Document:

Deed of Trust

 Exhibit 10.2 
  
 DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT 
 AND FINANCING STATEMENT 
  
 COLLATERAL INCLUDES FIXTURES 
  
 NORTH
CAROLINA, BEAUFORT COUNTY 
  
 THIS DEED OF TRUST,
ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FINANCING STATEMENT made and entered into as of September 19, 2005, by and among FOUNTAIN POWERBOATS, INC., a North Carolina corporation, whose address is 1653 Whichard’s Beach Road,
Washington, North Carolina 27889, and whose organizational identification number is 0055124 (hereinafter called “Grantor”), BRYAN F. KENNEDY, III, a resident of North Carolina, whose address is 6805 Morrison Boulevard, Suite
100, Charlotte, North Carolina 28211 (hereinafter called “Trustee”), and REGIONS BANK, an Alabama chartered bank, whose address is 6805 Morrison Boulevard, Suite 100, Charlotte, North Carolina 28211 (hereinafter called
“Beneficiary”); 
  
 RECITALS: 

 
 A. Grantor and Beneficiary have entered into a Loan Agreement dated as of
even date herewith (as amended, modified, restated, supplemented, extended, or renewed from time to time, the “Loan Agreement”) pursuant to which Beneficiary has made available to Grantor a term loan in the principal amount of
$16,500,000 (the “Loan”) as evidenced by a Note dated as of even date herewith, from Grantor and payable to Beneficiary (as the same may be amended, modified, replaced, restated, supplemented, extended, or renewed from time to time,
the “Note”). Unless extended or renewed, the Note is due and payable in full on or before the Maturity Date. Except as otherwise provided herein, capitalized terms used herein without definition shall have the meanings given to them
in the Loan Agreement. 
  

					
	 	  	 	  	 Prepared by and when recorded return to:
  
 Robinson, Bradshaw & Hinson, P.A.
 101 North
Tryon Street, Suite 1900
 Charlotte, North Carolina 28246-1900
 Attn: S. Graham Robinson

 B. As partial consideration for Beneficiary entering into the Loan Agreement, Grantor has agreed to
secure by execution and delivery of this Deed of Trust and the collateral hereafter described, the payment and performance of the obligations of Grantor under the following documents or instruments (hereinafter collectively referred to as the
“Obligations”): (i) payment of all payment obligations evidenced by the Loan Agreement in accordance with the terms thereof, including repayment of the indebtedness evidenced by the Note, with interest thereon; (ii) the fulfillment
and performance of the other covenants and agreements set forth in the Loan Agreement, the Note, this Deed of Trust, and in any of the other instruments or documents evidencing or securing the indebtedness described in the Loan Agreement; (iii) the
payment of all charges provided herein and all other sums, with interest thereon, advanced in accordance herewith to protect the security of this Deed of Trust; and (iv) payment and performance of any and all obligations of the Grantor under any
Hedge Agreement required or permitted under the Loan Agreement and to which the Grantor and the Beneficiary are parties (the Loan Agreement, the Note, this Deed of Trust, the Hedge Agreements and all documents and instruments evidencing or securing
any such indebtedness, as hereafter amended, modified, restated, supplemented, extended, or renewed from time to time, are known herein collectively as and are referred to herein as the “Loan Documents”). 
  
 NOW, THEREFORE, in consideration of these premises and the sum of One and
No/100 Dollars ($1.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor has given, granted, bargained, sold and conveyed, and by these presents does give, grant, bargain, sell, alien,
remise, release, convey, assign, transfer, mortgage, hypothecate, pledge, deliver, set over, warrant and confirm unto Trustee, its successors and assigns forever all right, title and interest of Grantor in and to the following property (the
“Premises”): 
  
 (a) The real
property described in EXHIBIT A ATTACHED HERETO AND INCORPORATED HEREIN BY REFERENCE (the “Land”); and 
  
 (b) All buildings and other improvements now or hereafter located in, on or about the Land, and all of Grantor’s building materials
intended for incorporation but not incorporated into the improvements to the Land, and all furnishings, furniture, fixtures, machinery, equipment, tools, and all other personal property or chattels used in connection with the operation of such
improvements, specifically including, without limitation, appliances, gas and electric fixtures and systems, radiators, heaters, engines and machinery, boilers, ranges, elevators and motors, plumbing and heating fixtures and systems, carpeting and
other floor coverings, water heaters, air conditioning apparatus and systems, window screens, awnings, and storm sashes, whenever acquired by Grantor and now or hereafter located in, upon or under the Land, together with all additions and accessions
thereto and replacements and proceeds thereof (the “Improvements”); and 
  
 (c) All right, title and interest of Grantor in and to the minerals, shrubs, timber and other emblements now or hereafter located on the
Land, or under or above the same; and 
  

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 (d) All leases, rents, issues, profits, royalties, income and other benefits derived from
the Land and the Improvements (the “Rents”), subject to the right, power and authority hereinafter given to Grantor to collect and apply such Rents, and the proceeds from any insurance or condemnation award relating to the Land and
the Improvements; and 
  
 (e) All easements,
rights-of-way and rights used in connection with the Land and the Improvements or as a means of access thereto, and all tenements, hereditaments and appurtenances thereof and thereto; and 
  
 (f) All proceeds, products, replacements, additions,
substitutions, renewals and accessions of or to any of the foregoing; and 
  
 (g) All the rights, interest and privileges which Grantor as lessor has or may have in the leases now existing or hereafter made and affecting the Land or the Improvements or any part thereof, as said leases may have
been or may from time to time be hereafter modified, extended and renewed, together with any and all guarantees of any leases affecting all or any part of the Land or the Improvements and all security deposits received in respect of such leases (the
“Security Deposits”). 
  
 TO HAVE AND TO HOLD the
Premises unto Trustee in fee simple forever, upon the trusts and for the uses and purposes hereinafter set out; 
  
 And Grantor covenants with Trustee that Grantor is seized of the Premises in fee and has the right to convey the same in fee simple; that the same are
free and clear of all encumbrances except as set forth in the loan policy of title insurance covering the Land issued to Beneficiary as of the date of the recording of this Deed of Trust; that Grantor has done no act to encumber the Premises and,
that Grantor will warrant and defend the title to the same against the lawful claims of all persons whomsoever, and that Grantor will execute such further assurances of title to the Premises as may be required. 
  
 THIS CONVEYANCE IS MADE UPON THIS SPECIAL TRUST, that if Grantor shall pay
the Obligations in accordance with the terms of the Loan Documents and shall comply with all the covenants, terms and conditions of this Deed of Trust, this conveyance shall be released and cancelled of record. Grantor hereby further covenants and
agrees with Trustee and Beneficiary as follows: 
  
 1. Loan
Agreement. The terms and provisions of the Loan Agreement are incorporated herein by reference. An Event of Default under the Loan Agreement shall for all purposes constitute a default hereunder. In the event of any default under this Deed of
Trust, Beneficiary may, at its option, defer application by it to Trustee to sell the Premises and may take action under and invoke such other rights and remedies as may be provided in the Loan Agreement, in this Deed of Trust or in any other
document or instrument evidencing or securing the Obligations. If there is any conflict between the Loan Agreement and this Deed of Trust, then the Loan Agreement shall control. 
  
 2. Payment and Performance of Obligations; Impositions. Grantor will pay and perform, as and when due, the
Obligations and, in all events prior to delinquency, all real and 

  

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personal property taxes and assessments, general and special, and all other taxes and assessments of any kind or nature whatsoever, including without
limitation non-governmental levies or assessments (hereinafter referred to as “Impositions”), such as owner association dues or charges or fees and maintenance charges which are assessed or imposed upon the Premises. Grantor shall
upon demand furnish to Beneficiary satisfactory evidence of payment of the Impositions and shall authorize the appropriate governmental official to deliver to Beneficiary at any time a written statement of the taxes and assessments against the
Premises. If at any time after the date hereof, there shall be assessed or imposed (the following hereafter referenced to as the “Additional Impositions”) (a) a tax or assessment on the Premises in lieu of or in addition to the
Impositions payable by Grantor or (b) a license fee, tax or assessment imposed on Beneficiary and measured by or based in whole or in part upon the amount of the outstanding Obligations secured hereby, Grantor shall pay and discharge all such taxes,
assessments or fees before they become delinquent. If Grantor fails to pay such amounts prior to delinquency and Grantor has not previously provided notice to Beneficiary of Grantor’s good faith protest of any such Impositions or Additional
Impositions and evidence that Grantor has taken appropriate measures to avoid the accrual of penalties for failure to pay any such Impositions or Additional Impositions, Beneficiary may, at its option, pay any such Impositions or Additional
Impositions of which payment, amount and validity thereof the official receipt shall be conclusive evidence, and any amounts so expended shall immediately become debts due by Grantor, shall bear interest at the rate specified in the Loan Agreement,
and such payment shall be secured by this Deed of Trust. 
  
 3.
Insurance. (a) The Grantor will keep the buildings and other improvements now or hereafter on the Land insured against loss and damage by fire or other casualty in accordance with the Loan Agreement. In the event of a transfer of the
Premises, including a transfer by foreclosure, exercise of the power of sale, or deed in lieu of foreclosure, Grantor’s interest in the insurance policies referred to above and any return premiums in connection therewith shall automatically be
transferred to the successor in title to Grantor’s interest in the Premises. 
  
 (b) In the event of loss, Grantor will give immediate notice by mail to Beneficiary who, as mortgagee or additional insured, as appropriate to the policy, may make proof of loss if not made promptly by Grantor, and
each insurance company concerned shall hereby be authorized and directed to make payment for such loss directly to Beneficiary instead of to Grantor and Beneficiary jointly. If the Premises, or any part thereof, shall be damaged by fire or other
hazard against which insurance is held, proceeds of insurance shall, to the extent of the Obligations then remaining unpaid, be paid to Beneficiary, and, at its option, may be applied either in such a manner so as to reduce the Obligations or to the
restoration or repair of the Improvements. 
  
 (c) If any portion
of the Improvements is located in a special flood hazard area according to the Federal Emergency Management Agency (“FEMA”), then Grantor must maintain a flood insurance policy in the amount of the Obligations plus the outstanding
principal balance of any senior liens on the Premises or the replacement value of the Improvements located in a special flood hazard area, whichever is less. If at any time during the term of the Credit Documents, the Improvements are classified by
FEMA as being located in a special flood hazard area, flood insurance will be mandatory. Should this occur, federal law requires Beneficiary to notify Grantor of the reclassification. If, within 45 days of receipt of notification 

  

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from Beneficiary that any portion of the Improvements has been reclassified by the FEMA as being located in a special flood hazard area, Grantor has not
provided sufficient evidence of flood insurance, Beneficiary is mandated under federal law to purchase flood insurance on behalf of Grantor, and any amounts so expended shall immediately become debts of Grantor, shall bear interest at the Default
Rate specified in the Loan Agreement, and payment thereof shall be secured by this Deed of Trust. 
  
