<PAGE>

                         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.






R#0202662.05
<PAGE>

                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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 <PAGE>


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 Reginald M. Fountain, Jr. 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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<PAGE>

     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.





                              - 4 -

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<PAGE>
      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


                              - 5 -

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 <PAGE>

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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<PAGE>

       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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<PAGE>

      (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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<PAGE>

      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



                              - 9 -

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<PAGE>

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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<PAGE>

               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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<PAGE>

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

                             - 18 -

R#0202662.05

<PAGE>

United  States  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 Beach Road
                    P.O. Drawer 457
                    Washington, North Carolina  27889
                    Attn:  Reginald M. Fountain, Jr.
                    Telecopy:  (919) 975-6793

                    The Lender:

                    General Electric Capital Corporation
                    6100 Fairview Road Suite 1450
                    Charlotte, North Carolina  28210
                    Attention:  Waller Blackwell
                    Telecopy:  (704) 554-0726

            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.


                             - 19 -

R#0202662.05

<PAGE>

           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/Blanche C. Williams   By:  /s/Reginanld M. Fountain, Jr.
_______ Secretary           ________ President

[CORPORATE SEAL]



                         LENDER:

ATTEST:                  GENERAL ELECTRIC CAPITAL CORPORATION,
                         a New York corporation

/s/Kerry S. Thomas       By:  /s/Waller T. Blackwell
_______ Secretary           ________ Region Credit Analyst

[CORPORATE SEAL]



                         PARENT CORPORATION:

ATTEST:                  FOUNTAIN POWERBOAT INDUSTRIES, INC.
                         a Nevada corporation

/s/Blanche C. Williams   By:  Reginald M. Fountain, Jr.
_______ Secretary           ________ President

[CORPORATE SEAL]



                             - 20 -

R#0202662.05

<PAGE>

                         PRESENT SUBSIDIARIES:


ATTEST:                  FOUNTAIN TRUCKING, INC.
                         a North Carolina corporation

/s/Blanche C. Williams   By:  /s/Reginald M.  Fountain,Jr.
_______ Secretary           ________ President

[CORPORATE SEAL]



ATTEST:                  FOUNTAIN AVIATION, INC.
                         a North Carolina corporation

/s/Blanche C. Williams   By:  /s/Reginald M.  Fountain, Jr.
_______ Secretary           ________ President

[CORPORATE SEAL]



ATTEST:                  FOUNTAIN UNLIMITED, INC.
                         a North Carolina corporation

/s/Blanche C. Williams   By:  /s/Reginald M. Fountain, Jr.
_______ Secretary           ________ President

[CORPORATE SEAL]



ATTEST:                  FOUNTAIN POWER, INC.
                         a North Carolina corporation

/s/Blanche C. Williams   By:  /s/Reginald M. Fountain, Jr.
_______ Secretary           ________ President

[CORPORATE SEAL]


                             - 21 -


R#0202622.05

<PAGE>


ATTEST:                  FOUNTAIN SPORTSWEAR, INC.
                         a North Carolina corporation

/s/Blanche C. Williams   By:  /s/Reginald M. Fountain, Jr.
_______ Secretary           ________ President

[CORPORATE SEAL]








































                             - 22 -


R#0202662.05
<PAGE>
                          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

<PAGE>

                          Schedule 2.05
      Receivables, Inventory or Tangible Personal Property
                      Owned by Subsidiaries
                                
                     As of November 30, 1996


A.   Fountain Aviation, Inc. - Asset Value $      0

B.   Fountain Sportswear, Inc. - Asset Value $  181,129.00

C.   Fountain Trucking, Inc.  - Asset Value $    67,287.00

D.   Fountain Unlimited, Inc. - Asset Value $     0

E.   Fountain Power, Inc. - Asset Value $  1,709,967.32
















<PAGE>

                          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 Richard
     Kall  v. Fountain 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

<PAGE>

     Fountain's  defense for all three suits  is  Christopher  J.
     Fransen of Fransen and Hardin, 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 Richard D. Kall, the insured boat owner,
     on  his  claim, and the insurance carrier now is seeking  to
     recover that amount from Fountain and its co-defendant.

