Document:

PROMISSORY NOTE BETWEEN FOUNTAIN POWERBOATS AND BANK OF AMERICA

 Bank of America, N.A. 
  
 EXHIBIT 10.10 
  
 Promissory Note 
  

	 Date: July 17, 2003
	 	 Amount: $18,000,000
	 	 Maturity Date: July 17, 2008

  
  

	Bank:	  	Borrower:
		
	Bank of America, N.A.	  	Fountain Powerboats, Inc.
	NC7-002-02-01	  	1653 Whichards Beach Road
	One Hannover Square, Suite 201	  	Washington, North Carolina 27889
	Raleigh, North Carolina 27601	  	 
		
	Wake County, North Carolina	  	Beaufort County, North Carolina
		
	(Street address including county)	  	(Name and street address, including county)

  
 FOR VALUE RECEIVED, the undersigned
Borrower unconditionally (and jointly and severally, if more than one) promises to pay to the order of Bank, its successors and assigns, without setoff, at its offices indicated at the beginning of this Note, or at such other place as may be
designated by Bank, the principal amount of Eighteen Million and no/100’s Dollars ($18,000,000), or so much thereof as may be advanced from time to time in immediately available funds, together with interest computed daily on the outstanding
principal balance hereunder, at an annual interest rate, and in accordance with the payment schedule, indicated below. 
  
 1. Rate. The interest rate on this Note (the “Rate”) shall be a rate per year equal to The Wall Street Journal LIBOR One Month Floating Rate plus the
Applicable Margin as defined below. 
  

	 	(a)	 	The Wall Street Journal LIBOR One Month Floating Rate is a fluctuating rate of interest equal to the one month London interbank offered rate as published in the “Money
Rates” section of The Wall Street Journal (or, if such source is not available, such alternate source as determined by the Bank), as adjusted from time to time in the Bank’s sole discretion for reserve requirements, deposit insurance
assessment rates and other requlatory costs (the “Index”). Any change in the rate will take effect on the effective date as indicated in The Wall Street Journal. Interest will accrue on any non-banking day at the rate in effect on the
immediately preceding banking day. 

  

	 	(b)	 	The Applicable Margin is the percent per annum set forth below, based on the Borrower’s Funded Debt to EBITDA Ratio, as defined in the Financial Covenants section of the Loan
Agreement executed by the Borrower and the Bank on the date hereof (the “Loan Agreement”), as set forth in the most recent compliance certificate received by the Bank. 

  

	 Funded Debt to EBITDA Ratio

	  	 Applicable
 Margin

	 
	 Less than or equal to 1.74 to 1.00*
	  	1.90	%*
	 1.75 to 1.00, but less than 2.50 to 1.00
	  	2.10	%
	 2.50 to 1.00, but less than 3.76 to 1.00
	  	2.25	%
	 Greater than or equal to 3.76 to 1.00
	  	2.50	%

  

	 	(c)	 	The Applicable Margin will be determined from the Borrower’s most recent quarterly compliance certificate received by the Bank, as required by the Loan Agreement. The
Applicable Margin will be in effect from the first day of the month following the receipt of that certificate until the first day of the month following receipt of the next quarterly compliance certificate. If any quarterly compliance certificate is
not delivered on time, the Applicable Margin from the date such certificate was due until the Bank receives it will be the highest level set forth above. Notwithstanding any other provision of this Note, from the date hereof to the first anniversary
of this Note, the Applicable Margin shall be deemed to be 2.25%. 

  
 Notwithstanding any provision of this Note, Bank does not intend to charge and Borrower shall not be required to pay any amount of interest or other charges in excess of the maximum permitted by the applicable law of the State of North
Carolina; if any higher rate ceiling is lawful, then that higher rate ceiling shall apply. Any payment in excess of such maximum shall be refunded to Borrower or credited against principal, at the option of Bank. 

	*	 	The Applicable Margin at this level shall be available only to the extent that the ratio of Total Liabilities to Tangible Net Worth (as determined pursuant to Section 4 of the Loan
Agreement) does not exceed 1.50 to 1.00. 

  
 2. Accrual Method.
Unless otherwise indicated, interest at the Rate set forth above will be calculated by the 365/360 day method (a daily amount of interest is computed for a hypothetical year of 360 days; that amount is multiplied by the actual number of days for
which any principal is outstanding hereunder). 
  
 3. Intentionally deleted

  
 4. Payment Schedule. All payments received hereunder shall be
applied first to the payment of any expense or charges payable hereunder or under any other loan documents executed in connection with this Note, then to interest due and payable, with the balance applied to principal, or in such other order as Bank
shall determine at its option. 
  
 (a) Principal and Interest. Principal
and interest shall be paid in consecutive installments as set forth in Schedule 1 attached hereto, payable monthly, commencing on August 11, 2003, and continuing on the same day of each successive month thereafter, with a final payment of all
unpaid principal and interest due thereon on July 17, 2008. If, on any payment date, accrued interest exceeds the installment amount set forth above, Borrower will also pay such excess as and when billed. 
  