 4. Maintenance of Premises; Compliance with Laws. Grantor will keep the Premises in good order, repair and condition, reasonable wear and tear
excepted, and shall not commit or permit any waste with respect to any of the Premises. Grantor also will comply with all applicable laws, statutes, ordinances, codes, judicial and administrative decisions (including without limitation and as
applicable, all such laws, statutes, judicial and administrative decisions relating to the physical accessibility requirements of Title III of the Americans with Disabilities Act of 1990 (as amended) and the implementing regulations promulgated
thereunder by the Department of Justice and the Americans with Disabilities Act Accessibility Guidelines (ADAAG) associated therewith and the applicable ANSI Standards under the Fair Housing Act (as amended) and all applicable regulations) of all
applicable state, federal or local governmental entities. Grantor will not make material changes to the Premises, change the use of the Premises, or consent to a change in zoning of the Premises without Beneficiary’s prior written consent.
Grantor shall immediately provide notice to Beneficiary of any proposed zoning changes affecting the Premises. 
  
 5. Liens; Conveyance of Premises. (a) Except for Permitted Liens, Grantor will not sell, convey, or transfer the Premises, or any part thereof or
interest therein, legal or equitable, without the prior written consent of Beneficiary. 
  
 (b) The Grantor agrees to ensure that no liens other than Permitted Liens are filed against the Premises by reason of any services or materials supplied thereto, whether such services or materials are supplied to
Grantor or to some person, firm or corporation in possession of all or a part of the Premises through or under Grantor; provided that the Grantor shall not be in breach of this covenant if any such liens are cancelled or appropriately bonded
within thirty (30) days of the filing thereof. 
  
 6. Hazardous
Material. Grantor represents and warrants to Beneficiary that the representations and warranties set forth in Section 4.13 of the Loan Agreement are true, accurate and complete with respect to Grantor and the Premises, as applicable. Grantor
shall comply with the provisions of Section 5.4 of the Loan Agreement, and Grantor shall indemnify Beneficiary pursuant to Section 9.2 of the Loan Agreement. Beneficiary shall have, and Grantor hereby grants to Beneficiary, the right to enter upon
the Premises, with reasonable advance notice to Grantor, to verify compliance by Grantor with the terms of this Section 6 and to conduct such environmental assessments and audits as Beneficiary shall reasonably deem advisable;
provided, however, GRANTOR ACKNOWLEDGES THAT IT SHALL HAVE THE SOLE RESPONSIBILITY FOR ALL HAZARDOUS WASTE HANDLING PRACTICES AND ENVIRONMENTAL PRACTICES, AND GRANTOR HAS FULL DECISION MAKING POWER WITH RESPECT THERETO. 
  

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 7. Leases. (a) Grantor will faithfully perform the covenants of the lessor contained in any
present or future lease by it of any part or all of the Premises, and in pursuance thereof, will neither do anything nor neglect to do anything, nor permit anything to be done which would cause the modification or termination of any of such leases,
or of the obligation of any lessee, his or its successors and assigns, or the Rents provided for therein or the interest of the lessor or of Beneficiary therein or thereunder resulting in a Material Adverse Effect. Grantor will not assign such
leases or the Rents therefrom or any part of such leases or Rents to anyone other than Beneficiary without the prior written consent of Beneficiary (which shall not be unreasonably withheld), nor collect such Rents (other than a security deposit)
for more than one month in advance, nor do any other act whereby the lien of this Deed of Trust may be impaired in value or quality. Grantor will not execute a mortgage, deed of trust or other instrument or permit a lien which may be or become
superior to any existing lease of any part of the Premises, except as expressly permitted in this Deed of Trust, the Loan Agreement or the Security Agreement. All material leases affecting the Premises entered into after the date hereof shall be on
forms, with tenants and on terms submitted to Beneficiary for its prior written approval (not to be unreasonably withheld conditioned or delayed), and shall be made subordinate or superior to the lien of this Deed of Trust at the option of
Beneficiary. Grantor agrees not to execute any lease, modification of lease, termination of lease or extension of lease of all or part of the Premises without first obtaining Beneficiary’s prior review and written approval (which shall not be
unreasonably withheld, conditioned or delayed) of the form, content and lessee of said lease and the form and content of said modification of lease, termination of lease or extension of lease. Grantor will advise Beneficiary of the execution of any
lease of all or part of the Premises and will assign such lease to Beneficiary in form and substance acceptable to Beneficiary as additional security for the Obligations. In addition, Grantor agrees to provide Beneficiary with a rent roll and copies
of any and all present and future leases of the Premises or any portion thereof and any modification or extension of leases as same may be requested by Beneficiary from time to time, together with all supplementary information relating to the status
of such leases. 
  
 Grantor does hereby assign and set over to
Beneficiary all leases affecting the Premises and all Rents of the Premises, whether under leases or tenancies now existing or hereafter created, and whether such Rents are to become due, are due or have been collected, and all general intangibles
in connection therewith, including without limitation such Rents as are due and unpaid from time to time, collected Rents and proceeds of Rents, accounts into which all or any of such Rents are deposited from time to time, and all accounts and
general intangibles of Grantor related in any manner to the Premises or the operation thereof, as additional security for the Obligations, as well as all funds received for the purpose of keeping said Premises in proper repair, and Beneficiary is
given a prior and continuing lien thereon. Grantor hereby appoints Beneficiary its attorney to collect such Rents with or without suit, and to apply the same, less expenses of collection, to the Obligations and to repairs in such manner as
Beneficiary may elect; provided, that until the occurrence of an Event of Default and after the cure thereof, Grantor may continue to collect and enjoy such Rents as they fall due without accountability to Beneficiary, except as Grantor is
herein required to account. This assignment and power of attorney shall apply to all leases, security deposits, rentals and other amounts received from tenants in the future, whether by present or by future owners of the Premises; shall be in
addition to other remedies herein provided for in Event of Default; and may be put into effect independently or concurrently with any of such remedies, but no liability shall attach to Beneficiary on account of failure or inability to collect any
such Rents. If at any time there is any conflict between any 

  

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provision of this Deed of Trust and any provision of the aforesaid leases, then such provision of this Deed of Trust shall govern and apply. Notwithstanding
the foregoing, nothing herein shall be deemed to grant a greater interest in or provide greater rights to Beneficiary with respect to any general intangibles, accounts or other personalty than are granted or provided to Beneficiary under the
Security Agreement or the Loan Agreement. 
  
 8. Right to Cure;
Protection of Security. If Grantor shall fail in any of the covenants and provisions contained in this Deed of Trust, Beneficiary may (but shall not be obligated to) take any action Beneficiary deems necessary or desirable to prevent or cure any
such default or failure. Beneficiary shall have the right to enter upon the Premises to such extent and as often as Beneficiary, in its reasonable discretion, deems necessary or desirable in order to prevent or cure any such default or failure by
Grantor. In addition, if any legal proceeding (such as bankruptcy, condemnation, forfeiture or other legal or regulatory proceeding) that may affect Beneficiary’s rights or interests in the Premises (or any part thereof) is commenced,
Beneficiary may act to protect or preserve such rights or interests (including, without limitation, the employment of an attorney or other professional(s)). Beneficiary may expend such sums of money as Beneficiary, in its sole discretion, deems
necessary for any such purpose, and Grantor hereby agrees to pay to Beneficiary, immediately upon demand, all sums so expended by Beneficiary, together with interest thereon from the date of each such payment at the Default Rate. All sums so
expended by Beneficiary, and the interest thereon, shall be added to and secured by the lien of this Deed of Trust. 
  
 9. Condemnation. Upon condemnation of the Premises or any part thereof, this Deed of Trust shall become a lien, charge and encumbrance upon the
proceeds or award realized as a result of any such proceeding or of any settlement or payment made in lieu of any such proceeding (the “Condemnation Proceeds”). Grantor hereby grants to Beneficiary a security interest in any
Condemnation Proceeds and hereby agrees to execute such further assignments of the Condemnation Proceeds as Beneficiary may require. Grantor further covenants and agrees that Beneficiary may (and is hereby authorized and empowered but not required
to) collect and receive any Condemnation Proceeds and, if received by Grantor, Grantor shall pay over and deliver immediately to Beneficiary all Condemnation Proceeds to be held by Beneficiary and applied as follows: 
  
 (a) In the event the entire Premises shall be taken by condemnation or in
settlement of any threat of condemnation, then any Condemnation Proceeds shall be paid to Beneficiary and applied in payment in whole or in part of the Obligations, whether or not then due and payable, and any excess shall be delivered to the
parties legally entitled thereto. 
  
 (b) In the event of a
partial taking of the Premises, the portion of the Condemnation Proceeds necessary to prevent impairment of the security of this Deed of Trust, as determined in Beneficiary’s reasonable discretion, shall be set aside, withheld or paid over to
Beneficiary and applied to the Obligations, whether or not then due and payable, and the excess of such award or proceeds shall be delivered to Grantor or other parties legally entitled thereto. Upon any partial taking of the Premises, this Deed of
Trust shall continue in full force as security for the unpaid portion of the Obligations secured hereby. Upon any partial taking of the Premises, Grantor covenants with Beneficiary to restore the Premises as nearly as possible to the condition
thereof immediately prior to such taking and to apply Grantor’s portion of any Condemnation Proceeds 

  

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together with any other necessary funds to complete and pay for the costs of restoration. Any amounts applied to principal of the Obligations shall be
applied to principal last maturing thereon. The application or release by Beneficiary of any Condemnation Proceeds under this Section 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. 
  
 (c) Notwithstanding any contrary
provision of this Deed of Trust, (i) upon condemnation of the entire Premises, or (ii) if it shall at any time be determined that Section 40A-68 of the North Carolina General Statutes (or any amendment thereto) shall for any reason be unenforceable
or inapplicable to this Deed of Trust, upon partial condemnation of the Premises, the entire unpaid balance of the Obligations shall, at the option of Beneficiary, at once become due and payable, whereupon any Condemnation Proceeds shall be paid
over to Beneficiary and applied in accordance with the first sentence of subsection (a) of this Section. 
  
 10. Inspection. Beneficiary may inspect the Premises at all reasonable times, and access thereto shall be permitted and is hereby granted for that
purpose to it or its authorized agents. 
  
 11. Events of
Default. “Event of Default,” “default,” “breach” or any similar term shall mean the occurrence or existence of an Event of Default as defined in the Loan Agreement. 
  
 12. Acceleration. If an Event of Default shall have occurred, the
entire balance of the Note and any or all of the other Obligations, including without limitation, all accrued interest, shall, at the option of Beneficiary, become immediately due and payable, without presentment, protest, or other notice of any
kind, all of which are hereby waived by Grantor; and no omission on the part of Beneficiary to exercise any such option when entitled to do so shall be construed as a waiver of such right. 
  