     Richard  D. Kall v. Fountain 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 Jefferson Parish,  and  Orleans
     Parish,  Louisiana.  Mr. Kall 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.   Michael   Jordan/Air  Jordan  Trademark  Claim  -   Fountain
     received  a  demand letter, dated February  22,  1996,  from
     David Falk, representative and agent for Michael Jordan, for
     damages  in  connection with an advertisement  for  Fountain
     which  used  Michael  Jordan's  name  and  the  phrase  "Air
     Reggie."  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. v. Fountain 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.

<PAGE>

5.   Allstate  Insurance Company, as subrogee of Michael Centanzo
     v.  Fountain  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. v. Fountain 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.

<PAGE>

                          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

<PAGE>

     requirements.   A  copy  of  the related  correspondence  is
     attached hereto.
























<PAGE>

                     State of North Carolina
    Department of Natural Resources and Community Development
                       Northeastern Region
     1424 Carolina Avenue, Washington, North Carolina  27889
                                

James G. Martin, Governor                       Lorraine G. Shinn
William W. Cobey, Jr., Secretary                 Regional Manager


              DIVISION OF ENVIRONMENTAL MANAGEMENT
                          May 30, 1989

Mr. Thomas W. Harwell
Carolina Benchmark, Inc.
10 Oakmont Drive
P.O. Box 2687
Greenville, NC  27836

     SUBJECT:  Fountain Power Boats, Inc.
               Remedial Action
               Beaufort County

Dear Mr. Harwell

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 946-6481.

                                   Sincerely

                                   /s/Jim Mulligan

                                   Jim Mulligan
                                   Regional Supervisor







P.O. Box 1507, Washington, North Carolina 27889-1507   Telephone
                          919-946-6481
                                
        An Equal Opportunity Affirmative Action Employer

<PAGE>

                               CB
                       CAROLINA BENCHMARK
                  ENGINEERS-SURVEYORS-PLANNERS
                          INCORPORATED
                                
                                
                          June 5, 1989


Mr. John Ward
Ward & Smith
P.O. Box 867
New Bern, NC  28560

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/Thomas W. Harwell

Thomas W. Harwell
Chairman

TWH/nwd

Enclosure



Copy to:  Fountain Power Boats














CAROLINA BENCHMARK  102 OAKMONT DRIVE  P.O. BOX 2687 (ECU
STATION)  GREENVILLE, N.C. 27836 TELEPHONE (919) 756-8440

<PAGE>

                               CB
                       CAROLINA BENCHMARK
                  ENGINEERS-SURVEYORS-PLANNERS
                          INCORPORATED
                                
                          July 13, 1989

Mr. Ken Bornstein
Fountain Powerboats, Inc.
P.O. Drawer 457
Washington, NC  27889

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/Thomas W. Harwell

Thomas W. Harwell
Chairman

CAROLINA BENCHMARK  102 OAKMONT DRIVE  P.O. BOX 2687 (ECU
STATION)  GREENVILLE, N.C. 27836 TELEPHONE (919) 756-8440

<PAGE>

                               CB
                       CAROLINA BENCHMARK
                  ENGINEERS-SURVEYORS-PLANNERS
                          INCORPORATED
                                
                         August 13, 1990
                                
Mr. David L. Ward, Jr.
Ward & Smith, PA
P.O. Box 867
New Bern, NC  28563

                              RE:  Fountain Powerboats, Inc.
                                   Beaufort County, NC Plant

Dear Sir:

In accordance with Mr. Leon Smith's 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/Thomas W. Harwell

Thomas W. Harwell, PE

Copy to:  Fountain Powerboats















CAROLINA BENCHMARK  102 OAKMONT DRIVE  P.O. BOX 2687 (ECU
STATION)  GREENVILLE, N.C. 27836 TELEPHONE (919) 756-8440

<PAGE>

                               CB
                       CAROLINA BENCHMARK
                  ENGINEERS-SURVEYORS-PLANNERS
                          INCORPORATED

                         August 14, 1989


Mr. Alton R. Hodge, Environmental Engineer
Division of Environmental Management
Water Quality Section
P.O. Box 1507
Washington, NC 27889


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  Brian
E.  Gray, 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/Thomas W. Harwell

Thomas W. Harwell
Chairman


TWH/nwd

CAROLINA BENCHMARK  102 OAKMONT DRIVE  P.O. BOX 2687 (ECU
STATION)  GREENVILLE, N.C. 27836 TELEPHONE (919) 756-8440

<PAGE>

                    State of North Carolina
     Department of Environment, Health and Natural Resources
                       Northeastern Region
     1424 Carolina Avenue, Washington, North Carolina  27889
                                