 (b) Mandatory Prepayments. In addition to the required payments of principal of the
Loan set forth above in this Section 4, the Borrower shall make a mandatory prepayment of the principal amount of the Note annually in an amount equal to fifty percent (50%) of the Borrower’s Excess Earnings After Debt Service. Each such
prepayment is to be made within fifteen days of the issuance of the Borrower’s annual financial statements as required by the Loan Agreement, but in no event later than 120 days after the close of the Borrower’s fiscal year. The term
“Excess Earnings After Debt Service” means, with respect to each fiscal year of the Borrower, Cash Flow (as defined in the Loan Agreement) less Debt Service. The term “Debt Service” means, with 

  

 1 

 
respect to each fiscal year of the Borrower, the sum of the scheduled principal payments during such fiscal year, plus interest expense during such fiscal
year, plus the principal portion of scheduled capital lease payments during such fiscal year.  
  
 5. Intentionally deleted. 
  
 6.
Automatic Payment. The Borrower has elected to authorize Bank to effect payment of sums due under this Note by means of debiting Borrower’s account number 000694517459. This authorization shall not affect the obligation of Borrower to pay
such sums when due, without notice, if there are insufficient funds in such account to make such payment in full on the due date thereof, or if Bank fails to debit the account. 
  
 7. Waivers, Consents and Covenants. Borrower, any indorser or guarantor hereof, or any other party hereto (individually an
“Obligor” and collectively “Obligors”) and each of them jointly and severally: (a) waive presentment, demand, protest, notice of demand, notice of intent to accelerate, notice of acceleration of maturity, notice of protest,
notice of nonpayment, notice of dishonor, and any other notice required to be given under the law to any Obligor in connection with the delivery, acceptance, performance, default or enforcement of this Note, any indorsement or guaranty of this Note,
or any other documents executed in connection with this Note or any other note or other loan documents now or hereafter executed in connection with any obligation of Borrower to Bank (the “Loan Documents”); (b) consent to all delays,
extensions, renewals or other modifications of this Note or the Loan Documents, or waivers of any term hereof or of the Loan Documents, or release or discharge by Bank of any of Obligors, or release, substitution or exchange of any security for the
payment hereof, or the failure to act on the part of Bank, or any indulgence shown by Bank (without notice to or further assent from any of Obligors), and agree that no such action, failure to act or failure to exercise any right or remedy by Bank
shall in any way affect or impair the obligations of any Obligors or be construed as a waiver by Bank of, or otherwise affect, any of Bank’s rights under this Note, under any indorsement or guaranty of this Note or under any of the Loan
Documents; and (c) agree to pay, on demand, all costs and expenses of collection or defense of this Note or of any indorsement or guaranty hereof and/or the enforcement or defense of Bank’s rights with respect to, or the administration,
supervision, preservation, or protection of, or realization upon, any property securing payment hereof, including, without limitation, reasonable attorney’s fees, including fees related to any suit, mediation or arbitration proceeding, out of
court payment agreement, trial, appeal, bankruptcy proceedings or other proceeding, in such amount as may be determined reasonable by any arbitrator or court, whichever is applicable; Provided, however, Brunswick Corporation shall not be subject to
the foregoing provisions of this Section 7, it being the intent of the parties that any such waivers, consents and covenants of Brunswick Corporation shall be set forth in the Guaranty Agreement executed by Brunswick Corporation and dated as of the
date of this Note. 
  
 8. Prepayments. Other than the mandatory prepayments
required in Section 4 above, the Borrower may not prepay the Loan except as hereinafter provided. The Borrower may make voluntary partial prepayments of principal of this Note from time to time from the cash flow of the Borrower. The Borrower may
prepay the balance of this Note in full (but not in part) at any time provided that: (i) The Bank shall have received from the Borrower prior written notice of the Borrower’s intent to prepay and the date on which prepayment will be made, (ii)
the prepayment shall be in the amount of 100% of the outstanding principal due under this Note, plus accrued and unpaid interest thereon to the date of prepayment, plus any other sums which have become due to the Bank under the Loan Documents on or
before the date of prepayment but have not been paid, and plus the Make-Whole Amount (as defined herein). The “Make-Whole Amount” shall equal (i) if the date of prepayment occurs on or before the date that is one year after the date
hereof, one percent (1%) of the unpaid balance due under this Note on the day before the date of prepayment; and (ii) if the date of prepayment occurs after the date that is one year after the date hereof, one-half of one percent (0.50%) of the
unpaid balance due under this Note on the day before the date of prepayment. Nothing herein shall be deemed to alter or affect any obligations that the Borrower may have to the Bank under any Swap Agreements (as defined in the Loan Agreement).