 13. Power of Sale. Upon the occurrence of an Event of Default,
Beneficiary may notify Trustee to exercise the power of sale granted hereunder, and upon such notification it shall be lawful for and the duty of Trustee, and Trustee is hereby authorized and empowered to expose to sale and to sell the Premises or
any part thereof at public sale to the highest bidder for cash, in compliance with applicable requirements of North Carolina law governing the exercise of powers of sale contained in deeds of trust, and upon such sale, Trustee shall collect the
purchase proceeds and convey title to the portion of the Premises so sold to the purchaser in fee simple. In the event of a sale of the Premises or any part thereof, the proceeds of sale shall be applied in the following order of priority: (i) to
the payment of all costs and expenses for and in connection with such sale, including a commission for Trustee’s services as hereinafter provided and reasonable attorneys’ fees incurred by Trustee for legal services actually performed;
(ii) to the reimbursement of Beneficiary for all sums expended or incurred by Beneficiary under the terms of this Deed of Trust or to establish, preserve or enforce this Deed of Trust or to collect the Obligations (including, without limitation,
reasonable attorneys’ fees); (iii) to the payment of the Obligations; and (iv) the balance, if any, to the parties lawfully entitled thereto. In the event of a sale hereunder, Beneficiary shall have the right to bid at such sale and shall have
the right to credit all or any portion of the Obligations against the purchase price. Trustee shall have the right to designate the place of sale in compliance with applicable law and the sale shall be held at the place designated by the notice of
sale. Trustee may require the successful bidder at any sale 

  

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to deposit immediately with Trustee cash or certified check or cashier’s check in an amount up to 5% of the bid provided notice of such deposit
requirement is published as required by law. The bid may be rejected if the deposit is not immediately made. Such deposit shall be refunded in case of a sale to another purchaser pursuant to an upset bid or if Trustee is unable to convey the portion
of the Premises so sold to the bidder because the power of sale has been terminated in accordance with applicable law. If the purchaser fails to comply with its bid, the deposit may, at the option of Trustee, be retained and applied to the expenses
of the sale and any resales and to any damages and expenses incurred by reason of such default (including the amount that such bid exceeds the final sales price), or may be deposited with the Clerk of Superior Court. In all other cases, the deposit
shall be applied to the purchase price. Pursuant to Section 25-9-604 of the North Carolina General Statutes (or any amendment thereto), Trustee is expressly authorized and empowered to expose to sale and sell, together with the real estate, any
portion of the Premises which constitutes personal property. If personal property is sold hereunder, it need not be at the place of sale. 
  
 The Premises may be sold in such parcels or lots without regard to principles of marshaling and may be sold at one sale or in multiple sales, all as
determined by Trustee. A previous exercise of the power of sale hereunder by Trustee shall not be deemed to extinguish the power of sale which power of sale shall continue in full force and effect until all the Premises shall have been finally sold
and properly conveyed to the purchasers at the sale. Grantor’s duties and responsibilities under the Loan Documents, including this Deed of Trust, shall continue until the Obligations are fully paid and performed, notwithstanding any partial
foreclosure of the Premises. Trustee shall be entitled to a reasonable commission for a completed or uncompleted foreclosure. 
  
 14. Appointment of Receiver. Beneficiary shall have the right, after the occurrence of an Event of Default, to the appointment of a receiver to
collect the Rents from the Premises and to operate and manage the Premises without notice to Grantor or any other party (Grantor hereby waiving any right to such notice) and without consideration of the value of the Premises or the solvency of any
person liable for the payment of the amounts then owing, and all amounts collected by the receiver shall, after expenses of the receivership, be applied to the payment of the Obligations, and Beneficiary, at its option, in lieu of an appointment of
a receiver, also shall have the right to take all actions set forth in the previous sentence. If such receiver should be appointed, or if there should be a sale of the Premises, as provided in Section 13, Grantor, or any person in possession
of the Premises thereunder, as tenant or otherwise, shall become a tenant at will of the receiver or of the purchaser and may be removed by a writ of ejectment, summary ejectment or other lawful remedy. 
  
 15. Possession of Premises. If an Event of Default shall have occurred
and be continuing, Grantor, upon demand of Beneficiary, shall forthwith surrender to Beneficiary the actual possession of Premises, and, to the extent permitted by law, Beneficiary may enter and take possession of the Premises and may exclude
Grantor and Grantor’s agents and employees wholly therefrom. If Grantor shall for any reason fail to surrender or deliver the Premises or any part thereof after Beneficiary’s demand, Beneficiary may obtain a judgment or decree conferring
on Beneficiary the right to immediate possession or requiring Grantor to deliver immediate possession of all or part of the Premises to Beneficiary, and, to the extent permitted by applicable law, Grantor hereby specifically consents to the entry of
such judgment or decree. Grantor shall 

  

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pay to Beneficiary, upon demand, all costs and expenses of obtaining such judgment or decree and reasonable compensation to Beneficiary, its attorneys, and
agents, and all such costs, expenses and compensation shall, until paid, be secured by the lien of this Deed of Trust. Upon every such entering and taking of possession, Beneficiary may hold, store, use, operate, manage, control and maintain the
Premises and conduct the business thereof, and from time to time, (i) make all necessary and proper repairs, renewals, replacements, additions, betterments and improvements thereto and thereon and purchase or otherwise acquire additional fixtures,
personalty and other property, (ii) insure or keep the Premises insured, (iii) manage and operate the Premises and exercise all the rights and powers of Grantor in Grantor’s name or otherwise with respect to the same, and (iv) enter into any
and all agreements with respect to the exercise by others of any of the powers herein granted Beneficiary, all as Beneficiary may from time to time reasonably determine to be to its best advantage; and Beneficiary may collect and receive all of the
income, rents, profits, issues and revenues of the Premises, including those past due as well as those accruing thereafter and, after deducting (a) all expenses of taking, holding, managing and operating the Premises (including compensation for the
services of all persons employed for such purposes), (b) the cost of all such maintenance, repairs, renewals, replacements, additions, betterments, improvements, purchases and acquisitions, (c) the cost of insurance, (d) such taxes, assessments and
other charges as Beneficiary may determine to pay, (e) other charges upon the Premises or any part thereof as Beneficiary shall determine to pay, and (f) the reasonable compensation and expenses of attorneys and agents of Beneficiary, the remainder
of the money so received by Beneficiary shall be applied first to the payment of late fees, and then accrued interest on and then to the payment of principal of the Obligations or other indebtedness secured hereby. For the purpose of carrying out
the provisions of this Section, Grantor hereby constitutes and appoints Beneficiary the true and lawful attorney-in-fact of Grantor to do and perform, from time to time, any and all actions necessary and incidental to such purpose and does, by these
presents, ratify and confirm any and all actions of said attorney-in-fact. Whenever all such Events of Default have been cured and satisfied, Beneficiary shall surrender possession of the Premises to Grantor, provided that the right of
Beneficiary to take possession from time to time pursuant to this Section shall exist if any subsequent Event of Default shall occur and be continuing. 
  
 16. Delay Not to Operate as Waiver; Indemnification of Trustee and Beneficiary. No delay or forbearance by Beneficiary in exercising any rights
hereunder or otherwise afforded by law shall operate as a waiver thereof or preclude the exercise thereof during the continuance of any default hereunder, and all such rights shall be cumulative. In case Beneficiary or Trustee voluntarily or
otherwise shall become a party to any suit or legal proceeding to protect the Premises or the lien of this Deed of Trust, Trustee and Beneficiary shall be saved harmless and reimbursed by Grantor for any amounts paid, including all reasonable costs,
charges and attorneys’ fees incurred in any such suit or proceeding, which obligations shall be secured by this Deed of Trust. No right, power or remedy conferred upon or reserved to Beneficiary and Trustee by this Deed of Trust, or the
Obligations, any loan agreement or any separate assignment of rents and leases is intended to be exclusive of any other right, power or remedy, but each and every such right, power and remedy shall be cumulative and concurrent and shall be in
addition to any other right, power and remedy given hereunder or now or hereafter existing at law or in equity or by statute. No act of Beneficiary or Trustee shall be construed as a waiver or as an election to proceed under any provision herein or
under the other documents evidencing the loan or securing same to the exclusion of any other provisions, and either Beneficiary or Trustee shall be entitled 

  

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to enforce all remedies severally or concurrently as it shall see fit. No release or subordination by Beneficiary or Trustee of any part of the Premises or
any other property, collateral or obligation securing the Obligations or any other indebtedness secured by this Deed of Trust shall release or impair the lien or title of unreleased property. 
  
 17. Beneficiary’s Powers. Without affecting the liability of any
other person liable for the payment of the Obligations, and without affecting the lien or charge of this Deed of Trust upon any portion of the Premises not then or theretofore released as security for the Obligations, 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 the Obligations, (iii) grant other indulgences, (iv) release or reconvey (or cause to be released or reconveyed at any time at
Beneficiary’s option) any part or all of the Premises, (v) take or release any other or additional security for the Obligations, (vi) make compositions or other arrangements with debtors in relation thereto, or (vii) advance additional funds to
protect the security hereof or pay or discharge the obligations of Grantor hereunder, or under the other Loan Documents or any document executed in connection with or securing the Loan Documents, and all amounts so advanced, with interest thereon at
the Default Rate set forth in the Loan Agreement, shall be secured hereby. 
  
 18. Waivers. To the extent permitted by law, Grantor hereby waives any rights or remedies on account of any extensions of time, releases granted or other dealings between Beneficiary and any subsequent owner of
the Premises as said activities are contemplated or otherwise addressed in Section 45-45.1 of the North Carolina General Statutes (or any amendment thereto) or any similar or subsequent law. The foregoing waiver shall not be construed as affecting
or otherwise amending the covenants of Grantor contained in Section 5 hereof. Grantor waives 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 Premises
and (ii) in any way extending the time for the enforcement of the collection of the Note or the debt evidenced thereby or any of the other Obligations. To the full extent Grantor may do so, Grantor agrees that Grantor will not at any time insist
upon, plead, claim or seek to take the benefit or advantage of any law now or hereafter in force providing for any exemption (including homestead exemption) appraisement, valuation, stay, redemption, or extension and Grantor’s heirs, devisees,
representatives, successors and assigns, and for any and all persons claiming any interest in the Premises, to the extent permitted by law, hereby waive and release all rights of valuation, appraisement, foreclosure of the liens hereby created.
Except as expressly provided herein, Grantor further waives any and all notices including, without limitation, notice of intention to accelerate and of acceleration of the Obligations. 
  
 19. Interest Not to Exceed Maximum Allowed by Law. The parties hereto shall in no event be deemed to have contracted
for a greater rate of interest than the maximum rate permitted by law. Should a greater amount be collected, it shall be construed as a mutual mistake of the parties and the excess shall be returned to the party paying same. 
  
 20. Escrow of Taxes, Insurance. The Grantor, in order to more fully
protect the security of this Deed of Trust, agrees that in addition to any payments due under the Loan Documents, Grantor, upon request of Beneficiary (which may only be made during the occurrence and continuance of an Event of Default), will pay to
Beneficiary on the first day of each month, or on the due date of scheduled payments under the Loan Documents, a sum equal 

  

 11 

 
to one-twelfth of the known or estimated (by Beneficiary) yearly taxes, assessments and insurance premiums on or against the Premises. Beneficiary shall hold
such payments (and Grantor does hereby expressly agree that Beneficiary shall be under no obligation to pay interest thereon) and any interest earned shall belong to Beneficiary and shall apply the same to the payment of taxes, assessments and
insurance premiums as and when due. If the total of such monthly payments shall exceed the amount needed, the excess shall be held for future needs; but, should such monthly payments at any time fail to provide sufficient funds to pay taxes,
assessments and insurance premiums when due, then Grantor shall, upon demand, pay to Beneficiary the amount necessary to cover the deficiency. When Grantor shall have paid and performed the Obligations, Beneficiary shall refund to Grantor or other
person lawfully entitled thereto any excess funds accumulated hereunder. In the event of a foreclosure sale of the Premises, Beneficiary may apply any balance remaining of the funds accumulated for the above purposes to the payment of the
Obligations. 
  
