functional and economic whole, the Grantor shall,
at the Grantor's cost and expense, so repair and restore the
remaining portion of the Trust Estate with reasonable diligence;
provided, however, the Grantor's obligation under this Deed of
Trust to repair and restore the remaining portion of the Trust
Estate following any Condemnation shall be limited to the extent
that, pursuant to Section 1.14(b) above or any other Loan
Instrument, the Beneficiary elects not to make the proceeds
available to the Grantor to fund such repair and restoration.
(d) The application or release by the Beneficiary of any
Condemnation Proceeds pursuant to this Deed of Trust shall not
cure or waive any default or notice of default under this Deed of
Trust or invalidate any act done pursuant to such notice.
1.15 Additional Security. In the event the Beneficiary at
any time holds additional security for any of the obligations
secured hereby, it may enforce the sale thereof or otherwise
realize upon the same, at its option, either before, concurrently
with or after a sale made hereunder.
1.16 Appointment of Successor Trustee. The Beneficiary
shall at any time have the irrevocable right to remove the
Trustee herein named without notice or cause and to appoint his
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successor by an instrument in writing, duly acknowledged, in such
form as to entitle such written instrument to be recorded in the
State of North Carolina. In the event of the death or
resignation of the Trustee herein named, the Beneficiary shall
have the right to appoint his successor by such written
instrument. Any Trustee so appointed shall be vested with the
title to the Trust Estate and shall possess all the powers,
duties and obligations herein conferred on the Trustee in the
same manner and to the same extent as though he were named herein
as the Trustee.
1.17 Inspections. The Beneficiary, or its agents,
representatives or workers are authorized to enter at any
reasonable time upon or in any part of the Trust Estate for the
purpose of inspecting the Trust Estate and performing any of the
acts it is authorized to perform under the terms of any of the
Loan Instruments. The Beneficiary and its agents, however, shall
conduct such inspections in such a manner that does not interfere
unreasonably with any tenant's operations and in accordance with
the terms of all leases affecting or encumbering the Trust
Estate.
1.18 Liens. The Grantor covenants and agrees to pay and
promptly discharge, a t the Grantor's cost and expense, all
liens, encumbrances and charges upon the Trust Estate, or any
part thereof or interest therein. The existence of any
mechanic's laborer's, materialman's, supplier's or vendor's lien
or right thereto shall not constitute a violation of this Section
if payment is not yet due under the contract which is the
foundation thereof and if such contract does not postpone payment
for more than sixty (60) days after the performance thereof. The
Grantor shall have the right to contest in good faith the
validity of any such lien, encumbrance or charge, provided the
Grantor shall first deposit with the Beneficiary a bond or other
security satisfactory to the Beneficiary in such amounts as the
Beneficiary shall reasonably require (but not more than one and
one-half (1-1/2) times the amount of the claim) and provided
further that the Grantor shall thereafter diligently proceed to
cause such lien, encumbrance or charge to be removed and
discharged. If the Grantor shall fail to discharge any such
lien, encumbrance or charge or provide such reasonable security,
then, in addition to any other right or remedy of the
Beneficiary, the Beneficiary may (but shall not be obligated to)
discharge the same, either by paying the amount claimed to be
due, or by procuring the discharge of such lien by depositing in
court a bond for the amount claimed or otherwise giving security
for such claim, or in such manner as is or may be prescribed by
law. The Beneficiary shall be entitled to recover from the
Grantor all expenses it incurs in discharging such a lien
(including, but not limited to, its attorneys' fees), in addition
to the amount paid by the Beneficiary for such discharge.
1.19 Trustee's Powers. At any time, or from time to time,
without liability therefor and without notice, upon written
request of the Beneficiary and presentation of this Deed of Trust
and the Note secured hereby for endorsement, and without
affecting the personal liability of any remainder of the Trust
Estate, the Trustee may (i) release or reconvey any part of the
Trust Estate, (ii) consent in writing to the recording of any map
or plat thereof, (iii) join in granting any easement with respect
to the Trust Estate, (iv) or join in any extension agreement or
any agreement subordinating the lien or charge hereof.
1.20 Beneficiary's Powers. Without affecting the liability
of any other person liable for the payment of any obligation
herein mentioned, if any, and without affecting the lien or
charge of this Deed of Trust upon any portion of the Trust Estate
not then or theretofore released as security
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for the full amount of all unpaid obligations, the Beneficiary
may, from time to time and without notice, (i) release any person
so liable, (ii) extend the maturity or alter any of the terms of
any such obligation, (iii) grant other indulgences, (iv) release
or reconvey (or cause to be released or reconveyed at any time at
the Beneficiary's option) any parcel, portion or all of the Trust
Estate, (v) take or release any other or additional security for
any obligation herein mentioned, (vi) make compositions or other
arrangements with debtors in relation thereto or (vii), as
provided herein, advance additional funds to protect the security
hereof or pay discharge the obligations of the Grantor hereunder,
or under the Loan Instruments, and all amounts so advanced, with
interest thereon, at the Default Rate, shall be secured hereby.
The Grantor consents that the provisions of N.C. Gen. Stat. 45-
45.1 or any similar statute hereafter enacted in replacement or
in substitution thereof shall be inapplicable to this Deed of
Trust.
1.21 Operating Statements; Financial Statements. The
Grantor will cause to be delivered to the Beneficiary financial
information and reports required by the Loan Agreement.
1.22 Filings and Recordings. The Grantor covenants and
agrees to promptly cause this Deed of Trust and the Assignment of
Rents and any supplements, amendments, or modifications thereto
and financing statements and continuation statements under the
Uniform Commercial Code and other instruments with respect
thereto to be filed, registered and recorded (and when and if
necessary to be refiled, re-registered or re-recorded) in such
place or places as may be required by any law in order to create,
perfect or protect the lien of (and security interest created by)
this Deed of Trust, the Security Agreement and Assignment of
Rents; to protect the validity thereof to publish notice thereof
and to protect and maintain the estate, right, interest, claim
and demand of the Beneficiary in, to and under the Trust Estate,
the Rents and Leases described in the Assignment of Rents and the
Collateral described in the Security Agreement.
1.23 Trade Names. At the request of the Beneficiary, the
Grantor shall execute a certificate in form satisfactory to the
Beneficiary listing the trade names under which the Grantor
intends to operate the Trust Estate, and representing and
warranting that the Grantor does business under no other trade
names with respect to the Trust Estate. The Grantor shall
promptly notify the Beneficiary in writing of any change in these
trade names, and will, upon request of the Beneficiary, execute
any additional financing statements and other certificates
revised to reflect the change in trade name.
1.24 Leases. The Grantor shall not lease the Trust Estate
to any third party without the Beneficiary's prior written
consent.
1.25 Hazardous Materials.
(a) The Grantor warrants and covenants (1) that the
Property does not contain and that the Grantor will not cause or
permit the property to contain (i) asbestos in any form; (ii)
urea formaldehyde foam insulation (iii) transformers or other
equipment which contain dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million; or
(iv) except as disclosed in any schedule to the Loan Agreement,
any other chemical, material, or substance which is regulated as
toxic or hazardous or exposure to which is prohibited, limited,
or regulated by any federal, state, county, regional, local, or
other governmental authority (except for chemicals,
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materials or substances used, stored and disposed of in a manner
required by applicable laws and regulations) or which, even if
not so regulated, may or could pose a hazard to the health and
safety of the occupants of the Property or the owners of property
adjacent to the Property (such substances described in (i), (ii),
(iii) and (iv) above are referred to collectively herein as
"Hazardous Materials"); (2) that the Property is not now being
used nor has ever been used for any activities involving,
directly or indirectly, the use, generation, treatment, storage,
transportation, or disposal of any Hazardous Materials; (3) that
neither the Property nor the Grantor is subject to any existing,
pending, or threatened investigation or inquiry by any
governmental authority, or any remedial obligations under any
applicable laws, rules, or regulations pertaining to health or
the environment. The Grantor shall not install, store, use,
treat, transport or dispose (or permit or acquiesce in the
installation, storage, use, treatment, transportation or disposal
by the Grantor, its agents, employees, independent contractors or
tenants) on the Property of any Hazardous Materials. In the
event of any such installation, storage, use, treatment,
presence, transportation or disposal, whether prior to or during
the term of the loan secured by this Deed of Trust, and whether
by the Grantor or any predecessor in title, the Grantor promptly
shall remove any such Hazardous Materials if the presence of such
Hazardous Materials is violative of applicable law, or otherwise
comply with the regulations or orders of such authority, all at
the expense of the Grantor. If the Grantor shall fail to proceed
with such removal or otherwise comply with such regulations or
orders promptly, the Beneficiary may declare the indebtedness
secured hereby to be in default or the Beneficiary (without
regard to any applicable cure period provided for herein) may
(but shall not be obligated to) do whatever is necessary to
eliminate such Hazardous Materials from the Property or otherwise
cure any violation of the applicable regulation or order, and the
cost thereof shall constitute additional indebtedness secured
hereby and shall become immediately due and payable without
notice, and with interest thereon at the Default Rate. The
Grantor shall give to the Beneficiary and its agents and
employees access to the Property for such purposes and hereby
specifically grants to the Beneficiary a license to remove the
Hazardous Materials or otherwise cure any such violation. The
Grantor and its general partners (if the Grantor is a
partnership) shall indemnify the Beneficiary and hold the
Beneficiary harmless from and against all loss, damage, and
expense (including, without limitation, attorneys' fees and costs
incurred in the investigation, defense, and settlement of claims)
that the Beneficiary may incur as a result of or in connection
with the assertion against the Beneficiary of any claims, actions
or violations relating directly or indirectly, in whole or in
part, to the presence or removal of any Hazardous Materials on
the Property, or relating to any activity on or off the Property,
whether prior to or during the term of the loan secured by this
Deed of Trust, and whether such activity was carried on by the
Grantor or any predecessor in title or any employees, agents,
contractors or third parties, if such activity involved Hazardous
Materials, in whole or in part, directly or indirectly, or was in
violation of any federal, state, or local laws, rules regulations
or orders relating thereto.
(b) The representations, warranties and covenants of the
Grantor in Section 1.25(a) above specifically exclude Hazardous
Materials in the form of normal and customary janitorial cleaning
supplies and fluids stored and used in the Improvements in
connection with the maintenance and cleaning of the Improvements,
normal and customary office supplies and equipment stored and
used in the Improvements in connection with the operation of
tenant businesses therein and heating oil stored and used in the
Improvements.
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(c) The Grantor shall promptly notify the Beneficiary in
writing of any order or pending or threatened action by any
regulatory agency or other governmental body, or any claims made
by any third party, relating to Hazardous Materials on, or
emanating from, the Property, and shall promptly furnish the
Beneficiary with copies of any correspondence or legal pleadings
in connection therewith.
In addition, the Beneficiary shall have the right (but shall
not be obligated) to notify any state, federal or local
governmental authority of information which may come to its
attention with respect to Hazardous Materials on or emanating
from the Property. The Grantor irrevocably releases the
Beneficiary from any claims of loss, damage, liability, expense
or injury relating to or arising from, directly or indirectly any
such disclosure.
(d) The liability of the Grantor and its general partners
(if the Grantor is a partnership) to the Beneficiary under the
covenants of this Section is not limited by any exculpatory
provision in the Note, this Deed of Trust or in any other of the
Loan Instruments and shall survive any foreclosure of this Deed
of Trust or any transfer of the property by deed in lieu of
foreclosure.
(e) At any time during the term of this Deed of Trust, but
no more than once in any calendar year (unless the Beneficiary
has reasonable cause for suspecting the presence of Hazardous
Materials on the Trust Estate or unless an Event of Default has
occurred and is continuing), the Beneficiary may require the
Grantor to cause to be performed, at the expense of the Grantor,
an inspection or audit of the Property by a qualified consultant
approved by the Beneficiary, to furnish to the Beneficiary a
written report thereon by the consultant opining as to the
presence or absence of Hazardous Materials, or to permit the
Beneficiary to so inspect or audit the Property at the Grantor's
expense. The Grantor hereby grants the Beneficiary, its
employees, agents and independent contractors, the right to enter
upon the Property upon reasonable notice for the purpose of
conducting tests and soil borings, installing monitoring xxxxx,
and conducting such other tests as the Beneficiary deems
necessary or desirable.
(f) If the Property or any of the Improvements now or
hereafter contains any material or product containing more than
0.1 percent asbestos by weight, the Grantor shall prepare,
implement, and comply with, on an ongoing basis, a written
asbestos operations and maintenance program prepared by a
qualified environmental consultant. Such program shall be
designed to assure that (i) all persons are protected from any
release of asbestos fibers, and (ii) asbestos fibers are not
distributed or released on the Property during maintenance,
repairs, alterations or improvements.
ARTICLE II
ASSIGNMENT OF RENTS, ISSUES AND PROFITS
2.01 Assignment of Rents. The Grantor hereby assigns and
transfers to the Beneficiary all the Rents, as hereinbefore
defined, of the Trust Estate, and hereby gives to and confers
upon the Beneficiary the right, power an authority to collect
such Rents. The Grantor irrevocably appoints the Beneficiary its
true and lawful attorney-in-fact, at the option of the
Beneficiary at any time and from time to time following an Event
of Default, to demand, receive and enforce payment, to give
receipts, releases and satisfactions, and to xxx, in the name of
the Grantor or the Beneficiary, for all such Rents and apply the
same to the indebtedness secured hereby. The
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Grantor shall have the right to collect such Rents (but not more
than one month in advance) prior to or at any time there is not
an Event of Default under any of the Loan Instruments. The
assignment of the Rents of the Trust Estate in this Article II is
intended to be an absolute, present assignment from the Grantor
to the Beneficiary and not merely the passing of a security
interest. The Grantor hereby assigns absolutely the Rents to the
Beneficiary contingent only upon the occurrence of an Event of
Default under any of the Loan Instruments.
2.02 Assignment of Leases. The Grantor agrees to (and
hereby does) assign and transfer to the Beneficiary as additional
security for the payment of the indebtedness secured hereby, all
present and future leases upon all or any part of the Trust
Estate and to execute and deliver, at the request of the
Beneficiary, all such further assurances and assignments in the
Trust Estate as the Beneficiary shall from time to time
reasonably require. In the event the Grantor, as additional
security has sold, transferred and assigned, or may hereafter
sell, transfer and assign, to the Beneficiary, its successors and
assigns, any interest of the Grantor as lessor in any lease or
leases, the Grantor expressly covenants and agrees that the
Grantor, as lessor under such lease or leases so assigned, shall
perform and fulfill all terms, covenants, conditions and
provisions in such lease or leases, or any of them, on the
Grantor's part to be performed or fulfilled, at the times and in
the manner in such lease or leases provided. In the event of an
explicit conflict between the provisions hereof and the
provisions of the Assignment of Rents, the Deed of Trust shall
control.
2.03 Assignment of Security Deposits. The Grantor hereby
assigns to the Beneficiary all security deposits, if any,
received by the Grantor or any agent of the Grantor relative to
the Trust Estate. Prior to an Event of Default hereunder and
demand by the Beneficiary for delivery of such security deposits
to it or its designee, the Grantor shall maintain the security
deposits in a separate, identifiable account with a bank
acceptable to the Beneficiary. Upon delivery of such security
deposits to the Beneficiary, the Beneficiary shall hold such
deposits pursuant to the terms of the leases in respect of which
such deposits were obtained by the Grantor. In no event shall
the Beneficiary be liable to any lessee of any part of the Trust
Estate for the return of any security deposit in any amount in
excess of the amount delivered to the Beneficiary by the Grantor.
Any security deposits held by the Beneficiary shall not bear
interest.
2.04 Collection Upon Default. Upon any Event of Default
under any of the Loan Instruments, the Beneficiary may, at any
time without notice, either in person, by agent or by a receiver
appointed by a court and without regard to the adequacy of any
security for the indebtedness hereby secured, (1) enter upon and
take possession of the Trust Estate, or any part thereof, (2) in
its own name xxx for or otherwise collect the Rents, including
those past due and unpaid, and apply the same, less costs and
expenses of operation and collection, including attorneys' fees,
upon any indebtedness secured hereby, and in such order as the
Beneficiary may determine. The collection of the Rents or the
entering upon and taking possession of the Trust Estate, or the
application thereof as aforesaid, shall not cure or waive any
default or notice of default hereunder or invalidate any act done
in response to such default or pursuant to such notice of
default.
2.05 Beneficiary's Right of Possession in Case of Default.
Upon the occurrence of an Event of Default, whether before or
after the whole principal sum secured hereby is declared to be
immediately due, or whether before or after the institution of
legal proceedings to foreclose the lien hereof or before or after
the sale thereunder, forthwith, upon demand of the Beneficiary,
the
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Grantor shall surrender to the Beneficiary and the Beneficiary
shall be entitled to take actual possession of the Trust Estate
or any part thereof personally, or by its agent or attorneys, as
for condition broken. In such event the Beneficiary in its
discretion may, with or without force and with or without process
of law, enter upon and take and maintain possession of all or any
part of the Trust Estate, together with all documents, books,
records, papers and accounts of the Grantor or the then owner of
the Trust Estate relating thereto, and may exclude the Grantor,
its agents or servants, wholly therefrom and may as attorney in
fact or agent of the Grantor, or in its own name as the
Beneficiary and under the powers herein granted , hold, operate,
manage and control the Trust Estate and conduct the business, if
any, thereof, either personally or by its agents, and with full
power to use such measures, legal or equitable, as in its
discretion or in the discretion of its successors or assigns, may
be deemed proper or necessary to enforce the payment or the
security of Rents of the Trust Estate, including actions for the
recovery of rent, actions in forcible detainer and actions in
distress for rent, and with full power:
(a) to cancel or terminate any lease or sublease for any
cause or on any ground which would entitle the Grantor to cancel
the same;
(b) to elect to disaffirm any lease of sublease which is
then subordinate to the lien hereof;
(c) to extend or modify any then existing leases and to
make new leases, which extensions, modifications and new leases
may provide for terms to expire, or for options to lessees to
extend or renew terms to expire, beyond the maturity date of the
indebtedness hereunder and beyond the date of the issuance of a
deed or deeds to a purchaser or purchasers at a foreclosure sale,
it being understood and agreed that any such leases, and the
options or other such provisions to be contained therein, shall
be binding upon the Grantor and all persons whose interests in
the Trust Estate are subject to the lien hereof and upon the
purchaser or purchasers at any foreclosure sale, notwithstanding
any redemption from sale, discharge of the mortgage indebtedness,
satisfaction of any foreclosure decree, or issuance of any deed
to any purchaser;
(d) to make all necessary or proper repairs, decorating,
renewals replacements, alterations, additions, betterments and
improvements to the Trust Estate as it may deem judicious;
(e) to insure and reinsure the same and all risks
incidental to the Beneficiary's possession, operation and
management thereof; and
(f) to receive all of such Rents.
The Grantor hereby grants full power and authority to
exercise each and every of the rights, privileges and powers
herein granted at any and all times hereafter, without notice to
the Grantor (except as otherwise provided herein).
The Beneficiary shall not be obligated to perform or
discharge (nor does it hereby undertake to perform or discharge)
any obligation, duty or liability under any leases. The Grantor
shall and does hereby agree to indemnify and hold the Beneficiary
harmless of and from any and all liability, loss or damage which
it may or might incur under such leases or under or by reason of
the
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assignment thereof and of and from any and all claims and demands
whatsoever which may be asserted against it by reason of any
alleged obligations or undertakings on its part to perform or
discharge any of the terms, covenants or agreements contained in
such leases. Should the Beneficiary incur any such liability,
loss or damage, under such leases or under or by reason of
assignment thereof, or in the defense of any claims or demands,
the amount thereof, including cots, expenses and reasonable
attorney's fees, shall be secured hereby, and the Grantor shall
reimburse the Beneficiary therefor promptly upon demand.