  
 9. Delinquency Charge. To the extent permitted by law, a delinquency
charge may be imposed in an amount not to exceed four percent (4%) of the unpaid portion of any payment that is more than fifteen days late. Unless the terms of this Note call for repayment of the entire balance of this Note (both principal and
interest) in a single payment and not for installments of interest or principal and interest, the 4% delinquency charge may be imposed not only with respect to regular installments of principal or interest or principal and interest, but also with
respect to any other payment in default under this Note (other than a previous delinquency charge), including without limitation, a single payment of principal due at the maturity of this Note. In the event any installment, or portion thereof, is
not paid in a timely manner, subsequent payments will be applied first to the past due balance (which shall not include any previous delinquency charges), specifically to the oldest maturing installment, and a separate delinquency charge will be
imposed for each payment that becomes due until the default is cured. 
  
 10.
Events of Default. The following are events of default hereunder: (a) the failure of Borrower to make any payment of principal, interest or any fees due under this Note or any Loan Documents, as and when due (whether upon demand, at maturity or
by acceleration); (b) the failure to perform or observe any covenant set forth in Section 4.A., 4.C., 4.H., or Section 5 of the Loan Agreement; (c) the failure of the Borrower or any other Obligor to perform or observe any covenant, agreement or
provision of the Loan Documents (other than as described in clauses (a) and (b) above) and such failure shall continue for 30 or more days after the earlier of receipt of notice of such failure by the Borrower from the Bank or an officer of the
Borrower becoming aware of such failure, (d) the failure to pay or perform any other material obligation, liability or indebtedness of any Obligor other than Brunswick Corporation to any other party, and such failure shall continue for 30 or more
days after receipt of notice of such failure from the Bank; (e) the death of any Obligor (if an individual); (f) the commencement of a proceeding against any Obligor for dissolution or liquidation, the voluntary or involuntary termination or
dissolution of any Obligor; (g) the insolvency of, the business failure of, the appointment of a custodian, trustee, liquidator or receiver for or for any substantial part of the property of, the assignment for the benefit of creditors by, or the
filing of a petition under any bankruptcy, insolvency or debtor’s relief law or the filing of a petition for any adjustment of indebtedness, composition or extension by or against any Obligor and, if filed against any Obligor, such petition is
not dismissed within 60 days; (h) the determination by Bank that any representation or warranty made to Bank by any Obligor in any Loan Documents or otherwise in connection herewith is or was, when it was made, untrue or materially misleading; (i)
the entry of a judgment against any Obligor which has had or is reasonably likely to have a Material Adverse Effect (as defined in the Loan Agreement); (j) the seizure or forfeiture of, or the issuance of any writ of possession, garnishment or
attachment, or any turnover order for any property of any Obligor if such event has had or is reasonably likely to have a Material Adverse Effect (as defined in the Loan Agreement); (k) any Obligor asserts the invalidity of any Loan Document or
security interest, or (l) any event occurs under any guaranty of this Note which, pursuant to the express terms of such guaranty, permits Bank to demand immediate payment by the Obligor under such guaranty. 
  
 11. Remedies upon Default. Whenever there is a default under this Note (a) the entire
balance outstanding hereunder and all other obligations of any Obligor to Bank (however acquired or evidenced) shall, at the option of Bank, become immediately due and payable and any obligation of Bank to permit further borrowing under this Note
shall immediately cease and terminate, and/or (b) to the extent permitted by law, the Rate of interest on the unpaid principal shall be increased at Bank’s discretion up to a rate of interest per annum which shall be two percent (2%) above the
Rate set forth in Section 1 above (the “Default Rate”). The provisions herein for a Default Rate and a delinquency charge shall not be deemed to extend the time for any payment hereunder or to constitute a “grace period” giving
Obligors a right to cure any default. At Bank’s option, any accrued and unpaid interest, fees or charges may, for purposes of computing and accruing interest on a daily basis after the due date of this Note or any installment thereof, be deemed
to be a part of the principal balance, and interest shall accrue on a daily compounded basis after such date at the Default Rate until the entire outstanding balance of principal and interest is paid in full. Upon a default under this Note, Bank is
hereby authorized at any time, at its option and without notice or demand, to set off and charge against any deposit accounts of any Obligor other than Brunswick Corporation (as well as any money, instruments, securities, documents, chattel paper,
credits, claims, demands, income and any other property, rights and interests of any Obligor other than Brunswick Corporation), which at any time shall come into the possession or custody or under the control of Bank or any of its agents, affiliates
or correspondents, any and all obligations due hereunder. Additionally, Bank shall have all rights and remedies available under each of the Loan Documents, as well as all rights and remedies available at law or in equity. 
  