 21. Substitution of Trustee. Beneficiary
shall at any time have the irrevocable right to remove the Trustee herein named without notice or cause and to appoint its successor by an instrument in writing, duly acknowledged and recorded. 
  
 22. Restoration to Former Positions. In case Beneficiary shall have
proceeded to enforce any right or remedy under this Deed of Trust by suit, receiver, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to Beneficiary, then and
in every such case, Grantor and Beneficiary shall be restored to their former positions and rights hereunder, and all rights, powers and remedies of Beneficiary shall continue as if no such proceeding had been taken. 
  
 23. Security Agreement. Grantor hereby grants to Beneficiary to secure
payment and performance of the Obligations a security interest in all Improvements and other portions of the Premises that are or are deemed to be personal property and not a part of the realty. The Grantor covenants and agrees that the terms and
conditions of this Deed of Trust, insofar as they govern the relationship between Grantor and the Beneficiary, shall be deemed to apply appropriately as the terms and conditions of a security agreement under the Uniform Commercial Code
(“UCC”) as adopted in North Carolina, the lien of which may be perfected by filing simultaneously or hereafter any financing statements showing the Beneficiary’s interest as a lienholder or creditor with respect to any
Improvements or any class of items constructed, installed, placed, planted or growing on the Premises or related to or arising out of the operation of the Premises and described in any UCC financing statements filed by or on behalf of the
Beneficiary. In the event of default, the Beneficiary, as secured party, shall have, without limitation, all of the rights and remedies provided for in the UCC as adopted and amended in North Carolina. Notwithstanding the foregoing, nothing herein
shall be construed to grant any greater security interests or afford any greater rights to Beneficiary with respect to personalty than are granted or afforded the Beneficiary under the Security Agreement or the Loan Agreement. 
  
 24. Notices. All notices and other communications required under this
Deed of Trust shall be in writing and shall be deemed to have been properly given, if given in accordance with the provisions of Section 9.5 of the Loan Agreement. 
  

 12 

 25. Successors and Assigns. The covenants, terms and conditions herein contained shall bind, and
the benefits and powers shall inure to the respective heirs, executors, administrators, successors and assigns of the parties hereto. Whenever used herein, the singular number shall include the plural, the plural the singular, and the term
“Beneficiary” shall include any payee of the Obligations and any transferee or assignee thereof, whether by operation of law or otherwise. 
  
 26. Governing Law. This Deed of Trust shall be governed by and construed in accordance with the laws of the State of North Carolina without regard
to principles of conflicts of laws. 
  
 27. Expenses.
Grantor shall pay or reimburse Beneficiary for all reasonable costs, charges and expenses, including reasonable attorneys’ fees and disbursements, incurred or paid by Beneficiary in documenting or servicing the Obligations or in any pending or
threatened action or proceeding in which Beneficiary is or may become a party and which affects or might affect the Obligations, or the Premises or any part thereof, or the interests of Grantor or Beneficiary therein, including but not limited to
the foreclosure of this Deed of Trust, condemnation involving all or part of the Premises or any action to protect the security hereof. The amounts so incurred or paid by Beneficiary, together with interest thereon at the Default Rate set forth in
the Loan Agreement from the date incurred until paid by Grantor, shall be added to the indebtedness and secured by the lien of this Deed of Trust. 
  
 28. Severability. If any provisions of this Deed of Trust or the application thereof to any person or circumstance shall be invalid or
unenforceable to any extent under applicable law, the remainder of this Deed of Trust and the application of such provisions to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by
law. 
  
 29. Greater Estate. In the event that Grantor is
the owner of a leasehold estate with respect to any portion of the Premises and Grantor obtains a fee estate in such portions of the Premises, then, such fee estate shall automatically, and without further action of any kind on the part of Grantor,
be and become subject to the security title and lien hereof. 
  
 30. Headings. The headings of the sections, paragraphs, and subparagraphs of this Deed of Trust are for convenience of reference only, are not to be considered a part hereof and shall not limit or otherwise affect any of the terms
hereof. 
  
 31. Time of Essence. Time is of the essence
with respect to all provisions hereof. 
  
 32. Duplicate
Originals. This Deed of Trust may be executed in any number of duplicate originals, each of which shall be deemed an original and all of which shall constitute a single copy. 
  
 33. Indemnity. Grantor shall protect, indemnify and save harmless Beneficiary from and against all liabilities,
obligations, claims, damages, penalties, causes of action, costs and expenses (including attorneys’ fees and expenses) imposed upon or incurred by Beneficiary for reason of any and all liability arising from any of lease of the Premises (or
portion thereof) or any negligence in the management, operation, upkeep, repair or control of the Premises resulting 

  

 13 

 
in loss or injury or death to any tenant, occupant, licensee, employee or stranger. In the event Beneficiary incurs any liability, loss or damage arising out
of or in any way relating to the transactions contemplated by the Loan Documents (including any of the matters referred to in this Section), the amounts of such liability, loss or damage shall be added to the Obligations, shall bear interest at the
interest rate specified in the Loan Agreement from the date incurred until paid and shall be payable on demand. 
  
 [The remainder of this page is left blank intentionally.] 
  

 14 

 IN WITNESS WHEREOF, Grantor, pursuant to duly adopted resolutions of the board of directors of
Grantor, has caused this Deed of Trust, Assignment of Rents, Security Agreement and Financing Statement to be executed as of the day and year first above written. 
  

			
	 GRANTOR:
  
 FOUNTAIN POWERBOATS, INC., a North Carolina corporation

		
	By:	 	/s/    REGINALD M. FOUNTAIN,
JR.        
	 Name:
	 	Reginald M. Fountain, Jr.
	 Title:
	 	President

  
 Signature Page to Deed of Trust 

 STATE OF North Carolina 
  

COUNTY OF Pitt 
  
 This 16th day of
September, 2005, personally came before me Reginald M. Fountain, Jr., who being by me duly sworn, says that he is the President of Fountain Powerboats, Inc., a North Carolina corporation (the “Company”), and that said writing was
signed by him, on behalf of the Company in his capacity as President of the Company, by authority duly given. And the said President acknowledged the said writing to be the act and deed of the Company in its capacity as President of the Company.

  

	
	
	/s/    LAURA R. NORTON        
	 Notary Public

  
 My Commission Expires:

  

	
	 March 27, 2009

	 [NOTARIAL SEAL]

  
 Notary Page to Deed of Trust 
  
 LAURA R. NORTON

  
 NOTARY 
  
 PUBLIC 
  
 CRAVEN COUNTY, NC 

  
 EXHIBIT A

  
 Legal Description 
  
 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 (Whichard’s Beach Road 60 ft. right of way); 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 to a point; thence South 36° 20’ 33” West 30.61 feet to a point; thence South 64° 01’ 09” East 16.66 feet to the point of beginning. THENCE FROM
SAID POINT OF BEGINNING SO LOCATED, along and with the southern right of way line of NCSR 1166 South 64° 01’ 03” East 132.39 feet to a point; thence along and with the southern right of way line of NCSR 1166 the following courses and
distances: 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 in a southeastern direction along a curve to the right having 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 South 51° 52’ 17” East 300.00 feet to an existing iron pipe; thence leaving NCSR 1166 South 38° 00’ 08” West 140.26 feet to an existing iron pipe; thence South 51° 52’ 37” East 31.00 feet to an
existing iron pipe; thence South 51° 52’ 19” East 131.00 feet to an existing iron pipe; thence South 38° 00’ 08” West 50.00 feet to an existing iron pipe; thence North 51° 59’ 55” West 21.00 feet to an
existing iron pipe; 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 an existing iron pipe; thence South 37° 39’ 39” West 18.38 feet to a point in a ditch; thence along and with said ditch the following courses and distances: North 56° 10’ 32” West
114.97 feet to a point; thence 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
in the eastern right of way line of a private road; thence along and with the eastern right of way line of said private road the following courses and distances: 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 in a northeastern direction along a curve to the right having a radius of 20.00 feet an arc distance of 27.78 feet (said curve having a chord bearing and distance of North
76° 08’ 47” East 25.60 feet) to the point of beginning. 
  
 The
above described Tract I is delineated as Tract A and Tract B on a survey prepared for Fountain Power Boats, Inc. by Carolina Benchmark, P.A. dated October 12, 1987. 
  

 A-1 

 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. 
  
 Together with the reversionary interest of Fountain Powerboats, Inc. reserved in that certain
deed recorded in Book 1145, Page 127 in the office of the Register of Deeds of Beaufort County. Said reversionary interest is more fully described in said deed and is incorporated herein by reference. 
  
 SAVING AND EXCEPTING FROM THE ABOVE DESCRIBED TRACT I THE FOLLOWING: 
  
 EXCEPTION 1: All that certain tract or parcel of land lying and being situate in Beaufort
County, North Carolina and being more particularly described in that certain Deed from Fountain Powerboats, Inc., as Grantor, to the City of Washington, North Carolina, as Grantee, recorded in the Office of the Register of Deeds of Beaufort County,
North Carolina, in Book 1145, at Page 127. 
  
 EXCEPTION 2: 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: All of Tract 2B as shown and delineated on the map entitled “Subdivision Map, Fountain Power
Boats, Inc., Tracts 2A & 2B,” prepared by Thomas W. Harwell, dated May 22, 2001, recorded in the office of the Register of Deeds of Beaufort County, North Carolina, in Plat Cabinet F, at Slide 83-6 (the “Subdivision Map”),
reference to said map being hereby made for a more particular description of the property. 
  
 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 (Whichard’s Beach Road 60 ft. right of way), said concrete monument also being 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 SO LOCATED, North 30° 36’ 00” East 375.64 feet to a point; thence North 30° 36’ 00” East 17.00 feet to a point in a
canal; thence along and with the canal the following courses and distances: North 48° 42’ 00” East 23.43 feet to a point; thence North 30° 26’ 00” East 476.44 feet to a point; thence leaving said canal 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 

  

 A-2 

 
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 South 38° 18’ 41” West 701.64 feet to a concrete monument; thence South 38° 18’ 41” West 64.72 feet
to a concrete monument; thence 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 South 38° 18’ 41” West 104.29 feet to a
concrete monument; thence South 38° 18’ 41” West 102.43 feet to a concrete monument; thence South 38° 18’ 41” West 127.21 feet to a concrete monument; thence South 38° 18’ 41” West 35.74 feet to a concrete
monument; thence South 38° 18’ 41” West 63.98 feet to a concrete monument; thence South 38° 18’ 41” West 99.54 feet to a concrete monument; thence South 38° 18’ 41” West 99.16 feet to a concrete monument;
thence South 38° 18’ 41” West 106.40 feet to a concrete monument in the northern right of way line of NCSR 1166; thence along and with the northern right of way line of NCSR 1166 the following courses and distances: North 51°
41’ 19” West 100.00 feet to a point; thence in a northwestern direction along a curve to the left having a chord bearing and distance of North 55° 31’ 51” West 396.18 feet to a point; thence North 62° 36’ 41”
West 58.52 feet to a point; thence North 63° 28’ 00” West 100.00 feet to a point; North 64° 04’ 00” West 470.44 feet to the point of beginning. 
  