James G. Martin, Governor                       Lorraine G. Shinn
William W. Cobey, Jr. Secretary                 Regional Manager

              DIVISION OF ENVIRONMENTAL MANAGEMENT
                         August 27, 1990



Mr. Reggie Fountain
Fountain Powerboats, Inc.
P.O. Box 457
Washington, NC  27889

     SUBJECT:  Status of Site
               Beaufort County

Dear Mr. Fountain:

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/Jim Mulligan

                              Jim Mulligan
                              Regional Supervisor

cc:  Lorraine Shinn
     Ted Dennis
     Tom Harwell











P.O. Box 1507, Washington, North Carolina  27889-1507  Telephone
                          919-946-6481
                                
        An Equal Opportunity Affirmative Action Employer

<PAGE>
                               CB
                       CAROLINA BENCHMARK
                  ENGINEERS-SURVEYORS-PLANNERS
                          INCORPORATED

                        September 6, 1990
                                


Mr. John L. Ward, Jr.
Attorney-at-Law
Ward & Smith, P.A.
P.O. Box 867
New Bern, NC  28560


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 Sandra 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/Thomas W. Harwell

Thomas W. Harwell
Chairman

TWH/nwd


Enclosures




CAROLINA BENCHMARK  102 OAKMONT DRIVE  P.O. BOX 2687 (ECU
STATION)  GREENVILLE, N.C. 27836 TELEPHONE (919) 756-8440

<PAGE>

                    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  6100
Fairview  Road,  Suite 1450, Charlotte, North Carolina  ("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 Whichard's  Beach  Road,
Washington, North Carolina 27889 ("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

<PAGE>

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

<PAGE>

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

<PAGE>

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

<PAGE>

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

<PAGE>

      (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

<PAGE>

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

<PAGE>


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

<PAGE>

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

<PAGE>

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

R#0202392.04

<PAGE>

      (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

<PAGE>

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.

                               12


R#0202392.04

<PAGE>

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

<PAGE>

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/Blanche C. Williams________________  By:  /s/Reginald M.
Fountain, Jr.
____________  Secretary       ___________ President



                           SECURED PARTY:

                           GENERAL ELECTRIC CAPITAL CORPORATION,
                           a New York corporation


                           By:  /s/Waller T. Blackwell
                              Region Credit Analyst










                               14


R#0202392.04

<PAGE>

                            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             MLD.MA. 27' SB Hull 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 & Hull
741              33SB 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' S.B.
1391             Mold 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 & Hull
746              36SB Mold Foot Boxes
754              36 Radar Arch Modifi
837              38C Deck Splashes
841              33SC Deck Prep
876              38' Radar Arch Tool
877              38' S.C. Patterns
891              38' S.C. Deck Mold
893              38' S.B. Venturi 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             MLD.MA 38' Deck #2
1240             MLD.MA 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' S.B.
1394             Mold Maint. 38' S.B.
1403             Pos. Lift 38' S.B.

<PAGE>

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' S.F. Cuddy Design
976              31' S.F. Cuddy Molds
998              31' S.F. Cuddy Design
1009             31' S.F. Cuddy Parts
1010             31' S.F. Cuddy Store
1024             31' S.F. Cuddy Deck Mold
1025             31' S.F. Cuddy I/B Dk Mld
1140             31' S.F. Cuddy 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             MLD.MA 31' SF Liner
1239             MLD.MA. 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

<PAGE>
                            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

<PAGE>

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  Ottis  M.
Crisp line as shown on the plat entitled "Plan of Land surveyed for
Jennis  M.  Crisp" 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

<PAGE>

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

<PAGE>
                            EXHIBIT C
                                


Northwestern Mutual Life Insurance Policy #12-839-890 on  the  life
of  Reginald  M. Fountain, Jr. 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 Hackney 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  Warren
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.











<PAGE>




                            EXHIBIT D
                                
                                
      Being an area 200 feet by 200 feet being immediately adjacent
to  and  to  the  South of the Hackney 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 J. A. Hackney & Sons Inc. from Warren 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.