 2 

 12. Non-Waiver. The failure at any time of Bank to exercise any of its options or any other rights hereunder shall
not constitute a waiver thereof, nor shall it be a bar to the exercise of any of its options or rights at a later date. All rights and remedies of Bank shall be cumulative and may be pursued singly, successively or together, at the option of Bank.
The acceptance by Bank of any partial payment shall not constitute a waiver of any default or of any of Bank’s rights under this Note. No waiver of any of its rights hereunder, and no modification or amendment of this Note, shall be deemed to
be made by Bank unless the same shall be in writing, duly signed on behalf of Bank; each such waiver shall apply only with respect to the specific instance involved, and shall in no way impair the rights of Bank or the obligations of Obligors to
Bank in any other respect at any other time. 
  
 13. Applicable Law, Venue and
Jurisdiction. This Note and the rights and obligations of Borrower and Bank shall be governed by and interpreted in accordance with the law of the State of North Carolina. In any litigation in connection with or to enforce this Note or any
indorsement or guaranty of this Note or any Loan Documents, Obligors (other than Brunswick Corporation), and each of them, irrevocably consent to and confer personal jurisdiction on the courts of the State of North Carolina or the United States
located within the State of North Carolina and expressly waive any objections as to venue in any such courts. Nothing contained herein shall, however, prevent Bank from bringing any action or exercising any rights within any other state or
jurisdiction or from obtaining personal jurisdiction by any other means available under applicable law. Notwithstanding the foregoing, however, in the event Brunswick Corporation succeeds to the rights of the Bank as the holder of this Note, any
suit, action or proceeding brought in connection with or arising out of this Note shall be brought solely in the Federal Courts of the Northern District of Illinois or, if such court lacks jurisdiction, in the State Court located in Lake County,
Illinois. 
  
 14. Partial Invalidity. The unenforceability or invalidity of
any provision of this Note shall not affect the enforceability or validity of any other provision herein and the invalidity or unenforceability of any provision of this Note or of the Loan Documents to any person or circumstance shall not affect the
enforceability or validity of such provision as it may apply to other persons or circumstances. 
  
 15. Binding Effect. This Note shall be binding upon and inure to the benefit of Borrower, Obligors and Bank and their respective successors, assigns, heirs and personal representatives, provided, however, that
no obligations of Borrower or Obligors hereunder can be assigned without prior written consent of Bank. 
  
 16. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS,
AGREEMENTS OR DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE
AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR ANY SUCCESSOR THEREOF (“J.A.M.S.”), AND THE “SPECIAL RULES” SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL.
JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION. FOR THE PURPOSES OF THIS ARBITRATION PROVISION ONLY, THE TERM “PARTIES”, AS IT RELATES TO LENDER, SHALL INCLUDE ANY PARENT CORPORATION, SUBSIDIARY OR
AFFILIATE OF BANK INVOLVED IN THE SERVICING, MANAGEMENT OR ADMINISTRATION OF ANY OBLIGATION DESCRIBED OR EVIDENCED BY THIS AGREEMENT. 
  
 A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE COUNTY OF ANY BORROWER’S DOMICILE AT THE TIME OF THE EXECUTION OF THIS
INSTRUMENT, AGREEMENT OR DOCUMENT OR IF THERE IS REAL OR PERSONAL PROPERTY COLLATERAL, IN THE COUNTY WHERE SUCH REAL OR PERSONAL PROPERTY IS LOCATED, AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY
PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. NOTWITHSTANDING THE FOREGOING, HOWEVER, IN THE EVENT BRUNSWICK CORPORATION SUCCEEDS TO THE RIGHTS OF THE BANK AS THE HOLDER OF THIS NOTE, THE
ARBITRATION SHALL BE CONDUCTED IN LAKE COUNTY, ILINOIS. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF
SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS. 
  
 B.
RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR DOCUMENT; OR
(II) BE A WAIVER BY BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO
FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. BANK MAY EXERCISE SUCH
SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THIS EXERCISE OF
SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES. 
  
 Borrower
represents to Bank that the proceeds of this loan are to be used primarily for business, commercial or agricultural purposes. Borrower acknowledges having read and understood, and agrees to be bound by, all terms and conditions of this Note and
hereby executes this Note under seal as of the date here above written. 
  
 NOTICE OF FINAL AGREEMENT. THIS WRITTEN PROMISSORY NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN OR ORAL AGREEMENTS BETWEEN THE PARTIES. 
  

	 Borrower:

	
	 FOUNTAIN POWERBOATS, INC.

	
	 By /s/ Reginald M. Fountain, Jr.

	
	 Name: Reginald M. Fountain, Jr.

	
	 Title: Chairman, CEO and President

	  

	 Attest (If Applicable)

	
	[Corporate Seal]

  

 3CONTINUING AND UNCONDITIONAL GUARANTY BETWEEN FOUNTAIN POWERBOAT/ BANK OF AMERIC

	 Bank of America, N.A.
	  	EXHIBIT 10.11

  
 Date: July 17, 2003 
  
 Continuing and Unconditional
Guaranty 
  

	Bank:	 	Guarantor:
		
	 Bank of America, N.A.
	 	 Fountain Powerboat Industries, Inc.