 The above described Tract II is taken from a site plan prepared for Fountain Power Boats, Inc. by Carolina Benchmark, P.A. dated August 27,
1990. 
  
 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. 
  
 TRACT III: 
  
 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 located in the northern right of way line of NCSR 1166 (Whichard’s Beach Road 60 ft. right of way), said point being located South 59° 50’ 02” East 1121.46 feet 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 point of
beginning also being the southeastern corner of the property of Fountain Powerboats, Inc. described in the deed recorded in Deed Book 844, Page 519 in the office of the Register of Deeds of Pamlico County. THENCE FROM SAID POINT OF BEGINNING SO
LOCATED, North 38° 18’ 41” East 205.53 feet to an existing concrete monument; thence North 38° 18’ 41” East 99.54 feet to an existing concrete monument; thence North 38° 18’ 41” East 99.57 feet to an
existing concrete monument; thence North 38° 18’ 41” East 127.20 feet to an existing concrete monument; thence North 38° 18’ 41” East 102.41 feet to an existing concrete monument; thence 

  

 A-3 

 
North 38° 18’ 41” East 383.45 feet to an existing concrete monument; thence North 38° 18’ 41” East 723.64 feet more or less to
the mean high water line on the southern shoreline of the Pamlico River; thence along and with the mean high water line on the southern shoreline of the Pamlico River South 03° 48’ 08” East 35.33 feet to a point; thence South 31°
43’ 09” West 1,725.69 feet more or less to the northern right of way line of NCSR 1166; thence along and with the northern right of way line of NCSR 1166 North 51° 54’ 27” West 221.81 feet to the point of beginning.

  
 The above described Tract III contains approximately 4.84 acres and is taken
from a survey prepared for Fountain Powerboats, Inc. by W. C. Owen of Quible and Associates, P.C. dated October 15, 1996. 
  

 A-4Security Agreement

 Exhibit 10.3 
  
 SECURITY AGREEMENT 
  
 THIS SECURITY AGREEMENT, dated as of September 19, 2005 (as amended, supplemented or modified from time to time, this “Security
Agreement”), is made by FOUNTAIN POWERBOATS, INC., a North Carolina corporation with its principal office at 1653 Whichard’s Beach Road, Washington, North Carolina 27889 (the “Borrower”), FOUNTAIN POWERBOAT
INDUSTRIES, INC., a Nevada corporation (the “Parent” and together with the Borrower, the “Pledgors”), in favor of REGIONS BANK, an Alabama chartered bank with offices in Charlotte, North Carolina (the
“Bank”). Except as otherwise provided herein, capitalized terms used herein without definition shall have the meanings given to them in the Loan Agreement referred to below. 
  
 BACKGROUND STATEMENT 
  
 A. The Borrower, the Parent and the Bank are parties to a Loan Agreement,
dated as of even date herewith (as amended, modified or supplemented from time to time, the “Loan Agreement”), providing for the availability of a $16,500,000 term loan facility (the “Loan”) to the Borrower upon the
terms and conditions set forth therein. 
  
 B. As a condition to
making the Loan to the Borrower, the Parent has guaranteed to the Bank the payment in full of the Obligations under the Loan Agreement and the other Loan Documents. 
  
 C. It is a further condition to the making of the Loan to the Borrower that the Pledgors shall have agreed, by executing and
delivering this Agreement, to secure the payment in full of their respective obligations under the Loan Agreement and the other Loan Documents. The Bank is relying on this Agreement in their decision to extend credit to the Borrower under the Loan
Agreement, and would not enter into the Loan Agreement without the execution and delivery of this Agreement by the Pledgors. 
  
 D. The Pledgors will obtain benefits as a result of the making of the Loan to the Borrower, which benefits are hereby acknowledged, and, accordingly,
desire to execute and deliver this Agreement. 

 STATEMENT OF AGREEMENT 
  
 NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Pledgors and the Bank, for themselves, their successors and assigns, hereby agree as follows: 
  
 ARTICLE I 
  
 DEFINITIONS 
  
 1.1 Defined Terms. In addition to the terms defined elsewhere in this Security Agreement, the following terms shall have the meanings set forth below: 
  
 “Accounts” or “Accounts Receivable” means all of the Pledgors’ accounts, as defined
in the Uniform Commercial Code, now owned or hereafter acquired or arising, and all of the Pledgors’ present or future accounts receivable, rights to payment for goods sold or leased, or to be sold or to be leased, or for services rendered or
to be rendered, all present and future receivables, all health-care insurance receivables, book debts, notes, bills, drafts, acceptances, choses in action, tangible chattel paper, instruments and documents, together with all proceeds thereof, and
all monies due or to become due thereon, and all returned or repossessed goods. The term “Accounts Receivable” also includes all of the Pledgors’ rights, remedies, security interests and liens in, to and in respect of Accounts
Receivable, present and future, including without limitation, rights of stoppage in transit, replevin, repossession and reclamation and other rights and remedies of an unpaid vendor, lienor or secured party, guaranties or other contracts of
suretyship with respect to any Account Receivable, deposits or other security for the obligation of any debtor or obligor in any way obligated on or in connection with any Account Receivable, and credit and other insurance, and all proceeds of the
foregoing and all proceeds of any insurance on the foregoing, and, to the extent permitted by applicable law, all of the Pledgors’ right, title and interest, present and future, in, to and in respect of all goods relating to, or which by sale
have resulted in, Accounts Receivable, including without limitation all goods described in invoices or other documents or instruments with respect to, or otherwise representing or evidencing, any Account Receivable, and all returned, reclaimed or
repossessed goods, and all proceeds of the foregoing and all proceeds of any insurance on the foregoing, together with all customer lists, books and records, ledger and account cards, computer tapes, disks, printouts and records, whether now in
existence or hereafter created, relating to Accounts Receivable. 
  
 “Collateral” means and includes all of the Pledgors’ Accounts Receivable, Equipment, General Intangibles, Inventory, and Other Assets and all other similar articles of personal property of any of the Pledgors now or
hereafter held or received by, in transit to, or in the possession or control of any of the Pledgors or the Bank, and any substitutions or replacements thereof and any products and proceeds thereof, including without limitation, insurance proceeds.
Notwithstanding the foregoing, “Collateral” shall not include the Parent’s treasury stock. 
  
 “Equipment” means all of the Pledgors’ equipment, as defined in the Uniform Commercial Code, now owned or hereafter acquired, and
includes, without limitation, all machinery, equipment, Mobile Goods, computer equipment and software, accessions, accessories, additions, parts, supplies, apparatus, appliances, tools, patterns, dies, cylinders, molds, blueprints, fittings,
furniture, fixtures, office equipment and office furnishings of every kind and description, wherever located, and all proceeds, including insurance proceeds, thereof. 
  
 “General Intangibles” means all general intangibles, as defined in the Uniform Commercial Code, now
existing or hereafter owned, acquired or arising, in which any of the Pledgors now has or hereafter acquires any rights, and all contracts and contract rights, but excluding contracts of any of the Pledgors that by their express terms are void or
voidable upon the pledge or assignment thereof, unless consent has been obtained for the pledge or assignment thereof, causes of action, things in action, corporate or business records, inventions, designs, patents, patent applications, trademarks,
trademark registrations and applications, goodwill, goodwill associated with trademarks, trade names, trade secrets, trade processes, copyrights, copyright registrations and applications, licenses, permits, franchises, customer lists, computer
programs, all claims under guaranties, tax refund claims, rights and claims against carriers and 

  

 2 

 
shippers, leases, claims under mechanics’ and materialmen’s liens, claims under insurance policies, all rights to indemnification or contribution,
whether arising by contract or otherwise, and all other intangible personal property of similar kind and nature, together with any and all extensions, modifications, amendments and renewals, and all proceeds of any and all of the foregoing, as
applicable. 
  
 “Inventory” means all of
Pledgors’ inventory, as defined in the Uniform Commercial Code, wherever located, now owned or hereafter held or acquired, and all goods manufactured, acquired or held for sale or lease, all raw materials, work-in-process and finished goods,
all supplies, goods, incidentals, office supplies, packaging materials and any and all items used or consumed in the operation of the business of any of the Pledgors or that may contribute to finished goods or to the sale, promotion and shipment
thereof, in which any of the Pledgors now or at any time hereafter may have an interest, whether or not the same is in transit or in the constructive, actual or exclusive occupancy or possession of any of the Pledgors or is held by any of the
Pledgors or by others for any of the Pledgors’ account, and all proceeds, including insurance proceeds, thereof. 
  
 “Mobile Goods” shall mean, collectively, all of the Pledgors’ motor vehicles, tractors, trailers, aircraft, rolling stock, and other
like property, whether or not the title thereto is governed by a certificate of title or ownership, in each case whether now owned or existing or hereafter acquired. 
  
 “Other Assets” means all of the Pledgors’ personal property, wherever located, now owned or hereafter
acquired, except for Accounts Receivable, Equipment, General Intangibles, and Inventory and, to the extent not covered or not specifically included in Accounts Receivable, Equipment, General Intangibles, and Inventory. 
  
 1.2 UCC Terms. Unless otherwise defined herein, or unless the context
otherwise requires, all terms used herein which are defined in the North Carolina Uniform Commercial Code (the “UCC”) shall have the meanings therein stated. 
  
 1.3 Capitalized Terms. All capitalized terms not defined herein shall have the meanings given to them in the Loan
Agreement. 
  
 ARTICLE II 
  
 CREATION OF SECURITY INTEREST 
  
 2.1 Pledge and Grant of Security Interest. Each Pledgor hereby
pledges, assigns and delivers to the Bank and grants to the Bank a Lien upon and security interest in all of its right, title and interest in and to the Collateral. 
  
 2.2 Security for Secured Obligations. This Agreement and the Collateral secure the full and prompt payment, at any
time and from time to time as and when due (whether at the stated maturity, by acceleration or otherwise), of all liabilities and obligations of each Pledgor, whether now existing or hereafter incurred, created or arising and whether direct or
indirect, absolute or contingent, due or to become due, under, arising out of or in connection with the Loan Agreement, this Agreement, or any of the other Loan Documents to which it is or hereafter 

  

 3 

 
becomes a party, or any Hedge Agreement required or permitted under the Loan Agreement and to which the Borrower and the Bank are parties, including, without
limitation, (i) in the case of the Borrower, all obligations, including, without limitation, all principal of and interest on the Loan, all fees, expenses, indemnities and other amounts payable by the Borrower under the Loan Agreement or any other
Loan Document (including interest accruing after the filing of a petition or commencement of a case by or with respect to the Borrower seeking relief under any applicable federal and state laws pertaining to bankruptcy, reorganization, arrangement,
moratorium, readjustment of debts, dissolution, liquidation or other debtor relief, specifically including, without limitation, the Bankruptcy Code and any fraudulent transfer and fraudulent conveyance laws, whether or not the claim for such
interest is allowed in such proceeding), and all obligations of the Borrower to the Bank under any Hedge Agreement required or permitted under the Loan Agreement and to which the Borrower and the Bank are parties, and (ii) in the case of the Parent,
all of its liabilities and obligations under the Guaranty; and in each case under (i) and (ii) above, (a) all such liabilities and obligations that, but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, would
become due, and (b) all fees, costs and expenses payable by such Pledgor under Section 6.1 (the liabilities and obligations of the Pledgors described in this Section 2.2, collectively, the “Secured Obligations”).