<PAGE>



                         PROMISSORY NOTE
                                
                        December 31, 1996
                                
                         Beaufort County
                   Washington, North Carolina
                                

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 6100 Fairview Road, Suite 1450, Charlotte, NC  28210  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

<PAGE>

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,
44  Old Ridgebury Road, Danbury, CT 06810-5105).  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
     
<PAGE>
     
     (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

<PAGE>

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

<PAGE>

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

<PAGE>

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/Reginald M. Fountain, Jr.
                                      _______________ President

/s/Blanche C. Williams
_____________Secretary


[CORPORATE SEAL]































                                6


R#0202454.04

<PAGE>
                         BK 1063 PG 337


This document prepared by (and return to):


William C. Matthews, Jr.
Womble Carlyle Sandridge & Rice, P.L.L.C.
P.O. Box 831
Raleigh, North Carolina  27602


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 Whichard's Beach Road,
Washington, North Carolina  27889 (hereinafter referred to  as  the
"Grantor"),  WILLIAM C. MATTHEWS, JR., the Trustee, a  resident  of
Wake  County,  North  Carolina, whose  address  is  Womble  Carlyle
Sandridge  &  Rice,  P.L.L.C.,  2100 First  Union  Capitol  Center,
Raleigh,  North  Carolina  27601 (hereinafter referred  to  as  the
"Trustee"), and GENERAL ELECTRIC CAPITAL CORPORATION,  a  New  York
corporation  whose  address  is 6100  Fairview  Road,  Suite  1450,
Charlotte,  North Carolina 28210 (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

<PAGE>
                         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

R#0202455.04

<PAGE>
      
                        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


<PAGE>
                         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  Ottis  M.
Crisp line as shown on the plat entitled "Plan of Land surveyed for
Jennis  M.  Crisp" 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

<PAGE>
                        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
CDR/DCR
WSMAIN/205631

<PAGE>
                         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





                              - 3 -


R#0202455.04

<PAGE>
                        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:








                              - 4 -



R#0202455.04

<PAGE>
                        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















<PAGE>


                        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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                        BK  1063  PG 346


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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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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<PAGE>
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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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<PAGE>
                        BK  1063  PG  352


      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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                        BK  1063  PG  355


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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                        BK  1063  PG  356


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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                        BK  1063  PG  357

      (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  wells,
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 sue, 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 sue for or otherwise collect the Rents,  including
those  past  due and unpaid, and apply the same, less  costs  and
expenses of operation and collection, including 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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                         BK 1063  PG 359


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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                        BK  1063  PG  360


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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                        BK 1063  PG  361


      (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,



                             - 21 -


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<PAGE>
                        BK  1063  PG 362


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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<PAGE>
                       BK   1063  PG  363


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, sue 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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<PAGE>
                        BK  1063  PG  365


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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                        BK  1063  PG 366


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


                             - 26 -
                                
R#0202455.04

<PAGE>
                        BK  1063  PG 367


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


                             - 27 -


R#0202455.04

<PAGE>
                        BK  1063  PG 368


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.
                   Whichard's Beach Road
                   Washington, North Carolina 27889
                   Telecopy:  (919) 975-6793
                   Attention:  Reginald M. Fountain, Jr.
     
     Beneficiary:  General Electric Capital Corporation
                   6100 Fairview Road, Suite 1450
                   Charlotte, North Carolina  28210
                   Telecopy:  (704) 554-0726
     
     Trustee:      William C. Matthews, Jr.
                   Womble Carlyle Sandridge & Rice, PLLC
                   2100 First Union Capitol Center
                   150 Fayetteville Street Mall
                   Raleigh, North Carolina  27601
                   Telecopy  (919) 755-2150

     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.


                             - 28 -


R#0202455.04

<PAGE>
                        BK  1063  PG 369


      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.


                             - 29 -

R#0202455.04

<PAGE>
                        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/ Reginald M. Fountain, Jr.
                                 _____________ President


  /s/  Blanche C. Williams
______________ Secretary


     [CORPORATE SEAL]




































                             - 30 -

R#0202455.04

<PAGE>
                        BK  1063  PG 371


NORTH CAROLINA


  CRAVEN        COUNTY

      I,  Stephanie C. Crosby, a Notary Public of Craven  County,
North  Carolina,  do  hereby certify that  Blanche   C.  Williams
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/ Stephanie C. Crosby
                              Notary Public


[NOTARY SEAL]


My commission expires:

  11-30-99












     North Carolina
     Beaufort County
                    The  foregoing  Certificate of  Stephanie  C.
                    Crosby
                    
                    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/Judy Till
                    Register of Deeds   Ass't/Deputy Register  of
                    Deeds