	 NC7-002-02-01
	 	 1653 Whichards Beach Road

	 One Hanover Square, Suite 201
	 	 Washington, North Carolina 27889

	 Raleigh, North Carolina 27601
	 	 
		
	 Wake County, North Carolina
	 	 Beaufort County, North Carolina

		
	 (Street address including county)
	 	 (Name and street address, including county)

  
 “Borrower”: Fountain
Powerboats, Inc. 
  
 1. Guaranty. FOR VALUE RECEIVED, and to induce Bank of
America, N.A. (“Bank”) to make loans or advances or to extend credit or other financial accommodations or benefits, with or without security, to or for the account of Borrower, the undersigned “Guarantor”, if more than one, then
each of them jointly and severally, hereby irrevocably and unconditionally guarantees to Bank the full and prompt payment when due, whether by acceleration or otherwise, of any and all Liabilities (as hereinafter defined) of Borrower to Bank. This
Guaranty is continuing and unlimited as to the amount, and is cumulative to and does not supersede any other guaranties. 
  
 Guarantor further unconditionally guarantees the faithful, prompt and complete compliance by Borrower with all Obligations (as hereinafter defined). The undertakings of
Guarantor hereunder are independent of the Liabilities and Obligations of Borrower and a separate action or actions for payment, damages or performance may be brought or prosecuted against Guarantor, whether or not an action is brought against
Borrower or to realize upon the security for the Liabilities and/or Obligations, whether or not Borrower is joined in any such action or actions, and whether or not notice is given or demand is made upon Borrower. 
  
 Bank shall not be required to proceed first against Borrower, or any other person, or entity,
whether primarily or secondarily liable, or against any collateral held by it, before resorting to Guarantor for payment, and Guarantor shall not be entitled to assert as a defense to the enforceability of the Guaranty any defense of Borrower with
respect to any Liabilities or Obligations. 
  
 2. Paragraph Headings, Governing
Law and Binding Effect. Guarantor agrees that the paragraph headings in this Guaranty are for convenience only and that they will not limit any of the provisions of this Guaranty. Guarantor further agrees that this Guaranty shall be governed by
and construed in accordance with the laws of the State of North Carolina and applicable United States federal law. Guarantor further agrees that this Guaranty shall be deemed to have been made in the State of North Carolina at Bank’s address
indicated above, and shall be governed by, and construed in accordance with, the laws of the State of North Carolina, or the United States courts located within the State of North Carolina, and is performable in the State of North Carolina. This
Guaranty is binding upon Guarantor, his, their or its executors, administrators, successors or assigns, and shall inure to the benefit of Bank, its successors, indorsees or assigns. Anyone executing this Guaranty shall be bound by the terms hereof
without regard to execution by anyone else. 
  
 3. Definitions. 

 
 A. “Guarantor” shall mean Guarantor or any one or more
of them. 
  
 B. “Liability” or
“Liabilities” shall mean without limitation, all liabilities, indebtedness, and obligations of Borrower to Bank under the Note, the Loan Agreement and the other Loan Documents, whether direct or indirect, absolute or contingent, joint or
several, secured or unsecured, due or not due, contractual or tortious, liquidated or unliquidated, arising by operation of law or otherwise, now or hereafter existing, or held or to be held by Bank for its own account or as agent for another or
others, whether created directly, indirectly, or acquired by assignment or otherwise, including but not limited to all extensions or renewals thereof, and all sums payable under or by virtue thereof, including, without limitation, all amounts of
principal and interest, all expenses (including reasonable attorney’s fees and cost of collection) incurred in the collection thereof or the enforcement of rights thereunder (including, without limitation, any liability arising from failure to
comply with state or federal laws, rules and regulations concerning the control of hazardous waste or substances at or with respect to any real estate securing any loan guaranteed hereby), whether arising in the ordinary course of business or
otherwise. If Borrower is a partnership, corporation or other entity the term “Liability” or “Liabilities” as used herein shall include all Liabilities to Bank of any successor entity or entities. 
  
 C. “Loan Agreement” shall mean the Loan Agreement of even
date herewith between the Bank and the Borrower. 
  
 D.
“Loan Documents” shall mean the Loan Agreement, the Note, all deeds to secure debt, deeds of trust, mortgages, security agreements and other documents securing payment of the Liabilities and all notes and other agreements, documents, and
instruments evidencing or relating to the Liabilities and Obligations. 
  
 E. “Note” shall mean the Promissory Note of the Borrower to the Bank in the original principal amount of $18,000,0000 dated as of even date herewith, which Note evidences the loan described in the Loan Agreement.

  

 1 

 F. “Obligation” or “Obligations” shall mean all terms, conditions, covenants,
agreements and undertakings of Borrower and/or Guarantor under all notes and other documents evidencing the Liabilities, and under all deeds to secure debt, deeds of trust, mortgages, security agreements and other agreements, documents and
instruments executed in connection with the Liabilities or related thereto. 
  