  
 2.3 Security Interests Absolute. All rights of the Bank
and security interests hereunder, and all obligations of each Pledgor hereunder, shall be absolute and unconditional and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by: 
  
 (i) any extension, renewal, settlement, compromise or waiver
in respect of any Secured Obligation, the Note or any other document evidencing or securing such Secured Obligation, by operation of law or otherwise; 
  
 (ii) any modification or amendment or supplement to the Loan Agreement, the Note or any other document evidencing or securing any Secured
Obligation; 
  
 (iii) any non-perfection or
invalidity of any direct or indirect security for any Secured Obligation; 
  
 (iv) any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Borrower or its assets or any resulting disallowance, release or discharge of all or any portion of the Secured Obligations;

  
 (v) the existence of any claim, set-off or
other right which any Pledgor may have at any time against the Borrower, the Bank or any other corporation or person, whether in connection herewith or any unrelated transactions; provided, that nothing herein shall prevent the assertion of
any such claim by separate suit or compulsory counterclaim; 
  
 (vi) any invalidity or unenforceability relating to or against the any Pledgor for any reason of any Secured Obligation, or any provision of applicable law or regulation purporting to prohibit the payment by any
Pledgor of the Secured Obligations; 
  

 4 

 (vii) any failure by the Bank (A) to file or enforce a claim against any Pledgor (in a
bankruptcy or other proceeding), (b) to give notice of the existence, creation or incurring by the Borrower of any new or additional indebtedness or obligation under or with respect to the Secured Obligations, (c) to commence any action against any
Pledgor, (d) to disclose to the Parent any facts which the Bank may now or hereafter know with regard to the Borrower or (e) to proceed with due diligence in the collection, protection or realization upon any collateral securing the Secured
Obligations; or 
  
 (viii) any other act or
omission to act or delay of any kind by any Pledgor or the Bank or any other corporation or person or any other circumstance whatsoever which might, but for the provisions of this clause, constitute a legal or equitable discharge of each
Pledgor’s obligations hereunder. 
  
 ARTICLE III

  
 REPRESENTATIONS AND WARRANTIES 
  
 Each Pledgor hereby represents and warrants as follows: 
  
 3.1 Ownership of Collateral. Each Pledgor owns, or has valid rights as
a lessee or licensee with respect to, all Collateral purported to be pledged by it hereunder, free and clear of any Liens except for the Liens granted to the Bank pursuant to the Security Documents, and except for other Permitted Liens. No security
agreement, financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any government or public office, and no Pledgor has filed or consented to the filing of any such statement or notice,
except (i) Uniform Commercial Code financing statements naming the Bank as secured party, and (ii) as may be otherwise permitted by the Loan Agreement. 
  
 3.2 Security Interests; Filings. This Agreement, together with (i) the filing, with respect to each Pledgor, of duly completed and executed Uniform
Commercial Code financing statements naming such Pledgor as debtor, the Bank as secured party, and describing the Collateral, in the jurisdictions set forth with respect to such Pledgor on Schedule I hereto (which filing is hereby authorized
by such Pledgor), (ii) to the extent required by applicable law, the filing, with respect to each relevant Pledgor, of duly completed and executed assignments with the U.S. Copyright Office or the U.S. Patent and Trademark Office, and (iii) as to
Mobile Goods covered by a certificate of title or ownership, the notation of the Bank’s security interest therein on the applicable certificates of title or ownership, creates, and at all times shall constitute, a valid and perfected security
interest in and Lien upon the Collateral in favor of the Bank, to the extent a security interest therein can be perfected by such filings or possession, as applicable, superior and prior to the rights of all other Persons therein (except for
Permitted Liens). 
  
 3.3 Locations. Schedule II
lists, as to each Pledgor, (i) its exact legal name, (ii) the jurisdiction of its incorporation or organization, its federal tax identification number, and (if applicable) its organizational identification number, (iii) the addresses of its chief
executive office and each other place of business, and (iv) the address of each location at which any Equipment or Inventory (other than Mobile Goods and Goods in transit) owned by such Pledgor is kept or maintained, in each instance except for any
new locations established in accordance 

  

 5 

 
with the provisions of Section 4.2. No Pledgor presently conducts business under any prior or other corporate or company name or under any trade or
fictitious names, except as indicated beneath its name on Schedule II, and no Pledgor has entered into any contract or granted any Lien within the past five years under any name other than its legal corporate name or a trade or fictitious
name indicated on Schedule II. 
  
 3.4 Authorization;
Consent. The execution, delivery and performance by each Pledgor of this Security Agreement require no action by or in respect of, or filing with, any Governmental Authority and do not contravene, or constitute (with or without the giving of
notice or lapse of time or both) a default under, any provision of applicable law or of any agreement, judgment, injunction, order, decree or other instrument binding upon or affecting each Pledgor. 
  
 3.5 No Restrictions. There are no statutory or regulatory
restrictions, prohibitions or limitations on any Pledgor’s ability to grant to the Bank a Lien upon and security interest in the Collateral pursuant to this Agreement or (except for the provisions of the federal Anti-Assignment Act and
Anti-Claims Act, as amended) on the exercise by the Bank of its rights and remedies hereunder (including any foreclosure upon or collection of the Collateral), and there are no contractual restrictions on any Pledgor’s ability so to grant such
Lien and security interest. 
  
 3.6 Accounts. Each Account
is (i) a bona fide, valid and legally enforceable indebtedness of the account debtor according to its terms, arising out of or in connection with the sale, lease or performance of goods or services by the Pledgors or any of them, (ii) to the
knowledge of the Pledgors, or except as disclosed in writing to the Bank, subject to no offsets, discounts, counterclaims, contra accounts or any other defense of any kind and character, other than warranties and discounts customarily given by the
Pledgors in the ordinary course of business and warranties provided by applicable law, (iii) to the extent listed on any schedule of Accounts at any time furnished to the Bank, a true and correct statement of the amount actually and unconditionally
owing thereunder, maturing as stated in such schedule and in the invoice covering the transaction creating such Account, and (iv) not evidenced by any other instrument; or if so, such other instrument (other than invoices and related correspondence
and supporting documentation) shall promptly be duly endorsed to the order of the Bank and delivered to the Bank to be held as Collateral hereunder. To the knowledge of each Pledgor, there are no facts, events or occurrences that would in any way
impair the validity or enforcement of any Accounts except as set forth above. 
  
 3.7 Documents of Title. No bill of lading, warehouse receipt or other document or instrument of title is outstanding with respect to any Collateral other than Mobile Goods and other than Inventory in transit in
the ordinary course of business to a location set forth on Schedule II or to a customer of a Pledgor. 
  

 6 

 ARTICLE IV 
  

COVENANTS 
  
 Each Pledgor agrees that so long as any Secured Obligation remains unpaid: 
  
 4.1 Use and Disposition of Collateral. So long as no Event of Default shall have occurred and be continuing, each
Pledgor may, in any lawful manner not inconsistent with the provisions of this Agreement and the other Loan Documents, use, control and manage the Collateral in the operation of its businesses, and receive and use the income, revenue and profits
arising therefrom and the Proceeds thereof, in the same manner and with the same effect as if this Agreement had not been made; provided, however, that no Pledgor will sell or otherwise dispose of, grant any option with respect to, or
mortgage, pledge, grant any Lien with respect to or otherwise encumber any of the Collateral or any interest therein, except for the security interest created in favor of the Bank hereunder and except as may be otherwise expressly permitted in
accordance with the terms of this Agreement and the Loan Agreement (including any applicable provisions therein regarding delivery of proceeds of sale or disposition to the Bank). 
  
 4.2 Change of Name, Locations, etc. No Pledgor will (i) change its name, identity or corporate structure, (ii) change
its chief executive office from the location thereof listed on Schedule II, (iii) change the jurisdiction of its incorporation or organization from the jurisdiction listed on Schedule II (whether by merger or otherwise), or (iv) remove
any Collateral (other than Mobile Goods, Goods in transit and finished goods inventory or parts maintained at dealers), or any books, records or other information relating to Collateral, from the applicable location thereof listed on Schedule
II, or keep or maintain any Collateral at a location not listed on Schedule II, unless in each case such Pledgor has (A) given twenty (20) days’ prior written notice to the Bank of its intention to do so, together with information
regarding any such new location and such other information in connection with such proposed action as the Bank may reasonably request, and (B) delivered to the Bank ten (10) days prior to any such change or removal such documents, instruments and
financing statements as may be required by the Bank, all in form and substance satisfactory to the Bank, paid all necessary filing and recording fees and taxes, and taken all other actions reasonably requested by the Bank, in order to perfect and
maintain the Lien upon and security interest in the Collateral; provided, however, each Pledgor shall not be required to deliver such twenty (20) day prior written notice if such Collateral, or any books, records or other information
relating to such Collateral, is moved from the applicable location thereof listed on Schedule II to another location listed on Schedule II. 
  
 4.3 Records; Inspection. 
  
 (a) Each Pledgor will keep and maintain at its own cost and expense satisfactory and complete records of the Accounts and all other Collateral, and will
furnish to the Bank from time to time such statements, schedules and reports (including, without limitation, accounts receivable aging schedules) with regard to the Collateral as the Bank may reasonably request. 
  
 (b) Each Pledgor shall, from time to time at such times as may be reasonably
requested and upon reasonable notice, permit the Bank to visit its offices or the premises upon which any Collateral may be located, inspect its books and records and make copies and 

  

 7 

 
memoranda thereof, inspect the Collateral, discuss its finances and affairs with its officers, employees and independent accountants and take any other
actions necessary for the protection of the interests of the Secured Parties in the Collateral. 
  
 4.4 Accounts. Unless notified otherwise by the Bank in accordance with the terms hereof, each Pledgor shall endeavor to collect its Accounts and
all amounts owing to it thereunder in the ordinary course of its business consistent with past practices and shall apply forthwith upon receipt thereof all such amounts as are so collected to the outstanding balances thereof, and in connection
therewith shall, at the request of the Bank, take such action as the Bank may deem necessary or advisable (within applicable laws) to enforce such collection. No Pledgor shall, except to the extent done in the ordinary course of its business
consistent with past practice and in accordance with sound business judgment and provided that no Event of Default shall have occurred and be continuing, (i) grant any extension of the time for payment of any Account, (ii) compromise or settle any
Account for less than the full amount thereof, (iii) release, in whole or in part, any Person or property liable for the payment of any Account, or (iv) allow any credit or discount on any Account. Each Pledgor shall promptly inform the Bank of any
disputes with any account debtor or obligor and of any claimed offset and counterclaim that may be asserted with respect thereto involving, in each case, any material amount, where such Pledgor reasonably believes that the likelihood of payment by
such account debtor is materially impaired, indicating in detail the reason for the dispute, all claims relating thereto and the amount in controversy. 
  