                             - 31 -

R#0202455.04

<PAGE>
                        BK  1063  PG 372




This document prepared by:
William C. Matthews, Jr.
Womble Carlyle Sandridge &  Rice, PLLC
Post Office Box 831
Raleigh, North Carolina  27602
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

<PAGE>
                        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

<PAGE>

                         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  Ottis  M.
Crisp line as shown on the plat entitled "Plan of Land surveyed for
Jennis  M.  Crisp" 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

<PAGE>

                        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

<PAGE>
                        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

<PAGE>
                        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

<PAGE>
                        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/ Reginald M. Fountain, Jr.
                                 _____________ President

ATTEST:

  /s/  Blanche C. Williams
______________ Secretary


     [CORPORATE SEAL]




































                              - 4 -

R#0202465.02

<PAGE>
                        BK  1063  PG 379


NORTH CAROLINA


  CRAVEN        COUNTY

      I,  Stephanie C. Crosby, a Notary Public of Craven  County,
North  Carolina,  do  hereby certify that  Blanche   C.  Williams
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/ Stephanie C. Crosby
                              Notary Public


[NOTARY SEAL]


My commission expires:

  11-30-99












     North Carolina
     Beaufort County
                    The  foregoing  Certificate of  Stephanie  C.
                    Crosby
                    
                    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/Judy Till
                    Register of Deeds   Ass't/Deputy Register  of
                    Deeds






                              - 5 -

R#0202465.02

<PAGE>

CORPORATE GUARANTY

                              Date:  December 31, 1996


General Electric Capital Corporation
6100 Fairview Road, Suite 1450
Charlotte, North Carolina 28210

      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

<PAGE>

       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

<PAGE>


      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

<PAGE>

     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/ Reginald M. Fountain, Jr.
                                 _________________ President


  /s/ Blanche C. Williams
______________ Secretary


[CORPORATE SEAL]





                              - 4 -



R#0202886.03

<PAGE>

     FOUNTAIN SPORTSWEAR, INC.

ATTEST:

                             By: /s/ Reginald M. Fountain, Jr.
                                 _________________ President

  /s/ Blanche C. Williams
______________ Secretary


[CORPORATE SEAL]



     FOUNTAIN TRUCKING, INC.

ATTEST:

                             By: /s/ Reginald M. Fountain, Jr.
                                 _________________ President

  /s/ Blanche C. Williams
______________ Secretary


[CORPORATE SEAL]



     FOUNTAIN UNLIMITED, INC.

ATTEST:

                             By: /s/ Reginald M. Fountain, Jr.
                                 _________________ President

  /s/ Blanche C. Williams
______________ Secretary


[CORPORATE SEAL]



     FOUNTAIN POWER, INC.

ATTEST:

                             By: /s/ Reginald M. Fountain, Jr.
                                 _________________ President

  /s/ Blanche C. Williams
______________ Secretary


[CORPORATE SEAL]

                              - 5 -
R#0202866.03

<PAGE>

     FOUNTAIN POWERBOAT INDUSTRIES, INC.

ATTEST:

                              By: /s/ Reginald M. Fountain, Jr.
                                 _________________ President


  /s/ Blanche C. Williams
______________ Secretary


[CORPORATE SEAL]











































                              - 6 -


R#0202886.03

<PAGE>

                     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
REGINALD M. FOUNTAIN, JR. (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

<PAGE>

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, sue  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,  sue
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

<PAGE>

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
Reginald  M. Fountain, Jr., at Whichard's Beach Road, Washington,
North  Carolina 27889 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 6100 Fairview Road, Suite 1450,
Charlotte, North Carolina  28210, 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

<PAGE>

        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

<PAGE>

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

<PAGE>

     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/ Reginald M. Fountain, Jr.
(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/ Reginald M. Fountain, Jr.
                                 _____________ President

Attest:

  /s/  Blanche C. Williams
______________ Secretary


     [CORPORATE SEAL]























                              - 6 -


R#0202895.03

<PAGE>

          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/ Reginald M. Fountain, Jr.
                                 President





R#0202980.01

<PAGE>

STATE OF NORTH CAROLINA  )
                         )
COUNTY OF BEAUFORT       )

      On  this  31st  day of December, 1996, personally  appeared
before  me  Reginald  M.  Fountain, Jr.,  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/ Stephanie C. Crosby
     Notary Public

                              Stephanie C. Crosby
     Printed Name of Notary Public


My commission expires:


  11-30-99

[SEAL]

































R#0202980.01

<PAGE>







                  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 Mark shown herein, a copy of  said
Mark 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 Mark registered under the Trademark Act  of
1946, as amended, and the said Mark 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/  Harry F. Manbeck, Jr.
                                   Commissioner of Patents and
                                   Trademarks


<PAGE>






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.
P.O. DRAWER 457
WASHINGTON, NC  27889                  SER. NO. 74-006.862, FILED 12-
                                       1-1989.