2.06 Application of Income Received by the Beneficiary.
The Beneficiary, in the exercise of the rights and powers
hereinabove conferred upon it by Sections 2.01, 2.04 and 2.05
hereof, shall have full power to use and apply the Rents of the
Trust Estate to the payment of or on account of the following, in
such order as the Beneficiary may determine:
(a) to the payment of the operating expenses of the Trust
Estate, including cost of management and leasing thereof (which
shall include reasonable compensation to the Beneficiary and its
agent or agents, if management be delegated to an agent or
agents, and shall also include reasonable and customary lease
commissions and other reasonable and customary compensation and
expenses of seeking and procuring tenants and entering into
leases), established claims for damages, if any, subsequent
claims for damages which arise (if any), and premiums on
insurance hereinabove authorized;
(b) to the payment of taxes and special assessments now due
or which may hereafter become due on the Trust Estate;
(c) to the payment of all repairs, decorating, renewals,
replacements, alterations, additions, betterments, and
improvements of the Trust Estate, and of placing the Trust Estate
in such condition as will, in the reasonable judgment of the
Beneficiary, make it readily rentable;
(d) to the payment of any indebtedness secured hereby, in
such order as the Beneficiary shall determine in its sole
discretion.
ARTICLE III
SECURITY AGREEMENT
3.01 Creation of Security Interest. The Grantor hereby
grants to the Beneficiary a security interest in the Personal
Property, as hereinbefore defined, including without limitation,
any and all property of similar type or kind, and any
replacements or renewals thereof, for the purpose of securing all
obligations of the Grantor contained in any of the Loan
Instruments. This Deed of Trust constitutes a Security agreement
as that term is used in the Uniform Commercial Code of North
Carolina (the "Uniform Commercial Code"). In the event of an
explicit conflict between the provisions hereof and the
provisions of any separate security agreement with respect to the
personal property described herein, this Deed of Trust shall
control.
3.02 Warranties, Representations and Covenants of the
Grantor Respecting the Personal Property. The Grantor hereby
warrants, represents and covenants as follows:
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(a) Except for the security interest granted hereby, the
Grantor is, and as to portions of the Personal Property to be
acquired after the date hereof will be, the sole owner (or lessee
in the case of Personal Property leased by the Grantor) of the
Personal Property, free from any adverse lien, security interest,
encumbrance or adverse claim thereon of any kind whatsoever. The
Grantor will notify the Beneficiary of, and will defend the
Personal Property against, all claims and demands of all persons
at any time claiming the same or any interest therein.
(b) The Grantor will not lease, sell, convey or in any
manner transfer the Personal Property without the prior written
consent of the Beneficiary, except as permitted under Section
3.02(d) below and except as permitted in the Security Agreement.
(c) The Personal Property is not used or bought for
personal, family or household purposes.
(d) The Personal Property will be kept on or at the
Property. The Grantor will not remove the Personal Property from
the Property without the prior written consent of the
Beneficiary, except such portions or items of Personal Property
which are consumed or worn out in ordinary usage, all of which
shall be promptly replaced by the Grantor with new items of equal
or greater quality.
(e) The Grantor has its principal place of business in the
State of North Carolina, and the Grantor will immediately notify
the Beneficiary in writing of any change in its principal place
of business as set forth in the beginning of this Deed of Trust.
(f) At the request of the Beneficiary, the Grantor will
execute one or more financing statements and renewals and
amendments thereof pursuant to the Uniform Commercial Code in
form satisfactory to the Beneficiary, and will pay the cost of
filing the same in all public offices wherever filing is deemed
by the Beneficiary to be necessary.
(g) All covenants and obligations of the Grantor contained
herein relating to the Trust Estate shall be deemed to apply to
the Personal Property whether or not expressly referred to
herein.
ARTICLE IV
REMEDIES UPON DEFAULT
4.01 Events of Default. Any of the following events shall
be deemed an Event of Default hereunder.
(a) Default in the payment of any installment of principal
and/or interest on the Note or any other sum secured hereby when
due, provided, however, the failure to make such payment when due
shall not constitute an Event of Default hereunder until after
the passage of ten (10) calendar days from the date on which such
payment is due;
(b) The Grantor, or any general partner of the Grantor, (1)
shall file a voluntary petition in bankruptcy or shall benefit
from or be subject to any order for relief entered by any court
of insolvency, or shall file any petition or answer seeking or
acquiescing in any reorganization,
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arrangement, composition, readjustment, liquidation, dissolution
or similar relief for itself under any present or future federal,
state or other statute, law or regulation relating to bankruptcy,
insolvency or other relief for debtors; (2) shall seek or
consent to or acquiesce in the appointment of any trustee,
receiver, or liquidator of the Grantor, or any general partner of
the Grantor, or of all or any part of the Trust Estate, or of any
or all of the Rents thereof; of (3) shall make any general
assignment for the benefit of creditors or shall admit in writing
its inability to pay its debts generally as they become due;
(c) A court competent jurisdiction shall enter an order,
judgment, or decree approving a petition filed against the
Grantor, or any general partner of the Grantor, seeking any
reorganization, dissolution or similar relief under any present
or future federal, state, or other statute, law or regulation
relating to bankruptcy, insolvency or other relied for debtors,
and such order, judgment or decree shall remain unvacated and
unstayed for an aggregate of sixty (60) days (whether or not
consecutive) from the first date of entry thereof; or any
trustee, receiver or liquidator of the Grantor, or any general
partner of the Grantor, or of all or any part of the Trust
Estate, or of any or all of the Rents thereof, shall be appointed
without the consent or acquiescence of the Grantor, or any
general partner of the Grantor, an such appointment shall remain
unvacated and unstayed for an aggregate of sixty (60) days
(whether or not consecutive);
(d) A writ of execution or attachment or any similar
process shall be issued or levied against all or any part of or
interest in the Trust Estate, or any judgment involving monetary
damages shall be entered against the Grantor, or any general
partner of the Grantor, which shall become a lien on the Trust
Estate or any portion thereof or interest therein and such
execution, attachment or similar process or judgment is not
released, bonded satisfied, vacated or stayed within sixty (60)
days after its entry or levy;
(e) Except as otherwise provided below, the Grantor shall
voluntarily or involuntarily, directly or indirectly, without the
prior written consent of the Beneficiary, (i) sell, transfer or
convey (including, without limitation, by way of mortgage or deed
of trust) the Trust Estate or any portion thereof or interest
therein, (ii) change, or permit or suffer any change in, the
ownership (legal or beneficial), composition or form of business
association of the legal entity constituting the Grantor, except
for transfers of any limited partnership interest therein, (iii)
execute a contract of sale or record a condominium declaration
affecting the Trust Estate or any portion thereof or interest
therein (legal or beneficial), (iv) permit any other financing to
be secured by the Trust Estate or any portion thereof or interest
therein (legal or beneficial), (v) change the nature of the use
of the Trust Estate. The Grantor acknowledges and agrees that
the Beneficiary may require, as a condition to granting its
consent to any of the foregoing, the payment of a transfer fee
and/or that the Loan Instruments be modified so as to increase
the Interest Rate on the Note, alter the maturity of the Note, or
both.
(f) Failure to maintain hazard insurance with respect to
the Trust Estate as required in this Deed of Trust.
(g) There has occurred a breach of or default under any
other term, covenant, agreement, condition, provision,
representation or warranty in this Deed of Trust or under any
term,
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covenant, agreement, condition, provision, representation or
warranty contained in any of the other Loan Instruments or any
part thereof, whether or not referred to in this Section 4.01 and
such default has continued for a period of thirty (30) days after
the Beneficiary's written notice of default to the Grantor.
(h) The furnishing by the Grantor to the Beneficiary of any
document or statement (including a financial or operating
statement) which contains any untrue and materially adverse
statement of a material fact, or which omits a material fact,
necessary to make the statements made, in light of the
circumstances in which they were made, not misleading.
4.02 Acceleration upon Default, Additional Remedies. In
the event of any Event of Default, the Beneficiary may declare
all indebtedness secured hereby to be due and payable and the
same shall thereupon become due and payable without any
presentment, demand, protest or notice of any kind. Thereafter,
the beneficiary may:
(a) Either in person or by agent, with or without bringing
any action or proceeding, or by a receiver appointed by a court
and without regard to the adequacy of its security, (i) enter
upon and take possession of the Trust Estate, or any part
thereof, in its own name or in the name of the Trustee, and do
any acts which it deems necessary or desirable to preserve the
value, marketability or rentability of the Trust Estate, or part
thereof or interest therein, increase the income therefrom or
protect the security hereof, and (ii) with or without taking
possession of the Trust Estate, xxx for or otherwise collect the
Rents thereof, including those Rents past due and unpaid and
apply the same, less costs and expenses of operation and
collection (including attorneys' fees), upon any indebtedness
secured hereby, all in such order as the Beneficiary may
determine. The entering upon and taking possession of the Trust
Estate, the collection of the Rents and the application thereof
as aforesaid shall not cure or waive any default or notice of
default hereunder or invalidate any act done in response to such
default or pursuant to such notice of default. Notwithstanding
the continuance in possession of the Trust Estate or the
collection, receipt and application of the Rents, the Trustee or
the Beneficiary shall be entitled to exercise every right
provided for in any of the Loan Instruments or by law upon
occurrence of any Event of Default, including the right to
exercise the power of sale, as authorized by law;
(b) Commence an action to foreclose this Deed of Trust (or
cause the Trustee to foreclose this Deed of Trust by power of
sale), appoint a receiver, or specifically enforce any of the
covenants hereof;
(c) Exercise any or all of the remedies available to a
secured party under the Uniform Commercial Code, including, but
not limited to:
(1) Either personally or by means of a court-appointed
receiver, take possession of all or any of the Personal
Property and exclude therefrom the Grantor and all others
claiming under the Grantor, and thereafter hold, store, use,
operate, manage, maintain and control, make repairs,
replacements, alterations, additions and improvements to and
exercise all rights and powers of the Grantor in respect to
the Personal Property or any part thereof. In the event the
Beneficiary demands or attempts to take possession of the
Personal Property in the exercise of any rights under any of
the Loan Instruments, the Grantor promises and agrees to
promptly turn over and deliver complete possession thereof to
the Beneficiary;
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(2) Without notice to or demand upon the Grantor, make such
payments and do such acts as the Beneficiary may deem
necessary to protect its security interest in the Personal
Property, including without limitation, paying, purchasing,
contesting or compromising any encumbrance, charge or lien
which is prior to or superior to the security interest granted
hereunder and in exercising any such powers or authority to
pay all expenses incurred in connection therewith;
(3) Require the Grantor to assemble the Personal Property
or any portion thereof, at a place designated by the
Beneficiary, and promptly to deliver such Personal Property to
the Beneficiary or to an agent or representative designated by
it. The Beneficiary and its agents and representatives shall
have the right to enter upon any or all of the Grantor's
premises and property to exercise the Beneficiary's rights
hereunder;
(4) Sell, lease or otherwise dispose of the Personal
Property at public sale, with or without having the Personal
Property at the place of sale, and upon such terms and in such
manner as the Beneficiary may determine. The Beneficiary may
be a purchaser at any such sale;
(5) Unless the Personal Property is perishable or threatens
to decline speedily in value or is of a type customarily sold
on a recognized market, the Beneficiary shall give the Grantor
at least ten (10) days prior written notice at the address
specified in or pursuant to this Deed of Trust of the time and
place of any public sale of the Personal Property or other
intended disposition thereof. Such notice shall be mailed to
the Grantor in the manner set out in Section 5.06 of this Deed
of Trust.
(d) Upon the acceleration of the maturity of the
indebtedness as herein provided, a tender of payment of the
amount necessary to satisfy the entire indebtedness secured
hereby made at any time prior to foreclosure sale (including sale
under the power of sale) by the Trustee, shall constitute an
evasion of the prepayment terms of the Note and be deemed to be
a voluntary prepayment thereunder. Any such payment, to the
extent permitted by applicable law, will therefore include the
additional payment (if any) required under the prepayment
privilege contained in the Note. In no event shall the amount
due pursuant to this paragraph exceed the maximum non-usurious
amount permitted by applicable law.
4.03 Foreclosure by Power of Sale. Should the Beneficiary
elect to foreclosure by exercise of the power of sale herein
contained, the Beneficiary shall notify the Trustee and shall
deposit with the Trustee this Deed of Trust and the Note and such
receipts and evidence of expenditures made and secured hereby as
the Trustee may require.
Upon application of the Beneficiary, it shall be lawful for
and the duty of the Trustee, and he is hereby authorized and
empowered, to expose to sale and to sell the Property and the
Improvements (either in whole or in separate parcels and in such
order as the Trustee may determine), and the Personal Property at
public auction for cash. After having first compiled with all
applicable requirements of North Carolina law with respect to the
exercise of powers of sale contained in deeds of trust and upon
such sale, the Trustee shall convey title to the purchaser in fee
simple. After retaining from the proceeds of such sale just
compensation for his services and all
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expenses incurred by him, including a trustee's commission not
exceeding three percent (3%) of the bid, the Trustee shall apply
the residue of the proceeds first to the payment of all sums
expended by the Beneficiary under the terms of this Deed of
Trust; second, to the payment of the Note and interest thereon
secured hereby; and third, the balance, if any, to the parties
entitled to such proceeds. The Grantor agrees that in the event
of sale hereunder, the Beneficiary shall have the right to bid
thereat. The Trustee may require the successful bidder at any
sale to deposit immediately with the Trustee cash or certified
check in the amount not to exceed ten (10%) of the bid, provided
notice of such requirement is contained in the advertisement of
the sale. The bid may be rejected if the deposit is not
immediately made, and thereupon the next highest bidder may be
declared to be the purchaser. Such deposit shall be refunded in
case a resale is had; otherwise, it shall be applied to the
purchase price. If the Personal Property is sold hereunder, it
need not be at the place of sale. The published notice, however,
shall state the time and place where such property may be
inspected prior to sale. If a foreclosure proceeding is
commenced by the Trustee but not completed, the Trustee's fee
shall be one percent (1%) of the then-outstanding principal
balance of the Note if the termination occurs prior to the first
public auction sale and two percent (2%) of the then-outstanding
principal balance of the Note if the termination occurs after the
first public auction sale.
Before taking any action hereunder, the Trustee may require
that satisfactory indemnity be furnished for the reimbursement of
all costs and expenses to which he may be put and to protect him
against all liability, except liability which is adjudicated to
have resulted from his negligence or willful default by reason of
such action. The Trustee shall not be required to see that this
Deed of Trust is recorded nor be liable for its validity or its
priority as a first-priority Deed of Trust or otherwise, nor
shall the Trustee be answerable for the default or misconduct or
any agent or attorney appointed by him in good faith in pursuance
hereof. The Trustee may act upon any instrument believed by him
in good faith to be genuine and to be signed by the proper party
or parties and shall not be liable for any action taken or
suffered by him in reliance thereon. The Trustee shall be
entitled to reasonable compensation for all services rendered in
the execution of the trust hereby created. The Grantor agrees to
pay all reasonable costs, expenses and liability for which the
Trustee is indemnified hereunder or pursuant hereto, and until
the payment thereof, the Trust Estate is hereby charged with the
payment of the same in full as an obligation secured hereby. The
Trustee, at any time, may consult counsel for the purposes of
this trust and shall be protected in any action taken or suffered
by him in accordance with the opinion of such counsel.
The Beneficiary, at its option, is authorized to foreclose
this Deed of Trust subject to the rights of any tenants of the
Trust Estate. The notice of sale published by the Trustee shall
specify the tenants to which the sale of the Trust Estate is
subject. The failure to make any such tenants parties to any
such foreclosure proceedings and to foreclose their rights will
not be, nor be asserted by the Grantor as, a defense to any
proceedings instituted by the Beneficiary for repayment of the
Note.
4.04 Appointment of Receiver. If an Event of Default shall
have occurred and be continuing, the Beneficiary as a matter of
right and without notice to the Grantor or to anyone claiming
under the Grantor, and without regard to the value of the Trust
Estate at such time or the interest of the Grantor therein, shall
have the right to apply to any court having jurisdiction to
appoint a receiver or receivers of the Trust Estate. The Grantor
hereby irrevocably consents to such appointment and waives notice
of any application thereof. Any such receiver or receivers shall
have
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all the usual powers and duties of receivers in like or similar
cases and all the powers and duties of the Beneficiary in case of
entry as provided in Section 4.02(a) and shall continue as such
and exercise all such powers until the date of confirmation of
sale of the Trust Estate unless such receivership is sooner
terminated.
4.05 Remedies Not Exclusive. The Trustee and the
Beneficiary, and each of them, shall be entitled to enforce
payment and performance of any indebtedness or obligations
secured hereby and to exercise all rights and powers under this
Deed of Trust or under any other Loan Instrument or other
agreement or any laws now or hereafter in force, notwithstanding
some or all of the indebtedness and obligations secured hereby
may now or hereafter be otherwise secured, whether by mortgage,
deed of trust, pledge, lien, assignment or otherwise. Neither
the acceptance of this Deed of Trust nor its enforcement, whether
by court action or pursuant to the power of sale or other powers
herein contained, shall prejudice or in any manner affect the
Trustee's or the Beneficiary's right to realize upon or enforce
any other security now or hereafter held by the Trustee or the
Beneficiary. The Trustee and the Beneficiary, and each of them,
shall be entitled to enforce this Deed of Trust and any other
security now or hereafter held by the Beneficiary or the Trustee
in such order and manner as they or either of them may in their
absolute discretion determine. No remedy herein conferred upon
or reserved to the Trustee or the Beneficiary is intended to be
exclusive of any other remedy herein or by law provided or
preclusive of any other remedy herein or by law provided or
permitted but each shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute. Every power or
remedy given by any of the Loan Instruments to the Trustee or the
Beneficiary (or to which either of them may be otherwise
entitled) may be exercised, concurrently or independently, from
time to time and as often as may be deemed expedient by the
Trustee or the Beneficiary and either of them may pursue
inconsistent remedies.
ARTICLE V
MISCELLANEOUS
5.01 Governing Law. This Deed of Trust shall be governed
by the laws of the State of North Carolina. In the event that
any provision or clause of any of the Loan Instruments conflicts
with applicable laws, such conflicts shall not affect other
provisions of such Loan Instruments which can be given effect
without the conflicting provision. To this end, the provisions
of the Loan Instruments are declared to be severable. This
instrument cannot be waived, changed, discharged or terminated
orally, but only by an instrument in writing signed by the party
against whom enforcement of any waiver, change, discharge or
termination is sought.
5.02 Successors and Assigns. This Deed of Trust applies
to, inures to the benefit of and binds all parties hereto, their
heirs, legatees, devisees, administrators, executors, successors
and assigns. The term "Beneficiary" shall mean the owner and
holder of the Note, whether or not named as the Beneficiary
herein.
5.03 Grantor's Waiver of Rights. The Grantor waives, to
the extent allowed by applicable law, the benefit of all laws now
existing or that hereafter may be enacted providing for (i) any
appraisement before sale of any portion of the Trust Estate and
(ii) any extension of the time for the enforcement of the
collection of the Note or the debt evidenced thereby or the
creation or
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extension of a period of redemption from any sale made in
collecting the debt. To the full extent the Grantor may do so,
the Grantor agrees that the Grantor will not at any time insist
upon, plead, claim or take the benefit or advantage of any law
now or hereafter in force providing for any appraisement,
valuation, stay, extension or redemption. The Grantor, the
Grantor's heirs, devisees, representatives, successors and
assigns, and for any and all persons ever claiming any interest
in the Trust Estate, to the extent permitted by law, hereby waive
and release all rights of redemption, valuation, appraisement,
stay or execution, notice of election to mature or declare due
the whole of the secured indebtedness and marshalling in the
event of foreclosure of the liens hereby created. If any law
referred to in this Section and now in force, of which the
Grantor, the Grantor's heirs, devisees, representatives,
successors and assigns or other persons might take advantage
despite this Section, shall hereafter be repealed or cease to be
in force, such law shall not thereafter be deemed to preclude the
application of this Section. To the extent permitted by
applicable law, the Grantor expressly waives and relinquishes any
and all rights and remedies which the Grantor may have or be able
to assert by reason of the laws of the State of North Carolina
pertaining to the rights and remedies of sureties.