 4. Waivers by Guarantor. Guarantor waives notice of acceptance of this Guaranty, notice of any Liabilities or Obligations to which it may apply, presentment, demand for payment, protest, notice of dishonor or nonpayment of any
Liabilities, notice of intent to accelerate, notice of acceleration, and notice of any suit or the taking of other action by Bank against Borrower, Guarantor or any other person, any applicable statute of limitations and any other notice to any
party liable on any Loan Document (including Guarantor). 
  
 Each Guarantor also
hereby waives, until payment in full of the Liabilities, any claim, right or remedy which such Guarantor may now have or hereafter acquire against Borrower that arises hereunder and/or from the performance by any other Guarantor hereunder including,
without limitation, any claim, remedy or right of subrogation, reimbursement, exoneration, contribution, indemnification, or participation in any claim, right or remedy of Bank against Borrower or against any security which Bank now has or hereafter
acquires, whether or not such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise. 
  
 Guarantor also waives the benefits of any provision of law requiring that Bank exhaust any right or remedy, or take any action, against Borrower, any Guarantor, any other
person and/or property including but not limited to the provisions of N.C. Gen. Stat. §26-7 through § 26-9, inclusive, as amended, or otherwise. 
  
 Bank may at any time and from time to time (whether before or after revocation or termination of this Guaranty) without notice to Guarantor (except as required by law),
without incurring responsibility to Guarantor, without impairing, releasing or otherwise affecting the Obligations of Guarantor, in whole or in part, and without the indorsement or execution by Guarantor of any additional consent, waiver or
guaranty: (a) change the manner, place or terms of payment, or change or extend the time of or renew, or change any interest rate or alter any Liability or Obligation or installment thereof, or any security therefor; (b) loan additional monies or
extend additional credit to Borrower, with or without security, thereby creating new Liabilities or Obligations the payment or performance of which shall be guaranteed hereunder, and the Guaranty herein made shall apply to the Liabilities and
Obligations as so changed, extended, surrendered, realized upon or otherwise altered; (c) sell, exchange, release, surrender, realize upon or otherwise deal with in any manner and in any order any property at any time pledged or mortgaged to secure
the Liabilities or Obligations and any offset there against; (d) exercise or refrain from exercising any rights against Borrower or others (including Guarantor) or act or refrain from acting in any other manner; (e) settle or compromise any
Liability or Obligation or any security therefor and subordinate the payment of all or any part thereof to the payment of any Liability or Obligation of any other parties primarily or secondarily liable on any of the Liabilities or Obligations; (f)
release or compromise any Liability of Guarantor hereunder or any Liability or Obligation of any other parties primarily or secondarily liable on any of the Liabilities or Obligations; or (g) apply any sums from any sources to any Liability without
regard to any Liabilities remaining unpaid. 
  
 5. Subordination. Upon
demand of Bank, Guarantor agrees that it will not demand, take or receive from Borrower, by set-off or in any other manner, payment of any debt, now and at any time or times hereafter owing by Borrower to Guarantor unless and until all the
Liabilities and Obligations shall have been fully paid and performed, and any security interest, liens or encumbrances which Guarantor now has and from time to time hereafter may have upon any of the assets of Borrower shall be made subordinate,
junior and inferior and postponed in priority, operation and effect to any security interest of Bank in such assets. 
  
 6. Waivers by Bank. No delay on the part of Bank in exercising any of its options, powers or rights, and no partial or single exercise thereof, shall constitute a
waiver thereof. No waiver of any of its rights hereunder, and no modification or amendment of this Guaranty, shall be deemed to be made by Bank unless the same shall be in writing, duly signed on behalf of Bank; and each such waiver, if any, shall
apply only with respect to the specific instance involved, and shall in no way impair the rights of Bank or the obligations of Guarantor to Bank in any other respect at any other time. 
  
 7. Termination. This Guaranty shall be binding on each Guarantor until written notice of revocation signed by such Guarantor or
written notice of the death of such Guarantor shall have been received by Bank, notwithstanding change in name, location, composition or structure of, or the dissolution, termination or increase, decrease or change in personnel, owners or partners
of Borrower, or any one or more of Guarantors. No notice of revocation or termination hereof shall affect in any manner rights arising under this Guaranty with respect to Liabilities or Obligations that shall have been committed, created,
contracted, assumed or incurred prior to receipt of such written notice pursuant to any agreement entered into by Bank prior to receipt of such notice. The sole effect of such notice of revocation or termination hereof shall be to exclude from this
Guaranty, Liabilities or Obligations thereafter arising that are unconnected with Liabilities or Obligations theretofore arising or transactions entered into theretofore. 
  