 4.5 Equipment. Each Pledgor will, in accordance with sound business practices, maintain all Equipment used by it in its business (other than
obsolete Equipment) in good repair, working order and condition (normal wear and tear excepted) and make all necessary repairs and replacements thereof so that the value and operating efficiency thereof shall at all times be maintained and
preserved. No Pledgor shall knowingly permit any Equipment to become a Fixture to any real property (other than real property the fee interest in which is subject to a mortgage in favor of the Bank). 
  
 4.6 Inventory. Each Pledgor will, in accordance with sound business
practices, maintain all Inventory held by it or on its behalf in good saleable or useable condition. Unless notified otherwise by the Bank in accordance with the terms hereof, each Pledgor may, in any lawful manner not inconsistent with the
provisions of this Agreement and the other Loan Documents, process, use and, in the ordinary course of business but not otherwise, sell its Inventory. 
  
 4.7 Mobile Goods. Upon the request of the Bank at any time, whether or not an Event of Default shall have occurred and be continuing, each Pledgor
will deliver to the Bank originals of the certificates of title or ownership for all Mobile Goods owned by it, together (in the case of motor vehicles) with the manufacturer’s statement of origin with the Bank listed as lienholder and odometer
statements and together in all other cases with appropriate instruments or certificates of transfer and delivery, duly completed and executed, and will take such other action as the Bank may deem necessary to perfect the security interest created by
this Agreement in all such Mobile Goods. 
  

 8 

 4.8 Collateral in Possession of Third Party. Without limiting the generality of any other
provision of this Agreement, each Pledgor agrees that it shall not permit any Collateral to be in the possession of any bailee, warehouseman, agent, processor or other third party at any time unless (i) such bailee or other Person shall have been
notified of the security interest created by this Agreement (or, if required under applicable law in order to perfect the Bank’s security interest in such Collateral, such bailee or other Person shall have acknowledged to the Bank in writing
that it is holding such Collateral for the benefit of the Bank and subject to such security interest and to the instructions of the Bank) and such Pledgor shall have exercised its reasonable best efforts to obtain from such bailee or other Person,
at such Pledgor’s sole cost and expense, the written acknowledgement described above (if not already required by applicable law to perfect the Bank’s security interest) and agreement to waive and release any Lien (whether arising by
operation of law or otherwise) it may have with respect to such Collateral, such agreement to be in form and substance reasonably satisfactory to the Bank or (ii) such bailee is a dealer and the Collateral involved is finished goods inventory or
parts. 
  
 4.9 Change in Law. Each Pledgor will promptly
notify the Bank in writing of any change in law known to him (and will use his best efforts to become aware of any such change in law) which (i) adversely affects or will adversely affect the validity, perfection or priority of the security
interests or (ii) requires or will require a change in the procedures to be followed in order to maintain and protect the validity, perfection and priority of the security interests. 
  
 4.11 Protection of Security Interest; Further Assurances. Each Pledgor will, at his expense and in such manner and
form as the Bank may require, execute, deliver, file and record any financing statement, specific assignment or other paper and take any other action that may be necessary or desirable, or that the Bank may request, in order to create, preserve,
perfect or validate the security interests granted hereby or to enable the Bank to exercise and enforce its rights hereunder with respect to any of the Collateral. To the extent permitted by applicable law, each Pledgor hereby authorizes the Bank to
execute and file, in the name of each Pledgor or otherwise, Uniform Commercial Code financing statements which the Bank in its sole discretion may deem necessary or appropriate to further perfect the security interests. 
  
 ARTICLE V 
  
 GENERAL AUTHORITY; REMEDIES 
  

5.1 General Authority. Each Pledgor hereby irrevocably appoints the Bank and any officer or agent thereof, with full power of substitution, as
his true and lawful attorney-in-fact, in the name of each such Pledgor or its own name, for the sole use and benefit of the Bank, but at each Pledgor’s expense, at any time during the occurrence and continuance of an Event of Default, to take
any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to carry out the terms of this Security Agreement and, without limiting the foregoing, each Pledgor hereby gives the Bank the
power and right on its behalf, without notice to or further assent by any Pledgor to do the following during the occurrence and continuance of an Event of Default: 
  
 (i) to receive, take, endorse, assign and deliver any and all checks, notes, drafts, acceptances, documents
and other negotiable and nonnegotiable instruments taken or received by any Pledgor as, or in connection with, the Collateral; 
  

 9 

 (ii) to demand, sue for, collect, receive and give acquittance for any and all monies due
or to become due upon or in connection with the Collateral; 
  
 (iii) to commence, settle, compromise, compound, prosecute, defend or adjust any claim, suit, action or proceeding with respect to, or in connection with, the Collateral; 
  
 (iv) to sell, transfer, assign or otherwise deal in or with
the Collateral or any part thereof, as fully and effectually as if the Bank were the absolute owner thereof; and 
  
 (v) to do, at its option, but at the expense of the Pledgors, at any time or from time to time, all acts and things which the Bank deems
necessary to protect or preserve the Collateral and to realize upon the Collateral. 
  
 5.2 Rights and Remedies. If an Event of Default shall have occurred and be continuing, the Bank shall be entitled to exercise in a commercially reasonable manner in respect of the Collateral all of its rights,
powers and remedies provided for herein or otherwise available to it under any other Loan Document, by law, in equity or otherwise, including all rights and remedies of a secured party under the UCC, and shall be entitled in particular, but without
limitation of the foregoing, to exercise the following rights, which each Pledgor agrees to be commercially reasonable: 
  
 (a) To notify any or all account debtors or obligors under any Accounts or other Collateral of the security interest in favor of the Bank created hereby
and to direct all such Persons to make payments of all amounts due thereon or thereunder directly to the Bank or to an account designated by the Bank; and in such instance and from and after such notice, all amounts and Proceeds received by any
Pledgor in respect of any Accounts or other Collateral shall be received in trust for the benefit of the Bank hereunder, shall be segregated from the other funds of such Pledgor and shall be forthwith deposited into such account or paid over or
delivered to the Bank in the same form as so received (with any necessary endorsements or assignments), to be held as Collateral and applied to the Secured Obligations as provided herein; 
  
 (b) To take possession of, receive, endorse, assign and deliver, in its own name or in the name of any Pledgor, all checks,
notes, drafts and other instruments relating to any Collateral, including receiving, opening and properly disposing of all mail addressed to any Pledgor concerning Accounts and other Collateral; to verify with account debtors or other contract
parties the validity, amount or any other matter relating to any Accounts or other Collateral, in its own name or in the name of any Pledgor; to accelerate any indebtedness or other obligation constituting Collateral that may be accelerated in
accordance with its terms; to take or bring all actions and suits deemed necessary or appropriate to effect collections and to enforce payment of any Accounts or other Collateral; to settle, compromise or release in whole or in part any amounts
owing on Accounts or other Collateral; and to extend the time of payment of any and all Accounts or other amounts owing under any Collateral and to make allowances and 

  

 10 

 
adjustments with respect thereto, all in the same manner and to the same extent as any Pledgor might have done; 
  
 (c) To transfer to or register in its name or the name of any of its agents
or nominees all or any part of the Collateral, without notice to any Pledgor and with or without disclosing that such Collateral is subject to the security interest created hereunder; 
  
 (d) To require any Pledgor to, and each Pledgor hereby agrees that it will at its expense and upon request of the Bank
forthwith, assemble all or any part of the Collateral as directed by the Bank and make it available to the Bank at a place designated by the Bank; 
  
 (e) To enter and remain upon the premises of any Pledgor and take possession of all or any part of the Collateral, with or without judicial process; to
use the materials, services, books and records of any Pledgor for the purpose of liquidating or collecting the Collateral, whether by foreclosure, auction or otherwise; and to remove the same to the premises of the Bank or any designated agent for
such time as the Bank may desire, in order to effectively collect or liquidate the Collateral; and 
  
 (f) To sell, resell, assign and deliver, in its sole discretion, in accordance with the UCC, all or any of the Collateral, in one or more parcels, at
public or private sale, at any of the Bank’s offices or elsewhere, for cash, upon credit or for future delivery, at such time or times and at such price or prices and upon such other terms as the Bank may deem satisfactory. If any of the
Collateral is sold by the Bank upon credit or for future delivery, the Bank shall not be liable for the failure of the purchaser to purchase or pay for the same and, in the event of any such failure, the Bank may resell such Collateral. In no event
shall any Pledgor be credited with any part of the Proceeds of sale of any Collateral until and to the extent cash payment in respect thereof has actually been received by the Bank. Each purchaser at any such sale shall hold the property sold
absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption of any Pledgor, and each Pledgor hereby expressly waives all rights of redemption, stay or appraisal, and all rights to require the Bank to
marshal any assets in favor of such Pledgor or any other party or against or in payment of any or all of the Secured Obligations, that it has or may have under any rule of law or statute now existing or hereafter adopted. No demand, presentment,
protest, advertisement or notice of any kind (except any notice required by law, as referred to below), all of which are hereby expressly waived by each Pledgor, shall be required in connection with any sale or other disposition of any part of the
Collateral. If any notice of a proposed sale or other disposition of any part of the Collateral shall be required under applicable law, the Bank shall give the applicable Pledgor at least ten (10) days’ prior notice of the time and place of any
public sale and of the time after which any private sale or other disposition is to be made, which notice each Pledgor agrees is commercially reasonable. The Bank shall not be obligated to make any sale of Collateral if it shall determine not to do
so, regardless of the fact that notice of sale may have been given. The Bank may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. Upon each public sale and, to the extent permitted by applicable law, upon each private sale, the Bank may purchase all or any of the
Collateral being sold, free from any equity, right of redemption or other claim or demand, and may make payment therefor by endorsement and application 

  

 11 

 
(without recourse) of the Secured Obligations in lieu of cash as a credit on account of the purchase price for such Collateral. 
  
 5.3 Application of Proceeds. 
  
 (a) All Proceeds collected by the Bank upon any sale, other disposition of or
realization upon any of the Collateral, together with all other moneys received by the Bank hereunder, shall be applied as follows: 
  
 (i) first, to payment of the expenses of such sale or other realization, including reasonable compensation to the Bank and its agents and
counsel, and all expenses, liabilities and advances incurred or made by the Bank, its agents and counsel in connection therewith or in connection with the care, safekeeping or otherwise of any or all of the Collateral, and any other unreimbursed
expenses for which the Bank is to be reimbursed pursuant to Section 6.1; 
  
 (ii) second, after payment in full of the amounts specified in clause (i) above, to payment of the Secured Obligations; and

  
 (iii) finally, after payment in full of the
amounts specified in clauses (i) and (ii) above, any surplus then remaining shall be paid to the Pledgors, or their successors or assigns, or to whomsoever may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct. 
  