5.04 Limitation of Interest. It is the intent of the
Grantor and the Beneficiary in the execution of this Deed of
Trust and the Note and all other instruments securing the Note to
contract in strict compilance with usury laws of the State of
North Carolina governing the loan evidenced by the Note. In
furtherance thereof, the Beneficiary and the Grantor stipulate
and agree that none of the terms and provisions contained in the
Loan Instruments shall ever be construed to create a contract for
the use, forbearance or detention of money requiring payment of
interest at a rate in excess of the maximum interest rate
permitted to be charged by the laws of the State of North
Carolina governing the loan evidenced by the Note. The Grantor
or any guarantor, endorser or other party now or hereafter
becoming liable for the payment of the Note, if any, shall never
be liable for unearned interest on the Note and shall never be
required to pay interest on the Note at a rate in excess of the
maximum interest that may be lawfully charged under the laws of
the State of North Carolina. The provisions of the Section shall
control over all other provisions of the Note and any other
instrument executed in connection herewith which may be in
apparent conflict herewith. In the event any holder of the Note
shall collect monies which are deemed to constitute interest
which would otherwise increase the effective interest rate on the
Note to a rate in excess of that permitted to be charged by the
laws of the State of North Carolina, all such sums deemed to
constitute interest in excess of the maximum permissible rate
shall be applied forthwith to the reduction of the principal
balance of the Note.
5.05 Statements by Grantor. The Grantor, within ten (10)
days after being given notice by mail, will furnish to the
Beneficiary a written statement stating the unpaid principal of
the Note and any other amounts secured by this Deed of Trust and
stating whether any offset or defense exists against such
principal and interest.
5.06 Notices. All notices, requests or other
communications provided for or permitted to be given pursuant to
this Deed of Trust, the Note or the Loan Instruments (herein
called a "notice") must be in writing (which includes by
telephonic facsimile transmission) and shall be served by
personal delivery or by depositing in the United States of
America mail, postage prepaid registered, return receipt
requested, and addressed to the addresses set forth below. All
notices shall be effective upon personal delivery or on the third
(3rd) day after being deposited in the United
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States mail. Personal delivery may be accomplished through the
use of a reputable commercial courier or air freight service or
through use of a telephonic facsimile transmitter (telecopier);
provided, however, notices sent by telecopy shall also be sent on
the same day by one of the other methods of giving notices
provided for herein. Rejection or other refusal to accept or the
inability to deliver because of changed address of which no
notice was given shall be deemed to be receipt of the notice
sent. By giving at least fifteen (15) days' written notice
thereof, any party hereto shall have the right, from time to
time, to change their respective addresses and each shall have
the right to specify as its address any other address in the
Untied States of America. Each notice given by telecopy shall be
deemed given on the date shown on the sender's copy thereof
bearing the proper "answer back code" for the telecopy number to
which the notice is sent, provided such telecopy number is the
correct number of the receiving party at the time such notice is
sent.
Grantor: Fountain Powerboats, Inc.
Xxxxxxxx'x Xxxxx Xxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxxx, Xx.
Beneficiary: General Electric Capital Corporation
0000 Xxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopy: (000) 000-0000
Trustee: Xxxxxxx X. Xxxxxxxx, Xx.
Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, PLLC
0000 Xxxxx Xxxxx Xxxxxxx Xxxxxx
000 Xxxxxxxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopy (000) 000-0000
5.07 Acceptance by Trustee. The Trustee accepts this trust
when this Deed of Trust duly executed and acknowledged is made a
public record as provided by law.
5.08 Captions. The captions or headings at the beginning
of each Section hereof are for the convenience of the parties and
are not a part of this Deed of Trust.
5.09 Invalidity of Certain Provisions. If this Deed of
Trust is invalid or unenforceable as to any part of the Trust
Estate or any part of the debt, the unsecured or partially
secured portion of the debt shall be completely paid prior to the
payment of the remaining and secured or partially secured portion
of the debt. All payments made on the debt, whether voluntary or
under foreclosure or other enforcement action or procedure, shall
be considered to have been first paid on and applied to the full
payment of that portion of the debt which is not secured or fully
secured by this Deed of Trust.
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5.10 Subrogation. To the extent that proceeds of the Note
or advances under this Deed of Trust are used to pay any
outstanding mortgage, deed of trust, lien, charge or prior
encumbrance against the Trust Estate, such proceeds or advances
have been or will be advanced by the Beneficiary at the Grantor's
request, and the Beneficiary shall be suborgated to any and all
rights and liens held or owned by an owner or holder of such
outstanding liens, charges and prior encumbrances irrespective of
whether these liens, charges or encumbrances are released.
5.11 No Merger. If both the lessor's and lessee's estates
under any lease or any portion thereof which constitutes a part
of the Trust Estate shall at any time become vested in one owner,
this Deed of Trust and the lien created hereby shall not be
destroyed or terminated by application of the doctrine of merger.
In such event, the Beneficiary shall continue to have and enjoy
all of the rights and privileges of the Beneficiary as to the
separate estates. In addition, upon the foreclosure of this Deed
of Trust pursuant to the provisions hereof, any leases or
subleases then existing and created by the Grantor shall not be
destroyed or terminated by application of the law of merger or as
matter of law or as a result of such foreclosure unless the
Beneficiary or any purchaser at any such foreclosure sale shall
so elect. No act by or on behalf of the Beneficiary or any such
purchaser shall constitute a termination of any lease or sublease
unless the Beneficiary or such purchaser shall give written
notice thereof of such tenant or subtenant.
5.12 Non-Waiver. The acceptance by the Beneficiary of any
sum after the same is due shall not constitute a waiver of the
right either to require prompt payment, when due, of all other
sums hereby secured or to declare a default as herein provided.
The acceptance by the Beneficiary of any sum in an amount less
than the sum then due shall be deemed an acceptance on account
only and upon condition that it shall not constitute a waiver of
the obligation of the Grantor to pay the entire sum then due.
The Grantor's failure to pay the entire sum then due shall be and
continue to be a default notwithstanding such acceptance of such
amount on account, as aforesaid. At all times thereafter and
without regard to whether the entire sum then due shall have been
paid (and notwithstanding the acceptance by Beneficiary thereof
of further sums on account, or otherwise), the Beneficiary and
the Trustee shall be entitled to exercise all rights in this
instrument conferred upon them, or either of them, upon the
occurrence of a default. The right to proceed with a sale under
any notice of default, and election to sell, or the right to
exercise any other rights or remedies hereunder, shall in no way
be impaired, whether any of such amounts are received prior or
subsequent to such proceeding, election or exercise. Consent by
the Beneficiary to any transaction or action of the Grantor which
is subject to consent or approval of the Beneficiary hereunder
shall not be deemed a waiver of the right to require such consent
or approval to future or successive transaction or actions.
5.13 Attorneys' Fees. Notwithstanding anything herein to
the contrary, where this Deed of Trust requires the Grantor to
pay for attorneys' fees incurred by the Beneficiary, such fees
shall be calculated at such attorneys' standard hourly rates for
time in fact spent, rather than on the basis of any statutory
presumption.
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BK 1063 PG 370
IN WITNESS WHEREOF, the Grantor has executed this Deed of
Trust under seal as of the day and year first above written.
FOUNTAIN POWERBOATS, INC., a
North Carolina corporation
By: /s/ Xxxxxxxx X. Xxxxxxxx, Xx.
_____________ President
/s/ Xxxxxxx X. Xxxxxxxx
______________ Secretary
[CORPORATE SEAL]
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BK 1063 PG 371
NORTH CAROLINA
CRAVEN COUNTY
I, Xxxxxxxxx X. Xxxxxx, a Notary Public of Xxxxxx County,
North Carolina, do hereby certify that Xxxxxxx X. Xxxxxxxx
personally came before me this day and acknowledged that [s] he
is the - Secretary of Fountain Powerboats, Inc., a North
Carolina corporation, and that by authority duly given and as the
act of the corporation, the foregoing instrument was signed in
its name by its - President, sealed with its corporate
seal and attested by himself/herself as its -
Secretary.
WITNESS my hand and notarial seal, this 31st day of
December, 1996.
/s/ Xxxxxxxxx X. Xxxxxx
Notary Public
[NOTARY SEAL]
My commission expires:
11-30-99
North Carolina
Beaufort County
The foregoing Certificate of Xxxxxxxxx X.
Xxxxxx
Notary Public/Notaries Public is/are
certified to be correct This 31st day of
December, 1996 at 3:16 o'clock P.M.
By /s/Xxxx Till
Register of Deeds Ass't/Deputy Register of
Deeds
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BK 1063 PG 372
This document prepared by:
Xxxxxxx X. Xxxxxxxx, Xx.
Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, PLLC
Xxxx Xxxxxx Xxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
After recording please return to the draftsman.
STATE OF NORTH CAROLINA )
) ASSIGNMENT OF RENTS AND LEASES
COUNTY OF BEAUFORT )
THIS AGREEMENT OF RENTS AND LEASES (this "Assignment") made
this 31st day of December, 1996, by and between FOUNTAIN
POWERBOATS, INC., a North Carolina corporation (hereinafter
referred to as the "Assignor"), and GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation (the "Assignee");
WITNESSETH:
THAT, the Assignor, in consideration of credit extended by
the Assignee, hereby conveys, transfers and assigns unto the
Assignee, its successors and assigns, all the rights, interests
and privileges that the Assignor as lessor has and may have in
the leases now existing or hereafter made and affecting the Trust
Estate (as defined and described below) or any part thereof (the
"Leases") as the Leases may have been or may from time to time be
hereafter modified, extended or renewed, with all rents, income
and profits due and becoming due therefrom (the "Rents"). The
Assignor will, on request of the Assignee, execute assignments of
any future leases affecting any part of certain real property
situated in Beaufort County, North Carolina and described in
EXHIBIT A attached hereto and incorporated by reference (such
real property, together with all improvements located thereon,
hereinafter referred to as the "Trust Estate"). Notwithstanding
any provision herein to the contrary, this Assignment is intended
to be an absolute present assignment from the Assignor to the
Assignee and not merely the passing of a security interest. The
Rents and Leases are hereby assigned absolutely by the Assignor
to the Assignee contingently only upon the occurrence of an Event
of Default (as defined in the Deed of Trust, as defined and
described below).
This Assignment is made as additional security for the
payment of a certain promissory note in the maximum principal sum
of $10,000,000.00 with interest, made by the Assignor to the
Assignee, dated of even date herewith (the "Note), and
performance by the Assignor of its obligations and agreements
contained in that certain Deed of Trust, Assignment of Rents and
Security Agreement dated of even date herewith (the "Deed of
Trust"), and all extensions or modifications thereof, made by the
Assignor to the trustee therein named for the benefit of the
Assignee, covering the Trust Estate.
The acceptance of this Assignment and the collection of
Rents or the payments under the Leases hereby assigned shall not
constitute a waiver of any rights of the Assignee under the terms
of the Note and the Deed of Trust. Before an Event of Default
occurs under the terms of the Note and the Deed of Trust, the
Assignor shall have the right to collect the Rents from the
Leases and to retain, use and enjoy the Rents. Even before an
Event of Default occurs, however, no Rent more than one month in
advance shall be collected or accepted without the prior written
consent of the Assignee. Anything to the contrary
notwithstanding, the Assignor hereby assigns to the Assignee (1)
any award made hereafter
R#0202465.02
BK 1063 PG 373
EXHIBIT A
TRACT I:
All that certain tract or parcel of land lying and being situate in
Chocowinity Township, Beaufort County, North Carolina, and being
more particularly described as follows:
Beginning at a point in the southern right-of-way line of NCSR 1166
(Whichards Beach Road); said point being located the following
courses and distances from a concrete monument located at the
southeasternly corner of the subdivision known as Harbor Estates,
as shown on a plat thereof recorded in Plat Cabinet A, Slide 113A
in the office of the Register of Deeds of Beaufort County, North
Carolina (said concrete monument also being the southwesterly
corner of Tract II described below): South 35- 52' 54" East 62.93
feet; South 36- 20' 33" West 30.61 feet; and South 64- 01' 09" East
16.66 feet to a point. THENCE FROM SAID POINT OF BEGINNING BEING
SO LOCATED, along and with the southern right-of-way line of
Whichards Beach Road South 64- 01' 03" East 132.39 feet to a point;
thence South 64- 00' 52" East 49.07 feet to a point; thence South
64- 01' 18" East 50.66 feet to a point; thence South 64- 01' 12"
East 220.27 feet to a point; thence South 64- 01' 09" East 45.61
feet to a point; thence continuing along and with the southern
right-of-way line of NCSR 1166 with a curve to the right in a
southeastwardly direction which has a chord bearing and distance of
South 57- 55' 13" East 341.99 feet to a point; thence South 51- 52'
17" East 22.40 feet to a point; thence continuing South 51- 52' 17"
East 300.00 feet to a point in the southern right-of-way line of
NCSR 1166 (all previous calls being along and with the southern
right-of-way line of NCSR 1166); thence leaving NCSR 1166 South 38-
00' 08" West 140.26 feet to a point; thence South 51- 52' 37" East
31.00 feet to a point; thence South 51- 52' 19" East 131.00 feet to
a point; thence South 38- 00' 08" West 50.00 feet to a point;
thence North 51- 59' 55" West 21.00 feet to a point; thence South
37- 59' 26" West 137.56 feet to a point; thence South 52- 57' 27"
East 107.66 feet to a point; thence South 35- 48' 31" West 49.16
feet to a point; thence South 37- 39' 39" West 149.73 feet to a
point; thence continuing South 37- 39' 39" West 18.38 feet to a
point in a ditch; thence along and with said ditch the following
courses: North 56- 10' 32" West 114.97 feet to a point; North 57-
56' 27" West 120.08 feet to a point; thence North 59- 09' 12" West
105.20 feet to a point; thence North 57- 02' 11" West 105.33 feet
to a point; thence North 64- 27' 40" West 506.54 feet to a point;
thence North 56- 33' 24" West 99.24 feet to a point; thence North
48- 59' 54" West 220.23 feet to a point; thence North 47- 02' 51"
West 145.55 feet to a point; thence North 36- 19' 37" East 158.65
feet to a point; thence North 36- 19' 33" East 51.10 feet to a
point; thence North 36- 20' 24" East 24.66 feet to a point; thence
North 36- 20' 24" East 24.66 feet to a point; thence North 36- 20'
20" East 100.34 feet to a point; thence North 36- 20' 41" East
166.95 feet to a point; thence with a curve to the right (which
curve has radius of 20 feet, a chord bearing
BK 1063 PG 374
and distance of North 76- 08' 47" East 25.60 feet, and an arc
distance of 27.78 feet) to the point of beginning.
Together with a perpetual non-exclusive easement for ingress,
egress and regress across a 60-foot wide private right-of-way
running southwardly from NCSR 1166 at point (C) in the Xxxxx X.
Xxxxx line as shown on the plat entitled "Plan of Land surveyed for
Xxxxxx X. Xxxxx" recorded in Plat Cabinet A, Slide 42A, in the
Beaufort County Registry.
TRACT II:
All that certain tract or parcel of land lying and being situate in
Chocowinity Township, Beaufort County, North Carolina, and being
more particularly described as follows:
Beginning at an existing concrete monument in the northern right-
of-way line of NCSR 1166 (Whichards Beach Road), said concrete
monument being also the southeasterly corner of the subdivision
known as Harbor Estates, as shown on a plat thereof recorded in
Plat Cabinet A, Slide 113A in the office of the Register of Deeds
of Beaufort County, North Carolina. THENCE FROM SAID POINT OF
BEGINNING BEING SO LOCATED, North 30- 36' 00" East 375.64 feet to a
point; thence North 30- 36' 00" East 17.0 feet to a point in a
canal; thence continuing with the canal North 48- 42' 00" East
23.43 feet to a point; thence continuing with the canal North 30-
26' 00" East 476.44 feet to a point; thence North 31- 42' 00" East
427.85 feet to a point in the mean high water line of the Pamlico
River; thence along and with the mean high water line of the
Pamlico River the following courses and distances; North 71- 11'
00" East 88.88 feet to a point; thence North 78- 57' 00" East 77.78
feet to a point; thence North 51- 09' 00" East 53.88 feet to a
point; thence South 21- 39' 00" East 42.48 feet to a point; thence
South 55" 23' 00" East 82.19 feet to a point; thence North 65- 06'
00" East 38.64 feet to a point; thence South 45- 07' 00" East
146.64 feet to a point; thence South 59- 32' 00" East 106.73 feet
to a point; thence South 65- 55' 46" East 91.98 feet to a point;
thence South 87- 44' 21" East 82.14 feet to a point; thence South
83- 21' 00" East 96.80 feet to a point; thence North 78- 56' 00"
East 251.10 feet to a point; thence South 63- 13' 00" East 91.37
feet to a point; thence South 63- 13' 00" East 182.56 feet to a
point; thence South 63- 13' 00" East 107.00 feet to a point; thence
leaving said river South 38- 18' 41 " West 21.94 feet to a concrete
monument; thence continuing South 38- 18' 41" West 701.64 feet to a
concrete monument; thence continuing South 38- 18' 41" West 64.72
feet to a concrete monument; thence continuing South 38- 18' 41"
West 108.03 feet to a concrete monument; thence South 38- 18' 41"
West 106.26 feet to a concrete monument; thence continuing South
38- 18' 41" West 104.29 feet to a concrete monument; thence
continuing South 38- 18' 41" West 102.43 feet to a concrete
monument; thence South 38- 18' 41" West 127.21 feet to a concrete
monument; thence South 38- 18' 41" West 35.74 feet to a concrete
BK 1063 PG 375
monument; thence South 38- 18' 41" West 63.98 feet to a concrete
monument; thence continuing South 38- 18' 41" West 99.54 feet to a
concrete monument; thence continuing South 38- 18' 41" West 99.16
feet to a concrete monument in the northern right-of-way line of
NCSR 1166; thence continuing South 38- 18' 41" West 106.40 feet to
a concrete monument along and with the northern right-of-way line
of NCSR 1166 along a curve to the left in a northwestwardly
direction to a point (which curve has a chord bearing and distance
of North 51- 41' 19" West 100.00 feet); thence continuing along and
with the northern right-of-way line of NCSR 1166 along a curve to
the left in a northwestwardly direction to a point (which curve has
a chord bearing and distance of North 55- 31' 51" West 396.18
feet); thence continuing along and with the northern right-of-way
line of NCSR 1166 North 62- 36' 41" West 58.52 feet to a point;
thence continuing along and with the northern right-of-way line of
NCSR 1166 North 63- 28' 00" West 100.00 feet to a point; ;thence
continuing along and with the northern right-of-way line of NCSR
1166 North 64- 04' 00" West 470.44 feet to the point or place of
beginning.
Together with all property lying between the northern property line
of the above-described property, the eastern and western property
line of the above-described property extended in a northeasterly
direction to the mean high water line of the Pamlico River and the
mean high water line of the southern shore of the Pamlico River.
81-0242 (DV)
12/28/96
CDR/DCR
WSMAIN/205631
BK 1063 PG 376
to it in any court procedure involving any of the lessees under
the Leases in any bankruptcy, insolvency, or reorganization
proceedings in any state or federal court and (2) any and all
payments made by lessees in lieu of Rent. The Assignor hereby
appoints the Assignee as its irrevocable attorney-in-fact to
appear in action and/or to collect any such award or payment
following an Event of Default.
The Assignor hereby assigns to the Assignee all security
deposits received by the Assignor or any agent of the Assignor in
respect of any Leases. Prior to an Event of Default and demand
by the Assignee for delivery of such security deposits to it or
its designee, the Assignor shall maintain the security deposits
as required by the Deed f Trust. After an Event of Default and
upon demand by the Assignee, the Assignor shall deliver such
deposits to the Assignee or its designee. Upon delivery of such
security deposits to the Assignee, the Assignee shall hold such
deposits pursuant to the terms of the Leases in respect of which
such deposits were obtained by the Assignor. In no event,
however, shall the Assignee be liable under any Lease of any part
of the Trust Estate for the return of any security deposit in any
amount in excess of the amount delivered to the Assignee by the
Assignor. Any security deposits delivered to and held by the
Assignee shall not bear interest.