 In the event of the death of a Guarantor, the liability of the estate of the deceased Guarantor shall continue in full force and effect as
to (i) the Liabilities existing at the date of death, and any renewals or extensions thereof, and (ii) loans or advances made to or for the account of Borrower after the date of death of the deceased Guarantor pursuant to a commitment made by Bank
to Borrower prior to the date of such death. As to all surviving Guarantors, this Guaranty shall continue in full force and effect after the death of a Guarantor, not only as to the Liabilities existing at that time, but also as to Liabilities
thereafter incurred by Borrower to Bank. 
  
 8. Partial Invalidity and/or
Enforceability of Guaranty. The unenforceability or invalidity of any provision of this Guaranty shall not affect the enforceability or validity of any other provision herein and the invalidity or unenforceability of any provision of any Loan
Document as it may apply to any person or circumstance shall not affect the enforceability or validity of such provision as it may apply to other persons or circumstances. 
  
 In the event Bank is required to relinquish or return the payments, the collateral or the proceeds thereof, in whole or in part, which had
been previously applied to or retained for application against any Liability, by reason of a proceeding arising under the Bankruptcy Code, or for any other reason, this Guaranty shall automatically continue to be effective notwithstanding any
previous cancellation or release effected by Bank. 
  
 9. Change of Status.
Guarantor will not become a party to a merger or consolidation with any other company, except where Guarantor is the surviving corporation or entity, and all covenants under this Guaranty are assumed by the surviving entity. Further, Guarantor
may not change its legal structure, without the written consent of Bank and all covenants under this Guaranty are assumed by the new or surviving entity. Guarantor further agrees that this Guaranty shall be binding, legal and enforceable against
Guarantor in the event Borrower changes its name, status or type of entity. 
  

 2 

 10. Financial and Other Information. Guarantor agrees to furnish to Bank any and all financial information and any
other information regarding Guarantor and/or collateral requested in writing by Bank within ten (10) days of the date of the request. Guarantor has made an independent investigation of the financial condition and affairs of Borrower prior to
entering into this Guaranty, and Guarantor will continue to make such investigation; and in entering into this Guaranty Guarantor has not relied upon any representation of Bank as to the financial condition, operation or creditworthiness of
Borrower. Guarantor further agrees that Bank shall have no duty or responsibility now or hereafter to make any investigation or appraisal of Borrower on behalf of Guarantor or to provide Guarantor with any credit or other information which may come
to its attention now or hereafter. 
  
 11. Notices. Notice shall be deemed
reasonable if mailed postage prepaid at least five (5) days before the related action to the address of Guarantor or Bank, at their respective addresses indicated at the beginning of this Guaranty, or to such other address as any party may designate
by written notice to the other party. Each notice, request and demand shall be deemed given or made, if sent by mail, upon the earlier of the date of receipt or five (5) days after deposit in the U.S. Mail, first class postage prepaid, or if sent by
any other means, upon delivery. 
  
 12. Guarantor Duties. If the Borrower
shall default in payment or performance of any Liabilities, whether principal, interest, premium, fee (including, but not limited to, loan fees and attorneys’ fees and expenses), or otherwise, when and as the same shall become due, whether
according to terms of the Loan Agreement, by acceleration, or otherwise, or upon the occurrence of an Event of Default (as defined in the Note), then the Guarantor shall, upon notice or demand by Bank, promptly and with due diligence pay all
Liabilities and perform and satisfy all Obligations for the benefit of the Bank. 
  
 13. Remedies. Upon any failure of Guarantor to fulfill its obligations under Section 12, Bank shall have all of the remedies of a creditor and, to the extent applicable, of a secured party, under all applicable law, and without
limiting the generality of the foregoing, Bank may, at its option and without notice or demand: (a) declare any Liability due and payable at once; (b) take possession of any collateral pledged by Guarantor wherever located, and sell, resell, assign,
transfer and deliver all or any part of said collateral of Guarantor at any public or private sale or otherwise dispose of any or all of the collateral in its then condition, for cash or on credit or for future delivery, and in connection therewith
Bank may impose reasonable conditions upon any such sale, and Bank, unless prohibited by law the provisions of which cannot be waived, may purchase all or any part of said collateral to be sold, free from and discharged of all trusts, claims, rights
or redemption and equities of Guarantor whatsoever; Guarantor acknowledges and agrees that the sale of any collateral through any nationally recognized broker-dealer, investment banker or any other method common in the securities industry shall be
deemed a commercially reasonable sale under the Uniform Commercial Code or any other equivalent statute or federal law, and expressly waives notice thereof except as provided herein; and (c) set-off against any or all Liabilities of Guarantor all
money owed by Bank or any of its agents or affiliates in any capacity (other than in its capacity as a fiduciary) to Guarantor whether or not due, and if exercised by Bank, Bank shall be deemed to have exercised such right of set-off and to have
made a charge against any such money immediately upon the occurrence of such default although made or entered on the books subsequent thereto. 
  