 (b) Each Pledgor shall remain liable
to the extent of any deficiency between the amount of all Proceeds realized upon sale or other disposition of the Collateral pursuant to this Agreement. Upon any sale of any Collateral hereunder by the Bank (whether by virtue of the power of sale
herein granted, pursuant to judicial proceeding, or otherwise), the receipt of the Bank or the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold, and such purchaser or purchasers shall
not be obligated to see to the application of any part of the purchase money paid over to the Bank or such officer or be answerable in any way for the misapplication thereof. 
  
 5.4 Collateral Accounts. Upon the occurrence and during the continuance of an Event of Default, the Bank shall have
the right to cause to be established and maintained, at its principal office or such other location or locations as it may establish from time to time in its discretion, one or more accounts (collectively, “Collateral Accounts”) for
the collection of cash Proceeds of the Collateral. Such Proceeds, when deposited, shall continue to constitute Collateral for the Secured Obligations and shall not constitute payment thereof until applied as herein provided. The Bank shall have sole
dominion and control over all funds deposited in any Collateral Account, and such funds may be withdrawn therefrom only by the Bank. Upon the occurrence and during the continuance of an Event of Default, the Bank shall have the right to apply
amounts held in the Collateral Accounts in payment of the Secured Obligations in the manner provided for in Section 5.3. 
  
 5.5 Waivers. Each Pledgor, to the greatest extent not prohibited by applicable law, hereby (i) agrees that it will not invoke, claim or assert the
benefit of any rule of law or statute now or hereafter in effect, or take or omit to take any other action, that would or could 

  

 12 

 
reasonably be expected to have the effect of delaying, impeding or preventing the exercise of any rights and remedies in respect of the Collateral, the
absolute sale of any of the Collateral or the possession thereof by any purchaser at any sale thereof, and waives the benefit of all such laws and further agrees that it will not hinder, delay or impede the execution of any power granted hereunder
to the Bank, but that it will permit the execution of every such power as though no such laws were in effect, (ii) waives all rights that it has or may have under any rule of law or statute now existing or hereafter adopted to require the Bank to
marshal any Collateral or other assets in favor of such Pledgor or any other party or against or in payment of any or all of the Secured Obligations, and (iii) waives all rights that it has or may have under any rule of law or statute now existing
or hereafter adopted to demand, presentment, protest, advertisement or notice of any kind (except notices expressly provided for herein). 
  
 ARTICLE VI 
  
 MISCELLANEOUS 
  
 6.1 Indemnity and Expenses. The Pledgors agree jointly and severally: 
  
 (a) To indemnify and hold harmless the Bank and each of its respective directors, officers, employees, agents and affiliates from and against any and all
claims, damages, demands, losses, obligations, judgments and liabilities (including, without limitation, reasonable attorneys’ fees and expenses) in any way arising out of or in connection with this Security Agreement and the transactions
contemplated hereby, except to the extent the same shall arise as a result of the gross negligence or willful misconduct of the party seeking to be indemnified; and 
  
 (b) To pay and reimburse the Bank upon demand for all reasonable costs and expenses (including, without limitation,
reasonable attorneys’ fees and expenses) that the Bank may incur in connection with (i) the custody, use or preservation of, or the sale of, collection from or other realization upon, any of the Collateral, including the reasonable expenses of
retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, (ii) the exercise or enforcement of any rights or remedies granted hereunder (including, without limitation, under Article V),
under any of the other Loan Documents or otherwise available to it (whether at law, in equity or otherwise), or (iii) the failure by any Pledgor to perform or observe any of the provisions hereof. The provisions of this Section 6.1 shall
survive the execution and delivery of this Security Agreement, the repayment of any of the Secured Obligations, the termination of the commitments under the Loan Agreement and the termination of this Security Agreement or any other Loan Document.

  
 6.2 No Waiver. The Bank’s failure at any time or
times hereafter to require strict performance by any Pledgor of any of the provisions of this Security Agreement shall not waive, affect or diminish any right of the Bank at any time or times hereafter to demand strict performance therewith and with
respect to any other provision of this Security Agreement, and any waiver of any Event of Default shall not waive or affect any other Event of Default, whether prior or subsequent thereto, and whether of the same or a different type. None of the
provisions of this Security Agreement shall be deemed to have been waived by any act or knowledge of the Bank, its agents, officers or employees except by an instrument in writing signed by an officer of the Bank and directed to the Pledgors
specifying such waiver. 
  

 13 

 6.3 Binding Effect. This Security Agreement and all other instruments and documents executed and
delivered pursuant hereto or in connection herewith shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. 
  
 6.4 Governing Law. This Agreement shall be construed and interpreted in accordance with the internal laws and judicial decisions of the State of
North Carolina without giving effect to the conflict of laws principles thereof, except to the extent that matters of perfection and validity of the security interests hereunder, or remedies hereunder, are governed by the laws of a jurisdiction
other than the State of North Carolina. 
  
 6.5 Survival of
Agreement. All representations and warranties of each Pledgor and all obligations of each Pledgor contained herein shall survive the execution and delivery of this Security Agreement. 
  
 6.6 Pre-Filing and Filing of Financing Statements. By execution of this Security Agreement, each Pledgor (a)
expressly authorizes the Bank to prepare and file or cause to be filed such Uniform Commercial Code financing statements (including attached schedules, exhibits, and addenda) as the Bank may deem reasonably necessary to perfect the security
interests and liens granted herein and (b) hereby ratifies and confirms that the Bank was and is authorized to file all such Uniform Commercial Code financing statements (including attached schedules, exhibits, and addenda) prior to the execution
and delivery of this Security Agreement, and hereby ratifies any such filings. 
  
 6.7 Continuing Security Interest; Term; Successors and Assigns; Assignment; Termination and Release; Survival. This Agreement shall create a continuing security interest in the Collateral and shall secure the
payment and performance of all of the Secured Obligations as the same may arise and be outstanding at any time and from time to time from and after the date hereof, and shall (i) remain in full force and effect until the Maturity Date or when all of
the Secured Obligations have been paid and finally discharged in full (the “Termination Requirements”), (ii) be binding upon and enforceable against each Pledgor and its successors and assigns (provided, however, that
no Pledgor may sell, assign or transfer any of its rights, interests, duties or obligations hereunder without the prior written consent of the Bank) and (iii) inure to the benefit of and be enforceable by the Bank and its successors and assigns.
Upon any sale or other disposition by any Pledgor of any Collateral in a transaction expressly permitted hereunder or under or pursuant to the Loan Agreement or any other applicable Loan Document, the Lien and security interest created by this
Agreement in and upon such Collateral shall be automatically released, and upon the satisfaction of all of the Termination Requirements, this Agreement and the Lien and security interest created hereby shall terminate; and in connection with any
such release or termination, the Bank, at the request and expense of the applicable Pledgor, will execute and deliver to such Pledgor such documents and instruments evidencing such release or termination as such Pledgor may reasonably request and
will assign, transfer and deliver to such Pledgor, without recourse and without representation or warranty, such of the Collateral as may then be in the possession of the Bank (or, in the case of any partial release of Collateral, such of the
Collateral so being released as may be in its possession). 
  
 6.8
Notice. Except as otherwise provided herein, notice to the Pledgors or to the Bank shall be given or delivered in the manner set forth in Section 10.05 of the Loan Agreement. 
  

 14 

 6.9 Severability. To the extent any provision of this Security Agreement is prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Security Agreement. 
  
 6.10 Captions. The captions to the sections of this Security Agreement
have been inserted for convenience only and shall not limit or modify any of the terms hereof. 
  
 6.11 Counterparts. This Security Agreement may be executed in two or more counterparts, which when assembled shall constitute one and the same agreement. 
  
 6.12 Amendments and Waivers. Any provision of this Security Agreement
may be amended or waived, if, but only if, such amendment or waiver is in writing and is signed by each Pledgor and the Bank. 
  
 6.13 Conflict of Terms. The terms of this Security Agreement and the terms of the Loan Agreement shall be construed and interpreted to the full
extent possible to give effect to all such terms. In the event of any conflict between the terms of this Security Agreement and the Loan Agreement, the terms of the Loan Agreement shall control. 
  
 [The remainder of this page is left blank intentionally.] 
  

 15 

 IN WITNESS WHEREOF, this Security Agreement has been executed as of the day and year first above
written by the duly authorized officers of the parties hereto. 
  

			
	BORROWER:
	
	FOUNTAIN POWERBOATS, INC.
		
	By:	 	/s/    REGINALD M. FOUNTAIN,
JR.        
	Name:	 	Reginald M. Fountain, Jr.
	Title:	 	President
	
	PARENT:
	
	FOUNTAIN POWERBOAT INDUSTRIES, INC.
		
	By:	 	/s/    REGINALD M. FOUNTAIN,
JR.        
	Name:	 	Reginald M. Fountain, Jr.
	Title:	 	President

  
 ACCEPTED AND AGREED TO AS OF THE
DATE FIRST ABOVE WRITTEN: 
  

			
	REGIONS BANK
		
	By:	 	/s/    KEMP SIMMONS        
	Name:	 	Kemp Simmons
	Title:	 	Vice President

  
 Signature Page to
Security Agreement 

 SCHEDULE I 
  

JURISDICTIONS FOR UCC FILINGS 
  

			
	 Legal Name

	  	 Filing Location

	 Fountain Powerboats, Inc.
	  	 North Carolina

	 Fountain Powerboat Industries, Inc.
	  	 Nevada

 SCHEDULE II 
  
 PRINCIPAL PLACE OF BUSINESS; 
 LOCATIONS OF COLLATERAL; FICTITIOUS NAMES 
  
 Fountain Powerboats, Inc: 
  

			
	Jurisdiction of Incorporation/Organization:	  	North Carolina
		
	Federal Tax ID no.:	  	56-1277497
		
	Organizational ID no.:	  	0055124
		
	Chief Executive Office Address:	  	 1653 Whichard’s Beach Rd
 Washington, NC
27889

		
	Locations of Accounts Receivable Records:	  	 1653 Whichard’s Beach Rd
 Washington, NC
27889

		
	Locations of Inventory:	  	 1653 Whichard’s Beach Rd
 Washington, NC
27889

		
	Other places of business:	  	None
		
	Trade/fictitious or prior corporate names (last five years):	  	None

  

 2 

 Fountain Powerboat Industries, Inc: 
  

			
	Jurisdiction of Incorporation/Organization:	  	Nevada
		
	Federal Tax ID no.:	  	56-1774895
		
	Organizational ID no.:	  	0249305
		
	Chief Executive Office Address:	  	 1653 Whichard’s Beach Rd
 Washington, NC
27889

		
	Locations of Accounts Receivable Records:	  	 1653 Whichard’s Beach Rd
 Washington, NC
27889

		
	Locations of Inventory:	  	 1653 Whichard’s Beach Rd
 Washington, NC
27889

		
	Other places of business:	  	None.
		
	Trade/fictitious or prior corporate names (last five years):	  	None.

  

 3

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