The Assignor, upon the occurrence of an Event of Default,
hereby authorizes the Assignee, at its option, to enter and take
possession of the Trust Estate; to manage and operate the Trust
Estate; to collect all or any Rents accruing therefrom and from
the Leases; to let the Trust Estate or any part thereof; to
cancel the Leases pursuant to the terms of the Leases and to
enter into any modification of any lease with tenant of such
Lease; to evict tenants in accordance with the terms of the
applicable Leases; to bring or defend any suits in connection
with the possession of the Trust Estate in its own name or the
Assignor's name; to make repairs as the Assignee deems
appropriate; and to perform such other acts in connection with
management and operation of the Trust Estate as the Assignee, in
its discretion, may deem proper.
The receipt by the Assignee of any Rents pursuant to this
instrument after the institution of foreclosure proceedings under
the Deed of Trust shall neither cure such default nor affect such
proceedings or any sale pursuant thereto.
The Assignee shall not be obligated to perform or discharge
any obligation or duty to be performed or discharged by the
Assignor under any of the Leases. The Assignor hereby agrees to
indemnify the Assignee for, and to save it harmless from, any and
all liability arising from any of the Leases or from this
Assignment, except for gross negligence or willful misconduct of
the Assignee during any period in which the Assignee is in
possession of the Trust Estate. This Assignment shall not place
responsibility for the control, care management or repair of the
Trust Estate upon the Assignee, or make the Assignee responsible
or liable for any negligence in the management, operation,
upkeep, repair or control of the Trust Estate resulting in loss
or injury or death to any lessee, licensee, employee or stranger
prior to the Assignee's assuming actual operation or management
of the Trust Estate following an Event of Default.
The Assignor covenants and represents: that the Assignor has
full right and title to assign the Leases and the Rents due or to
become due thereunder; that the terms of the Leases have not been
changed from the terms in the copies of the Leases submitted to
the Assignee for approval; that no other assignment of any
interest therein has been made; that, to Assignor's actual
knowledge, there are no existing defaults under the provisions
thereof; and that the Assignor will not hereafter cancel,
surrender or terminate any of the Leases, exercise any option
which might lead to such termination, or change, alter or modify
them or consent to the release of any party liable thereunder or
to the assignment of the lessees' interest in them without the
prior written consent of the Assignee.
- 2 -
R#0202465.02
BK 1063 PG 377
The Assignor hereby authorizes the Assignee upon the
occurrence of an Event of Default, to give notice in writing of
this Assignment at any time to any lessee under any of the
Leases. The Assignor authorizes and directs each and every
tenant under the leases, upon receipt of written notice from the
Assignee that an Event of Default has occurred, to pay Rents to
the Assignee upon written demand for payment by the Assignee,
without any liability to the Assignor to inquire further as to
the existence of any Event of Default hereunder or under any of
the other Loan Instruments (as defined in the Deed of Trust) by
the Assignor.
Violation of any of the covenants, representations and
provisions contained herein by the Assignor is default under the
terms of the Note and the Deed of Trust.
A material default (one on the basis of which the tenant is
entitled to terminate its lease, to withhold rent, or to expend
funds and deduct the amount of such expenditure from rent) by the
Assignor under any of the terms of the Leases assigned herein
shall be deemed a default hereunder. Any expenditures made by
the Assignee in curing such a default on the Assignor's behalf
(including, without limitation, reasonable attorneys' fees for
services in fact provided, whether or not suit is commenced),
with interest thereon at the per annum rate of 18% or the highest
contract rate permitted by applicable law, whichever is less,
shall become part of the debt secured by this Assignment. If the
Assignor is liable for attorneys' fees incurred by the Assignee
pursuant to any provision in this Assignment, such attorneys'
fees for which the Assignor is liable shall be the actual
attorneys' fees incurred and shall be based on the normal hourly
rate of the attorneys and paralegals performing the work, without
regard to any statutory presumption.
Any controversy or claim arising our of or relating to this
Assignment of Rents and Leases shall be determined by arbitration
in accordance with Commercial Arbitration Rules of the American
Arbitration Association. The number of arbitrators shall be
three. One arbitrator shall be appointed by each of the parties
and the third arbitrator, who shall serve as chairman of the
tribunal, shall be appointed by the American Arbitration
Association. The place of arbitration shall be Charlotte, North
Carolina. Any arbitral award arising from any arbitration
pursuant to this paragraph shall be final and binding upon all
parties hereto.
All communications and notices provided for hereunder shall
be in writing and shall be given in the manner (and shall be
deemed effective at the time) prescribed by the Deed of Trust.
The full performance of the Deed of Trust and the duly
entered release or cancellation of the Deed of Trust of record
render this Assignment void.
Neither the existence of this Assignment nor the exercise of
its privilege to collect the Rents shall be construed as a waiver
by the Assignee, or its successors and assigns, of the right to
enforce payment of the debt hereinabove mentioned, in strict
accordance with terms and provisions of the Note and the Deed of
Trust for which this Assignment is given as additional security.
This Assignment applies to and binds the parties hereto and
their respective heirs, administrators, executors, successors and
assigns, as well as any subsequent owner of the Trust Estate and
any assignee of the Deed of Trust referred to herein.
- 3 -
R#0202465.02
BK 1063 PG 378
IN WITNESS WHEREOF, the Assignor has signed and sealed this
instrument the date first above set out.
FOUNTAIN POWERBOATS, INC., a
North Carolina corporation
By: /s/ Xxxxxxxx X. Xxxxxxxx, Xx.
_____________ President
ATTEST:
/s/ Xxxxxxx X. Xxxxxxxx
______________ Secretary
[CORPORATE SEAL]
- 4 -
R#0202465.02
BK 1063 PG 379
NORTH CAROLINA
CRAVEN COUNTY
I, Xxxxxxxxx X. Xxxxxx, a Notary Public of Xxxxxx County,
North Carolina, do hereby certify that Xxxxxxx X. Xxxxxxxx
personally came before me this day and acknowledged that [s] he
is the ___-____ Secretary of Fountain Powerboats, Inc., a North
Carolina corporation, and that by authority duly given and as the
act of the corporation, the foregoing instrument was signed in
its name by its __-_____ President, sealed with its corporate
seal and attested by himself/herself as its ________-______
Secretary.
WITNESS my hand and notarial seal, this 31st day of
December, 1996.
/s/ Xxxxxxxxx X. Xxxxxx
Notary Public
[NOTARY SEAL]
My commission expires:
11-30-99
North Carolina
Beaufort County
The foregoing Certificate of Xxxxxxxxx X.
Xxxxxx
Notary Public/Notaries Public is/are
certified to be correct This 31st day of
December, 1996 at 3:16 o'clock P.M.
By /s/Xxxx Till
Register of Deeds Ass't/Deputy Register of
Deeds
- 5 -
R#0202465.02
CORPORATE GUARANTY
Date: December 31, 1996
General Electric Capital Corporation
0000 Xxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
To induce you to enter into, purchase or otherwise acquire,
now or at any time hereafter, any promissory notes, security
agreements, chattel mortgages, pledge agreements, conditional
sale contracts, lease agreements, and/or any other documents or
instruments evidencing, or relating to, any lease, loan,
extension of credit or other financial accommodation,
specifically including, but not limited to, credit extended
pursuant to that certain promissory note dated December 31, 1996,
executed by the Customer (hereinafter defined) and payable to
you, in the amount of $10,000,000 (collectively "Account
Documents" and each an "Account Document") to FOUNTAIN
POWERBOATS, INC., a corporation organized and existing under the
laws of the State of North Carolina ("Customer"), but without in
any way binding you to do so, the undersigned for good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, does hereby guarantee to you, your
successors and assigns, the due regular and punctual payment of
any sum or sums of money which the Customer may owe to you now or
at any time hereafter, whether evidenced by an Account Document,
on open account or otherwise, and whether it represents
principal, interest, rent, late charges, indemnities, an original
balance, an accelerated balance, liquidated damages, a balance
reduced by partial payment, a deficiency after sale or other
disposition of any leased equipment, collateral or security, or
any other type of sum of any kind whatsoever that the Customer
may owe to you now or at any time hereafter, and does hereby
further guarantee to you, your successors and assigns, the due,
regular and punctual performance of any other duty or obligation
of any kind or character whatsoever that the Customer may owe to
you now or at any time hereafter (all such payment and
performance obligations being collectively referred to as
"Obligations"). Undersigned does hereby further guarantee to pay
upon demand all losses, costs, attorneys' fees and expenses which
may be suffered by you by reason of Customer's default or
default of the undersigned.
One of the undersigned, FOUNTAIN POWERBOAT INDUSTRIES, INC.,
a Nevada corporation (the "Parent Corporation"), owns all of the
stock of the Customer and therefore receives a direct financial
benefit as a result of the credit extended by you to the
Customer. The remaining undersigned guarantors are wholly owned
subsidiaries of the Customer and likewise shall be directly
benefited as a result of the credit extended by you to the
Customer. The undersigned acknowledge that they are familiar
with the financial condition of the Customer and acknowledge that
you have no obligation to provide the undersigned with
information regarding the present or future financial condition
of the Customer.
R#0202886.03
The Guaranty is a guaranty of prompt payment and
performance (and not merely a guaranty of collection). Nothing
herein shall require you to first seek or exhaust any remedy
against the Customer, its successors and assigns, or any other
person obligated with respect to the Obligations, or to first
foreclose, exhaust or otherwise proceed against any leased
equipment, collateral or security which may be given in
connection with the Obligations. The undersigned hereby waives
any and all rights under N.C.G.S. 26-7 et seq. and any similar
subsequent law pursuant to which the undersigned might otherwise
be entitled to require that you pursue collection against
collateral and/or primary obligors. It is agreed that you may,
upon any breach or default of the Customer, or at any time
thereafter, make demand upon the undersigned and receive payment
and performance of the Obligations, with or without notice or
demand for payment or performance by the Customer, its successors
or assigns, or any other person. Suit may be brought and
maintained against the undersigned, at your election, without
joinder of the Customer or any other person as parties thereto.
The obligations of each signatory to this Guaranty shall be joint
and several.
The undersigned agrees that its obligations under this
Guaranty shall be primary, absolute, continuing and
unconditional, irrespective of and unaffected by any of the
following actions or circumstances (regardless of any notice to
or consent of the undersigned): (a) the genuineness, validity,
regularity and enforceability of the Account Documents or any
other document; (b) any extension, renewal, amendment, change,
waiver or other modification of the Account Documents or any
other document; (c) the absence of, or delay in, any action to
enforce the Account Documents, this Guaranty or any other
document; (d) your failure or delay in obtaining any other
guaranty of the Obligations (including, without limitation, your
failure to obtain the signature of any other guarantor
hereunder); (e) the release of, extension of time for payment or
performance by, or any other indulgence granted to the Customer
or any other person with respect to the Obligations by operation
of law or otherwise; (f) the existence, value, condition, loss,
subordination or release (with or without substitution) of , or
failure to have title to or perfect and maintain a security
interest in, or the time, place and manner of any sale or other
disposition of any leased equipment, collateral or security given
in connection with the Obligations, or any other impairment
(whether intentional or negligent, by operation of law or
otherwise) of the rights of the undersigned: (g) the Customers
voluntary or involuntary bankruptcy, assignment for the benefit
of creditors, reorganization, or similar proceedings affecting
the Customer or any of its assets; or (h) any other action or
circumstances which might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor.
This Guaranty may be terminated upon delivery to you (at
your address shown above) of a written termination notice from
the undersigned. However, as to all Obligations (whether
matured, unmatured, absolute, contingent or otherwise) incurred
by the Customer prior to your receipt of such written termination
notice (and regardless of any subsequent amendment, extension or
other modification which may be made with respect to such
Obligations), this Guaranty shall nevertheless continue and
remain undischarged until all such Obligations are indefeasibly
paid and performed in full.
- 2 -
R#0202886.03
The undersigned agrees that this Guaranty shall remain in
full force and effect or be reinstated (as the case may be) if at
any time payment or performance of any of the Obligations (or any
part thereof) is rescinded, reduced or must otherwise be restored
or returned by you, all as though such payment or performance had
not been made. If, by reason of any bankruptcy, insolvency or
similar laws affecting the rights of creditors, you shall be
prohibited from exercising any of your rights or remedies against
the Customer or any other person or against any property, then,
as between you and the undersigned, such prohibition shall be of
no force and effect, and you shall have the right to make demand
upon, and receive payment from, the undersigned of all amounts
and other sums that would be due to you upon a default with
respect to the Obligations.
Notice of acceptance of this Guaranty and of any default by
the Customer or any other person is hereby waived. Presentment,
protest demand, and notice of protest, demand and dishonor of any
of the Obligations, and the exercise of possessory, collection or
other remedies for the Obligations, are hereby waived. The
undersigned warrants that it has adequate means to obtain from
the Customer of a continuing basis financial data and other
information regarding the Customer and is not relying upon you to
provide any such data or other information. Without limiting the
foregoing, notice of adverse change in the Customer's financial
condition or of any other fact which might materially increase
the risk of the undersigned is also waived. All settlements,
compromises, accounts stated and agreed balances made in good
faith between the Customer, its successors or assigns, and you
shall be binding upon and shall not affect the liability of the
undersigned.
Payment of all amounts now or hereafter owed to the
undersigned by the Customer or any other obligor for any of the
Obligations is hereby subordinated in right of payment to the
indefeasible payment in full to you of all Obligations and is
hereby assigned to you as a security therefor. The undersigned
hereby irrevocably and unconditionally waives and relinquishes
all statutory, contractual, common law,, equitable and all other
claims against the Customer, any other obligor for any of the
Obligations, any collateral therefor, or any other assets of the
Customer or any such other obligor, for subrogation,
reimbursement, exoneration, contribution, indemnification, setoff
or other recourse in respect of sums paid or payable to you by
the undersigned hereunder, and the undersigned hereby further
irrevocably and unconditionally waives and relinquishes any and
all other benefits which it might otherwise directly or
indirectly receive or be entitled to receive by reason of any
amounts paid by, or collected or due from, it, the Customer or
any other obligor for any of the Obligations, or realized from
any of their respective assets.
Any controversy or claim arising out of or relating to this
Corporate Guaranty shall be determined by arbitration in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association. The number of arbitrators shall be
three. One arbitrator shall be appointed by each of the parties
and the third arbitrator, who shall serve as chairman of the
tribunal, shall be appointed by the American Arbitration
Association. The place of arbitration shall be Charlotte, North
Carolina. Any arbitral award arising form any arbitration
pursuant to this paragraph shall be final and binding upon all
parties hereto.
- 3 -
R#0202886.03
As used in this Guaranty, the word "person" shall include
any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated
organization, or any government or any political subdivision
thereof.
This Guaranty is intended by the parties as a final
expression of the guaranty of the undersigned and is also
intended as a complete and exclusive statement of the terms
thereof. No course of dealing, course of performance or trade
usage, nor any paid evidence of any kind, shall be used to
supplement or modify any of the terms hereof. Nor are there any
conditions to the full effectiveness of this Guaranty. This
Guaranty and each of its provisions may only be waived, modified,
varied, released, terminated or surrendered, in whole or in part,
by a duly authorized written instrument signed by you. No
failure by you to exercise your rights hereunder shall give rise
to any estoppel against you, or excuse the undersigned from
performing hereunder. Your waiver of any right to demand
performance hereunder shall not be a waiver of any subsequent or
other right to demand performance hereunder.
This Guaranty shall bind the undersigned's successors and
assigns and the benefits thereof shall extend to and include your
successors and assigns. In the event of default hereunder, you
may at any time inspect undersigned's records, or at your option
undersigned shall furnish you with a current independent audit
report.
If any provisions of this Guaranty are in conflict with any
applicable statute, rule or law, then such provisions shall be
deemed null and void to the extent that they may conflict
therewith, but without invalidating any other provisions hereof.
Each signatory on behalf of a corporation guarantor warrants
that he had authority to sign on behalf of such corporation and
by so signing, to bind said guarantor corporation hereunder.
IN WITNESS WHEREOF, this Guaranty is executed the day and
year above written.
FOUNTAIN AVIATION, INC.
ATTEST:
By: /s/ Xxxxxxxx X. Xxxxxxxx, Xx.
_________________ President
/s/ Xxxxxxx X. Xxxxxxxx
______________ Secretary
[CORPORATE SEAL]
- 4 -
R#0202886.03
FOUNTAIN SPORTSWEAR, INC.
ATTEST:
By: /s/ Xxxxxxxx X. Xxxxxxxx, Xx.
_________________ President
/s/ Xxxxxxx X. Xxxxxxxx
______________ Secretary
[CORPORATE SEAL]
FOUNTAIN TRUCKING, INC.
ATTEST:
By: /s/ Xxxxxxxx X. Xxxxxxxx, Xx.
_________________ President
/s/ Xxxxxxx X. Xxxxxxxx
______________ Secretary
[CORPORATE SEAL]
FOUNTAIN UNLIMITED, INC.
ATTEST:
By: /s/ Xxxxxxxx X. Xxxxxxxx, Xx.
_________________ President
/s/ Xxxxxxx X. Xxxxxxxx
______________ Secretary
[CORPORATE SEAL]
FOUNTAIN POWER, INC.
ATTEST:
By: /s/ Xxxxxxxx X. Xxxxxxxx, Xx.
_________________ President
/s/ Xxxxxxx X. Xxxxxxxx
______________ Secretary
[CORPORATE SEAL]
- 5 -
R#0202866.03
FOUNTAIN POWERBOAT INDUSTRIES, INC.
ATTEST:
By: /s/ Xxxxxxxx X. Xxxxxxxx, Xx.
_________________ President
/s/ Xxxxxxx X. Xxxxxxxx
______________ Secretary
[CORPORATE SEAL]
- 6 -
R#0202886.03
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "Agreement") is made as
of this 31st day of December, 1996, in favor of GENERAL ELECTRIC
CAPITAL CORPORATION, a New York corporation (the "Lender"), by
XXXXXXXX X. XXXXXXXX, XX. (the foregoing individual hereinafter
referred to as the "Unsecured Creditor");
Recitals:
1. FOUNTAIN POWERBOATS, INC., a North
Carolina corporation (the "Borrower"), has applied to the Lender
for a loan in the principal amount of $10,000,000 (such loan
being referred to as the "Financial Accommodations") pursuant to
the provisions of a Loan Agreement of even date herewith, by and
between the Lender, the Borrower and certain other parties (the
"Loan Agreement"). The Financial Accommodations are to be
evidenced by, and repaid with interest in accordance with the
provisions of, a promissory note dated of even date herewith in
the amount of $10,000,000, executed by the Borrower and payable
to the Lender (the "Note").
2. The Unsecured Creditor has
requested the Lender to enter into the Loan Agreement with the
Borrower and to make the Financial Accommodations to the Borrower
pursuant thereto. The Unsecured Creditor has a substantial
interest in the Borrower and shall derive direct financial
benefit as a result of credit extended to the Borrower.
3. The Lender has required, as a
condition to the making of the Financial Accommodations, the
execution of this Agreement by the Unsecured Creditor.
NOW, THEREFORE, in consideration of the recitals and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Unsecured Creditor hereby
agrees with the Lender as follows:
1. Amount of Subordinated Indebtedness and Recitals. the
Unsecured Creditor represents and warrants that (a) as of the
date hereof the Subordinated Indebtedness is in the amount of __-
0-__ and No/100 Dollars ($__-0-_______) and after the date
hereof, the Subordinated Indebtedness shall not at any time
exceed $500,000; (b) the above Recitals are true, accurate, and
correct and are incorporated in this Agreement by reference; (c)
the Unsecured Creditor is the lawful owner of the Subordinated
Indebtedness, free and clear of all liens, assignments, security
interests and other encumbrances; and (d) the Unsecured Creditor
has not previously subordinated the subordinated Indebtedness.