 Bank shall have a properly perfected security interest in all of Guarantor’s funds on deposit with Bank to secure the balance of any Liabilities and/or Obligations
that Guarantor may now or in the future owe Bank. Bank is granted a contractual right of set-off and will not be liable for dishonoring checks or withdrawals where the exercise of Bank’s contractual right of set-off or security interest results
in insufficient funds in Guarantor’s account. As authorized by law, Guarantor grants to Bank this contractual right of set-off and security interest in all property of Guarantor now or at anytime hereafter in the possession of Bank, including
but not limited to any joint account, special account, account by the entireties, tenancy in common, and all dividends and distributions now or hereafter in the possession or control of Bank (excluding any account held by Bank in a fiduciary
cpacity). 
  
 14. Attorney Fees, Cost and Expenses. Guarantor shall pay all
costs of collection and reasonable attorney’s fees, including reasonable attorney’s fees in connection with any suit, mediation or arbitration proceeding, out of Court payment agreement, trial, appeal, bankruptcy proceedings or otherwise,
incurred or paid by Bank in enforcing the payment of any Liability or defending this agreement. 
  
 15. Intentionally deleted. 
  
 16.
Preservation of Property. Bank shall not be bound to take any steps necessary to preserve any rights in any property pledged as collateral to Bank to secure Borrower and/or Guarantor’s Liabilities and Obligations as against prior parties
who may be liable in connection therewith, and Borrower and Guarantor hereby agree to take any such steps. Bank, nevertheless, at any time, may (a) take any action it deems appropriate for the care or preservation of such property or of any rights
of Borrower and/or Guarantor or Bank therein; (b) demand, sue for, collect or receive any money or property at any time due, payable or receivable on account of or in exchange for any property pledged as collateral, to Bank to secure Borrower and/or
Guarantor’s Liabilities to Bank; (c) compromise and settle with any person liable on such property; or (d) extend the time of payment or otherwise change the terms of the Loan Documents as to any party liable on the Loan Documents, all without
notice to, without incurring responsibility to, and without affecting any of the Obligations or Liabilities of Guarantor. 
  
 17. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS INSTRUMENT,
AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE,
THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR ANY SUCCESSOR THEREOF (“J.A.M.S.”), AND THE “SPECIAL RULES” SET FORTH BELOW. IN THE EVENT OF ANY
INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED
PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION. 
  
 A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE COUNTY OF ANY BORROWER’S DOMICILE, OR IF THERE IS REAL OR PERSONAL PROPERTY
COLLATERAL, IN THE COUNTY WHERE SUCH REAL OR PERSONAL PROPERTY IS LOCATED AT THE TIME OF THE EXECUTION OF THIS INSTRUMENT, AGREEMENT OR DOCUMENT AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED
FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. NOTWITHSTANDING THE FOREGOING, HOWEVER, IN THE EVENT BRUNSWICK CORPORATION SUCCEEDS TO THE RIGHTS OF THE BANK AS THE HOLDER OF THIS GUARANTY, THE ARBITRATION
SHALL BE CONDUCTED IN LAKE COUNTY, ILINOIS. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR 

  

 3 

 
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL
60 DAYS. 
  
 B. RESERVATION OF RIGHTS. NOTHING IN
THIS ARBITRATION PROVISION SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR DOCUMENT; OR (II) BE A WAIVER BY BANK OF THE PROTECTION
AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. BANK MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY,
OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THIS EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR
MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO
SUCH REMEDIES. 
  
 18. Intentionally deleted. 
  
 19. Execution Under Seal. This Guaranty is being executed under seal by Guarantor.

  
 20. NOTICE OF FINAL AGREEMENT. THIS WRITTEN CONTINUING AND UNCONDITIONAL
GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 

 
 IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be executed under seal on
this 17th day of July, 2003. 
  

	Witnessed By:	  	Guarantor:
		
	 /s/ Carol J. Price

	  	 (Seal)

		
	 Carol J. Price, Secretary

	  	  

	 Print Name and Title
	  	Print Individual’s Name
		
	 	  	                        Corporate or Partnership Guarantor:
		
	 	  	                       Fountain Powerboat Industries, Inc.
                           Name of Corporation, Partnership,
etc.

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

	 	  	 Name:
	  	 Reginald M. Fountain, Jr.

	 	  	 Title:
	  	 Chairman, CEO and President

		
	 	  	
 Attest (If
Applicable)

		
	 	  	 [Corporate Seal]

  

	 Corporate Acknowledgment
	  	 
		
	 State of North Carolina        
	  	)
	 	  	)
	 County of
Wake                   
	  	)

  
 This instrument was acknowledged
before me on July 16, 2003, by Reginald M. Fountain, Jr., Chairman, CEO and President of Fountain Powerboat Industries, Inc., a Nevada corporation, on behalf of said corporation. 
  

	 	  	 /s/ Eric Sean Brown

	 (Seal)
	  	 Notary Public
 in and for the State of
North Carolina

		
	 June 27, 2004

	  	 Eric Sean Brown

	 My Commission Expires
	  	                    Print Name of Notary

  
  

 4

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