FOR BOATS,  IN CLASS 12 (U.S. Cl. 19)  R.G. COLE. EXAMINING ATTORNEY

























<PAGE>



                  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 Mark shown herein, a copy of  said
Mark 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 Mark registered under the Trademark Act  of
1946, as amended, and the said Mark 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/  Harry F. Manbeck, Jr.
                                   Commissioner of Patents and
                                   Trademarks

<PAGE>

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.
P.O. DRAWER 457
WASHINGTON, NC  27889                 SER. NO. 74-007.625 FILED 12-1-
                                      1989.

FOR BOATS, IN CLASS 12 (U.S. Cl. 19)  ELLEN A. RUBEL EXAMINING ATTORNEY







<PAGE>

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 1450
Whichards Beach Rd.             Charlotte, NC  28210       961214
96 DEC 31  PM 3:17
Washington, NC  27889           

(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


<PAGE>

                            WARD AND SMITH, P.A.
                              ATTORNEYS AT LAW
                             1001 COLLEGE COURT
120 WEST FIRE TOWER ROAD     POST OFFICE BOX 867  
POST OFFICE BOX 8088        NEW BERN, N.C.  28563-0867
GREENVILLE, N.C. 27835-8088      ___________     
TELEPHONE (919) 355-3030    TELEPHONE (919) 633-1000
FACSIMILE (919) 756-3689    FACSIMILE (901) 636-2121

SUITE 2400
TWO HANNOVER SQUARE
FAYETTEVILLE STREET MALL
POST OFFICE BOX 2091
RALEIGH, N.C.  27602-2091
TELEPHONE (919) 836-1800
FACSIMILE (919) 836-1507

UNIVERSITY CORPORATE CENTER                
127 RACINE DRIVE
POST OFFICE BOX 7068
WILMINGTON, N.C. 28406-7068
TELEPHONE (910) 392-5100
FACSIMILE (910) 392-2333

                        December 31, 1996


General Electric Capital Corporation
6100 Fairview Road, Suite 1450
Charlotte, North Carolina  28210

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  William  c.
Matthews,  Jr., 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;

<PAGE>

WARD AND SMITH, 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 Reginald M. Fountain, Jr. 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 Reginald M. Fountain, Jr. 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

<PAGE>

WARD AND SMITH, 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

<PAGE>

WARD AND SMITH, 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 Jack B. 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.

      B.    Fountain 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.

     C.   Fountain 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.

      D.    Fountain  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

<PAGE>

WARD AND SMITH, 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.

     E.   Fountain 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.

       F.    Fountain  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.

      G.    Fountain 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

<PAGE>

WARD AND SMITH, 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

<PAGE>

WARD AND SMITH, 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)

<PAGE>

WARD AND SMITH, 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;

<PAGE>

WARD AND SMITH, 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

<PAGE>

WARD AND SMITH, 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  Reginald M. Fountain,  Jr.,  President  of
Borrower,  and  Allan  L. Krehbiel, 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

<PAGE>

WARD AND SMITH, 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 Crockett 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.

<PAGE>

WARD AND SMITH, 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,



                              Ward and Smith, P.A.

81-0242 (DV)\WSMAIN/206466.

<PAGE>

                    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
6100   Fairview  Road,  Suite  1450,  Charlotte,  North  Carolina
("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 Whichard's
Beach Road, Washington, North Carolina 27889 ("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

<PAGE>

       (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

<PAGE>

      (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

<PAGE>

      (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

<PAGE>

      (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

<PAGE>

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

<PAGE>

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

<PAGE>

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.



                                8

R#0204908.03

<PAGE>

      (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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<PAGE>

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/Carol J. Price          By:/s/ R.M. Fountain, Jr.
Assistant Secretary           ___________ President

[CORPORATE SEAL]



                           SECURED PARTY:

                           GENERAL ELECTRIC CAPITAL CORPORATION,
                           a New York corporation


                           By:  __________________________
                              Vice President
























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