2. Subordination to Lender's Obligations. The Unsecured
Creditor hereby subordinates and postpones the payment and the
time of payment of the Subordinated
R#0202895.03
Indebtedness to and in favor of the payment and the time of
payment of the Lender's Obligations. Except as hereinafter
provided, so long as all or any part of the Lender's Obligations
remain unpaid, the Unsecured Creditor shall not, without the
prior written consent of the Lender, ask, demand, xxx for, set
off, accept, or receive any payment of all or any part of the
Subordinated Indebtedness from the Borrower; provided, that until
the occurrence of an event of default under any of the Loan
Documents, the Unsecured Creditor may receive scheduled payments
of interest only and scheduled principal payments due in
accordance with the Subordinated Indebtedness. The Unsecured
Creditor agrees not to subordinate, grant a security interest or
lien on, assign, or transfer all or any part of the Subordinated
Indebtedness to any other person without the prior written
consent of the Lender. The Unsecured Creditor will not, without
the prior written consent of Lender: (a) commence, or join with
any other creditor in commencing, any bankruptcy,
reorganization, insolvency or similar proceedings with respect to
Borrower; or (b) extend, modify or renew any of the Borrower's
obligations under the Subordinated Indebtedness or the documents
evidencing or executed or delivered in connection with the
Subordinated Indebtedness, or release any surety or security for
such obligations or obtain additional collateral security or
exercise any other right under the Subordinated Indebtedness, or
the documents evidencing or executed or delivered in connection
with the Subordinated Indebtedness. the Unsecured Creditor shall
take no action, either within an Insolvency Proceeding or
otherwise, that would affect, contest or hinder the Lender's
entitlement to priority over the Subordinated Indebtedness.
The Borrower agrees that it will not give any security
agreement with respect to, convey, assign, or pledge any property
of the Borrower as security for or to be applied to the payment
of the Subordinated Indebtedness while this agreement is in
effect.
3. Distributions, etc. In the event
of any distribution, division, or application, partial or
complete, voluntary or involuntary, by operation of law or
otherwise , of all or any part of the assets of the Borrower or
the proceeds thereof to creditors of the Borrower or to any
indebtedness, liabilities, and obligations of the Borrower by
reason of the liquidation, dissolution, or other winding up of
the Borrower or Borrower's business or in the event of any sale,
receivership, insolvency, or bankruptcy proceeding, or assignment
for the benefit of creditors, or any proceeding by or against the
Borrower for any relief under the Bankruptcy Code or any
insolvency law or other laws relating to the relief of debtors,
readjustment of indebtedness, reorganizations, compositions, or
extensions (an "Insolvency Proceeding"), then and in any such
event, any payment or distribution of any kind or character,
whether in cash, securities, or with respect to all or any part
of the Subordinated Indebtedness, shall be paid or delivered
directly to the Lender for application to the Lender's
Obligations (whether due or not due and in such order and manner
as the Lender may elect). The Unsecured Creditor hereby
irrevocably authorizes and empowers the Lender to demand, xxx
for, collect, and receive every such payment or distribution and
to give acquittance therefor and to file claims, vote, and take
such other proceedings in the Lender's own name or in the name of
the Unsecured Creditor or otherwise as the Lender may deem
necessary or advisable to carry out the provisions of this
Agreement. The Unsecured Creditor hereby agrees to execute and
deliver to the Lender such powers of attorney, assignments,
endorsements, or other instruments as may be required by the
Lender in order to enable the Lender to enforce any and all
claims upon or with respect to the Subordinated Indebtedness and
- 2 -
R#0202895.03
to collect and receive any and all payments or distributions
which may be payable or deliverable at any time upon or with
respect to the Subordinated Indebtedness.
4. Receipt of Payments by Unsecured
Creditor. Should any payment or distribution not permitted by
the provisions of this Agreement be received by the Unsecured
Creditor upon or with respect to all or any part of the
Subordinated Indebtedness, the Unsecured Creditor will deliver
the same to the Lender in precisely the form received (except for
the endorsement or assignment of the Unsecured Creditor where
necessary) for application to the Lender's Obligations (whether
due or not due and in such order and manner as the Lender may
elect) and, until so delivered, the same shall be held in trust
by the Unsecured Creditor as property of the Lender. In the
event of the failure of the Unsecured Creditor to make any such
endorsement or assignment, the Lender, or any of its officers or
employers on behalf of the Lender, is hereby irrevocably
authorized to make the same.
5. Consents, Waivers, ect. The
Unsecured Creditor hereby consents that at any time and from time
to time and with or without consideration, the Lender may,
without further consent of or notice to the Unsecured Creditor
and without in any manner affecting, impairing, lessening, or
releasing any of the provisions of this Agreement, renew, extend,
change the manner, time, place, and terms of payment of, sell,
exchange, release, substitute, surrender, realize upon, modify,
waive, grant indulgences with respect to, and otherwise deal with
in any manner: (a) all or any part of the Lender's Obligations;
(b) all or any of the Loan Documents; (c) all or any part of any
property at any time securing all or any part of the Lender's
Obligations; and (d) any person at any time primarily or
secondarily liable for all or any part of the Lender's
Obligations and/or any collateral and security therefor. The
Unsecured Creditor hereby waives demand, presentment for payment,
protest, notice of dishonor and of protest with respect to the
Subordinated Indebtedness, notice of acceptance of this Agreement
by the Lender, notice of the making of any of the Lender's
Obligations, and notice of the occurrence of an event of default
under any of the Loan Documents.
6. Notices and Communications. All
notices and other combinations hereunder shall be in writing and
shall be effective when sent by certified mail, return receipt
requested: (a) if to the Unsecured Creditor, addressed to
Xxxxxxxx X. Xxxxxxxx, Xx., at Xxxxxxxx'x Xxxxx Xxxx, Xxxxxxxxxx,
Xxxxx Xxxxxxxx 00000 or at such other address as the Unsecured
Creditor shall have furnished in writing to the Lender, or (b) if
to the Lender, addressed to it at 0000 Xxxxxxxx Xxxx, Xxxxx 0000,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, or at such other address as the
Lender shall have furnished in writing to the Unsecured Creditor.
7. Transfer or Assignment of
Obligations. If any of the Lender's Obligations should be
transferred or assigned by the Lender, this Agreement will inure
to the benefit of the Lender's transferee or assignee to the
extent of such transfer or assignment, provided that the Lender
shall continue to have the unimpaired right to enforce this
Agreement as to any of the Lender's Obligations not so
transferred or assigned.
- 3 -
R#0202895.03
8. Acceleration of Lender's
Obligations. In the event that any of the agreements hereinabove
set out shall not be compiled with or shall be violated, the
Lender may, at its option, in any such event, terminate any
credit agreement or commitment for loans theretofore made to the
Borrower and (notwithstanding any of the provisions of any note
or other instrument evidencing the debts of the Borrower to the
Lender) immediately declare all or any part of such debt, with
interest, due and payable, and may without presentment for
payment, demand, protest, or any other notice or demand
whatsoever proceed to collect such debt.
9. Definitions.
The following terms have the following meanings:
"Lender Obligations" means all past, present, and future
indebtedness, liabilities, and obligations of any nature
whatsoever of the Borrower to the Lender in connection with the
Financial Accommodations including, without limitation, the Note
(as such Note may be amended, renewed, extended, provided the
principal amount of such Financial Accommodations may not be
increased above the principal amount of the Financial
Accommodations referenced herein or increased whatsoever upon
repayment of the principal evidenced by the Note, whether by
prepayment or through scheduled payments), and which are direct,
indirect, contingent, primary, secondary, alone, jointly with
others, due, to become due, unsecured, secured, future advances,
now existing, hereafter created, principal, interest, expense
payments, liquidation costs, and attorneys' fees and expenses.
"Loan Documents" means collectively any security agreement,
mortgage, deed of trust, indemnify deed of trust, collateral
pledge agreement, loan agreement, letter of credit application,
assignment, reimbursement agreement, promissory note, guaranty,
indemnity agreement, or any other instrument or agreement
previously, simultaneously, or hereafter executed and delivered
by the Borrower, or any other person as evidence of, security
for, guarantee of, or in connection with, the Financial
Accommodations, including, without limitation, the Loan Agreement
and the Note.
"Subordinated Indebtedness" means all past and present
indebtedness, liabilities, and obligations of any nature
whatsoever of the Borrower to the Unsecured Creditor (including
any renewals or extensions of present indebtedness), which are
direct, indirect, contingent, primary, secondary, alone, jointly
with others, due, to become due, unsecured, secured, future
advances, now existing, hereafter created, principal, interest,
expense payments, liquidation costs, and attorneys' fees and
expenses.
10. Arbitration. any controversy or
claim arising out of or relating to this Subordination Agreement
shall be determined by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association. The number of arbitrators shall be three. One
arbitrator shall be appointed by each of the parties and the
third arbitrator, who shall serve as chairman of the tribunal,
shall be appointed by the American Arbitration Association. The
place of
- 4 -
R#0202895.03
arbitration shall be Charlotte, North Carolina. Any arbitral
award arising from any arbitration pursuant to this paragraph
shall be final and binding upon all parties hereto.
11. Miscellaneous. The Lender may, at
its option, by written instrument, waive any of its rights
hereunder without in any manner impairing or affecting any of its
other rights hereunder. This Agreement shall not be affected,
impaired, or released b the delay or failure of the Lender to
exercise any of its rights and remedies against the Borrower or
under any of the Loan Documents or against any collateral or
security for the Lender's Obligations. No delay or failure on
the part of the Lender to exercise any of its rights or remedies
hereunder or now or hereafter existing at law or in equity or by
statute or otherwise, or any partial or single exercise thereof,
shall constitute a waiver thereof. All such rights remedies are
cumulative and may be exercised singly or concurrently and the
exercise of any one or more of them will not be a waiver of any
other. No waiver of any of its rights and remedies hereunder and
no modification or amendment of this Agreement shall be deemed to
be made by the Lender unless the same shall be in writing, duly
signed on behalf of the Lender, and each such waiver, if any
shall apply only with respect to the specific instance involved
and shall in no way impair the rights and remedies of the Lender
hereunder in any other respect at any other time.
The Lender shall have the right to grant participation in
the Lender's Obligations to others at any time and from time to
time, and the Lender may divulge to any such participant or
potential participant all information, reports, financial
statements, and documents obtained in connection with this
Agreement, any of the Loan Documents, or otherwise.
If any term of this Agreement or any obligation thereunder
shall be held to be invalid, illegal, or unenforceable, the
remainder of this Agreement and any other application of such
term shall not be affected thereby.
This Agreement may be executed in duplicate originals or in
several counterparts, each of which shall be deemed an original
but all of which together shall constitute one instrument, and it
shall not be necessary in making proof hereof to produce or
account for more than one such duplicate, original, or
counterpart.
This Agreement shall be binding upon the heirs, personal
representatives, successors, and assigns of the Unsecured
Creditor and shall inure to the benefit of the successors and
assigns of the Lender. As used herein, the singular number shall
include the plural, the plural the singular, and the use of the
masculine, feminine, or neuter gender shall include all genders,
as the context may require, and the term "person" shall include
an individual, a corporation, an association, a partnership, a
trust, and an organization. The paragraph headings of this
Agreement are for convenience only and shall not limit or
otherwise affect any of the terms hereof.
This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina and shall
be deemed to be executed, delivered and accepted in the State of
North Carolina.
- 5 -
R#0202895.03
IN WITNESS WHEREOF, the Unsecured Creditor has caused this
Agreement to be signed, sealed, and delivered on the day and year
first written above.
By: /s/ Xxxxxxxx X. Xxxxxxxx, Xx.
(SEAL)
_____________ President
The Borrower join in the execution of this Agreement so as
to signify their acceptance of and agreement and consent to the
provisions of this Agreement.
FOUNTAIN POWERBOATS, INC.,
a North Carolina corporation
By: /s/ Xxxxxxxx X. Xxxxxxxx, Xx.
_____________ President
Attest:
/s/ Xxxxxxx X. Xxxxxxxx
______________ Secretary
[CORPORATE SEAL]
- 6 -
R#0202895.03
COLLATERAL ASSIGNMENT OF SECURITY INTEREST IN
PATENTS, TRADEMARKS AND RELATED APPLICATIONS
WHEREAS, Fountain Powerboats, inc., a North Carolina
corporation ("Assignor"), and General Electric Capital
Corporation, a New York corporation ("Assignee"), executed and
entered into that certain Loan Agreement, dated as of December
31, 196 (the "Loan Agreement"); and
WHEREAS, the Loan Agreement requires Assignor to submit to
Assignee, on a quarterly basis, a document confirming the
Security Interest of Assignee in any patent or trademark with
respect to which Assignor or any of its subsidiaries has filed an
application or an assignment during the preceding calendar month;
and
WHEREAS, Assignor has filed federal trademark registration
applications and/or received trademark applications or
registrations by assignment with respect to the trademarks listed
on Schedule A (collectively, the "Trademarks"); and
WHEREAS, the parties hereto desire to confirm and perfect
the security interest (the "Security Interest") granted to
Assignee in the Trademarks, in accordance with the Loan
Agreements;
NOW, THEREFORE, subject in the terms, conditions and
limitations set forth in the Loan Agreement, and in consideration
of the mutual covenants, warranties and promises set forth in the
Loan Agreement, and other good and valuable consideration, the
full receipt and sufficiency of which are hereby acknowledged.
Assignor hereby grants and conveys unto Assignee a first lien
Security Interest in and to the Trademarks, any trademark
applications filed with respect thereto and any federal trademark
registrations issued or issuing with respect thereto and all
goodwill associated with the Trademarks, such grant being hereby
effected for the purposes and subject to the terms, conditions
and limitations set forth in the Loan Agreement.
Assignor hereby appoints General Electric Capital
Corporation, with full power of substitution, to file and record
this Collateral Assignment of Security Interest in Patents,
Trademarks and Related Applications, to transact all business in
the United States Patent and Trademark Office in connection
therewith, to receive any confirmatory documents relating
thereto, and to take any and all action before the Patent and
Trademark Office to give effect to this collateral Assignment of
Security Interest in Patents, Trademarks and Related Applications
and to the Loan Agreement referred to herein.
IN WITNESS WHEREOF, Assignor has duly executed this
Collateral Assignment of Security Interest in Patents, Trademarks
and Related Applications as of the 31st day of December, 1996.
FOUNTAIN POWERBOATS, INC.,
By: /s/ Xxxxxxxx X. Xxxxxxxx, Xx.
President
R#0202980.01
STATE OF NORTH CAROLINA )
)
COUNTY OF BEAUFORT )
On this 31st day of December, 1996, personally appeared
before me Xxxxxxxx X. Xxxxxxxx, Xx., President of Fountain
Powerboats, Inc., a North Carolina corporation, and, being by me
first duly sworn, signed the foregoing instrument and
acknowledged that he executed the same in the capacity and for
the purposes stated therein.
/s/ Xxxxxxxxx X. Xxxxxx
Notary Public
Xxxxxxxxx X. Xxxxxx
Printed Name of Notary Public
My commission expires:
11-30-99
[SEAL]
R#0202980.01
THE UNITED STATES OF AMERICA
1604523
CERTIFICATE OF REGISTRATION
This is to certify that the records of the Patent and
Trademark Office show that an application was filed in said
Office for registration of the Xxxx shown herein, a copy of said
Xxxx and pertinent data from the Application being annexed hereto
and made a part hereof,
And there having been due compilance with the requirements
of the law and with the regulations prescribed by the
Commissioner of Patents and Trademarks,
Upon examination, it appeared that the applicant was
entitled to have said Xxxx registered under the Trademark Act of
1946, as amended, and the said Xxxx has been duly registered this
day in the Patent and Trademark Office on the
PRINCIPAL REGISTER
to the registrant named herein.
This registration shall remain in force for TEN years unless
sooner terminated as provided by law.
In Testimony Whereof I have
hereunto set my hand and
caused the seal of the Patent
and Trademark Office to be
affixed this third day of July
1990.
/s/ Xxxxx X. Xxxxxxx, Xx.
Commissioner of Patents and
Trademarks
Int. Cl.: 12
Prior U.S. Cl.: 19
Reg. No. 1,604,523
United States Patent and Trademark Office
Registered July 3, 1990
TRADEMARK
PRINCIPAL REGISTER
FOUNTAIN
FOUNTAIN POWERBOATS, INC. (NORTH FIRST USE 11-25-1981:
CAROLINA CORPORATION) IN COMMERCE 11-25-1981.
X.X. XXXXXX 000
XXXXXXXXXX, XX 00000 SER. NO. 74-006.862, FILED 12-
1-1989.
FOR BOATS, IN CLASS 12 (U.S. Cl. 19) X.X. XXXX. EXAMINING ATTORNEY
THE UNITED STATES OF AMERICA
1606329
CERTIFICATE OF REGISTRATION
This is to certify that the records of the Patent and
Trademark Office show that an application was filed in said
Office for registration of the Xxxx shown herein, a copy of said
Xxxx and pertinent data from the Application being annexed hereto
and made a part hereof,
And there having been due compliance with the requirements
of the law and with the regulations prescribed by the
Commissioner of Patents and Trademarks,
Upon examination, it appeared that the applicant was
entitled to have said Xxxx registered under the Trademark Act of
1946, as amended, and the said Xxxx has been duly registered this
day in the patent and Trademark Office on the
PRINCIPAL REGISTER
to the registrant named herein.
This registration shall remain in force for TEN years unless
sooner terminated as provided by law.
In Testimony Whereof I have
hereunto set my hand and
caused the seal of the patent
and Trademark Office to be
affixed this third day of July
1990.
/s/ Xxxxx X. Xxxxxxx, Xx.
Commissioner of Patents and
Trademarks
Int. Cl.: 12
Prior U.S. Cl.: 19
Reg. No. 1,606,329
United States Patent and Trademark Office
Registered July 17, 1990
TRADEMARK
PRINCIPAL REGISTER
FOUNTAIN POWERBOATS, INC. (NORTH FIRST USE 11-25-1981:
CAROLINA CORPORATION) IN COMMERCE 11-25-1981.
X.X. XXXXXX 000
XXXXXXXXXX, XX 00000 SER. NO. 74-007.625 FILED 12-1-
1989.
FOR BOATS, IN CLASS 12 (U.S. Cl. 19) XXXXX X. XXXXX EXAMINING ATTORNEY
This FINANCING STATEMENT is presented to a Filing Officer for
No. of Additional
filing pursuant to the Uniform Commercial Code. Sheets
Presented: 10
(1) Debtor(s) (Last Name First) and Address(s): (2) Secured
Party(ies) (Names and Address(es)
(Please TYPE)
Fountain Powerboats, Inc. General Electric Captial Corporation
P.O. Drawer 457, 6100 Fairview Rd., Suite 0000
Xxxxxxxxx Xxxxx Xx. Xxxxxxxxx, XX 00000 961214
96 DEC 31 PM 3:17
Xxxxxxxxxx, XX 00000
(3)(a) x Collateral is or includes fixtures.
(b) 1
. Timber, Minerals or Accounts Subject
to G.S: 25-9-103(5) are covered
(c) 1. Crops Are Growing Or To Be Grown For
On Real Property Described In Section (5). Filing
If either block 3(a) or block 3(b) applies described real Officer
estate, including record owner(s) in section (5).
(4) Assignee(s) of Secured Party, Address(es):
(5) This financing Statement Covers the Following types [or
items] of property.
See Attached Exhibit A.
1. Products of the Colleteral Are Also Covered.
TERMINATION STATEMENT: This Statement of Termination of
Financing is presented to a filing Officer pursuant to the
Uniform commercial Code. The Secured party certifies that the
Secured Party no longer claims a security interest under the
financing statement bearing the file number shown above. (A
termination statement signed by a person other than the secured
party of record must include or be accompanied by the assignment
r a statement by the secured party of record that he has assigned
the security interest to the signer of the Termination
Statement.)
Date _______________________, 19_______________________
By _______________________________
(Signature of Secured Party or Assignee)
President
(3) Filing Officer Copy Acknowledgment. Filing Officer is requested
to note file Number and hour of filing on this copy and
return to the person filing as an acknowledgment. UCC-1
XXXX AND XXXXX, P.A.
ATTORNEYS AT LAW
0000 XXXXXXX XXXXX
000 XXXX XXXX XXXXX XXXX POST OFFICE XXX 000
XXXX XXXXXX XXX 0000 XXX XXXX, X.X. 28563-0867
XXXXXXXXXX, X.X. 00000-0000 ___________
TELEPHONE (000) 000-0000 TELEPHONE (000) 000-0000
FACSIMILE (000) 000-0000 FACSIMILE (000) 000-0000
XXXXX 0000
XXX XXXXXXXX XXXXXX
XXXXXXXXXXXX XXXXXX XXXX
XXXX XXXXXX XXX 0000
XXXXXXX, X.X. 00000-0000
TELEPHONE (000) 000-0000
FACSIMILE (000) 000-0000
UNIVERSITY CORPORATE CENTER
000 XXXXXX XXXXX
XXXX XXXXXX XXX 0000
XXXXXXXXXX, X.X. 00000-0000
TELEPHONE (000) 000-0000
FACSIMILE (000) 000-0000
December 31, 1996
General Electric Capital Corporation
0000 Xxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Ladies and Gentlemen:
We have acted as counsel to Fountain Powerboats, Inc., a
North Carolina corporation ("Borrower"), Fountain Powerboat
Industries, Inc., a Nevada corporation, Fountain Aviation, Inc.,
a North Carolina corporation, Fountain Sportswear, Inc., a North
Carolina corporation, Fountain Trucking, Inc., a North Carolina
corporation, Fountain Unlimited, Inc., a North Carolina
corporation, and Fountain Power, Inc., a North Carolina
corporation (collectively, "Guarantors"), in connection with that
certain $10,000,000.00 loan (the "Loan") from General Electric
Capital Corporation, a New York corporation ("Lender") to
Borrower.
For purposes of rendering this opinion, we have examined the
following documents, all dated of even date herewith, unless
otherwise noted below:
1. Loan Agreement ("Loan Agreement") among Borrower,
Guarantors, and Lender;
2. Promissory Note ("Note") in the original principal
amount of $10,000,000.00 executed by Borrower and payable to the
order of Lender;
3. Deed of Trust, Assignment of Rents and Security
Agreement ("Deed of Trust") executed by Borrower to Xxxxxxx x.
Xxxxxxxx, Xx., as trustee for Lender, encumbering certain real
property ("Real Property") located in Beaufort County, North
Carolina, as more particularly described therein, as security for
the Loan;
4. Assignment of Rents and Leases ("Assignment of Leases")
executed by Borrower to the benefit of Lender with respect to the
Real Property;
XXXX AND XXXXX, P.A.
General Electric Capital Corporation
December 31, 1996
Page 2
5. Master Security Agreement ("Security Agreement")
executed by Borrower and Lender granting Lender a security
interest in certain personal property described therein
("Personal Property") as security for the Loan (the Real Property
and the Personal Property being hereinafter collectively called
the "Property");
6. Collateral Assignment of Security Interest in Patents,
Trademarks and Related Applications ("Collateral Assignment")
executed by Borrower granting Lender a security interest in
certain personal property described therein as security for the
Loan;
7. One updated UCC-1 Financing Statement to be filed in
the office of the Register of Deeds of Beaufort County naming
Borrower as Debtor and Lender as Secured Party;
8. One undated UCC-1 Financing Statement to be filed in
the office of the Secretary of State of North Carolina naming
Borrower as Debtor and Lender as Secured Party (the two financing
statements collectively being referred to as the "Financing
Statements");
9. Corporate Guaranty ("Guaranty") executed by Guarantors
to the benefit of Lender;
10. Subordination Agreement ("Subordination Agreement")
executed by Xxxxxxxx X. Xxxxxxxx, Xx. and Borrower to the benefit
of Lender; and,
11. Assignment of Life Insurance Policy as Collateral
("Life Insurance Assignment") executed by Borrower granting
Lender a security interest in a specific life insurance policy on
the life of Xxxxxxxx X. Xxxxxxxx, Xx. as security for the Loan.
For purposes of this opinion, the Loan Agreement, the Note,
the Deed of Trust, the Assignment of Leases, the Security
Agreement, the Collateral Assignment, the Financing Statements,
and the Life Insurance Assignment collectively hereinafter are
called the "Loan Documents".
In connection with this opinion, we have requested Borrower
and Guarantors to provide us with specific documents and any and
all other documents which might be applicable to this
transaction, and we have examined all documents they have
provided to us. Our review of the documents provided to us by
Borrower and Guarantors did not notify us of any additional
documents which directly bear
XXXX AND XXXXX, P.A.
General Electric Capital Corporation
December 31, 1996
Page 3
on this transaction. The documents provided to us by Borrower
and Guarantors consisted of the articles of incorporation
(including amendments) and the bylaws (including amendments) of
Borrower and Guarantors.
In rendering this opinion, we have assumed, with your
express permission and without independent verification or
investigation, each of the following:
1. Each of the respective parties thereto (other than
Borrower and Guarantors) has the full right, power and authority
to execute, deliver and perform all of its obligations under the
Loan Documents, the Guaranty, and all other documents required or
permitted to be executed, delivered and performed thereunder and
has taken all necessary action to enter into, and has duly
executed and delivered, each such document;
2. All natural persons executing the Loan Documents and
the Guaranty are legally competent to do so; all signatures on
all documents submitted to us (other than signatures of Borrower
and Guarantors) are genuine; all documents submitted to us as
originals are authentic; and all documents submitted to us as
copies conform to the original documents, which themselves are
authentic;
3. To the extent that any Loan Document or the Guaranty
imposes any obligations upon Lender, the Loan documents and the
Guaranty are valid and binding obligations of Lender, enforceable
against Lender in accordance with their respective terms;
4. In connection with our opinion, we have assumed that
Fountain has good title to all non-real property as described in
the Loan Documents;
5. We have assumed that all necessary and proper actions
shall be taken by or on behalf of Lender to file continuation
financing statements or other documents required to continue the
perfection of its security interests, and that Lender will
enforce its rights under the loan documents in circumstances and
in a manner which is commercially reasonable; and,
6. We have assumed that the Financing Statement for the
office of the Secretary of State of North Carolina has been filed
properly in the office of the Secretary of State of North
Carolina, and that, except for the filing of that
XXXX AND XXXXX, P.A.
General Electric Capital Corporation
December 31, 1996
Page 4
Financing Statement, no additional financing statements
which named Borrower as the debtor were filed in the office
of the Secretary of State of North Carolina after 5:00 P.M.
on December 22, 1996, the effective date and time of the UCC
report of Xxxx X. Styles.
Based upon the foregoing assumptions and subject to the
qualifications, limitations and exceptions set forth herein, we
are of the opinion that:
A. Borrower is a corporation duly organized and validly
existing under the laws of the State of North Carolina with full
corporate power to borrow money and to undertake the other
obligations as contemplated by the Loan Documents, to execute and
to deliver the Loan Documents, to encumber the Property as
security and to perform Borrower's obligations under the Loan
Documents. The execution and delivery of the Loan Documents have
been duly authorized by all necessary corporate action on the
part of Borrower.
X. Xxxxxxxx Powerboat Industries, Inc. is a corporation
duly organized and validly existing under the laws of the State
of Nevada with full corporate power to undertake the obligations
as contemplated by the Loan Agreement and the Guaranty which it
has executed, to execute and to deliver the Loan Agreement and
the Guaranty and to perform its obligations under the Loan
Agreement and the Guaranty. The execution and delivery of the
Loan Agreement and the Guaranty have been duly authorized by all
necessary corporate action on the part of Fountain Powerboat
Industries, Inc.
X. Xxxxxxxx Aviation, Inc. is a corporation duly organized
and validly existing under the laws of the State of North
Carolina with full corporate power to undertake the obligations
as contemplated by the Loan Agreement and the Guaranty which it
has executed, to execute and to deliver the Loan Agreement and
the Guaranty and to perform its obligations under the Loan
Agreement and the Guaranty. The execution and delivery of the
Loan Agreement and the Guaranty have been duly authorized by all
necessary corporate action on the part of Fountain Aviation, Inc.
X. Xxxxxxxx Sportswear, Inc. is a corporation duly
organized and validly existing under the laws of the State of
North Carolina with full corporate power to undertake the
obligations as contemplated by the Loan Agreement and the
Guaranty which it has executed, to execute and to deliver the
Loan Agreement and the Guaranty and to perform its obligations
under the Loan Agreement and the Guaranty. The execution and
delivery of the Loan Agreement
XXXX AND XXXXX, P.A.
General Electric Capital Corporation
December 31, 1996
Page 5
and the Guaranty have been duly authorized by all necessary
corporate action on the part of Fountain Sportswear, Inc.
X. Xxxxxxxx Trucking, Inc. is a corporation duly organized
and validly existing under the laws of the State of North
Carolina with full corporate power to undertake the obligations
as contemplated by the Loan Agreement and the Guaranty which it
has executed, to execute and to deliver the Loan Agreement and
the Guaranty and to perform its obligations under the Loan
Agreement and the Guaranty. The execution and delivery of the
Loan Agreement and the Guaranty have been duly authorized by all
necessary corporate action on the part of Fountain Trucking, Inc.
X. Xxxxxxxx Unlimited, Inc. is a corporation duly
organized and validly existing under the laws of the State of
North Carolina with full corporate power to undertake the
obligations as contemplated by the Loan Agreement and the
Guaranty which it has executed, to execute and to deliver the
Loan Agreement and the Guaranty and to perform its obligations
under the Loan Agreement and the Guaranty. The execution and
delivery of the Loan Agreement and the Guaranty have been duly
authorized by all necessary corporate action on the part of
Fountain Unlimited, Inc.
X. Xxxxxxxx Power, Inc. is a corporation duly organized
and validly existing under the laws of the State of North
Carolina with full corporate power to undertake the obligations
as contemplated by the Loan Agreement and the Guaranty which it
has executed, to execute and to deliver the Loan Agreement and
the Guaranty and to perform its obligations under the Loan
Agreement and the Guaranty. The execution and delivery of the
Loan Agreement and the Guaranty have been duly authorized by all
necessary corporate action on the part of Fountain Power, Inc.
H. Each of the Loan Documents has been duly executed and
delivered by Borrower and is a valid and binding obligation of
Borrower, enforcement against Borrower in accordance with its
terms.
I. The Loan Agreement and Guaranty have been duly executed
and delivered by Guarantors and are valid and binding obligations
of Guarantors, enforceable against Guarantors in accordance with
their terms.
J. The Loan Documents and the performance by Borrower of
its obligations thereunder do not conflict with, or result in a
violation of the Articles of Incorporation and By-Laws of
Borrower. To the best of our knowledge, the execution, delivery
and performance of the Loan Documents by Borrower (a) do not and
will
XXXX AND XXXXX, P.A.
General Electric Capital Corporation
December 31, 1996
Page 6
not violate or conflict with any order, writ, injunction or
decree of any court, administrative agency or any other
governmental authority applicable to Borrower or the Property or
any agreement by which Borrower is bound and (b) will not result
in the creation or imposition of any lien, charge or encumbrance
upon any assets of Borrower, except as contemplated by the terms
of the Loan Documents.
K. The Loan Agreement and Guaranty and the performance by
Guarantors of their obligations thereunder do not conflict with,
or result in a violation of the Articles of Incorporation and By-
Laws of the Guarantors. To the best of our knowledge, the
execution, delivery and performance by Guarantors of their
obligations under the Loan Agreement and Guaranty does not and
will not violate or conflict with any order, writ, injunction or
decree of any court, administrative agency or any other
governmental authority applicable to any Guarantor or any
agreement by which any Guarantor is bound.
L. To the best of our knowledge, there is no action, suit
or proceeding at law or in equity, or by or before any
governmental instrumentality or agency or arbitral body now
pending, or overtly threatened against Borrower, any Guarantor or
the Property, except as set forth in Schedule 2.09 to the Loan
Agreement.
M. The Loan, as reflected in the Loan Documents, does not
violate any existing laws of the State of North Carolina relating
to interest or usury and will not violate any such law by virtue
of any fluctuations in any base, prime, index or equivalent rate
or rates in which interest charges may be based under the Loan
Documents.
N. The Deed of Trust and the Assignment of Leases have
been filed in the office of the Register of Deeds of Beaufort
County. The Deed of Trust creates for the Benefit of Lender a
valid lien on the Real Property described in Exhibit A to the
Deed of Trust.
O. The Security Agreement creates for the benefit of
lender a valid security interest in that portion of the Personal
Property owned by Borrower which consists of types or items of
personal property to which Article 9 the Uniform Commercial Code
of the State of North Carolina ("UCC") is applicable and in which
a security interest may be created thereunder. The financing
Statements are in proper form for filing in the office of the
Register of Deeds of Beaufort County and in the office of the
Secretary of State of North Carolina, the only offices in North
Carolina in which they are required to be filed to perfect under
the UCC the security interest granted to Lender under the Loan
XXXX AND XXXXX, P.A.
General Electric Capital Corporation
December 31, 1996
Page 7
Documents in the Personal Property. The Financing Statement for
the office of the Register of Deeds of Beaufort County has been
filed properly in the office of the Register of Deeds of Beaufort
County, and any and all filing fees therefor and stamp or
documentary taxes in connection therewith have been paid. The
filing of the Financing Statements in such offices will perfect
the security interest in that portion of the Personal Property
owned by Borrower and described in the Financing Statements and
Security Agreement which consist of types or items of personal
property to which Article 9 of the Uniform Commercial Code of the
State of North Carolina is applicable and in which a security
interest may be perfected by filing of financing statements in
the State of North Carolina. Our examination of the Uniform
Commercial Code Financing Statements records in the office of the
Register of Deeds of Beaufort County, North Carolina under the
names of the Borrower and Guarantors disclosed the following
financing statements as being effective as of December 31, 1996
at 3;17 p.m.:
a. 89-2003 to ITT Commercial Finance Corp.,
which has been continued by 94-0707;
b. 92-1204 to Mercury Marine, a division of
Brunswick Corporation;
c. 94-0404 to Southern National Leasing
Corp.;
d. 94-0426 to MetLife Capital Corporation;
e. 94-0628 to ITT Commercial Finance Corp.,
which has been amended to Deutsche
Financial Services Corporation;
f. 94-0829 to Southern National Leasing
Corp.;
g. 94-0880 to Southern National Leasing
Corp.;
h. 94-1030 to Sunox, Inc.;
i. 96-0014 to General Electric Capital
Corporation; and,
j. 96-0787 to Executive Leasing.
The opinions set forth herein are subject to the following
qualifications:
1. Enforceability of the Loan Documents and the Guaranty
may be limited by (i) applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent conveyance
and other similar state or federal debtor relief laws from time
to time in effect and which affect the enforcement of creditors'
rights or the collection of debtors' obligations in general, (ii)
general principles of equity, the application of which may deny
Lender certain of the rights and remedies granted to Lender under
the Loan Documents, including rights to specific performance,
injunctive relief and appointment of a receiver, and (iii)
XXXX AND XXXXX, P.A.
General Electric Capital Corporation
December 31, 1996
Page 8
general principles of commercial reasonableness and good faith to
the extent required of lender by applicable law;
2. Certain remedies, waivers and other provisions of the
Loan Documents or the Guaranty may not be enforceable, but such
unenforceability will not render the Loan Documents or the
Guaranty invalid as a whole or preclude (i) the judicial
enforcement of the obligation of Borrower or the Guarantor to
repay the principal, together with interest thereon, as provided
in the Note (to the extent not deemed a penalty), and (ii) the
foreclosure of the Deed of Trust. Provisions that may be
unenforceable due to public policy concerns may include, but are
not limited to, issues related to the waiver of procedural,
substantive or constitutional rights or other legal or equitable
rights, including, without limitation, the waiver of the right to
a jury trial and the right of statutory or equitable redemption;
the confession or consent to any judgment; the consent by
Borrower or the Guarantors to the jurisdiction of any court;
disclaimers or limitations of liabilities; discharges of
defenses; the exercise of self-help or other remedies without
judicial process; and the waiver of accountings for rent or sale
proceeds;
3. We express no opinion as to the enforceability of any
provisions of any of the Loan documents or the Guaranty which
impose liquidated damages, penalties, forfeitures, or an increase
in interest rate upon default; or that appoint Lender or others
as the agent or attorney-in-fact for Borrower or any Guarantor.
We are not aware of any North Carolina statute or case clearly
addressing the enforceability of a default rate of interest;
4. Pursuant to N.C.G.S. Section 40A-68, Lender may share
in the amount of condemnation compensation awarded for a partial
taking of the Real Property only to the extent determined
necessary to prevent a impairment of Lender's security, and
without imposition of any prepayment penalty, and pursuant to
N.C.G.S. Section 40A-31, a court may allocate the proceeds of a
private condemnation to the parties entitled thereto,
notwithstanding any agreement to the contrary;
5. We express no opinion as to the effectiveness of any
security contemplated by the Loan Documents in real property not
described specifically in Exhibit A in the Deed of Trust or in
real property acquired by Borrower after the date of recordation
of the Deed of Trust;
XXXX AND XXXXX, P.A.
General Electric Capital Corporation
December 31, 1996
Page 9
6. We express no opinion with respect to the description,
title or location of any of the Property or the priority of any
lien of security interest intended to be granted therein
pursuant to one or more of the Loan Documents; however, the
foregoing limitation does not detract from out opinion as to our
UCC searches in the office of the Register of Deeds of Beaufort
County under the names of the Borrower and the Guarantors;
7. We express no opinion as to the effectiveness of any
provisions of the Loan Documents that provide for the assignment
of transfer of any permits, licenses or similar rights of
Borrower or any Guarantor;
8. N.C.G.S. Section 6-21.2 sets forth the procedures and
limitations applicable to the collection of attorneys' fees
pursuant to the Loan Documents and the Guaranty, and North
Carolina caselaw requires that attorneys' fees charged to
borrowers by lenders be reasonable in amount. Accordingly, any
provisions in the Loan Documents and the Guaranty relating to the
ability of either the Lender or its trustee under the Deed of
Trust to collect attorneys' fees are subject to those
limitations;
9. In connection with the opinion set forth in paragraph O
above, we call your attention to the following:
(i) The perfected security interest of Lender in the
Personal Property requires the filing of continuation
statements duly executed by Lender within the period of six
(6) months prior to the expiration of five (5) years from
the date of filing of the Financing Statements;
(ii) Under certain circumstances described in N.C.G.S.
Section 25-9-306, the rights of a secured party to enforce a
perfected security interest in proceeds of collateral may be
limited:
(iii) Under certain circumstances described in
N.C.G.S. Section 25-9-307 and 25-9-308, purchasers of
collateral may take the same free and clear of a perfected
security interest;
(iv) Pursuant to N.C.G.S. Section 25-9-402(7),
perfection of the security interest of Lender in the
Personal Property will be terminated as to any property
acquired by Borrower more than four (4) months after the
date Borrower changes its name or identity so as to make
XXXX AND XXXXX, P.A.
General Electric Capital Corporation
December 31, 1996
Page 10
the filed Financing Statements seriously misleading unless
new appropriate financing statements indicating the new name
or identity of Borrower are properly filed before the
expiration of such four (4) month period;
(v) Certain provisions of the Uniform Commercial Code
do not govern the perfection of security interests in
certain types of personal property and the terms used in the
Loan Documents may include collateral in which the security
interest is not capable of being perfected by recordation of
financing statements, such as cash, investments, depository
accounts, patents, leases or rents, articles with
certificates of title or other matters. Except for the
filing of the Financing Statements, we will take no other
steps to perfect any security interests;
(vi) Certain super-priority security interests (such
as purchase money interests) and possessory liens may not be
defeated by the filing of UCC statements and accordingly,
Lender's security interests would be subject to any such
super-priority or possessory security interests now existing
or any super-priority security interests arising in the
future; and,
(vii) This opinion is subject to the sale of goods in
the ordinary course of business and the loss of security
interest in the collateral subject to such sales
notwithstanding the filing of appropriate UCC statements.
10. In rendering the opinions set forth in paragraph J, K,
and L above bases on our knowledge, we have, with your permission
advised you only as to such knowledge as we have obtained from
(a) affidavits from Xxxxxxxx X. Xxxxxxxx, Xx., President of
Borrower, and Xxxxx X. Xxxxxxxx, Chief Financial Officer of
Borrower, and interviews with lawyers presently in our firm whom
we have determined are likely, in the ordinary course of their
respective duties, to have knowledge of the transactions
contemplated by the Loan Documents, the Guaranty and the matters
covered by this opinion. In addition, with respect to the
opinions contained in paragraph 7 above, we have examined the
public records in the office of the Clerk of Superior Court of
Beaufort County, North Carolina, on December 31, 1996. Except to
the extent otherwise set forth above, for purposes of this
opinion, we have not made an independent review of any
agreements, instruments, writs, orders, judgments, rules or other
regulations or decrees which may have been executed by or which
may now be binding upon
XXXX AND XXXXX, P.A.
General Electric Capital Corporation
December 31, 1996
Page 11
Borrower or Guarantors or which may affect the Property, nor have
we undertaken to review our internal files or any files of
Borrower or Guarantors, relating to transactions to which
Borrower or Guarantors may be a party, or to discuss their
transactions or business with any other lawyers in our firm or
with any other officers, partners or any employees of Borrower.
11. To the extent that the Loan Documents have a "due on
sale clause" and also contain restrictions on secondary financing
or transfers of equity ownership interests, then the provisions
may be unenforceable. To the extent that the Loan Documents
provide for simultaneous enforcement of due on sale clauses and
prepayment penalties, and to the extent that Federal law does not
preempt the field, such simultaneous enforcement may not be
permitted under North Carolina law due to Xxxxxxxx v. Savings and
Loan Association, 224 S.E.2d 580 (1976), although the court did
not state which of the provisions would stand and which would
fall.
12. No opinion is rendered as to whether any hazardous or
toxic materials are legally or illegally present or contained in,
under or upon the subject property or its waters or if any
hazardous or toxic materials have contaminated such property or
its waters in any way whatsoever. Further, no opinion is
rendered as to any violation of any environmental laws or
regulations, either Federal or state, in connection with this
opinion. For the purposes of this opinion, "hazardous or toxic
material" means and includes all types of petroleum products, any
flammable explosives, radioactive materials, asbestos or any
material containing asbestos, and/or any hazardous, toxic or
dangerous waste, substance or material defined as such in (or for
the purpose of) the environmental laws. For the purposes of this
opinion, "environmental laws" includes the Comprehensive
Environmental Response, Compensation and Liability Act, the
Hazardous Materials Transportation and Liability Act, the
Hazardous Materials Transportation Act, the Resource Conversation
and Recovery Act, the Clean Water Act, the Clear Air Act, the
Toxic Substances Control Act, the Coastal Area Management Act,
any "Superfund" or "Superlien" law, the Oil Pollution and
Hazardous Substances Control Act or any other federal, state or
local law, regulation, rule, order, ordinance or decree
regulating, relating to or imposing liability, responsibility or
standards of conduct applicable to human health, safety,
environmental conditions and/or releases (or potential releases)
of hazardous or toxic materials in, on, at or affecting the
premises, as such may now or at any time hereafter be defined or
in effect.
XXXX AND XXXXX, P.A.
General Electric Capital Corporation
December 31, 1996
Page 12
13. No opinion is expressed as to whether Fountain is in
compliance with the provisions or requirements imposed on it
under the Loan Documents or any other agreements with Lender.
We are admitted to practice only in the State of North
Carolina and we express no opinion as to matters under or
involving the laws of any jurisdiction other than the United
States of America and the State of North Carolina and its
political subdivisions. This opinion is rendered solely to
Lender in connection with the Loan and may not be relied upon by
any other party (except counsel to Lender) or for any other
purpose other than the purposes herein stated without our prior
written consent.
Yours very truly,
Xxxx and Xxxxx, P.A.
81-0242 (DV)\WSMAIN/206466.
MASTER SECURITY AGREEMENT
THIS MASTER SECURITY AGREEMENT, made this 31st day of
January, 1997 ("Agreement"), by and between GENERAL ELECTRIC
CAPITAL CORPORATION, a New York corporation with an address at
0000 Xxxxxxxx Xxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxx Xxxxxxxx
("Secured Party"), and FOUNTAIN POWER, INC., a corporation
organized and existing under the laws of the State of North
Carolina, with its chief executive offices located at Xxxxxxxx'x
Xxxxx Xxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 ("Debtor").
This Security Agreement is given in connection with the loan
evidenced by the certain Loan Agreement between the Fountain
Powerboats, Inc., a North Carolina corporation (the "Borrower"),
the Secured Party, the Debtor and certain other parties, dated
December 31, 1996 (the "Loan Agreement"). The Borrower has
previously executed that certain Master Security Agreement, dated
December 31, 1996 (the "Borrower's Security Agreement").
WITNESSETH:
WHEREAS, the Borrower is indebted to the Secured Party in
the principal amount of up to TEN MILLION AND NO/100 DOLLARS
($10,000,000), as evidenced by that certain Promissory Note in
such principal amount, dated December 31, 1996, executed by
Borrower, and payable to the order of the Secured Party (the
`Note"); and
WHEREAS, the Note is secured by a Deed of Trust, Assignment
of Rents and Security Agreement, dated December 31, 1996, from
the Borrower to a trustee designated therein for the benefit of
the Secured Party, encumbering certain real property located in
Beaufort County, North Carolina and described in Exhibit B
attached hereto and incorporated herein by reference (the "Real
Property"); and
WHEREAS, as a condition to the Secured Party's making of the
loan evidenced by the Note, the Secured party required and the
Debtor agreed to grant to the Secured Party the security
interests hereinafter set forth. The Debtor is a wholly-owned
subsidiary of the Borrower and shall derive direct financial
benefit from credit extended by the Secured Party to the
Borrower.
NOW, THEREFORE, in consideration of the promises herein
contained and of certain other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged,
Debtor and Secured Party hereby agree as follows:
1. CREATION OF SECURITY INTEREST.
Debtor hereby gives, grants and assigns to Secured Party,
its successors and assigns forever, a security interest in and
against any and all of the following property:
R#0204908.03
(a) Tangible Personal Property. All furniture,
furnishings, machinery, apparatus, equipment [specifically
including but not limited to that attached to any collateral
schedule (the "Collateral Schedule") now or hereafter attached
hereto as an Exhibit A], fittings, fixtures and other articles of
tangible personal property now owned or leased or hereafter
acquired by the Debtor, wherever located [but specifically
including any such property now or hereafter located on the Real
Property and any additional real property now or hereafter owned
by the Debtor (the "Additional Property") (the Real Property and
the Additional Property hereinafter referred to as the
"Property"), including but not limited to, goods, machinery,
tools, equipment (including fire, sprinkler and alarm systems;
air conditioning, heating, refrigerating, electronic monitoring,
entertainment, and recreational equipment; window or structural
cleaning rigs; maintenance equipment; equipment relating to
exclusion of vermin or insects, removal of dust, refuse or
garbage; and all other equipment of every kind), elevators,
indoor and outdoor furniture (including tables, chairs, planters,
desks, sofas, shelves, lockers and cabinets), wall beds wall
safes, furniture, furnishings, appliances (including ice boxes,
refrigerators, fans, heaters, stoves water heaters and
incinerators), rugs, carpets and other floor coverings, draperies
and drapery rods and brackets, awnings, window shades, venetian
blinds, curtains, lamps, chandeliers, and other lighting fixtures
and office maintenance and other supplies and the proceeds and
products of all of the foregoing and all replacements and
renewals thereof being hereafter referred to as the ("Tangible
Personal Property").
(b) Inventory. All of the Debtor's inventory now owned or
hereafter acquired, including but not limited to (I) goods
intended for sale, use or lease by the Debtor or to be furnished
by the Debtor under contracts of service, (ii) all raw materials,
goods in process, finished goods, materials and supplies of every
nature used or usable in connection with the manufacture,
packing, shopping, advertising, selling, leasing or furnishing of
such goods (specifically including, but not limited to, all
molds, metals, plastics, upholstery, windscreens, fiberglass, and
other components in boat manufacture), and any and all items
including machinery and equipment used or consumed in the
operation of the business of the Debtor or which contribute to
the finished product or to the sale, promotion, and shipment
thereof, in which the Debtor now or at any time hereafter may
have an interest, whether or not such inventory is listed on any
reports furnished to the Secured Party from time to time; (iii)
all inventory whether or not the same is in transit or in the
constructive, actual, or exclusive occupancy or possession of the
Debtor or is held by the Debtor or by others for the Receivables
(as hereafter defined), including, without limitation, all goods
covered by purchase orders, and contracts with suppliers and all
goods billed and held by suppliers; (iv) all inventory which may
be located on premises of the Debtor or of any carrier,
forwarding agents, truckers, warehousemen, vendors, selling
agents, or third parties; (v) all general intangibles relating to
or arising out of inventory; (vi) all documents evidencing or
representing the same, all documents of title, all negotiable and
non-negotiable warehouse receipts representing the same; and
(vii) all products and proceeds of the foregoing (including cash,
accounts receivable, non-cash trade ins, and non-cash-proceeds),
wherein the foregoing may be located (referred to herein
collectively as "Inventory").
(c) Insurance Policies. All rights in and to all pertinent
present and future fire and/or hazard insurance policies
(including, but not limited to, insurance proceeds) covering the
Property, and improvements thereon (the "Improvements") or the
property described in (a) and (b) above.
2
R#0204908.03
(d) Awards. All awards made by any public body or decreed
by any court of competent jurisdiction for a taking or for
degradation of value of the Property, the Improvements or the
property described in (a) above in any eminent domain proceeding
and all payments made in respect of a conveyance made in lieu of
any such taking.
(e) Lease Rights and Security Deposits. All of the
Debtor's rights and interests in and to all present and future
leases of the Property and Improvements or any part thereof
and/or all rental income and/or security deposits, whether
payable pursuant to any present or future lease of otherwise
growing out of any occupancy or use of the Property and the
Improvements.
(f) Accounts Receivable and General intangibles Relating to
Debtor. (i) All obligations and indebtedness of every kind at
any time owing to the Debtor from whatever source arising, and
including (without limitation) all accounts, accounts receivable,
tax refunds, refunds, payments or proceeds under any insurance
policies, instruments, contract rights, chattel paper, general
intangibles and documents, whether secured or unsecured, now
existing or hereafter created; (ii) any and all sums and property
recovered by the Debtor or any trustee, receiver or fiduciary
acting on the Debtor's behalf as a result of or arising from a
fraudulent or preferential transfer or payment (as determined
under present or future federal or state law or regulations
relating to bankruptcy, insolvency or other relief or debtors)
made by the Debtor or on the Debtor's behalf; (ii) all of the
Debtor's rights as an unpaid seller, including stoppage in
transit, replevin, detinue and reclamation; (iv) all customer
lists and other documents containing names, addresses and other
information regarding the Debtor's customers, subscribers and
those to whom the Debtor provides any services, and all supplier
lists of the Debtor; (v) all books, records, files, computer
tapes, programs, software, discs and other material or documents
relating to the recording, billing or analyzing of any of the
above; (vi) all now or hereafter existing balances, credits
deposits (general or special, time or demand, provisional of
final), accounts and all other sums credited by, maintained with
or due from the Debtor the Debtor or any of the Debtor's
affiliates to the Debtor or subject to withdrawal by the Debtor,
together with all goods, inventory, and merchandise returned by
or reclaimed by or repossessed from customers wherever such
goods, inventory and merchandise are located, and all proceeds
thereto; and (vii) all products and proceeds of any of the
foregoing in any form, including cash, insurance proceeds,
negotiable instruments and other evidences of indebtedness,
chattel paper, security agreements and other documents (all of
the foregoing being herein referred to as "Receivables").
All trade names, symbols, logos, copyrights, patents, patent
applications, federal trademark registrations, any trademark
applications now or hereafter filed with respect thereto and any
federal trademark registrations issued or issuing with respect
thereto, and all goodwill associated with the trademarks and
patents.
All goodwill and all other general intangibles of every kind
and description now or hereafter owned by the Debtor.
(g) Motor Vehicles. All motor vehicles and trailers now or
hereafter owned by the Debtor.
3
R#0204908.03
(h) Proceeds. All proceeds or sums payable in lieu of or
as compensation for the loss or damage to any property described
in (a) through (g) above.
(i) Additions, Accessions, Substitutes. Any and all
additions, attachments, accessories and accessions thereto, any
and all substitutions, replacements or exchanges therefor, and
any and all insurance and/or other proceeds thereof.
All of the foregoing personal property is hereinafter
individually and collectively referred to as the "Collateral".
The foregoing security interest is given to secure the
payment and performance of any and all debts, obligations and
liabilities of any kind, nature or description whatsoever
(whether primary, secondary, direct contingent, sole, joint or
several, or otherwise and whether due or to become due) of Debtor
and the Borrower to Secured Party, now existing or hereafter
arising, including but not limited to the payment and performance
of the Note, and any renewals, extensions and modifications of
such Note and any other debts, obligations and liabilities of the
Borrower and the Debtor to the Secured Party (all of the
foregoing being hereinafter referred to as the "Indebtedness").
Notwithstanding the foregoing, and notwithstanding anything to
the contrary contained elsewhere in this Agreement, to the extent
that Secured Party asserts a purchase money security interest in
any items of the Tangible Personal Property constituting a
portion of the Collateral ("PMSI Collateral"): (i) the PMSI
Collateral shall secure only that portion of the Indebtedness
which has been advanced by Secured Party to enable Debtor to
purchase, or acquire rights in or the use of such PMSI Collateral
(the " PMSI Indebtedness"), and (ii) no other Collateral shall
secure the PMSI Indebtedness.
2. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF DEBTOR.
Debtor hereby represents, warrants and covenants as of the
date hereof and as of the date of execution of each Collateral
Schedule hereto that:
(a) Debtor is, and will remain, duly organized, existing
and in good standing under the laws of the State set forth in the
first paragraph of this Agreement, has its chief executive
offices at the location set forth in such paragraph, and is, and
will remain, duly qualified and licensed in every jurisdiction
wherever necessary to carry on its business and operations;
(b) Debtor has adequate power and capacity to enter into,
and to perform its obligations, under this Agreement and any
other documents evidencing, or given in connection with, any of
the Indebtedness (all of the foregoing being hereinafter referred
to as the "Debt Documents");
(c) This Agreement and the other Debt Documents have been
duly authorized, executed and delivered by Debt and constitute
legal, valid and binding agreements enforceable under all
applicable laws in accordance with their terms, except to the
extend that the enforcement of remedies may be limited under
applicable bankruptcy and insolvency laws;
4
R#0204908.03
(d) No approval, consent or withholding of objections is
required from any governmental authority or instrumentality with
respect to the entry into, or performance by, Debtor of any of
the Debt Documents, except such as may have already been
obtained;
(e) The entry into, and performance by, Debtor of the Debt
Documents will not (I) violate any of the organizational
documents of Debtor or any judgment, order, law or regulation
applicable to Debtor, or (ii) result in any breach of, constitute
a default under, or result in the creation of any lien, claim or
encumbrance on any of Debtor's property (except for liens in
favor of Secured Party) pursuant to, any indenture, mortgage,
deed of trust, bank loan, credit agreement, or other agreement or
instrument to which Debtor is a party;
(f) There are no suits or proceedings pending or threatened
in court or before any commission, board or other administrative
agency against or affecting Debtor which could, in the aggregate,
have a material adverse effect on Debtor, its business or
operations, or its ability to perform its obligations under the
Debt Documents, except those disclosed in Schedules to the Loan
Agreement;
(g) All financial statements delivered to Secured Party in
connection with the Indebtedness have been prepared in accordance
with generally accepted accounting principles, and since the date
of the most recent financial statement, there has been no
material adverse change;
(h) The Collateral is not, and will not be, used by Debtor
for personal, family or household purposes;
(i) The Collateral constituting Tangible Personal Property
and Inventory is, and will remain, in good condition and repair
and Debtor will not be negligent in the care and use thereof;
(j) Debtor is, and will remain, the sole and lawful owner,
and in possession of the Collateral (except for Inventory in
transit to dealers for sale and except for Inventory sold in the
ordinary course of business), and has the sole right and lawful
authority to grant the security interest described in this
Agreement; and
(k) The Collateral is, and will remain, free and clear of
all liens, claims and encumbrances of every kind, nature and
description, except for (i) liens in favor of Secured Party, (ii)
liens for taxes not yet due or for taxes being contested in good
faith and which do not involve, in the reasonable judgment of
Secured Party, any risk for the sale, forfeiture or loss of any
of the Collateral, and (iii) inchoate materialmen's mechanic's,
repairmen's and similar liens arising by operation of law in the
normal course of business for amounts which are not delinquent
(all of such permitted liens being hereinafter referred to as
"Permitted Liens").
3. COLLATERAL.
(a) Until the declaration of any default hereunder, Debtor
shall remain in possession of the Collateral; provided, however,
that Secured Party shall have the right to possess (i) any
chattel
5
R#0204908.03
paper or instrument that constitutes a part of the Collateral,
and (ii) any other Collateral which because of its nature may
require that Secured Party's security interest therein be
perfected by possession. Secured Party, its successors and
assigns, and their respective agents, shall have the right to
examine and inspect any of the Collateral at any time during
normal business hours. Upon any request from Secured party,
Debtor shall provide Secured Party with notice of the then
current locations of the Collateral, specifically including the
names and addresses of dealers to whom Inventory is sent from
time to time.
(b) Debtor shall (i) use the Collateral only in its trade
or business, (ii) maintain all of the Collateral in good
condition and working order, (iii) use and maintain the
Collateral only in compliance with all applicable laws, and (iv)
keep all of the Collateral free and clear of all liens, claims
and encumbrances (except for Permitted Liens).
(c) Debtor shall not, without the prior written consent of
Secured party, (i) part with possession of any of the Collateral
(except to dealers for sale of Inventory, to Secured Party, or
for maintenance and repair), (ii) remove any of the Collateral
from the continental United States, or (iii) sell, rent, lease,
mortgage, grant a security interest in or otherwise transfer or
encumber (except for Permitted Liens) any of the Collateral.
Notwithstanding the foregoing, the Debtor may ship Inventory to
dealers outside the continental United States for sale, provided
payment is made in full prior to shipment or is secured by an
irrevocable letter of credit from a domestic bank.
(d) Debtor shall pay promptly when due all taxes, license
fees, assessments and public and private charges levied or
assessed on any of the Collateral, on the use thereof, or on this
Agreement or any of the other Debt Documents. At its option,
Secured Party may discharge taxes, liens, security interests or
other encumbrances at any time levied or placed on the Collateral
and may pay for the maintenance, insurance and preservation of
the Collateral or to effect compliance with the terms of this
Agreement or any of the other Debt Documents. Debtor shall
reimburse Secured Party, on demand, for any and all costs and
expenses incurred by Secured Party in connection therewith and
agrees that such reimbursement obligation shall be secured
hereby.
(e) Debtor shall, at all times, keep accurate and complete
records of the Collateral, and Secured Party, its successors and
assigns, and their respective agents, shall have the right to
examine, inspect, and make extracts from all of Debtors books and
records relating to the Collateral at any time during normal
business hours. Such reports shall be in such detail, form and
scope as the Secured Party shall require. The Secured Party and
the Secured Party's agents and representatives may at all times
have access to, examine and inspect the Inventory, the Tangible
Personal Property, and all records pertaining thereto. The
Debtor now keeps and shall continue to keep correct and accurate
records itemizing and describing the kind, type, quality and
quantity of Inventory, the Debtor's cost therefor and the selling
price thereof, the daily withdrawals therefrom and the additions
thereto. Any equipment and molding designated by the Secured
Party shall be tagged so as to disclose the security interest of
the Secured Party in such personalty.
(f) If agreed by the parties, Secured Party may, but shall
in no event be obligated to, accept substitutions and exchanges
of property for property, and additions to the property,
6
R#0204908.03
constituting all or any part of the Collateral. Such
substitutions, exchanges and additions may be accomplished at any
time and from time to time, by the substitution of a revised
Collateral Schedule for the Collateral Schedule now or hereafter
annexed. Any property which may be substituted, exchanged or
added as aforesaid shall constitute a portion of the Collateral
and shall be subject to the security interest granted herein.
Additions to, reductions or exchanges of, or substitutions for,
the Collateral, payments on account of any obligation or
liability secured hereby, increases in the obligations and
liabilities secured hereby, or the creation of addition
obligations and liabilities secured hereby, may from time to time
be made or occur without affecting the provisions of this
Agreement or the provisions of any obligation or liability which
this Agreement secures.
(g) Any third person at any time and from time to time
holding all or any portion of the Collateral shall be deemed to,
and shall hold the Collateral as the agent, and as pledge holder
for, Secured Party. At any time and from time to time, Secured
Party may give notice to any third person holding all or any
portion of the Collateral that such third person is holding the
Collateral as the agent of, and as pledge holder for, the Secured
Party.
4. INSURANCE.
The Collateral shall at all times be held at Debtor's risk,
and Debtor shall keep it insured against loss or damage by fire
and extended coverage perils, theft, burglary, and for any or all
Collateral which are vehicles, for risk of loss by collision, and
where requested by Secured Party, against other risks as required
thereby, for the full replacement value thereof, with companies
in amounts and under policies acceptable to Secured Party.
Debtor shall, if Secured Party so requires, deliver to Secured
Party policies of certificates of insurance evidencing such
coverage. Each policy shall name Secured Party as loss payee
thereunder, shall provide for coverage to Secured Party
regardless of the breach by Debtor of any warranty or
representation made therein, shall not be subject to co-
insurance, and shall provide for thirty (30) days written notice
to Secured Party of the cancellation or material modification
thereof (unless such insurance coverage is not obtainable).
Debtor hereby appoints Secured Party as its attorney in fact to
make proof of loss, claim for insurance and adjustments with
insurers, and to execute or endorse all documents, checks or
drafts in connection with payment made as a result of any such
insurance policies. Proceeds of insurance shall be applied, at
the option of Secured Party, to repair or replace the Collateral
or to reduce any of the Indebtedness secured hereby.
5. REPORTS.
(a) Debtor shall promptly notify Secured Party in the event
of (i) any change in the name of Debtor, (ii) any relocation of
its chief executive offices, (iii) any relocation of any of the
Collateral, (iv) any of the Collateral being lost, stolen,
missing, destroyed, materially damaged or worn out, or (v) any
lien, claim or encumbrance attaching or being made against any of
the Collateral other than Permitted Liens.
(b) Debtor agrees to furnish its annual financial
statements and such interim statements as Secured Party may
require in form satisfactory to Secured Party and as required in
the Loan
7
R#0204908.03
Agreement. Any and all financial statements submitted and to be
submitted to Secured Party have and will have been prepared on a
basis of generally accepted accounting principles, and are and
will be complete and correct and fairly present Debtor's
financial condition as at the date thereof. Secured Party may at
any reasonable time examine the books and records of Debtor and
make copies thereof.
6. FURTHER ASSURANCES.
(a) Debtor shall, upon request of Secured Party, furnish to
Secured Party such further information, execute and deliver to
Secured Party such documents and instruments (including, without
limitation, Uniform Commercial Code financing statements) and do
such other acts and things, as Secured Party may at any time
reasonably request relating to the perfection or protection of
the security interest created by this Agreement or for the
purpose of carrying out the intent of this Agreement. Without
limiting the foregoing, Debtor shall cooperate and do all acts
deemed necessary or advisable by Secured Party to continue in
Secured Party a perfected first security interest in the
Collateral, and shall obtain and furnish to Secured Party any
subordinations, releases, landlord, lessor, or mortgagee waivers,
and similar documents as may be from time to time requested by,
and which are in form and substance satisfactory to, Secured
Party.
The Debtor shall provide to the Secured Party a schedule of
all Receivables, Tangible Personal Property, and Inventory at
least once every fiscal quarter, as described in the Loan
Agreement. The Debtor shall also notify the Secured Party of any
patent and trademark applications filed each fiscal quarter and
take such measures as the Secured Party may require to confirm
the assignment and to perfect the security interests granted
hereby.
If any Inventory is in the possession or control of any of
the Debtor's agents or processors, the Debtor shall notify them
of the Secured Party's security interest therein, and upon the
Secured Party's request, instruct them to hold all such Inventory
for the Secured Party's account and subject them to the Secured
Party's instructions.
If at any time the Secured Party determines that the Secured
Party's security interest in any boat constituting a portion of
Inventory is required to be perfected by the filing of a marine
vessel mortgage, the Debtor agrees to execute such a vessel
mortgage (in form and substance satisfactory to the Secured
Party) and cause such mortgage to be filed in appropriate
governmental offices so as to perfect the Secured Party's
security interests in such vessel.
(b) Debtor hereby grants to Secured Party the power to sign
Debtor's name and generally to act on behalf of Debtor to execute
and file applications for title, transfers of title, financing
statements, notices of lien and other documents pertaining to any
or all of the Collateral. Debtor shall, if any certificate to
title be required or permitted by law for any of the Collateral,
obtain such certificate showing the lien hereof with respect to
the Collateral and promptly deliver same to Secured Party.
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(c) Debtor shall indemnify and defend the Secured Party,
its successors and assigns, and their respective directors,
officers and employees, from and against any and all claims,
actions and suits (including, without limitation, related
attorneys' fees) of any kind, nature or description whatsoever
arising, directly or indirectly, in connection with any of the
Collateral.
(d) The Secured Party shall have no duty or care with
respect to the Collateral, except that the Secured Party shall
exercise reasonable care with respect to Collateral in its
custody, but shall be deemed to have exercised reasonable care if
such property is accorded treatment substantially equal to that
which it accords its own property, or if it takes such action
with respect to the Collateral as the Debtor shall request in
writing. No failure to comply with any such request nor any
omission to do any such act requested by the Debtor shall be
deemed a failure to exercise reasonable care, nor shall the
Secured Party's failure to take steps to preserve rights against
any parties or property be deemed a failure to have exercised
reasonable care with respect to Collateral in its custody.
7. EVENTS OF DEFAULT
Debtor shall de in default under this Agreement and each of
the other Debt Documents upon the occurrence of any of the
following "Event(s) of Default":
(a) Either the Borrower or the Debtor fails to pay any
installment or other amount due or coming due under any of the
Debt Documents within ten (10) days after its due date;
(b) Any attempt by Debtor, without the prior written
consent of Secured Party, to sell, rent, lease, mortgage, grant a
security interest in, or otherwise transfer or encumber (except
for Permitted Liens and except as elsewhere permitted herein) any
of the Collateral;
(c) Debtor fails to procure, or maintain in effect at all
times, any of the insurance on the Collateral in accordance with
Section 4 of this Agreement.
(d) Debtor or the Borrower breaches any of its other
obligations under any of the Debt Documents and fails to cure the
same within thirty (30) days after written notice thereof;
(e) Any warranty, representation or statement made by
Debtor or the Borrower in any of the Debt Documents or otherwise
in connection with any of the Indebtedness shall be false or
misleading in any material respect;
(f) Any of the Collateral being subjected to, or being
threatened with, attachment, execution, levy, seizure or
confiscation in any legal proceeding or otherwise;
(g) The occurrence of an "Event of Default" under the Deed
of Trust or the Loan Agreement; or any default by Debtor or the
Borrower under any other agreement between Debtor
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or the Borrower and Secured Party, specifically including (but
not limited to) the Borrower's Security Agreement, after the
passage of any applicable cure period set out in such agreement;
(h) Any dissolution, termination of existence, merger,
consolidation, change in controlling ownership, insolvency, or
business failure of Debtor, the Borrower or any guarantor or
other obligor for any of the Indebtedness (collectively
"Guarantor"), except as permitted in the Loan Agreement, or if
Debtor or any Guarantor is a natural person, any death or
incompetence of Debtor or such Guarantor;
(i) The appointment of a receiver for all or any part of
the property of Debtor, the Borrower or any Guarantor, or any
assignment for the benefit of creditors by Debtor, the Borrower
or any Guarantor; or
(j) The filing of a petition by Debtor, the Borrower or any
Guarantor under any bankruptcy, insolvency or similar law, or the
filing of any such petition against Debtor, the Borrower or any
Guarantor if the same is not dismissed within thirty (30) days of
such filing.
8. REMEDIES ON DEFAULT.
(a) Upon the occurrence of an Event of Default under this
Agreement, the Secured Party, at its option, may declare any or
all of the Indebtedness, including without limitation the Note,
to be immediately due and payable, without demand or notice to
Debtor or any Guarantor. The obligations and liabilities
accelerated thereby shall bear interest (both before and after
any judgment) until paid in full at the lower eighteen percent
(18%) per annum or the maximum rate not prohibited by applicable
law.
(b) Upon such declaration of default, Secured Party shall
have all of the rights and remedies of a Secured Party under the
Uniform Commercial Code, and under any other applicable law.
Without limiting the foregoing, Secured Party shall have the
right to (i) notify any account debtor of Debtor or any obligor
on any instrument which constitutes part of the Collateral to
make payment to the Secured Party, (ii) with or without legal
process, enter any premises where the Collateral may be and take
possession and/or remove said Collateral from said premises,
(iii) sell the Collateral at public or private sale, in whole or
in part, and have the right to bid and purchase at said sale,
(iv) lease or otherwise dispose of all or part of the Collateral,
applying proceeds therefrom to the obligations then in default,
and/or (v) use, without charge or liability to the Secured Party,
any of the Debtor's labels, trade names, trademarks, patents,
patent applications, licenses, certificates of authority,
advertising materials, or any of the Debtor's other properties or
interests in properties of similar nature in advertising for
sale, selling or otherwise realizing upon any of the Collateral.
If requested by Secured Party, Debtor shall promptly assemble the
Collateral and make it available to Secured party at a place to
be designated by Secured Party which is reasonably convenient to
both parties. Secured Party may also render any or all of the
Collateral unusable at the Debtor's premises and may dispose of
such Collateral on such premises without liability for rent or
costs. Any notice which Secured Party is required to give to
Debtor under the Uniform Commercial Code of the time and place of
any public sale or the time after which any private sale or other
intended disposition of the Collateral is to be made shall be
deemed to constitute reasonable
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notice if such notice is given to the last known address of
Debtor at least five (5) days prior to such action.
(c) Proceeds from any sale or lease or other disposition
shall be applied: first, to all costs of repossession, storage,
and disposition including without limitation attorneys',
appraisers', and auctioneers' fees; second, to discharge the
obligations then in default; third, to discharge any other
Indebtedness of Borrower or Debtor to Secured Party, whether as
obligor, endorser, guarantor, surety or indemnitor; fourth, to
expenses incurred in paying or settling liens and claims against
the Collateral; and lastly, to Debtor, if there exists any
surplus. Debtor and the Borrower (as the case may be) shall
remain fully liable for any deficiency.
(d) In the event this Agreement, any Note or any other Debt
Documents to which the Debtor is a party are placed in the hands
of an attorney for collection of money due or to become due or to
obtain performance of any provision thereof, Debtor agrees to pay
all reasonable attorneys' fees incurred by Secured Party at such
attorneys' standard hourly rates for time in fact incurred
(without regard to any statutory presumption), and further agrees
that payment of such fees is secured hereunder. Debtor and
Secured Party agree that such fees to the extent not in excess of
fifteen percent (15%) of subject amount owing after default (if
permitted by law, or such lesser sum as may otherwise be
permitted by law) shall be deemed reasonable.
(e) Secured Party's rights and remedies hereunder or
otherwise are cumulative and may be exercised singularly or
concurrently. Neither the failure nor any delay on the part of
the Secured Party to exercise any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or privilege preclude any
other or further exercise thereof or the exercise of any other
right power or privilege. Secured Party shall not be deemed to
have waived any of its rights hereunder or under any other
agreement, instrument or paper signed by Debtor unless such
waiver be in writing and signed by Secured Party. A waiver on
any one occasion shall not be construed as a bar to or waiver of
any right or remedy on any future occasion.
(f) Any controversy or claim arising out of or relating to
this Master Security Agreement shall be determined by arbitration
in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The number of arbitrators
shall be three. One Arbitrator shall be appointed by each of the
parties and the third arbitrator, who shall serve as chairman of
the tribunal, shall be appointed by the American Arbitration
Association. The place of arbitration shall be Charlotte, North
Carolina. Any arbitral award arising from any arbitration
pursuant to this paragraph shall be final and binding upon all
parties hereto.
9. INVENTORY AND RECEIVABLES COVENANTS.
The following are covenants applicable to Inventory and
Receivables generally:
(a) The Secured Party's security interest in the Inventory
will continue through all stages of manufacture and will, without
further act, attach to raw materials, to goods in process, to
finished goods, to all products of the foregoing, to the
Receivables (as defined in the Agreement) and all
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other proceeds resulting from the sale or other disposition
thereof and to all such Inventory that may be rejected, returned,
reclaimed, repossessed or stopped in transit.
(b) Inventory shall be kept only at the address identified
on the first page of this Security Agreement, and shall not be
removed therefrom except for purposes of sale and promotion in
the regular course of the Debtor's business.
(c) No Inventory has been or shall be consigned without the
Secured Party's prior written consent; no Inventory is or shall
ever be stored with a bailee, warehouseman or similar party
without the Secured Party's prior written consent, and in such
event the Debtor will, concurrently with delivery to such party,
cause any such party to issue and deliver to the Secured Party,
in form acceptable to the Secured Party, warehouse receipts in
the Secured Party's name evidencing the storage of such
Inventory.
(d) Until the occurrence of an Event of Default, the Debtor
may, subject to the provisions of this Agreement, sell finished
Inventory, but only in the ordinary course of the Debtor's
business; however, in no event shall the Debtor make any sale of
Inventory which would cause a breach of the Debtor's warranties,
representations and covenants under this Agreement. A sale of
Inventory in the ordinary course of the Debtor's business does
not include a transfer in partial or total satisfaction of a debt
owing by the Debtor. The Debtor agrees to report the receipt or
creation of all sales or other dispositions of Inventory to the
Secured Party. The Debtor hereby agrees to execute and deliver
to the Secured Party, in form satisfactory to the Secured Party,
a formal assignment or schedule of accounts receivable or other
proceeds resulting from the sale or other disposition of
Inventory but in the absence of such assignment or schedule this
Agreement shall constitute such assignment or schedule and the
grant of a security interest therein.
(e) The Secured Party shall not, under any circumstance, be
liable for any error or omission or delay of any kind occurring
in the settlement, collection or payment of any Receivables or
any instrument received in payment thereof or for any damage
resulting therefrom. The Secured Party shall not be liable for
or prejudiced by any loss, depreciation or other damage to
Receivables or other Collateral unless caused by the Secured
Party's willful and malicious act, and the Secured Party shall
have no duty to take any action to preserve or collect any
Receivable or other Collateral.
(f) The Secured Party may notify customers at any time that
Receivables have been assigned to the Secured Party and collect
them directly in the Secured Party's own name but, unless and
until the Secured Party does so or gives the Debtor other
instructions, the Debtor shall, at its cost and expense, collect
and otherwise hold for the Secured Party as trustee of an express
trust for the Secured Party's benefit all amounts of unpaid
Receivables, and, if so requested by the Secured Party, shall not
commingle such collections with the Debtor's own funds or use the
same for any purpose.
(g) As to any Receivable forming part of the Collateral,
unless the Secured Party otherwise consents in writing: (i) all
Receivables are and will be bona fide existing obligations of the
customer named therein, for a fixed sum as set forth in the
invoice relating thereto, created by the sale and actual delivery
of goods or other property or the rendition of services or the
furnishing of other good and sufficient consideration to the
customer in the regular course of business; (ii) all unpaid
balances appearing on the Debtor's books and records and any
invoice or statement delivered
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or to be delivered to the Secured Party relating to any
Receivable are and shall be true and correct in all respects;
(iii) all shipping or delivery receipts and other documents
furnished or to be furnished to the Secured Party in connection
therewith are all and will be genuine, complete, correct, valid
and enforceable in accordance with the Debtor's terms; and (vi)
no Receivable has arisen or shall arise out of a contract or
purchase order containing provisions prohibiting assignment
thereof or the creation of a security interest therein and the
Debtor has not received and shall not accept any note, or other
instrument with respect to any Receivable or in payment thereof
which is not assigned and delivered to the Secured Party
immediately.
(h) To facilitate the maintenance of the Secured Party's
records, the Debtor shall: (I) hold in trust for the Secured
Party's benefit all items constituting proof of shipment or
delivery of all goods sold and services rendered together with
copies of all of the Debtor's invoices to customers; and (ii)
furnish the Secured Party promptly with copies of such
information as the Secured Party may reasonable require. The
Debtor's billing of customers on such invoices or otherwise shall
be conclusive evidence of the assignment to the Secured Party of
the Receivables represented thereby whether or not the Debtor
executes any other document. The items to be provided under this
paragraph are to be in form satisfactory to the Secured Party and
are executed and delivered to the Secured Party from time to time
solely for the Secured Party's convenience in maintaining records
of the Collateral; the Debtor's failure to give any of such items
to the Secured Party shall not affect, terminate, modify or
otherwise limit the Secured Party's lien or security interest in
the Collateral.
10. MISCELLANEOUS
(a) This Agreement, the Note and/or any of the other Debt
Documents may be assigned, in whole or in part, by Secured Party
without notice to Debtor, and Debtor hereby waives any defense,
counterclaim or cross-complaint by Debtor against any assignee,
agreeing that Secured Party shall be solely responsible therefor.
(b) All notices to be given in connection with this
Agreement shall be in writing, shall be addressed to the parties
at their respective addresses set forth hereinabove (unless and
until a different address may be specified in a written notice to
the other party), and shall be deemed given when given in the
manner prescribed by the Deed of Trust.
(c) Secured party may correct patent errors herein and fill
in all blanks herein or in any Collateral Schedule consistent
with agreement of the parties.
(d) Time is of the essence hereof. This Agreement shall be
binding, jointly and severally, upon all parties described as the
"Debtor" and their respective heirs, executors, representatives,
successors and assigns, and shall inure to the benefit of Secured
Party, its successors and assigns.
(e) This Agreement and its Collateral Schedules, the Note
and the other loan documents executed on December 31, 1996 and
the date hereof constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede
all prior understandings (whether written, verbal, or implied)
with respect thereto. This Agreement and its Collateral
Schedules shall not be changed or terminated orally or by course
of conduct, but only by a writing signed by both
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parties hereto. Section headings contained in this Agreement
have been included for convenience only, and shall not affect the
construction or interpretation hereof.
(f) This Agreement shall continue in full force and effect
until all of the Indebtedness has been indefeasible paid in full
to Secured Party. The surrender, upon payment or otherwise, of
the Note or any of the other documents evidencing any of the
Indebtedness shall not affect the right of Secured party to
retain the Collateral for such other Indebtedness as may then
exist or (with the consent of the Borrower) as it may be
reasonable contemplated will exist in the future. This Agreement
shall automatically be reinstated in the event that Secured Party
is ever required to return or restore the payment of all or any
portion of the Indebtedness (all as though such payment had never
been made).
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IN WITNESS WHEREOF, Debtor and Secured Party, intending to
be legally bound hereby, have duly executed this Agreement in one
or more counterparts, each of which shall be deemed to be an
original, as of the day and year first aforesaid.
DEBTOR:
FOUNTAIN POWERBOATS, INC.,
a North Carolina corporation
ATTEST:
/s/Xxxxx X. Xxxxx By:/s/ X.X. Xxxxxxxx, Xx.
Assistant Secretary ___________ President
[CORPORATE SEAL]
SECURED PARTY:
GENERAL ELECTRIC CAPITAL CORPORATION,
a New York corporation
By: __________________________
Vice President
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